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  • #181
  • Nov 16, 2015 3:06pm Nov 16, 2015 3:06pm
Quoting cat
One of the reasons why so many people fail as traders is that trading is one of the most solitary pursuits one can expose oneself to. Life in general does nothing to prepare us for it. In our family, in school, college or university, and in business, we have the support and encouragement of others, we are part of a team and we rely on others just as others rely on us. But none of this exists in the world of retail trading. We are on our own, there is no back up, no support, no team to fall back on, no encouragement, just us, and we live or die alone....
Good point!

The people who are more introverted are more likely to succeed in this challenge.
For the more extroverted personality type it might be better to work in a team. That's why many traders join trading groups, chat rooms, prop shops...... they need some support, and contact with other traders.

When it comes to trading, the autotelic type personality is the most likely candidate for the top 1%.

"An autotelic person needs few material possessions and little entertainment, comfort, power, or fame because so much of what he or she does is already rewarding. Because such persons experience flow in work, in family life, when interacting with people, when eating, even when alone with nothing to do, they are less dependent on the external rewards that keep others motivated to go on with a life composed of routines. They are more autonomous and independent because they cannot be as easily manipulated with threats or rewards from the outside. At the same time, they are more involved with everything around them because they are fully immersed in the current of life."
  • #182
  • Nov 17, 2015 1:43am Nov 17, 2015 1:43am
Quoting alphaomega
{quote} Good point! The people who are more introverted are more likely to succeed in this challenge. For the more extroverted personality type it might be better to work in a team. That's why many traders join trading groups, chat rooms, prop shops...... they need some support, and contact with other traders. When it comes to trading, the autotelic type personality is the most likely candidate for the top 1%. "An autotelic person needs few material possessions and little entertainment, comfort, power, or fame because so much of what he or she does...
  • #183
  • Edited Nov 19, 2015 1:30am Nov 18, 2015 12:11pm | Edited Nov 19, 2015 1:30am
I know that most people reading this will have seen the 90% mental, 10% skill tag attached to trading, so I'd just like to say that I am one person who disagrees with this completely. I would go further and say that not only do I disagree with it, but I also believe it gives many people new to trading an entirely false illusion of what it takes to become a successful trader.

Most of us believe at the start of our trading journey that as we are unlikely to have any problem with the psychological side of trading, a few months of practice will be sufficient to start making loads of money - a big, fat WRONG!

We therefore start out underestimating both the mental and technical skill side of trading, usually to our detriment in the form of lost money, disillusionment, and ultimately for most, exit from the world of retail trading. Trading is way harder than that, sorry, but it just is. The psychological challenge is massive, but then so is the technical challenge of identifying the where and when of price movement. The 90/10% implies that all you have to do to make a fortune is get your head right - if only!

If a trader starts putting his or her money on the line in any capacity whereby losses hurt, before they actually know what they are doing, then a whole host of psychological issues will arise to compound the lack of market knowledge, and these together will bring the brief foray into the world of trading to a very abrupt end.

How many traders who occupied the eur/usd thread back in 2010 when I joined FF are still there now? A handful, no more. The rest come and go by the week/month.

Don't underestimate the difficulty of this business, but also, never listen to anyone who tells you it cannot be learnt, because it can, but it just takes a lot longer than most people realize, which is good, because when you do finally crack it, you'll be super proud of yourself for achieving something that most people never even get close to achieving, and isn't that a goal to really strive for?

I personally won't be posting any more on this thread, but if anyone else has anything they want to put out there, feel free. I wish everyone the very best with their trading career. Work hard, never stop believing in yourself, and never give up unless your heart isn't in it. Trading isn't for everybody, but if it is for you, you'll get there sooner or later if you want it badly enough.
  • #184
  • Jan 5, 2016 1:18pm Jan 5, 2016 1:18pm
I did say that the last post would be the last, but there's something really important concerning timing your entries that I may have not mentioned above, and that is once you have recognized the area where the price is likely to move away in your desired direction, there will almost always be a trigger candle, a particular candle pattern which other traders are also watching for, which will bring enough of an influx of traders into the market to move the price. When everything else has lined up, and a trade looks on, wait for this candle, which often be a hammer/inverted hammer/shooting star, or a combination of two or three such candles. This must be your last confirmation, so obviously you need to have already predefined the pattern ( not candle pattern ) whether it be MA positioning or whatever, prior to the candle trigger. These will usually give you the optimum points of entry, because provided your analysis is correct, they will bring enough traders into the market on your side for the price to move away. Look out for these candles, they are really important.

