torero

Mind Over Markets touched very briefly on this subject. I agree it takes a while to rewire the left to the right or vice versa. I think in order for my right brain to be creative from constant information without interruption from the left brain, I write down in advance on the chalk board the rules made by the left brain to remind the right brain of its obligations. I think this is why writing down the trading plan and keep sticky notes and other reminders do so well to help improve trading and eventually become second-nature-- when the 2 finally work together in harmony.

I think these funds are another reason people should invest their own money with their own wits and knowledge. Most of us got caught up in the tech bubble (guilty here!) so another 10 years or so, another batch of wall street guys pitch the same spiel again to catch the next wave of losing funds. We sure have short memories don't we? As for MP, reading the book is opening up new ideas for me. I'm already using the POC with success so can't say it's useless anymore. I'm going to delve into it more tasty setups.

I think I'm capping my losses well but I'm working on uncapping my profitable days and get more aggressive and go for more. Greed is good... with style and emotionless, of course. Good point, brown.

That's great! Now we have 3 theories that confirm this pattern, that means it's bound to have high probability of working!

I think for me it's trying to identify the day or the morning where it's best to enter on the breakout or enter on the pullback after a breakout. Some days, the prices zig zag so much, keeps whipping me out. This is important to identify this type of days. Hard to do.

Excellent passages, thanks, MrPaul. Have you used this method to improve your trading? I think I would have to go back to review my trades as well as the days when they don't work. I think this is a tough job, because in intraday action it's difficult to identify something that change day to day. My particular problem I seem to have identified is that if I lose 2 trades in a row, I'm trading the wrong day. If I do well the first trade, I should be more aggressive and continue the streak. But this is from an introspective point of view. But from identifying the market price action, if I knew, I'd be rich by now LOL.

Everyone feels helpless in face of no control and letting fear control you. This is especially true in trading. The market does what it does and anyone who think he can control is a fool and the market will prove him wrong eventually. You have to let go of having control in trading and only control what is controllable. Uncontrollable: market direction and where it will go and where it will stop, controllable: where to set stop loss. It sucks if you think about it, you only have a small portion of control but this part is what makes a winner from a loser, a trader who can pull in profits in the long run. I see this everyday with myself, I can't control how the market behave but I can control how much the market is allowed to take away from me. That, my friend, is power and control! Learning to let go of what is uncontrollable and focus on what is controllable, it's the right mindset to take to a next step to be a better trader. When you take a whole picture of what is going on in your life, accomplish small goals and tasks will help minimize the BIGNESS of the problem. Focus of these tasks/goals will eventually solve the problem. Trading is the same, stick to the plan and eventually the money will solve itself. Good luck, James and hope things work out. All rooting for your quick return!

Hi Nick, I trade forex so I'm aware of the fact there is no volume. The tick is the best substitute, PP himself uses this to best gauge the volume as close as possible. I think it's the really the only chance of getting something out of forex. However, I'm trying incorporate tick charts into my trading but so far, the best is the time charts (15-,60-,240-min and higher charts). I can only assume Anna-Marie and her colleagues don't use volume to trade, am I correct?

Thanks mrpaul and doc! I'll check the book. I think there's a cycle that my brain starts kicking some negative mindset that I think was causing the losses. This is where I get ahead and then my mind tells me this is easy then I start to get sloppy. This happens once in a while, but this state of staleness and profitless period gets annoying because I know I can do better. The truth is I only trade about 2-3 hours max each day (if the opportunities are there). So it's the mindset I mentioned above that is holding me prisoner locked in this winning/losing cycle.

I think you can use tick chart as a substitute for volume for forex no?

Cool. Thanks for the quick reply, guys.

Ok, I see it. In classical TS, this is a rising wedge which usually means a quick bearish drop is imminent (if you draw the line from point 2 through point 4 along with 1 through 3, you'll see the wedge). This wedge has a target of going back to point 2. This is all in Edwards and Magee's book, very well explained.

I tried to modify my own post to add a few things in but the site just hangs. James can you verify this? This has happened a few times already. Thanks.

There has been many questions about the markets being automated little by little and leaving discretionary traders as a bunch of minority lose cannons (Soultrader brought up this topic a while back). I think it is going this way, but the fundamental problem remains is who owns the money that they're losing? Machines? Computers? or Humans? If they answer correctly, then it's down to human psychology driving the markets, not machines (I've never seen a machine screaming "Oh my GOD, I'm losing millions, I got to scale down, scale down!!!!!). Of course the end result is the investors lose the money but Wall St. keep ticking with their fees and comms. End game: no matter how you play, they win. Maybe we'll go back to basics. This is due to the fact that quant has enjoyed a nice bull market. Heck, anyone can make money at this point, engineer or not. Once the cycle changes (i.e. volatility, bearish, consolidation, range-bounce, what have you), that's when the real test on which funds/traders can cut it. This was exactly happened up til the tech bubble.

