Free video training, I show you the elements of Holistic Trading and how you can make money trading with these concepts.
I show you specific techniques from the Holistic Trading arsenal. Take them and make money with them!
Holistic Trading is a way of investing that takes a 360 degree look at the market so you get a very deep understanding of the current market. Very little will surprise you. You will feel a sense of ease as you will know what's going to happen before it happens. You will understand who is controlling the market and how to trade profitably with that information.
I explain it in this free video training which you can see by clicking here.
Posted by Courtney Smith on March 15, 2017 at 04:31 PM in Chart Patterns, Commodities, Courtney Smith, ETFs, Forex, General, Indicators/Oscillators, Investing, Master The Gap, Options, Risk Management, Stock Market, Systems Trading, Technical Analysis, Trader Psychology, Tradewins, Video, Webinars | Permalink | Comments (0)
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Who: Alex Linden
What: FREE Exclusive Webinar
When: February 19, 2013 at 4:30 PM EST
Where: Click Here to Register
Most financial instruments are linear: traders are limited to speculation on the direction of a move only. Options are multidimensional instruments, allowing speculation on the direction, duration, timing, and volatility of the underlying instrument's move.
Must-know topics to be covered:
A Bullish Gartley Pattern recently completed on Lockheed Martin Corp (LMT on NYSE.) The XA leg of the Gartley pattern indicates the direction of the trend and the AB=CD symmetry indicates the completion of a correction against the trend. The intent is to identify the completion of the correction at the projected D point and then to open trading positions in the direction of the trend. The trade setup was complete on December 14th, 2012 when LMT traded at 89.38 at the 1.1 line. At this point we would be looking to buy one tick above the high of the most recent low bar.
On December 18th, our stop order to buy was hit and LMT quickly moved to hit our first two profit targets.
As seen above, the trade worked. Our favorite method of managing a trade like this is with the Single In/Scale Out method of money management as described in the book The Gartley Trading Method: New Techniques to Profit From the Market's Most Powerful Formation. To learn about this effective trade management technique, click here to watch an instructional video. To identify Gartley Patterns before they complete, check out our free introductory video course at at www.geometrictrading.com
David Vomund, author of ETF Trading Strategies Revealed and Exchange Traded Profits: Cashing in on New ETF Trading Methods, is featured in this month's issue of Technical Analysis of Stocks & Commodities.
David is the president of Vomund Investment Management, an investment advisory company that specializes in managing exchange traded fund (ETF) portfolios. While other advisory firms are only now discovering ETFs, Vomund’s firm has an exceptional nine-year track record of ETF trading. With more than 20 years of investment and portfolio management experience, he is a frequent speaker at national investment conferences as well as the publisher of VIS Alert.com, a weekly newsletter that covers market timing, ETF rotation, and stock selection.
A short excerpt from his interview with Stocks & Commodities:
S&C: What led to your interest in exchange traded funds?
DV: We have to learn from every bear market so that mistakes are not repeated. I learned from the 2000–03 bear market that you need to be flexible in the type of analysis that you use. For example, growth investors did very well in the 1990s, but then value investors fared better in the early 2000s. Along the same lines, the large-cap stocks in the NASDAQ 100 performed best in the 1990s, but small-cap stocks performed best in the early 2000s.
ETFs gave me the flexibility to employ whatever style of investing was in favor at the time.As market conditions change, your trading style will move into and out of favor. We have to be flexible, but that is easier said than done. It is hard for a growth investor to employ a value strategy, and it is hard for a value investor to employ a growth strategy.
I am a growth investor so it goes against my nature to buy undervalued, high-yielding value stocks. That’s where ETFs come in. Instead of forcing myself to become a value investor when growth investing is out of favor, I can just buy a value ETF.
So in 2003 I began a managed account program that used mechanical strategy to, in effect, jump around the Morningstar box. If large-cap value stocks are leading, then I’ll own a large-cap value ETF. If small-cap growth stocks are in favor, then I’ll buy a small-cap growth ETF.
ETFs gave me the flexibility to employ whatever style of investing was in favor at the time. Nearly 10 years later, the portfolios, after all the fees, have almost doubled in value.
To read the full article, click here!
We recently received this question from a reader called Pravin as a response to this post.
"I often find that when I place my stop loss just below the support line say, the price seems to form a candle with a long tail wig to take me out. Is the broker able to see my stop and playing games with me? This happens even when my stop loss is several pips away from the support line."
Pravin's question about stop losses prompted the following, a thoughtful response on one of traders' most important tools from the Director of the Strategic Trading educational program and the Chief Analyst for Your Trading Room (YTR), Dr. John Keppler.
