Think people are getting a little hung up on the charts point. Another angle:
one should have a model which describes a market based on testable parameters
this then gives a baseline / estimated fair value
then you trade deviations from that value (again if you can understand why the deviations should occur)
so the price compared to your model gives whether there is a signal to trade
whereas people go wrong not having a model and so just start comparing price to itself or price in the recent past .
Charts are just a simple/lazy way to do make this unproductive pseudo-comparison. But they also have the additional disadvantages garachen described. So in addition to not having a proper strategy in the first place you now have something which is likely to trigger incorrect decisions.
Charts give an approximation/summary - to compensate for the fact that the human brain cannot process every price change. So lets ignore the inside market and focus on trades only, ignore the sizes being transacted, and pick out e.g. 4 transactions essentially at random over an interval of time, and lets use the same time interval as a constant despite the obvious fact that the pace of a product changes throughout the trading session. -not logical
You are preserving something far less than 1% of the data and you've chosen which to discard essentially at random : "
Almost nothing I do and nothing I care about watching is going to show up on a chart.
"
Imagine that everyday there is a product with this payout: if ES is down at the close you lose 8c. If ES is up you make 10c. Assume ES follows a random walk. How much should this product cost? 1c. Trading isn't really about guessing overall market direction, it's about synthetically constructing scenarios where you can buy the above payout structure for 0c or less.
Inability to think abstractly and the tendency for retail to see everything as directional in a single product stumbling points here. Perhaps a familiar simplistic concept is a spread - so similar to a situation where you can leg into a spread at better than fair value and then liquidate into e.g. exchange supported spread - but how you manage your orders and the risk of being filled on one side needs to be accounted for.
And it is constructed as a payout structure rather than a single position so you may be doing e.g. high correlation microstructure work in a product complex where you don't get much net directional exposure (delta) compared to the convexity you are capturing.
There are many different ways to apply this but they should all force you to closely examine the reason for why you are getting paid.
What you wrote earlier about high correlation microstructure relationships and looking for short term disparities (e.g. stops/ icebergs) comes to mind.
Manual traders should be expert at doing this. People can spot 'movement dislocations' across products much easier than a computer can. It's too much a priori knowledge to program into a trading strategy.
But this is my standard....
When I first started in trading I found one of the true price edges - printing/stealing money - that rallymode refers to. Obviously this depended on someone making a mistake which didn't go on forever. Instead of seeing this as a windfall profit I started to seriously explore whether this could be an escape from the employment matrix which serves to capture most. I also by chance did some computer work for a successful manual trader and was exposed to / taught a few concepts which had value.
Per rallymode's post above, I then went through the difficult and expensive cycle of learning that strategies / market approach need to be adapted. In hindsight I overvalued my ability, undervalued my time, and my lack of professional/institutional background was a definite disadvantage. Mathematical intuition too.
So somewhere between not having done badly enough to quit but not well enough to retire - but we can only spend our time once. I can understand your position of discouraging most if they cannot come up with a viable plan to make that e.g. $300k and in hindsight I'd have made different decisions if I'd had access to correct information in the beginning. So certainly appreciate your contributions here on ET.
I think perhaps my biggest meta-mistake was the failure to plan early enough to be able to provide value to others in the trading industry in order that in turn they could help me bridge areas in which I am weak. I've found some things which are legit and persistent in places where nearly nobody else seems to be looking but which I don't have the skill set to maximally exploit. (and paradoxically I probably never would have found these things if I'd followed a more traditional path)As you have mentioned elsewhere people tend to overvalue their strategy and undervalue the other components to fully leveraging that strategy.
And simply didn't have the necessary perspective to start - yet was aggressive and trusted in my ability to make it work. A false sense of certainty or near certainty far more dangerous than uncertainty.
