Strat's Long Term Stress Free Trading

Or Little Peggy March the same year, with due respect to Ricky's memory. Can't find out who did it first.

PASR is easy Strat...The difficult part is stated below...

Trading Mistakes (A part of SPA Trading Journal)

I would like to elaborate on a significant aspect that we should include in a trade or analysis review: the classic trading mistakes of traders.

In order to achieve success in the markets we need to minimize our trading mistakes. I didn’t say to completely avoid them because this is impossible, at least according to my own personal trading experience. We are humans and we will make mistakes and most probably we will repeat the same mistakes many times during our trading career.

In order to minimize these mistakes, we must be able to identify what actually went wrong. In other words, we must be able to determine the nature of our mistakes as well as their impact and cost to our psychology as well as the monetary loss using a trading journal. Please read again this article here http://trade-mentors.com/SMF/index.p...sg1047#msg1047.

We can separate mistakes into two categories:
The ordinary mistake which is the normal outcome of dealing in this probability business or in other words “the cost of doing this business”.
The fatal mistakes where the responsibility comes upon the trader himself due to lack of internal control and psychological/behavioral issues. All these crucial and deadly mistakes are stated as follows:
The first classic mistake is the lack of discipline to follow the SPA trading rules or a trading plan in general. Moreover, it is unacceptable to enter the markets without a solid and trustful trading plan at all. Yet, there are many retail traders out there doing this deadly mistake and with a mathematical precision, they are leading themselves to failure. Without a trading plan, there is the absence of discipline which equals to an emotional hysterical trading behavior. With no plan the probability of failure is close to certain.

On the other hand, when you develop a trading plan that fits you personally, you must follow its rules. If you don’t follow your trading plan is like having no plan at all. Therefore, the most important factor in SPA performance is YOU. Your trading success depends on the methodology structure we presented to you. Are you comfortable with SPA? Is SPA the right trading method for you? Does the method fit you personally? Last but not least, did you obtain this radical change of internal control to follow our methodology?

The second classic mistake is to refuse to take a loss by removing the stop loss. Removing the stop loss is the same as having no stop. It is the “I know I am right syndrome”. Similarly, it is much worse to place a mental stop and when the time comes to trigger it, you are most likely going to freeze. Without a calculated solid stop loss or moving the initial stop loss reveals lack of discipline and a potential personality problem. It reveals your fear of a loss. This is a recipe for a disaster and the quickest way to diminish or to wipe off your trading account.

On the other hand, you can move the stop loss only to reduce your losses, minimize your initial risk exposure, breakeven your position or to lock profit. If the initial stop loss is triggered, then accept the fact that your analysis was wrong and move on to the next trading opportunity. Trying to be right in the market is very expensive. Either your trade will work or it will not work. When the market deviates from your analysis and triggers your calculated stop loss, you have to accept losses without fuss or impulsive, emotional reactions.

The third mistake among novice traders is to overleverage. Reckless and rookie traders want large profits and they want them fast. This is again a recipe for disaster. You must always adjust and determine your position size according to SPA rules and based on your money management plan. If you attempt to chase quick profits then certainly you will face quick losses. Controlling risk goes against our natural tendencies. Risk control requires tremendous internal control. SPA methodology offers you the ability to find low-risk trading ideas but this requires tolerance and patience to wait for the right opportunity. Being able to live to trade another day is the proper mindset you should develop, targeting long-term survival and longstanding profit accumulation.

The fourth mistake of weak traders is the lack of an exit approach. A potential winning position is more difficult to be managed rather than a losing one. The weak traders haven’t developed yet the winning state of mind. They are ruled by fear of losing a potential profit. They are governed by their greed for more profit than what the market is offering. Finally, they are controlled by their fear of making a loss. This is the reason of having a realistic exit plan based on logical expectations in order to control your emotions of fear and greed and above all you must obtain the internal control and the willingness to follow your exit plan. In other words don’t make an entry unless you know the exit. Read again this post here http://trade-mentors.com/SMF/index.p....msg922#msg922.

The fifth mistake among amateur traders is failing to adapt themselves according to what the market is really telling them in order to be flexible with their thinking process. It is vital to originate your trading decisions based on solid facts according to SPA and completely avoid hopes or emotions. You need to obtain trust on what you see and not on what you feel and thus always trade what you trust. This is the way that statistics are in your favor.

