Why you suck at trading

about a month ago, I decided to become a participating member on this forum, rather than just an observer. I've gotten a good deal out of it so far, and I've appreciated how receptive many have been in general to discussing the various aspects of trading in a fair and objective manner.

But, of course i've noticed many...many many many.... who are either struggling, or just outright failing. and even a few that think it's just not possible to be successful at.

I personally have been able to do this for a full time income for several years now, but along the way there were many, many "tools" I had to find, develop, and add to my "tool kit" in order to do this with any lasting success.

I believe some are just not cut out to do this.... in the same way not everyone is cut out to be a pilot, an interior decorator, or an engineer.

but, I also believe there are many who could, but haven't yet learned what it is that they need to in order to do this with some degree of regular success.

If I had to speculate on a number, I'd say probably 50% of those who try probably will always struggle, maybe 25% could do it successfully, but probably lack the raw "talent" (for lack of better word) to make it "big" (but could become proficient, and make some money over time), and then there are probably about 25% who try who really can become very good, and make a very good full time income or even get very rich, but lack the tools to do it properly.

So, the idea with this thread here is to explain some of the "tools" that I believe nearly every struggling trader could benefit from, and give folks an opportunity to maybe see something or try something that they haven't seen or tried before... be it a new form of analysis, or looking at a psych issue, or money management, or whatever.

something like a "menu" of skills and components...all of which should be considered if you want to improve your trading.

oh, and BTW: feel free to post a question, reason for sucking (i know..i know. sounds like something else.), case study, personal situation, personal trading struggles, etc. i won't continue this much if it's primarily a monologue.

for now, i've limited this to be a thread that requires at least +1 rep to participate in, because I want at least some standard of posts, and allowing ANYONE to post can lead to a lot of off topic and even "catty" thread interactions in a thread like this.

IF YOU WANT TO POST BUT DON'T HAVE 1 REP: send me a PM, and i'll put you on "the list" so you can contribute... I believe if someone is willing to make the effort to send me a PM with why they want to post here, they are probably sincere enough in wanting to participate in an objective, fair, educational, tounge in cheek kind of thread.

with that said, i'm going to start with the inaugural "why you suck at trading" post below -

if you suck at trading, maybe it's because you don't really understand how the market works...

here are some concepts that should be understood if someone wants to not suck at trading:

1. learn the basics of market microstructure. it's kinda like learning how orders work on the "atomic level" of the market.

2. learn how various market participants, such as large commercial institutions, retail speculators, banks, hedge funds, etc... all operate differently within the market, and how they each affect price movement.

3. learn how the interbank market works, as well as how your own retail broker works.

These are just a few elements to learning "how the market works"... but they are IMO extremely important to understand if your serious about being successful. So if you suck at trading, ask yourself if you feel you really understand these 3 points above, at least with a good degree of proficiency. If you don't, well... thats one possible reason why you suck at trading.

I personally never really understood this. I tried it back in the day, but it never worked for me.

I think we can all agree that in order to make the best possible decision in any matter in life... it is helpful to have all important and relevent information to make that decision... right?

I mean, if your going to make an investment decision on, say, a piece of real estate... wouldn't you want to know how much similar properties in that area are currently selling for? wouldn't you want to know if there was any major floods or earthquake damage on the property? wouldn't you also want to know if they owner would actually give you a partial loan on the property? maybe you want to know how desperate the owner is to sell because a desperate owner may be willing to drop the price lower....?

in fact, i could probably list about 20-30 more things you would want to know, before you bought a piece of investment property.

Well, why do you approach trading any differently? since you are probably aware that many traders don't use the exact same time frame you look at... but yet, their orders and going to influence the market (and thus, your trades...)

wouldn't you want to know kinda what all the other guys are looking at?!?

i mean, if this looks like a great LONG trade to the guys looking at the monthly charts, and guys looking at weekly charts, and the guys looking at the daily charts, and the guys looking at the 4hr charts, and the guys looking at the 1 hr charts....etc...etc...etc...

doesn't it make more sense that the market will probably go up?

and if your 5 minute chart shows a bearish reversal pattern against very minor 5 minute resistance.... isn't this actually a pretty dangerous situation to go short in?

we all know the market moves because of the aggregate body of orders executed in the marketplace by every participant...

so, wouldn't it be best to have more information as to what the MAJORITY might be seeing on a chart?

