The best insights

aphexcoil

aphexcoil

Please post your favorite insight into trading. If you have a story to tell, then tell it. If you have a quick aphorism to share, then share it -- but let's keep this thread clean and filled with nothing but true trading gems.

What are the most insightful messages you can contribute about trading?
 
I will begin.

Although I am not as experienced as many of the people who will be offering their own insights, I have to say that, through all of my discovery process, simplicity, discipline and money-management are the keys to successful trading.

<B>Simplicity</B>
There are two only main things that every TA indicator is based off. Price and Volume. These two things should be central to any solid system. In my opinion, TA is virtually worthless because it merely presents these two main pieces of information in various forms. However, the two things should be what you use most when trading -- not endless indicators.

<B>Discipline</B>
Pick a system that you have tested and feel confident using and stick with it until it either works or does not. Do not change systems constantly while trading, or you will learn less about the shortcomings of your technique.

<B>Money Management</B>
Learn when to cut a loss -- either by a stop order, a mental stop, or when your system tells you that the trade is not working out according to your system parameters.

If your system allows for it, try and let your profits run. Sometimes this is hard. You can review a lot of the past journals on this site and see that, if people had let their profits run like they did their losses, they'd be doing quite well. Don't be afraid to let a good run keep going.

Hope this helps.
 
"In my opinion, TA is virtually worthless". I've always considered "Technical" to mean "information derived from the market" vs Fundamental, being information from outside the market (like an opinion about the economy). What "Worthless TA" are you talking about??

BTW, you've stated it eloquently. You should be well on your way to being a successful trader, if not already.

Speaking of Simplicity, an old timer once told me, "no more than 2 or 3 indicators" (for making trading decisions)... "preferably 2".
I believe that's good advice.
 
Originally posted by inandlong
If you don't know where you want to go...you can't make a plan to get there.

And of course, my signature...
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Exactly. Most people, IMO, work this backwards - the make up a system they think works and then decide what they want to get from it.

It makes more sense, IMO, to first decide very specifically what you want and then try and find a system/method that gives you exactly that. Cuts out all of the noise.
 
gnome,

"TA being worthless" may be a bit strong of a way to put it. I think the application of a lot of TA is worthless. TA itself, if used correctly, can be helpful as an indicator -- but too many people instead use it as a dictator (as in dictating their trading decisions off of the TA.

TA should be in the background. Perhaps a confirmation after you get a signal from your most important indicators (chart, price, volume) -- The TA may be a nice touch. Somewhat akin to, "Ahh, I see the Stochastic was low when my signal came."
 
Originally posted by aphexcoil
gnome,

"TA being worthless" may be a bit strong of a way to put it. I think the application of a lot of TA is worthless. TA itself, if used correctly, can be helpful as an indicator -- but too many people instead use it as a dictator (as in dictating their trading decisions off of the TA.

TA should be in the background. Perhaps a confirmation after you get a signal from your most important indicators (chart, price, volume) -- The TA may be a nice touch. Somewhat akin to, "Ahh, I see the Stochastic was low when my signal came."
More...

Trend Slope has a significant influence on how most "range measuring" indicators work... RSI, Stochastic, CCI, etc
 
Example: Let's say the rules of Blackjack were that you didn't have to bet until you saw your cards and the dealer's up card. Then, only when you have 19 or 20 and the dealer has a 7 or less do you bet. That would be an edge. Your trading method should lead you to to believe you have an edge at the time you initiate risk.
 
some of a traders greatest enemies are:

1. feeling the need to trade

2. trying desperately to make back a loss

these two can do really bad things to your account.
 
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