One of the most common reasons that cause many individual traders to lose money in the market is the way that they use their stop loss. The basic purpose of a stop loss is to help manage risk and protect a trader when a trade starts to move against them.
Unfortunately, all too often the stop loss is the primary source of losses for a trader. Even when they have correctly identified market direction, the market takes out their stop only to reverse and continue in the direction of the original trade. Some blame this frustrating experience on their broker; others blame the market makers or professional traders that are simply gunning for their stops. However, the true culprit is an efficient auction market.
The major problem with stop losses is that many traders place their stops in the same zone. These stops then appear as sitting orders on the exchange; naturally, an efficient market should fill as many orders as possible for both buyers and sellers. Once the market finds a large cluster of orders on the books, it needs to fill them. As matter of fact, the auction market would not be functioning efficiently if it abandons large clusters of orders and leaves them unfilled. The auction market must move in the direction of where the orders are to be found. A large cluster of stop orders is basically screaming at the market to be filled. Once the market fills this large cluster of stops and there are no more orders to fuel the market in the wrong direction, it now becomes time for the market to move back in the direction of where the other orders are sitting, waiting to be filled. As a result, the dynamic auction quickly adjusts and starts to move back in the direction of where the volume and orders are found. The market is simply doing its job; it’s filling as many orders as it can for buyers and sellers.
Regrettably, once a stop is hit, the psychological impact of the loss keeps may traders on the sidelines and does not encourage them to participate in the directional move once it starts. There are a number of alternatives to tackle this problem. Each of the alternatives has its advantages and disadvantages. One possible solution is simply to overcome the psychological barriers and to develop the stamina required to enter the market again once the market starts to move directionally after taking out your stop.
Another, alternative is to use a wide stop. A stop that is away from the usual zone of where most stops are placed. This requires more experience on the part of the trader, first, it requires a trader to be able to identify the potential stop cluster zone and more importantly, it also demands that the trader be able to distinguish between a market that is temporarily moving in the opposite direction and a market that has in fact changed direction. If the direction of the market has changed, the wide stop must be moved quickly to terminate the trade before the losses mount. Some choose to trade with what is called a “mental stop” along with an actual wide stop. The wide stop is immediately decreased to the mental stop level if the mental stop level is reached. This approach requires agility and a cooperative market. If the market is volatile, it is extremely difficult to properly implement this technique.
The issue can also be mitigated with an adjustment in position size. A trader may initially start the trade with a small position and a wide stop. This decreases the potential loss amount if the stop is triggered and allows the trade more room for fluctuations. Once the market starts to move in the desired direction, the position size can then be increased with a greater level of confidence. The wide stop can also then be decreased and a trailing stop can be used to lock in profits.
Using and managing stops are both important skills that are cultivated with education and experience. The most dangerous and risky of all alternatives is to trade without any risk management in place. There is an art and science to the placement of stops. A stop should never be arbitrary, it should be determined based on the instrument, the individual’s trading style, trading goals, and risk tolerance.
For more from Dr. Keppler, visit www.strategictrading.net. And be sure to keep an eye out for his new book on the Market Profile to be released Fall 2011.
An excerpt from Winning Methods of the Market Wizards e-Guide to the video seminar by Jack Schwager
I am sure that the theme of this chapter comes as no surprise to you. We all know, (or at least most of us do) that to get anywhere in this life, no matter what your field may be, it is going to require some hard work along the way. There can’t be a harvest if you haven’t worked in the fields. And no where is this concept of hard work more evident than in the professional traders I have come to know over the years.
What is striking to me about this group of super-traders, the Market Wizards, is how almost every single one of them is a genuine workaholic. For these people, the level of commitment and dedication to trading is absolutely amazing, and it has engendered in them a performance level so intense and so consistent, it almost boggles the mind. When you look at these individuals, you find the kind of hard work that is almost inconceivable for most people to maintain even for one day, never mind as a lifestyle. But it is this difference in personality and commitment that makes the Market Wizards who they are, and accounts for much of their high levels of achievement.
In order for you to get a real sense of the kind of hard work we are talking about here, I think I should describe for you a couple of individuals and how they work. This will give you a good idea as to how intensely passionate they are about their pursuits.
Dr. John Keppler is the Director of the Strategic Trading educational program, business professor, and author of a soon-to-be-released volume on trading and profiting with the market profile. Here, he analyzes yesterday's drop in the markets through the lens of the market profile.
