The Trouble With Scribbles

There's at least one tiny little thing left out of this: the winrate. BS disparages any interest in "being right", but in order to make his approach work, one must have a reasonably decent winrate.

As I pointed out yesterday in another thread, after 11 consecutive losing trades (not unheard of), a $1000 account becomes $800, risking 2% on each trade. In order to get back just to breakeven, having lost 20% of his account. the trader must increase his account balance by 25%. And if the trader has a cavalier disregard for the winrate, the odds of his earning back that 25% any time soon, are slim.

Beginners should exercise extreme caution in accepting any approach at face value. There is a great deal left out of this "correct method".
 
Buy1Sell2 said:
4. Don't scale in or scale out.
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Well, you can't scale out if you only trade a one lot of the ES (and with 40 point stops, who could blame you). But for those trading even modest size (say 2-10 lots) scaling out makes complete sense, unless, of course, you have a method that is trying to predict what price will do rather simply trying to ride the coattails of those big enough to move the market.

The case, in my mind, for scaling out with profits is this: The market spends most of its time in ranges. It ranges, then trends, then ranges, then trends, etc and so on. When it is in a range, my experience has been that ranges tend to contract, rather than expand. Not always, but usually that is the case. So, since price becomes less and less likely to traverse the whole of its range as each session goes by (think of what a triangle or hinge "looks" like on paper), it becomes prudent to take some profits, imo, as one never really knows in advance when and where price might reverse from within its range.

However, it is easy to identify in advance where the limits of the current range are, and then to plan to trade either a reversal from or a breakout through that limit, whichever the market calls for at the time. How does one know what the market is going to do - breakout or reverse? I don't know. As R. W. Schabacker said, "there seems to be no dependable guide to forecasting which type of price action will follow the attainment of a critical support or resistance level." Of course, I have finally figured out that this is the "missing component" that so many of the naysayers, critics, and whiners are looking for - to them the idea of S/R is nothing more than the trite "so it could go up or it could go down - thanks for nothing." Or, they want to know "how do you know whether to buy a level or not."

This is where watching how price behaves when at these extremes is necessary to learn how to trade S/R. It is also why most of my entries are market orders - because frequently I do not know until the second before I hit the button whether I want to be long or I want to be short. All I can tell you is this - most of the time price ain't gonna hang out at the extremes for very long (most of the time), and so once you get the sign (for me, a Higher Low for a long or a lower high for a short) it is time to get on board.
 
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fortydraws said:
How does one know what the market is going to do - breakout or reverse? I don't know. As R. W. Schabacker said, "there seems to be no dependable guide to forecasting which type of price action will follow the attainment of a critical support or resistance level." Of course, I have finally figured out that this is the "missing component" that so many of the naysayers, critics, and whiners are looking for - to them the idea of S/R is nothing more than the trite "so it could go up or it could go down - thanks for nothing." Or, they want to know "how do you know whether to buy a level or not."
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That was a particular problem this morning. I posted two ranges, one straddling the other. If one had bought the bounce off the median of the lower one, he'd then be faced with a choice of either shorting a possible reversal off the upper limit of it or staying long and "hoping" that price breaks through and reaches the upper limit of the higher range. A third choice is to exit at that first upper limit and assess the situation objectively since, of course, one cannot short a trade in which he's long until he exits the long first, and if the market is fast-moving, he may well lose money on both sides. This is something that is left out by the "experts" and leaves the trader with several decisions which must be made almost simultaneously: do I exit the long or not? do I short or not? do I stand aside or not and if so for how long? do I re-enter the long or not? all of which should have been decided before the session ever started, but few engage in this level of planning (and of course he has to get that "real-time call" posted to the message board).

It's always easy in the book.
 
In the absence of any real time or in advance calls by anyone using the scribble method, I must come now to the conclusion that there is nothing extraordinary about the scribble system. Anyone can look at a chart and see where scribbles can be drawn horizontally across charts. Each artist will likely draw these linear objects at different levels. I can say this, because I have seen the participants draw them at odds with other proponents. That is direct evidence of that point. No one steps out and make a call . ie long at x with stop at y and target of z. ---There must be a reason that there are no calls. The fact is that other methods are at least equal to the scribble method and perhaps are superior. Let's see some calls and not just some vague charts with numerous possibilities suggested. Otherwise, this conclusion will stand.
 
Buy1Sell2 said:
In the absence of any real time or in advance calls by anyone using the scribble method, I must come now to the conclusion that there is nothing extraordinary about the scribble system. Anyone can look at a chart and see where scribbles can be drawn horizontally across charts. Each artist will likely draw these linear objects at different levels. I can say this, because I have seen the participants draw them at odds with other proponents. That is direct evidence of that point. No one steps out and make a call . ie long at x with stop at y and target of z. ---There must be a reason that there are no calls. The fact is that other methods are at least equal to the scribble method and perhaps are superior. Let's see some calls and not just some vague charts with numerous possibilities suggested. Otherwise, this conclusion will stand.
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Today, we saw one of the students begin to ask questions addressing the over-complexity of the scribble method as they see it. In addition, there were queries and proposals concerning stops This is refreshing indeed
 
So. BS (how apt) is finally stopped out of his ES trade, in at 95 and out at 86 for 9pts. 9. This out of potentially hundreds of swing points between the day he entered (3/23) and today. At $50 per ES point, about how much did he miss out on by following his "simple" method: wait for some sort of okay from an array of indicators, enter when it looks good, and hold until you reach some unspecified target or you lose 2% of your net worth?

Gee, how can one resist?
 
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