sunday
this caught my eye
Brett Steenbarger said:
A common piece of market wisdom is that traders must trade in a way that is consistent with their personalities. There is truth to that--a quantitative investor probably will not do well as a discretionary day trader--but all too often that principle is used to justify sticking with trading methods that simply do not fit market conditions.
the question is, how far back does any technique have to travel to gain a reasonable framework for the technique to be effective, how far back to frame each part of a technique to each size of market play,
or, looking forward, how far forward can a technique focus, sharply enough, to play chop for the smaller time frame ?
to use an analogy, think of a an Olympic relay that occurs on one day
what kind of practice does a 800m sprinter need to do to become a 100m sprinter
what type of things does a 100m sprinter need to do to be a 800m sprinter
the market does not suit a 100m sprinter all the time, nor a 800m sprinter all the time
and you as a trader need to know the length of the race and whom you are racing with and against
before, during and after the race ....this is a limited analogy in that it supposes the auction is linear
and I have likened the auction to a rugby match where your opponent is coming at you with the ball, at speed,
twice your size, your job is to stop him, he drops the right shoulder and steps left...it's a no-win, you didnt get pummeled (that's nice!) and he scores the try (that's not!) notwithstanding that a rugby game has four corners and time limits, the dynamics of an auction has advantages that are themselves a disadvantage used incorrectly
summised incorrectly, engaged incorrectly, framed incorrectly, given incorrect context
rugby players have a specific-sized ball rule, traders screw up by constantly carrying the wrong sized ball,
a conversation all to itself......
so these are basic questions, to frame the current phase of play, about how to deal with intent, stop-runs,
news whips, completing set-ups, creating a play, true breaks, false break, when to scale most vigorously, when to add, when price is impulsively traveling, when price is being moved with intent, when money is
moving in or out, moving in and out for an upcoming release, when to say I don't know,
when to sit on your hands during games within games, phases within phases, building ideas on what has priority,
etc etc
again, i ask how far back do we need to look
the reason is size of money
i keep hammering about relative size and context
part of the reason some technicians had success, huge success, in some phases of play is simply due to bringing the greatest leverage they could to one specific stage of play, for example, Hurst understood that the further out in his Sigma bands price traveled, the higher the probabilities that major money would bring itself to the table to take a major stake in the buy-side game when price slumped, regardless of the immediacy of causality that money would come into play, hence, someones account is buying all that panic selling, someones selling to all that bargain buying, at sigma 1 the most likely bids are retail with the reactive time span of a latte,
at sigma 5 deep pockets with a time span of a decade, probably, maybe longer.....
so, if that has truth on that larger time scale, how can that be focused on intraday, what are the markers that give a clue to holding positions into the next time scale....once these are identified, they need to be dissected backwards, to bring balance
relative size + context + balance
understand the relative size of a previous set of phases, focusing each level phase of price (price width)
find context for each phase and price width
when is context different, how is it different for each size of price width
width is different to length, in that, price can travel the same distance twice and hint that that is a completion
but if the context is different and not interpreted correctly then your balance is lost, that is, you have become emotively attached to a previous phase of play without realising you are now in that emotive logic
every single execution has context as it has its own size, bid v offer, every single execution has its own intent to do business in a certain zone, whether its framed as value or framed as a function of price, or simply emotive logic ....being aware that not every single bid is met by a single offer, that multiple bids can be met by a single offer, that a single bid (size) can be filled by multiple offers (same size in total) and this alone clearly tells us of the dynamics of many ideas of price fulfilling one single idea of price...in an auction process where many traders are going to make their daily bread, lose a truck load, oversize, get divorced, lose the house, be in debt
there is no such thing as laziness, there is only such a thing as personal accountability
you cannot define for a person what laziness is, you can define for someone what personal accountability is
I can prove that beyond opinion, in that, your brain can grasp a firm idea by rules and guidelines what accountability actually is in a tangible, present-day, in-the-moment, actionable and realisable way that can bring effective results
lazyness conversely is a summation of something abstract, it lends to judgement and does not allow one to progress, rather regress, it does not seek to do anything constructive
traders are mostly one of two things ignorant or slightly ignorant = price discovery
it is neither good nor bad, right nor wrong only extent
applying my own accountability i do all the parts I have placed here for you to read