Many investors and traders were quite surprised and even shocked at the significant drop that the market has experienced over the past few days. One of the great benefits of being a profile trader and analyst is that we are rarely surprised by market activity. Our market profile analysis is always derived from actual market activity. Market activity has made it more than clear to us that value is dropping in the market. Profile traders do not predict or guess about the market, they simply rely on interpreting what market activity is telling them.
If we look at the daily profile structures for any of the major indices, whether it is the NASDAQ, the S&P 500, or the Dow, it is quite apparent that the markets are in a state of imbalance and that value has been dropping.
Based on the consecutive profiles of the past few days for the major indices, the market is still in search of value in the market. The market will continue to move lower seeking equilibrium or fair value. As the market arrives at new lows, it will explore whether or not these new lows will be accepted or rejected. As of market close on Thursday, the markets had arrived at new lows at the end of the day and had not yet had a chance to test whether or not these new lows would be accepted or rejected. The activity on the futures indices may shed some light on this but undoubtedly it will become more apparent in today's activity.
As profile traders, we are always attentive to each day’s market activity, each day’s profile developments, and the auction phase of the market. If the markets continue lower, the next key reference levels for the DOW will be 11,250 followed by 10,950. As for the S&P 500 Index, 1175 and 1150 are the next potential test levels lower. Once the market finds a new fair price, rotational activity will develop around that price and we are likely to see a retracement higher testing resistance levels. If the market auctions higher, the 11,613 level will be an important level to watch for the Dow, and the 1228 level will be a significant level for the S&P.
***Update 8/5/2011: Notice how today's market behavior followed what Dr. Keppler described in his commentary above. The market continued to search for a fair price after the drop. It moved lower to the levels he identified and bounced back up (rotating up and down) around the new low, seeking a fair price. The market has not settled yet and has yet to find a fair price in this new area. If it does not find it here, it will drop even lower. We'll be watching closely to see what happens next week!!
Scott Redler, chief strategic officer at T3 Live, went live on CNBC Asia last night to discuss the specific stocks he is currently following, his strategically disciplined investment approach, and his new book, The Modern Trader.
In the book, Scott and his partners at T3 Live share their improbable and inspiring stories and the trading lessons they've learned along the way, illustrating the necessity of adaptability in today's modern markets.
Check out this clip to find out why Scott's chapter is called "The Workhorse..."
and click here to learn more about the book!
I asked several of our authors and trading experts to weigh in on Monday's post in reference to the New York Times article about high-frequency trading. We received a number of responses with some really enlightening opinions and information from the people that know best. I'm going share some of their expertise here on the blog, so keep an eye our for these upcoming posts.
Here, we have Alan Farley of the HardRightEdge.com and author of new trading DVD course Cash In Instead of Getting Crushed: New Market Patterns for Active Traders...
Program algorithms now comprise more than 70% of all market volume. This transistorized influence has undermined the traditional role of greed and fear in price discovery. In addition, the broad market and individual stocks no longer trend to higher or lower ground according to the classic forces of supply and demand.
Marketplace Books’ latest release of educational resources, The Modern Trader, shares the experiences and wisdom of the founders of T3, a new online platform that aims to revolutionize the way traders are educated. In the book, five traders who managed to become extremely successful at a time when most other investors were struggling to keep their heads above water share their stories and how they climbed the financial industry’s steep ladder to reach success on their own terms. Each trader brings to the table real-life stories, all of them drastically different. Nadav Sapeika shares how he emigrated from South Africa to Harlem, struggling to get by while he pursued his dreams of the United States. Evan Lazarus describes waiting tables while learning to trade. No two stories are alike, and none hold back from sharing the hard times and failures that came before finally making a living from trading.
The T3 founders’ unique experiences give The Modern Trader intimate details of what it really takes. Each T3 founder is given his own chapter to detail his approach, so readers can draw from the varying strategies to apply to their own trading for increased results. While one chapter focuses on the need for plans and preparation in order to yield consistent results, another focuses on the importance of optimism and continuously educating yourself, despite what you think you may know.
The Modern Trader reflects T3 Live’s unique approach to trading education, allowing anyone to relate to and understand the lessons from the individual authors, as well as from the group as a whole. The book is slated for a June 14th release, and will be available in hardcover and digital format, as well as on the Kindle.
