tech/a
No Ordinary Duck
- Joined
- 14 October 2004
- Posts
- 20,452
- Reactions
- 6,504
In reply to some comments I made on the One Good trade thread of Can Oz.
There are NO SECRETS and here they are!
Firstly ALL analysis "works" in a bull market. Anyone can make a profit in a strongly trending bull market--just ask your local taxi driver.
Its pretty common knowledge and one of the TRUE truisms of trading/investing that the market will trend 30% of the time and either distribute or accumulate in consolidations during the other times--70 %.
Its also true that there will be trends in sometime frame at any one time--during consolidations.
So if we are going to trade/invest profitably we best be able to recognise that we need to find a trend 2 bars or more--in a time frame so we can profit.
Our analysis---at best--- points us to set-ups which give us the ability to anticipate price action both--- Fundamental and Technical. At best its a 50/50 result over very long periods but by identifying where we are in a move (Consolidation or Trend) in a time frame we can be better prepared to trade or invest in the time frame chosen.
We should be constantly looking for set-ups which point to a trend --- be it within a lower time-frame in a consolidation or a breakout in any time frame.
Most trends last longer than expected and most consolidations resist breaking out in either direction longer than expected.
In the short term we can identify time periods which are likely to trend in a direction for a number of bars ( Trend or Counter trend trades).This can swing the odds in our favour---giving us one string to the bow of profit---anticipation.
Radge once said that " It doesn't matter if your wrong---only how long you stay wrong "
So the best way to minimise loss through being wrong too long is to have either a stop loss---OR a mechanism in your analysis which tells you that your analysis is wrong---quick enough to mitigate risk.
"Let your winners run"
The next string to the bow. You need to have either an anticipated target OR a mechanism to determine the end of your trading trend in your time frame which maximises your time in a trade in your chosen direction.
You see there are ONLY 3 ways (Other than Arbitrage) That you can profit from your Trading/Investing.
More aggregate wining profitable trades than aggregate losing trades.
OR
Bigger aggregate Winning trades to Aggregate losing trades.
OR
A combination of both.
So in that thread I mentioned that it doesn't matter if you find your analysis doesn't pan out or you read it wrong.
The reason.
If you know the above and you've put those understandings in place you'll be trading time frames and set-ups that in the long run will deliver you positive expectancy through your trade management and the understanding that there are NO SECRETS.
The traders trap is to constantly buy that new book or try that new trading technique
in the hope that it will find and give an EDGE.
That edge is staring you in the face
REGARDLESS OF METHOD USED.
There are NO SECRETS and here they are!
Firstly ALL analysis "works" in a bull market. Anyone can make a profit in a strongly trending bull market--just ask your local taxi driver.
Its pretty common knowledge and one of the TRUE truisms of trading/investing that the market will trend 30% of the time and either distribute or accumulate in consolidations during the other times--70 %.
Its also true that there will be trends in sometime frame at any one time--during consolidations.
So if we are going to trade/invest profitably we best be able to recognise that we need to find a trend 2 bars or more--in a time frame so we can profit.
Our analysis---at best--- points us to set-ups which give us the ability to anticipate price action both--- Fundamental and Technical. At best its a 50/50 result over very long periods but by identifying where we are in a move (Consolidation or Trend) in a time frame we can be better prepared to trade or invest in the time frame chosen.
We should be constantly looking for set-ups which point to a trend --- be it within a lower time-frame in a consolidation or a breakout in any time frame.
Most trends last longer than expected and most consolidations resist breaking out in either direction longer than expected.
In the short term we can identify time periods which are likely to trend in a direction for a number of bars ( Trend or Counter trend trades).This can swing the odds in our favour---giving us one string to the bow of profit---anticipation.
Radge once said that " It doesn't matter if your wrong---only how long you stay wrong "
So the best way to minimise loss through being wrong too long is to have either a stop loss---OR a mechanism in your analysis which tells you that your analysis is wrong---quick enough to mitigate risk.
"Let your winners run"
The next string to the bow. You need to have either an anticipated target OR a mechanism to determine the end of your trading trend in your time frame which maximises your time in a trade in your chosen direction.
You see there are ONLY 3 ways (Other than Arbitrage) That you can profit from your Trading/Investing.
More aggregate wining profitable trades than aggregate losing trades.
OR
Bigger aggregate Winning trades to Aggregate losing trades.
OR
A combination of both.
So in that thread I mentioned that it doesn't matter if you find your analysis doesn't pan out or you read it wrong.
The reason.
If you know the above and you've put those understandings in place you'll be trading time frames and set-ups that in the long run will deliver you positive expectancy through your trade management and the understanding that there are NO SECRETS.
The traders trap is to constantly buy that new book or try that new trading technique
in the hope that it will find and give an EDGE.
That edge is staring you in the face
REGARDLESS OF METHOD USED.