Humbled Trading Log

[Enigmatics 10]

So, the above statement should have read:

 

The central question remains, again, whether price is going up or down

with reference to a trader’s point of reference

.

 

So, the question arises as to what this “point of reference” is? A point of reference is that price from which you determine the trend (see the definition of trend in my first post on this thread). Some call this reference point as support or resistance, and some as Point of Control, etc.

 

As a trader trying to understand market action, you need to do the following:

1. Wait for price to reach a point of reference. Observer if price is accepted or rejected there. That gives you the trend for now;
   
2. Once you determine the trend, determine the next target (a future point of reference). This is the target you expect the price to reach.
   
3. If the price reaches that target, observe if that target accepted or rejected; this will determine if the trend persists or changes;
   
4. Always monitor for trend change before the target is reached (i.e., price fail to reach the target).
   

 

I agree with this 100%.

 

I know Humbled doesn't know how to trade like me, nor does he understand the concepts I've explained to him on here or via private messages ...... but the fact remains, what I've shown him is how I "frame" every single trading day and how I frame potential longer term setups. If that framework is not there, I am not trading. That's all it is.

 

I also wanted to say that I understand how some of the things Wyckoff taught can be "subjective". I noticed it, so I sought ways to fix that. Things started to become clearer based on "confluence" of other methods used in conjuction with it. So that's why I started using Volume Profile, Auction Theory, and Divergence.

 

Example ....

 

1. Sellers are exhausted after a big selling climax and the candle shows professionals buying into the weakness (Volume Spread Analysis)

2. Sell Climax happens at a Value Area Low (VAL) on the volume profile and I know that there is potential for mean reversion

3. I watch for signs of secondary testing ... i.e. lower lows on lower volume. (Wyckoff)

4. My MACD is making higher lows while price is making lower lows (Divergence)

5. I wait for a key trend line to break and confirmation of demand overcoming supply (Volume Histogram)

6. Targets are then based upon VWAP and volume POC's. I know that many insitutions guarantee price execution at VWAP and I know that POC's are from "previous auctions" where the most buyers/sellers agreed on price on that timeframe. (Auction Theory)

 

Again, an amalgam of different methods to help with the "quality control" of the trade. It enables me to properly mark my stops/targets. I am typically entering trades from the extreme instead of getting caught in "the middle" where risk/reward is often so freakin' poor its disgusting. All of this came from careful observation and a desire to understand orderflow better. Eventually I noticed a consistent behavior. Enough to provide plenty of trading opportunities.

 

I'm not here to master every trading pattern known to man and be in the markets at all times. 90% of the public out there trading price patterns don't even know what the patterns mean in the context of the orderflow. That's why they're forced to trade it every time they see it and most of the time their risk/reward is skewed against them. They just don't realize it. They become "liquidity" for the professionals to unload their positions into.

Edited July 10, 2013 by Enigmatics

[DbPhoenix 42]

Although valid in principle, this statement is loosely formed [and when it comes to trading, as in any other profession, loosely formed sentences creates more confusion than clarifications they provide]. For example, a scalper might see the prices moving UP, whereas, as a intra-day position trader, I might see prices as moving DOWN; and both of us could be right! So, what is missing in the above statement? A point of reference.

 

So, the above statement should have read:

The central question remains, again, whether price is going up or down

with reference to a trader’s point of reference

.

So, the question arises as to what this “point of reference” is? A point of reference is that price from which you determine the trend (see the definition of trend in my first post on this thread). Some call this reference point as support or resistance, and some as Point of Control, etc.

 

As a trader trying to understand market action, you need to do the following:

1. Wait for price to reach a point of reference. Observer if price is accepted or rejected there. That gives you the trend for now;
   
2. Once you determine the trend, determine the next target (a future point of reference). This is the target you expect the price to reach.
   
3. If the price reaches that target, observe if that target accepted or rejected; this will determine if the trend persists or changes;
   
4. Always monitor for trend change before the target is reached (i.e., price fail to reach the target).
   

As you can see, the process is simple: you determine the trend, next you determine a target, observer what happens at the target (or if price fails to reach the target), and the cycle continues. Trading from this stand point is very simple; however with a big qualifier: you need to know how to (a) pick points of references; (b) monitor price to determine acceptance and or rejection at the point of reference; and © determine when a price failing to reach a target is really that as opposed to a temporary reaction. As a debutant trader, (a), (b) and © are what you are trying to observe. This is the “feel” for the market.

 

All of which comes much later. And if you'd like to take Humbled under your wing and tutor him to the point where he can is able to do what you suggest, great. Otherwise, it's unlikely that he will be any less confused than he already is.

 

What Humbled does, of course, is entirely up to Humbled. I've explained all of this in as much detail as I can, elsewhere.

[madspeculator 10]

I am typically entering trades from the extreme instead of getting caught in "the middle" where risk/reward is often so freakin' poor its disgusting. All of this came from careful observation and a desire to understand orderflow better.

 

And Humbled, what Enigmatics had to say above is the hallmark of a "consistent" trader!

 

-MadSpeculator.

[humbled 10]

And Humbled, what Enigmatics had to say above is the hallmark of a "consistent" trader!

 

-MadSpeculator.

 

 

 

Yes Enigmatics has shared concrete information with me that I am reviewing right now. It is people like Enigmatics and yourself that have given me options to grow from. There are differences but I am reviewing those now.

 

Thanks again,

 

Humbled

[humbled 10]

All of which comes much later. And if you'd like to take Humbled under your wing and tutor him to the point where he can is able to do what you suggest, great. Otherwise, it's unlikely that he will be any less confused than he already is.

 

What Humbled does, of course, is entirely up to Humbled. I've explained all of this in as much detail as I can, elsewhere.

 

 

Db,

 

You have made it more than clear that the only answer that exists is to just watch Time and Sales. I believe at this moment that is the only value I can extract from your advice other than packing it in. I am reviewing the T&S option now.

