DbPhoenix

If you trade price action, your edge never fails.

Exceptional post, Siuya. You hit the nail on the head (tip of the hat to Maslow). The class of '09 is considerably different from the class of '03 and even more so from the class of '98. The last was all about momentum, but this group is all about engineers and mathematicians and statisticians and algorithms and, even more than ever, indicators. They appear to believe that the market is not only something to be wrestled to the ground but something that can be wrestled to the ground. And pinned there. Until it submits. Livermore encapsulated it a hundred years ago: Rarely do any of us grow up learning how to operate in an arena that allows for complete freedom of creative expression, with no external structure to restrict it in any way. In the trading environment, you will have to make up your own rules and then have the discipline to abide by them. The problem is, price movement is fluid, always in motion, quite unlike the highly structured events that most of us are accustomed to. In the market environment, the decisions that confront you are as endless as the price movements you intend to take advantage of. You don't just have to decide to participate, you also have to decide when to enter, how long to stay in, and under what conditions to get out. There is no beginning, middle, or end - only what you create in your own mind.

Traders lose due to, as Steve46 suggests, arrested development. They also lose due to laziness. Either or both of these may be ameliorated through therapy. Or a swift kick in the pants. But they also lose due to stupidity, and therapy can't fix this. As an old Southern saying puts it, beauty may be skin deep, but stupid goes right to the bone.

As to your first question, both. As to your second question, see the Stickie on Auction Markets and scroll down to Springboards. Most of your questions will be answered once you've read the material in the Stickies. You may also want to do a search on "springboards" using my name.

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Not all of these entries are requireds. Most are electives. I put them all in so that no one gets the idea that there is only one entry in each section. Those who are aggressive can take the aggressive entries, those who need more confirmation can wait (the penalty for the latter, of course, being that one can be stopped out rather suddenly). The first long is taken at the first RET after the climax low. This can be assumed to be a climax due to the support level and the capitulative decline. The subsequent short is taken at the first RET after the break of the demand line because there's no way of knowing whether this will be a secondary reaction or if price will continue down toward the next support level. As it turns out, the secondary reaction takes place as it should, and one can take the risk of going long even though the supply line is not yet broken, or one can wait and take it just after. If one had the balls, he could take both, the second one being a scale-in. There's no trade on the next leg down, partly because price is falling out of a hinge and the first move out of a hinge is nearly always fake and partly because price only falls about 50% of the immediately preceding rally. When price makes one of its famous U-turns back into and then out of the hinge on the upside, the long can be taken with more assurance. If more confirmation is needed, the next can be taken. Or, as before, they both can be taken. Note that if only the second is taken, it will be stopped out quickly. The next short is taken at the first RET after the break of the demand line. The fact that the line was broken after price appeared to find R at the premkt high is a confirmative element (waiting for price to find support is another way of saying hoping that it will, and if it doesn't, you're watching price fall and you're not in the trade). The supply line is then broken after price appears to find S at the previous swing low and the next long is taken. If one doesn't like that, he can wait for the next opportunity, though this one takes a while. If he takes both, the second can be a scale-in. The great disadvantage of static charts is that one has absolutely no idea of pace, and pace can provide a great deal of information in real time, particularly with regard to hesitations and punching through (note, for example, the hesitation when price first drops out of that hinge). There are also the elements of extent and duration of waves. Some last a long time but don't go very far. Some go far but don't last very long, like the climax run. Some do both. Some neither. And there is also the tendency of beginners to read charts from right to left instead of left to right. Reading from right to left can create all sorts of confirmation biases, which is why backtests done improperly can so often (always) yield exactly the wrong information. There is also the ever-present hindsight bias. One tells himself that if only he'd held, he would have done so much better, and with fewer trades to boot. This is also why so many will work at this for four or five or nine or fifteen years and never do much better than cover expenses. You have to trade what's in front of you, without hesitation. And if you're prepared to get out immediately if things don't go as expected, there is virtually zero risk. Knowing this, and I mean knowing it, enables the trader to take these trades and even make immediate exit-and-reversals because he knows that he can't be screwed. If you have any other questions, just ask.

