Tradewinds

I like what you are saying, and it does make sense. I do agree that outside influences have a huge affect on our lives and on the mental and psychological part of trading. So I think you are saying that we are born neutral, and that all the negative stuff comes from external experiences? Well, you have got me thinking now. LOL. So if a child from birth was raised perfectly, and only taught good things, and brought up to be a confident and well adjusted person, those influences would guarantee that the child would grow up to be a good person and a good trader? If that really is the case, then how do we explain the bad things that happen in the world? I guess there is the possibility that people are born neutral, or born "good traders", and then some force of evil in the world has shifted that neutrality from birth to a downward cycle of problems and destructiveness. Unless the pure randomness of life guarantees a certain degree of bad things, that then perpetuates itself. But then why don't we overcome all those bad things? I guess whether it's pre-programed genetics, or 100% outside influences, or some combination of the two, in any case, "it is what it is", and how does it get fixed?

After re-reading my post, I can see that I worded that part in a way that is confusing. I would not want to exit a long position if price is surging, . . . or go short. I was trying to give examples of things I'm trying to avoid.

I would like to dedicate this thread to the topic of why price sometimes continues moving hard in one direction. Here is an example: Price breaks over a high, and has a larger than normal move up. The close is at or near the high, then the price continues to go up even more, with no pull back or retracement. Sometimes price pauses, giving you an opportunity to exit, and get back into a trade in the same direction. With a price surge, there is no opportunity to get out, and get back in at a better price. Here are possible scenarios: You could take long profit as you normally would, which would be to early, and you will miss out on some profit. If you enter a short trade, then the order immediately goes to a loss that just keeps getting bigger. I'd like to know people's opinions. Is there a way to predict an extended price surge? How do you deal with this? Is it better to take profit at every opportunity, and not worry about the profit you didn't make? Is it better to wait, and see if you can make more profit, risking that price will retrace or reverse on you? Does your trading style take this price behavior into account, or not? Do you use volume as an indication of price heading into an longer than usual price move? Do you have an indicator that you think can predict a runaway price or a longer than usual price move? Do these extended price moves happen when price starts moving back to a former level, and that's why there is no hesitation until that former level is hit? Does this happen after a scheduled news event? Are there market internals that can help predict this? Are there momentum indicators that can predict this? Is there nothing that can predict a long price surge?

Good point. And that point does need to be made. Technically, the price does not need to go past the order price for your order to fill. The bid and the ask can move up and down, without the price moving at all. And depending upon whether the bid and ask move up or down, your order can get filled or not, even if the price does not change. Ask Definition Bid Definition If you use the Active Trader ladder in TOS, you can see the bid and ask shift directions, even as the price stays the same.

Do NOT look at your profit and loss numbers. Look at your CASH BALANCE!!! In scalping, you can show a "Profit", and actually have lost money because of trading fees. The cash balance deducts the trading fees. TheNegotiator mentioned fills on touch. You have to understand what that means. Normally, for your order to fill in real trading, the price needs to "trade through" the price, not just be at that price. For example, you are long, and decide to exit the order at a profit. You enter a sell order. In TOS paper money, that sell order will fill instantly when the price is hit. In real trading, that will NOT happen. So you will need to hope the price goes higher than your target, so the order will fill, or sell at a lower price, or sell with a market order and risk slippage, that will give you less profit at a worse price. And you have very, very little time to make that decision when you are scalping. If you make the decision after the market has already show signs of turning against you, then in real trading, you would be way too late. In paper money, you could make a decision way too late, get a "touch fill", show a profit, and think you are doing just fine. When you start trading live, that behavior that you have been programed into, will be a disaster. Touch fills in paper money program you for failure. You become accustomed to trading a certain way that becomes hard wired into your brain. Then you have to unlearn it.

