So, what am I missing ?

Hey folks,

During the past few months, I have been studying about TA and price action trading. But I am so stuck and can not move on any further. I always have this question in my mind which I can't find a persuasive answer to it. If there is a pattern/ strategy/ edge to consistently beat the market using price action and charts then competition from other traders should make it disappear or at least make it difficult to beat the market after costs. (the edge should self-defeats).

In other words, beating the market using past price data seems too good to be true because if it is not the case then that would be very easy for everyone to do the same. It is very reasonable to believe that the massive competition should eventually make any advantage/ edge self-defeat and stop working. So, what am I missing here guys ?

Sorry for my average English. And thanks in advance

You said (If there is a pattern/ strategy/ edge to consistently beat the market using price action and charts then competition from other traders should make it disappear or at least make it difficult to beat the market after costs)

a)Patterns are always appearing, It takes time to recognize the ones that you can trust. It takes money management skills to keep you from losing too much on a given trade. I don't risk more than 100$ on a given trade. If the day trading margin is 1k and your account is 6K? How many tries do you think you have if you only risk 100$ per trade? "Lots" but you can also burn thru it quick if you don't have a solid plan and money management skills. Also how many losses do you need to make to realize you don't know what you are doing?

Best to experiment with Demo account first. There are tons to learn and know. But there is no beating the market, as Handle123 has said you will be trading against yourself, especially when real money is on the line. Markets will destabilize you when you are trading for real and they will find your weakness. Best to look at this as gambling, when you risk money you are just taking a bet on a transaction and hope your entry will give you a return. If your too hungry than you will lose more. You need a note pad on your desk and you need to write down your thoughts and observations than re-read your journal over the weekend. If it makes no sense than you will know why.

b) Strategies, are dime a dozen. Your best strategy is managing your risk using money management to limit your losses.
Stop overthinking, your not competing with anyone other than yourself. This is electronic trading your order is minuscule at the very least. This is not brain surgery but the risks can be big if you don't use stops.

Hope this helps a bit.
 
there is huge difference between the pro and the amateur in most things......the gap is enormous or gigantic.
it highlights how difficult it is to make money or make someone give money to you
 
In order words, a working strategy would become less profitable when more people start using it?
in theory that is correct
because if everyone wants to buy then the seller will be at a high price.

but, in practice, in today's variety of markets , a multitude of which are highly liquid and,some more are sufficiently liquid,how likely is it for 2 traders,or even 50000 traders, using the same strategy, will end up trading, in the same instrument and in the same time frame ,in the same market,with the same time horizon for taking their profit?
i think that is a rhetorical question....but what do you think?
 
What you are missing is the size of the trader.
You, me, anyone on ET, can enter/exit an entire position and *rarely* have to worry about bringing down the market with selling pressure, or *creating* a surge in price by trying to buy in.

What you are missing is the size of those who might need a week or two to get out of a position. This is readily discernible in price action, and readily demonstrated in "T/A" tools. The problem is, that by the time you discover such a heavy and trending agenda, it may be dead (or ordered *reversed*) by those who brought it to market.

We are but little speed boats in a world of super-tankers. We are nimble, we are quick, but we do NOT set the agendas, nor do those who work those agendas notice in the least should they run right over us.

Practically poetic. See post 'What info does TA tell you' reply #22 :D
 
Green follows green 70% of the time, so trade micro trends in the direction of the longer time frame.
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in theory that is correct
because if everyone wants to buy then the seller will be at a high price.

but, in practice, in today's variety of markets , a multitude of which are highly liquid and,some more are sufficiently liquid,how likely is it for 2 traders,or even 50000 traders, using the same strategy, will end up trading, in the same instrument and in the same time frame ,in the same market,with the same time horizon for taking their profit?
i think that is a rhetorical question....but what do you think?

"This type of thinking is totally incorrect", Its the quantity of orders" at or near a given point that cause the start of a tipping point. This than will wake up and startle the herd, than price starts to follow. Just look at your DOM and start adding and subtracting. It wont be totally correct, because of the fake Bids or offers but it will help clear the fog. Let me know If you hear the fog horn:D
 
the million dollar question is for how long the herd follows

So you want to engineer this process? Your into this for a book deal like Bollinger maybe? keep learning and wasting your time, after all its not Money lost, its just opportunities lost-$. You cant add what you don't collect.
 
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