hwsteele
Experienced member
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I have been looking for what I am about to post stated flat out, but have not been able to find it so I thought that I would state it simply to maybe help some folks out.
Tell me if this sounds like something you have heard before… (Or maybe have experienced)
You have a system and it seems to work great. All goes well for some time and then all of the sudden it starts to fail. Those wins that you could practically pull off in your sleep are nowhere to be found and almost every trade you make is a loser.
Now you are smart enough to use a stop loss and good money management so you don’t kill yourself in only three or four trades
BUT
What happened to all the winning?
The account is shrinking just as fast as it grew…why?
In most cases of the above the following is your answer:
(Now please keep in mind this is for the sake of newer traders. Folks who have been trading for a while know this even if they don’t seem to know they know it.)
Any freely traded market’s price can only do two things.
1: Trend
2: Consolidate
And it can only do one at a time.
(I know a market can be trending on an hour chart and not on a daily, but what I am talking about is from any static perception. A lot of people/systems pick a time frame or two to trade from and that becomes their perception of that market.)
Here is why there will never be a “holy grail” that always wins…
You trade the two market types in OPPOSITE ways.
If the market you are trading is trending well and you are using a trending type of system you will be successful until the market starts to consolidate on a large scale.
Before when you would enter the market in the direction of the trend, because the market was trending, you would win. Once the market started a large scale consolidation your system would be stopped out quite a bit if not most of the time.
If you are trading a trending market with a consolidation type system you will lose most of the time because those systems look for and trade reversals.
If you are in a consolidating market and trading with a consolidation type system then you will make a killing.
Up to the point where the market starts to trend again. Then you will lose and fast.
The above is a good part of why most successful traders will tell you to leave “systems” alone and learn to trade what you see.
Or at least have multiple setups/systems to use and then learn to identify the current market type.
I know the above is NOT new information, but like I said before I have not seen it stated plainly before (and I could have easily missed it as I don’t have the time to read all or even most of the forum).
I know when I was starting out if I had been able to just read the above it would have saved me months of stupid mistakes. That is if I was smart enough to take it to heart.
Tell me if this sounds like something you have heard before… (Or maybe have experienced)
You have a system and it seems to work great. All goes well for some time and then all of the sudden it starts to fail. Those wins that you could practically pull off in your sleep are nowhere to be found and almost every trade you make is a loser.
Now you are smart enough to use a stop loss and good money management so you don’t kill yourself in only three or four trades
BUT
What happened to all the winning?
The account is shrinking just as fast as it grew…why?
In most cases of the above the following is your answer:
(Now please keep in mind this is for the sake of newer traders. Folks who have been trading for a while know this even if they don’t seem to know they know it.)
Any freely traded market’s price can only do two things.
1: Trend
2: Consolidate
And it can only do one at a time.
(I know a market can be trending on an hour chart and not on a daily, but what I am talking about is from any static perception. A lot of people/systems pick a time frame or two to trade from and that becomes their perception of that market.)
Here is why there will never be a “holy grail” that always wins…
You trade the two market types in OPPOSITE ways.
If the market you are trading is trending well and you are using a trending type of system you will be successful until the market starts to consolidate on a large scale.
Before when you would enter the market in the direction of the trend, because the market was trending, you would win. Once the market started a large scale consolidation your system would be stopped out quite a bit if not most of the time.
If you are trading a trending market with a consolidation type system you will lose most of the time because those systems look for and trade reversals.
If you are in a consolidating market and trading with a consolidation type system then you will make a killing.
Up to the point where the market starts to trend again. Then you will lose and fast.
The above is a good part of why most successful traders will tell you to leave “systems” alone and learn to trade what you see.
Or at least have multiple setups/systems to use and then learn to identify the current market type.
I know the above is NOT new information, but like I said before I have not seen it stated plainly before (and I could have easily missed it as I don’t have the time to read all or even most of the forum).
I know when I was starting out if I had been able to just read the above it would have saved me months of stupid mistakes. That is if I was smart enough to take it to heart.
