Do it! Chat sites become so critical, it's wrong, it only inhibits and breeds negetivity. Good luck.
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Do it! Chat sites become so critical, it's wrong, it only inhibits and breeds negetivity. Good luck.
Well I count you out then.
Mmmm, dont get slippery LT, i meant it in all sincerity. Honestly, i think it's a good idea.
Exactly! This is the main reason there are many more trend following losers than winners. As soon as one thinks a trend has been identified and opens a position, a correction takes place. Also, this is the reason most people prefer swing and day trading. The term "elusive trend" has been coined by Michael Harris in this article that I think offers some good insight into this subject:
Trend Trading with Short-Term Patterns
I think that Michael Harris' reference to price concession is a very important point. You can get a good idea of price concession if you have good information about true order flow. This is also one reason floor traders always make money at the expense of retail traders.
Alex
black bear
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Trend not your friend, hows that
Hi Alex
I agree but
The trend is your true friend IMO, his or her value is identified after entry IMO
THE MARKET MAKES MANY HIGHS AND MANY LOWS IN A DAY BUT ONLY ONE TRUE HIGH AND ONE TRUE LOW
Andy
Hi Alex
I agree but
The trend is your true friend IMO, his or her value is identified after entry IMO
THE MARKET MAKES MANY HIGHS AND MANY LOWS IN A DAY BUT ONLY ONE TRUE HIGH AND ONE TRUE LOW
Andy
TWI
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I think that trend following is still a very effective way to make a return in many markets but what a lot of pure technicians miss and I find essential is an understanding of the underlying story in the market you are trading. Does not matter whether it's a stock, currency or commodity. In order to stay in a trend you really do need to have a good degree of confidence that there is a "story" and then make sure you get on that story and ride it out. If you really understand a particular market you know when the price has overextended and you have confidence to buy or sell in a scale. There is nothing worse than losing confidence at the point of maximum pain, realise a loss and end up getting back in at a worse level than you originally entered a position due to a sudden fear that you may be wrong.
Rhody Trader
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That sounds well and good, but the key to trend following success is catching the largest portion of a trend. If you wait for a "clear-cut" trend you may miss the real profits and see severely reduced returns.
dbphoenix
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firewalker99
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I would argue that there is always a trend to be found... just switch to another timeframe.
JTrader
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Missing the 1st chunk of the move, b4 a pull-back trend-following entry for example, can be an issue, if your approach does not allow flexible/multiple modes of entry that are all capable of working the %'s equally well in your favour.
FXSCALPER2
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Trading is an illusion as much as every other activity where we want to gain something is an illusion. What makes any endeavor hard is the possibility of loss and how we see ourselves and our place in society after any serious loss. This affects our behavoiur and what we are able to accomplish even in situations where not very much is at stake. Playing chess after Sunday lunch can get us entngled in all sorts of self-esteem issues, for example. In practical terms what we stand to lose is pretty much a question of ego but we take it very seriously.
Consider what would happen if you lose 10k trading the stock market. In the great scheme of things, it probabaly is not that much of a big deal. There are people who take large sums of money and go on an expensive holiday and spend years pays that money back. This is done for a few weeks' pleasure. The same person would tell you you are crazy if you borrow 10k to trade. Financially the two situations are identical, with the possibilty that you can make money trading.
We panic and attach a lot of importance to how we would look if we fail at any endevour and this is partularly true in trading because we feel we are taking a risk that is generally seen as foolhardy and irresponsible.
When you sit in front of your screen to trade, there is too much at stake and that distorts everything. One of the things you are told is 'only trade with money you can afford to lose'. The subtext says it is not acceptable to get yourself in difficulties in order to achieve large finacial gain at the cost of living a normal and ordinary life. This psychological baggage will ensure that trading is practically impossible to succeed at. You are really at the mercy of a lot of psychological factors the underpinning assumption of which is you are doing something that you should not be doing. After all, why would you try something in which your probabaility of loss is so high that you have to make sure it will not affect your life at all if you fail at it? Your ordinary 9-5 life with the Ford Focus is so special and precious, you should not be putting yourself in a position to lose it. In other words, what you are setting out to do is much less important than the life you are trying to build by attempting this new work you call trading the markets.