I think so.

so, if your only using one TF to decide how to trade...and your not making a good living as a trader... maybe that one time frame is why you suck at trading.

"on the spot" trading...like freqent "scalping" can work. This is one component to my own personal trading. But, it's not the most profitable, nor is it the most successful in terms of win percentage, and it's also very easy to give profits back this way...much more than with my pre planned trades.

If you suck at trading, maybe it's because you don't plan your trades out ahead of time.

and i don't mean just set up an order at a price with a stop loss and a profit target.

I mean something like this:

AUD/USD - Alert at 0.9800 -

Setup Type: Superior Daily or 4hr Level

0.9795 is a stop run of a prior daily low that almost borders a fresh daily, and it does also almost fill a gap. Watch daily/4hr/1hr/30 min candle as price is hit to determine if it is likley to see a reversal...focusing on a loss of momentum across these time frames. If in doubt, use a 15 minute trendline break and/or market profile that gives a good idea as to what is likley to happen.

If this exact set of criteria shows up, look to enter a trade on the close of a 30 min reveral candle, with a stop loss 10 pips past the swing low, but no bigger than 45 pips total. do not enter if you cannot get in at 9799 or lower, and make sure you set a 50+ pip target.

once the trade has reached 25 pips of profit, close half the trade, and move stops to 20 pips above your entry price (thus, giving the trade more room to pull back without hitting my stop, but also creating a “risk free” trade)

Also, only enter the trade if it triggers before london close today, and only if no negative data or news release comes out about the AUD or about china today. Furthermore, do not take the trade if the S&P is currently trading below the low of yesterday when this trade criteria are met

If market hits 9795, pay attention to the above and enter if valid.

You see? now THIS is planning a trade. Do you do this? I do.

remember, the only money you make in forex is money you took from someone else.

and, since I do this for many of my trades, and you don't do this, it would seem to anyone that I'm probably better prepared to make money than you are.

Put another way, if you were going to a job interview to be a trader...and you and I both showed up to the interview, and I showed the new "boss" this type of analysis for my trades in my resume....

and you showed him...well... not this.

who do you think he would probably hire?

if you suck at trading, it's possibly because you don't really plan your trades.

now, at least I understand the motivation behind this... it's along the lines of "keeping it simple", and there is some validity to this, no doubt.

BUT... it's a LOT easier to make money going long in a market that is making a spectacular bull run.

and, it's a lot easier to make money going short by trading the WEAKEST currency short against the STRONGEST currency.

again, makes sense right? like... if you were gonna bet on a horse race, you could go to the Kentucky derby, and if your really really good, you can pick a the winning horse.

But, how cool would it be to be able to take a horse that is about to race in the kentucky derby... and put him in a race with about 7 other horses that are all 10 years old, somewhat crippled, and none have ever been in a horse race before.

if you COULD do that...wouldn't you want to do that? i mean... you could bet on that race instead.

and what do you think the odds of you betting on the winning horse in THAT race would be eh?

probably a lot better than picking the winning horse out of a stable of top class horses.

give you a currency trading example. The other day, I saw the AUD/CAD and the AUD/USD coming into a very nice resistance level...around 1.0400 on the AUD/CAD, and 1.0200 on the AUD/USD.

had I gone short, they both would have worked out...but, which one would have been more likley to work out the best?

well, after taking a look at the USD/CAD, i determined that it was at a critical level of support, and it very likley would see the USD power to the upside against the CAD.

so, while the AUD would drop against the CAD, and the USD...

the BEST trade opportunity was against the USD, because it was showing some serious signs of probable reversal, at a price level that showed serious reason to create a move up in price against the CAD on that day.

you make money faster, and easier, if you bet on a champion running against mules, than if try to pick a winning champion running against other champions.

i make money more than I lose money because I trade the market that provides me the best opportunity...

not because "uuuhhh...weelll...gee george, i traded dis market yesterday! and the day before that too! that's why i'll trade it today!" for some arbitrary reason....

