Best strategies to start trading

[Wheezooo]

Yup exactly random. Place a fake bet, one minute up another down.

To express my sentiments. I would say, what is a market? Nothing more than an equilibrium mechanism. No more – no less. Price is its voice. The only mechanism it has to communicate. And it is constantly seeking Fair Value, a point of neutrality, to which it will then tend to oscillate and settle around until that equilibrium is once again unsettled by unbalanced forces.

You present as an example a news report, one was known would cause highly volatile movements. So you say random, but was it? The market tried going down, it met an opposing force greater than it, turned around, and proceeded in the direction of that greater force, which it will continue to, until it meets a force equal to or greater than it.

In my experience, and I do not, nor ever have considered myself to be a directional trader, the number one failure is that people enter trades for a reason, then when the trade fails to fulfill that reasoning, they don’t get the fuck out, but find other reasons to keep on the trade. If they are losing, then they will find 400 more reasons to keep on the trade, none of which were the original reason. From there it is always the same ‘say goodnight Gracie.’ Do not pass go, do not collect your $200. So to answer, yes, I believe it is considerably more controllable then roulette, but most people just don’t have the level of discipline to carry that out. The best directional traders I have watched, and what caught my attention and impressed the shit out of me when I started, were the guys who could be balls to the wall long, bullish as shit, and a second later when they don’t see the market performing consistent to their expectation, they don’t go flat, but immediately, and without blinking, go short. Takes an amazing combination of ego and humility to do that.

 

[IAlwaysWin]

The main bread and butter of my strategy is transient zone pricing. Keeps you on the correct side of the market and gives rrr you an accurate indicator of where price is most likely to go next.

 

[Wheezooo]

Economists, especially those from FOMC, are lagging indicators. Like the stochastics and the moving averages on the chart, they merely mirror the price of the stock market. If the stock market surges then there's nothing to worry. If the stock market tanks, then the world's coming to an end and they need to slash the rates, blah blah. You will never see FOMC taking preemptive moves to solve the problem BEFORE it happens.

Two semesters of undergrad and you get to call yourself an economist. They are absolute morons. A PhD just makes you a moron with some skills at empirical mathematics and an expert on some esoteric topic you wrote some ridiculous thesis for which you have no practical experience with. WooHoo!!

 

[gaussian]

You present as an example a news report, one was known would cause highly volatile movements. So you say random, but was it? The market tried going down, it met an opposing force greater than it, turned around, and proceeded in the direction of that greater force, which it will continue to, until it meets a force equal to or greater than it.

Too many people read A Random Walk Down Wall Street and The Black Swan without mathematical context.

The market, when taken in summary, behaves approximately randomly. In summary the market is generally efficient at any given point in time. This is demonstrably false for almost any random stock/future (perhaps except ES/NQ/SPY/QQQ), but when you summarize them (maybe into an index) the behavior is almost always random. Further, if you compare bar-to-bar it is almost certainly random at any given point in time. This looks nice on a dissertation but doesn't bear much weight in practice.

This, however, doesn't mean there aren't sub-markets that are not priced correctly due to an event or something. This is where edge lives. I'd put money on people trading blips on a screen on 1/5/15/30/hourly basically trading noise. Sure, there is microstructure but Joe DayTrader barely made it through high school algebra - microstructure is a big word and he can barely log into facebook without trouble. Information asymmetry is where edge is. You have to know something the market doesn't (or with a large enough account - bluff really well). No different than poker, really.

 

[farmerjohn1324]

Consider --

Maritime navigation for centuries relied on the Ptolemic view that the sun orbited the earth. Results could be ok, even good.

Results got much better when navigators adopted Copernican astronomy.

Almost the entire population of traders using TA are doing something akin to tweaking various Ptolemic views of markets. Results can be ok, even very good, even excellent, depending on all sorts of factors, many of which are not related to market analysis, eg money management and great skill at the trading operation, or in structuring and managing options positions.

But since their market models are fundamentally off the market base, and since most traders cannot endure the losing streaks that beset even strategies w/ 60% win rates, many traders throw out TA as worthless. Their learning does not advance far enough for them to see beyond the undetected Ptolemic haze that envelops public discussion of TA.

Unlike the spread of scientific advances, Copernican market insight does not diffuse much beyond those who achieve it on their own, it does not reach the Ptolemians. Thus self-confirming conversations among Ptolemians about the worthlessness of TA. Availability bias at work.

And then there's the rare public education that is truly Copernican, but usually, viscerally rejected by most of those in the Ptolemic haze as "catching a falling knife" ....

Ok. So what are the best technical indicators to use in your opinion?

I basically know that TA is very far off from the factors that actually drive price long-term. But that could be okay because in short-term, prices may be more based on momentum, news, and data releases.

 

[CharlesS]

Price bar OHLCs

 

[farmerjohn1324]

To express my sentiments. I would say, what is a market? Nothing more than an equilibrium mechanism. No more – no less. Price is its voice. The only mechanism it has to communicate. And it is constantly seeking Fair Value, a point of neutrality, to which it will then tend to oscillate and settle around until that equilibrium is once again unsettled by unbalanced forces.

You present as an example a news report, one was known would cause highly volatile movements. So you say random, but was it? The market tried going down, it met an opposing force greater than it, turned around, and proceeded in the direction of that greater force, which it will continue to, until it meets a force equal to or greater than it.

In my experience, and I do not, nor ever have considered myself to be a directional trader, the number one failure is that people enter trades for a reason, then when the trade fails to fulfill that reasoning, they don’t get the fuck out, but find other reasons to keep on the trade. If they are losing, then they will find 400 more reasons to keep on the trade, none of which were the original reason. From there it is always the same ‘say goodnight Gracie.’ Do not pass go, do not collect your $200. So to answer, yes, I believe it is considerably more controllable then roulette, but most people just don’t have the level of discipline to carry that out. The best directional traders I have watched, and what caught my attention and impressed the shit out of me when I started, were the guys who could be balls to the wall long, bullish as shit, and a second later when they don’t see the market performing consistent to their expectation, they don’t go flat, but immediately, and without blinking, go short. Takes an amazing combination of ego and humility to do that.

Then it becomes about understanding what the forces are that have been moving a price in a certain direction.

Problem #1: Depending on what timescale you're looking at, you don't even know what direction the price is going or in what magnitude.

And there are no textbooks written on these forces. I find it interesting that we can put a man on the moon, but even the world's best economists can't foresee enough to prevent a crisis like 2007-2009.

Perhaps the "up" force was the easing of Brexit worries?

Also, some forces seem to be based on nothing real. For example, you might see...

Monday: Trump says deal with China likely in near future = markets go up

Thursday: Trump says deal not as likely as previously thought = markets go down.

Nothing real actually happened there and it's enough to move billions or trillions of dollars.

 

[farmerjohn1324]

Price bar OHLCs

Is that a technical indicator or just a type of chart?

 

[Wheezooo]

but even the world's best economists

-Ain't no such thing.

As for the rest. Like I said... not going to defend it. My journey with this ended over a decade and a half ago. Still all looks about the same to me. Even the 'there is no edge, like there was in the good ol' days...' Funny thing was, I found edge everywhere I looked. I still see things I know without a doubt, are wrong. Markets are vast, and people tremendously overestimate the players.

 

[CharlesS]

O: Open
H: High
L: Low
C: Close

prices of price bars

Attempt to see relations among these prices, in one bar and in sequences of bars.

This is the kind of hard work that has been mentioned in this thread.