 

Humbled

Edited July 10, 2013 by humbled

[madspeculator 10]

Humbled:

 

You said:

 

There are differences but I am reviewing those now.

Humbled

 

There might be difference on "how" (the specifics of how to do it) but I believe the "what" (what should be done) is the same. Don't just concentrate on the "how" but abstract it out and get to the "what". I have given you the "what", with a suggestion to help you try the "how" (using the 30-min bars). Enigmatics has given you the "how". Keep the distinction in mind.

 

The difference between how and what is this: how is the equivalent of "giving a man a fish"; the what is "teaching a man to fish". "what" will eventually help you develop your own methodology. Whenever you learn or review a trading methodology always ask "what are they trying to achieve". This will get you to the "what"; the only way to increase your knowledge.

 

All the best!

 

-MadSpeculator.

[humbled 10]

I have to agree with this last statement

 

Once I saw how I could simplify my own approach I asked myself, "will I still make money"?

 

It didn't change a thing....I do use "aids" but only to help me see where things are headed in a general sense...after that you use your common sense....participants act like a school of fish, price moves and the school moves with it....if there is sufficient interest, it becomes momentum and that school of fish just keeps on moving forward...if not then they change direction...you watch long enough and you can see WHERE they are going and WHY they turned at this place (price) or that place (price)....

 

I don't like the idea of watching short time frame charts but here is one idea that appeals to me....put a short time frame chart in place and a longer time frame chart next to it....watch that and see how price swims along from place to place....referring to the longer time frame to pinpoint the price "reference points". On the short time frame you can see how multiple tests of a price create S/R and on the longer time frame how this activity creates key reference points that are often in play the next day....

 

Good luck

 

 

I guess one more thought....again I generally agree with DB but with respect to price movement it ISN"T black or white....up or down....actually what works is to notice that price trends (up or down) then pauses (and moves sideways)....this run/pause model is how our markets work.....people get an idea (I'm going to buy or sell) then they stand aside and wait (for news or whatever)....the real question is .......once the market has paused "is it going to resume the previous trend, or is it going to reverse......when you get to that point in your development, (and you can answer that question) which is similar to DB's comment, THEN you have something...

 

Steve46,

 

 

This post added some clarity to this discussion. Thank you for sharing. I have just added it to my trading log along with many things I have learned from this heated discussion.

 

Humbled

[DbPhoenix 42]

Db,

 

You have made it more than clear that the only answer that exists is to just watch Time and Sales. I believe at this moment that is the only value I can extract from your advice other than packing it in. I am reviewing the T&S option now.

 

Humbled

 

No, sorry, T&S is not the only answer to anything. It is merely a device to show that price does not move in bars. Or candles. Or any form other than the continuous flow of prints.

 

If there is any "value" at all to be "extracted" from what I've written it's that you have to develop your own method or system, not copy somebody else's. If that message still has not been conveyed, then you will be here two months from now, ready to start all over again.

[Enigmatics 10]

Humbled:

 

You said:

 

 

 

There might be difference on "how" (the specifics of how to do it) but I believe the "what" (what should be done) is the same. Don't just concentrate on the "how" but abstract it out and get to the "what". I have given you the "what", with a suggestion to help you try the "how" (using the 30-min bars). Enigmatics has given you the "how". Keep the distinction in mind.

 

The difference between how and what is this: how is the equivalent of "giving a man a fish"; the what is "teaching a man to fish". "what" will eventually help you develop your own methodology. Whenever you learn or review a trading methodology always ask "what are they trying to achieve". This will get you to the "what"; the only way to increase your knowledge.

 

All the best!

 

-MadSpeculator.

 

When I first started in the markets I was completely uncomfortable buying stocks that already moved up significantly. The thought of chasing price was too much for me. I wanted to buy at a discount like the big boys. Retail is the last to know and once again, they provide liquidity for the pro's. That mindset is what eventually lead me down the path on how to better (not "perfectly") achieve a discounted price. You know the age old expression .... "Buy into weakness, sell into strength". That's what I set out to do and my trading methodology now matches that mindset. Then as I stated before, I started learning about "the extremes", not only to the downside .... but for shorting the upside as well, as I do not want to be relegated to a one-way trader.

 

I guess we should ask Humbled what his belief is about how the markets operate. Without that foundation, I am not sure how one can build a trading plan. Does he know about market/stock cycles? Wyckoff did a very good job explaining the different stages from accumulation to distribution. The we get back to the question of can he learn how to spot supply/demand? Drawing parallel, vertical, and horizontal lines doesn't help much if one cannot translate what is trying to be achieved out in the market place. I constantly ask myself, where is it going and how good of a job is it doing getting there?

Edited July 11, 2013 by Enigmatics

[Gekko78 10]

I am writing a thesis about human emotion and how it plays a role in the financial markets.

 

This is the perfect thread .......my whole project is right here.

 

 

An abundance of great information shared by others in this thread.

 

Humbled : Failure is only defeat once you stop trying.

[optiontimer 10]

I would summarize DB's "plan" post like this:

 

1. Stop trading

2. Observe price

3. Notice repeatable behaviour

4. Write plan base on (3)

5. Test plan

6. Make adjustments

7. Trade plan

 

Is this what you have done?

 

TradeRunner is not the most prolific poster, but when he posts, it is usually well worth the reading.:applaud:

 

A couple of years ago, I started a thread here at TL that was in response to a PM I received from another TL member. Here is what it said:

 

Hi Optiontimer

 

I am not a good trader. I have good setups, and can make money for a while, but I don't handle all conditions too well - Still giving a fair bit of winnings back, and stopped live trading until I sort it out.

 

I am trying new strategies all the time. I have many times thought of getting out of trading altogether, because it was not supposed to be like this. I was supposed to learn how to trade, and then make a gradual transition from shift work (nursing) to trading as I ease into retirement in about 4 or 5 years time.

