Why Is The Obvious Not So Obvious?

  • Setup (question)
Im answering that question, besides I worked out that the motives of the question is but to challenge me.

Obvious for me:
  • drop indicators; best example for me is moving averages - always lagging.
  • Trading is gambling - use the force of epextancy and shift the odds in your favor. The reasoning behind it is absoluty clear. But transforming stochastics into trading is still open for me.
  • learn chart reading and the look behind the curtain - I have not even one idea :D but tried many ... obviously useless ;) I found that one hard, despite it absolutly makes sense for me, there is just no simple or clear manual how to do i - what is right what is wrong.

Why the obvious is not so obvious:
  • related to what? related to the above
    • Indikators: People like it the easy way. Anybody heard about the Allegory of the Cave? Pretty much convinced markets are the same. But to get out of the cave - thats hard ... for me.
    • Gambling: Change the odds. Various ways - one would be to only trade risk rewards of 5:1. But it is surly also related to taking trades with an increased probability. And that is not obvious to me.
    • Chart reading, tape reading etc. Not obvious. I assume it only comes while trading and building up experience. Did I mention that I know to play an instrument quite well? Surprise: getting good is all about doing and experience - never ever read one single book about playing that instrument
 
_eug_ said:
You need to sell ahead of where others are forced to sell and buy where you expect others to buy. All this information is available in your chart if you reason out what is going on. Use logic.
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I appreciate that simple and straight forward approach. It sometimes feels that an understanding is just in reach.
Where are traders trapped and thelike - at least not obvious to me ;)
 
ironchef said:
OK, then how do you spot a "major trend"?
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They are pretty easy to spot. There's one marked A-B on the attached chart.

But I imagine that's not what you meant. :)
 

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fairvalue said:
I take your question and will try to handle it like

(a) a trade
(b) under my own assumptions and conclusions I made by posting about this thread - very much like a trading plan ;)

Why am I doing it this way? I feel that this question could lead me be going down into the rabbithole. I won't do that, because it is silly. Therefore, evaluation.

(a)
  • Context:
    • a extremly exerienced forum member is asking me for help ("help me out")
    • what is obvious and
    • why the obvious is not so obvious
  • Setup (question)
    • Answering the question related to the intended motives of the questioner. Just like analysing a trade and making an evaluated guess where price may go and trade that.
Analysis:
  • Context:
    • As everbody can see and as I truly state, I am unexperienced and doenst make money in the markets. So why should a experienced forum member ask me for an answer related to this thread?
  • really has no clue by himself and is unexperienced. Doubt that, by the quality of the many posts I read of this member
  • wants to see the capabilities of the other army and uses a feint to evalute that
  • is really interested in findings, open minded
--> I go for the second motive, which from a trading perspective is the most likley one for me. The last one could be possible aswell, but then I would have expected more "momentum" - ie latest posts in this thread of this member; which i cant find. So I discard that.​
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1. You are too modest. Your posts and analysis made a lot of sense to me, so don't sell yourself short. Like you I am an amateur and a newbie.

2. My time is precious, the ONLY reason I am here is to learn and get better. If I can, I pay forward.

3. I learned from pros and amateur alike, it doesn't matter, I treat all posters and posts the same, all of you are my coach. Often a statement/question by a newbie would trigger my senses and let me found a nugget within.

4. You mentioned MrScalper, his genius was he pushed me to look within and found my bearing on chart reading, not from him spoon feeding me his "recipe". If you ask yourself the questions I or @_eug_ asked, you could develop your own chart reading skills, from within you.

5. What is obvious? For most of us retail, what is obvious is we cannot predict where the market will go. What do we do about it? I found my answer. You have to find yours on your own.

Those were the lessons I learned from studying this thread.

Welcome to ET.
 
Ed48 said:
They are pretty easy to spot. There's one marked A-B on the attached chart.

But I imagine that's not what you meant. :)
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That is exactly what I meant.

They are usually easy, after the fact. How do we "spot" the trend say in the beginning of 2009?
 
ironchef said:
4. You mentioned MrScalper, his genius was he pushed me to look within and found my bearing on chart reading, not from him spoon feeding me his "recipe". If you ask yourself the questions I or @_eug_ asked, you could develop your own chart reading skills, from within you.
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yeah - use the damn bar charts ;) the first thing I immediately changed.

Valuable reference by you to chart reading - sucked it in :thumbsup:
 
ironchef said:
That is exactly what I meant.

They are usually easy, after the fact. How do we "spot" the trend say in the beginning of 2009?
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You can't.

The Nasdaq bottomed in Feb 2009, at about 1600, but there was no way of knowing, at the time, that this was the final bottom. By about June, when it reached 2200, it looked like it might have turned but it could have just been a bear market rally. And here's the paradox. The longer you wait, and the higher it goes, the more confidence you can have that it's a new bull market, but the more of the move you will have missed.

And, by the way, the Nasdaq is still in a major trend. Now might be a good time to enter even though you've missed 10 years of the move. The fact, is nobody knows.

It's often said that if the market falls 20% from a bull market high, it signals a bear market, and if it rises 20% from a bear market low it signals a bull market. But, if you try trading this as a system, I doubt it would beat buy&hold over the very long term. Even if it did produce a somewhat higher return it's probably not worth the effort compared to passive investing.

FWIW, I think Gold may be in the early stages of a major trend. But that's just my guess. :D
 
Ed48 said:
They are pretty easy to spot. There's one marked A-B on the attached chart.

But I imagine that's not what you meant. :)
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That is exactly right, IMHO. trading is gambling, but, in a very important way, it is very different from any other type of gambling as the chance that today price will move in the same direction of the several days previous is way higher than the opposite.

if you take this into account than trading becomes just a matter of choosing the TF to trade, wait for a pull back, set the stop outside the reasonable pullback area and wait for price to stop moving (for the right amount of time) to enter the trade.

This is the easy part, anyone who can read a chart can do it. the hard part is accepting that occasionally things will not work that way (but if there is a Stop to protect your account, you are OK) and be patient when you are bored and wait the right time to enter the trade. And more than anything, never enter a trade without a plan.

Finally, if something doesn't feel right, don't trade it, it is better to miss winning trade than to enter a losing one:D
 
Vindago said:
That is exactly right, IMHO. trading is gambling, but, in a very important way, it is very different from any other type of gambling as the chance that today price will move in the same direction of the several days previous is way higher than the opposite.

if you take this into account than trading becomes just a matter of choosing the TF to trade, wait for a pull back, set the stop outside the reasonable pullback area and wait for price to stop moving (for the right amount of time) to enter the trade.

This is the easy part, anyone who can read a chart can do it. the hard part is accepting that occasionally things will not work that way (but if there is a Stop to protect your account, you are OK) and be patient when you are bored and wait the right time to enter the trade. And more than anything, never enter a trade without a plan.

Finally, if something doesn't feel right, don't trade it, it is better to miss winning trade than to enter a losing one:D
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Trading is similar to gambling in a casino in that you are taking a risk to make monies. However, in a casino, the odds are fixed in favor of the casino and you are guaranteed to lose over time. In the stockmarket, you are taking a risk but, your risk can be controlled thru risk management and on top of that, you can put the odds of making monies highly in your favor. If each time you lose, you lose $100 but, each time you win, you win $700, what are the odds you will make monies assuming you have a 30% win rate only. That means you lose 7 times out of 10 trades. So you lose 7 times x $100 = $700, you win 3 times x $700 = $2100 for a net gain of $1,400. Nobody is forcing you to place trades and you can always be very selective and only trade when the reward is several multiples of your risk.
 
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