Remember, breakouts fail 80% of the time, so you shouldn't just jump in to the trade as soon as it breaks out. First, confirm that it closes above the resistance level. Second, more often than not, it will come back down and retest the previous resistance. That's where you wanna get in. Even if it tanks back under again (not very likely), your loss would be very minimal.
Why do i keep buying at the wrong time?
- Thread starter mute9003
- Start date
the breakdown of the chart this is what im having problem with tbh. is there a book that teaches how to think like that and how to analyze the charts as cause and effect?
or is it purely time spent in charts?
or journaling?
or is it something that i should get a mentor for?
because i feel like im spinning wheels looking at charts but im getting nowhere because i dont know how to explain what is happening.
i cant afford a mentor at the moment but if that is whats needed i would start saving money for that.
like when i looked at same chart i didnt notice any of those points i have no context as you call it and i dont know whether its something that comes with experience and can be figured out on your own or only with a mentor.
For example, suggestion by @wxytrader to use EW and fibs on the intraday chart of this penny stock is probably the most hilarious thing I’ve ever read on this forum. Even without knowing that it was a penny stock, one could clearly see the huge wide range bars in comparison the the bars in the previous day.
Honestly, should I laugh or cry???
Lol what? I nailed it with simple RSI divergence! You guys are over complicating things with your dubious methods like support and resistance, order blocks and mitigation, atr and standard deviations, higher high lower lows, double tops/bottoms, volume blah blah etc...You would probably do better just using a magic 8 Ball.
The only thing laughable is trying to trade off the 5min chart lol. Once the retrace to .382 occurred I would have drawn in the triangle and known my entries for the next 3 days lol.
(GME) - This was drawn in prior to the move to $60 AH, but I knew price was coming back to the triangle.
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I hope nobody is that gullible to believe your hindsight analysis. Instead of showing us what happened, tell us what will happen by this Friday.(GME) - This was drawn in prior to the move to $60 AH, but I knew price was coming back to the triangle.
Did you not notice all the empty space in that triangle? That's called the future
I'm got assigned 300 shares at $33.50 and will unload at 40...or maybe I'll load up more if it dips. I don't sell calls on GME because last week had I done so I would have made $1600 instead of $16k.
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I’m not aware of a book that would give you the answers you’re after. It’s like @schizo said “So if they give you what looks like a bunch of crumbs, don't get offended too fast. It's probably much more than what it first appears. Take it one or two steps further and see if you can make sense out of those crumbs yourself.”
In other words, you really need to start thinking for yourself, and backtest everything for yourself, and add few tweaks here and there to match your personality. Here are few crumbs:
Dopamine Hits
First of all, you need to understand that successful traders get dopamine hits from successfully executing their plans rather than the small wins. Stay away from the “action” in “quick pump and dump” penny stocks! If you need adrenaline, then go bungee jumping. This might sound trivial, but being drawn to the action in the markets is a major red flag, it really is a big NO NO, it's totally incompatible with successful trading !!!
Stop spiining wheels, start a journal with set-ups and stats
Start keeping a journal with your set-ups that you took and/or missed, so you can (somewhat objectively) do more of what works and less of what doesn’t.
Checklists
It is detrimental to your psyche to stare at charts without knowing exactly what to look for. Discretionary trader needs to analyze set-ups in real time (and not after the fact), therefore it is critical to know exactly what s/he needs to see. For example, I cannot see a trend there as you did, and that's OK, as long as you have your own objective definition of uptrend which you apply on consistent basis. Use checklists as a pilot would before take off. Use checklists almost like an algorithmic process. And yes, we all make mistakes and miss things even with checklists. But checklist will slow you down and should interject some objectivity. (Whether the trader will follow the checklist/plan is a different can of worms)
Stop staring at the screen
Staring at the screen introduces stress. The longer one stares at the screen (intraday), the stronger the inclination becomes to take action to justify one’s time. This mainly applies to beginning and intermediate traders, experienced traders will sit on their hands. It’s far better to take one good quality set-up per day, then half a dozen shitty trades.
Psychological Diary
Also keep an emotional diary like girls do. Seriously, it’s like as Marty Schwartz said:
“Trading is a psychological game. Most people think they’re playing against the market, but the market doesn’t care. You’re really playing against yourself.”
Trade liquid stocks that pattern well
I’d argue that the TA “context” is quite different for liquid stocks vs illiquid stocks. I’d strongly recommend to stick to big caps and liquid mid-caps in which institutions, hedge funds, etc., get involved in. Otherwise you might continue spinning wheels because the illiquid stocks don’t pattern well and their volume reading is unreliable. Plus it takes just one trader with even small account to move illiquid stock. On the other hand, you can follow the buying/selling pressure in very liquid stocks, because the big elephants with their volume simply cannot hide (major edge if you learn to read the nuance in volume).
Have defined set-up based on trade logic
Perhaps consider @schizo suggestion of focusing on retests, because he’s right that breakouts fail a lot, plus retests are also based on how the markets actually trade. You can add few rules around it, and then start back-testing it by manually scrolling past charts (and filling out your journal with stats and screenshots). For example, if you want to trade retests of intraday breakouts, then the night before you can run scans for stocks that show buying pressure on daily time-frame, and things like that is what will slowly help you to develop your own “context” that you’ll actually believe in.
Start off with being as mechanical as possible
To most beginners I’d recommend to start off as mechanical as possible (to enforce objectivity and consistency), and only once they start becoming consistent, then they can slowly start introducing PA. Unfortunately, those beginning traders that start off with price action (especially on intraday charts) are going to be juggling far too many dynamic variables at once (TA and psychological variables), and they’ll continue to mess up and spin wheels for a very long time. Simplify things to few robust rules that work and you believe in, even if the returns will be very low. First you need to learn to play defense and protect your capital without pissing away your money on trades which make no sense to you.
“There is no single market secret to discover, no single correct way to trade the markets. Those seeking the one true answer to the markets haven’t even gotten as far as asking the right question, let alone getting the right answer.” ~Jack D. Schwager
To be blunt; you’re a noob and you are fulfilling your purpose of being liquidity for more informed traders. That won’t change anytime soon as you continue to trade live not knowing what you are doing. Through a lifetime of programming you have been conditioned to react in specific predictable ways and your pattern of self-sabotage will wash you out of participating in the markets before you can address your self-esteem issues.
PPC has given you the best overall advice, but chances are you will continue to trade intraday live in poor instruments because you are chasing money.
Many sell noobs on “the thing” that will solve their issues eg. Psychology, Risk Management, various flavors of TA, Indicators, Signals, Subscriptions, Rooms, Chats, etc for you are the prospector. They are selling picks and shovels to the noob that have gold fever/dream of gold and thinks that they are a special snowflake.
It’s not impossible, just improbable until you start using the scientific method on the markets, yourself and your relationship to the markets. If you make it, it’s due to the fact that you have transformed yourself which is a unique endeavor specifically tailored to you and for you.
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And to paraphrase from the movie Tombstone:"Look darlin',evidently Mr wildchild is an educated man..."
Oh sure wildchild quotes some Shakespeare (and not even good Shakespeare) & Sun Tzu inferring the same thing I've been saying about the market being determined, and he gets all the praise???
wth
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