Isn't this a simple answer? To profit from my activites in the market, I have to be faster than the others. If I want to buy, I have to be fast enough to get in at the price I want before prices go up, and to sell, I have to be fast enough to get out before a reversal or stand on the side and watch.
I do not believe so. Good trading is not synonmous with âspeedâ. There is the âspeedâ of the decision making process, i.e. the reaction/analysis time in understanding the market and then there is pure speed of execution. Letâs distinguish the two. Foremost your decision making process should remove as much subjectivity as possible from what you are watching. This allows you to act without overanalyzing the situation and in turn creating doubts about the validity of the signal you just witnessed. How do you do this? By anticipating the signal.
This is an NQ trade today(see attachment). Mind you today was an easy day to trade, lots of directional bias but if you didnât know what to look for and WHEN, the risk/reward you assign to certain entries may have been violated and you wouldâve been out with losses. Here is a chart of the NQ today: This is a trade setup, study it carefully as it occurs frequently on directional long days. This a start. Add this setup to your arsenal and wait for it. Its only going to occur maybe 10-12 times a year in the SIFs.
Four âthingsâ have to happen in order to generate my signal, can you venture as to what they are (Iâve already told you one of them on the chart)?
In any further discussion, I will refer to speed in terms of your ability to execute your decision, not in terms of how fast you get your data of how quickly you are able to click buttons. âSpeedâ of network execution really doesnât matter as the market will offer multiple opportunities for you to enter the price you want. I donât scalp, so my comments do not apply there.
With the above in mind, I ask someone to disagree with me regarding the issue of timeframe ~ it is my belief that the shorter the time frame, the higher the execution costs and the greater the tendency for a trader to overtrade. For this reason I do not trade under a 5 min timeframe. I not do practice scalping, hence, I cannot talk about it. What I do know about is recognizing intraday 5 and 30 min price ârejectionsâ and âacceptancesâ. I also know how to position myself at those levels and never in between.
Let me define what I consider a setup like the above posted: A trade opportunity that allows a risk to reward of 2 or better via prior experience of seeing this setup occur and result with statistical significance. You have to find your own setups and trade them. Its really that simple. The key points are: don't trade when you can't explain your setup and never violate the rules of exit and entry. In order for your series of trades/setups to work over time ~ you simply CANNOT FUCK THEM UP. This is all discipline and only you can prevent yourself from being an idiot. Easier said than done.
A plan is a formal capital preservation document in order to execute REPEADETLY that series of setups. Capital preservation plan + a series of setups = Trading plan. Note I have over 17 good quality setups that Iâve been able to generate through LOSING in the market. I made the mistake of not back-testing very much during my learning curve, but, I kept (and still keep) very good records of my setups and why they did or did not work. I recommend you do the same ~ these records will become a part of your trading plan.
"how you will facilitate this transfer of capital; and from whom you will be profiting off of... how will I profit from this set of data, as opposed to someone else?"
I dont think I understand the first part. I trade in VERY small size (100 - 200 max), getting in/ out is never a problem for transfering capital. Who I profit from depends on my timeframe. If I'm scalping, I'm taking $$ from other scalpers and MM's, if position trading, I'm taking money from other investors, and long term traders. How I profit from this data, again goes back to holding period. For example, when scalping, Trader A who can read the tape better than trader B will make more money because he acts FASTER on the data given and understands it. I could be wrong though.
No. You profit from a change in price. Period. The timeframe is really irrelevant but the amount of time spent AT a certain price IS. Did you get that? What causes a change in price? ~ First let attempt to generally answer this question and then lets work on defining areas where price is likely to be accepted versus rejected (i.e. support and resistance in combination with volume). Once you have a good understanding of volume at these levels then weâll go into what âothersâ are doing and why. You need a good understanding of price/volume analysis in order to start understanding MMâs and other longer term market participants.
"This is a warning sign that you cannot ignore. Lescor, Mschey and others (as well as myself) have asked you to write down a response to illiquid's post (essentially a trading plan). It appears like you still have not done this. Why? "
I first must ask, Whats the difference between a system, a method, a plan, and a strategy?... Please tell me if I'm right about the following:
* System - A software package bought from a vendor with years of backtested data. Many traders flock to these "Magic bullets"...That's why I dont have/ use a system.
* Method - A "check list" of what a trader does before entry and before exits.
* plan - Samething as a strategy
* Strategy - A way of trading (scalping, swing, position trade) combined with a method
Hopefully I cleared some of this up.
