This thread is for the beginning traders out there.
I have always had great success by simply observing market intent, waiting for pullbacks, and enter by considering the relevant support and resistance lines. I have written a FULL explanation of how I trade on my website. It is an educational site and completely free but when I last posted it here I had my account closed.
The site has already been immensely helpful to many traders and I know it can be for many here.
I would like to discuss the strategy here after some folks read it on the site. Can the webmaster here tell me what I am allowed to post or link to so I don’t get closed again.
The entire idea behind how I trade successfully is to watch for market intent and then wait for pullbacks before the market continues. This is absolutely the most effective way to trade. We are waiting (key word) for a handful of HIGH PROBABILITY MOMENTS to happen each day. That is the most important sentence for you to remember on entries. We are not chasing the market which most traders do. We are not randomly entering and hoping for the best with a huge stop loss set way behind us. And we are not waiting for breakouts to happen and then chase! Breakout chasing only leads to getting whipped by the market. Trust me on this if you have not figured it out yet.
You need to think of the market as a rubber band. As it is moving in a general direction it is stretching up and then down and then up again. It cannot stretch too far up before coming back down again. This is the price testing new highs and lows to see how far it can move either way. All of this is happening according to support and resistance lines. The points where the market stretches to, stops, and turns to head the other way typically coincide with other points. Think of the area between support and resistance lines as �comfort zones� of all the traders in the world. Price will bounce around in a range for a bit between support and resistance lines. Once price moves up or down and out of a �comfort zone� into new territory, you can typically expect that price will return back to the outer limit it just broke before going to a new high or low. In other words, price will test into a new area it has not been lately, then pull back to where it came from, before it tests even further.
If the market is going to move up it will shoot upward a bit blowing through a current resistance line into new �territory�. This move just showed us the market�s intent. We need to constantly be watching for CHANGES IN INTENT. This is very important to recognize. The market will typically then return back approximately to the resistance line it just broke before continuing higher. These moves usually reflect Elliot Wave theory. If you haven�t yet, I suggest you do some reading on Elliot Wave theory. On the return back is when a low-risk and high-probability opportunity can present itself. Market Intent is the single most important �indicator� anyone can use. Observing intent is the best way to develop a trade idea. Three very important notes on market intent are:
If we have identified market intent as upward, we must only be watching for and taking up trades until the market gives us downward intent.
If we have identified market intent as downward, we must only be watching for and taking down trades until the market gives us upward intent.
Do not trade against the overall momentum and intent of the market.
I checked out your website (profitforextrader: site link available when clicking his screen name)…your method looks good and sound. Perhaps posting some real time charts when a setup is in the making would be helpful as this thread progresses.
So many others post chart examples after the fact, but your examples on your site show what the charts look like before & during…which is the what we all face in real time…and I like that, and that you seem to use 15m charts, which is where I’m at too.
Good good. I am happy to get good feedback from my material. That is the compilation of my education, relationships, experience, and mistakes.
Unfortunately even with my method there is so much that cannot be typed up. As with most there is a certain amount of foresight and interpretation needed to see opportunities coming. However once they are present they are typically very each to catch. How do the methods of you two compare to mine?
similar in a sense that you rely more on what you see and not what your indicators tell you, you are willing to adapt to the market and make the most of every opportunity, attempt to actually understand the market you are trading as opposed to just mechanically following a system hoping to escape with a profit, traits all traders should aspire to have yet so many dont want to put in the work thus the reason they fail
although personally i strongly refuse to use any indicators and rely solely on candles, horizontal and trendlines but the mindset it still pretty similar lol
indeed very true when it comes to trading as experience can teach more than anything or anyone could ever tell you, although we can certainly help put you on the right track
At present I’ve been focusing on fib patterns…gartley’s butterflies etc. It too allows you to let the market come to you rather than chasing it.
My problem, so to speak, is that my prime trading time is the Asian session and with my low budget it and the 15m is better suited for my stoploss, but not so suited for pattern completions. Therefore I’m open to checking out something that perhaps will also work at that time to fill the gaps.