If you don't do this, that might be why you suck at trading.

Last I checked, in order to be a professional carpenter, you actually need a full belt of tools, and probably a full toolbox, or even a couple fully stacked toolboxes.

and I'm yet to see a carpenter with ONLY a hammer, but also a full time job.

carpenters with just hammers are carpenters who are just not employed.

funny thing, it's the same with accountants. i'm yet to meet one accountant who tells me "oh ya...I took a class once....ya, that's right, one class. statistics. and yep, here I am! making 6 figures a year as a professional accountant!"

it's also the same with Doctors. you ever meet a doctor with just one tool? like, maybe ONLY an x-ray machine... but, no scale, no stethescope, no tounge depressor, no MRI machine, no prescription pad...etc.?

it's be pretty funny to see him try: "oh...ok, so, you're puking blood, and you had a seizure last week, and you have had a high fever...well.. hop up on my x-ray machine, and i'll take a picture of your femur, and see if that's the problem, oh hmm...your leg isn't broken...well... gee...lemme think...hmm...."

yet, millions around the world try to trade at some point in their life, and all they know is what they learned in college, without any knowledge of technical analysis.

or, all the know is fibonacci retracements and candlestick reversal patterns, but don't take trend, or correlated markets, or market sentiment, or obvious levels of S/R into consideration...etc

if you are trying to just just a 1 or 2 or 3 things to decide if a good trade is setting up, and your not having much success with that approach...

maybe you need to learn more, and learn how to use other tools as well, or instead of, the ones yourusing now.

a hammer is great for pounding nails, but sucks for painting a wall.

don't paint with a hammer, and don't trade with one tool.

otherwise, you might end up with a sucky paint job, or a sucky trading results.

if you walked up to a venture capitalist, or a bank, and tried to obtain funding for a business idea you have...

one of the very first things you would have to present is a business plan that shows what you idea is, gives an executive summary, includes a list of what the funding will be used for, as well as a full marketing plan, series of projections, analysis of competitors, your competitive edge...etc.

in business, it's no plan...no money.

Ya..you heard me...BUSINESS, as in an exchange or transaction of value for a particular price, in an attempt to make a profit from that exchange

huh... BUSINESS + NO PLAN = NO MONEY

well guess what?

trading is a business too.

I have a plan. a pretty darn good one in fact...and it's getting better every day. I also read it on the weekends, cover to cover. i always improve it, and almost never ignore it.

and remember, you can only make money in trading by taking it from someone else.

I have a very well written, well organized trading plan that I am constantly improving.... if you DON'T have a written plan... who do you think is going to end up with more money.... the guy with the plan? (me) or they guy with a few ideas and a lot of hope (you)

if your good at sucking your probably also bad at plan writing

maybe your a big fundamental guy... you like central bank decisions, interest rates, GDP trends, the yield curve, the carry trade, and the wall street journal.

good for you! you base your trading decisions on that, and that's all fine and good.

maybe your a big techincal guy... you like price action, candles, trends, support and resistance, moving averages, indicators, trendlines, etc.

good for you! you base your trading decisions on that, and that's all find and good.

maybe your a big sentiment guy... you like the COT reports, parabolic and unsustainable market moves, put:call ratios, net long and net short calculations, divergent market internals, extreme optimism, and extreme pessimism

good for you! and you base your trading decisions on that...and that's all fine and good.

Only problem is... there are 3 primary forms of analysis that I am aware of, and believe it or not, lots of traders just use that to make a decision!

ever met a pure fundamental guy? sure u have.

what about a pure technicals guy? oh ya.

what about a pure sentiment guy, u know, the "contrarians"...probably so.

funny thing is, if you use ANY ONE of these forms of analysis and exclude the others, you really will only be able to determine how a MINORITY of market players are basing their decisions around.

Again, the market moves not because of what techincal analysts see, or what fundamentals support, or what sentiment is...