Good luck and Happy New Year, it'll be a great one for us traders, be of no doubt!
  • #185
  • Jan 5, 2016 4:43pm Jan 5, 2016 4:43pm
Cat, Volume plays a huge part in my entry timing -
Volume that is exhausting coming into a level, can be a sure fire indication that price has no further (downside/upside) momentum, and is probably ready for a reversal entry - message me - and I will send you a example of this - best regards​
  • #186
  • Jan 6, 2016 3:08pm Jan 6, 2016 3:08pm
Quoting cat
I did say that the last post would be the last, but there's something really important concerning timing your entries that I may have not mentioned above, and that is once you have recognized the area where the price is likely to move away in your desired direction, there will almost always be a trigger candle, a particular candle pattern which other traders are also watching for, which will bring enough of an influx of traders into the market to move the price. When everything else has lined up, and a trade looks on, wait for this candle, which...
cheers mate - have been reading with interest and following quietly in the background. All the best for the New Year too and will drop you a line once in a while.
Regards,
In the tempest of a fast moving market; not everyone is happy.
  • #187
  • Jan 7, 2016 1:10am Jan 7, 2016 1:10am
Quoting kiwis
{quote} cheers mate - have been reading with interest and following quietly in the background. All the best for the New Year too and will drop you a line once in a while. Regards,
To you too Kiwis, wishing you a really great 2016!
  • #188
  • Jan 7, 2016 5:04am Jan 7, 2016 5:04am
Quoting cat
I did say that the last post would be the last, but there's something really important concerning timing your entries that I may have not mentioned above, and that is once you have recognized the area where the price is likely to move away in your desired direction, there will almost always be a trigger candle, a particular candle pattern which other traders are also watching for, which will bring enough of an influx of traders into the market to move the price. When everything else has lined up, and a trade looks on, wait for[/highlight]...
Hi Cat, I agree on the point but I would ask you, as you trade the 30 sec. or 1M. charts, the candle you meaning on what TF do you consider reliable to make other traders jump in?
By the way happy new year and great success to you.
Per aspera ad astra
  • #189
  • Edited 9:36am Jan 7, 2016 7:56am | Edited 9:36am
Quoting jpadvisor
{quote} Hi Cat, I agree on the point but I would ask you, as you trade the 30 sec. or 1M. charts, the candle you meaning on what TF do you consider reliable to make other traders jump in? By the way happy new year and great success to you.
It depends jp on what time frame you use to time your entries. If you are a 30m trader, then you trade off of a 30m candle, and if you are a 10 sec trader like me, then you trade off of a trigger candle on the 10 sec chart, but remember, that I am a multi-time frame trader, so the 10sec chart will merely give me the entry candle for a move that I have been anticipating from the price movement and pattern formation on the higher charts, namely the 30sec, 2m, 10m, 30m, but obviously the further out in time I move, the less the time frames influence the actual entry. Sometimes I'll trade off of a 1m candle, sometimes a 2 min candle, though mostly the 30 and 10 secs will give me the precise entry I'm looking for. Hope that helps

ps - when the volume is fairly low, like right now, or out of the peak trading hours, the candles on the 10 sec chart or anything smaller do not form properly, but usually the 30sec or 1m are fine. It's not just candles though that define whether I take a trade or not of course, as moving average positioning plays a big part, and often I'll take trades governed by this, without any candle trigger. Entries have to be part of a package, where different components come together to give you the trading opportunities.

oh, and Happy new Year to you too as well jp - wishing you great success this year

