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Market structure & Mental efficiency

  • #1
  • First Post: Edited Aug 8, 2012 5:06pm Jul 3, 2012 7:29am | Edited Aug 8, 2012 5:06pm
Static fixed entries in a dynamic market

Static fixed entries is a solution in creating a healthy energetic mental state(efficiency)
Dynamic market structure knowledge is the solution in creating the biggest technical probability enhancer there is(effectiveness)
But how to combine these two? This will be the essence of this topic so if you are interested... read on!

Market structure & Mental efficiency

A lot of topics are aimed at discussing technical entry triggers. What technical elements are giving that higher win probability?Often enough mental aspects are completely disregarded. I am not talking about mental aspects in the sense of what to undertake when a losing streak occurs.

I am rather talking about the system itself. How do you keep your energy at a sustainable level for the day in order to be fully focused on your trading session? In what way is this implimented in your tradingsystem? How do you avoid chasing price with your system? Especially when it comes to people daytrading/scalping the lower timeframes.

Price action in general is one of the most appraised ways to trade off. Systems based on this however often disregard the fact that price action alone causes the trader to chase price more often and see things they WANT to see. Especially when it comes to daytrading fulltime behind your screen. Your unconscious awareness will make you see things you want to see and in further absence of patience will make you enter before market movements have even fully developed. Keep in mind that overtrading and early entries are the most common mistakes new traders tend to make.

Mechanical triggers biggest advandage is creating time intervals in order to keep you in a healthy mental state for the remainder of your trading session. Only when your mechanical trigger goes off you will watch market structure with a clear mind without the mindset “my patience must pay off!”.

Pure price action alone does not have this advandage and requires tons of discretion ( which eventually you will need anyway ), but will allways drain your energy more than a mechanical system would do so. Especially when scalping of price action and orderflow for fulltime days behind your screen. Results will therefore dramatically be decreased because of this fact alone.

The “holy grail” will arrive when you are able to create your own system that is not only based on rapidly changing dynamic market structure, but also based on mechanical triggers that will help your mental state.

This topic is aimed at traders trading purely off market structure/price action/orderflow while trying to build in mental sustainabilities into their trading system. Like earlier mentioned: How do you create static fixed elements in a rapidly changing dynamic market yourself? Let’s discuss this matter!!
  • #2
  • Jul 3, 2012 7:42am Jul 3, 2012 7:42am
Quoting Robertk
Static fixed entries in a dynamic market

Static fixed entries is a solution in creating a healthy energetic mental state(efficiency)
Dynamic market structure knowledge is the solution in creating the biggest technical probability enhancer there is(effectiveness)
[color=black][font=Verdana]But how to combine these two? This will be the essence of this topic so if you are...
IMHO: "Chasing price" works the same chart area for all it's worth,
while "static fixed elements" jumps between areas for dangerously high in-trade drawdowns.

Your "mechanical triggers....{based on} time intervals" sounds interesting, not sure how you'd figure the intervals.
  • #3
  • Edited 8:29am Jul 3, 2012 8:04am | Edited 8:29am
Quoting ha-pattern
IMHO: "Chasing price" works the same chart area for all it's worth,
while "static fixed elements" jumps between areas for dangerously high in-trade drawdowns.

Your "mechanical triggers....{based on} time intervals" sounds interesting, not sure how you'd figure the intervals.
Thanks for your input! Time intervals will avoid the “patience must pay off!"mindset & will therefore eliminate the self-changing market shapes that are in ones favor.

The big issue with normal time intervals however ( for example -> alarm every 15 minutes ) are missed market inefficiencies that could have otherwise been exploited.

An example of better implementation of time intervals would be a simple alarm when RSI crosses lines. Then watch market structure after and see if certain setup is in place. This would work perfectly if the RSI alarm is put on the highest boundaries possible. A touch of the highest boundary by momentum while price being in confluence with a resistance/support gives solid entries. The big con would again be multiple missed obvious price action setups when momentum is not hitting these boundaries. Lowering the boundaries to 40-60 on the other hand would exploit market inefficiencies to the fullest but will drain your mind. There's always an imbalance between those two when trading off market structure.

Keyquestion therefore remains the same. How are you able to exploit as many market inefficiencies as possible ( PA/orderflow setups are everywhere ) while still remaining your healthy focussed mental state of mind. A near impossible task, or is it not?

