The trick is to identify spots where market bias is better than 50:50. That's edge. Once you've got it, refine it, hone it, then master your psychology.
Hardest and Most Valuable Things In Trading
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If any of my posts come across as rude, it is not intentional. I was just trying to understand the response, and point out something that did not seem to be correct.
Jack: could you take the lead and explain the 50/50, and/or answer my question/concerns? I do not know who burb is?
burb is xburbx and he/she gave a response that could have been related to the markets or to coin flippiing.
It looks like you are trying to find an expert and you are using a sieve of questions you originated.
Nodoji was addressing your need by substituting other questions that may lead you to an expert suitable for solving questions and concerns that interests you.
No one is intentionally rude or reads what others write as containing rudeness.
In trading or learning trading, a person can step out of the probabilistic world.
Non probabilistic finite math is a good place to reside.
Consider how many combinations of adjacent bars are possible. This is finite math.
From the answer, you see that the ends of fixed time or volume bars is not where the market offer is optimum for taking profits.
You may notice that looking at adjacent bars involves left and right instead of up and down.
You may notice that entry/exit trading creates two non overlaping mental states where in one of the states, no money can be made.
An Einstein quote appeard recently. He very very correctly pointed out that "differentiating" is the name of the game. He was not explicit enough for most people to comprehend.
To be an expert trader, you DO what Einstein dictated.
You build a completely differentiated mind. Putting coin flipping in one's mind is a mistake as far as trading is concerned. If it is there it has to be made inaccessable while trading.
Thus nodoji is explaining to you that an expert does not deal with coinflipping and he instructs others to get it off the table vis a vis trading.
Why is risk taking not part of trading? Risk taking creates incoherence in the mind. When a mind is incoherent the mind cannot learn. If, the mind is in a state where learning cannot take place, then at those times, having market experiences does not include skills and knowledge acquisitions.
I will state the market/trader dilemma of entry/exit style trading. See if you get it in any way. See if you are going to be able to do a workaround for this dilemma.
When a potential trader takes a risk to enter the market, he is incoherent during that time and cannot learn to trade. If that potential trader rcognizes his incoherence and seeks coherence he exits to the sidelines where is is unable to make any money since he is on the sidelines.
This dilemma decribes clearly and cogently why most potential traders are only, in fact, learning repeated failure.
Now the workaround for incoherence. Learn to drive a car properly and defensively. To do this the mind becomes, as Einstein pointed out, fully differentiated for driving a car. Examine this mental state: unconscioius competence.
How does a potential trader go through becoming fully differentiated and trade with unconscious competence? Google this question and find no resourses. Google "learning to learn" and find the answer.
No one makes edges to drive cars and compete with other drivers. People learn to drive cars. People learn to ski. People learn to read. All these things involve building the mind so the mind becomes fully differentiated. The person becomes unconsciously competent.
As a person trades he always "knows that he knows" when he has become unconsciously competent.
Why are my above comments "gibberish" to Covel? Covel can't trade; it is as simple as that. He cannot recognize others who can or cannot trade either.
What does it feel like to hold and reverse and keep taking the market's offer segment by segment? It is one hell of an experience. It is like none other to go through BE DO HAVE for expert trading.
Some people may get to the point of noticing that the market is ALWAYS making it offer. Money? There is an unlimited supply of money ALWAYS available for the taking.
Stay with your dilemma; now you have it defined for you.
AN EXIT TO TAKE PROFITS IS AN IDENTITY WITH AN ENTRY TO BEGIN A PROFIT SEGMENT.
I am curious about what you think your answer to this question might be, as I suspect mine would be different (in the current context).
While I do not have the ability at this time to do what you stated, I can see this being the end result of a lifetime of training and mastery in this "sport".
I must admit I think probalistically to make decisions easier as I do not feel I do not have the confidence to fully listen to the market. In the sense you described, the market is your master 100% completely and all you do is follow it like a dog following its master.
Very eloquently stated. Thank you.
A perfectly balanced coin is tossed by a perfectly calibrated machine 50 times in a row and comes up heads. What is the probability that this coin will come up heads on the 51st toss?
In the hypothetical situation outlined (in which this is a test question and so must be taken at face value), we must assume that "perfectly balanced" and "perfectly calibrated" are, in fact, true. In that case there is a 50% chance that the coin will come up heads on the 51st toss, same as on any toss. An unbiased mind knows that and such a mind can learn to take a trading edge and milk it for all it's worth.