Not all of these entries are requireds. Most are electives. I put them all in so that no one gets the idea that there is only one entry in each section. Those who are aggressive can take the aggressive entries, those who need more confirmation can wait (the penalty for the latter, of course, being that one can be stopped out rather suddenly). The first long is taken at the first RET after the climax low. This can be assumed to be a climax due to the support level and the capitulative decline. The subsequent short is taken at the first RET after the break of the demand line because there's no way of knowing whether this will be a secondary reaction or if price will continue down toward the next support level. As it turns out, the secondary reaction takes place as it should, and one can take the risk of going long even though the supply line is not yet broken, or one can wait and take it just after. If one had the balls, he could take both, the second one being a scale-in. There's no trade on the next leg down, partly because price is falling out of a hinge and the first move out of a hinge is nearly always fake and partly because price only falls about 50% of the immediately preceding rally. When price makes one of its famous U-turns back into and then out of the hinge on the upside, the long can be taken with more assurance. If more confirmation is needed, the next can be taken. Or, as before, they both can be taken. Note that if only the second is taken, it will be stopped out quickly. The next short is taken at the first RET after the break of the demand line. The fact that the line was broken after price appeared to find R at the premkt high is a confirmative element (waiting for price to find support is another way of saying hoping that it will, and if it doesn't, you're watching price fall and you're not in the trade). The supply line is then broken after price appears to find S at the previous swing low and the next long is taken. If one doesn't like that, he can wait for the next opportunity, though this one takes a while. If he takes both, the second can be a scale-in. The great disadvantage of static charts is that one has absolutely no idea of pace, and pace can provide a great deal of information in real time, particularly with regard to hesitations and punching through (note, for example, the hesitation when price first drops out of that hinge). There are also the elements of extent and duration of waves. Some last a long time but don't go very far. Some go far but don't last very long, like the climax run. Some do both. Some neither. And there is also the tendency of beginners to read charts from right to left instead of left to right. Reading from right to left can create all sorts of confirmation biases, which is why backtests done improperly can so often (always) yield exactly the wrong information. There is also the ever-present hindsight bias. One tells himself that if only he'd held, he would have done so much better, and with fewer trades to boot. This is also why so many will work at this for four or five or nine or fifteen years and never do much better than cover expenses. You have to trade what's in front of you, without hesitation. And if you're prepared to get out immediately if things don't go as expected, there is virtually zero risk. Knowing this, and I mean knowing it, enables the trader to take these trades and even make immediate exit-and-reversals because he knows that he can't be screwed. If you have any other questions, just ask.

None of that shows on a chart. The point is that whether a daytrader or swing trader "makes more" has absolutely nothing to do with whether the trader is daytrading or swing trading but rather with the competence of the trader.

The same way one should approach any sort of trading: Developing a Plan: The Trading Journal

This is the same question tupapa was asking. Did you not see my reply? The chart is not mine; it's his. I added the S/D lines. Edit: Once you've read my reply to his question, the chart below may be helpful.

You're setting up a false dichotomy. There is no difference between day trading and swing trading except for the bar interval, if one is using bars. Remove the X and Y axes and you'd be hard-pressed to tell the difference. That you've been unsuccessful at daytrading may mean only that you've approached it in the wrong way.

Doing this on a hindsight chart doesn't make a great deal of sense. However, doing it in real time enables the trader to track the progress of supply and demand and pick up on changes in the balance between buying pressure and selling pressure and get out when his trend is over. See the charts (6) I posted to the AM thread this morning to see how these lines are plotted in real time. You can also plot trendlines (chart 2), but while these may help you know where to look for trading opportunities during the coming day (again, see the charts I posted this morning), they aren't going to do you much good in real time in terms of tracking the push and shove of buyers and sellers.

People learn in different ways. Some can read an article or book and run with it. Others need the visual equivalent. The charts are simply another way of expressing the content of the course. The chief advantage of observing price movement without any consideration of entries and exits is that one develops a sensitivity to what buyers and sellers are trying to accomplish and how well they're doing. This cannot be done if one is continually worrying about where he should enter or exit or where his stop should be and how much money am I making/losing. The trader should be concerned enough about what price is doing to take action when necessary, but he should not care in the least about it otherwise. Call it active apathy. If he gets stopped out, his reaction, if any, should be Oh, well, not Oh, shit waddoo I do now? All of your questions have to do with entering and exiting and managing, not with what buyers and sellers are doing. Even when you think you're focusing on price flow, you're still thinking about where do I enter? If you can't get past this, you'd really be better off trading with indicators.