I hope that tru solid procedures/ideas we can together create a key component for systems that will allow its user to make full benefit from his/her mental state, which would then result in full potential knowledge useage.
  • #4
  • Edited Jul 4, 2012 4:29am Jul 3, 2012 8:27am | Edited Jul 4, 2012 4:29am
Finding a way to be objective is the key IMO. Keep it simple - follow price from level to level, watching the PA at those levels and embrace the market sentiment. When you free yourself from emotional attachment you allow your unconscious to see what you know and understand rather than what you want to see (as you mentioned). This is the difference between chasing price and following price.

When you follow price you get the feeling of 'being in sync'. That is a very typical statement but it is true. You allow price to do the thinking for you (or rather your unconscious) while your conscious relaxed and clear from judgement.

A solution I had found is to multi-task. While I was interacting with some other work I had my charts open on another screen. Without the other work being too distracting it was keeping my mind active and still in tune with the market.

..
  • #5
  • Jul 3, 2012 8:41am Jul 3, 2012 8:41am
Quoting Tyoon
Finding a way to be objective is the key IMO. Keep it simple - follow price from level to level, watching the PA at those levels and embrace the market sentiment. When you free yourself from emotional attachment you allow your unconscious to see what you know and understand rather than what you want to see (as you mentioned). This is the difference between chasing price and following price.

When you follow price you get the feeling of 'being in sync'. That is a very typical statement but it is true. You allow price to do the thinking for you (or...
I tried this myself but did not really felt at ease. I kept on alt-tabbing in order to check price again and again but this may be due to the fact I trade the one minute and only have one screen

Did you had fixed time alarms or alarms placed at these levels?

Anyway, indicator alarms, multitasking, all in order to maintain that neutral and clear mind / emotionally detach yourself in order to make full use of your knowledge and stay objective, I like it!.. keep the suggestions coming!
  • #6
  • Jul 3, 2012 8:45am Jul 3, 2012 8:45am
Quoting Robertk
I tried this myself but did not really felt at ease. I kept on alt-tabbing in order to check price again and again but this may be due to the fact I trade the one minute and only have one screen

Did you had fixed time alarms or alarms placed at these levels?

Anyway, indicator alarms, multitasking, all in order to maintain that neutral and clear mind.. keep the suggestions coming!
I have a few screens.. there is no way I would be able to multi-task with one screen. As I could see the charts (6 charts tiled in mt4) on my left screen I can easily monitor price without any concern.. and in a way.. it is almost subliminal when your charts are in your peripheral vision.
  • #7
  • Jul 3, 2012 9:06am Jul 3, 2012 9:06am
I like to start with top down analysis and indentify keep price levels of support and resistance on the higher time frames. I use these as references for my trading time frame.

When trading intraday, I then incorporate S/R during current price action along with Fibs using static stops and targets.

The confluence of all of these levels tend to be good areas for profit targets.

Once I place a trade, I usually just walk away, trusting my analysis and trade plan.

Analysis will also include harmonics at key levels as well.

Basic stuff, but time-tested and highly profitable.

All the best.

dcginc
  • #8
  • Jul 3, 2012 9:56am Jul 3, 2012 9:56am
Quoting dcginc
I like to start with top down analysis and indentify keep price levels of support and resistance on the higher time frames. I use these as references for my trading time frame.

When trading intraday, I then incorporate S/R during current price action along with Fibs using static stops and targets.

The confluence of all of these levels tend to be good areas for profit targets.

Once I place a trade, I usually just walk away, trusting my analysis and trade plan.

Analysis will also include harmonics at key levels as well.

Basic stuff, but...
Some goods points,

Quote
Once I place a trade, I usually just walk away, trusting my analysis and trade plan.

This is exactly what this topic is about. Just walking away when a trade is being placed would drain less energy which keeps you fit the remainder of your trading sessions.

