MightyMouse

Right = green = you are aligned with market direction/orderflow. Wrong = red = hopefully out quickly.

OTF traders act or react on larger time frame. While trading, you have to be cognizant of where the daily activity is in relation to weekly, monthly data formations. Price action begins to stop making sense on the lower time frames when they enter because their size overwhelms the activity of the smaller time frame traders. In my mind they are not even aware of what is occurring on a sub-hour chart. Depending on what the market looks like, you'll have a fair share of otf who are trading the breakout or those who are trading to fade the move. When trading MP on an intraday basis, during periods where we were at major highs or lows, I switched to anticipating break outs where I normally would have wanted to fade the move. Doing so allowed me to capture the losses of the traders who continued to try to fade the move at bracket highs and lows.

Your question is a good question. You wouldn't want a stop if you have the advantage of foreknowledge that the second curve would prevail. You can argue too that you wouldn't want a stop if the top curve would prevail. The fact is that you do not know what the curve is going to look like until you get it. If you looked closely at the raw data from the period being tested and not the resulting equity curve, you'll understand better why the curves look the way it does. The trouble is that the data only occurred in the past and you can't back test the future, so you need a stop a stop in place if you want to survive. Looking at the two curves, though, why would anyone pick the top curve? Personally, I look at both curves and know damn well that I would never attempt to commit real money to the market with a system of commands that buy the market after A occurs and sell after B occurs on a chart. I know the curves were posted for exposition purposes only, but a trading system should seek to reap profits from traders, not from price movements on a chart. Just my opinion.

You have nicely demonstrated that you buying pullbacks without a stop in a bull market is a good strategy. How would it work with stops?

Unfortunately, rational thought is not on the agenda.

Father to incorrigible, derelict son: If I buy you a car, will you promise me that you will stop smoking pot and get straight A's in school? Son: Yes Dad I promise you I will be good. Germany/EU and IMF to Greece: Do you promise to impose Austerity measures if we approve a $170 billion bail out? Greece: Yes I promise to be good.

The wall of sell orders when a price breaks a high, or any perceived key resistance area, are buyers who want sellers to panic and sell lower into their standing limit buy orders, thereby getting a slightly lower price for their long entry or their short exit. Generally, when the offer is stacked, the intentions of those trading is to take price higher. No need to marvel at their brilliance since it frequently backfires. The traders attempting to force price downward to enter lower or exit their short positions at a lower price end up short or shorter which is counter to their intentions. In other words, these traders now have larger short positions to exit at higher prices or are short when they intended to be long. These situations make for awesome moves. The moves are generally stimulated by large fish attempting to eat large fish. As a small fish, you need to decide whether these are waters that you should be swimming in. There is no "smart" money; instead, there are long term well capitalized traders and short term well capitalized traders or long term poorly capitalized traders and short term poorly capitalized traders. Of course there are all the in betweens, but those are the extremes to either expect to get paid from or steer clear of.

Let me guess: You were cleaning up after partying last night and you found a half joint.

If you want to try trading, you should start with stocks and trade them in a small account on a non-leveraged basis. They are the simplest to understand and safest account to open. To trade full time and derive income exclusively from trading, you'll need a lot of money. Why might you not succeed? The major reason could be that you may not have enough money. Most businesses fail because they do not have enough capital in the first place. Trading is absolutely no different. consider this: if you need to make $50,000 a year and you want to make it from trading, then you'll need: Capital = income + income/(3*R) R is the +- 10 year treasury rate rounded to the nearest percent.Today it is +- 2%. If R increases, the amount of capital you need decreases and vice versa.So, to make 50k a year, currently, if you are an above average trader, you will need about 830k in an account to make 50k. And you shouldn't commit that kind of money until you know you can take money from the market. Most people will disagree with the above until they fall victim to it. Markets are very competitive. Do not ever think that a professional uses a market as an ATM. That is pure fantasy and there are a lot of people who want you to believe it. Be smart. Good luck

Similarly, I cringe when people say" google it" to find an answer, as if the right answers are just a few keystrokes away. There are certainly answers, but they are not right by virtue of the fact that they have been put on a website. Most people will accept an answer as truth when they read or see threads that have similar or consistent answers. Research takes patience but it has turned into an .A.D.D. event We only wish it was so easy. Just a thought

