THE IMPORTANCE OF CONTEXT
Peter Reznicek
If you cannot yet master and be consistent with just one setup, it would probably behoove you to not be looking at multiple setups. Try to pare it down to just one setup, get very good at that one setup and just stay with it. And also understand that if you're getting six to seven to eight to ten different signals a day, that's way too many signals.
You're simply not going to be able to follow all that.
And as the person alluded to in the email, saying that they enter on the signal only to have it reverse, that immediately tells me that this individual is not paying enough attention to context. They're just thinking that each signal is equal to another signal, and that's not true.
Whatever your edge is in the market, remember that it is going to generate more signals than are actually valid. Your job as a trader is to parse those signals and to figure out which ones are valid and which ones are not.
And of course, you don't know when entering a trade if it is going to become a winner or a loser, but using all those contextual clues of the breadth, the AD, weighted AD, what are the ticks doing, what is the general tone of the market, etc. All of that is going to help you to discern whether or not that setup is legit.
And as you move further and further along in your trading journey, what's going to happen is you're going to be able to make those discernments quicker and quicker and quicker and be able to know on a moment's notice, getting the signal, checking the context, saying, yes, this is a legit setup, and then most importantly, entering it without having another thought, without any sort of doubt or hesitation or anything. You've done it so many times that it just becomes second nature.
So that's basically the goal of where you want to get to, with the understanding that even when you move to that level, there's no such thing as mastery. Nobody can say that they've mastered trading. There's no such thing. I've been in this game a long time and I consistently also have losing trades. I see trades where I could have done this better. I could have done that better, etc. Do not come into this game thinking that you are ever going to eradicate all of that. The best you can do as a trader is to minimize those losses.
And most importantly, always be paying attention to context. That's the most important takeaway here. Again, I get lots of emails like this week after week. And when I see that the person tells me I take all these different setups, but it doesn't work, I think they might just be taking too many setups. So focus on mastering just one and pay very close attention to context.