I've attached a pretty good example of a trigger candle from today's Dax which gave a 120 pip move down to the big support level of the Daily 76.4% which so far has held nicely. This is the 20 sec chart. Firstly it's important to stress that the momentum was heavily down. The price rose from the London open up towards the 1m 200ema before putting in some very clear directional change candles on the 1m chart. It would have been possible to have taken a pretty clean sell off of the 1m chart, but I like to get in closer, because the 20 or 10 sec chart is giving me so much more information, plus I can use a smaller stop loss. I also have to stress that I was expecting London to take the price up a bit before selling, they almost always do and vise-versa, and although I had no idea how far they would take it back up, the price action and the candles gave me all the information I needed that we were topping. So back to this 20 sec chart, these were the classic signs - diversion with MACD, one higher high, followed by another ( all the time MACD falling ) and then I got what I was waiting for, a lower high, followed by a Doji, which was followed by a shooting star, an incredibly powerful combination when a trade is imminent. I sold upon the completion of the shooting star, or you can wait in a situation like this for the 20ema to be crossed, and you have to be quick, no time for hesitation when trading these small time frames.
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  • #190
  • Jan 10, 2016 6:27am Jan 10, 2016 6:27am
Here's a theory of mine I'd like to share about why so many traders fail to make money consistently.

Apart from the obvious reason that trading is a lot more difficult to master than anyone realizes when they first come into it, for a variety of reasons, there is another one which has more to do with the way our brains are wired than anything else.

I base this theory upon what I have observed following various threads during my six years as a member here on forex factory, and that is that the overall majority of people seem to prefer jumping into the market when they think it has either topped or bottomed, than waiting patiently for a pullback and jumping in with the momentum and trend on their side. Everyone knows the aphorism ' Let the trend be your friend ', but few people seem to take any notice of it. But why?

In my opinion, and I am no psychologist, this stems from the fact that as humans, we tend to want all or nothing, which in trading terms means that we are more likely to try and capture an entire move than we are to settle for a percentage of it. Therefore, when the start of a big move has been missed, time and time again I see people attempting to counter it rather than trade with it. Because most moves move in a stair pattern rather than straight up or down, too many people see the counter moves as a possible change of direction without any such confirmation, and trade into the trend, when what they should be doing is using this as an opportunity to join the move on the winning side. It is almost as if the brain is saying to the market.. " I'll teach you, I missed the top, now I'm going to get in at the bottom ". This may well capture a few pips, but most traders will be hoping that the price keeps going for them at the very moment that they should be trading the other way as the price rejoins the trend.

Trade with the momentum, not against it, and learn to settle for a % of a move rather than trying to capture all of it, because entering with the trend following a pullback is the highest probability trading opportunity there is in this business.
  • #191
  • Jan 10, 2016 6:57am Jan 10, 2016 6:57am
Quoting cat
I did say that the last post would be the last, but there's something really important concerning timing your entries that I may have not mentioned above, and that is once you have recognized the area where the price is likely to move away in your desired direction, there will almost always be a trigger candle, a particular candle pattern which other traders are also watching for, which will bring enough of an influx of traders into the market to move the price. When everything else has lined up, and a trade looks on, wait for this candle, which...
The candle that allows you to add size with minimal risk. It appears on almost all timeframes before large moves.

and your theory about why traders lose money and how this game is 100% skill and 100% psychology rather than 10/90 are absolutely spot-on.

Fantastic posts cat.
Build good relationships with others.
  • #192
  • Jan 10, 2016 7:04am Jan 10, 2016 7:04am
Quoting cat
Preparation is key with trading. I don't know about you, but I get up two hours before the markets open at 7am trading the Dax. I either go for a run by the sea where I live or I do some yoga. I'm at my desk 40 minutes before the Frankfurt open, studying the charts to determine the most likely direction for the price to move and where S&R is most likely to be. By the time the markets open I am prepared, wide awake, and ready to go. If I worked for some organization, I would have to be like this, so working for myself is no different. I am meticulous...
+++
Build good relationships with others.
  • #193
  • Jan 10, 2016 7:07am Jan 10, 2016 7:07am
Quoting cat
Here's a theory of mine I'd like to share about why so many traders fail to make money consistently. Apart from the obvious reason that trading is a lot more difficult to master than anyone realizes when they first come into it, for a variety of reasons, there is another one which has more to do with the way our brains are wired than anything else. I base this theory upon what I have observed following various threads during my six years as a member here on forex factory, and that is that the overall majority of people seem to prefer jumping into...
Completely agree, and I think an additional factor is that it is harder to identify a tradeable pullback, for a continuation entry, than a tradeable extreme, for a mean-reversion entry. Consider the example of Friday morning's cash open in the DAX (8 am in the M15 chart below). For the red candles marked A and B, how would one, without the benefit of hindsight, answer the question

Is this the beginning of a down-trend or a pullback in an up-trend?