Sean Hendelman is the Co-Founder and Chief Executive Officer of T3 Live and specializes in high-frequency automated trading. He has been in the equity trading industry for more than 10 years. Scott Redler is the Chief Strategic Officer of T3 Live and focuses on thorough preparation and discipline in achieving success and consistency as a trader. Alongside Hendelman and Redler work Marc Sperling, President of T3 Live, Nadav Sapeika, Chief Operating Officer, and Evan Lazarus, Chief Knowledge Officer, each of whom bring a different perspective and history to T3 Live. Sharing their combined knowledge, the founders of T3 reach students of all backgrounds and experiences to learn from.
Who: Larry McMillan
What: Exclusive Webinar
When: June 15, 2011 | 8:00 PM - 9:30 PM EDT
Where: Click Here to Register
Most traders spend a great deal of time analyzing a position before entering – whether it be fundamental analysis on the underlying stock, theoretical value analysis on the price and volatility of the options, or something else. However, it is quite often the case that the actual decisions of how large of a position to take is made by some seat-of-the-pants method rather than any strict criteria. In addition, once the position is in place, much more of one’s profitability is determined by how the position is managed than how it was selected. Many professional traders feel that this is the most important aspect of all.
In this seminar, we’ll discuss risk management from the basics to some of the more advanced methods. Regarding position sizing, we’ll look at Martingale, Fibonacci, Kelly, Optimal f, and more. The concepts will be applied to individual positions as well as to portfolio position sizing.
Then we’ll discuss how to manage positions that are already in place. Topics to be discussed include, among others:
Our goal here at the Traders’ Library blog is to provide you with informative content that you can use to help improve your trading—your one stop resource for everything trading.
If you have a question that you would like answered by one of our experts add it here! Want to know:
How can inverted ETFs help you beat tough markets?
What are the most effective option spread strategies?
What is the best way to make consistent gains with options and still manage risk?
What makes Fibonacci even more powerful?
How candlestick can improve the processes you are already using?
We will contact our experts and authors and get your questions answered!
Posted by Danielle on April 25, 2011 at 08:49 AM in Candlesticks, David Vomund, DVDs and Courses, Elliott Wave, ETFs, Fibonacci, Forex, Indicators/Oscillators, Investing, Options, Risk Management, Sector Trading, Stock Market, Systems Trading, Technical Analysis | Permalink | Comments (8) | TrackBack (0)
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In a recent article, James Montier lists several principles that have always guided sensible investing. Let's take a look.
1. Always Insist on a Margin of Safety. Keep in mind that no asset class or stock sector or particular commodity is free from risk. Always think safety first, being right second. Your thesis may be correct on paper but you can go broke along the way.
2. This Time Is Never Different. The four most dangerous words in investing is "this time is different" because these words set up false expectations. A new era does not mean the era is different in principle. It may simply be a wolf in different clothing.
3. Be Patient And Wait For your Trade. Many investors suffer from "action bias" or a desire to do something. However, when there is nothing to do the best thing to do is nothing.
4. Be Contrarian. The herd is usually wrong. The punch bowl of speculation is usually spiked with denial. Be careful getting in when the getting is at the end.
5. Risk Is Permanent Loss of Capital, Never A Number. Pay attention to valuation, fundamental, and financial risks and thus avoid permanent impairment of your capital.
6. Be Leery of Leverage. Leverage is a dangerous beast. It can't turn a bad investment good, but it can turn a good investment bad. Whenever you see a financial product with leverage as its foundation you should be skeptical, not delighted.
7. Never Invest In Something You Don't Understand. If something sounds too good to be true it probably is. If you do not understand where your money is going then don't press the pedal 'cause the vehicle may be in reverse.
Invest when the law is on your side; otherwise you may find yourself on the other side of the barbed wire fence at BROKE prison.
If you would like to read the article in its entirety you may go HERE.
See you later...IN THE CROSSHAIRS!
Dennis Gartman's stock trading rules have been around for quite some time. They are classic and should be read and re-read often. Let's take a look at them now shall we?
1. Never, under any circumstance add to a losing position! Ever! Nothing more need be said; to do otherwise will eventually and absolutely lead to ruin!
2. Trade like a mercenary guerrilla. We must fight on the winning side and be willing to change sides readily when one side has gained the upper hand.
3. Capital comes in two varieties: Mental and that which is in your pocket or account. Of the two types of capital, the mental is the more important and expensive of the two. Holding to losing positions costs measurable sums of actual capital, but it costs immeasurable sums of mental capital.
4. The objective is not to buy low and sell high, but to buy high and to sell higher. We can never know what price is too low. Nor can we know what price is too high. Always remember that sugar once fell from $1.25/lb to 2 cent/lb and seemed cheap many times along the way.