balance is the practice of asking the question of what-if in any given phase of play, within each size of play, the context for that play
there must be a tool that allows balance to fruition, for me the basic tool is employing a wide array of ratios
however, again, not applied in ad-hoc way, not in a mechanical way, not in any rigidity
rather, in a structural way that pushes to understand the auction in terms of the time of the day, week, month
to assist in affirming or disseminating what kind type of liquidity is at work, at what point is retail money stepping in, manager money at work, deep pockets at work.....keeping alive the idea that these things are not absolute, in other words, framing probabilities is mostly yet not always about understanding the auction activity, sometimes the trade is a memory set-up of experience, experience being a sum of memory, like an unconscious competence (a different conversation to this one) this array of ratios allow for balance, what should be happening, what is happening, what would typically happen, phases within phases, allowing time to think without having the tool do the thinking for me
tools don't fail traders do, patterns don't fail traders do, trend-lines are just lines on a chart, they dont fail, the trader who drew them fails, bars don't open or close too early traders do, moving averages dont mislead, trader misunderstand, traders oversize and fail, triangles on a chart are only triangle until they're no longer that shape
like head and shoulders, they're an attempt to force price into an idea, a rush to a conclusion and those conclusions do more damage when they're bear out in a traders favour as the next time, when the trader gets beaten up does it become apparent that the previous occasion was coincidental
it is as much to get into your head about failure in trade execution as it is to have fear of smoking to cause you cancer, to have fear that stepping off a 100 storied building without a rope is to over-sizing your positions
your accountability lays within how you understand and internalize each part of your knowledge
to just know something is not enough
as much as it is the current activity that can cause damage, non-activity needs it's own context and understanding....what is stopping activity...what do they see that I don't, what's causing hesitation, what's affecting momentum.....ideally these things are read in the bars and not thru a derivative of price
rigidity of any format, or technique, breaks down where the dynamics of price transitions or rotates to a new phase within a larger phase
a challenge in posting ideas in forums is correct language, as language regardless of how subtle or pedantic it may seem, elicits specific focus that we each have whether inate or practiced, you may interpret me to mean one thing and go on a journey from there.....in that instance there is a vacuum at play
the consequences of vacuum, or vacuous conversation cannot be underestimated
it is the responsibility of the writer to be absolutely clear, concise and indepth to the point of nauseating boredom for the reader, as much as it is the responsibility to play his/her own part on narrating what they think is being conveyed
I am flippant and rude of any piece that i think to be shallow and dangerous for readers if that piece clearly purports itself to be knowledgeable in the trading game
again, language, as any surgeon or barrister shall attest, plays such a vital role in posting as it does in self-talk during a trading session,
a trader may not need to elocute outloud what is unfurling, yet, one requires a definitive dialogue when conveying to another person what their ideas are, this alone is the area where well-intentioned conversations have led to basic failings for the recipient, not withstanding, in many instances, the recipient may build a whole framework of thinking based on those conversations or a single idea, especially where the starting details or ending details are not apparent
most traders are asking questions to arrive at most-meaningful answers
most students of the auction process are asking questions of when something is the most-meaningless
FT71's 3 phases of a trader:
Trader FT71 said:
Risk averse, Risk neutral, Risk seeking
those 3 phases are true of a student of the markets too, long before any bet is placed, long before any trade is placed, those 3 phases are true in any endeavor, they are endogenous to us as human beings
the rush to be right and look good are part of what most of us bring to the auction process, our rubbish baggage.
you should not assume, reading any text on trading, that you understand what is being said in its entirety, with all the parts, nuances, practiced (or otherwise) skill-sets the writer has or has placed in front of you,
it is your responsibility to ask at what point a trading idea breaks down to its weakest point
first, define how many moving parts are in the text, then begin to dissect each part, thinking thru each part, taking time to suppose possibilities for each part so you can move to the probabilities of weakness/strength that exists within each part,
at that point you have your own cognitive logic to forward test, you are creating your own balance, you are creating your own context, you are building your own unconscious competence and building the rules for your own accountability
I am not a tutor.
re-commend this thought process:
FT71's 3 phases of a trader:
Trader FT71 said:
traders go from Risk averse, to Risk neutral, to Risk seeking
sources:
Dr Brett Steenbarger
http://traderfeed.blogspot.com.au/2015/08/getting-past-frustration-of-trading.html
FT71
https://twitter.com/futurestrader71