How Do You Trade Channels for Price Action Traders ?

Gotcha said:
I guess this is how I view simple. It should have only a few variables, and then you take a trade, and if you keep consistent stop and target, the trade hits one or the other. Trade management would be a huge part of this, and I think is a huge edge overall. Some might say its not an edge on its own, which is true, but without a sound and consistent approach with trade management, you might be the best trader and still lose money.

Once you introduce too many variables, I'm just not sure how you end up taking any trades because the setups would be so rare. To combat this, you may have many setups, and although quite rare, perhaps at least one presents every hour, even if it might not show up for the rest of the week. Now of course you have to keep track of them all in your head.

But the thing for me is that once you see stats on these trades, if they aren't so good, you almost have to wonder how profitable are these setups. If you first have to consider the general market sentiment, then the price in relation to the overnight action, then the price in relation to the previous day action, then you throw in some rules about how close to have to be to a previous swing point before you enter, and then you have to factor in time of day, etc., and then after all this you place your trade and hit 2 points profit before your 2 point stop is hit, how much of this winning trade can we contribute to all this analysis? There are literally tons of areas on the chart where you can take a 2 point trade that set up with so much analysis.

I figure that all this extra analysis should provide a hugely juicy win rate. If on a 1:1 trade you're only getting 60% win rate, and on a 1:2 barely cracking 40%, then is this the result of superior trade selection via countless variables, or perhaps a bit of luck, good timing, and trading in the direction of the trend?

I guess the point that I'm trying to make is that often times, trades are over complicated in order bring about the appearance of good trading. What results from this is the need to be right, given all the analysis, and perhaps even less opportunities to trade, since you're constrained by all the rules. Contrast this with a more simple system, which may produce more trades, but as long as the trade management is top notch, it might actually result in more profits, even if it seems worse because many trades end up being losers.

Its of course difficult to know any of this since so little trade stats are shared, but from all the sources I have been able to reference over the years, I am very much leaning to this conclusion.
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imho,along with a post by @Simples which i gave a like to yours is one of two top posts this week.

Edit:
You may find some goods from this and some posts on ET from around 2005 (±)2 years,go through each one of them
http://www.jltrader.com/wp-content/...ability-Theory-Related-to-Trading-Systems.pdf
 
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Gotcha said:
...I guess the point that I'm trying to make is that often times, trades are over complicated in order bring about the appearance of good trading. What results from this is the need to be right, given all the analysis, and perhaps even less opportunities to trade, since you're constrained by all the rules. Contrast this with a more simple system, which may produce more trades, but as long as the trade management is top notch, it might actually result in more profits, even if it seems worse because many trades end up being losers.

Its of course difficult to know any of this since so little trade stats are shared, but from all the sources I have been able to reference over the years, I am very much leaning to this conclusion.
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Yeah, I've seen very simple methods in which the trader makes the trade over complicated or stressful. Yet, I've always view such methods with rules that are too subjective when details of the actual trade signal aren't explained.

Like some do with trendlines and channel...that stuff can be automated and many standard programs today does such for the trader. Thus, the only thing a trader needs to do is develop a trade signal so that it would tell him if or if not its a trade when the price reaches the trendline or channel.

That's another difference. Traders have different trade signals when trendlines/channels are reached. Some will get a trade signal while others will not get a trade signal for the exact same trendline/channel.

I remember a trendline thread here at ET. Several traders drawing the same trendline but some got trade signals while others did not. The difference was that one guy was looking for specific types of candlestick patterns, another using flag/pennant patterns, another using info from his DOM (bid/ask) while another using volume analysis...but all using the same trendlines.

Each with different statistical results for the same trendlines/channels.

Yeah, they all had different results which is why some conclude trendlines/channels are subjective even with simple variables because of the difference in trade signals while others conclude the same subjectivity when the trendlines/channels are drawn differently because they're using a different set of simple variables.

Then the other issue is the actual trade itself. I've seen
 
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Van_der_Voort_4 said:
imho,along with a post by @Simples which i gave a like to yours is one of two top posts this week.

Edit:
You may find some goods from this and some posts on ET from around 2005 (±)2 years,go through each one of them
http://www.jltrader.com/wp-content/...ability-Theory-Related-to-Trading-Systems.pdf
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No time to read it now, but this looks like a very interesting link. I've always wanted to read up on stats relating to trading, but without going through a stats textbook. Just something written by a trader, for a trader, who can explain ideas with concrete examples and not just equations. So this should be a good read. Thanks.
 
wrbtrader said:
difference in trade signals
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Absolutely right. I even wonder sometimes about how a trade signal affect performance. Of course you need a reason to enter, but this reason is in some ways a confirmation, and this confirmation usually means a worse entry. I will explain what I mean.