I've been reading up on Dalton's book and I myself had the same question. It seems a logical choice to use London session as a starting point. But we can't ignore the other volume areas that may play a crucial role. In simple S/R, Tokyo and NY highs and lows play an important part of the price action movements so I think it's tricky using MP with currencies. I think Dalton used bonds are the main instrument as an example but he did use currencies and used the entire session (24-hr format). I'm testing out a few ideas right now so we'll see how it goes. Notouch, you see any edge in using MP for London session only?

I noticed from my equity curve recently that there tends to be a wave of ups and downs and I tried to determine if this has to do with the market or it's our own psyche that dictates these results? These waves happen on a very almost symmetrical order, in terms of time and $ value. Do you know what I'm saying? I mean, I'm a discretionary trader so when I execute trades to the setups on entries, no problem there, but I think it's the exit that is more flexible depending the market condition. So I'm not sure whether there is something in me or my mind that cause the equity to move to a level, then move back down then up again. I've read somewhere that we humans have a cycle to everything we do, at work, at play, etc. An example is not all of us devote all 8 hrs at work in productive mode. Stats show that no one can produce even half of those hours productively. So I'm thinking that traders that falter in their equity is due to lack of concentration, focus, productivity. It must be difficult to maintain high level of productivity for long before a drop and a losing streak would come. Any ideas doc?

Asking yourself why you took the trade is one every trader's mind when the trade went wrong, but only if it depends if you followed the trading plan or an impulsive trade. When you judged it as "why did I do that," it has to be in a proper context, or when you'll be judging from the perspective of win and loss and not good or bad execution on the trading plan. This is extremely important. I have 2 setups and I follow them, but there are days, the damn setups just don't pan out, but I have to keep in mind that they are setups of the trading plan, no questions asked.

Excellent documentary, thanks cooter. I was completely horrified how larger a problem is than originally thought. I don't want to use the word conspiracy but certainly alot of bullying tactics (lobbying) in a vicious cycle that make anyone difficult to get out of. What I don't get is these wall street guys get credit from the gov't in small interest while the rest of us rats get the usury rates. Something's wrong with this picture.

Even the brightest and best can't pull their own weight. http://www.bloomberg.com/apps/news?pid=20601087&sid=am005JehQcNY&refer=home

Yeah, I think in times of excesses and greed, there will be times of exposure of abuse of power, money, etc. that will whip the average investor into panic and distrust, one time or another. I think Bernanke will stand by the same stance as Greenspan made, not to intervene or interfere with the dollar (I think he made this point early in his new job as chairman) so not sure if he's concerned about the dollar falling, his job was to curb inflation and not get into a deep recession, a balance act between the two. The dollar would take care of itself. I could be wrong but I remember his stance as such and the price action of the EURUSD and other crosses made that clear by breaking into new record lows. It's just my perception.

From my observation of using tick charts, there is a tendency for the opening to continue the direction previously set from the late afternoon of previous day. The overnight tend to pull back then pull back, or move ahead then pull back at the opening (provided the news at 10AM doesn't bring surprises to change direction and market opinion). One of the setups I trade is to wait the first pivot to be made, and determine if the pivot is a higher low/high (from upward direction of previous day) or lower high/low (downward direction from previous afternoon). It's a not a sure-fire setup, but does provide clues to the probable momentum for the opening. Tick charts with overnight action show this better than regular charts.

I still don't get it, the pivot 3-4 from the chart must be in the channel. There is no channel unless 2 lows and 2 highs are made. So 1 & 3 must exist to draw a line, so does 2 & 4. I got this rule from investopedia but does't make sense. I think this pattern is classified are broadening pattern in the classical TA.

Great explanation, dogpile. But is this an unprecedented act? There were other crashes before but the Fed never intervened or is this a one-time deal? Only because real estate sector problem or they think it's expected to move into other sectors?

I agree, I find agricultures overnight S/R play a big part in the opening hour in direction and reversals. I tend to fade the direction if opening is inside the overnight high/low. ER2 overnight sentiment and action tend to be ignored. There was a floor trader who mentioned that if the same market that is traded heavily outside the US markets, then overnight S/R tend to be respected. This goes for Ags, forex, crude oil (Amsterdam, London, London, respectively). It makes sense as ER2 is US-centric instrument and not many trade outside the US. I'm not sure about ES, Gold, among others as I don't trade them.

So what you're saying is the Fed is making a temporary fix to a short-term problem instead of a making a long term solution. Does that mean that there is more long term market problems to come? I'm not sure if Cramer was seeking liquidity solution in the short term (sorry don't remember what he wanted specifically the Fed to do, I thought it was lowering interest rate). If this mortgage turns out to be a tip of the iceberg, more injection?