It moves because all 3 methods of analysis are used by different people, ALL of which move the market!

if you suck at trading...maybe because you don't really understand all 3 forms of analysis, or you don't know how to use them together properly, or you think one is "BETTER" than the other.

I got news for you. they all are equally bad. Because no single one of them will give you insight into how pepole are trading that use the OTHER TWO forms of analysis.

I personally look at all 3, every single day. so, I know when a technical setup is more likley to fail because of a negative GDP announement that came out yesterday....

or, when to ignore the fundamentals, because it's the trend that counts now the most...

or, when a trend is just about to really end... because i don't care what earnings are, or what the technicals say, but when everyone who wants to go long is long already...the market is bound to go down. period.

if you suck at trading, maybe it's because you only look at one part of the puzzle, but ignore the rest.

PS - for more missing puzzle pieces, see the above post on "using one time frame to analyze the market"

If you suck at trading, maybe it's because you are trying to day trade, or "scalp".

So, if that's not working for you, why haven't you tried the daily time frame or higher?

(insert list of absolutly pathetic, narrow minded, illogical, irrational, and down right plain ass F'ing stupid reasons here)

hehe...kinda funny coming from a guy who day trades for a living right?

no. not at all. first of all, after trying to "day trade" for a couple years, i finally decided just to "trade"... and focused on daily charts. and, literally had my first profitable trading month the very next month!

it was amazing!, and I had many more after that, for almost a whole year with just 1 losing month.

then, i slowly started moving back to day trading, and found it was much more doable. but, only after I learned just how to trade...and not day trade (nevermind "scalp")

there is only ONE reason to trade: to make money.

so, go back to that "list" of reasons you just gave regarding why you don't already just trade the daily TF and higher...

do you see anywhere on that list "BECAUSE IT ISN'T A PROFITABLE TIME FRAME TO TRADE ON"?

no? you mean, you didn't put that down?

Ahh... well, that's possibly why you suck.

you actually are trading for some other reason than to make a profit. otherwise, you would say "gee, i don't make a good profit now, and daily time frames I;ve heard are easier, and can be profitable....so, ok, good idea. i'll just do that."

but u probably put something else on that list other than "it's not possible to make money on the daily TF"

something about it taking too long, or not working with your schedule, or requiring you risk too many pips, or some other totally mumbo jumbo bullshit reason.

and, anything else other than "it doesn't make money", is very very possibly, exactly why you suck.

you want to make profits, but even more you want to do it in a very particular way. you selfish, narrow minded sucky trader.

it's a cute thought when your 6. my little niece always wants to play "tea party" with her little friends, but she wants to tell them how to do it right. She won't consider letting them interact differently.

needless to say, she is no longer allowed to play tea party with her frriends, because too many people end up crying. All because she's not content enough unless shes playing "tea party" EXACTLY as she wants too... it's really too bad, because she loves it so much, and she could get so much out of it, if she just would play the stupid game, and not demand it work how she wants it to.

every feel like crying while your day trading? I know you do... believe me. I know it VERY VERY well!

well, some day, you'll maybe decide to quit acting like a child, decide you won't suck anymore, and decide to trade on the daily charts.

not saying it can't be done otherwise, just saying if YOU PERSONALLY are not making an income as a trader...ehh...ya. this is a good place to start not sucking at trading.

if you don't know why the thing your doing isn't working, then you won't know how to fix it.

i dont think there is actually a whole lot to say here. I review all of my losing days. every single F'ing one. I review nearly every single losing trade. sometimes I have more than one entry on a trade. maybe I have 3 entries, each 5 pips apart. maybe the 1st entry loses, but the other two are profitable. i won't always review this... but most of the time, i will anyway.

if the entire trade were to lose? I MUST review it before I place a single order or trade the following day. it's in my plan (see the previous post on "you suck because you don't have a written plan" for more about a plan)

why is this so important? because what on this earth is to stop me from making that mistake today if I don't know that I even made it at all?

it's not exactly a question that needs any brilliance to answer.

in trading, you only make money by taking it from somebody else.

when I lose, I find out why. every single losing trade, on every single losing day.

