A simple price action approach

[JoshDance]

Quote from Gabe2004:

And how do you know that you are the problem and not a failed strategy?

If you don't let a strategy prove itself because of issues that YOU have, you cannot tell whether your strategy gives you an edge or not.
Sort of the chicken and the egg problem.

Gabe

When we're talking about a basic methodology like trend lines, it's obvious that the logic of the strategy gives the "edge" -- the "edge" is just a greater probability that one thing will happen versus another. The basic nature of a channel or trend is such that an edge is inherent--the very definition of a trend gives the probabilities that continuation is greater than reversal--else, it couldn't be called a "trend."

The discretion involved in then entering, managing, and closing trades is where each individual trader comes in, and is why one trader can successfully trade a trend or channel or range, whereas another fails. The "edge" becomes the trader, and his discretionary decisions. In general, will he tend to make a trading decision such that price is more likely to move in his favor? This is the edge now. The trader, and his discretion. At that point, the psychology almost completely takes over, as issues with entering early, exiting early, late, and all those things are fundamental psychological issues, if they're discretionary and not mechanical.

What I'm saying in a nutshell is: a discretionary trader cannot separate the strategy from himself. His mindset and attitudes become his strategy, for all intents and purposes. These are just my beliefs of course, and not said to be "truth" -- it's just my truth.

 

[Tonkadad]

Hi Gabe,

"And how do you know that you are the problem and not a failed strategy?"

You wouldn't know if it is you or the strategy, that's why I said if you have a problem "implementing" a methodology (= strategy) consistently.

You would know that it is you because you can't follow the rules of the strategy with consistency. In other words no deviation from what the rules tell you to do.

Each trader is the biggest variable in their trading strategy success or failure.

 

[Tonkadad]

Quote from JoshDance:

When we're talking about a basic methodology like trend lines, it's obvious that the logic of the strategy gives the "edge" -- the "edge" is just a greater probability that one thing will happen versus another. The basic nature of a channel or trend is such that an edge is inherent--the very definition of a trend gives the probabilities that continuation is greater than reversal--else, it couldn't be called a "trend."

The discretion involved in then entering, managing, and closing trades is where each individual trader comes in, and is why one trader can successfully trade a trend or channel or range, whereas another fails. The "edge" becomes the trader, and his discretionary decisions. In general, will he tend to make a trading decision such that price is more likely to move in his favor? This is the edge now. The trader, and his discretion. At that point, the psychology almost completely takes over, as issues with entering early, exiting early, late, and all those things are fundamental psychological issues, if they're discretionary and not mechanical.

What I'm saying in a nutshell is: a discretionary trader cannot separate the strategy from himself. His mindset and attitudes become his strategy, for all intents and purposes. These are just my beliefs of course, and not said to be "truth" -- it's just my truth.

Well said, totally agree.

 

[nakachalet]

this post was written some 6 hrs ago, but the internet failure preventing its dispatch in time.... sorry. you are saying alot but what are you saying in terms of specificities, trading friend?

any and all traders do have their own hangups, some are serious while others are not so. regardless, if they are not an interfering factor with your stats, your strats, your continuous ability to trade.... they remain a peripheral manageable problem, imho.

by the way, in your own estimation, just how far are you away from implementing whatever you are accumulating and collecting in order to go on paper trading, pls?

for what it is worth, it is best to just find your own temperament and try to delimit all your energy to focus on whichever that is most congruent with you, your inner self and your own preference, strength and ability. unless and until you can bring yourself to that point and that level.... you'll be spending endless hours riding the merry go round.... and enjoying everyone's post....

do not get me wrong, there are many consistently profitable traders on board here but you are not them.... they already have chosen and decided for themselves what they are going to trade, how they are going to trade, how often they are going trade and what is the threshold of each trade once the price is triggered....

a vivid example could be drawn from planning a trip, the very first question a traveler needs to find out is, what is his/her resource....
and how much is allocated for this venture....?

then proceed to formulate your planning....

i feel like i am talking too much.... already....; hope you get my point.... narrowing your search and your trial to a definable point.... so you may formulate your trading plan very soon, K?.... good luck, have fun in whatever you are formulating.... and many cheers for successes to come....

Quote from Tonkadad:

I am going to change your question around a bit since I think the more important question that should be asked is:

Do I think that the trade "info" that JD presented can be used to create a profitable strategy. In a word, yes, but there is more to trading a strategy than just the strategy if you want to be consistently profitable.

(To skip my unrequested mental yabbering, continue to next post.)

IME (in my experience) thru this trading journey I have been the limiting factor, at my current state (or lack) of awareness it seems so obvious that I (meaning my inner thoughts) was the road block to any possible success at trading, it seems silly to even mention it.

But at the beginning of my journey I was sure it was everything but me. Not enough knowledge, the markets were against me, I needed a faster computer, internet, on and on and on.

