See.. I'm actually of the opinion that being focused too much on observation ends up being a hindrance. When it comes time to put on a trade, all your observations give you a certain bias. But in the moment of that trade getting filled, this bias can be dangerous because it might prevent you from taking a quick loss, it might prevent you from seeing what actually is because your macro observations might be telling you something otherwise.
Given that we were in a range ever since hitting the top of the channel, the natural thing is to start looking for shorts. But for an intraday trader, waiting till the market opens to place a trade, none of that much matters. The focus really needs to shift to how to enter, and this is where the power of stats comes in of course. Who cares that we are at the top of a channel, who cares that we have been unable to make higher high, if a short sets up and you take it but it doesn't work right away, you've gotta abandon this, no matter what else AMT might tell you. I realize you have always said that you need to trade what you see right in front of you, but its almost like too much of the back story gets in the way of what is happening in the moment.
Now perhaps this is just my issue. But I almost think that a new trader would be better served not by seeing the big picture, but by focusing on the building blocks, which would be immediate direction, reason for entry, reason for exit, a small profit, and most importantly, rinse and repeat. To develop that trader's mindset and make it through a series of trades almost means you have to forget about how long the journey is. You always use the expression of not losing the forest for the trees, which is wonderful, but if your job is to walk across the forest, you do this by focusing on just the tree in front of you, making your way there, and then picking the next tree to focus on.
SLA works wonderfully well in a nice trending environment, but if a new trader doesn't have the luck of starting in this environment, then this gets dangerous, which I think many of us saw when we were headed into spring/summer where the moves aren't as huge, which is more than likely why so many traders take the summer off.
I think that in your teachings, you don't put enough emphasis on the issues a new trader faces. I haven't read the additions to the PDF yet, although I am aware that you added a section on fear, but when you present a trading plan that a person can use, but then say that entry and exit are trader's choice, you are literally leaving them going in blind. A new trader really needs a method where they can put on 10 trades, and hopefully after this first round, they come out breakeven or not down too much, perhaps hopefully even up. This therefore means that going for big swings, which is what SLA would help with, is only realistic if the environment favors this.
I do think that perhaps the most important thing for a new trader is to get in and out quick to get a feel for putting on a trade, trading real money, accepting a little loss, taking some profit, and most importantly, being able to do it all over again. The SLA once again can easily incur 5 point loses, and since there isn't a rule to take at least 5 point profits, often I've seen in so many other people's charts that a trade ends up having to be closed at BE or worse, even though it may have initially been good for 5 or 6 points. We were trying to be good by waiting for that line to break, and by being good, we unfortunately couldn't take some of those profits.
Now a 5 point loss might not be all that much in comparison to a 20 point profit which can be realized with SLA, but after several losses, us traders were getting out far too soon, or not even putting on the next trade as we should.
So my point is that although you know about fear, I'm not sure if you really understand or can put yourself in the shoes of a new trader since for you it must have been a long time ago. Your completely methodical, logical mind cannot understand how traders would go ahead and trade without a plan, and yet, this is what is happening over and over again. You not understanding it has no bearing on the fact that it happens. So I think that a method which is devised to help a struggling trader has to take this into account. The SLA assumes that a trader already will have a trader's mindset, and this is a huge miscalculation in my opinion.
I think that if a trading plan had a requirement that 10 trades have to be taken, a 3 point loss will be automatic, and a 5 point profit would be equally automatic, then perhaps most of us could find some way to risk the $600 plus commission and follow through with this for each and every trade. (I say $600 because if each trade fails, you lose 10x3=30 points plus comissions... but clearly each trade won't lose) If this setup had a 50% win rate, and we actually got through this series of 10 trades, then we might perhaps see that a series of trades is vital and this would go a long way towards developing the trader's mindset. But the SLA is far too lose for a new trader, and although you have the 1 point entry rule, the exit is up to the trader, and there are also far too many reasons to skip SLA trades. So developing a trader mindset with this trading plan is extremely difficult, and if a trader cannot easily develop a trader's mindset, even a solid trading plan won't help.
Furthermore, by using things such as behavior to enter or exit trades, this really muddies the statistical nature of trading because all of this is so subjective for a new trader. You and 40D might be very good at nailing what looks to be behavior that shows strength or weakness, but for a new trader, this might almost be random. And there is of course nothing worse than random entries. I tried for months to get someone to show me behavior, to point it out on a chart, any chart, take a clip of a video of the right tick, anything to show me this behavior. 40D did try, but sometimes he used a 20 tick chart, sometimes he used a 150 volume chart, and most of his replies were always just to watch some some action that spreads out over a 2 minute period. So much happens in that 2 minute period.... was all of it part of one huge setup?
Anyway, so I think the SLA is a wonderful way to manage a trade, and its perhaps a great way to trade a higher time frame chart, and it might even work for 1 minute charts if a trader knows how to avoid a range and can take multiple 5 point loses and not sweat it. But this is a tall feat for a new trader who hasn't yet developed the trader's mindset.
http://www.elitetrader.com/et/index...via-price-action.281995/page-160#post-4069398