I then am much less likely to make that mistake the next day.

You say you don't review every losing trade? Lets see... then...hmm... then i'm willing to bet you'll repeat the same trade, make the same mistake...and that'll be money that somewhere, somehow, i'll take from you.

but, you won't get it from me...because that mistake I made yesterday? ya... i'm not going to make it again. at least not as much, or as often.

and that's one less dollar that you will make, and one more I will keep.

if your good at sucking, your also bad at trade reviewing.

bet you feel all warm and fuzzy inside knowing that this is your reality eh?

Of every single tool you can have in trading, I believe this is the single most important one of all.

you can pretty much forget EVERYTHING else if you have honed your ability to recognize good support and resistance to a masterful level.

why do i say that? because then you will almost always know at exactly what price level will the market suddenly stop, and move back the other way.

think about it. if you could really nail this well, somehow, you could pretty much take trades with 5-10 pip stops, and 20-100 pip targets, risk 1% per trade, take one or 2 trades a day, and basically make 3-20% PER DAY.

if you REALLY learn how to determine when a price level is gonna produce a market turn... then you've basically have the greatest edge of all time. now you just need the right psych and money mangement to make it make you rich.

and i don't mean moving averages, or fib levels, or pivots.

those are fine...but that's not the stuff i'm really talking about.

pull up a naked chart. draw a line. done.

the day you are able to do this on a daily chart, set a stop loss 30-40 pips past that line, and a target of 60 pips or more (which is really easy to get in the daily TF) if you are correct even 50% of the time that the line you draw will be a market turning point for that day... that is the day you have discovered your own personal ATM machine.

don't think it can be done? well, that's ANOTHER reason why you suck...but that's for another post. Put simply, your dead wrong. If you want, i'll show you evidence. if that doesn't convince you, feel free to watch my own trades in my trade explorer for as long as you would like, until you are convinced.

my entire trading methodology is based primarily around this. and i know others who trade in similar fashion

a masterful understanding of support and resistance is the single greatest analytical tool a trader can master.

I can pick turning points well over 50% of the time. so I know when a particular move is likely to end, and where it will begin.

do you? if not... i'll be closing at the top, and going short while you are trying for that "breakout".

and your stop loss will be my profit target.

if you just went short the GBP/USD as it made a bearish reversal pattern at a resistance level... and yet, 3 hours later, it hasn't really dropped, and then, 4 hours later, your stopped out... even though eveything looked perfect?

well, when you took the trade, and for the 3 hours you were around BE...did you think to check on other correlated markets to see what they were doing? were they hitting resistance, and making reversal patterns? were they dropping like stones? or were they in fact pushing up with some force?

oh... your not sure what they were doing? you couldn't tell me?

well... that's another reason why you might suck.

go ahead... pull up a chart of the GBP/USD...a daily chart. and pull up a chart of the EUR/USD.

and take a look at candles. it's kinda intersting... if there is a big red candle on eur/usd for a particular day, there is probably a red candle on GBP/USD also on that same day.

and, if EUR/USD is moving up strong that day, GBP/USD probably didn't fall down much..did it?

This is just a very simple, obvious correlation to watch.

personally, when i'm trading any major, or any comdoll, i'm watching the S&P futures, crude oil, the dollar index, the EUR/USD, german, italian, and spanish bond yields, the european equity markets, the asian equity markets, and the U.S. bond market.