Almost everyone thinks, or is advised to think, like that. Now, what do you think are your chances of making it? Very close to zero, I am sure. So, that S/R level you have been waiting for gets tested and your experience and testing shows, if you just keep on trading this setup and risk a small amount of your capital to ensure longevity you will make money and reach the financial independence you seek. These setups happen lots of times a day. But you miss some of them because 'it doesn't look right', you take some of them but you get out with small profits because you are scared of losing the profit, in some cases you end up taking losses that are too big because you were afraid of takeing a small loss. The list is endless.
You then get confused and start asking questions. You start having doubts in the method you are supposed to be following. You then remember the trades that would have worked and look back at the chart and think 'this is just an illusion' because you didn't make as much money as your method suggested.
No, it is not an illusion at all. Those s/r levels were tested and you could have made money if you just took the trades but you didn't. Your mind and all the societal baggage is playing tricks with you. This is a game of probabilities. If you take trades that give you more profits than losses, over time you will win. But I wouldn't bet on people doing this stuff successfully because the strongest incentive for human beings is social pressure and how you would look if it all goes wrong. I am sure there are lots of people who read this and think, 'that doesn't apply to me'. Yes it does apply to you. There are very few people who are indifferent to the kind of car their neigbour drives, or wouldn't mind looking foolish in a major way.
I said in another thread trading requires talent. In addition to the intelligence to understand all the technical stuff, you also need to be the kind of person who acts on his/her convictions and must be prepared to fail and be seen to fail. You must be prepared to do whatever is neccessary to succed. Not many of us have these qualities. Trading is not an illusion, but it can look like that because it is frustraing not to be able to do something that looks so so simple
All the best.
Consider what would happen if you lose 10k trading the stock market. In the great scheme of things, it probabaly is not that much of a big deal. There are people who take large sums of money and go on an expensive holiday and spend years pays that money back. This is done for a few weeks' pleasure. The same person would tell you you are crazy if you borrow 10k to trade. Financially the two situations are identical, with the possibilty that you can make money trading.
We panic and attach a lot of importance to how we would look if we fail at any endevour and this is partularly true in trading because we feel we are taking a risk that is generally seen as foolhardy and irresponsible.
When you sit in front of your screen to trade, there is too much at stake and that distorts everything. One of the things you are told is 'only trade with money you can afford to lose'. The subtext says it is not acceptable to get yourself in difficulties in order to achieve large finacial gain at the cost of living a normal and ordinary life. This psychological baggage will ensure that trading is practically impossible to succeed at. You are really at the mercy of a lot of psychological factors the underpinning assumption of which is you are doing something that you should not be doing. After all, why would you try something in which your probabaility of loss is so high that you have to make sure it will not affect your life at all if you fail at it? Your ordinary 9-5 life with the Ford Focus is so special and precious, you should not be putting yourself in a position to lose it. In other words, what you are setting out to do is much less important than the life you are trying to build by attempting this new work you call trading the markets.
Almost everyone thinks, or is advised to think, like that. Now, what do you think are your chances of making it? Very close to zero, I am sure. So, that S/R level you have been waiting for gets tested and your experience and testing shows, if you just keep on trading this setup and risk a small amount of your capital to ensure longevity you will make money and reach the financial independence you seek. These setups happen lots of times a day. But you miss some of them because 'it doesn't look right', you take some of them but you get out with small profits because you are scared of losing the profit, in some cases you end up taking losses that are too big because you were afraid of takeing a small loss. The list is endless.
You then get confused and start asking questions. You start having doubts in the method you are supposed to be following. You then remember the trades that would have worked and look back at the chart and think 'this is just an illusion' because you didn't make as much money as your method suggested.
No, it is not an illusion at all. Those s/r levels were tested and you could have made money if you just took the trades but you didn't. Your mind and all the societal baggage is playing tricks with you. This is a game of probabilities. If you take trades that give you more profits than losses, over time you will win. But I wouldn't bet on people doing this stuff successfully because the strongest incentive for human beings is social pressure and how you would look if it all goes wrong. I am sure there are lots of people who read this and think, 'that doesn't apply to me'. Yes it does apply to you. There are very few people who are indifferent to the kind of car their neigbour drives, or wouldn't mind looking foolish in a major way.
I said in another thread trading requires talent. In addition to the intelligence to understand all the technical stuff, you also need to be the kind of person who acts on his/her convictions and must be prepared to fail and be seen to fail. You must be prepared to do whatever is neccessary to succed. Not many of us have these qualities. Trading is not an illusion, but it can look like that because it is frustraing not to be able to do something that looks so so simple
All the best.