Managing your trades on the other hand takes into account that the market is dynamic and is everchanging short term. In order to impliment this you however have to pay with energy yet again. It is a constant battle between these two. Achieving balance between them is key.
  • #9
  • Jul 3, 2012 3:16pm Jul 3, 2012 3:16pm
Quoting Robertk

The “holy grail” will arrive when you are able to create your own system that is not only based on rapidly changing dynamic market structure, but also based on mechanical triggers that will help your mental state.
I like this. Well !I am planning my own system to trade the market automatically without spend a lot of time in front of the screen to just place some simple trades. Apparently, emotionless is the crucial point.
  • #10
  • Jul 3, 2012 4:16pm Jul 3, 2012 4:16pm
It's definitely a challenge to day trade small time frames and maintain discipline and focus at all times. There is a good tool on the market which provides bio feed back so that you are aware of your mental state and can alert you to adjust your mindset when required.

From Lance Beggs:

"Biofeedback is the use of instruments to monitor certain components of our physiological state. The components will vary depending on the device, but may include heart rate, brainwaves, muscle tone or skin conductance. The intent is that through awareness of our physiological state we may then take conscious action to either maintain the state, or to place ourselves in an alternate desired state".



His review here


The question is, can the same mental awareness be achieved without this tool, using other methods such as self reflection alarms/triggers. At the end of the day its our mental condition that we must maintain. I think trading psychologist Steve Ward might have a few ideas.
  • #11
  • Jul 3, 2012 5:37pm Jul 3, 2012 5:37pm
Quoting Porkpie
The question is, can the same mental awareness be achieved without this tool, using other methods such as self reflection alarms/triggers. At the end of the day its our mental condition that we must maintain. I think trading psychologist Steve Ward might have a few ideas.
Well the first step I think would be to make yourself conscious of your different states. Define your 'norm' state; your physiology, emotion, thoughts, ect and note them down. Then do the same for when you are outside the norm when you are in either a coherent state or in-coherent state. The more you can capture and define your states, the more you will then recognize what state you are in and then be able to change it. It could be the tension in your shoulders or the lousy thoughts that enter you mind that will make you recognize you are in an in-coherent state and you need to interrupt it. It could be the feeling of clarity or the posture that you are sitting in that makes you recognize you are in a coherent state.

When in an incoherent state - recognize and interrupt the state. Stand up, shake, stretch, listen to a badass tune, go for a walk, slap yourself in the face with a fish, ect. Simply refresh yourself and try to get back to the norm state.

When in a norm state - try to mimic how you are when you are in a coherent state. Step into it and act it out.

When in a coherent state - recognize it and maintain it.

I haven't actually tried this myself.. I will start it tomorrow and see how it goes. Hope this helps or gets some ideas going.
  • #12
  • Jul 4, 2012 3:50am Jul 4, 2012 3:50am
Another method is to just write things down such as your thoughts and feelings about what is happening on the charts. That way you are reflecting back your subconscious and making it conscious so one can then act upon it.

Quoting Tyoon
Well the first step I think would be to make yourself conscious of your different states. Define your 'norm' state; your physiology, emotion, thoughts, ect and note them down. Then do the same for when you are outside the norm when you are in either a coherent state or in-coherent state. The more you can capture and define your states, the more you will then recognize what state you are in and then be able to change it. It could be the tension in your shoulders or the lousy thoughts that enter you mind that will make you recognize you are in an...
  • #13
  • Jul 4, 2012 6:11am Jul 4, 2012 6:11am
Quoting dcginc
I like to start with top down analysis and indentify keep price levels of support and resistance on the higher time frames. I use these as references for my trading time frame.

When trading intraday, I then incorporate S/R during current price action along with Fibs using static stops and targets.

The confluence of all of these levels tend to be good areas for profit targets.

Once I place a trade, I usually just walk away, trusting my analysis and trade plan.

Analysis will also include harmonics at key levels as well.

Basic stuff, but...
Hi dcginc,

"excuse my language"

I wish i've those confidence like your trading style, But is this stlye of execution apply before/during News day - eg like tommorrow with series of Red news in que.?,


Thank You

Gibril
  • #14
  • Jul 4, 2012 12:40pm Jul 4, 2012 12:40pm
On 06.28.2012 22:45 (NY) happened something with EUR/USD... Sentiment bought EUR 1793 pips. I've searched the news with possible references to this, but nothing. Someone to explain such tricky problem?
  • #15
  • Jul 5, 2012 8:14am Jul 5, 2012 8:14am
The thing is you need to condition yourself in solid executing trades, without any hesitation involved.

