Iterative Refinement
- Thread starter Spydertrader
- Start date
IMO washes belong to the group of teaching aids that aim to help the trader learn the methodology and trade at the same time. I believe it is based on a premise that if your entry is correct than the price will cross the entry line one or more times giving an opportunity to exit at the cost of the spread or small profit. As such it does not really do anything (IMO) to show which side of the market is right. If on the other hand the entry is not correct (e.g. long 1055 eob and holding for pt3 up - would have put one in the red for 3.5 points, or long 1250 eob on a pt3 up, reverse 1310 eob on IRV RTL break and reverse again 1340 eob on pt3 up would have set one back 7.5 points) washing is not going to save the day. In other words if one knows how to apply principles, then your entries are correct and it's 'one, two punch' in a fashion described in a link you found. In this case it's not clear why one would even need washes. However if one is not fluent with the principles, washes (IMO) represent double danger if one thinks one can wash out of incorrect entry.
No offence and please do not take my comment the wrong way but most of what you described belongs to more advanced learning stage. I base my conclusion on several facts:
- The point is this: price and volume in their relationship is the beginning of learning to trade. There is no alternative except failure.
- The relationship of price to volume is learned by annotating price and volume.
- I learned the value of hand drawing my charts daily. What I learned was that my mind was doing a drill over and over.
- It has been mentioned repeatedly that one should be able to make money using just 5 min ES annotated with channels and gaussians (no FTT's, change, continuation etc., just the RTL BO's), and that IMO becomes an ultimate test whether or not one can annotate properly and 'see' things and consequently is ready for the next step.
And an advice given to all of us who are beginners is to do the reps of 20's. An extremely valuable advice. Personally, I think until I can 'see' whatever is that I am looking for on a static annotated 5 min ES chart, watching live market serves no purpose.
Of course, that's just my opinion. I could be wrong.
I hesitate to interject here, as transference is a slippery fish, and Spydertrader is to be commended for his efforts.
However:
Washing is a skill. In my book, it is skill number one. If you are unsure about its importance now, it will become apparent to you as you begin to add contracts.
However:
Washing is a skill. In my book, it is skill number one. If you are unsure about its importance now, it will become apparent to you as you begin to add contracts.
I would also imagine that it is necessary to master washing as a trader seeks to increase his/her trading frequency (i.e. money velocity). In reviewing your recent blotter segment it is apparent that you are well acquainted with this skill.
Can you suggest any drills (or just tell me to go look for them)
for practice towards proficiency?Thanks for your comments.
I am in the same boat. I have not found 'it' yet. The only reason I know 'it' is there is because today I can see much more than I was able to see a month ago. And a month ago I was able to see much more than two months ago. So it's a simple deduction really. As an example compare two totally different sets of annotations arriving at the same result:
http://www.elitetrader.com/vb/attachment.php?s=&postid=1910122
vs.
http://www.elitetrader.com/vb/showthread.php?s=&postid=1910582#post1910582
Doesn't it strike you odd
how two separate individuals using opposite annotations knew what is forming.Quote from ehorn:
I would also imagine that it is necessary to master washing as a trader seeks to increase his/her trading frequency (i.e. money velocity). In reviewing your recent blotter segment it is apparent that you are well acquainted with this skill.
Can you suggest any drills (or just tell me to go look for them)
Thanks for your comments.
Read Jack's prior posts on wash trades. You should find quite a few of them. My fav is the "Crow's Nest" post.
It's not going out on a limb to say that every struggling trader here lacks the wash trade skill. You can tell from the comments that it will sometimes require a big shift in attitude to see its utility. That's mostly what learning is in any case. A shift in attitude.
I believe that wash trade is defined as a net negative result of recognizing that you are not on the right side of the market and correcting the situation to get on the right side of the market. Therefore, it's only logical to conclude that a wash trade is a direct result of one's ability to recognize the right side of the market. That pretty much places the wash trade skill in the hierarchy of other skills necessary to practice the methodology.