 

The reality for me is that it isn't happening. I have been doing this for 7 years now. It is not coming together. I am in touch with a trader who is doing well, and he is beginning to teach me to trade currencies on a futures platform, using Donchian Channels and Constant Volume Bars.

 

I know I can do this - else I would have ditched the whole scene after a couple of years. But something is still eluding me, and I don't want to die without finding out what it is.

 

If you could also offer any help that would steer me on the right track (if there is a "right track") that would be appreciated. I am not afraid of hard work, and I am not asking for the keys to the Cadillac. I just want my hard work to be in an area that will bear fruit.

 

I created my thread to try to teach this individual how to grasp certain basics of psrice action, specifically, to make him sensitive to the presence or absence of trend, or more simply, is price going up, down, or is it stuck in a horizontal range.

 

I am glad I did, because it did help a few traders move forward - not because of the particular system I presented there, but because they were able to grasp the general concept of a trend, and the benefit of entering a trade in the direction of the major trend but during a minor pullback or retracement against that trend. Unfortunately, I was unable to help the one trader who had originally asked me for help.

 

He had initial success, and then the same difficulties arose, and so he moved on. He came back with a system that worked. Then it did not work well enough, so he gave that up. He spoke of quitting trading altogether. He may have done that, but I think, though it is not very clear to me, that he found another system, and that that he is now trying to make that work for him. He says that he finally understands what I was trying to get him to see about trends and pullbacks, etc. I hope he has. I really really hope he has. But, I have my doubts.

 

I guess the point of all this is that the plight of that trader and humbled are very much alike. What each has tried repeatedly, and each time resulted in failure, to attempt to plug himself into a pre-fab system, an easily identified and repeatable pattern that requires nothing more than a "buy on green, sell on red" engagement with the market.

 

More importantly, each disregarded advice that attempted to point them toward plugging themselves into the flow of the markets.

 

It is an unfortunate thing that good advice, the advice that might actually give the trader a chance to succeed, is not at all the advice that the trader who is struggling wants to hear. I've not read this entire journal, but I did go through the discussion of the last few days. What interested me the most is that the posts I thought to be the most helpful, from TradeRunner, from Thales, from dbphoenix, went "unthanked" and "unliked" by the op, while others, the one's urging the op on, the one's taking issue with the good advice offered, were often "thanked" and "liked" by the op (to be fair, there were a couple of good posts from Steve46 that the op did acknowledge).

 

Well, I don't know exactly why I felt moved to post this, other than I've read this book before, and I (and a few others) can see exactly how its going to end, even if the op and his entourage think it is still a work in progress. The best thing I can do is point out this passage from an "unthanked" and "unliked" dbphoenix post that says in a few lines what I have babbled on for several paragraphs and probably failed to communicate:

 

If you haven't the least idea how supply and demand work, then open up the book you bought four years ago and never read. Or read Wyckoff's course. Or read Neill. Or O'Neil. Or Magee. Do something other than try to find somebody to copy. And please stop using all the "work" you've done as a rationalization for not getting anywhere. All that work is of no value if it hasn't moved you forward. But rather than move forward, you've done little more than move sideways from one guru to another, trying to find somebody to follow, some system to copy. Clearly that hasn't worked, and the method or system or approach that's just over the hill or just around the bend isn't going to do anything more for you than anything else you've tried.

 

In other words, the op needs to do something other than the same thing he has been doing. If it did not work the first 100 times, it is not going to work on the 101st.

Edited July 11, 2013 by optiontimer
spelling

[humbled 10]

TradeRunner is not the most prolific poster, but when he posts, it is usually well worth the reading.:applaud:

 

A couple of years ago, I started a thread here at TL that was in response to a PM I received from another TL member. Here is what it said:

 

Hi Optiontimer

 

I am not a good trader. I have good setups, and can make money for a while, but I don't handle all conditions too well - Still giving a fair bit of winnings back, and stopped live trading until I sort it out.

 

I am trying new strategies all the time. I have many times thought of getting out of trading altogether, because it was not supposed to be like this. I was supposed to learn how to trade, and then make a gradual transition from shift work (nursing) to trading as I ease into retirement in about 4 or 5 years time.

 

The reality for me is that it isn't happening. I have been doing this for 7 years now. It is not coming together. I am in touch with a trader who is doing well, and he is beginning to teach me to trade currencies on a futures platform, using Donchian Channels and Constant Volume Bars.

 

I know I can do this - else I would have ditched the whole scene after a couple of years. But something is still eluding me, and I don't want to die without finding out what it is.

 

If you could also offer any help that would steer me on the right track (if there is a "right track") that would be appreciated. I am not afraid of hard work, and I am not asking for the keys to the Cadillac. I just want my hard work to be in an area that will bear fruit.

 

I created my thread to try to teach this individual how to grasp certain basics of psrice action, specifically, to make him sensitive to the presence or absence of trend, or more simply, is price going up, down, or is it stuck in a horizontal range.

 

I am glad I did, because it did help a few traders move forward - not because of the particular system I presented there, but because they were able to grasp the general concept of a trend, and the benefit of entering a trade in the direction of the major trend but during a minor pullback or retracement against that trend. Unfortunately, I was unable to help the one trader who had originally asked me for help.

 

He had initial success, and then the same difficulties arose, and so he moved on. He came back with a system that worked. Then it did not work well enough, so he gave that up. He spoke of quitting trading altogether. He may have done that, but I think, though it is not very clear to me, that he found another system, and that that he is now trying to make that work for him. He says that he finally understands what I was trying to get him to see about trends and pullbacks, etc. I hope he has. I really really hope he has. But, I have my doubts.

 

I guess the point of all this is that the plight of that trader and humbled are very much alike. What each has tried repeatedly, and each time resulted in failure, to attempt to plug himself into a pre-fab system, an easily identified and repeatable pattern that requires nothing more than a "buy on green, sell on red" engagement with the market.

 

More importantly, each disregarded advice that attempted to point them toward plugging themselves into the flow of the markets.

