[I]“He who rides the tiger must always be in control of it, lest it devour him”[/I]
I read this in a novel yesterday and immediately it brought to mind how well this describes the mental attitude that is necessary in managing one’s positions and results in the markets.
Whilst one cannot, of course, actually control the market, one [I][U]can [/U][/I]aim at controlling how well one rides it. This means building a method/system that you trust and that carries your conviction of success. If you doubt your method then it is hard to hold on when positions look negative, or you put stop levels too close, and the market eats your equity.
Technical indicators are not a set of abracadabra/hocuspocus, magic spells that move the market your way if you combine them correctly. Market moves are the net result of the combined underlying buying and selling interests active in the market. One’s technical analysis should aim simply at identifying the real moves amidst all the “noise” in the price action and evaluating the extent of the “noise” in the TF concerned - only when you are confident that your model is doing that can you perhaps ride the tiger and survive.
Hello Manxx. I am starting to trade crude oil futures. Coming over from trading forex. I found oil to be a futures contract of choice. How I could follow on a daily basis so I can learn more of how oil chart behaves in a daily range. Would be nice to change futures trading ideas and perhaps exchange entry signals.
Or, “The Tiger” could be our own mind, emotions, fears, hopes, dreams, wants, desires, Mommie and Daddy issues, self doubt, desperation, impatience, arrogance, greed, past abuse, whether emotional, physical, sexual or a combination of all of these things. We ride our minds to success, no matter what area of life it my be. The issue of the mind and how it is functioning is especially important in trading, if we do not have a tight grasp on this “Tiger” it will turn and devour us emotionally and financially, as if we were a defenseless child in the jungle.
This was one of my first posts here - 2 years ago! (How time really does fly!) If I posted it today I certainly would not have put the title as “HE” who rides the tiger. This was certainly only intended as a generic term. Females or males, the issues are the same and the ability to conquer them perfectly equal - albeit sometimes with different skills and traits!
Concerning markets and tigers and personal conceptions, I just was reading an interesting comment on market perceptions, I rather liked this:
“Amateurs act as if the market is a giant happening, a ball game in which they can join the professionals and make money. Traders from a scientific or engineering background often treat the market as a physical event. They apply to it the principles of signal processing, noise reduction, and similar ideas. By contrast, all professional traders know full well what the market is - it is [just] a huge mass of people…”
Hi Clarbar,
I don’t trade futures (yet) with Crude Oil. I only started with oil back in the spring and, although the “earn while you learn” process is still going ok, I am only trading CFDs. I use the daily as my trend, or directional, guide and take my positions off the hourly chart. I only use a couple of MAs, nothing more.
But, for two reasons right now I am not trading oil constantly or in any size: Firstly, the market is broadly range-bound and the 5.pip spread on CFD’s is a depressingly large chunk of each move! And secondly, the N. Korea situation is too high a geopolitical risk for me right now.
So whilst I trade oil when a Grade A trade setup occurs, I am back to EURUSD for my daily B&B.!
Whilst on the subject of psychology and trading, here is another interesting and, in my opinion, accurate assessment of what underpins successful trading:
“Every winner needs to master three essential components of trading: a sound individual psychology, a logical trading system, and a good money management plan. These essentials are like three legs of a stool-remove one and the stool will fall, together with the person who sits on it. Losers try to build a stool with only one leg, or two at the most. They usually focus exclusively on trading systems.”
Manxx, thank you for your quick response. I’m learning as I trade the crude oil. I set up my CFD demo account to give me directional signal on the 15mtf and entry signal confirmation on the 30mtf. Usually all my trades I do on my phone. So it’s hard for me to look at my computer charts that is why I set up my home computer to run all day so I can receive the signals. On my phone I use stochastic and MACD default settings. I’m learning to only the opening of the Europe and new York because this where the most action is. But I still get a happy trigger fingers and trade any hours. But I have to stop that. My signalsis are based on 15ma and also supply and demand. I opened $2000… Futures account which is the minimum and on contract carries $1000.00 margin which is great for me. A crude oil future contract is worth $10.00 equal to a full lot in forex. I was used to trade 0.01 lot and now I’m trading 1.00 lot, that is crazy. Oh and my future broker charge me $15.04 per round trade, means open a s closing a trade. But it is less than 2 ticks… Yesterday I made $450 profits and my fees and commissions were $160.00. I will keep in touch.
It was a peaceful weekend, a pair of perfect autumn days…
The world was awash with MrT v. the NFL and the usual macho issue of whose got the biggest rocket. But as if the USA and N. Korea were not enough for one week, we also had the German elections yesterday - or was it really the EU elections? The were no surprises with who won the German election (for an amazing 4th term), but there are big questions over what kind of coalition will follow and how it will work and how it will fit with Macron’s France. What does the EU tiger look like now?
And of, course, uncertainty means selling. So it is not surprising to see the EU down this morning. But is it immediate reaction stuff or are there greater fears disturbing the jungle pathways - it is only Monday morning, not normally the most influential period of the week?