When I started to actually realize it was all my internal issues that were the larger problem to success whether it be in trading or life,
that's when everything turned around, it was like a light switch. NOT!

That was the beginning to digging deeper and really examining my motivations in life, it's a continual process. Actions speak louder than words.

Once you have a methodology and if you are having a problem implementing that methodology consistently then you will understand what I am saying.

 

[JoshDance]

Here is a real-time example in CL that is similar to the charts I posted of TF the other day... notice how the down thrusts are getting shallower... the good volume to the upside and channel breakout have now shifted my focus to looking for longs. Looking to buy on a retrace near the bottom.

 

[JoshDance]

I did not get the deeper pullback I was looking for to go long, so I'm trying a rather aggressive short at the previous resistance. Win or lose on this trade, the risk is very quantified, and I like my setup criteria, so it is worth the small risk to find out if my premise is right.

Update: I was just stopped out on the trade, and it has gone in my direction 30 ticks as of now, and my stop needed to be only 3 ticks higher. The premise was good, and the risk was quantified, so no big deal. I'll look for the next opportunity! I tend to have my stops too tight, and this is a good learning opportunity.

 

[JoshDance]

Here is the result on the trade. I would take the profit at this low, as .06 was my original target, due to the fact that it's a nice round number it's finding good support, and the other black lines to the left need to be broken down. You can see how important good stop placement is, which I did not do here! I should have re-entered, and this is one of my main focuses--not being afraid to re-enter after a close stop-out...

 

[nakachalet]

did you go long on that?

i did.... LOL

Quote from JoshDance:

Here is a real-time example in CL that is similar to the charts I posted of TF the other day... notice how the down thrusts are getting shallower... the good volume to the upside and channel breakout have now shifted my focus to looking for longs. Looking to buy on a retrace near the bottom.

 

[wrbtrader]

Quote from JoshDance:

Here is the result on the trade. I would take the profit at this low, as .06 was my original target, due to the fact that it's a nice round number it's finding good support, and the other black lines to the left need to be broken down. You can see how important good stop placement is, which I did not do here! I should have re-entered, and this is one of my main focuses--not being afraid to re-enter after a close stop-out...

JoshDance,

You mentioned in the prior message your stop was too tight. Is that a hindsight analysis of your trade or is this current problem you're having in your trading ?

I ask because had the trade worked (not hit your stop) in your favor via resulting as a profit...would you have stated your stop was "too tight" ?

(most don't)

My point is that many reading this thread will need to understand that there's other things like initial stop/loss placement, trailing stops, profit targets, exit early prior to a target or stop/loss being hit when things are obviously wrong et cetera that's arguably just as important or more important to an entry signal. Its that trade management stuff after entry that often gets lost in the translation sort'uv speak for discretionary traders when trying to keep discussions simple as possible.

Therefore, what are you're initial stop/loss protection based upon and what are your re-entry signals based upon in reaction to a recent trade that resulted in a loss?

I myself have had problems with re-entries but recently seen dramatic improvements when they occur when price retraces back through the area of the prior trade stop/loss...assuming I didn't freeze like a deer in front of coming headlights on a dark road after the loss in the prior trade.

Mark

 

[JoshDance]

Quote from wrbtrader:

You mentioned in the prior message your stop was too tight. Is that a hindsight analysis of your trade or is this current problem you're having in your trading ?

I ask because had the trade worked (not hit your stop) in your favor via resulting as a profit...would you have stated your stop was "too tight" ?

(most don't)

Thanks Mark--this is a current problem in my trading, not just this trade. I have calculated that if I have my stop 4 ticks higher on average per trade, then I would have a MUCH better win rate.

The stop in this trade is definitely based on S/R levels, and given the same trade again, I would probably look to place it in the same place. The best opportunity for re-entry was almost immediately after, when I saw a condition that led me to believe this was a shakeout, OR on a break a bit lower using a 5m chart. However, I did not take the re-entry as I should have.

Quote from wrbtrader:

My point is that many reading this thread will need to understand that there's other things like initial stop/loss placement, trailing stops, profit targets, exit early prior to a target or stop/loss being hit when things are obviously wrong et cetera that's arguably just as important or more important to an entry signal. Its that trade management stuff after entry that often gets lost in the translation sort'uv speak for discretionary traders when trying to keep discussions simple as possible.

Mark [/B]

Absolutely Mark, the entry really is the easiest part, and as long as it's relatively clear, then the hard part becomes the management. I think a good entry enables one to be in a good position to manage the trade with less heat, BUT another problem I have is early profit taking--twice today my profit target would have been hit, had I not exited after I was in the green 15 ticks. I left about 25 ticks on the table on each trade. That is unsustainable, as those wins are really quite necessary to have the good days that will allow one to weather the bad ones.

In this particular trade a more patient entry would have allowed me to get in at an even better price, and take pretty much zero heat. I think the SL on my trade was reasonably placed, and the failure to re-enter was the real mistake here.