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Learning to trade

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Question for any of the fellas here who are actual long term successful TRADERS (I'm not currently a trader, just a buy and hold guy, basically): if you have a genuine strong edge I assume you would guard it jealously; so how would you deal with the temptation to also manage other people's money under a prop / investment firm?

Say you have some fantastical strategy that lets you destroy the S&P 500 return by averaging say 30% growth annually over many years, unless you're already a multimillionaire, it can take a very long time to get wealthy without the "2 and 20" or similar arrangement of growing other's people's money (as well as your own).

I understand those firms tend to want to interview you and know all your secrets before they let you use their money. So you might be able to get access to their funds to earn performance fees on, but all your secrets are then owned and constantly tracked by very slick parasites.

Obviously it's not an issue for many; as the brutal reality is most traders simply fail.
 
@StockyGuy your post touches on a number of points that aren't a part of this thread, I think that it should have been posted into a thread that is more suitable for your topics.
 
@StockyGuy your talking about leverage.
For me I overcome that by trading Futures.
In the early days I traded margin. I now trade
my own super along with my own short term trading.
Its certainly not and never has been a temptation!.
 

I've studied Volume for 35 years.
Most people focus on Demand.
I think this is the wrong way to look at volume.
The biggest influence on price is supply.

If there is plenty of supply it means many important things.

(1) Holders are not willing to keep the instrument.
(2) Demand is not absorbing supply and as such price drops.
(3) Price will not rise until supply stops. Once this happens buyers must
pay more to those willing to sell. OR Demand absorbs price until it reaches a price where
supply sees value in selling into demand. Once the two match in perceived value then the price
will stall.

To me supply governs price. Not demand. If an instrument is held and supply is withdrawn
price will rise as any demand has to pay higher prices.

In volume charts, you will see these blocks: withholding and increasing supply.
These tend to become support and resistance levels NOT price support and resistance but
volume Support and Resistance.

Oneday I should write a paper on Volume support and resistance.
 
tech/a said:
@StockyGuy your talking about leverage.
For me I overcome that by trading Futures.
In the early days I traded margin. I now trade
my own super along with my own short term trading.
Its certainly not and never has been a temptation!.
Click to expand...
More of a general comment (not so much directed at what you stated): margin loans are terrifying these days - mostly 9-10% interest per annum! Sitting on the safe blue chips preferred by lenders you'd very often end up paying more in interest than the total return of the stock. I'm surprised anyone goes for such rates.
 
I'm posting below some wise words from a successful Australian trader, John Howell. He's a pure technical trader that uses a simple system to trade, he has about 20 years of experience in trading and his success is a good example showing that it's not so much the system that you use but your understanding of the markets that makes you the money.

Even experienced traders are always learning but this post is mainly for the benefit of traders in the earlier stages of their journey, or maybe some that have gotten a bit lost from information overload and need a reminder.


Embrace Every Loss, for It is the Seed of Your Growth

In the world of trading, it's not the wins that shape you the most—it's the losses.

Every losing trade carries with it a lesson, a chance to learn, adapt, and sharpen your skills. These moments aren't setbacks; they are stepping stones to mastery.

When you face a loss, don't see it as failure, but as a powerful opportunity to improve. Ask yourself, "What can I learn from this?

How can I adjust my strategy to be better next time?" It's this commitment to growth that will ultimately lead you to the bigger profits, the better decisions, and the more consistent success you seek.

Be grateful for the lessons hidden within each losing trade, for they are the foundation of your future victories. With every setback, you are getting closer to becoming the trader you were meant to be.

Trust in the process, stay disciplined, and know that your future profits will be built on the strength you gain from every loss.

Keep learning. Keep growing. Your best trades are still ahead of you.

Hope this helps
John Howell
 
Trading teaches you far more about yourself and the way you think and react to financial scenarios than any formal education or financial
Guru/advisor.

Number 1 By far the best thing I learnt very early on was how to address risk
How to quantify it and how to control it.

Number 2 is how to be ruthlessly decisive
Both on the buy and the sell side .
No second guessing no changing your mind
No rhetoric with yourself just do it and if your wrong repeat the above!

Number 3 and everyone has heard this time and again . Have a plan but not just any plan
Have a plan you that you know has a positive expectancy .
 