However, in real-world situation, if such a machine tossed such a coin in front of you and came up heads 50 times, how would you respond?
I, personally, would believe that either the coin or the machine were somehow "fixed" to create a consistent "heads" result and I would be unable to answer the question with any kind of certainty.
This is why, despite having a trading edge in which I know the overall odds are largely in my favor, I still pick and choose trades from among my signals/setups. It's a result of bias formed from external influences that have nothing to do with the pure price action at that moment in time (every trade is brand new).
An example today was when I saw that CL (crude oil futures) had sold off hard in one fell swoop in pre-market. As a result I came into the NYMEX open with a short bias, looking for a short entry signal. When the price action indicated that price might be reversing to the long side, I continued to watch for a short signal. When price broke out and made a screaming move up without me, and pulled back, leaving a potentially strong reversal signal, I then no longer had a pure short bias; I now had a "this looks like a potential bear trap and I'll wait for further action" short bias. When price then wiped out the reversal signal and made another move up so violent that I feared the single 5-min price bar would shoot through the top of my screen, reach over and slap me for not yet being in a long position, I began to think a pullback might present a decent long entry. However, my doubt was still so strong that I first had to play a counter-trend short just to be sure. When the CT short refused to break down more than 20 ticks from my entry and came back to stop me out b/e, a small idea began to form in my head: "I think I'll place a buy stop at the high of the day." After all that, I finally believed what the price action in real time had been screaming at me and decided to set up a long entry. It resulted in a very quick and painless profit.
Had I believed that the initial long signal had the same chance of resulting in a winning trade as any other similar long signal at any time despite what went on earlier that day, my profit on that trade alone would've been more than twice my entire day's gain.
I think your statememt is a good statement.
Clarity of observation is the equation that perception = sensing (10%) plus inference (90%). Building the mind is building the inference of long term memory so that the inference is available to match just what is sensed.
The above is just monitoring and having perception.
Analysis, decision making and action follows perception when "taking the market's offer".
Always in is the result and the goal. Nodoji says it all when she assures us that only some signals have utility and differentiating among all the signals is the name of the game. In effect, this is being always-in.
kidPWRtrader thinks of trading as a trader (dog) following his master (the market). There is no probability for the doggie. If the doggie is trained, he does follow his master's commands and only the commands that are directed, occasionally, to him, the doggie.
Full size is just a question of trading at market capacity because the capacity is there. Five times the "capacity" is done by using a partial fill capacity. As the pool of in-the-market capital grows, this pool capacity is monitored. Turns are carved using partial fills to EXTRACT a multiple of the market's capacity. Markets are huge and, at any time, there is a bi-directional flow.
Lets say the ES range is 8 points. To carve the range, you simply spread trades apart by dividing the time available into parts sufficient to turn all your contracts over. Take 2,000 contrcts as an example. The five parts of the period for the turn are: end of continue, beginning of change, optimum of change, end of change, and beginning of new continue.
If the market is even harmonic oriented this period could be longer with little price change. If the market is odd harmonic (spikey) the period is relatively short. The T and S dictates block size. The 2,000 was dictated by regs and the size in DOM of the four games being played. You could be doing partials as 50, 100 or even 500 contracts to turn the 2,000 contracts.
This is an extraction of 800,000 dollars over 5 to 10 minutes for that account. If you are running 5 accounts, you are splicing the partials together. 4 million dollars is extracted and it is not noticable in the markets.
An 8 point net is 25% of margin. So it takes 4 trades to double capital.
Everyone starts small and learns when they are small. By learning, the person builds inference and builds capital. At some point, the inference is there for having perception of waht is sensed. The doggie desires to obey since he gets rewards.
Slowly, the desire becomes less conscious but there is the same desire and it is an unconscious one.
Competence has emotional consequences. kidPWRtrader is a doggie who is probability oriented while I am a doggie that is certainty oriented. We were trained in different training schools. I learned obedience and he learned betting.
It is a major training decision to choose finite math compared to probalistic.
NOW is where the market unfolds as the future comes into the present.
Sensing one of two things is not a coin flip. Sensing is backed up by the mind's inference.
