Article Trends, Gaps and Probabilities

[T2W Bot]

Recently, I wrote an article about trading and gambling. Specifically, how trading is the one form of speculation on the planet that allows you to stack the odds in your favor before putting any of your hard earned money at risk. That discussion was fine but now I want to look at how we qualify the difference between some higher probability opportunities and lower ones as knowing the difference is a key to success.
In the Extended Learning Track (XLT) ? Futures Trading and Forex Trading programs, a market situation we are often faced with is a gap. We use a simple checklist based on objective information to determine exactly what action to take (or not to take). The checklist helps us determine the probabilities, risk, and reward. Here is how some of it works:
Downtrend:
1) Gap up into an objective supply (resistance) level
In a downtrend, selling short on a gap higher into supply is likely the highest probability trading opportunity there is. This is because only your...

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[egro1egro]

It is amasing to see an article that has the word "probability" in its title andyet tells nothing about it, how to measure it or how to use it. It gives some rules that may work or not work and no tools for the reader to check where and when it works.

To me it is just a mumbo-jumbo with occassional sprinkle of "risk","reward", "profit", "probability" and without any specific helpful information.
It is extremely difficult and uncertain to define support/resistance. The whole concept is very subjective. On top of that you can say anything about probability of success of a gap or anything else. I can invert all the sentences in the article to make them have the opposite meaning and nobody, nobody (!) will be able to substantiate that I am wrong.

 

[Cheaplogic]

I appreciate these articles, and look forward to reading them. And while this information may be useful to someone who started their journey this morning, it would be nice to see something useful to both newbies and those who could use something more of and "edge" than common sense. None the less thanks for the article T2W.

 

[linuxrules]

To me it seems hard to determine whether we are in an uptrend or downtrend. Most often by the time you know the trend direction the trend is over. Once a trend line is broken, say in a downtrend, every trading book will tell you it is time to buy. Yet you really only know that this is true when you have watched the trend reverse. Now Sam tells us it is time to sell. That is a good idea if you bet on a trend continuation. And you may be right. But then again maybe you are not. Doesn't sound like high probability to me.

 

[Baldwreck]

I'm with egro1egro on this - there is no substance to the probability "theory " put forward here - it might be right - it might be wrong - in my opinion probably the weakest piece put on T2W ever - sorry!

 

[joeking323]

I would recommend the Black Swan by Nassim Taleb

 

[Splitlink]

The whole thing about the Black Swan is that it is an event that comes completely out of the blue. Therefore, it is irrelevant to know that they exist, because one is usually caught flat footed when it happens.

The only thing that one can do about them is to spread hedge one's bets and believe in Murphy's Law.

Split

 

[fibonelli]

The article is clear as alpine spring water.

 

[Kristy1975]

Ya I'm a new trader and have definatley learned not to fight the trend.

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