DbPhoenix

If price bounces decisively off support, then support is most likely good. OTOH, if price tests support repeatedly, the odds of it failing is increased. The resolve of buyers may not be unassailable. As for the TICKQ, is there a divergence during these tests? A classic decline on a retest is a concurrent decline in volume and price with a concurrent renewal of strength in both if and when price resumes its progress. Compare the lengths and durations of the buying waves with the selling waves, i.e., do the buying waves last longer and go farther? Or are they getting shorter and briefer? Or are the selling waves beginning to last longer and go farther? As for the volume, it can be helpful but it isn't necessarily relevant until you arrive at a point or level where you're testing support or resistance. Price can move quite a distance on very little volume if there's nothing to stand in its way. To illustrate: Note that price rejected 1920 at the end of the day on Friday after having spent so much time there midday. Price rejected 1920 again this morning. You don't know why. Doesn't matter. Now at 3, price tests what might be resistance (1), but it subsequently makes a higher low (4). It tests what might be R again, and it looks as though it doesn't want to go higher. But it makes another higher low (6). It then spends quite a lot of time struggling to move higher, but again makes a higher low (7). This might be called "absorption", i.e., eating away at supply. Price then finally makes a clean break upward at 8, but then moves sideways, digesting the move before moving ahead again at 10. Among the lessons here is that what price does NOT do (i.e., make a lower low) is as important if not more so than what it DOES do and provides just as much information to the trader who's paying attention and is as free of bias as possible.

One could also say that the difference between people who lose money consistently and the people who lose BOAT loads of money consistently is also psychological. You seem to be looking for some sort of permission. Is the above question really all that this thread has been about?

Exactly. Although something can also be learned if, when the strategy isn't playing out as it had been during the testing phases, one's first reaction is (a) "hmmm, I must have missed something; let's run this again" or (b) "oh god what a loser I am; my father was right after all".

Not really. But here are a couple of books in which you might be interested: Reality Therapy A Guide to Rational Living

I agree. The procedures I've detailed elsewhere are essential. A strategy isn't automatically profitable simply because it's home-made. Experimentation, testing, analysis, verification. And doing it all over again if the results are unsatisfactory. All of which is, of course, something different from having the "faith" to implement the plan. But that has nothing to do with the plan, assuming that there is a plan and that's it's worth implementing.

As I said, if one is unable to follow a perfectly good strategy once he has it in the can, then looking within is a perfectly legitimate course of action (or inaction, if one is coming over all introspective). People engage in all sorts of self-sabotaging behaviors, and not just with regard to trading. But hand-wringing and commiseration do not make up for the lack of a profitable strategy. If more beginners were to put in more time on that particular front, the amount and degree of hand-wringing would likely be far less.

And that's the time for all the psychological mumbo-jumbo. But this is something very different from claiming that the battle is won through mental health rather than with a consistently profitable strategy. Which may be why Douglas's first principle of consistency is placed first. If you haven't objectively identified your edge(s), then where have you to go? Beginners read that entries aren't all that important, that exits matter much more. So they focus on their exits rather than their entries. And they learn what "death by a thousand cuts" means. Or they read that they needn't have a high hit rate. Doesn't even have to be better than 50/50. And their R:R ratio needn't be all that much. All they have to worry about is "cutting losers short" and "letting winners run". So they plug away with a 30 or 40% hit rate and an R:R of 1.5:1 and think that the reason they're doing so badly is because they're not disciplined enough. If one can't define his edge, then I suggest, again, that that is where he should look before undergoing therapy. If he has all his ducks in a row and still can't make it work, then by all means bring on the shrinks.

I wouldn't call it the easiest one. That one little sentence can take months out of your life. If you're lucky.

You're being selective. Have you read Zone in its entirety? What is the first principle of consistency?

All of this has to do with implementing the strategy, not with creating/developing it. Since most beginners skip these initial steps, I suggest that they don't "have to go up the middle" but rather elect to do so. Developing a strategy is rather cut and dried. All of the angst about proving that one is not the loser that everyone thinks he is (or whatever psychological tarpit one elects to stir up) can come later.