The euro has made a lower low in the current week and assuming we do not make a higher high for the week, we will have one week of ll and lower highs. The daily has a nice series of ll and lh, which certainly looks like the makings of a down trend. In order to say so, you really need agreement on the weekly time frame so we'll see what happens by Friday. The next area of support is about the 128.80 area and then there is the other at the 126.270-.280 area. There are lots of long stops that will form around those levels if they are not there already. There are also stops above 133.25. I am short and I still have risk exposure until we have a lh and ll under 1.3. When we do that, I'll move my stop to BE. If we break the 1.2628 lows, I'll start adding to the position and maintain a be stop. My position is a second attempt at the short. The first resulted in a small loss. The move could just be movement in a range or it could be part of a sloppy, slow downtrend that began from the high of the weekly range in May 2011. I am anticipating a push lower to the recent lows in January and the the low set back in june of 2010. If we push to the 1.16 area, I will dump everything somewhere around there. But, it all really depends on what happens between now and then. There is plenty room to make money on the downside if this continues. You do not need to catch the very high for a short. I do believe that, as a yacht dwelling acquaintance of mine has put it, we have a platypus event in the euro.

The close is a piece of information. Consider it the way you would consider a book in a library: Its useless until someone uses it. I get in after the close all the time. I wouldn't be able to get in if I didn't have a close, so in my case the close has a great deal of importance. However, I do not trade with time bars for short term trades so I can't comment on how or if a 5 minute bar trader could benefit from the close of the bar.

That is a very bad comparison. A task like driving can be broken down into many different steps and you can then measure progress in each step. That is why virtually every teen can learn to drive eventually. In trading most do not have the luxury of being able to break it down into a set of measurable steps with which we can measure progress That is why virtually no one learns to trade. The fact is that one truly does not understand the amount of risk we took on when we learned to drive. Rates for teen drivers are significantly higher than for adult drivers for a reason.

Then you have a catalog in your mind of all the questions that can be asked and are confident that you know the responses that can be given. I would suspect then that you would also have to be able to anticipate who is going to ask the question which means you will have to know who is present at the hearing or function. Additionally, if a liberal asked a question the market would react differently than if a conservative asked the same question, assuming too that bernanke is going to answer both the same way. I trade the news, but very differently. I try to get properly positioned before the news in a manner that opposes the weakest side. Properly positioned means that there is a decent distance between the current price and my breakeven entry stop. Not properly positioned means the current price is too close to my entry or I am negative on the trade. I get out either way and do not try to capitalize on the news. When the news moves in my direction without hesitation, I have the best trade location possible. If It moves toward me, I get stopped out of my position, frequently with slippage. I only attempt this with major economic news. In my mind a bernanke interview or hearing is a non event these days which speaks of the effectiveness of monetary policy under current economic conditions.

Your trade was not about logic, but it does lead you to an A or B or C conclusion. As a cynical onlooker, I would suggest that there are a lot more actions and reactions that might occur from a Bernanke comment than your non-logical A or B or C reactions, but at the same time I am not suggesting that you have cataloged them all in your short response. However, how do you know which reaction it is going to be to take advantage of your ability to be a few steps ahead of the crowd?

Trading a poor strategy is a sure way to destroy your account whether you use stops or not. Sometimes, stops will ruin a trade. Sometimes they will help a trade. To me a stop merely means that the limit that I wanted to risk on a particular entry has been reached. Also, to me it is a good sign that the timing of the entry is off. My timing is off all the time and I, therefore, get stopped out all the time. I have no reason to bull shit anyone The reason that I am willing to limit the risk on a trade is because I know that I do not know what the chance of losing on a trade really is until after the fact. It is somewhat foolhardy to believe that you can know what the market is going to do or not going to do. After the fact it all makes sense, before the fact I plan for the worst; but, not to suggest that everyone should do what I do. I give the market as little as I can. However, I am glad that there are others who are willing to give the market a lot more than I do when they are wrong.

I was mainly describing a particular type of trading I do which has a low win rate and a high payoff. Other types of trades that I do that are somewhat opposite (high win rate and a small payoff) still have hard stops in place. I read on this tread that there are no absolutes and only probabilities. I suggest that there is at least one absolute: In the long run everything that seems to only be remote, will happen. Trading without a stop with any system invites or invokes your worst nightmare. Yes a stop will take you out of trades that will go on to become winners or the sum of your stops will turn a winning trade into a loser. So what? If you ego is damaged from the exchange, go speak to someone like Rande on the other thread who may help you learn to shrug it off if you can't do it on your own. Getting stopped out and having it go on to be a winner is no different than folding trips in Hold'em when there are 4 spades on the board and then learning that you would have won. Trading without a stop is like playing no fold'em hold'em. One needs to play no limit poker to appreciate this.

The market doesn't have a real gun to point. Hard to trade when you believe the threat is real. However, the distorted perception that the market is holding a gun to you, makes it easy to take money from the market. Put another way, if you see a gun when you trade, you shouldn't trade until you make the gun go away. I am not directing these statements to anyone specific.

Through careful analysis we have indicators that can anticipate the direction the market will take dependent on a senator's pants, shirt, and tie. The wild card is the markets reaction to his selection of his shoes and belt, but we are working on it.

Well, for at least the last decade, it certainly appears that market participants have been well behaved when you decide to trade. Kudos for your discovery. The best part, to the best of my knowledge, is that you didn't have to fight your way out of a room full of snakes, or dodge large falling boulders. In my case I think I need a fresh read of "So ist der Lauf der Welt".

I always use a stop and it is never mental. I use a stop as a risk management tool. My stop is assigned a max dollar amount that is pertinent only to me and is small in relation to my account and the amount of time I plan on being in a trade. My stop has nothing to do with being right or wrong. If I get stopped out, generally, the trade has a lot further to go before I am wrong about the trade and it frequently continues in the wrong direction without me in it, proving me wrong. Other times I will take lots of small losses and still end up being right and making a decent chunk of change on the trade. Ideally, I get in, do not get stopped out and the trade goes in my favor, but you can't always get what you want. A mental stop allows the market to drain capital from my account while it decides if it is going to let me have it back. It's easier and more sensible for me to get out and get back in again at a worse or better price than to let the market have that much control over my money.

" I ask Jack to explain how he produces a winning attitude in trading. He responds, “The same way I did in sales. I use a visualization technique where I see and feel what it would be like to make $1,000,000. It really pumps me up. I can taste the victory. I then take that energy and focus it on my next sales opportunity or my next trade. I have photographs of what that success would provide me. I’ve built a sales career out of being able to create these high-energy states and to attract success.” I think it might be a good idea for Jack and the author to understand the real reason why Jack was a successful salesman. It will be difficult for the author to help Jack with his new endevour if he accepts or promotes the illusions that Jack already possesses. It appears from the brief description of Jack's sales career that Jack has ego issues. When companies downsize, they stop supplying coffee to employees, they consolidate real estate leases, they get rid of dead wood clerical staff, but they do not get rid of top sales people. Clean up the BS Rande, some people won't buy it.

Greed and taking huge risks are also the way that most extremely wealthy people got that way. Everyone thinks thier risk taking is calculated. It is brilliance if it works and an act of greed if it doesn't.

If you were to update the EU/USD daily it looks like we are developing a daily bar for 2/6/2012 that will be a LL LH. If in fact it does close that way, then I would suspect that The euro will continue downward. The risk is to a max of 1.3237 assuming the bar closes where it is at 1.3044, then the risk is just under 200 pips. Entry could be on the open of tomorrow 2/7/2012 if today is in fact a LL LH. You can time an entry with a hell of a lot less risk than 200 pips and still get in for the ride. The 1.3237 area is where the short trade is no longer valid. I would also exit if on 2/7 the day turned into a HH HL or exit on 2/8/2012 if 2/7/2012 turned into an inside or outside day and 2/8/2012 turned into a hh hl day, without it breaching the 1.3237 area. The area of interest is down at the 1.2628 area. there are lots and lots of stops below there. If we begin a series of LL LH, then that area could become a reality and it is a decent risk reward situation if you risk less than 200 pips. The next area of interest is on the weekly at 1.1874. On the weekly we could potentially be developing a LL LH after an inside bar on the weekly. If that happens, then there is a good chance further LL LHs and it could become a monster short. If you are short and the weekly turns negative as described, then you have to switch to managing the trade by following the weekly chart. I will do this trade almost as described, but with very small size and tiny risk. I will exit and reenter if I have to and will not give a blow by blow. I may get stopped out and get back in at a worse price or better price multiple times. It really makes no difference to me. I do not try to short the high and am only interested in being in the right direction and not being led to slaughter. I am not fond of currencies because there are is no decent volume measurement and I rely on volume. To me this is like flying with one eye, but it does look like it has decent potential and therefore worth the small risk. Incidentally, my day and week opens and closes coincide with the futures. I do not use a currency broker.

Yes, it is a word choice. I call persons gambling in a casino, who know they cannot win and still spend night after night gambling, obsessed with gambling and not passionate about gambling. Inexperienced? Maybe. Traders who risk capital for trading sake, are obsessed with trading in MM's unabashed glossary of trading terms.