Suppose you're looking to buy at the previous day low. If using a 5 minute chart, and wanting to buy above a bar that bounces somewhere close to this low, and using a stop that could be below the bar, then you might have to use a fairly big stop. If basing your entry on a 1 minute chart, you entry might be lower, hence your stop can be tighter, but certainly you might end up with a worse win rate because you might be sucked into trades that don't end up working.

If you lets say have an order to buy right at the low, you're taking a fairly risky trade, since price can blow right past your level, but at the same time, you're getting the best possible price if it should happen to trade down to this level to the tick and bounce off. You can use a tighter stop with this approach, which might make up for the smaller win rate of trying to catch the falling knife. Statistically speaking though, this might not be any worse off than waiting for price to bounce off a level nicely, and buying 3 points higher, but now having to use a 4 point stop lets say, whereas before, you could have used just a 1 point stop.

So this trade signal business is a huge variable like you say.
 
Sprout said:
Train your mind on how to See. The results come naturally.

Like learning a foreign language with vocabulary, grammar and learning nuances that only immersed in the culture can provide. Once you can See, than you can Read what the Market is saying at any point in time with a complete dataset that you've built with your mind with certainty by testing it all along the way.


No, I did not do those trades.
Yes it starts with hindsight.
Another word would be debriefing.

What makes this similar to this?
What makes this different from this?

As you debrief, you mind builds to see differences where you didn't perceive them before.
As you perform MADA, you see these trades develop in real time.

I wish I would have started training in MADA sooner. I would have saved a ton of anxiety, pain, fear, anger and financial loss.

Now I experience confidence, comfort, support and financial growth just like the wiser folks said.

Yes, I see those trades develop in real time now.
Yes, I can bank coin.
No, I'm not gonna show you any proof. That's crass with no class.
Yes, as a skeptic and critical thinker you should verify claims.
It's all bullshit otherwise, and cannot be anything other in the light of structured inquiry in the pursuit of truth. In a topsy-turvy world, discerning what is bullshit and what is not requires a great concentration of effort. The effort will be ridiculed - doubt, uncertainty and ambiguity will be at the party as well as frustration, sleeplessness and teetering on the edge of the abyss.

Yet everyone at any moment can make the choice to "learn how to learn."

Yes, I still have sticking points. Yes, I still make mistakes. Yes, I can still grow.
Just let Jack Hershey and Spydertrader 's writing wash over you. At first hardly any of it will make sense at least that's how it was for me. That changes for those that actually do the exercises and drills.

The things llIHeroic speaks is solid. There are priceless teachings in these archives, very generous individuals that contributed to the great succession of thinking minds.

Any shortcuts for doing the work is a waste of time, energy and resources.

Now get to it. ;-)
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What's MADA ?
 
Gotcha said:
Absolutely right. I even wonder sometimes about how a trade signal affect performance. Of course you need a reason to enter, but this reason is in some ways a confirmation, and this confirmation usually means a worse entry. I will explain what I mean.

Suppose you're looking to buy at the previous day low. If using a 5 minute chart, and wanting to buy above a bar that bounces somewhere close to this low, and using a stop that could be below the bar, then you might have to use a fairly big stop. If basing your entry on a 1 minute chart, you entry might be lower, hence your stop can be tighter, but certainly you might end up with a worse win rate because you might be sucked into trades that don't end up working.

If you lets say have an order to buy right at the low, you're taking a fairly risky trade, since price can blow right past your level, but at the same time, you're getting the best possible price if it should happen to trade down to this level to the tick and bounce off. You can use a tighter stop with this approach, which might make up for the smaller win rate of trying to catch the falling knife. Statistically speaking though, this might not be any worse off than waiting for price to bounce off a level nicely, and buying 3 points higher, but now having to use a 4 point stop lets say, whereas before, you could have used just a 1 point stop.

So this trade signal business is a huge variable like you say.
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Its because of trendlines/channels...I started thinking that I wish there was a standard for drawing trendlines/channels by some official international TA organization. I wish there was a standard for many other methods like support/resistance analysis.

Yet, due to human nature...that's not possible.

We think "our way" of drawing trendlines/channels is the correct way, efficient way, easy (simple) way or whatever. Unfortunately, the person in another city that's looking at the same price action is thinking that his/her way is the correct way, efficient way and easy (simple) way...that's different than someone else thinking the same thing.

Others come along and say prove it via requesting for them to be drawn in real-time and then lets see what happens when price action reaches the trendlines/channels. :cool:
 
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