Depending on the amount of baggage one is carrying, this can all seem too complicated to deal with. So much simpler to plot a MACD and a slosto. On previous websites, I preached price/volume, support/resistance, demand/supply, trend/trendlessness (ranging). Or if volume doesn't do it for you, focus on the waves and how far and how fast one side or the other is able to push price. Either way, focusing on these four elements helps to clarify the situation and clear the mind, thus enabling the trader to act quickly and decisively and not fuck himself over. By all means do not fall into the trap of believing that the market is a jungle and everyone is out to get you/trick you. Once you're in that place, you will be incapable of assessing the situation objectively and rationally. You will instead be second- and third-guessing yourself, and that's not the road to profit.

Keep in mind also that this 50% business is merely an indication of strength or weakness. Where you've pegged 50% is an indication of strength. And where you would have taken your long is a 50% retracement of the previous rally, also an indication of strength. However. Go back up to my post about retracements. The retracement is an opportunity for new buyers to jump in on a trade they think they've missed. And some might have entered where you would have. But for whatever reason (you may insert whatever conspiracy theory you subscribe to), they didn't have it. So price, despite all indications, resumed its downtrend. This is something you have to be prepared for. If you expect it to move, and it doesn't, then get the hell out.

Because you're ignoring support and resistance. Given the extent of the drop pre-market, it's unlikely that the secondary reaction would be so far above the climax low. But let's assume that it was, or might be. Opening this up, you'd go long at the spot you've chosen and be immediately stopped out. If you had your wits about you and stayed calm, you'd then reverse and go short anticipating a better test of the climax low. Or you could just wait for it and go long at the true secondary reaction. As long as you immediately exited your first entry, you'd lose nothing, or maybe a couple of ticks depending on how quick you were.

Given gozila's questions about supply and demand lines, this is as good an opportunity as any to point out the difference between these and trendlines. This is a little cramped, but you get the idea.

Well, a, you're looking at it in hindsight, b, your demand line would not be drawn that way in real time. In RT, the line would be broken at 2747, and since you would not know in RT that price would rebound at 2740, you'd take the short. If you took the short and got stopped out by a break of the supply line (which you don't show), you'd still make money. Trade what's in front of you, not a scenario.

From a trading standpoint, the practical reality is that it doesn't make any difference. Though I didn't post this series of (6) charts this morning to make any sort of statement about randomness or the absence thereof, it occurred to me when I finished that if I had approached the morning with the idea that it was all random, I likely would have been too paralyzed to take any action. But maybe that's just me. Instead I assumed that traders had some intent, and my course of action was clear throughout the morning. I could have used an indicator, of course, but if I believed the market was random, I probably wouldn't have taken its "signals". To do so anyway would have fed the anxiety that I likely would have felt by not understanding what was going in the first place. This would not have put me in the best place to trade, or not, the remaining opportunities in the day. Or perhaps even the next (trading) day.

This is a summary of what I've posted today, plus the last half hour, plus suggested entries. It should be clear that after a couple of hours one has a hell of a lot of notations. Presenting the fait accompli can cause those who know nothing about this sort of trading to think Jesus Christ How can anybody trade this mess? But taking it step by step from the very beginning may reveal the sense and logic of it. And a reminder that no exits are posted because trades are exited by the fearful when a supply or demand line is broken. The more confident who are watching price move in real time can give price a little more room.

This is a summary of what I've posted today, plus the last half hour, plus suggested entries. It should be clear that after a couple of hours one has a hell of a lot of notations. Presenting the fait accompli can cause those who know nothing about this sort of trading to think Jesus Christ How can anybody trade this mess? But taking it step by step from the very beginning may reveal the sense and logic of it. And a reminder that no exits are posted because trades are exited by the fearful when a supply or demand line is broken. The more confident who are watching price move in real time can give price a little more room.

Yes, that's the course. Go to Section 15. If you need more examples, there are dozens, if not hundreds, in the threads here. You can search each thread or search the Forum in its entirety using the Search This Thread or Search This Forum tabs with "supply line" and/or "demand line", but you'll likely get a hell of a lot of results. Others may have favorite posts to which they can provide links, but I'm afraid I don't. Edit: Actually "supply line" and "demand line" yield about 130 posts each throughout the Forum, which isn't all that bad, considering there are around 5000 posts all told.

Lessons are repeated until they are learned. --Iyanla Vanzant

And there they are, better late than never. But meeting R at 50. 1035 PS. By the time I got this posted, they'd made it through 50 but found R at the next level, 52.