 

It is an unfortunate thing that good advice, the advice that might actually give the trader a chance to succeed, is not at all the advice that the trader who is struggling wants to hear. I've not read this entire journal, but I did go through the discussion of the last few days. What interested me the most is that the posts I thought to be the most helpful, from TradeRunner, from Thales, from dbphoenix, went "unthanked" and "unliked" by the op, while others, the one's urging the op on, the one's taking issue with the good advice offered, were often "thanked" and "liked" by the op (to be fair, there were a couple of good posts from Steve46 that the op did acknowledge).

 

Well, I don't know exactly why I felt moved to post this, other than I've read this book before, and I (and a few others) can see exactly how its going to end, even if the op and his entourage think it is still a work in progress. The best thing I can do is point out this passage from an "unthanked" and "unliked" dbphoenix post that says in a few lines what I have babbled on for several paragraphs and probably failed to communicate:

 

 

 

In other words, the op needs to do something other than the same thing he has been doing. If it did not work the first 100 times, it is not going to work on the 101st.

 

 

Optiontimer,

 

You make some very good points. Understand I am very confused on what is my best course of action right now. I have thanked posts that gave me framework ideas how to approach the issue. The broad strokes of just saying "order flow" was a little much for me to digest. I understand the concept. It has been suggested that I need to develop a feel or sense of the flow of the market

 

I can show you the trend on a chart but feeling or being able to measure a reversal from a pause is a crap-shoot for me. If I stack up all the reasons to take a trade I can do that, but asking me if my feel says we are moving up next ,I might be able to answer from that exact spot but it seems to be nullified 30 seconds later.

 

I am trying to wrap my head around all of this so I make the best decisions moving forward. I admit I am not sure what is best. Maybe it is clear to some but as you can imagine I don't want to make the wrong choice.

 

 

I can read higher lows and higher highs. I can see breakouts and breakout failures. I see supply and demand in the charts but it is done using mechanical means. I have no sense of what will happen next. If price hits an area of resistance and a signal forms I just know that if the reasons align I can take that trade. I can't feel higher odds on this trade compared to the last one.

 

 

This process was working fine in this thread until the comments started to focus on tape reading. I can tell you I was hesitant at first because it was not being explained. I am willing to do whatever it takes but I am trying to figure out where to step next as the minefield seems to show in every direction.

 

I don't want to be a story of failure so imagine I am taking in everything I can to save myself. I want this more than anything so imagine I am poking in every direction looking for a path to move forward.

 

Humbled

 

PS. Put yourself in my shoes. I don't want to be a statistic.

Edited July 11, 2013 by humbled

[optiontimer 10]

Understand I am very confused on what is my best course of action right now ... I can show you the trend on a chart but feeling or being able to measure a reversal from a pause is a crap-shoot for me... I have no sense of what will happen next... This process was working fine in this thread until the comments started to focus on tape reading... I don't want to be a story of failure so imagine I am taking in everything I can to save myself...I am poking in every direction looking for a path to move forward... I don't want to be a statistic.

 

I do not know dbphoenix's work as others do, so I can only assume that this is an accurate statement of his plan:

 

 

I would summarise DB's "plan" post like this:

 

1. Stop trading

2. Observe price

3. Notice repeatable behaviour

4. Write plan base on (3)

5. Test plan

6. Make adjustments

7. Trade plan

 

Is this what you have done?

 

That is as good a plan as any I have ever come across.

 

Again, I have not followed the entire thread. But from what I have seen, you are looking for patterns to trade. The problem is this: First, you are looking at someone else's patterns. Yes, the patterns are there for all to see, but you are not seeing them with your understanding, just your eyes. Second, because you see them but do not understand what causes them, you are unable to exploit them. Ergo, you have no edge.

 

And whether you are trading stocks or, as dbphoneix said, playing poker, if you have no edge, you will go broke. It is a mathematical certainty.

 

You yourself said that you cannot tell whether a reversal or a continuation is more or less probable one from another when price reaches resistance. Well, then you have no business trading. To be clear, no one knows for sure what price is in fact going to do, but if you are going to trade, you had better have a good, solid, well-grounded reason for thinking it is more likely to do whatever it is you are placing your chips down and betting it will do.

 

That should make clear what option you should take. You can work as hard as you like. But if you work hard at the same thing over and over, your are wasting your work. Its like I told my friend who I spoke of in my last post, "yes, you have worked hard, but you've done a different version of the same thing for seven years. Therefore, you think you have seven years experience trading. What you in fact have is one day's experience, and you done it now for over 2000 days. Now it is time for day 2."

 

If I were you, I'd make sure that I put day 1 to rest today, and get on to day 2 as soon as I wake up tomorrow.

 

By the way, you already are a statistic. You need a different plan from the one you've been on if you wish to move yourself from the one column to the other in the register of trading success and failure.

[madspeculator 10]

Humbled:

 

There seems to be an unverbalized assumption in the posts of a few traders that, on surface, seem to suggest an existence of a difference of opinion in the suggestions given to you by traders. One poster even went to the extent of noting this [non-existing] difference by implying one set of suggestions are better than others.

 

The way I see it is that we all seem to have the same end-goal in mind. However, we are going about it in different ways. On the one hand, some have suggested that you should start by watching T&S [a.k.a DBPhoenix’s rule “observe price”] and use that as a base to build everything. This is absolutely necessary if you are scalper. There is no way around it. If you want to scalp you should seriously consider John Grady’s product. [Disclaimer: I have no affiliation to him]

 

On the other hand, if you are a intra-day position trader, or a swing trader, although you can build everything from watching T&S, there is another option: You can identify some points of reference first based on previous day’s activity, VWAP, PoC or based on extremes of some intra-day bar, etc and watch T&S around that point of reference as a starting point [a.k.a Modified DBPhoenix’s rule “observe price around reference point”] and build everything from there. [ This is what I do; and if you have read market wizards, you will find a few who follow this option ]. Although price does not move based on bars, the net effect of the order flow is captured in the summary statistic called the bar; however, a lot of good information is also lost in that summary statistic. But as a intra-day position trader or swing trader, you are only concerned with the price action around extremes.