I think tho that I’ll need more info on the fractal/alligator indicators with respect to the market cycles…perhaps a good place to start would be to post up some charts to help train the brain to find the changes in market behaviour.
Also according to your chart, we see the failed attempt to push lower, but at the time we wouldn’t have known that, and when price subsequently rose, it would have looked like a pullback and perhaps a limit sell order set at that first high fractal just below resistance… I mean after all, the alligator lines were all pointing down…lol. So would that have just been a failed trade, move on, or was there something to say no trade?
good observation. in this case the trade would not work. but here is the cool part. even though the market did shoot out the bottom a bit and then pullback (which we wait for to enter) it then “paused” for about 8 or so candles. this provided a good amount of time to question “was this just a market spasm?” and “we might be seeing a change in direction soon”. we can then get out with minimal or no losses after upward movement begins. not bad for a failed short trade.
(Since i can’t link to it, I borrowed the text and images below from my site)
One good saying I know is expect the worst and never be let down. This saying applies here. In our trading we need to expect the worst and have a very grounded reality. It is good to be prepared to handle 20 straight losses before one win. If you can handle this kind of loss you are managing your money well. Let me show how this can affect your account.
Look at these two examples of two different trading styles with just ten straight losses:
Example 1. With this first example you just lost 10 straight times and lost most of your account. You must now make back $3,257 to meet your starting balance. That is a formidable task especially since now your head will be all messed up from losing so badly. In other words you must now increase your balance by 287% to reach you starting balance of $5,000. This will be very tough.
Example 2. With this second example you just lost 10 straight times a faired pretty well. You must now make back $915 to meet your starting balance. You must now increase your balance by 122% to reach you starting balance of $5,000. This is very reasonable.
** Good money management is what will either make or break you as a trader. Choose your risk level wisely because you may only get one account. **
Nice thread and great website you have!
Talking about the images you can subscribe to photobucket and copy paste on the thread the link you have once you upload your images.
You can choose the size of the image and that way you have a totally seeable image to post.
Ok everybody. Photobucket hooked me up. Thanks.
So what I always look for are relative relationships between previous price levels. Remember that linear thinking people are driving this. Therefore price acts in a chaotic but linear fashion. This chart should show it:
Great picture! So much clear! Looks so simple. I haven’t read your website yet, just a quick glance, but what I understand for this post is that basically is just identifying support and resistance lines right?
If it’s a support line, trade it like a support line until it gets broken and now we trade it as a resistance line. Am I right?
Yeah thats pretty much how I trade. I feel that all of the indicator systems out there were designed for the rolling commodity markets of years ago. Unfortunately, in my opinion, there is no cut and dried indicator combination that can steer us the right way. This method here is what i have found works best.
Take care.
Thanks Josh! I’ll be following your thread it’s interesting. I’m not a fan of indicators either and I’m pretty sure you know what you’re doing so as long as I can learn from it I’m on!
I will be posting more from my site but since it would be cumbersome to paste it all I suggest going to the source. BTW find me on FB everyone.
To our mutual success.
Josh
Site Excerpt:
“It is important to stop yourself from looking at the charts, letting your eyes glaze over and just seeing a mess. Let your eyes and brain begin to pick the charts apart and find changes in behavior happening. This is key � CHANGES IN BEHAVIOR. These are what we are looking for. A little help in finding these changes in behavior is the Fractal indicator. This indicator has been put together by a man named Bill Williams. He is a legendary trader and has been a very significant influence on me and the way I trade. I do suggest you do some reading on Bill and the Fractal. His indicators help us navigate our way through a very chaotic market. In short the Fractal marks a change in behavior and direction. Each change is indicated by a little arrow either up or down which I have colored magenta. The other indicator on the screen is called the Alligator which is also created by Bill Williams. Thanks Bill.”
…except it’s too small to read :eek:
