Economists have forecast 9 out of the last 5 recessions
Nuggets of Wisdom from Jesse Livermore, Greatest Trader Ever
- #42
- Apr 6, 2010 9:06am Apr 6, 2010 9:06am
- Joined Apr 2009 | Status: Trader | 2,891 Posts
The number 1 mistake in your case, i feel is that you are predicting the market. No one in this universe can predict the market.
Why to predict the market? If the price has to go from 1.5277 to 1.50, it will cross key S/R on daily basis to move down.
I know it hurts seeing cable falling down and you still incurred loss on a bearish position. But you are predicting the market and i consider it as a sign of over confidence.
I mean when you predict you say X will go down.
And when you open a short trade the reason is that X will go down.
Or are you saying that we can predict direction of the move but we cannot predict the exact parameters of this move.
No sarcasm just a question.
.
So whats the difference between opening a trade and predicting a move?
I mean when you predict you say X will go down.
And when you open a short trade the reason is that X will go down.
Or are you saying that we can predict direction of the move but we cannot predict the exact parameters of this move.
No sarcasm just a question.
.
The word "predict" is a bad word to use as it relates to the markets. It is really used by people to inflate their ego in my opinion. Predicting the market's movements is what a psychic might be able to do, even though they know absolutely nothing about the markets. They are using their psychic abilities to "predict" market movement. Personally, I have a good handle on "projecting" where price might go and it based purely on momentum and historical data. If my target is hit based on my calculations; it means that I have successfully projected a price target.
- #47
- Apr 7, 2010 3:11am Apr 7, 2010 3:11am
- Joined Aug 2009 | Status: Reading the TAPE | 2,389 Posts
So whats the difference between opening a trade and predicting a move?
I mean when you predict you say X will go down.
And when you open a short trade the reason is that X will go down.
Or are you saying that we can predict direction of the move but we cannot predict the exact parameters of this move.
No sarcasm just a question.
.
There are basically 3 phases a trader goes through.
Phase 1: Predictive Discovery.
This is the first stage and here a trader makes assumptions about what he/she sees and future events. In other words this is the "I have noticed that if price does A,B,C, and D price goes up." "If RSI is over 80 and the mixiplix oscillator turns red, price falls". This initial stage seeks to either go from cause to effect or from effect to cause. In this stage, there is a predictive element as future outcomes are attempted to be ferreted out from current and past events.
Phase 2: Predictive Qualification/Quantification.
This is the back test/forward testing stage. Here the trader looks at mass amounts of data, and asks "what percentage of times that A,B,C, and D exist does price rise?" Or, "If I sold every time the RSI was over 80 and the mixiplix oscillator turned red, how many times would I be right (about future price direction)?" This stage has all sorts of inherent problems like curve fitting, but it is a vital stage.
Phase 3: Transformational Logic.
There must be a fundamental shift in one's thinking at this point. Prediction must be thrown out the window. No longer is it buy because you think prices will rise since A,B,C, and D are present. It is now buy because you have observed that A,B,C, and D are sufficient conditions to enter long based on your work in the previous two phases. Clearly on does not buy with the hope that price will fall. If one does then they have some underlying issues beyond trading. But the notion that buying constitutes a prediction of future direction is gone. Buying becomes an admission of trust. Trust of the work done in the previous two phases.
Phase two told you that 85% of the time that A,B,C, and D are present on the chart, price rises. At phase three, the trader is merely saying, " I trust that the conditions I am looking for (A,B,C, and D) are present and represent an opportunity to get long. 85% of the time this is the correct option. This individual trade will work or it wont, but I trust in this set up. I trust in me".
Whatever happens will be. The future is unknown and not knowable. Thankfully successful trading does not need it to be.
Without VSA, you're playing checkers while the Smart Money plays chess.
- #49
- Apr 7, 2010 5:35am Apr 7, 2010 5:35am
- Joined Aug 2009 | Status: Reading the TAPE | 2,389 Posts
Without VSA, you're playing checkers while the Smart Money plays chess.
- #52
- May 16, 2010 9:20am May 16, 2010 9:20am
- Joined Feb 2008 | Status: Cartographer | 1,981 Posts
Empty as water and soft as a facing wind mountain
- #54
- May 16, 2010 1:04pm May 16, 2010 1:04pm
- Joined Nov 2008 | Status: Trader | 4,830 Posts
Our AWESOME IMAGINATION is the true holy grail!
- #56
- May 16, 2010 11:12pm May 16, 2010 11:12pm
- Joined Nov 2008 | Status: Trader | 4,830 Posts
Our AWESOME IMAGINATION is the true holy grail!
