Summary
-The first thing to understand about trading markets is it’s all about probabilities.
-Learning to become an expert in losing. We are going to be wrong and we are going to lose at times. How do we deal with this? What can we learn from our losing trades?
-Observation: Looking for patterns that keep repeating. When you start trading, 75% of your time should be spent just observing charts and patterns.
-Tracking patterns: Learning to recognize accumulation, re-accummulation and absorption which lead to breakouts.
-Viewing our own psychology and staying positive. We are going to struggle early on in your trading career. Everyone struggles. If you are now, you will probably not get to the next level.
-Developing rules on selling and putting in stops. The technical situation is not the set up. Scott explains.
-Scott shares some examples of classic trend absorption for option trading
-Scott talks about the mistakes he made early on that really got him in trouble; the time he was losing the most.
-Becoming a combination trader by blending techniques.
-Tracking your net profitability
-Setting stops
-Dealing with stocks that have gapped up 100%. Scott doesn’t like them and explains why.
-Supply is the main factor in markets
-Young traders need to focus on strong stocks and breakouts and trade less.
-How premarket and after hours charts figure into the bigger picture
-Trading breakouts; observing characteristics of a stock that’s getting ready to break out.
and more –
Video reserved for subscribers
In this context of probabilities, it’s either win, lose, scratch. And we are striving for net profitability – net. That still includes losing, it can not be avoided. And if we are working hard, big if for most people, then we will struggle thru and the losing is a positive because it gets us closer, and eventually we can survive.
I am not understanding the problem with ZTO, Weren’t you up over 10%? So didn’t your trade work? To me, you are making this too hard for yourself. I still do not see you doing clear defined specific trade setups. You need to develop trade setups, hone them, use them in the right situations, AND have selling rules. This trade actually worked as far as I can see. ANd why would you not sell at least some at the LHBL res. Clear res at 21.50ish. And up there it had some 5 minute bar spikiness. Clear selling area especially when, to me, you should be doing a bounce trade, a box setup, and not sitting in it. The thing should have worked for you. So you track this and you will learn. And yes of course they are connected, everything in markets is connected, but it needs to be put in context. And again, too much analyzing of a chart, not enough pure pattern work and tracking and honing.
As far as the waves, it is too hard to explain, it depends on the technical situation in which it exists in. And it depends on what you’re trading, small stock or big market for instance. A bounce trade on a small stock, just looking for waves, or spike lows on the way down. A bigger bottom, there needs to be 2 EA waves. Often times the first wave is SA, not EA. Just work at this, observing.
Yes for A, maybe there is something for you. I do not know.
Just use parameters, res area, some % move, and selling rules. Keep it simple.
And do you see what I mean about spike lows/springs, like ZTO. That is a specific setup. Please listen to me. Trade a setup, not the analysis. Make it simple. Develop a setup, learn it, and wait for it. Otherwise do nothing. Do not rely on your analysis. Spend your time and energy tracking patterns, the probabilities and believe in them. It should be for you for now based on spike low/spring and/or breakouts. Everything else is much harder to learn and implement.
Raphael I do not understand that setup. You are going to have to be careful here, that 123 bottom setup took me a long time to hone. First I literally just started seeing something via being around and awake every day and I just started seeing something, a pattern. Then I started going thru a ton of charts, tracking it, seeing in real time, started believing there was a probability reason to pursue it, and then had to figure out how and when and where to implement, and only then did I start trading it – and losing. But I honed it, and it is a big part of what I do, but not the only part. You seem to be sort of fixated on a 123 pattern, but I really do not use it that often. A dip buy, a pure breakout, a spring in reaccum, a spike low buy on the open in a stock preparing to bko, a 123 bounce setup in a crap stock off of EA#1. All kinds of trades. But they are SETUPS, not analysis. Again, springs/spike lows and something involving bkos. That should be it. So awesome in those situations. It is about supply. When is it ready to move. I believe you consider yourself a trader, not investor. Then that thing, trade, should move in your direction soon after entering. My point with ZTO, I’m trying to get you to recognize the best setups, and only wait for them. And are you listening to me when I say you should be able to put a name to each setup that you are looking to trade. You should write it down right as you are looking to do it. If you can not write down the setup, and know exactly what it is, you should not be trading it.
And yes we can talk about that. But again, you are missing the point sort of. You were up over 10% and that would have worked. That should be what you are trying to work on. My friend Sheldon, one of the best pure traders I’ve known, he knew zero about analysis, was lost when he looked at a chart. He understood some type of things that kept repeating, and he did them. Whatever they were, not important, but he was a master at them. For years, I was very good about just sticking to minimal analysis, and just trading with a clear head. Over-analyzing messes with the head, causes too much of a guessing mindset. Since I started writing in public, I have found myself doing way too much analysis, it affects my mindset, and for now it is what it is. I’ll get back to the old approach at some time. This whole thing about trading, is about developing solid trade setups, know in what situation to implement them, knowing the probabilities, believing in your work meaning the probabilities, and seeing it unfold, and TRADING YOUR PROBABILITIES. It’s all about probabilities. You just need to believe in them. And you step in and do the trade, and it works or it doesn’t. Everything else about trading, about markets, is all noise, and total bullshit. The charts, the analyzing, it is purely to help us believe in the probabilities.
I have not researched that, I only go off of some type of EA. Your main focus should be on learning to recognize accum and reaccum. And focusing on strong stocks, uptrending stocks, bko stocks, recent bko stocks. And having trade setups or even one setup for those conditions. And implementing and then using selling rules, selling into strength, at res, with parameters, and setting stops, and moving stops up. Make this simpler. Dist is more difficult than accum.
Do you know about using OCO orders? I do not use them very often, don’t like them, but it is a possibility. In lieu of that, the stop is the most important. You should be able to understand why. Let me know why.
Yes there is no better teacher than the trading itself. Are you tracking all of your trades? Are you tracking them by trade setup? That is the way to do it. It’s the best way to begin to understand the probabilities of your trading opportunities.
You need to start somewhere, but the very important point is you need to just start and you need to just do it. Doing, doing, doing – something productive relative to success in trading.
You want to see a spike, but more so you want to see green like the incredible one in CVSI yesterday, 30% in 15 minutes.
Solid demand – you know this. What is an uptrend? What is the upside of accum? What is reaccum? That is when it is solid beneath. Basically the opposite of overhead supply. Solid demand below is why buying dips in uptrenders is so powerful. Most people are up on it. Less supply. Wave structure – look at the HEAR chart I posted today. That is wave structure.
Yes often times the news comes right into res. Yes things are manipulated, that is a big part of the great Richard Wyckoff’s teachings.
Have you been studying that CVSI chart. I have talked about that thing every single day. That is how to do this thing about learning this business. In my total incompetence early years I was obsessed with trying to figure out how the really competent guys were right so often. And how did they do that. So I would study study study the charts of trades I knew they were doing, trying to find the recurring patterns. That is a HUGE part of how I became really good at trading. So do you study all of these excellent trading stocks which I consistently post and discuss? That is the question I have.