Use the search tool to find all posts by "nysestocks" containing the word "gambling". Repeat the search for "The Expert" and the "The Oracle" if you like. Eg. --------------------- It's quite liberating when the full realization of this sinks in.
My two cents. . . I talk about psychology a lot and think that it's the most key part of trading. But risk is key too. When it comes to risk, I have seen many traders starting out with a plan of shooting for a 1/1 risk/reward ratio, or worse. It is a basic concept to have better odds when you plan your trades. Even if you don't fully succeed with a 1/3 gain in your trades, as least start with an intention to be 1/3 risk/reward. Be clear that what means as far as where you get into the trade and where you get out. If all your trades are 1/3 and you win half of them, in theory you will make money. This is really basic, but is often overlooked or misunderstood. Or, there is an idea that 1/1 trades are okay. Unless you have a really high win-ratio, I think a 1/1 expectation sets you up for failure.
When I first started trading it was "obvious" to me that the ultimate buyer of my positions would be losers. I struggled morally with this for many years. And even now after learning some positive expectancy setups, I still think my subconscious mind prevents me from holding winners because I do not want to do business with anyone unless it is beneficial to all parties. "Take a little out of the middle"...... The crowd is right during the trend and wrong at both ends. The best party to go to is one where everyone is having a good time. And "the Obvious" that nysestocks was showing on his charts was horizontal support and resistance. This is the mechanical side of it. The spiritual side of it is you need to know who is going to buy your position at the end and why. All business owners know this and so should you, the speculator. I've sucked at trading for 10 years because I refuse to make my counterparties losers. However the hedgers are the third and hidden element to the moral equation that makes it all right. Winning traders smooth out the spikes in the market so real businesses and producers can monetize their future products and cash flow. All the chart pattens in the world just distracted me from this obvious reality.
I think a lot of people look at the market with the "for every winner there has to be a loser" mentality. While this, in essence, is true of course, I don't it's a healthy mindset to carry into this ultimate game of human psychology. This industry spends billions of dollars to lure us into their world of red and green flashing lights. Free charting facilities and commission rebates instead of free sandwiches and suite upgrades. Would anyone feel sorry for the house if they walked in and dumped 100 bucks on red 18 and the ball just happened to land there? To picture every winning trader as taking money off another small trader is wrong. If I am not the counter party to that trader's position, them somebody else will be. The only way for that trader to AVOID future losses is to learn the game....like the age old story about teaching someone to fish. Hard truth. The "charts" are cleverly designed to inflict maximum pain on any participant. Imagine if 90% of short term participants actually won instead of lost....would we even have markets to trade? Where would the new money come from? SEE where the stoplosses are sitting and either counter-trade them (prepare for many small losses v spectacular R:R), or as you say, wait until the party is in full swing and everyone is having a good time. I think we all know now 3/4/5 hits on support or resistance doesn't make it stronger..it's just trying to etch a line in your brain.
The obvious pre-requisite to making GOOD money trading is spelled out in this post by "The Expert": https://www.elitetrader.com/et/thre...-trader-study-ta.197367/page-127#post-2893420 If you were hoping for something more specific than this, forget it. No-one who has found one of the "very few ways" is ever going to reveal details. I know I wouldn't! However, personally, I'm eternally grateful that they have saved me from wasting years on the "usual tripe". Time to engage my half a brain...
Years have passed since the 1st day, I'd perused this forum, so as a courtesy cuz I don't frequent this forum anymore for a long while, I reply why risk mgmt is trumping everything. It's very logical & common sense. 1) No one can have correct entry at all time. There will be a bad entry some where down the line. 2) To safeguard against own demise due to errors & mistakes which will 100% will happen, risk mgmt is a must. 3) With correct risk & reward mgmt, one can make money at an absolute uncertain level of 50%. Above 50% or below 50%, it's a defined certainty. 4) hence, works on risk mgmt first, whatever to improve next will only make the cake sweeter. 5) Yes, as an anecdote, positive expectancy of 66% to 87% is very achievable in regular basis so good risk mgmt is a must to handle the other parts. Or else. PS: It sounds simple but it isn't because by definition, if you know your risk & reward, you already know your entry & exit under that particular condition.
I rather thought that the pre-requisite was *opportunity* and that everything else was an ellaboration on that.