Post by traderAllen on Jan 10, 2015 13:29:22 GMT -5
Trading markets is one of the most difficult things you'll ever tried to accomplish. I have traded over the years just about everything. I traded stocks, ETF's, options, and 4X. Currently my main trading is spot Forex with some futures. I still manage some ETF's. I started this adventure write about 2001, after I picked up my family moved to a different state and started a new job where I finally was making enough money to start investing. My dream of being a stock market player started when I was about 15 years old when one of my teachers held a contest to see who could pick the best performing stock portfolio. From that point on I was hooked. The idea of making money with money is this fascinating.
However the road to being profitable is probably the most difficult path to ever follow, except for the very few that were born into families on Wall Street, the rest of us really like the guidance that's needed to navigate the path to financial freedom. As you travel along the path there are many many obstacles in the way, primarily the lack of any formal education for what it takes to be a profitable trader. This increases the amount of time that it takes to learn. When you're a new trader you have no clue what you really need to know and what is total BS. This leads to the second biggest problem, all the marketeers that of trying to separate you from your money. They try to sell you a magic algorithm or a magic indicator, or you read a book where for an indicator points this direction or line points that direction you should buy or sell. The truth is once you become a profitable trader you will realize just how much crap there is out there. It's enough to make you slightly angry at all the money you spent on work was books and systems and other junk that's only real purpose was to take money from your pocket.
Therefore, the only real way to learn how to trade or invest for that matter is to find someone who is a profitable trader or investor and model would they do. This is not always possible so many people like myself had to take the long path like most of you are doing. I hope that by sharing my knowledge I can decrease the learning curve for many of you and maybe save you some money in the long run.
If you're learning to invest there are many things that can give you a heads up I won't go into them here. But if you're learning to trade you really need to keep things simple. If you're going to be scalping the market as I do, speed is a necessity, not that you have to be supervised like the high-speed traders. But when you see a set up, and you see the orders coming in, you need to be prepared to jump in at the beginning of that order flow.
I gave the analogy earlier about Plato's cave. And that really is the best way to look at. Our job is a scalper is not to move the markets will never have the capital for that. Our job is a scalper is to watch the charts for patterns in our case we use FPAS. For determining these patterns. However once we see a pattern forming we now start attempting to look behind the shadows on the chart. If we take this trade are we going to be running headlong into a supporter resistance area. If we take this trade is there room enough for us to grab some pips for-profit and give some pips for spread before reaching a support or resistance area. If there's not we pass. Once we have determined we have a valid setup, and we have room for trade to maneuver for a profit. We then appear behind the shadows on the chart again only this time we are looking to figure out what is creating the shadows. Are we in an area where countertrend traders are likely to come in, are we in an area where with trend traders are looking to add to their position, and one of the big ones are we in an area where we can expect the Fib Bots to come into play.
If we are we now have the makings for a high probable trade.1 we have a valid set up. 2 we have room for a trade to complete. 3 we have the expectation that other traders are going to step in and push our trade to profit.
High probability low risk trades is what we search for. You must learn the patient's to sit on your hands until you have the setups.
A word on psychology. You have to realize that you are human you're going to have emotions. Trading can wreak total chaos on your psychological well-being. Over the years I have more than one occasion place a trade. And then went to bed and slept like a baby. Up all night kicking and crying. Trading can be very frustrating just when you think you've got it you had a string of losses. More likely than not you have done everything correct but you failed to recognize market conditions have changed. This is probably one of the most frustrating things when you're learning, you feel you've almost grabbed a golden ring then someone moves the ring higher. You start to feel stupid,you start to think that you screwed up, well maybe you did, and sometimes you will, but that's all part of being human. Keeping your position sizes small. We'll help you with your emotions. Realizing that getting a losing trade is not the end of the world and just part of trading will also help. This brings up another point of the Journal you must Journal. Did you hear me say that! I'll say it again! You must Journal! Losing trades causes up pain therefore we remember them. Winning trades make us happy, but so do our significant others, our children, and many other things. So we don't often remember all of our winning trades, but the losers will be stuck in our skulls like a hot knife. When you're able to look at your journal and see that you had a few losses but he had many winners you are able to overcome that pain and move on with your trading plan without being negatively affected.
So the best have to follow is to find a profitable trader to model their trading methodology. Ask questions, most profitable traders, granted there are few, don't mind answering questions when asked politely. Try to stay clear of all the gimmicks from the marketeers. You really don't need much more than a bare naked chart. With the exception of some utility indicators that can take over some functions for you. And then journal, Journal, Journal! This step most aspiring traders will never do. They will never understand the importance of recording your trading data. Not only does this help you emotionally, helps as a guide, but it also helps you to identify when you need to make adjustments for market conditions.