Why are people attracted to trading? Why are people attracted to sugar? Why are people attracted to other physically good looking people? Why are people attracted to luxury goods? To a certain degree, human behavior is pre-determined. All human beings have been programed to behave a certain way. It is in your DNA, and in the formation of your mind. Don't misunderstand me, you can manage your natural instincts, and you have a certain degree of free will and choice. Probably a lot, lot less than you would like to believe, but there is some degree of choice. If you or I do not admit to the extent of influence that our natural instincts have on our behavior, then you are powerless against the pre-wired behavior. Many human beings are practically mindless robots, who have no idea why they act, speak or behave the way they do. Observe a child who is 6 or 7 years old acting and talking just like one of their parents. That child has absolutely no comprehension of what they are doing, or why they are doing it. They are mimicking what they see around them, trying to form their identity. But it is done on "auto-pilot". The child did not consciously make a decision to start mimicking other people. They are behaving and talking in a way that is totally "mindless". That child might realize at some later point what they are doing. So there is self-awareness that automatically comes into play at some point. We are a mixture of automatic, pre-programmed behavior, and the ability to make our own decisions. Some people defer to the automatic, pre-programmed behavior, and give up their will to external forces. There are a mix of natural and instinctual behaviors. I'm not saying that they are good or bad. It's a matter of context, and how they are being used. In trading, if I defer to the natural, instinctual behaviors that run contrary to executing a good strategy, then I WILL loose money, . . guaranteed. I do have natural, instinctual behaviors to take on risk, and that can actually help me in trading. It depends on what behaviors I am "tapping into", and how I am managing those influences when I trade, that determines the outcome. I can not erase my natural instincts, but I hope to manage them. The reason I bring up the subject of instinctual behavior, within the context of the question, "Why are people attracted to trading?", is to state that some people are "hard-wired", to a certain degree, to take big risks. The natural world is a system of over compensation for a high attrition rate. In the natural world, there needs to be a lot of propagation in order to replenish the affects of a very high death rate. Very low survival rates would cause extinction of everything unless there is enough regeneration to outweigh the attrition rate. There needs to be more children than people dying. I'm not trying to promote a certain belief system here about why the world is the way it is, or how things got to this point. I'm just stating the way it is. This is the world we are programed to survive in. Because it is a world of death, disease, injury, sickness and attrition, we are looking for ways to combat those problems. And it would be nice to build up some reserves for the seasons of scarceness. Human beings have a strange mix of being fearful and cautious, but also being attracted to the big payoff. Why will bears risk being stung by the bees to go after the honey? There is a risk/reward battle going on. So, the reasons why people are attracted to trading have to do with our nature to seek out opportunities for gaining resources. We are wired to feel good when we propagate, get plenty of food and shelter, and do things to guarantee the perpetual regeneration of life. And we are hard wired to seek comfort. Of course, the irony is, that loosing all your money doesn't give you comfort or help guarantee your survival. But for progress to be made, and for long term survival to happen, at least some of the population needs to take a risk. If you are a caveman, running out of food in the winter, then you might be willing to try to kill a monster animal with a little stick that has nothing more than a sharp rock tied to the end of it. A certain percentage of the population will be wired to take the risk, or they will just automatically take the risk when conditions put them into the situation.

I agree. Originally, I just wanted to manage my own retirement account. (What was left of it.) I figured I could loose just as much money on my own as a broker could loose for me. So I might as well do it that way. I thought it was going to be easy. I did not know what the failure rate was.

Observation: When the problem is clearly, and consciously defined, THEN you start looking for the solution. I've seen the same price behaviors a thousand times, but until I find the correct and descriptive words to define the situation, then I'm not really looking for the answer, and I won't find an answer. It's kind of bizarre when I think of how this process works. After intuitively, and subconsciously seeing a certain price pattern a thousand times, I can still not really have a conscious understanding of it at the "front of my mind". When the "light bulb gets switched on", and my conscious mind attains some higher level of understanding, I realize, that I "knew" of the situation all along, but it's almost like operating in a "dream state". It's like you can see something in the fog, you know it's there, but there is something clouding your perception. If 90% of all people who attempt to trade never make any money, then I would guess that they never make it "out of the fog". But I want to make a point here. I think it's important to define what you are experiencing. I don't do a journal, but that's why a journal would be so helpful. I do make a lot of notes and write things down as I get an "aha!" moment. I think that either a journal, or writing things down is a critical process. Just tonight I figured out something new about trading. I wrote it down. Then, only a few minutes later, I re-read what I had written. I realized that part of what I had written, didn't make any sense to me. It made sense when I wrote it, but I had not described it very well. So I re-wrote it again. Then I re-wrote it again. Through that process, I am solidifying a very good definition of the market behavior, and wiring my brain to recognize the price behavior when it happens again. And I may go back and read my note again, and refine it more. That process of trying to accurately define in words what you are thinking, experiencing and trying to resolve, is critical to getting out of the fog.