I also check between other correlated forex markets. if i'm looking to go short aud/usd...i like to see nzd/usd also looking good to short, and even better, eur/usd as well.

you see, money moves in waves. these days, the "flow" is primarily risk on, or risk off.

so if i'm going long on risk, i want other risk markets to be moving up. it shows me the world investment community as a whole is doing the same general thing.

if you don't use market correlation, or understand its more than just "well, both the euro and the gbp were up when i got in my trade, why did it lose?!"

then your going to miss some warning signs, and your going to take some trades that stop out more often. you won't know why your "breakout" is stalling so quickly...

but I'll know. and so will others. and those losses will be our gains.

if you don't understand or pay attention to correlated markets, this could also be a good reason why you suck at trading.

if you've ever had a winning streak of 10 or more trades... and been really happy with your profits.

only to have a single trade lose, and suddenly your in the red....

well, then you probably don't know how to set an EV+ R:R ratio

and if u don't know that... it's a darn good bet that this is why you suck.

sure, you win 85%+ of your trades, maybe even 98%+

so you think "I'M A BAAAD ASS TRADA!"

your partially right, about the bad, or the ass... take your pick, but you can't pick both.

i'm not saying that there arn't a few out there that can take RR's on a regular basis that arn't at least 1:1 or better.

in other words, there average losing trade is a good degree bigger than their winners, and yet they still make money.

Mark Cook in "stock market wizards" actually discusses one setup he used at that time, that lost double what it won, and he made good money with it.

but your probably NOT mark cook, and if your not paying your bills with your profits, this could be another reason why.

Look... ask yourself "self, why DON'T I take 20 pip stop, and 100 pip targets? why do I instead take 20 pip targets, and 100 pip stops?"

the answer is probably something like "well, my stop always gets hit when i do that!"

or " i have a lot of losers and it makes me sad and lose money"

or "i never had a winning month the other way, but this way, I had 2 winning months now...in a row!"

Ya. ok. cool. let me decode that for you. the REAL answer is:

"I really have no idea how to trade. I just want to think that I do and feel good with a lot of winners"

Don't believe me? well...guess what. I know guys, including myself, who have no problem at all setting a stop, and a target, and getting at least 1 reward for every 1 risk...if not more than this!

and for those that can do this...i've never met a single one in my life, ever, that actually told me "ya...u know, I average a 2:1 reward:risk ratio, and I have a 55% win rate..but, i'm gonna stop all this now, it's for the birds. the MUCH BETTER way to do it is be me going for a 1:10 reward: risk ratio, and having a 90% win rate. we've been so silly all along fellow trader. it's about risking more than you can make. wow, how foolish we have been, and now we see the light, and the REAL money!"

I've heard a whole, whole lot from traders about trading... using astrology, numerology, "gut feel" alone, even "random entry" and "dart throwing" (no joke, dead serious)....

but i've never once heard this.

know why? because if you can do this, you wouldn't ever dream of risking pounds to make pennies.

and if you have to risk pounds to make pennies, you really don't know how to trade successfully

and this, is absolutely why you suck at trading.

no really. this could be a really valid reason why your trading sucks.

markets are like people - each one a bit different.

and broad types of markets are like countries - each with a different culture, and you will probably fit in better with some than others.

have you tried trading equities? what bout futures? how about bonds... or even options?

if your struggling in forex, consider other markets! I personally made more in currencies futures than I ever made in stocks, and I made more in oil futures than I ever made in currency futures!

Now, I make more in spot, and have for well over a year now, as my approach to the market has changed.

I make money in all of them, but i make the most in spot with the approach I have today.

i've know of some who never made mroe than a few hundered a week in spot, and went into futures, and suddenly could make that in just a few hours.

i know of others who blew up account after account trading futures and forex, only to become profitable after moving into options, or equities.

if you've only ever traded forex... and kinda suck....maybe you should try other markets too.

Look. learning how to interpret market sentiment and likely outcomes from possible news releases and data reports is a skill that you can learn like any other.

you learned candlesticks, right?

you learned what support and resistance is...right?

of course, you can always get better at both (almost always anyway)... and neither is 100%... but yet, with practice, work, and experience, you can get better and better at learning what price levels will hold as support or resistance, and how to identify a bullish or bearish engulfing pattern, etc.

guess what? news is the same way.

saying things like "well, good news came out, and the market went down, thats why i don't trade the news because it's BS"

that's like me saying "well, I saw a green candle and i bought, but then it went down. this is why i don't use candles because they are BS."

you see how really flawed this outlook is?

you must learn HOW to use it...how to figure out which news events matter, and which don't. AND... when news is "priced in" and when it's "a total surprise"

best way to do this... first, determine if news is likely to be market moving or not. write down what you THINK will happen if the news comes out more positive than expected, or more negative than expected.

and see if you are correct!

do this over and over. after a little while (say, 2-3 weeks), you'll start to understand what news is really more likley to do something, and what news is probably not gonna do anything.

best of all, you'll start to know what the market is expecting (or hoping)... and if it fails to materialize, you can know what to do.

a good example was the FED meeting this week.

many were hoping and expecting a QE announcement.