Plan the trade, trade the plan, Journal the trade
And enjoy this new trading year, Allen
However the road to being profitable is probably the most difficult path to ever follow, except for the very few that were born into families on Wall Street, the rest of us really like the guidance that's needed to navigate the path to financial freedom. As you travel along the path there are many many obstacles in the way, primarily the lack of any formal education for what it takes to be a profitable trader. This increases the amount of time that it takes to learn. When you're a new trader you have no clue what you really need to know and what is total BS. This leads to the second biggest problem, all the marketeers that of trying to separate you from your money. They try to sell you a magic algorithm or a magic indicator, or you read a book where for an indicator points this direction or line points that direction you should buy or sell. The truth is once you become a profitable trader you will realize just how much crap there is out there. It's enough to make you slightly angry at all the money you spent on work was books and systems and other junk that's only real purpose was to take money from your pocket.
Therefore, the only real way to learn how to trade or invest for that matter is to find someone who is a profitable trader or investor and model would they do. This is not always possible so many people like myself had to take the long path like most of you are doing. I hope that by sharing my knowledge I can decrease the learning curve for many of you and maybe save you some money in the long run.
If you're learning to invest there are many things that can give you a heads up I won't go into them here. But if you're learning to trade you really need to keep things simple. If you're going to be scalping the market as I do, speed is a necessity, not that you have to be supervised like the high-speed traders. But when you see a set up, and you see the orders coming in, you need to be prepared to jump in at the beginning of that order flow.
I gave the analogy earlier about Plato's cave. And that really is the best way to look at. Our job is a scalper is not to move the markets will never have the capital for that. Our job is a scalper is to watch the charts for patterns in our case we use FPAS. For determining these patterns. However once we see a pattern forming we now start attempting to look behind the shadows on the chart. If we take this trade are we going to be running headlong into a supporter resistance area. If we take this trade is there room enough for us to grab some pips for-profit and give some pips for spread before reaching a support or resistance area. If there's not we pass. Once we have determined we have a valid setup, and we have room for trade to maneuver for a profit. We then appear behind the shadows on the chart again only this time we are looking to figure out what is creating the shadows. Are we in an area where countertrend traders are likely to come in, are we in an area where with trend traders are looking to add to their position, and one of the big ones are we in an area where we can expect the Fib Bots to come into play.
If we are we now have the makings for a high probable trade.1 we have a valid set up. 2 we have room for a trade to complete. 3 we have the expectation that other traders are going to step in and push our trade to profit.
High probability low risk trades is what we search for. You must learn the patient's to sit on your hands until you have the setups.
A word on psychology. You have to realize that you are human you're going to have emotions. Trading can wreak total chaos on your psychological well-being. Over the years I have more than one occasion place a trade. And then went to bed and slept like a baby. Up all night kicking and crying. Trading can be very frustrating just when you think you've got it you had a string of losses. More likely than not you have done everything correct but you failed to recognize market conditions have changed. This is probably one of the most frustrating things when you're learning, you feel you've almost grabbed a golden ring then someone moves the ring higher. You start to feel stupid,you start to think that you screwed up, well maybe you did, and sometimes you will, but that's all part of being human. Keeping your position sizes small. We'll help you with your emotions. Realizing that getting a losing trade is not the end of the world and just part of trading will also help. This brings up another point of the Journal you must Journal. Did you hear me say that! I'll say it again! You must Journal! Losing trades causes up pain therefore we remember them. Winning trades make us happy, but so do our significant others, our children, and many other things. So we don't often remember all of our winning trades, but the losers will be stuck in our skulls like a hot knife. When you're able to look at your journal and see that you had a few losses but he had many winners you are able to overcome that pain and move on with your trading plan without being negatively affected.
So the best have to follow is to find a profitable trader to model their trading methodology. Ask questions, most profitable traders, granted there are few, don't mind answering questions when asked politely. Try to stay clear of all the gimmicks from the marketeers. You really don't need much more than a bare naked chart. With the exception of some utility indicators that can take over some functions for you. And then journal, Journal, Journal! This step most aspiring traders will never do. They will never understand the importance of recording your trading data. Not only does this help you emotionally, helps as a guide, but it also helps you to identify when you need to make adjustments for market conditions.
Plan the trade, trade the plan, Journal the trade
And enjoy this new trading year, Allen