Thanks for sharing about how much time and effort it has taken to get to where you are now. The effort I've put into trading is similar. I'm going into year 4 now. I'm looking for that peace.

Abilities Time Money Responsibilities Hobby Retirement Account Professional Trader Responsibilities/Money - This is an issue of whether you have a family to support or not. Time/Money - This depends on how much money you have left, and what your responsibilities are. Abilities - Have you proven that your strategy makes money. First of all, is trading a hobby or a profession, and are you improving. If you are not improving or learning, just stop! As long as I have the ability, knowledge and interest to make money trading, I will pursue it at some level. And that could range from being a very casual hobby, to having my own trading company. If you are putting your family at risk, STOP risking money! You don't need to stop altogether. You can get a real job, and work on your strategy some more. If you are loosing money, but not a lot, and you want to trade as a hobby, or within your retirement account with measured risk, okay. If you want to be a professional trader, then you must constantly be improving as a trader, or consistently making money. Otherwise, do it as a hobby, and go back to work. I would say that if trading is causing you and/or your family serious distress, then you need to stop. If things change later, fine. If you have good trading skills and knowledge, it's something that can probably stay with you for a lifetime. Although there are plenty of traders who were extremely successful, then crashed later in life. You can always take a break, re-charge your batteries, and get back into it. The main issue is whether your strategy is profitable. Ability to trade a profitable strategy is the gauge of whether to continue, take a break, go pro, make it a hobby or quit.

I like to use the "loaded dice" analogy. A "loaded" die has a hidden weight in one side. You roll it, and it's more likely to land with the weighted side down; the high number is on the other side. In trading, you can play with "loaded dice". The loaded dice is your knowledge about how the market behaves in certain conditions. If you are a new trader, and you don't know that you can use loaded dice, or you don't have any loaded dice to use, then you are gambling. If you find a pair of loaded dice, or someone gives you some loaded dice, then the game changes from gambling to managing probabilities, and how to place your bet. But even with loaded dice, some people can not manage the probability game, because they don't have faith in the loaded dice. The loaded dice will come up double sixes in your favor more often than not, but if the person rolling the dice can't put their faith in the loaded dice, they place the bet wrong. If you don't have loaded dice, it's gambling. Where are you going to get the loaded dice? Do you think you have loaded dice, but you really don't? Even if you have loaded dice, do you trust them? Even if you have loaded dice, and trust them, do you know how to manage the probabilities, and how to place the bet?

That is an excellent example. I see the same thing all the time myself, but with NFL football. It's so obvious. Players and teams will get upset after having some points scored against them, and they can't overcome their emotions, even though they are the better team. In practice trading, I can loose a lot of money, and then come back and never have a loosing day. I don't ever loose money for the day in practice trading. In real trading, I might have a hard time loosing a large amount of money right off, and not make it back.

That's a good point. To take your point further, and relate it to trading psychology; a negative view of the market could become a self-fulfilling, self-destruct exercise. If the trader is focused on a negative view of the market, that becomes the focus of their attention; as opposed to being focused on trying to understand the market. It's an exercise in simply filling the mind with a clean and accurate view of the market. I need to have an unbiased, and balanced perspective of the market. Simply accept what the market is, and is not, and execute the probabilities.

What is the custom calculation that you use? I've experimented with including the Unchanged data, but it doesn't seem to me to make that much difference. I've taken the difference UVOL-DVOL or used the ration UVOL/DVOL. The ratio seems to track the e-mini more closely.

