CL Redux
- Thread starter schizo
- Start date
I got the book some time ago and read the introductory material and the DD setup. I found the book to be superb at that point, worth the price of admission for the psychology behind price action and risk management guidance alone.
The book disappeared for months and I recently found it under a pile of other books and started reading it again.
I didn't notice what you're pointing out. He did discuss setups that qualified and ended up being losers, and he also discussed the importance of probability, uncertainty, and trading every valid setup, and accepting small losses very quickly without emotion. I'd be curious to know what pages have valid setups which result in more losers than winners. I'll keep my eyes open for those.
I do know that I utilize his DD and FB setups all the time. I'll trade those until they fail, then as soon as a new trend asserts itself, I'll wash, rinse and repeat the other direction.
I believe Hooti will confirm the validity of the FB, which we have a different "pet name" for.
Check out Volman's advice regarding normal fluctuations after putting on a trade ("heat"), and "second guessing" the trade (which usually results in traders exiting b/e or for tiny profits instead of holding for targets):
"When in the market, a trader, at all times, should keep his eyes on the chart, not on the mesmerizing fluctuations of his profit and loss window. If the traded break is picked with care, it most probably will defend its very existence and send these countertrend traders packing. The uncertainty of whether a trade will work out or not, and the fear of having capital at risk, can trigger all sorts of unhealthy emotions that will hardly contribute to managing the open position in proper manner. It may help to ask yourself what exactly is there to be uncertain about? Since we all know that certainty is an illusion in the marketplace, how could uncertainty really be an issue? Many times, though, a trader's discomfort is not caused by the possibility of a losing trade, but more by the disturbing uncertainty of whether it was the right thing to do to take the trade in the first place. This immediately shows us the necessity of proper education. Whereas a trader can never be certain about the market's response, he has got to be certain about his method! All a trader can go by is the likelihood of his edge to comply with probability over a longer term. Therefore, he has got to trust his setups and take every valid trade. It is pointless trying to imagine oneself being able to predict just these situations where probability will not work in favor of a a trade. At times, it can be very tempting, though. But it is crucial not to give in to this treacherous temptation. Prediction and hunches are like the ever-present hecklers who thrive on confusing the performer. Since they cannot be denied a ticket to the show, it is best to ignore them and just do what you have to do, even if it hurts."
In a word: Just hold your nose and trade your plan!
His book gave me an overview that really helped. I had many of the concepts, but they didn't all fit together before.
His book just clicked a lot into place for me.
I kept saying 'this man has a beautiful mind'. To me he knows what he is doing and writes in a clear way that was at times even fun to read. How often can one say that about a book on trading?
Of course, then I took his concepts and adapted them to CL and a 1 min chart.
I don't use his DD setup to speak of. The FB works for me.
Although I don't really buy into probability in trading ( a well-intentioned misnomer where perhaps "the balance of probability" would be a more accurate characterization), I'm fairly familiar with the uncertainty part. That aside, I never suggested there were more losers than winners for valid setups in the book's charts. I haven't done such a count. Just that, while he occasionally points to identified setups that didn't pan out, there also appears to be a fair number of unidentified setups that would not have fared well. Which pages? Do a small sampling and look at the charts ~bar-by-bar (so to speak) and I think you will come across unidentified ~setups that I believe should essentially qualify as DDs and breakouts but there are no identifying markers for them. (I don't recall such FB- and SB-type setups offhand, but then it's been a while since I read the book.) Please let me know if you come across any Waldos, or even if you don't, in which case I will have to dust off my copy and find a few.
As I noted earlier, it's not a bad book at all. Just that the author appeared somewhat selective in identifying setups even within the charts he chose to illustrate. I'm not suggesting he necessarily did this intentionally. It's one of the reasons I'm personally not so enamored of discretionary trading, even though my own approach has something of a discretionary component. (Much as I'd like to, I can't completely eliminate it.)