I saw there was no QE announcement, but only an extention of operation twist.

I then saw that the euro failed to move up higher on this news. seems only a QE would have been enough to push it up.

when somewhat decent news came out (more twist), but the market was expecting more (a QE)...it was easy for me to conclude that the next 24-48 hours would be moving to the downside.

it also was a good reason to get short risk markets.... just like I did here... on the AUD/USD - check the link to see where I got in and out of the trade:

http://www.forexfactory.com/showthre...trade964584829

So, if you don't know how to read and interpret and plan around the news and other events in a way that ENHANCES your trading, rather than DETRACTS from your trading...well, this could be another reason why you suck.

I know how to do this, and if you don't know how to do this, you will either make no money, or lose money, while guys like me get paid.

liquidity can be loosely defined as "relative density of orders over a range of prices"

if you open up your chart, and can't immediately tell me where liquidity is likely to be in abundence, as well as where it is NOT likely to be, and then furthermore, what types of orders (bids or offers) will likely comprise different price levels of that "liquidity map"....

if you can't do this, or even know what i'm talking about... this is another reason why you might suck at trading.

i'm not going to go into this in great detail here. maybe at my blog some time in the future (i already touch on some aspects of it)...

but it comes down to this. big traders, like the banks who move the forex markets, need big blocks of orders for them to be able to execute their trade.

i mean, if a bank wants to sell 100 million euros...then, they need to find a price level where someone wants to buy 100 million euros, or else they risk pushing the market down a great deal as the sell (that's slippage, and it's a big huge "no no" for institutional traders"

so, they tend to hold back until the market gets to a place where there are a high concentration of orders at a very tight range of prices.

this will enable them to get filled, for very little slippage.

and where can such tight concentrations of orders be found? just a little above and a little below market "fractals" or swing lows and highs...etc.

you know, where people place entry orders, and stop loss orders.

so, if you want to be a buyer ...and have a good chance that there will also be a large BANK who is buying around that same price level...

guess what? MR. BANK is probably not buying in the middle of a retracement of a smooth 120 drop from yesterday.

he's probably buying near the very low of the drop (btw, he probably is why the drop stopped, and reversed in the first place)

for all the talk of "the meat in the middle" and "the trend is your friend"... in practice, the really big orders that create swing highs and lows are place in the vacinity of other swing highs and lows.

there is a LOT MORE to understanding liquidity as a concept (see market profile, volume spread analysis, trading order flow, and market microstructure to learn more about liquidity)...

but, if you don't understand perfectly what i've said here... just know that there are guys that do, myself being one of them.

so, we'll know where its likely a big player will be buying or selling, and furthermore, where price will most likely move to based on where it has moved from, in order to find the liquidity required for the big players to take their profits, or get out with the smallest loss possible.

If you don't know how to look at a chart and determine this...

then your just gonna give your money to the banks and guys like me... and you'll continue to suck at trading.

aright. that's enough for now I think. feedback time. your contribution to this list. tell me i'm an F'ing prick for insulting your inept trading ability. whatever. lets get some dialogue going, rather than monologue.

X

Thanks for putting all the effort and experiences in this topic. I noticed a few things I partly disagree on. I will just post two here because I´m a bit short on time.


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I agree that you should be able to recognize potential working support and resistance & draw the lines yourself but these quotes are contradicting in a way.I am responding to this one in particular because my own system is working on so called key levels ( more information: http://www.forexfactory.com/showthread.php?t=361684 in case you want to take a look )

Key levels / confluence levels are taking the edge of multiple positive variables into account. A small group is trading based of fibs, a small group of pivot points, a small group of ma's and whatnot. When all these variables are coming together / are being clustered in a zone you take your decisions based on all the triggers of these groups. Result is a good order flow.