I can get into a cycle of bad trades. I make a mistake, and then get out of a good trading rhythm. When I'm marching along with the market, the P/L just keeps ratcheting upward. If I get "out of step", and then don't take a few moments to figure out what is going on, then I start making one bad trade after the other. If I believed in conspiracy theory, I would tell you that this is what the market is designed to make you do. :rofl: And sometimes I mindlessly let the market brainwash me, and take me for a ride. Maybe the broker is flashing subconscious messages on the screen to make me take bad trades. lol. Oops, I better not give them any ideas.

Those big tick readings, can be interpreted different ways depending upon the context of what is going on in the market. If the TICK was at -200 on the previous bar, and goes to +800 on the next bar, that is probably the start of a price run up. If the TICK was at +760 on the previous bar, and goes to +800 on the next bar, that is a totally different situation. So large, medium, or small TICK readings, in and of themselves really don't have a lot of meaning to me.

I was thinking about whether there is a way to combine TICK data and Advance/Decline data. I don't know if it would have any meaning. The TICK and Advance/Decline data are often synced up. But sometimes they diverge. For example, the TICK will be going up, while the Advancers/Decliners are still going down.

Is that the same as Up Volume and Down Volume? I chart the Up Volume/Down Volume ratio.

After reading that article and studying it, I realized that I'm trying to be perfect all the time, and that I don't need to be perfect. And my perfectionism comes from a fear of what other people might think of me. But the market doesn't even know that I exist. The market won't praise me if I win, or insult me if I loose. It is neutral to me personally.

I would make the distinction between trading and discretionary risk assumed in the market. If the definition of trading is an economic exchange, then yes, trading comes naturally. But I don't think that is what Rande is talking about when he uses the word, "trading". I think he is talking about something else. I think what Rande is talking about when he uses the word "trading", is about how the typical person deals with a level of risk that is outside the typical human experience. If I trade 2 cookies for a slice of pizza, or a toy car, the risk isn't very high. If I enter a a highly leveraged order in very volatile market, that is very different. Trading cookies for pizza, and walking a tight rope over a river are two very different things. My opinion is, that what Rande is talking about when he uses the word 'trading", are situations, where the risk is a lot greater than what the average person experiences.

The time frame you are going to trade depends upon your strategy, what you feel comfortable with, and how much time you can spend watching the market. Some people feel very uncomfortable leaving an order in the market overnight. Especially if it's a highly leveraged security, like a futures contract. There are products that gain or loose a lot of money on relatively small price swings. If you were trading a stock that historically had extremely little percent change over long periods, then the short term risk would be much less. But then there is less opportunity for profit also.

I do not trade pure price chart. if that means that I use no other indicators. I do use other lower study indicators. But for my base chart (price chart) all I use is price levels. Nothing else. Sometimes the price peaks after breaking resistance, sometimes it doesn't. It depends on whether the price closes over resistance or not. If the price breaks resistance, even by a lot, but fails to close over, that's a sign of weakness. Peaks and valleys often have a price bar with a long tail on the bar or candle. There is also the situation where price hits resistance multiple times, but the high never goes over.

With a margin account, the broker lends you money to purchase securities, . . . if you spend more than the amount of cash in your account. In other words, you can spend more money than you really have: http://www.investopedia.com/terms/m/marginaccount.asp Some brokers don't offer anything other than a margin account. Personally, I wouldn't purchase "on margin" unless you have at least months of proven trading success.

The increase in confidence that I continue to build, comes from knowledge and a deeper understanding of the market I'm interested in. So my main weapon against fear is the certainty. I see this as my foundation. There is no way around facing down the fear, and doing the emotional "work", but I want to do the emotional work while I'm standing on solid ground, not quick sand.

I have a particular set up in mind that I would never pass up, unless a scheduled news event was coming out in 5 minutes. I need to at least take that trade, because the odds are very much in my favor. So, that sounds like an excellent way to start. I'm making the commitment right now to take a trade live next week. lol.