I choose to sense "continuation" or "change". They overlap.
In my mind are many whats and they are organized where they belong.
By using a finite math binary vector orientation, I get to have the benefit of certainty all of the time. It is like playing poker with all the dealt cards face up all the time as each hand is played. And I am the only player; I play to extract the offer.
Trading is a tranparent experience. The requirement is to be in the market and take profit segments one after another.
We percieve at a rep rate of 10 to 100 milliseconds. The market is s l o w m o t i o n and transparent at all times.
What a person feels as he trades is whether he "knows he knows" or whether he does NOT know he knows.
A trader may only trade in the Present. He knows he knows or he doesn't know he knows.
As a person looks at the market for 10,000 hours, just about nothing is happening.
What if a person thinks critically about the market. What happens? He learns to make money very quickly bcause he has learned to obey the market He becomes a kidPWRdoggie.
The coin has a message. It works because it has just two sides. No one uses multi-sided coins.
The main coin of the market is the continue/change coin. If it ain't one, its the other. There is no coin flipping going bar to bar in markets. It is exactly like driving a car: spatial, patterns and movement.
The chart is the space. Information is seen as movement. Coninue or change prevails.
On any trading fractal a trend is three moves. A trend is a profit segment.
Trends begin and end on volume peaks. The nice thing about a volume peak is that it is approached and descended. Peaks are relative....hooray!!!!!.
The probability for ascent or descent is 100% or 0%. Pianos are binary: ivory or ebony.
By adding a tweak to the binary called the "vector" you also know ascent from descent. Right to left is dominant and left to right is non dominant in trending.
The whole trading Grail is stated as let the trend be your friend. It is a doggie and master statement.
Following trends is a ridiculous statement. Trend following is not what people who trade successfully do.
The name of the game is to learn markets. First you learn to learn.
To learn to make money is done after learning all there is to know about markets.
It is inecitable to come to one and only one conclusion about the market's operation.
Since trends begin and end, there must be a place where this happens. There is.
The beginning is plunk in the middle of the ending trend. It cannot be anywhere else.
The time it happens is called trending failure. It happens at a peak in volume.
This is all you have to know to be an obedient doggie.
Our head trudger, Covel, spent 8 hazardous years doing obedience traing and he flunked.
Think about a trend. It begins and ends. It would keep going if it would. Check out the little engine that could.
A trend is chugging away and applying more steam and it can't get anywhere. It has peaking volume and it is stuck in the middle of its container.
An expert reverses when the peak is reached and the trend fails.
Then he sits and obeys without any probability at all. He sits and waits for the trend to fail again so he can take all the profits of the trend segment.
This dog hunts. It is an expert doggie.
Hey........ what is the container of a trend? A dog house. Right.... the proverbial parallelodoghouse.
Point 1 is where it begins. it heads to the RTL and as it does the volume hits a trough.
WTF!!!! his is more post trend psychological failure going on all the way to the volume trough right at the exact cross of price on the RTL.
the price has escaped the container and it is on a NEW trend and ON its own.
this dog is HUNTING on dominant volume right up to the peak on point 2.
So at this point all the dogs that won't hunt do their probailistic early exits on non dominant declining volume right down to the point 3 called: "enough of this shit I am going to another peaking volume". And, of course the price can't make it across the parrallelodoghouse and the trend ends on peaking chugging. An FTT.
There is only one pattern for trading and for driving a car and being a good doggie. In driving a car you stay in the container. Good doggies make pyramids where their master tells them to crap.
kidPWRtrader has swagger and doesn't dig having a master. He hasn't been to obedience school he is telling all of us. He never will, probably.
As some may remember, we put a snippet on the charts called PRV. It is a shadow that tells you the end of the bar volume at the beginning and during a bar formation.
So you know about 5 minutes before the peak that it is going to be a peak. Lets say you made it through addition and sutraction. then you can do first and second deivatives of volume. many have seen my logs of first and scond derivatives of volume. they let me make 15 more points on 15 trades a day per contract. that is 50% of margin each day. By doing this addition and subtraction I get to double my money in two days (assuming 15 trades a day). Is it worth the attention I give it?
Woof woof (this is a yes in doggiese).
Why do black swans only live in Australia? So they aren't discovered by probability traders who just write books doing hazardous long jouneys.