 

Either way, the end-goal is to determine if price has the “strength” to proceed in the direction you expect it to move.

 

You said:

... but asking me if my feel says we are moving up next, I might be able to answer ....

No one can predict what price will do next. The best we can do is to determine if price has the conviction to move in the direction we expect it to move. Don’t fall into the “prediction” trap.

 

This probably will be my last post. I have offered you everything I can possibly offer in terms of advice. I have a rule not to give advice on how to trade: that, I believe, is something a trader has to discovery for himself.

 

I wish you all the best in your quest for consistency.

 

-MadSpeculator.

Edited July 11, 2013 by madspeculator

[SIUYA 11]

Either way, the end-goal is to determine if price has the “strength” to proceed in the direction you expect it to move.

 

 

IMHO - You could probably summarize most posters good advice in this one aim or goal.

 

 

If you dont have this basic goal worked out as a rationale for how you think market moves then applying the wrong method (or any random method) will be useless.

Repeating this will just be insanity.

Looking at any pattern in isolation without consideration of this rationale and trying to objectively measure it will just cause frustration.

Forcing a method that does not suit your rationale will be like trying to force a square peg in the round hole....why do it.

 

As the poster said " I have no sense of what will happen next." - probably as the rationale for how the market moves has not been thought through.

 

Your rationale may in fact be completely bonkers - but if it makes sense to you, can be shown then that with some money management and simple risk management you can then tweak how best to extract money from the market when it fits your rationale using various appropriate methods then perfect....

 

To use the previous market trading floor and fruit barrow picture analogy....if you dont have an idea of why others will regularly buy off you at a higher price than you paid - then you will be left with nothing but rotting eggplants...no matter how good your sales techniques, quality of produce or location, location location is.

Edited July 11, 2013 by SIUYA

[humbled 10]

I do not know dbphoenix's work as others do, so I can only assume that this is an accurate statement of his plan:

 

 

 

 

That is as good a plan as any I have ever come across.

 

Again, I have not followed the entire thread. But from what I have seen, you are looking for patterns to trade. The problem is this: First, you are looking at someone else's patterns. Yes, the patterns are there for all to see, but you are not seeing them with your understanding, just your eyes. Second, because you see them but do not understand what causes them, you are unable to exploit them. Ergo, you have no edge.

 

And whether you are trading stocks or, as dbphoneix said, playing poker, if you have no edge, you will go broke. It is a mathematical certainty.

 

You yourself said that you cannot tell whether a reversal or a continuation is more or less probable one from another when price reaches resistance. Well, then you have no business trading. To be clear, no one knows for sure what price is in fact going to do, but if you are going to trade, you had better have a good, solid, well-grounded reason for thinking it is more likely to do whatever it is you are placing your chips down and betting it will do.

 

That should make clear what option you should take. You can work as hard as you like. But if you work hard at the same thing over and over, your are wasting your work. Its like I told my friend who I spoke of in my last post, "yes, you have worked hard, but you've done a different version of the same thing for seven years. Therefore, you think you have seven years experience trading. What you in fact have is one day's experience, and you done it now for over 2000 days. Now it is time for day 2."

 

If I were you, I'd make sure that I put day 1 to rest today, and get on to day 2 as soon as I wake up tomorrow.

 

By the way, you already are a statistic. You need a different plan from the one you've been on if you wish to move yourself from the one column to the other in the register of trading success and failure.

 

Optiontimer,

 

I have to thank you for your assistance here. I am starting day 2 this morning. I am not trading. Even though I came out positive in this adventure, I truly had to struggle at each reaction point weighing all of the options on what to do next. None of it came as second nature. Not once did I have confidence which I feel is one of the largest missing pieces.

 

It truly is funny. I have read 30+ books and even after reading those consistent traders, I never came out with a summary like this thread has. Other than Enigamtics comments, not one person has really talked about what really made Oniel, Trader Vic, Darvas or others which I felt could be boiled down to a define entry criteria with risk reward to a large degree. As Vic Sperando said he took trades with a minimum of 3:1 and many were 8:1 or better. He was wrong often.

 

I always thought that if I built a system with some help and then reacted with risk reward, I could be consistent and profitable. I thought the edge was a larger winner and a smaller losers along with a sound consistent plan.

 

 

This thread lead me in a different path which suggest that consistency comes from feeling or being able to sense the flow of supply and demand. Now I have to decide how to proceed and I am not sure what I will do next.I can query others but I will have to decide how I will approach the market from a "Day 2" perspective.

 

Humbled

Edited July 11, 2013 by humbled

[Gekko78 10]

There sure are a lot of these "Help" threads popping up lately.

 

Not counting this thread , as there has been some really good info on this thread, The OP's of these threads should go back and change the titles to reflect what they are really asking:

 

PLEASE DO THE WORK FOR ME

[DbPhoenix 42]

Given the mischaracterization by some regarding my views on T&S displays and tick charts and tape reading in general (one needn't spend more than an hour at it or, at most, a day; one certainly needn't make a career of it), and given the apparent inability of some beginners to click links, I'm copying this here in its entirety just in case a beginner -- particularly one who has a history of failure -- might stumble on this thread at some point in the future and wonder how to get started on a more productive path. Those who are searching for specific entry and exit criteria are welcome to visit the Wyckoff Forum.

_____________________________

 

In order to profit from trading price and volume alone, one must forget nearly all of what he thought was true, and that presents an insurmountable obstacle to a great many people.

 

If, for example, one insists on focusing on how he can make it "work" with mathematically-derived indicators (stochastics, MACD, CCI, OBV, blah blah blah), then he blocks the process through which he would otherwise understand it and profit from it.

