Most Indicators are useless - why does anyone bother with them?
dbphoenix
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I suggest, however, that pattern recognition is only an initial step. Competence -- depending on how one defines it -- may be gained by "practicing" over and over again, but understanding and confidence are gained by understanding why the pattern is forming in the first place. This helps to avoid playing a pattern that is counterfeit.
If pattern recognition per se were all there was to it, the candlestick people would be making out like bandits
nkruger
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Agree DBP, I did say you're almost there...... The advantage of producing your own system is that you know it inside out (or should do) and so know why the pattern(s) are forming.
Newbies would be better using time rather than money to perfect their skills.
dbphoenix
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Really. I've never understood why beginners are so insistent on trading with real money while they're learning how to trade. They'd stick to it a lot longer with a lot less frustration if they weren't bleeding money throughout the process.
oilfxpro
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Back tests conducted by me proved .........lagging indicators reduced forex trading profits by as much as 1,000 pips a year per currency pair
OILFXPRO
Rhody Trader
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I suggest, however, that pattern recognition is only an initial step. Competence -- depending on how one defines it -- may be gained by "practicing" over and over again, but understanding and confidence are gained by understanding why the pattern is forming in the first place. This helps to avoid playing a pattern that is counterfeit.
If pattern recognition per se were all there was to it, the candlestick people would be making out like bandits
I certainly agree that it takes more than recognizing patterns to actually be a good trader. After all, that's just stage one of a trade. It can easily get fouled up at a number of points after that.
I would argue a little about the understanding the why part, however. Granted, you do tend to "buy in" to something when you understand the why's and wherefore's of it (increased confidence), but that's not a specific requirement of being competent. In fact, some people don't want to know and are in fact better off not knowing.
Heck, we could take it one step further and make the point that experience with the patterns will develop the understanding of when they are good and when not since the rest of it is nothing more than recognition of a wider pattern.
dbphoenix
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Argue only a little?
Note I said "competence -- depending on how one defines it". A chicken can become competent at recognizing pattern as long as he gets his pellet when he makes his selection. But being "competent" at recognizing a pattern does not necessarily lead to being able to profit from that competence.
As to your last paragraph, let's say "may develop", as I suggest that understanding -- and I'm referring to literal understanding -- may hinge on more than just repetition. Wah-wah, Helen. Wah-wah.
Its Being Professional... isnt it...?
My own sentiments, I am a Design Professional in a non-trading capacity and have undertaken University Degree's and Masters and then other professional exams. I have learnt much of what I practice today through work experience, learning from more experienced colleagues at work and from my own savvy. There have been some tough times and learning curves can be demanding and I have made lots of mistakes.
I often thought of practising on my own in my early career but it would have been a disaster as I didn’t understand many aspects of the business, let alone my own strengths and weaknesses’.
No Doubt the same logic applies to trading, you need to become a Professional in order to be successful, anything else is just Winging it...
Regards
Red
My own sentiments, I am a Design Professional in a non-trading capacity and have undertaken University Degree's and Masters and then other professional exams. I have learnt much of what I practice today through work experience, learning from more experienced colleagues at work and from my own savvy. There have been some tough times and learning curves can be demanding and I have made lots of mistakes.
I often thought of practising on my own in my early career but it would have been a disaster as I didn’t understand many aspects of the business, let alone my own strengths and weaknesses’.
No Doubt the same logic applies to trading, you need to become a Professional in order to be successful, anything else is just Winging it...
Regards
Red
Argue only a little?
Note I said "competence -- depending on how one defines it". A chicken can become competent at recognizing pattern as long as he gets his pellet when he makes his selection. But being "competent" at recognizing a pattern does not necessarily lead to being able to profit from that competence.
As to your last paragraph, let's say "may develop", as I suggest that understanding -- and I'm referring to literal understanding -- may hinge on more than just repetition. Wah-wah, Helen. Wah-wah.
firewalker99
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Or bad earnings from Google...? (don't know the exact timing)
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dbphoenix
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The rise was due to MBIA, so since price was having so much trouble getting past yesterday's high, I guess traders didn't want to hold. I sure wouldn't.
Hi db please excuse my lack of knowledge as ive just recently started trading but have been following this thread with great interest, looking at the chart you posted now that the price has retraced back down to the SR level what would one be looking for to get confirmation of direction a break below the 1700 level which would then fall in the next SR level, what confuses me is how far down on this chart would one wait before entering short.
dbphoenix
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Justin Mamis in The Nature of Risk talks about three kinds of risk: price risk, information risk, and time risk. Setting aside time risk for the time being, one assumes a greater degree of information risk when he enters a trade before knowing everything there is to know about the context, that is, he gets a great price but is flying without a net (or at best a net with very large holes). He assumes a greater price risk when he waits until he knows everything about the context before taking action, that is, the more confirmations he waits for, the worse the price available to him.
So, how long you want to wait and how many confirmations you require will dictate how much of each type of risk you assume. If you wait for multiple confirmations, you will not likely get the best price. If you want the best price, you're going to have to step out there on that highwire.
In this case, using this weekly chart, one might enter when R is hit two weeks ago. If he entered at R, he'd still be in profit. If he waited for a break of the bottom of that bar, he'd be at breakeven, if he were still in the trade. If he's not yet in the trade, he may wait for a break of 1700. Or he may wait after that break for a retracement back up to 1700, if there is one (there may not be, which takes us back to information risk and price risk).
If you're trading this via the QQQ, you have the luxury of dipping your toe into the water rather than jump all at once into the deep end. You can buy a few shares on a break, buy a few more on a retracement, buy even more on a continuation, or dump them all if the whole thing turns out to be a fakeout and reversal, all with little or no capital risk. The important thing is to anticipate every contingency and come up with a plan of action for each of those contingencies. That way, no matter what happens, you know exactly what you're going to do, how you're going to do it, when you're going to do it. This preparation enables you to remain calm and make a rational, objective decision when a decision is required.
Db
