Trading Rules

[tommcginnis]

The market is never wrong. Regardless of your bias the market will move in the direction it wants. Better to trades based on what the market is doing rather than what you believe it should be doing.

Except that, a priori, we don't know what the market is doing -- we only know what pops up into our tiny little brains as a thought, "Heyyyy, look at that volume building! The market is going to turn right here, with the other side of the trade exhausting the trend!"

Maybe yes. Maybe no.
Could just be that the pushing side went to lunch.

No matter what, on an epistemological basis, we have no fucking idea of what's going on, even after-the-fact. The issues come and go, the players come and go, the clocks all tick, the trade agendas driven by the issues and players all get flushed.... Who knows? [We don't.]

It's not hard to back down your 'act on observation rather than belief' dictum to something like 'act on the most robust, least context-sensitive assessment, rather than the one that's heavily imbued with theories/practices perhaps inappropriate to [this] shorter time-frame.' But it's an important change in mind-set, nonetheless.

 

[deaddog]

Except that, a priori, we don't know what the market is doing -- we only know what pops up into our tiny little brains as a thought, "Heyyyy, look at that volume building! The market is going to turn right here, with the other side of the trade exhausting the trend!"

Maybe yes. Maybe no.
Could just be that the pushing side went to lunch.

No matter what, on an epistemological basis, we have no fucking idea of what's going on, even after-the-fact. The issues come and go, the players come and go, the clocks all tick, the trade agendas driven by the issues and players all get flushed.... Who knows? [We don't.]

It's not hard to back down your 'act on observation rather than belief' dictum to something like 'act on the most robust, least context-sensitive assessment, rather than the one that's heavily imbued with theories/practices perhaps inappropriate to [this] shorter time-frame.' But it's an important change in mind-set, nonetheless.

The market is not wrong only fickle. I fully agree we don't know and can't know. At best it is an educated guess.

Bias formed from news and fundamentals might lead me to ignore what the market is telling me.

The solution is the old adage of cutting losses and letting winners run.

 

[treeman]

I have a POV on every contract I own. That doesn’t mean I’m right on the POV, nor does it mean I have to be.

 

[padutrader]

The market is never wrong. Regardless of your bias the market will move in the direction it wants. Better to trades based on what the market is doing rather than what you believe it should be doing.

better lose your opinion than your money

 

[Louis Winthorpe]

One of the most overlooked and arguably underrated trading rules is to actually choose a strategy and, by extension, rules which closely align with your character and personality.

If you haven't got the personality required to be an opening bell GAP or MOMO trader, rules are meaningless. For example, what good is it knowing your entry and exit price if you (a) don't have the conviction to put that theory into practice or (b) don't execute a STOP order in case you're wrong.

My initial introduction to trading strategies was based on Ross Cameron's principle Warrior Trading strategies i.e. momentum plays, 5-min pull backs etc. But, now that I'm trading real money, I don't think my temperament is where it needs to be when I see a stock bouncing up and down like a yo-yo within seconds. I actually choose to wait until the initial market volatility is finished and then I look for opportunities. Maybe when I have a lot more experience and capital I can start to take advantage of the opening bell moves but until my personality is ready for it, rules are secondary.

TLDR version; design strategies and rules which will be easiest for your personality to adhere to but if you don't dissect your personality first, your rules will either be wrong or misaligned.

 

[Handle123]

Depends on how you define "flat." The slope of a MA is seldom zero. I would recommend a signal-to-noise calculation to determine if a MA is range bound and non-trending.

I actually look at "flat" as a change of trend, I scalp one minute bars but use 120 WMA, so by the time that flattens, price has changed trend, and I am a believer that slow indicators keeps me from getting losers. Too fast of indicators makes for more losers and over trading. I use good deal of chart patterns to look for reversals so as not to be taking trades too late in cycle or Elliott's 5th wave.
imho

.... Better to trades based on what the market is doing rather than what you believe it should be doing.

I trade completely different and only use probabilities, system looks for defined patterns of where it is in within a pattern, being a scalper, normally go against immediate trend, I don't have any beliefs in automation, but anticipating reversals. I think almost everyone including trend traders are projecting where it should go.
But we all different and fun for all of us.

 

[tommcginnis]

One of the most overlooked and arguably underrated trading rules is to actually choose a strategy and, by extension, rules which closely align with your character and personality.

I'm sorry, but I can't read your ID without hearing the great Ralph Bellamy: "Winthorpe, ..."

 

[Louis Winthorpe]

I'm sorry, but I can't read your ID without hearing the great Ralph Bellamy: "Winthorpe, ..."

I only joined recently and I'm shocked Louis Winthorpe was available as an ID!