 

If he focuses on where and how to make mechanical entries and exits rather than understand the dynamics of demand and supply, then he blocks the process through which he would otherwise understand it and profit from it.

 

If he focuses on setups and patterns as gimmicks rather than as manifestations of changes in the balance of buying and selling pressure, then he blocks the process through which he would otherwise understand it and profit from it.

Hire yourself to do a job

 

The job is just to sit there and watch the bars form, to watch the buying and selling waves, the pokes and prods and feelers cast by buyers and sellers looking for a trade, not to create or test a strategy, not to make money, not to learn the "secrets" or the "tricks", just to develop a sensitivity to buying and selling pressure. No indicators, no MAs, no nothing but price bars/points and volume bars.

 

 

Make notes of what you see and what you think you see

 

Don't rush to draw conclusions. Throw away your crutches and focus on what the auction market is really all about. The market is not out to get you. The market is not out to trick you. Buying pressure is buying pressure. It lasts as long as it lasts according to who wants what. Ditto for selling pressure. Rather than focusing on avoiding getting screwed, focus on the pressures and the imbalances between them. Don't trade. Don't conclude. Just watch.

 

When you get tired, stop. Come back. Begin again. When you're done, review your notes. Look for those areas in which change took place. Formulate some hypotheses as to why those changes took place in those areas and not others. Don't force the Ah-Ha. Just let it come.

 

Begin with what appears to apply to whatever market you're trading. If it's in a trend, focus on retracements and continuations (a continuation being the logical result of a successful retracement). If it's in a trading range, focus on reversals. And so on. Develop the strategy thoroughly, with all the accompanying tactics. Test it. Learn it. Get comfortable with it.

Trade it

 

But understand always that whatever you're doing may not apply to every trading day. If you decide to focus on breakouts, for example, and the entire day is range-bound, then you're very likely going to have nothing to do. This is not your problem. Use the time for something else. But don't force trades. Don't see what isn't there (many novices fall into this trap when they've been working on reversals and insist on seeing reversal setups where none exist, e.g., on trend days). In time, you'll have a variety of strategies to cover most situations. But the key words here are "in time".

 

There is no inconsistency between tuning in to the buying/selling dynamic and defining setups with specific entry and exit points. A lower high, for example, says something about the balance of buying and selling pressure. Now at what point does the probability of a reversal become sufficiently higher than that of a continuation that the trader will go short instead of long (or vice-versa)? A drop of so many ticks? A break of a TL? A break of an MA of some sort (if he just has to use one)? And once one has determined that, how far does he allow the price to go against him -- if it does -- before he bails? And what is a reasonable target? And where is my pastrami on rye?

 

Changes in the balance between buying and selling pressure manifest themselves in recognizable and repeated ways, e.g., double bottoms, lower highs, bull/bear spikes (hammers et al,, if one is into that), but whether any of these are worth taking will depend on the context, what one wants, what one is willing to settle for, how much risk he's willing to assume, whether or not he's willing and ready to fade himself, etc. Sometimes the changes in balance are so rapid and so violent that the trader might think that only a loon would get involved. And sometimes the changes are so subtle and so quiet that waiting for the trade to resolve itself would put most people to sleep. Therefore, the trader has to decide under what conditions he's going to trade and during what portions of the day (or year) -- if not the entire day (or year) -- he's going to trade.

 

Which may be why so many beginners prefer just to buy when the green line crosses the red line and sell when the red line crosses the green line.

 

The degree to which one experiences anxiety before and during the trade is in direct inverse proportion to the amount of preparation he has done; in other words, the less prepared you are, the more anxious you will be (many people start the day anxious and stay that way until the final bell).

 

Trading according to buying and selling pressure entails looking for those areas which are most likely to attract attention and activity, which is why understanding the nature of support and resistance is important. Those areas where the most people traded the most shares/whatever in the past are most likely to ignite activity because all those people have something to gain or lose at those levels.

 

Again, there are several levels or areas or zones to look at, the most obvious of which are the previous day's (week's, month's, year's) high and low, and if one does nothing but sit idly by until those areas are tested, he will likely save himself a lot of money.

 

The opening high and low can also be a rich source of opportunity. I say "can" because one must also consider volume: if there's lots of activity, there's likely to be lots of opportunity. Targeting these opportunities in advance is simple. Sitting on your hands until the opportunities actually present themselves is considerably more difficult. But if one knows well in advance what he's going to do and where he's going to do it, and has some understanding of the nature of probability, he has nothing to be anxious about.

A good friend of mine, Julian Snyder, wrote a book for traders called

The Way of the Hunter Warrior

. Recently I asked him about the use of such a metaphor for trading, and he conceded that it's total nonsense in the light of what he now knows. "You have to trade without ego, and any contest elevates ego," he said.

 

I like to think of trading as sailing. Here you harness the forces that are there. You take into account the wind direction and velocity, the currents, and your destination. You've got your charts to guide you and you constantly adjust to nature's forces, sometimes pointing into the wind, sometimes running before the wind, sometimes tacking, but always in partnership with your boat, your crew, the wind, and the currents. Sure, storms can come up, but you can always let down the sail and anchor and wait out the storm. You work with the forces that are there, the forces that are much bigger than you, but you enjoy the journey, the day, the sport, and you're confident you can get to your destination, your port, your safe harbor.

Ruth Barrons Roosevelt

 

 

How Long Does It Take?

Realistically, how long do you think it would take a beginner to go through the steps you suggest to study the principles, tactics, and develop/test a trading plan and acquire the correct mindset?

 

I know this'll be variable, but from your experience what's the least amount of time someone has picked all this up in ?

 

It's been said before that it takes 1,000 hours to learn something, maybe 5,000-10,000 to master it.

 

What do you think, could a complete novice pick this up in 6 months spending around 8 hours a day ???

