Prudent Risk Management Is The Only True Edge In TRADING

[Rodrigcn]

You just described part of my process, of course I would never sell at the first A or buy at the first B, and that's part of my edge.
I agree that having an Idea about where is Low and where is High as relative to the TF you intend to trade is the key for successful trading, very simple but effective KISS...

Exactly, I would never either, there's much more to picking trades, I was showing these as an example to prove my point. I really think a good price action reader who is very familiar (specialized) to certain markets can do very well. I mainly focus on the EURUSD and trying to get better at the ES but there are very specific ways those markets move and if traded correctly you can perform very well. Of course it's very difficult though.

For example, I look at oil and even other currency pairs and they move in different ways that I haven't studied therefore while I can trade them since they follow PA principles I would not do well in them at the moment I believe. I think my edge is reading the PA well for my specific markets, managing trades actively, understanding the market depth, the participant psychology (does one side give up, is one side trapped, are both sides fighting for market control, etc), and then risk management (structuring trades with good trader's equations - incorporating risk:reward)

 

[Rodrigcn]

Exactly, I would never either, there's much more to picking trades, I was showing these as an example to prove my point. I really think a good price action reader who is very familiar (specialized) to certain markets can do very well. I mainly focus on the EURUSD and trying to get better at the ES but there are very specific ways those markets move and if traded correctly you can perform very well. Of course it's very difficult though.

For example, I look at oil and even other currency pairs and they move in different ways that I haven't studied therefore while I can trade them since they follow PA principles I would not do well in them at the moment I believe. I think my edge is reading the PA well for my specific markets, managing trades actively, understanding the market depth, the participant psychology (does one side give up, is one side trapped, are both sides fighting for market control, etc), and then risk management (structuring trades with good trader's equations - incorporating risk:reward)

Plus I've noticed that just one market usually offers more than ample trading opportunity in a few hours

 

[Rodrigcn]

Plus I've noticed that just on market usually offers more than ample trading opportunity in a few hours

One last thing - i think an often non mentioned factor is time - how long you as the trader are willing to stay in the trade which is a sub factor of the risk you are taking. I.e. - in my second example, the trader was willing to hold for a very long time (if he is a short term trader) was able to salvage a loss into a break even trade

 

[Vindago]

Time is the most important variable when Trading. It is a complex variable, it is multilayered and has different meaning for different instruments.

By the way, Rodrigcn, I trade Forex as well, started with USD.CHF and now I trade several other pairs. As you trade at EUR.USD and look at USD.CHF for correlation, I suggest you look at EUR.CHF as well as the correlation is three ways and, while it takes some time and work to use the correlation, it is a useful one.

 

[Rodrigcn]

Time is the most important variable when Trading. It is a complex variable, it is multilayered and has different meaning for different instruments.

By the way, Rodrigcn, I trade Forex as well, started with USD.CHF and now I trade several other pairs. As you trade at EUR.USD and look at USD.CHF for correlation, I suggest you look at EUR.CHF as well as the correlation is three ways and, while it takes some time and work to use the correlation, it is a useful one.

Interesting, I'll check it out, I do find the correlation helpful but it can also be confusing at times. I'm thinking of trading both, for example is i see a sell setup in the usd.chf then selling there, even if it doesn't necessarily look like a buy in the eur.usd as long as its valid, because at the moment i only trade eur.usd and not the franc. The franc does make me a little nervous because some of the moves can be quite dramatic, the eur.usd is more tame i think.

Also i was looking at the usd.chf this weekend. Jan 15th 2015 was a pretty crazy day, I was reading some horror stories on it. If you were trading then, if you remember was there really no warning, or at least a meeting advisory for those who didn't want to participate in the market that day/time?

 

[777]

You have to have an edge on your bets as well as mange your money well.

Big winning professional traders, speculators, and gamblers who have stood the test of time know this.

Some armchair quaterbacks or those who have gotten lucky in the short run or online trolls will say differently.

 

[Vindago]

Interesting, I'll check it out, I do find the correlation helpful but it can also be confusing at times. I'm thinking of trading both, for example is i see a sell setup in the usd.chf then selling there, even if it doesn't necessarily look like a buy in the eur.usd as long as its valid, because at the moment i only trade eur.usd and not the franc. The franc does make me a little nervous because some of the moves can be quite dramatic, the eur.usd is more tame i think.

Also i was looking at the usd.chf this weekend. Jan 15th 2015 was a pretty crazy day, I was reading some horror stories on it. If you were trading then, if you remember was there really no warning, or at least a meeting advisory for those who didn't want to participate in the market that day/time?

Oh, I remember it well, I was online, (I was actually talking on Skype with a friend when one of my alarm went off) I was Short on USD.CHF (very lucky chance, I had no idea that that was gonna happen) and I made I big fat lot of money, after the first few seconds of shock for the speed and size of the move and of thinking that a nuke may have gone off somewhere...

Nobody knew in advance if not the top management of Swiss central bank and probably a few member of Swiss federal government, so it caught everybody by surprise.

the EUR.CHF is the missing link to correlate EUR.USD and USD.CHF however, even looking at the three pairs the correlation is not 100%. Something that may be of use as well is the CHF index like USD and EUR indexes...

 

[Vindago]

You have to have an edge on your bets as well as mange your money well.

Big winning professional traders, speculators, and gamblers who have stood the test of time know this.

Some armchair quaterbacks or those who have gotten lucky in the short run or online trolls will say differently.

The edge is simple, Buy low and sell higher, Sell high and buy lower, know what is high and what is low, the rest is just mechanics...

 

[Rodrigcn]

Oh, I remember it well, I was online, (I was actually talking on Skype with a friend when one of my alarm went off) I was Short on USD.CHF (very lucky chance, I had no idea that that was gonna happen) and I made I big fat lot of money, after the first few seconds of shock for the speed and size of the move and of thinking that a nuke may have gone off somewhere...

Nobody knew in advance if not the top management of Swiss central bank and probably a few member of Swiss federal government, so it caught everybody by surprise.

the EUR.CHF is the missing link to correlate EUR.USD and USD.CHF however, even looking at the three pairs the correlation is not 100%. Something that may be of use as well is the CHF index like USD and EUR indexes...

Yeah i was taking a look at eur.chf and it was a little confusing, I would have to study the correlation more, but I can see that getting pretty complex until I can get good at estimating the correlation factors between the three currencies. I do like to look at the usd.chf alongside the inverse eur.usd though, I find that pretty helpful.

Yeah that drop was terrifying, that's like my new worst nightmare. I would hope something like that wouldn't be able to happen on the eur.usd but anything is possible. Glad you were on the right side of the market. I feel like if I was trading that day I would have shorted up top but had a buy limit lower, makes me realize the importance of not just having limits idle in the market. i tend to like to start trades in anticipation of moves (via limits) and am trying to get more reactive instead because it can lead me to get into spikes on the opposite side of the market

 

[Rodrigcn]

The edge is simple, Buy low and sell higher, Sell high and buy lower, know what is high and what is low, the rest is just mechanics...

Exactly, at the most macro level it's buy low sell high. I would also add the ability to spot a price/zone/w/e you want to call it - area, where in the case of a market with 100 participants, you have a good probability of being right in your take on the percentage distribution between both sides at that area and placing a logical appropriately sized directional bet there, of course not betting the farm and having respect for the opposite side of your trade