The sixth mistake among novice traders is the misperception that trading is easy. This is a trap. Successful and consistent trading requires a great amount of effort to attain. Trading is not a game. It is a serious business and it must be treated with the appropriate respect. If you don’t realize this early then you are going to fail. Read this post here http://trade-mentors.com/SMF/index.p....msg985#msg985.

The seventh mistake of fragile traders is changing their trade plan during mid-trade. This is again the absence of the trader’s internal control and the existence of fear or greed. Unless you have logical and solid facts suggesting an adjustment on your primary trade plan that will improve your situation in the market, don’t alter or deviate a bit from you primary trade plan.

The eighth deadly mistake of novice traders is to average down on a losing trade by adding more positions hoping the market will reverse to their favor. What usually happens is they end up suffering a bigger loss. Or the opposite mistake which is to increase their commitment with success by adding, without the proper know-how, on a winning trade to increase profits. The market then reverses and wipes off all profits and the trader takes a loss when he should have been taking a decent profit.

The ninth serious mistake of reckless traders is overtrading. They are acting in this way believing they will miss a great opportunity not being in the market. They have the wrong mentality that the next trade is going to make them a lot of money. They are constantly risking their capital in the markets hoping to make money. They have absolutely no internal control to wait and see a great trading opportunity revealing itself. This is why we always direct SPA trader to be ultra-selective on the SPA price action setups they intend to take a risk on. Learn to trade the price action setups that are protruding and shouting “trade me”.

The tenth mistake of novice traders is their attitude towards demo trading. They think that a trial period is not essential. Please read these posts here http://trade-mentors.com/SMF/index.p....msg320#msg320 and here http://trade-mentors.com/SMF/index.p...sg1417#msg1417.

The eleventh mistake of careless traders is falling in love with the story of their analysis. It is the “I know I am right syndrome” I mentioned earlier. This “me against my ego” mental state will directly lead your account into destruction. You have to train yourself to accept the fear of being wrong because market doesn't care about you or your analysis.

The twelfth deadly mistake among beginner traders is trying to revenge the market after suffering a loss. Most probably the loss resulted out of one or a combination of the deadly trading errors already stated in this article. Trying to fight the market in order to get back your monetary and emotional losses is self-destructive because you are most probably going to suffer additional damages. After a lost trade, adopt the internal control to become ultra-selective on the next trading opportunity. Time should not be a factor that affects your decisions.

The thirteenth deadly mistake of traders is losing internal control when in state of excitement. A series of winning trades in a row could easily damage the trader’s self-control as he might think he is invincible and can "walk on water". He most likely forgets that easy money in trading is the hardest job in the planet and eventually falling in the trap to make deadly trading errors. Trading is taking a great amount of psychological energy despite the outcome. Therefore, it is absolutely essential to be in control and not in a state of excitement especially after a series of consecutive winning trades. Implement a pause on trading after you achieve a series of winning trades to reassess yourself towards the proper mindset.

The fourteenth mistake of beginner traders is lack of faith. A great irony is that the majority of traders don’t trust themselves. The worst enemy of a trader is himself. All it takes is a few stop outs in a row and suddenly the method that worked for them for months, goes out the window. The most annoying thing about trading is that even if traders are doing everything right they will be wrong continuously. Trading has a high rate of failure and it seems acceptable. Practice is the only way to obtain faith and reinforce your lost confidence. Trading is an interactive activity and can only be mastered through endless repetition. The more you trade, the more you will learn the complexities. The more patient you will become. The more you will start to trust your method and the more you will start to trust yourself.

Success and consistency in trading comes from internal control. This is a fundamental change for most traders. Internal control is not that difficult to attain, but it is difficult for most people to appreciate how important it is.

I would like to end this article by highlighting the importance of tracking the nature as well as the cost of your trading mistakes on both your monetary and psychological capital using a trading journal. Automatically you are becoming a mentor of yourself. You can always utilize the relevant forum topic to do that. This is the only way to minimize and correct your mistakes in the future.

Finally, this post will take the form of a dynamic article by a constant flow of deadly mistakes that could harm our success in the markets. This is where your help is required.

The Big Boss turned around after a 50% Fibonacci pull back so that should give some clues.

Since you are in violation of Forex Factory Rule # 1 "Respect thy fellow trader" by promoting your SPA method on my PASR Strat's Long Term Stress Free Trading thread, you are BANNED from further participation here.

