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Market evolving
- Thread starter prj
- Start date
Get used to the idea of impermanence -- it will help you survive.
As far as how to deal with that impermanence day-to-day? Get used to the idea of "telescoping" -- where you switch from 1min to 1hour to 1day to 1week (or whatever perspective-changes work best for you)...and back down -- a practice that will alert you to what the greater timeframes hold.
DO NOT operate under the misapprehension that whatever you look at in December will hold for you forever, or through to next December, or even into next week. You must *always* have other irons in the fire, and be testing both what you're operating, and what you *may*be* operating next. What looks great today may be obsolete next year, and in deep trouble by just next summer. And likewise, what looks like it should hold promise right now but *sucks* -- that may be your bread&butter next year.
Yup yup yup...!
Markets haven't changed how price action moves at a baseline level in forever, someone will always lose and capitulate providing opportunity. If what you're doing only works for a week or even only for a year than you're just using a temporary niche or getting lucky that context just happens to match what you're doing.
If you understand how the markets work at a deep level than you can trade virtually any market environment. Most strategies are just entry vehicles, it's context that matters. So of course if you're doing a strategy and market changes it can stop working.
Can you elaborate on your definition of context for day trading.Most strategies are just entry vehicles, it's context that matters. So of course if you're doing a strategy and market changes it can stop working.
Can you elaborate on your definition of context for day trading.
It's all inclusive. Experience would be the most beneficial and covering the most ground but you can get context by other means too. What you're asking me to answer is pretty vast. I can list some things in not necessarily any particular order:
#1 Macro directional bias (multiple different ways and theories to see this) but essentially is the market macro bullish or macro bearish.
#2 Stability of the markets. Are lower time frames active? Meaning after a smaller pull back are buyers showing up in a consistent manner or do we have to pull back on a medium or larger time frame before active and consistent buying is taking place. Is the market just unstable and getting 5-10 points NQ swings in less than a second up and down? Well if you're running a tight stop strategy than probably need to not use that.
#3 What did overnight and europe action do? Are we breaking relative highs and going higher? are we stopping before relative highs and having decent pullbacks? are we going above relative highs just a little bit and than candle closing back below the structure and dumping?
#4 Is US opening happening more near the overnight lows or overnight highs? and how is it responding most days? Are we opening up and taking out the overnight low first or the overnight high and how do we respond after that.
#5 Does it look like larger players are buying to sell or selling to buy? meaning in the micro price action does it look they are just getting people off sides moving market up to take it down or is actually accumulation for an extended move up that has intention for higher. I have no clue how to quantify this it's just a certain look the market gives when trading.
Again I can't sit here and list every single thing, but that's just some examples. Context is all inclusive. It's just asking the basic questions:
#1 What is the market doing?
#2 Do you clearly see and understand what is going on?
#3 What entry vehicle do you have to give yourself the best risk/reward to be able to capture that movement.
They say that the market is constantly evolving and one should adapt to it, but to which extent? Some traders say that they are looking for new patterns some part of their time and the other part they're following their system. I trade for about several month and want to build a persistent system, and a bit puzzled about the degree of impermanence that implied here. What kind of system is solid enough? To which extent I may want to modify it during the time?
Totally related and agreed with you, experience is king in the markets. But there's always something new to learn, right? For me, it boils down to three things: Big picture, then specifics, Learning the market's language, Building a solid strategy: I define my risk tolerance and create clear entry and exit criteria based on my analysis. Even the best analysis can't guarantee success, so managing risk is crucial. It's a continuous learning process, and the ability to adapt your approach based on market conditions is key.