Someone smarter than I may like to explain the last sentence in the article:

"High volume indicates heightened enthusiasm of investors eager to sell while
low volume indicates heightened enthusiasm of investors eager to sell."
 
Hi @tech/a ,

Firstly let me say I love reading your insights on volume.


I've been trading price and volume relationships for around 10 years and many of your points resonate with my understanding and my experience trading.


Over the years I've developed my own way of interpreting price in relation to volume, namely, identifying the path of least resistance and then trading in that direction, at key points on retracements within market structure HH HL or LH LL and using a two timeframe approach. A large One for bias and smaller one for retracements and execution.


I agree it's all about the supply, not demand. Essentially, when price (at the right points in time) is able to close above or below 'significant' volume on ( importantly) low volume candles, the path of least resistance is identified. From that point, you can create different kinds of trading edges with the information, namely, trading in the direction of least resistance. IMHO most of the herd understanding by retail traders out there on how volume and price works is the opposite to the reality (such as in the article mentioned above) Eg high vol candles are good sign of demand and buy signal. In most cases it's distribution not aggressive buying. Or low volume bars are a sign of no interest when in many cases low volume bars closing above higher volume bars indicates low supply can close over high volume, the path of least resistance is UP. Only buys should be considered.


Anyway thanks for sharing your insights on volume much appreciated.
 
Last edited:
Such wisdom there.
 
Trender.

Don't know if you've had much experience with Market Profile
But if you're into volume and Support resistance this is a topic you'll eat!

Peter Steidlmayer was blazing a trail long before us!

 
tech/a said:
Trender.

Don't know if you've had much experience with Market Profile
But if you're into volume and Support resistance this is a topic you'll eat!

Peter Steidlmayer was blazing a trail long before us!

View attachment 190752
Click to expand...
Thanks for the recommendation and yes I have the book and highlighted and underlined the crap outta it over the years and it helped form my trading methodology.

Essentially, I am a market profile trader but I prefer to use volume resistance and support levels on a much more 'recent' basis, basically from the most recent price action where I see paths of least resistance created as opposed to possibly a larger volume level which may indicate support or resistance. I've found my edge in honing in closer to the most recent PA then executing. Sorry I know I'm not explaining clearly, I'll post an example when I'm on ny laptop which will better demonstrate what I'm (attempting but likely failing), to articulate.

Thanks again for the book reco.
 
Just to follow up with a simple example of what I was trying to articulate. A forex example. Even though there's no centralized volume I am still able to get an edge using the broker platform volume.

Chart 1: 4h Chart. Price making HH and HL. I will assume markets are perfect (even though they are not) and will continue with the structure and the protected strong low shouldnt be breached. Once a new HH is formed on say the 4h, I then go to the 1H and wait for a retracement. As long as it doesn't break the 4h strong low, I am still looking for buys. Once I identify to me what the Path of Least resistance most likely is, I will enter with a SL and TP similar to the example posted. I often will target the higher bias high (or low if shorting) or look for a measured move to TP.





Chart 2: 1h, As price retraces, I am not interested to look for buys unless it retraces at least 50%. If it does, I look for price to close above 'high' volume' on a low volume candle. Lets assume in this case the high vol candles are in yellow and blue and green are low. the white arrow is indicating the first 'low' vol candle closing above a high vol.




Anyway thanks for listening to my babble. Just wanted to follow up on what I said I would post. I very much see myself as a student of the market and of other experienced traders.




Looking forward to getting involved in more related discussions.
 
One more longer TF example. Weekly chart. Using just this timeframe,

US30:

As soon as 'low vol' (arrow indicating first low vol candle) candle is able to close above 'high vol', the path of least resistance (probability wise) is to the upside (for my methodology). This has to happen within some market structure, Btw this was the covid drop. I see those massive yellow vol bars as absorption by the smart money. Once supply is absorbed, it doesn't take much volume for price to rise. Its the low volume that i see as key, once this happens, Its off to the races.

 
@trender
Thanks for the charts
Clear evidence of volume ( particularly ) absorption
Of Supply allowing forward movement.
And blow off tops at crucial S&R levels
Don’t trade Forex so not up with market quirks.
 
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