 

There are too many variables involved to provide anything approaching a satisfactory answer. If, for example, the novice were literally complete, had nothing to unlearn, had no preconceptions, was able to work without investing his ego in it, was curious, was able to concentrate, was reasonably intelligent, then he would be able to get it far faster than someone who was or had the opposite.

 

But if you're asking in your heart of hearts how long it would will should ought to take you to "pick this up", that depends on how willing you are to focus on application rather than theory (since you registered more than two years ago, you very likely have had more than enough theory).

 

Some members tire of my continually encouraging newcomers to this subject to open journals. But there's only so much theory. This thread, for example, has over 1000 posts (which is around 950 too many). The "theory" just isn't that complicated.

 

When it seems so, the reason is more likely that whoever is trying to understand it is focusing on something else entirely (so and so says, or I read somewhere that, or I took this seminar once that, or this book said, or but the ADX says). Therefore, the sooner one begins looking at real charts, the sooner he is likely to "get it".

 

This search for instructions as to where EXACTLY to draw the line is in large part what makes Pivots and Fib and Gann and MAs and so forth so seductive. One doesn't have to think about just where it is that price (traders) really react. All the trader has to do is draw the calculated lines. This search for exactitude also motivates the search for the EXACT stop and exact TYPE of stop that the trader should use, along with the EXACT trigger and the EXACT target. But if it were all that simple, one could package it into a kit and sell it (wait a minute . . . ).

 

Many people can't get this. Maybe most people can't get it. They simply cannot trade without indicators, they can't trade without patterns, they can't trade without candlesticks, etc. And if they make money doing whatever they're doing, who's to say they're not right to do it. However, a lot of people also struggle with all of that and can't make money at it. They find instead that focusing on price is best for them.

 

Unfortunately, by the time they reach that point, they have to unlearn an extraordinary amount of what for them is generally -- or entirely -- useless information (I've read that . . . People say that . . . I've been told that . . . ). This state of affairs makes learning to trade by price vastly more difficult than it would have been had the trader learned how to do it outright in the first place. But there's no going back, this side of amnesia, so wanting to is simply wishful thinking.

 

The Go With the Force, Luke stuff only goes so far, true as it may be. But the individual who's willing to backtrack and learn a new or at least different way of looking at charts and price action may -- not will -- find that when he's looking at his umpteenth chart, the light suddenly goes on and he understands all those back and forth pressures which are propelling price one way or the other. All the babble about pace and momentum and trend and chop and all the rest of it will make sense.

 

But there's no shortcut. One may have to look at hundreds of charts. Maybe thousands. And he may never get it. Which is why people continue to spend so much money on 4x Made Easy and Weekend Seminar (lunch included) and Profits R Us.

The average man does not like uncertainties. He is not trained to cope with them. He will try to “sweep them under the rug.” He will use any device that will make it possible for him to feel “more sure,” for he is not willing to accept a “maybe” or an “I don’t know” as an answer.

 

And so he will resort to averages, to market indicators, to complicated charts of intersecting lines designed to prove that “it” is either a Bull Market or a Bear Market. He will accept almost any kind of nonsense if it is stated with

enough assurance. He will buy horoscopes to determine the trend of the market by the position of the planets. If all else fails, he will look for some authority who will relieve him of using his own intelligence, by making the either/or decisions for him. But he must have a straight, simple answer; otherwise it means nothing to him.

 

Do you see how this way of looking at things is out of line with the facts? Do you see how it leads, inevitably, to frustration, anxiety, and demoralization?

It is asking too much of reality. It is setting up a make-believe world, and then crying if the world isn’t exactly like the make-believe.

 

We know, for instance, that trees “in general” are round. But you have seen

tree trunks distorted by a cramped location, or by the trunks of adjacent trees, that are not round at all. It is useful to know that “tree trunks are round,” only so long as we understand that this is an abstraction, and the reality in any particular case has to be looked at, and if it is not round, that is that; the territory is the final answer, not our “map.”

 

John Magee

[humbled 10]

There sure are a lot of these "Help" threads popping up lately.

 

Not counting this thread , as there has been some really good info on this thread, The OP's of these threads should go back and change the titles to reflect what they are really asking:

 

PLEASE DO THE WORK FOR ME

 

 

 

Gekko,

 

I did not want anything for free. I busted my ass and failed at consistency and take offense to your comment. I made money and lost money for years. I did not get consistent like I wanted . I did not look for anything to be given to me. My error could have been pushing to be the 1% that makes it consistent as income.

 

I finally came to TL to try another path. I admit to begging for some assistance to find a clue from someone already getting the results I wanted. Maybe someone like Thales could help me find the areas I was missing. I did EVERYTHING I was told exactly by my mentor Thales but I lacked a sense that a 9 year old could grasp. I am so confused I still don't see what supply and demand clues or direction someone of that age can see but I can't. I am sure it is the pressure of this moment.

 

WHY ?? I have no idea but thanks for the kick while while I sit here on the ground.

 

Maybe I am a human being and really hurt here. Honestly I am in hell and don't yet know the way out.

 

Thanks for adding to pain.

 

Humbled

Edited July 11, 2013 by humbled

[Gekko78 10]

Gekko,

 

I did not want anything for free. I busted my ass and failed at consistency and take offense to your comment. I made money and lost money for years. I did not get consistent like I wanted . I did not look for anything to be given to me. My error could have been pushing to be the 1% that makes it consistent as income.

 

I finally came to TL to try another path. I admit to begging for some assistance to find a clue from someone already getting the results I wanted. Maybe someone like Thales could help me find the areas I was missing. I did EVERYTHING I was told exactly by my mentor Thales but I lacked a sense that a 9 year old could grasp. I am so confused I still don't see what supply and demand clues or direction someone of that age can see but I can't. I am sure it is the pressure of this moment.

 

WHY ?? I have no idea but thanks for the kick while while I sit here on the ground.

 

Maybe I am a human being and really hurt here. Honestly I am in hell and don't yet know the way out.

 

Thanks for adding to pain.

