Quote from bearmountain:
Good point, I am making a transition from mechanical trading to discretionay trading.
high probability setup - I have thought about this, why I have difficulty with this. I believe my previous trading style of 100% mechanical trading is the culprit. Where in systemetic trading one takes every signal, my win rate was only 43%. With mechanical trading waiting for high probability setup is quite foreign.
Al Brooks does this quite well, I paid for his webinars few months ago. He lets many trades go and just waits and waits.
Thank you all for your replies. will look into Tom Williams VSA.
I believe footprint charts help quite a bit with price action trading.
Frankly I am surprised they are not that well known, certainly I never heard of them until quite recently.
Very impressive post.
Your rationale for leaving mechanical trading and going to discretionary trading has a strong basis of your difficulties regarding your specific mechanical approach.
In terms of PA only, Separate PA derived indicators must be used for different market platform execution actions.
I follow you posts wherever they are made.
The platform possible behavioral actions DO have a heirarchy. This is a different consideration than trading probabilities.
Your mechanical orientation was to take all signals and do something when the signal occured. You also note that skilled traders do not do this, you mentioned one of the five behavioral platform actions in this regard (WAIT).
There ar many ways to trade. The PA only list has a spectrum as well. You noted it.
My point to you is to consider and see if you can figure out the behavioral action heirarchy. From my experience in watching people overcome your current difficulties, I notice that they improve most once they figure out why and how the hierarchy of platform behavioral actions works.
Placing WAIT above ENTER in the hierarchy is what you are going to begin to do someday. thi sacrifices time in the market but you gain what you call "less risk".
By symmetry, you have to consider how this pair (WAIT and ENTER) are replaced by another pair for times when you are IN the market as opposed to times when you are OUT of the market.
This pair is HOLD and Exit. Which triumphs which in the hierarchy? If you can understand that, for you and for Al Brooks, WAIT triumphs ENTER to avoid a lot of ENTER signals, then wouldn't HOLD triumph over EXIT for a lot of exit signals?
You will probably leave mechanical trading and take fewer trades BUT you will not stay in a trade very long because your discretionary goal will become to get to the sidelines and then do a lot of waiting. I think this is how it goes for most traders before they give up trading due to long relative inactivity between profit segments.
This means, of course, that you can't pair as above. That is probablyy how it will turn out for you.
Lets say you wid compare the two pairs (above) and you stacked them over one or the other. What is at the top? To make money you have to prefer HOLD and EXIT above the WAIT and ENTER.
Look at it for a moment all stacked up.
You can see where the fifth behavioral action item fits into the hierarchy. Then you get to see the target for the top level of trading that makes most money from the market's offer.
Starting to learn to develop skills has to have a lot of "WHY's" worked through.
As we find out in ET, people get headaches really easily when they stop postponing thinking about gaining expert skills.