John, according to the 1963 Billboard Charts, Little Peggy March was the first although Petula Clarke had the hit in France a year earlier. It gets a little complicated because the Ricky Nelson song was changed to "I Will Follow You" instead of the original "I Will Follow Him". Back in England in 1963, the only version I remember was the Little Peggy March version but maybe that was because we were both 15 at the time! A look at those songs in 1963 made me realise what crap the current generation have to listen to.

I agree, there will be no other generations can be compared to 60s generation songs.

Gbpjpy

I believe current market condition now is ranging until breaking the top. If you need more evident the big boys know us retails traders trading PA, here it is. I am sure a lot of traders in drawdown and about to be stopped out, only 40 pips in green the rest is painfully drawdown.

It is in the middle of forming the right shoulder for those who follow Head & Shoulder patterns. It will be interesting to see if it forms or if PRICE goes on to test the February 7th high. Whichever way PRICE goes, PASR will show us the way. "Show Me the Way" - Peter Frampton 1975.

Well I didn't say that trend has changed nor did I take any positions against trend. I'm just seeing bearish actions ( strong 3 week down movement ) which are giving me signals for a possible trend change and looking for PA to confirm this.

What Strat said about strong trends and that there are no rules for them is when trend is so strong that you can't squeeze out a PA to enter that trend like we recently had on USD/JPY and also GBP/JPY untill New Year. Currently that's not the case anymore. We have plenty of opportunities to enter and we're not only getting bullish PA but also bearish PA.

You are correct

"according to the 1963 Billboard Charts" now why didn't I think of checking them ?


"the Ricky Nelson song was changed to "I Will Follow You" instead of the original "I Will Follow Him" "I had noted the subtle difference (which would have been made for obvious reasons)

"but maybe that was because we were both 15 at the time!" Gee that is old - I was only 10 !

"made me realise what crap the current generation have to listen to"Amen to that ...

Lucky guess, how convenient for them.

If you don't believe in SR, believe it but that is not the reason to close a trade. You have to have an exit plan and follow it until it tells you to exit. Price will do what it wants to do, sometime it will respect SR, sometime it will blow through SR.

GBPCHF

BigBoss - Formed support at beginning of 2009 and broke through it at the end of 2010. At 2011.08 Big Boss formed huge hammer after all this downtrend which lasted 4 years. Did the hammer PA work? Yes it did. It pushed prices up but only to the last formed real resistance which was broken support at the end of 2010. After hitting this resistance volume has reduced and prices were moving down since. We're in a downtrend.



Boss - We can see a nice support/resistance level formed on Boss which price has respected for some time now and that is 1.4300. Recently 4 weeks back price has broken through it and now came back to test it. Boss is at resistance level.



Worker - Beginning this week worker has formed a hammer. On Wednesday formed another PA of BUEB showing higher prices to come, but that was against the trend. We have Strat shadow in front and of course the resistance level of 1.4300. Strong PA pushed prices into Strat shadow, have hit resistance of 1.4300 and were harshly rejected showing that price knows what this resistance is about giving nice strong BEOB which is closing outside Strat shadow . ( 4 hours left to bar close, but it's Friday and it's late, volume should be low and that's where prices should stay about )

Is this text book Strat's PASR trading ?

Hey patrick,

Thank you for your posts. Could you elaborate more of what you wanted to say? Are you talking about taking profit at S/R vs looking at PA at S/R and acting by the exit plan?

So what does the trader do? If he took that shooting star, price got him stopped out and there market gives another one.

It is text book PASR analysis - you have not identified a trade.

After hitting this resistance volume has reduced

How do you know that? What is there on the chart to tell you that?

I will now post what I did for the members on GBPCHF without the commentary of course!

GBPJPY

Are you saying GO SHORT?

Take a look at my chart - I can't use Patrick's because he has lost his Strat Shadow.

Where on my chart do you see a place to go short?

I have not lost my Strat Shadow, it is in my heart.

I look at volume as the size of the movement on the graph, other words the ATR. Since that Big Boss hammer or we can call that the start of the 2012 the monthly movement decreased greatly that's all I wanted to say, not that this view has any impact on this analysis.

Looking at your graph I see HL. Interesting, I didn't look at it this way. I was looking at it as if it was making LH which might be at that resistance we're at now. It would be interesting to hear from you Strat how do we determine when swing high has ended? How do we know that a swing high is still not in continuation? I hope you understand what I mean. I'll post a chart of my view which is different from yours and why mine is wrong.