Add to this the fact that the most important factor for long-term success is consistency, i.e. you need a backtested method for answering the question above with some degree of accuracy, and picking extremes can seem an easier, and more attractive, task.
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  • #194
  • Jan 10, 2016 7:10am Jan 10, 2016 7:10am
Quoting cat
Here's a theory of mine I'd like to share about why so many traders fail to make money consistently. Apart from the obvious reason that trading is a lot more difficult to master than anyone realizes when they first come into it, for a variety of reasons, there is another one which has more to do with the way our brains are wired than anything else. I base this theory upon what I have observed following various threads during my six years as a member here on forex factory, and that is that the overall majority of people seem to prefer jumping into...
.
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  • #195
  • Jan 10, 2016 7:49am Jan 10, 2016 7:49am
Quoting seahorse
{quote} . {image}
haha..nice!! Makes me look as though I know what I'm talking about
  • #196
  • Edited 10:44am Jan 10, 2016 8:30am | Edited 10:44am
Quoting medici
{quote} Completely agree, and I think an additional factor is that it is harder to identify a tradeable pullback, for a continuation entry, than a tradeable extreme, for a mean-reversion entry. Consider the example of Friday morning's cash open in the DAX (8 am in the M15 chart below). For the red candles marked A and B, how would one, without the benefit of hindsight, answer the question Is this the beginning of a down-trend or a pullback in an up-trend? Add to this the fact that the most important factor for long-term success is consistency,...
I can only speak for myself in answering this question, and although we are now referring to everything with hindsight, I will do my best to elucidate how I saw the Dax on Friday morning at this time.

The particular moving average positioning I use indicated that it would be an up move, and I did buy immediately on the close of the 08.14 candle. Firstly, momentum on the smaleer time frames, 5-15 min was up, and I had certain moving averages still below the price on the 1m, 5 & 15m, and my strategy prevents me taking shorts whilst these are in this position. One never knows for sure, but I had enough information to buy as opposed to do nothing or sell

The price does what it usually does at the London open, dips back away from the pre-London open direction, which was up. When it does this, it is a sign that the London boys want to take it back to a level where it is safe to buy, and this is usually a major moving average on one of the small time frames. When the price left a strong looking hammer candle just above the 1m 200ema at 08.14, also dragging a smaller moving average down close to the 200ema, this was my buy signal - I was trading with momentum on my side, not against it, and I had the sort of candle, in the right position, that I know other traders are also watching for. It doesn't always work, but as long as the right mix of signals comes together, it does more often that not, and with such a move on the Dax, which moves fast, you don't need to risk a stop loss of more than 15 pips, which gets you beneath the 200ema and the Bollinger.

So where do you bail out, because with such a move, AGAINST the longer term momentum, try and stay in too long and you can easily throw your profit away. As I use six monitors, I am able to watch all the important time frames, and this move put in a double top on the 20min 200ema which showed up nicely on the 1m TF, and I was able to get my exit in close to the top of the move.

The important thing for me is that the 200ema was bearing down above the price on the bigger time frames ( 20m, 30m, H1 ), and although I did have some key moving averages below the price on the 30m chart on Friday, indicating the possibility of a strong up move, the mother of all of them, the 200ema/sma was still above, and with the sort of selling pressure we'd seen all week, it was unrealistic to expect the price to punch through it, even with a good NFP. As it happened, the up move from the NFP stopped just below the 30m 200ema/sma, but why just short of it, why not all the way to it? The answer is the 76.4% fib level, and it stopped there to the pip.