One very effective method that help you to achieve this:

A solid routine procedure which you always follow
Again, trading off price action will give the ultimate freedom for trade execution. Things are happening everywhere. To the left, and to the right of your charts. Based on a bunch of "recognitions" one feels the urge to enter based on his or her favor.

You really need that one static trigger in order to succesfully condition yourself in entering ONLY when that static trigger is in place. Use as less "freedom" variables as possible. Analyzing MTF PA, supply and demand, trendlines and whatsoever before entering one trade is cool and all, for one trade, but when continiously trading based off all these triggers it will severely decrease your performance for the remainder. Simply because of mind exhaustion and unconscious awareness.

When you implement a solid routine on your execution trigger it will help you in not thinking back whether you made the right descision by entering the trade. And this results in being able to maximize either the management of your current trade, or to identify the next potential trade setup... and therefore improve your efficiency by a bunch.

The one thing you may never do is to leave your procedures and go for impulsive trades.. Which are really tempting when trading pure PA by the way. Every impulsive trade is a losing trade, no matter what.
  • #16
  • Jul 6, 2012 7:10am Jul 6, 2012 7:10am
Gibril
Quote
I wish i've those confidence like your trading style, But is this stlye of execution apply before/during News day - eg like tommorrow with series of Red news in que.?,

For intraday trading, I am out of the market during NFP, FOMC and major testimony or news regarding the ECB, IMF or Fed.

So yes, I am very aware of the "red" announcements and trade around them accordingly.

Good luck.

dcginc
  • #17
  • Jul 6, 2012 8:49am Jul 6, 2012 8:49am
outside of oneself --
Quoting dcginc
For intraday trading, I am out of the market during NFP, FOMC and major testimony or news regarding the ECB, IMF or Fed.
So yes, I am very aware of the "red" announcements and trade around them accordingly.
inside of oneself --
Quoting Robertk
The one thing you may never do is to leave your procedures and go for impulsive trades.. Which are really tempting when trading pure PA by the way. Every impulsive trade is a losing trade, no matter what.
One's directive is to trade the fastest, biggest moves with the strongest reason.

The best news and the impulsive move are the least controllable/projectable.

Give enough reason for the impulsive trade or for the chart area the news is in, and one fulfills the directive.
I just wouldn't count on getting as much $ as one feels one should -- It's another trade, like any other.
  • #18
  • Jul 6, 2012 9:03am Jul 6, 2012 9:03am
ha-pattern
Quote
Give enough reason for the impulsive trade or for the chart area the news is in, and one fulfills the directive.

I never speculate on fundmentals, so I am out of the market before such news.

After the news (15 minutes) if my rules are met, I will enter the market just like any other trade.

dcginc
  • #19
  • Jul 7, 2012 4:24pm Jul 7, 2012 4:24pm
One more typical example I just came up with.

Market structure vs mental efficiency when it comes to stops.

Why is a bunch of traders putting their stops to their BE level as soon as possible? They obviously want to feel at ease within their position and basically it became a free ticket for further potential profit. Good point, but where did they enter the trade in the first place?

The majority places trades around s/r levels, pivots whatsoever. Price tends to retest those points often. Therefore a stop to BE right away would not make any sense. If you take market structure into consideration you would at least know that your stop should cover that potential retest s/r level + a few extra pips when taking into account price can spike a bit because of good orderflow around these levels.

Do you want your free tickets and ease the mind as soon as possible or do you want to implement more market structure knowledge into your system? A midway would be partially closing your trade on a point where the partial close would cover your stop. You basically have a near free runner while still having your stop cash and level covered that way.
  • #20
  • Jul 10, 2012 5:46am Jul 10, 2012 5:46am
Re: Porkie's quote: "The question is, can the same mental awareness be achieved without this tool, using other methods such as self reflection alarms/triggers. At the end of the day its our mental condition that we must maintain. I think trading psychologist Steve Ward might have a few ideas."[/quote]

Check out this little youtube click where Steve Ward talks about mindfulness in trading.

http://www.youtube.com/watch?v=nLnTwdpEqKM

His style really resonated with me so I have studied all of his work. Check out his massive freely accessible library with lots of article, webinars etc on www.highperformanceglobal.com/resources/.
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