 

Humbled

 

Humbled,

 

You obviously did not read my entire post I said NOT COUNTING THIS THREAD.

Your postings are that of someone willing to learn , I have not seen you come out and just say "give me a system"

 

You are willing to learn where most are not and just want all the info handed right to them without putting in the work. I have spent the last 8 years researching, studying and developing my own system and I will be dammed if I just hand it over to someone just because they haven't made money for like 6 months or a year.

 

I apologize if I offended you as I was not talking about you specifically rather others not willing to learn.

[Seeker 11]

humbled, what were the overall trading stats for this thread? P&L, win%, average win, average loss...I have the impression that the results are not that bad

[MightyMouse 12]

Humbled,

 

Out of curiosity, what does consistency mean to you? If you have already defined this, then feel free to ignore the question.

 

I am asking because I suspect that your expectations of what is possible compared to what really is possible might be off. Therefore, it could be that your trading is fine and you are trying to get help to fix something that isn't broken. Sort of like drilling a hole in your head to let the head ache out.

 

MM

[humbled 10]

humbled, what were the overall trading stats for this thread? P&L, win%, average win, average loss...I have the impression that the results are not that bad

 

 

Here is my private review form from this last weekend. I will get you better stats. I need to load the data in an application to output this information.

 

Weekend Trading Review

Week ending 7/5/13

 

Week Gain / Loss Commission Spent

Week of 6/10/13 $-287.06 60.30 1 car

Week of 6/17/13 $1369.16 68.34 a few 2 car trades that I stopped doing

Week of 6/24/13 $267.34 132.66 1 car

Week of 7/5/13 $430 192.00 1 car

 

How did I do this week?

I came out positive but feel resistance that the method lacked some clarity at key levels. I am mechanical and just reacting as I am told but confidence is lacking because I am unclear once I reach a level. I am afraid of the 2b pattern because I feel like any slight pierce of resistance can be viewed as one and then I am run over 1 bar or 2 bars later.

How is my plan developing?

I am following directions well. I look forward to the new update Thales gave to me today. The change is now a full planning before the market open to reduce stress. I feel it is progress but I am getting input that suggests this is not enough.

 

Have I stuck to my plan or did I deviate?

I have stuck to the plan the best I can tell from the rules I have been taught. I am not mentioning it in my thread but I often do a reverse or two each day trying to figure out which direction to take.

 

 

How was this week compared to last week?

This week was much harder as I started the week on Monday -5 and struggling at every level to decide the direction.

 

How many points gained or lost this week?

+8.5

 

What % of my gain is fees?

45%

 

What will I do to move forward into the next week? What steps can I take?

I am working to define the day before it starts. This should lower the stress.

 

How is my progress thus far? (Scale of -10 to +10)

+1 Above the zero line.

 

I feel I am above the zero but I experienced plenty of frustration in the heat of the decisions. The lack of risk reward causes me to fear the system to some degree. I look forward to improving this along with a few added layers to improve my trading.

 

What I don’t understand is this shift to saying that this setup is not good enough without being able to sense supply and demand. I can gauge retracements using the 50% level DB has shared. I can use demand and supply lines. I can review swing points. I can talk myself though what is happening. This along with risk reward of 3 to 1 or better should make this plan profitable? WHY is this not good enough? Can’t I add just another layer like volume to confirm an exhaustive turn or a change of supply and demand? WHAT AM I MISSING? Thales acts like I have hit a brick wall because beyond all of the teachings there is a layer of supply and demand feel that I don’t have.

 

 

 

 

Humbled

 

P.S. The results were not bad at all it was the indication that all of this is still not enough of an edge without an understanding of supply and demand. I took that to heart and pushed Thales too much for info and he needed to move on. I fought the idea of learning to read the tape.

I am not fighting any more. I am just deciding how to approach this so I do more than create a setup that is nullified. Something that I have been warned about by many that is critical beyond the mechanical approach.... understanding and reading supply and demand.

Edited July 12, 2013 by humbled

[Seeker 11]

Thanks Humbled. So you are making money.

 

You doubt the strategy, the entry, no confidence in it etc. Yet you're profitable.

 

And that despite not having much experience with the method, and still working on the rules and your understanding.

 

My suggestion is, give it time. Keep thinking about how to improve. Be patient and work hard. Dont' expect every trade or every day or even every week to be a winner.

 

Don't start looking for secret sauce, or changing the basics principles of what you have been given by Thales.

 

Understand that the secret sauce is experience, and it can't be rushed. But that it can be slowed down by looking at the wrong things and approaching it in the wrong way. You have been given the right approach.

 

Also if I may, stop putting problems for yourself where there aren't any. You worry about the entry, but the entry is usually fine. You worry about the method, but you're profitable and only just started trading this way! You worry about risk reward but I think I saw a +16 point winner in this journal, and your biggest loss was about 4 or 5 points.

Edited July 12, 2013 by Seeker

[humbled 10]

Humbled,

 

Out of curiosity, what does consistency mean to you? If you have already defined this, then feel free to ignore the question.

 

I am asking because I suspect that your expectations of what is possible compared to what really is possible might be off. Therefore, it could be that your trading is fine and you are trying to get help to fix something that isn't broken. Sort of like drilling a hole in your head to let the head ache out.

 

MM

 

MightyMouse,

 

 

Consistency to me is making money week over week. Not every day. Let me add a few more factors. I would not consider it consistent if the losing week was larger than an average winning weeks. This might mean one slip up and the losses exceed the gains. I have had that issue before. It also means some level of confidence built. Being stopped out 5 to 9+ times in a row OFTEN does not seem to match that description in my mind. Maybe I am nuts but that is how I feel. If these conditions are met then I could see adding an extra cars as I grow the account. I can't imagine with the helter-skelter trading I have done, that I can add to and grow size.

 

 

I thought I was in the right direction to reach this but was stopped in my tracks and told I was missing the boat on what is needed as an edge.

 

Humbled