Probability: An Idea Worth Exploring

[bojangle 10]

Consider for a second the nature of trading: uncertainty. We don`t know what will happen for sure. Therefore, we should do what is probable. So, what`s probable? The bigger picture would logically have more meaning than the micro, right? So, trade with the bigger picture. What does that mean? Trade with the bigger picture rotations (composite volume profiles). Volume bulges were created by churn. Low volume areas were created by swift moves through or quick moves away. Which provides a better edge? (it's obvious) Another thing: The market is constantly searching for value/acceptance daily. The ES is a very news driven market. So, knowing that, use the news as a way to gauge whether value/acceptance of today's session is most likely to change or stay the same. If you believe it will change, trade away from prior value/acceptance. If not, trade towards it. To add in probability, always align yourself with the major rotation and trade from a low volume area.

 

So, with probability taken care of, next is trade management and risk management. It's cute to hold out for large winners, but is the market more likely to move majorly or average? An average rotation is realistic. Adjust your stop accordingly to have a 1:2 risk:reward or better. But make sure you trade from where your idea is wrong. There's more probability for you.

 

Next, let go. Does focusing on results actually get you anywhere? Nope. Focusing on the process does. You naturally want control. In trading, you don't control what will happen. Your being should not depend on your trading results. If it does, your ego will feel every loss and you will stress yourself out trying to find the strategy that wins 100% of the time. A 100% win rate is something only twitter arrow posters have.

 

That is an edge. Trade for the long-term. 5 trades is meaningless in a trading career. Know that with a 50% win rate, you can make very good returns by all standards. This is not a get-rich-quick scheme.

 

My edge in as few words as possible: Take probable trades within my r:r parameters. Trade for the long-term.

 

Bojangle out!

[Patuca 13]

Consider for a second the nature of trading: uncertainty. We don`t know what will happen for sure. Therefore, we should do what is probable. So, what`s probable? The bigger picture would logically have more meaning than the micro, right? So, trade with the bigger picture. What does that mean? Trade with the bigger picture rotations (composite volume profiles). Volume bulges were created by churn. Low volume areas were created by swift moves through or quick moves away. Which provides a better edge? (it's obvious) Another thing: The market is constantly searching for value/acceptance daily. The ES is a very news driven market. So, knowing that, use the news as a way to gauge whether value/acceptance of today's session is most likely to change or stay the same. If you believe it will change, trade away from prior value/acceptance. If not, trade towards it. To add in probability, always align yourself with the major rotation and trade from a low volume area.

 

So, with probability taken care of, next is trade management and risk management. It's cute to hold out for large winners, but is the market more likely to move majorly or average? An average rotation is realistic. Adjust your stop accordingly to have a 1:2 risk:reward or better. But make sure you trade from where your idea is wrong. There's more probability for you.

 

Next, let go. Does focusing on results actually get you anywhere? Nope. Focusing on the process does. You naturally want control. In trading, you don't control what will happen. Your being should not depend on your trading results. If it does, your ego will feel every loss and you will stress yourself out trying to find the strategy that wins 100% of the time. A 100% win rate is something only twitter arrow posters have.

 

That is an edge. Trade for the long-term. 5 trades is meaningless in a trading career. Know that with a 50% win rate, you can make very good returns by all standards. This is not a get-rich-quick scheme.

 

My edge in as few words as possible: Take probable trades within my r:r parameters. Trade for the long-term.

 

Bojangle out!

mr bojangle..what do you think is the longterm bigger picture outlook for the s&p from today forward?

[bojangle 10]

mr bojangle..what do you think is the longterm bigger picture outlook for the s&p from today forward?

 

Hey Patuca!

 

No idea! the market's balancing right now after a major upmove. I'm a short-term trader trading for the long-term - I honestly don't care enough to think about the next year when all i need to think about is tomorrow! Way too many macroeconomic variables to take into account, anyways.

 

- Bo

Edited June 13, 2013 by bojangle

[Patuca 13]

Hey Patuca!

 

No idea! the market's balancing right now after a major upmove. I'm a short-term trader trading for the long-term - I honestly don't care enough to think about the next year when all i need to think about is tomorrow! Way too many macroeconomic variables to take into account, anyways.

 

- Bo

mr bojangle..not sure i get your drift here...you said trade with the bigger picture in your orginal post so how you gonna do that if you don't know what bigger picture is?

Or are you referring to trading in the direction of what the bigger picture HAS been (past) and not what you think it WILL be?

Thanks

[bojangle 10]

mr bojangle..not sure i get your drift here...you said trade with the bigger picture in your orginal post so how you gonna do that if you don't know what bigger picture is?

Or are you referring to trading in the direction of what the bigger picture HAS been (past) and not what you think it WILL be?

Thanks

 

I trade the bigger picture in the day time-frame via major levels and major rotations.

 

I trade what I think will happen based on past (price action, news) and current information (price action, news), of course - which is all i can do.

 

I should clarify something: I trade what I can. I see no point in having these long-term ideas if i don't even trade outside the day timeframe. It would just be purely academic and philosophical. I focus on what i can trade.