JTrader
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At different times of year, the major market moves/trends can to occur at different times of day.
For example, GBPUSD June/july 2007 saw a lot of in the night pre-0800 BST big moves, and from 0800-1600 uk time – the market stayed still & choppy. In the last few months there have been a lot of 0800 onwards big moves.
Therefore this is an example of an illusion perhaps. Just as you think you have cornered an approach that works well, although the approach continues to work well, the goal posts may move slightly so that the approach continues to work well but at a different time of day, outside your trading hours, for no apparent reasons, & you miss the moves due to this .
So perhaps a good simile would be to describe trading/the markets as being like a glacier - slippery, full of cravasses, always changing dimensions & always on the move!
For example, GBPUSD June/july 2007 saw a lot of in the night pre-0800 BST big moves, and from 0800-1600 uk time – the market stayed still & choppy. In the last few months there have been a lot of 0800 onwards big moves.
Therefore this is an example of an illusion perhaps. Just as you think you have cornered an approach that works well, although the approach continues to work well, the goal posts may move slightly so that the approach continues to work well but at a different time of day, outside your trading hours, for no apparent reasons, & you miss the moves due to this
.So perhaps a good simile would be to describe trading/the markets as being like a glacier - slippery, full of cravasses, always changing dimensions & always on the move!
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JTrader
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At different times of year, the major market moves/trends can to occur at different times of day.
For example, GBPUSD June/july 2007 saw a lot of in the night pre-0800 BST big moves, and from 0800-1600 uk time – the market stayed still & choppy. In the last few months there have been a lot of 0800 onwards big moves.
Therefore this is an example of an illusion perhaps. Just as you think you have cornered an approach that works well, although the approach continues to work well, the goal posts may move slightly so that the approach continues to work well but at a different time of day, outside your trading hours, for no apparent reasons, & you miss the moves due to this
So perhaps a good analogy would be to describe trading/the market as being like a glacier - slippery, full of cravasses, always changing shape & always on the move!
Perhaps the big players - govts. IMF etc. (those that basically control the markets, prices etc.) pump price up & down at different times of day on some kind of schedule throughout the year, in order just to confuse the speculators, take their cash and ensure that there are no free lunches :idea: Then if you think that if they do this through carefully designed & controlled algorithymic trading, it doesn't leave the individial trader with much chance
.
JTrader
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However we all trade, i think the majority of us would agree that we like price to move as smoothly as possible in one direction for extended periods. And when this doesn't happen, this is when potential can exist for the **** to at least get a lot closer to the fan.
Rhody Trader
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You started this thread saying trading is an illusion. Now you say it's not. Are you recanting?
Rhody Trader
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Perhaps the big players - govts. IMF etc. (those that basically control the markets, prices etc.) pump price up & down at different times of day on some kind of schedule throughout the year, in order just to confuse the speculators, take their cash and ensure that there are no free lunches :idea: Then if you think that if they do this through carefully designed & controlled algorithymic trading, it doesn't leave the individial trader with much chance
While the big players do perform certain market functions at certain times of day sometimes, the idea that they do things just to mess with the little guys is nonsense. The big money Goldman Sachs made this year didn't come from trading against us peons, but rather from trading against the other big boys.
JTrader
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Fair enough
. I'm just playing with ideas, as i'm still wondering why the hell the markets can't be more predictable on a day to day/month to month round the clock basis . Same pattern day after day would suit me .
dbphoenix
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Actually, laptop started it, though I have yet to understand the point he's trying to make, unless it's that trading and predicting are the same thing, which is untrue, or perhaps that one's own competence as a trader is an illusion, which is probably usually true.
Db
scotty_dog
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I recently came across some elegant thinking on this subject. The source was a highly successful trader, now in his 70s.
Rather than seeing trendiness as a single, variable condition, he maintains there are always two trends in the market.
Where there is "no clear cut trend", he sees two trends of equal strength. Where there is a clear cut trend, he sees the market being pushed by one side more strongly than the other. While this does sound almost ridiculously self-evident, it was of use to him. He approached each market (from a discretionary but methodical stance) with two hats on. One that looked exclusively for defined long entries and one that looked exclusively for defined short entries. With good trade management, he found himself able to make money in directional and rangebound markets. The caveat here, of course, is that market inactivity is a trading condition to be avoided.
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