The Best Edge??

[carlos430]

Hello,

My name is Carlos & I have been trading on and off for a few years now. After blowing a few account's & trying all the normal amateur ideas I have now come to the conclusion that any success I may have will be generated from support and resistance areas, using candle stick pattens for entry and exit?

I have recently read some Steve Nison books & Trading the Zone by Mark Douglas, and completely understand the concept of thinking in probability's, as I owned a business for twelve years that worked exactly on those grounds, I truly believe in this as my business was successful and has allowed me to retire with a high six figure pension at the age of thirty six.

My question is, what is going to give me the best edge? There seem to be hundreds of books out there, all with plenty of different trading ideas????? I think Trading The Zone was recommended to me on a trading forum & I was hoping for a recommendation for a good trading strategy book? I would be interested to know if anyone has comments on Short Term Trading Strategies That Work by Larry Conners & Robert C. Miner "High Probability Trading Strategies. Ideally I would prefer a book to work around the ideas I now feel are a realistic way to trade for profit.

Thanks for reading my post.

Carlos

 

[meanreversion]

I was having this discussion with a friend yesteday. He said "no-one would sell a good trading system". I asked him to define what he meant by "good". He said "one which consistently makes money". Define what you mean by "consistent".. and so on. There are systems readily available for free on the internet which will make money over time, but you might go straight into drawdown and stay there for 3 months. Most people will abandon after 1 month and say the system was no good.

My first question to you is, what do you mean by "short term strategies"? Are you looking to try to be profitable day in day out, or maybe week in week out, or maybe you don't mind having the occasional down month but an overall up year? Profitable strategies which make money every day .... hmmm, good luck finding one of those. Strategies which make money most months? That can be done. Strategies which nearly always make money over the years (trend following) - this can be done as well, but you could easily find yourself in drawdown for a month or two immediately after starting trading.

Why do you think you didn't make money before? What caused losses? If it was lack of discipline, perhaps what you were doing may have made money had you stuck to the rules? If you stuck to your rules and still lost money, the market you were trading was simply not conducive to your strategy, but that doesn't mean it isn't now. There is no such thing as a strategy which always loses money -- sometimes it will work, sometimes it won't.

If your previous strategy stuck to some general ideas, run winners/cut losers, trade with the underlying trend, then if applied to several markets, it should have positive expectancy. You just need to stick with it during the drawdown.

I think you're looking for a Holy Grail which doesn't exist. No system or strategy is perfect. With books, I'd recommend "Trade your way to financial freedom" by Van Tharp, which deals with entries, sizing and exits. Also "Come into my trading room" by Elder is very well regarded.

 

[William Waller]

Hello,

My name is Carlos & I have been trading on and off for a few years now. After blowing a few account's & trying all the normal amateur ideas I have now come to the conclusion that any success I may have will be generated from support and resistance areas, using candle stick pattens for entry and exit?


Thanks for reading my post.

Carlos

Hi Carlos,

The two tools that you mention are excellent, I'd just like to chuck another thing in that you might find useful. Please bear in mind this is just my opinion.

Charts and indicators are a fiction - they are not real. They are just a picture that we create as we wish.

The only thing that is real is price and therefore that is what I concentrate on. Orderflow is everything in the market. Break it down - why does price move? Interest rates, non-farm, because some indicator is registering "overbought", blah blah blah? No, it moves because selling interest overwhelms buying interest and vice versa.

Therefore you want to be trading at areas where there is significant orderflow. Where does this tend to occur?

Areas of support and resistance certainly, and most particularly at flips in support and resistance. This is nothing surprising.

If you want a free "edge" in short-term trading (say trading off H1 and H4 charts) try this:

Open up a load of H1/H4 forex charts and put a line at every big round number. For this purpose we will define these as every 500 pips. For example on cable it might be 1.3, 1.35, 1.4 and so on. Observe how price reacts around these areas, and see what happens when you get good price action.

You've now got more "edge" than most traders will ever have. You just need to work on trade management, psychology, and getting the details right.

The chart is just a picture. Orderflow is creating that picture - try to understand it.

William

 

[meanreversion]

That's an awesome post William, very succint and clearly written by someone who knows their stuff.

 

[STRTRADA]

Hi Carlos,

The two tools that you mention are excellent, I'd just like to chuck another thing in that you might find useful. Please bear in mind this is just my opinion.

Charts and indicators are a fiction - they are not real. They are just a picture that we create as we wish.

The only thing that is real is price and therefore that is what I concentrate on. Orderflow is everything in the market. Break it down - why does price move? Interest rates, non-farm, because some indicator is registering "overbought", blah blah blah? No, it moves because selling interest overwhelms buying interest and vice versa.

Therefore you want to be trading at areas where there is significant orderflow. Where does this tend to occur?

Areas of support and resistance certainly, and most particularly at flips in support and resistance. This is nothing surprising.

If you want a free "edge" in short-term trading (say trading off H1 and H4 charts) try this:

Open up a load of H1/H4 forex charts and put a line at every big round number. For this purpose we will define these as every 500 pips. For example on cable it might be 1.3, 1.35, 1.4 and so on. Observe how price reacts around these areas, and see what happens when you get good price action.

You've now got more "edge" than most traders will ever have. You just need to work on trade management, psychology, and getting the details right.

The chart is just a picture. Orderflow is creating that picture - try to understand it.

William

Very similar post to one in my thread...

I don't know if you've attempted to copy it...

If not you have almost the same thinking as me...

 

[meanreversion]

You're both, like, wicked smart !!!

 

[STRTRADA]

You're both, like, wicked smart !!!

Do I detect an element of sarcasm?:smart:

 

[William Waller]

Very similar post to one in my thread...

I don't know if you've attempted to copy it...

If not you have almost the same thinking as me...

LOL

I haven't seen your thread, but I'm not going to claim that my thinking is in any way original.

I'm a lifetime member of the J16 PF. If you're not familiar with it, basically this is our bread and butter for intraday.

So if anyone likes my post, all credit to Mike (mbqb11), and none to me. Although I believe that Mike got a lot of his orderflow stuff from Darkstar, and on and on.

William

 

[meanreversion]

No, not really. I do think that post was excellent, whether it's you or William.. so whoever wrote it, well done.

 

[meanreversion]

LOL

I haven't seen your thread, but I'm not going to claim that my thinking is in any way original.

I'm a lifetime member of the J16 PF. If you're not familiar with it, basically this is our bread and butter for intraday.

So if anyone likes my post, all credit to Mike (mbqb11), and none to me. Although I believe that Mike got a lot of his orderflow stuff from Darkstar, and on and on.

William

Oh goodness, stop with the mock modesty. Move on!!

 

[STRTRADA]

Oh goodness, stop with the mock modesty. Move on!!

Haha

 

[William Waller]

That's an awesome post William, very succint and clearly written by someone who knows their stuff.

Thanks buddy, very generous of you to say so .

Of course, knowing how to wave a scythe about and actually bringing in the harvest are two different things, but I'm past breakeven and into lightly profitable. Losing is fast becoming a distant memory, thanks largely to the stuff in my post (again 100% credit to J16 and mbqb11).

William

EDIT: LOL just seen your subsequent post. You're right, enough's enough. Trouble is I've got nothing to do until 2.55.