It is never a good idea to trade against the 200ema, unless it is taking a trade up towards it, as with the 08.14 long, but once there, I will usually trade away from it. There are set ups where you can use the big MAs like the 200ema/100sma to get trade entries up or down through them, and I think I may have posted something on this somewhere on a previous post above, but fundamentally, it is usually better to trade away from them.
  • #197
  • Jan 10, 2016 8:31am Jan 10, 2016 8:31am
Quoting shellsnail
{quote} The candle that allows you to add size with minimal risk. It appears on almost all timeframes before large moves. and your theory about why traders lose money and how this game is 100% skill and 100% psychology rather than 10/90 are absolutely spot-on. Fantastic posts cat.
Thanks Shellsnail, greatly appreciated!
  • #198
  • Jan 10, 2016 12:25pm Jan 10, 2016 12:25pm
Quoting cat
{quote} I can only speak for myself in answering this question, and although we are now referring to everything with hindsight, I will do my best to elucidate how I saw the Dax on Friday morning at this time. The particular moving average positioning I use indicated that it would be an up move, and I did buy immediately on the close of the 08.14 candle. Firstly, momentum on the smaleer time frames, 5-15 min was up, and I had certain moving averages still below the price on the 1m, 5 & 15m, and my strategy prevents me taking shorts whilst these are...
Thank you! So you've got your method, and I've got mine. They're different, but they both work. In the spirit of this thread, I thought it might be helpful to share a little bit about how one may go about developing something that works over the long term.

The first thing to note is that all trading is about identifying support and resistance levels. If, like you, one trades with a 15 point stop loss, then one wants to find entry levels where the security is more likely to move 15 points in one direction than the other. Similarly, exits ought to be at S/R levela too.

A tool that I, and many others who trade for a living, use is that of a Keltner Channel - a moving average channel with bands at a fixed ATR multiple from the MA. In the chart below of the same Friday morning, I've chosen an EMA160 channel with 8 ATR bands. Simply put, the idea is to use the EMA for entries and the channel bands for exits. Then I've added an oscillator, a Coppock Curve, for entries/exits.

Say the rules are to enter from the EMA in the direction of the trend, with change of colour in the Coppock Curve as entry trigger. On Friday morning there would have been a long entry at close of the 8.15 candle for about 50 points up to the channel band. Then long again at close of the 9.45 candle for about 25 points until the index loses momentum, as indicated by the Coppock Curve, in a lower high at 10.04. Then the EMA fails as support, and one may consider short entries. And so forth.

Admittedly, this was too brief and involved a bit of curve fitting. But along these lines it is possible to develop a profitable and stable trading strategy. One just has to make the curve fitting in a statistical sense, so that it works in backtesting over the last few months at least. Then, of course, one also has to define the rules more precisely about entries and exits as well as what constitutes trend/reversal/consolidation and so on.

For the interested reader, this theme is developed in much more detail in Alexander Elder's book Come Into My Trading Room. Last time I looked one could find a pdf for free download. The stuff about channel trading starts at the bottom of page 94. If you do the work, you will be successful. I promise. This approach works.

Of course, one may, like cat and myself, add more MAs, or one may not. And one may, like cat, add multiple time-frames, or one may not. I used to trade with three monitors, but have now cut down to two. The simpler the better, and less information means less cognitive stress. In fact, I'm happy to trade off a single chart on a laptop, and I do when travelling.

Good luck!
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  • #199
  • Jan 10, 2016 3:40pm Jan 10, 2016 3:40pm
[quote=medici;8681457]{quote} Thank you! So you've got your method, and I've got mine. They're different, but they both work. In the spirit of this thread, I thought it might be helpful to share a little bit about how one may go about developing something that works over the long term. The first thing to note is that all trading is about identifying support and resistance levels....

That's great medici, thanks, that's what this thread was intended for - traders sharing their own little bit of wisdom for the benefit of others. Much appreciated
  • #200
  • Jan 14, 2016 12:59pm Jan 14, 2016 12:59pm
Hi guys, anyone here can tell me about price action? Many thanks for all the good stuff you're publishing here
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