My daily chart is pressing some stiff, long term trendlines and supports around here, but the recent pattern of highs on the daily does not look very encouraging. In the normal rhythm of markets, it is certainly time for a turnaround here. The 3hr and 1h that form my trading areas (having finally weaned myself off the 15min chart) are both short and I have already been for a quick early morning dip in and out of the pool for a refreshing 15 pips - afterall, it is Monday and I do like a good pip breakfast to start the week. Now for a break and see what the afternoon brings.
Yes, a peaceful weekend, autumn sunshine and lingonberries for the cold winter ahead. There were no bears or elks in the forests, but is there a tiger in the EU market waiting to break cover on the downside. Will it be a warm, sunny week for the Euro, or the first chills, portents, of a cold winter ahead …
Thanks Bob, It is sometimes rewarding to step back and take stock of things and see the world going round regardless of our own little bit of it.
But it is also fascinating to see such similarities between nature and the human…
I have 3 robins that exist outside my trading room window. It is clear which two are the males as they never stop chasing each other off the lawn and out of their territory. I call them Kim and Don but when it comes down to it, it is not so easy to tell the difference. In the meantime, the third Mrs robin, and the other birds, just get on with making it to the end of another day - just like the rest of us!!!
These four swans were off on an early morning start through the mists, skimming the lake surface, they’ve got bigger moves in mind - they’re heading your way! …maybe the Euro will be following them south?
Some days the skies are clearer than others. Some days they are as clear as could possibly be. Pure, crisp, bright and colours clearly defined.
Today’s move was one of those days. The reason was clear, the trendline breaks crisp and the MA’s bright and clearly defined. It was a “sell and sit with it day”:
Yes, some days are that clear, they are to be enjoyed for all they’re worth - today was one of those days:
Its harvest time of the year and pips a plenty in EU. Making hay while the sun shines…
Since the current daily uptrend in EU was broken yesterday for the first time since April this year, it is not surprising that there has been good follow-through, and probably more to come. It does help the momentum that there is an identifiable cause, if only temporary, in the form of uncertainty concerning the structure and future effectiveness of the new German govermnment.
There are some fairly near-term support areas but I’m not playing greedy and I’m closed out now from this leg of the move (probably, and typically for me, too soon!)
Yes, there are great harvests and there are poor ones. Sometimes none at all. But during the good times, eat well, stock up… and survive though the next lean times ahead.
I came across this quote in a book just now by Dr Van K. Tharp and it caught my attention:
“To be a money master, you must first be a self master” J.P. Morgan
He then goes on to say about the majority of traders that , "their focus tends to be on the need to be right. People are obsessed with it to the exclusion of all else. "
Well, isn’t that the be-all and end- all of trading - to be right?
No it is not! At least according to Mr Tharp…and I have to agree with him…
He argues that if a trader concentrates on six components of their trading system then they can still be profitable even when entering positions based purely on a toss of a coin. He is not, of course, suggesting that one should do that. He is saying that a total trading system should be focused on all these six components and not on just being right. In fact he states that just focusing on being right is just plain näive!
The first four of his components refer to what he calls expectancy:
(1) system reliability (success ratio losses v. gains)
(2) reward-to-risk ratio (The relative size of your profits compared with your losses)
(3) cost of trading (primarily spreads, commissions)
(4) your trading opportunity level (how often you trade)
The last two components are part of what he calls money management or position sizing.
(5) the size of your equity
(6) your position-sizing rules
And there it is, a comprehensive trading system is not just about getting it right. The “perfect” system has you at the centre with the right personal factors, surrounded by a model providing your entries and exits consistent with your objectives, and with the elements of expectancy and money management radiating out in balanced harmony to form a perfect whole - a balanced thing of beauty…
This morning I’m thinking maybe this week’s “easy” days are over and now’s time to actually “think” about things here!
This EU market is still vulnerable on the down side , that is for sure. But I wonder if there is a creepy risk of some sudden bounces from here. The move down has been relatively orderly and steady - you know, the perfect stuff for MA’s! But I am now a bit cautious.
There have been some nice compressions on the 1H chart (circled in red) which were golden entry opportunities as prices fell out of the bottom of them into the next leg in line with the daily chart. We touched the top edge of the support areas on the daily and may well see another approach to them today - but I am now still sidelined, waiting for the next compression point to see which way the jungle trails lead from there.
Yep, that’s what I said this morning…and I’m still waiting for that compression that never came! I should have realised that the last compression that I even ringed on the morning chart was the signal for today!..And where was I when it occured? Still in bed!
The only consolation has been that the market stopped (at least temporarily) at my choice of daily supports for the second day running. But what is the point if one is not in the market!..three identical days and I missed one totally!
Now we have the best compression on the 1H that we have seen since this move started last Monday. We haven’t managed to break below yesterday’s low in early trading and we have subsequently retraced back above the daily Pivot - but still within yesterday’s range.
If the compression breaks again to the downside then I want to see an hourly close below both the Pivot and yesterday’s close. There may well be more on the upside here, but that would be against my 3H and daily and therefore not a Class “A” trade and one to just watch and wonder!
Right now the near-term direction is clouded and foggy - and when the fog is thick enough not to be able to get one’s bearings then it is wise to leave one’s boat in its moorings and wait for the sun to break through and shed some light around…
Such a great thread! I very much enjoy your analysis ending with beautiful pictures. If you can tell me, where do you live and make these beautiful photographs? Are you a full-time trader or you have another job?