There appears to be an underlying assumption that one is using somebody else's strategy. This is not what I was referring to. The "consistently profitable trading strategy" is one which the would-be trader develops himself. It is not something which one obtains somewhere else. Given that many if not most beginners obtain strategies from elsewhere, if buying a book or a course or a manual or a seminar or software with little red and green arrows were all there was to it, then the success rate would be far higher than it is. If one does not have the patience and/or the discipline and/or the focus to develop his own trading strategy, it is unlikely that he will have the patience, etc, to follow somebody else's. And whereas considerable faith might be required in the latter case, the only faith required in the former is in one's ability to follow the procedure. As to "knowing" oneself, there are questions that have to be answered, like how much time do I have to devote to this. But this is not the same as the introspective quest for enlightenment which is implied in these discussions. If the answer to this question is "not much", then the would-be trader is already well on the road to reaching some sort of conclusion. As to a "business plan", yes, such a document is handy, and the process of completing it is valuable. However, it has been my experience that most people who create these frameworks are so pleased with themselves from having written the list of things to do that they bask permanently in the glow of having written the list but never actually do many -- or any -- of the things they've listed. Which is why I suggest cutting to the chase of developing the strategy itself. It is through the process of creating/developing his own strategy that the trader learns something directly -- not by proxy -- about how price moves, how his indicators act, how his software and datafeed and trading platform behave. This trader doesn't have to take anybody's word for anything. He needn't have "faith". He avoids putting himself in the position of wasting money on what turns out to be nonsense. And he can do it all for so little money that it amounts to a pittance. But he has to be willing to pull up his socks and walk the journey. Otherwise, he may as well just open up his wallet and say "here".

To all traders who are reading this thread and who are having difficulties: If you do not have evidence of a consistently profitable trading strategy, then your problem is not "psychology". It is not "discipline". It is not ego or greed or fear. Your problem is that you don't have a consistently profitable trading strategy. Until you do, you can be mental health poster child with the strictest discipline on the planet and you won't be profitable. You have to have a consistently profitable trading strategy. Cranking up your software and logging in to your data feed, then waiting for the open to "see if something is going to happen" is not a trading strategy (or at least not one which is likely to be consistently profitable). Going short because "buying seems exhausted", then going long because "selling seems exhausted" or because the "big boys" seem to be "stepping up to the plate" is not a trading strategy. If you're trading and you don't know exactly what it is that you're looking for, then stop trading until you do. If you know exactly what it is that you're looking for but you don't what exactly what it is that you're going to do if and when you see it, then stop trading until you do. If you elect to view trading as a game, then don't be surprised at how much money you can lose and at how fast you can lose it. If instead you view trading as a business, then don't be surprised at the amount of time and effort required to make it a profitable one.

As long as you don't leave out the word "potential", then yes. But you may also want to plot the midpoints of the boxes. This would have come in handy yesterday, for example.

A methodology is not an edge unless it is at least consistently profitable. Trading profitably takes more than "feeling" the shift in balance between buying and selling or predicting market direction or collecting bumper stickers like "cut your losses short and let your profits run". It takes a lot of time and a lot of effort. And even then, unless one can learn from failure, he can spend years just running in place.

If every trader you've met is trying "only" to refine his edge, then none of those traders has one, and it is the lack thereof that prevents them from being profitable. And, yes, it would seem that more than 5% would "have something consistent figured out". But they don't. Most likely they have no idea how to go about putting a strategy together. Yes, there are a great many people "out there" trying to trade. But few of them have any idea what they're doing. I have yet to meet a losing trader who has a winning strategy.

Traders most often blow their accounts because they don't have a consistently profitable trading strategy. Without that, all the mental health in the world won't save them.

If you want something that really works, paint your Esc key with red fingernail polish.....

You'll note that not only is the quote italicized, but the author is provided in the parentheses at the end. This is standard style.

...99% of newbies are deaf when they are told by genuine traders the real hard facts that they need to know about trading. First of all they put their hands up in horror, then they give a mouthful to the person who has told them, and then they firmly slap their hands over their ears so that they can't hear any more. And then someone comes along who tells them all the sorts of things they want to hear. Wonderful cosy things such as how easy it all is, how it only takes a few hours to master the markets, how money just falls over itself to jump into their accounts, how special software will only select winning stocks, how a newsletter will reveal all the secrets, how there are secret formulae and secret pivot levels which are guaranteed to work, there's a guaranteed money-back offer, etc, etc. They are wooed by these softly spoken people and happily hand over thousands of pounds and wait eagerly with their wheelbarrows to cart off all the promised riches from the market. And they end up having to sell the wheelbarrow to get the bus fare for the trip home. There are things newbies NEED to know, but these are never the things they WANT to know. (Skimbleshanks)

I found this post on "Re: Dollar Getting Ready to Make a Big Leg Down" interesting and have nominated it accordingly for "Topic Of The Month July, 2008"

Good answer, cowpip

Put simply, support is the price at which those who have enough money to make a difference are willing to show their support by retarding, halting, and reversing the decline by buying. Resistance is the price at which those who have enough money to make a difference attempt to retard, halt, and reverse a rise by selling. Whether one calls this money professional or big or smart or institutional or crooked or manipulative or (fill in the blank) is irrelevant. If repeated attempts to sell below this support level are met by buying which is sufficient to turn price back, these little reversals will eventually form a line, or zone. Ditto with resistance. A swing high or low represents a point at which traders are no longer able to find trades. Whether that point represents important support or resistance will be seen the next time traders push price in that direction. But everyone knows this point, even if they aren't following a chart. It exists independently of the trader and his lines and charts and indicators and displays. It is the point beyond which price could not go. Hence its importance, both to those who want to see price move higher and those who don't. The first two posts to this thread address these matters, as do others here and there. However, finding S&R in real charts in real time takes more than just a couple of posts. But one must understand the nature of support -- and resistance -- itself before he begins to look for it. Otherwise, he will find what he thinks are S&R in some very peculiar places. Before coming to any conclusions about what “works” or “doesn’t work”, and thus does or does not provide an edge, one ought to keep in mind that a given event -- such as price seemingly finding support or resistance at a trendline (or moving average, candlestick, Pivot Point, Fib level or whatever) -- may be only incidental to what is truly providing that support or resistance. A fundamental misunderstanding of how "indicators" are calculated and what they're supposed to do can lead to all sorts of off-task behavior. We think we see the indicators indicating something, or not, and believe we have made an important discovery. We then devote our efforts to improving the hit rate and the probability of whatever it is we think the indicator is indicating when our efforts ought to be focused on determining whether or not the indicator is actually indicating what we think it's indicating. In most if not all cases, it isn't. Consider the virgin being tossed into the volcano: sometimes it results in a great crop, sometimes it doesn't. Maybe tossing her in earlier or later will change the probability of a healthy crop. Maybe two virgins are better than one. Maybe six. Maybe tall virgins are more effective than short ones. And surely age is important. But does the robustness of the crop really have anything to do with tossing the virgin into the volcano in the first place? The money under the pillow is not evidence of the existence of the tooth fairy, and spring will arrive regardless of whether the virgin is tossed into the volcano or not. (Db)

Last Swing Low.

Or.....

I haven't mentioned the Wyckoff Forum at all, and I mentioned my blog only in reference to the t2w links which Bearbull provided. If someone wants to go there to read the material, that's fine. If no one does, that's also fine. I'm hardly trying to jam anything down anyone's throat, but I do make the material available to whoever is interested. As to the "one or two page summary", exactly what is it that you'd like a one or two-page summary of? Wyckoff's approach? If so, see the Introduction to the Wyckoff Forum. If you're looking for something else, I'll try to oblige.