Basically in your first quote you are mentioning to not exclude forms of analysis while in your second quote you are, in fact, approving that one should exclude TA factors like ma's, fibs and whatnot ( I thought we were going to add in multiple variables from various trading groups in order to bigger possibilities ? At least, if I understand your first quote correctly that is ).

Also, "the even worse" part when it comes to scalpers is a bit offensive. I am a partly a short term scalper because my system(build around the earlier mentioned key levels) is creating good initial profit. There are multiple ways for a scalper to succeed.

Robert, thanks for the post! I kinda thought this thread might be misunderstood a bit....as it can totally be seen that way, and i don't clarify.

Lemme start with the second part... Dude, i make my living "scalping" and day trading. my average profit targets are 40 pips or less, and i'd say 1/3 of my trades last less than 1 hour.

and maybe 5-10% of my trades are working off of 5 min, 1 min, or even tick charts.

It's not that it can't be done. it absolutely can be, and I know this first hand!

But, nevertheless, I find WAAY too many people who refuse to trade off of daily charts, but instead obsess over finding a way to become a full time trader while watching only a 5 min chart.

there are probably many thousands of folks who can "scalp" successfully (as in, going for small, quick profits, mulitple times a day)

but, there are probably hundreds of thousands, or even a million or more who have tried day trading or "scalping", and were never able to make a good income doing such.

had they just not fixated on some form of day trading, but instead, focused on just "trading"... they may have been much better, or at least, been better much more quickly in their career aspirations.

and much the same goes for your ideas of confluence using "impure" SR levels (derivitives of, rather than straight PA bounce points)

that will all completely work, and I use some of it myself every day (including fib levels, and pivot points).

it's just, if your ONLY using that, but dont' know how to determine SR levels straight off a chart... then you should learn to do this FIRST, as this could very likley be a major leak in your game.

Some of these assertations I make here will be UNIVERSAL (trading plans, trade review, etc)

others, will be individual (including sentiment analysis, learning more on market microstructure, placing more "accepted" risk : reward ratios...etc)

if one is successful and not doing something i've listed... great! and more so, I know that many, many are.

The list here is my blunt, cheeky, humorous way to give those that are NOT having success a long list of factors they should consider in order to improve themselves.

too many try every indicator, fail, and then become dissillusioned.

others have luke warm results, but could do so much better if they added a particular element they don't already have.

it's this audience I am primarily aiming the "lessons" here for.

not the already successful trader. I know as well as anyone that every successful trader I know has a slightly unique approach to the markets...

but i personally wasted at least a year of my life focusing on indicators, while never considering actual "support and resistance" to any degree.

if someone who had known how to trade had simply said "hey dude. don't focus on indicators. focus on SR", I would have cut my learning curve by at least 1 year.

That's kinda what i'm loooking to do here, and i'm trying to drive it home as directly as possible.

so no, your right, i'm totally with you. it's just some will try something like what your doing, and won't have your success.

it's probably because they are missing "something"

this thread is to provide those with a list of possible "somethings" they may choose to try to "fix" this problem, and also become successful.

X

Good Points ! but where is the most important one?

ie. Discipline/psychology in executing your trade , plan etc... ..

as if u are inconsecuent in executing your plan or trade or both.. your mind will all get fucked up .. and u are on TILT .. making mistake after mistake.. no mather how good you can read the market and spot entrys...


it is a hard task.. to sit on your hands.. and watch how a setup unflods wich just slightly isnt the way you want it to see... and that happens for days..

so you would rather jump in and be in a trade u shouldnt be in first place (but i waited so long till price moved there! etc.. fuck that gibberish).. then sitting on your hands and waiting for the pefect setup.. (wich do come btw).. but u shouldnt be ..trigger happy... for the sake of your career... and all the hard work u allready put in it...!!

thats what iam working ATM... thats why i Suck!

cheers