Yea, there's a reason why the most successful trading approaches are the ones that are simple in nature. Either way, my ears are open to understand a little more of what is being suggested - even though right now it sounds like he's trying to persuade himself by language that really is unnecessary. Redesigning the wheel is no always required...
To all thee would-be traders out there....
- Thread starter truth101
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Perhaps, and it also illustrates a personal incapability to observe reality - but if that takes your interest then go for it!!!
In which case, the people who believe this are clearly in the wrong career - or perhaps hobby, as i can't imagine it went any further than just that.
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It's cool. No offense taken. Like you said, your eyes roll. I suspect any measurement I give you would compound this effect.
The ten cases of price are pretty simple. Out of 81 daily bars, all of them can be sorted into ten buckets.
Most people will not attempt thinking through it. Two cases make money. One case makes money both long and short. Four cases have no statistically significant measure of price movement, therefore by identifying just those four cases will give one clarity with trade timing in regards to about 50% of daily market movement. If this 50% is known then we work half as much for they are holds if we are in the market and waits if we are sidelined.
Like you said flipping a coin would be just as good.
The difference is the coin that we are flipping.
Respectful inquiry will be engaged. Any ad hominum attacks will be met with ignore.
I'd recommend that most people put me on ignore.
EDIT: prior duplicate post deleted
Robert Morse
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Got to say, I like that other members are participating. Good to see.
If you concede that flipping a coin is just as good, then why bother with so much analysis? I don't understand what you mean by the difference is the coin we are flipping.
I revert back to my original question about your stats. If your system tells you what to do, and yet you are only right 50% of the time, then in my opinion, there is no need for all this analysis. The trick of course to making money will be holding onto the winners and cutting the losers, so having excellent trade management.
If you are trading daily bars, there is much less noise as they say, so it certainly makes making decisions easier, but now your stops have to be huge if you're trading something like the futures (huge as in large money stops). I mention this because sometimes when in a trade, risking 2 ES points and getting stopped out might just be an unlucky occurrence that doesn't mean you're wrong on direction, but wrong on timing. But if day trading, clearly a 2 point stop might not work unless you're really trying to nail a top or bottom, and so a stop hit would generally be much bigger. With a bigger stop, chances of getting stopped out are much less, unless you're really wrong on direction.
I was using an analogy that you could relate to. A PA trader coin has two sides - price increasing or decreasing. This is a vertical orientation of the markets. HH or LL based in time.
A trader whom includes volume as a measurable parameter shifts into a horizontal orientation. This orientation gives a sequence of events that constantly repeat themselves. It defines and describes sentiment change. But like a squirrel climbing a tree, each branch taken excludes the other branches.
For example is volume increasing or decreasing? Are the volume peaks increasing or decreasing? Are the volume troughs increasing or decreasing?
This is against an ever-mutating context of where we are in trend or change of trend.
Two bars are all that's needed to establish a context and call a trend if one is present.
There is a different coin that we share. This one has the sides of true or false.
However it's truly useful when we bound it within the scientific method.
IF ____, THEN ____
is true?
is false?
You used it in your first statement. Your conclusion was based on an assumption. Therefore your conclusion would be false based on a larger more comprehensive inclusive dataset.
To spell it out, "you concede that flipping a coin is just as good" is an interpretation of my statement that knowing 50% of the bars one will be witnessing today will be holds and waits. In other words - noise.
This cuts down on the remaining work of defining and understanding the remaining 50% which just increased your signal to noise ratio.
But only if you first suss out the ten cases of price. This is building block and a solid foundation in becoming a better trader.
Stepping over it transforms it from a stepping stone to a stumbling block.
To answer your question of "why bother with so much analysis".
Well, making money is just a by-product of understanding and developing true skill,...
it's just such a richer, deeper and more joyous experience.
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Your logic that you should nail tops or bottoms with a 2 point stop is completely wrong. If you don't even understand that you better stop "trading".
An adverse move any time when in an open position is the problem, not tops or bottoms.