Thoughts on where to initiate a trade...

Buy1Sell2 · Mar 2, 2015

profitlocker said:
It may work for longer term positions with high risk:reward ratios, but based on my own experiences as an intraday stock trader, I have to somewhat disagree with this. You cant have your cake and eat it too. As much as I like the idea of risking 1/2 a point to make 2 points, it's not that simple. The market has a way of shaking out people who tighten up against it. Realistically I do much better risking 1 point to make 1.5. Now if I notice volatility quieting down I may cut that 1 risk point in 1/2. This is where some discretion comes into play

Stops are to be placed outside the noise. Lower the use of margin and place stops outside the noise. Do not use break-even stops.

k p · Mar 2, 2015

k p said:
So my thinking going forward is that if this was a major resistance level, like a previous day high, trying for a reversal trade at the resistance line is legit, but if this is just a narrow range where the resistance level is only minor, then focusing on continuation of the trend is more prudent than looking for a reversal. Is this a good summary?

I'm such an idiot as I see you already said this here:

Wide range - Fade the range extremes with very small stops

Narrow range - buy or sell in the direction of the previous strong move, preferable at the narrow range extreme opposite the previous strong move with a very small stop.

http://www.elitetrader.com/et/index...o-initiate-a-trade.289926/page-4#post-4093144

Clearly my head is spinning! Its funny how I just concluded what you said, as if I thought it myself, and yet its more like you put the idea into my head hours ago.

halfwaythere · Mar 2, 2015

Ever get a feeling to take a trade, but don't really have a sound/logical reason as to why? Your subconscious is picking up something you can't quite put your finger on. I don't know about you.. but when I have this feeling it's more right than wrong.

How does one take this and cultivate it into trading without the negative self talk "nah it's just an impulse gut trade"

NoDoji · Mar 2, 2015

k p said:
...I really do have an edge, I'm just applying it backwards.

When you said this was the wrong path, I assumed you meant looking for counter-trend price turns.

Yes, you really do have an edge; you're just not applying it.

You're not on the wrong path because you're using a fast chart, or because you're trading counter to the trend.

You're on the wrong path because the analyses you're doing are based on a quest for certainty, perfection, safety and emotional comfort.

The path that will bring you consistent profits is the path where you focus on one single edge (context, setup, trigger price that results in a positive expectancy win%/R:R combination) and learn it trade it aggressively, rigorously and according to the trade management rules that resulted in the edge during your statistical analysis.

This is what the RIGHT PATH feels like.

Consistent profitability over time is what the RIGHT PATH looks like.

The language spoken on the RIGHT PATH is foreign to you. However, the best way to learn a foreign language is to immerse yourself in it.

profitlocker · Mar 2, 2015

Buy1Sell2 said:
Stops are to be placed outside the noise. Lower the use of margin and place stops outside the noise. Do not use break-even stops.

This is easily accomplished when I can actually see established noise, but I place most of my trades before noise is established during the open

VPhantom · Mar 2, 2015

profitlocker said:
This is easily accomplished when I can actually see established noise, but I place most of my trades before noise is established during the open

If you know your instrument intimately, you still have a good enough idea of what its Average True Range is going to be.

profitlocker · Mar 2, 2015

@VPhantom

Exactly. That's the only map I really have. Use statistics and just react

k p · Mar 2, 2015

NoDoji said:
You're not on the wrong path because you're using a fast chart, or because you're trading counter to the trend.

You're on the wrong path because the analyses you're doing are based on a quest for certainty, perfection, safety and emotional comfort.

These two comments really stand out for me ND.

None of what you said is actually a surprise because I already do know all this, but having it summarized and typed up to me yet again is clearly necessary so thank-you.