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This is my way of solving the dilemma created by randomness. Will the market reverse in a v-bottom or a double bottom, or even a triple bottom for that matter? You don't know so will take the trade when I believe the v-bottom is beginning. On that bottom I was a little early but I have a plan...

Spot on again BSAM. Those who trade successfully based on technical analysis simply don't know how good they are at trading randomness. They have skills that even they can't fully appreciate.

Thanks tradestrong. I had the opportunity to learn on a message board similar to this when I was trying to find my way so I am more than willing to give something back.

True words of Wisdon BSAM. Excellent post!

There is only 1 type of consistently profitable trader: the ones who "go with the flow, trade what happens, believe anything can happen, know how to manage risk, actively take profits," and the list goes on. Why on earth do successful traders all posses these unique characteristics? Because...

I'm sure everyone has heard of Edward Thorp, the MIT mathematics professor who beat Las Vegas at the game of black jack....he was eventually banned from Vegas. Where did he venture? Off to the stock market of course. And his method of choice? Well.....the mathematics of randomness of course...

Black Monday 1987 is an outlier and can be discarded. The markets most commonly form an F-distribution with normal distributions within the F-distribution. I went to the pain staking task of actually plotting this out.

The market can indeed form a normal distribution curve. It depends on the data you choose to analyze. The market can also form a skewed curve, which can also be analyzed using statistics, and depends on the data sample you choose. The markets movements are largely explained by randomness and...

Yeah, makes sense. This is also one of the reasons I take that initial partial. We could easily go to a new low and at that time I'd be looking for that low to occur on lighter volume. This is one of the ways I solve the dilemma between, does the market bottom in a V-shape or a double bottom...

By "fade" doesn't he mean buy? If the market is going to new lows on light volume you'd be buying - i.e. fading falling price.

What he is talking about is a double bottom trigger where the first bottom occurs on aggressive selling and the second bottom occurs on light selling. That is a great setup!!

Granted, there are times when I do take a beating. This method does not come without risk. This year I have an 88% win rate so if I can generate consistent profits 88% of the time and take reasonable losses, let's say 10% of the time, and take a beating 2% of the time then I'm good. There are...

traderNik, Check this out. This may help you see what I'm doing with regard to fading patterns. Here we have a head and shoulders (red support) along with something that comes close to a bear flag (blue lines). I'm fading the moves out of these patterns but only when all the other...

I was actually a little surprised when I saw the chart of your trades. I guess I was expecting to see these perfectly formed traditional chart patterns (since that's essentially how this conversation started) and then the typical move out of those patterns followed by reactions against those...

Great question, great example. For starters, you have to consider what the mood of the day is. Are banking announcing write downs? Are earnings poor? Has unemployment spiked? Is there fear in the market. If the answer to any of these question is yes then I have to be careful fading what...

yes

The wonderful thing about trading is there is no <i>one</i> way. There are as many ways to trade as there are traders. You just gotta find the groove that suits you. I'm always interested in <i>how</i> other traders <i>do it.</i> The market is one big puzzle with a whole lotta solutions!

Now here’s another important concept. Look at the volume pattern as the price was falling at 12:30. Volume is increasing – sellers are getting washed out. These sellers no longer exist when the price recovers and heads back up. That’s a WHOLE bunch of sellers who no longer have the...

Now this next one reinforces my philosophy on timing. You can’t time the market. If you look closely you’ll see a red line above my trigger at 1572.75. In fact, you’ll see two of them. The first one was my initial trigger to get short. The market didn’t go that high so do I just sit...

Alright, enough on the assumptions…let’s get to the trading. There are five trades on this chart, each highlighted with an alternating black or red box. On a different thread, Don Bright talks about opening orders with specialists. I am very interested in the behavior of the market...