5. In bull markets we can only be long or neutral, and in bear markets we can only be short or neutral. That may seem self-evident; it is not, and it is a lesson learned too late by far too many.
6. Markets can remain illogical longer than you or I can remain solvent according to our good friend, Dr. A. Gary Shilling. Illogic often reigns and markets are enormously inefficient despite what the academics believe.
7. Sell markets that show the greatest weakness, and buy those that show the greatest strength. Metaphorically, when bearish, throw your rocks into the wettest paper sack, for they break most readily. In bull markets, we need to ride upon the strongest winds as they shall carry us higher than shall lesser ones.
8. Try to trade the first day of a gap, for gaps usually indicate violent new action. We have come to respect gaps in our nearly thirty years of watching markets; when they happen (especially in stocks) they are usually very important.
9. Trading runs in cycles: some good; most bad. Trade large and aggressively when trading well; trade small and modestly when trading poorly. In good times even errors are profitable; in bad times even the most well researched trades go awry. This is the nature of trading; accept it.
10. To trade successfully, think like a fundamentalist; trade like a technician. It is imperative that we understand the fundamentals driving a trade, but also that we understand the market’s technicals. When we do, then, and only then, can we or should we, trade.
11. Respect outside reversals after extended bull or bear runs. Reversal days on the charts signal the final exhaustion of the bullish or bearish forces that drove the market previously. Respect them, and respect even more weekly and monthly, reversals.
12. Keep your technical systems simple. Complicated systems breed confusion; simplicity breeds elegance.
13. Respect and embrace the very normal 50-62% retracements that take prices back to major trends. If a trade is missed, wait patiently for the market to retrace. Far more often than not, retracements happen just as we are about to give up hope that they shall not.
14. An understanding of mass psychology is often more important than an understanding of economics. Markets are driven by human beings making human errors and also making super-human insights.
15. Establish initial positions on strength in bull markets and on weakness in bear markets. The first addition should also be added on strength as the market shows the trend to be working. Henceforth, subsequent additions are to be added on retracements.
16. Bear markets are more violent than are bull markets and so also are their retracements.
17. Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are right only 30% of the time, as long as our losses are small and our profits are large.
18. The market is the sum total of the wisdom and the ignorance of all of those who deal in it; and we dare not argue with the market’s wisdom. If we learn nothing more than this we’ve learned much indeed.
19. Do more of that which is working and less of that which is not: If a market is strong, buy more; if a market is weak, sell more. New highs are to be bought; new lows sold.
20. The hard trade is the right trade: If it is easy to sell, don’t; and if it is easy to buy, don’t. Do the trade that is hard to do and that which the crowd finds objectionable. Peter Steidlmayer taught us this twenty five years ago and it holds truer now than then.
21. There is never one cockroach! This is the winning new rule submitted by our friend, Tom Powell.
22. All rules are meant to be broken: The trick is knowing when and how infrequently this rule may be invoked!
Gartman pretty much covers all the rules. It is up to us to heed the advice.
See you later...IN THE CROSSHAIRS!
One of the trader’s biggest psychological barriers to overcome is over trading. Of course, over trading is relative depending on the type of trader you are and the time frame(s) used to make trading decisions. However, if you have a well formulated trading plan, you will know from past experience when you are walking the line between planned trading and over trading.
Here are some of the symptoms of over trading:
1. not sticking to a plan or system
2. taking trades for no clear reason
3. taking on larger than normal positions
4. second guessing your system
5. jumping the gun (entering a trade in anticipation of an affirmative signal/pattern)
6. obligatory trading (if I am not in a trade, then I am not working)
The underlying cause of over trading is purely a lack of confidence either in yourself and/or your system. If you truly believe that your trading strategy provides X number of high probability set-ups over X number of days, then why would you waste your energy (and capital) taking high risk, low probability trades? The answer: lack of confidence. The solution: think and train like a sniper.
According to the dictionary a sniper is a skilled military shooter detailed to spot and pick off enemy soldiers from a concealed place using long-range small arms. The word originates from the snipe, a game bird difficult for hunters to sneak up on.
Looking at just the statistics, more is not necessarily better when seeking to kill an enemy soldier on the battlefield. Here are the stats when looking at the ratio of bullets fired to enemies killed in several major wars:
WAR BULLETS FIRED TO KILL ONE ENEMY SOLDIER
WWII 25,000 TO 1
KOREA 50,000 TO 1
VIETNAM 200,000 TO 1
And the sniper’s stats: 1.3 bullets to kill an enemy soldier!
Charles Sasser, in his book ONE SHOT-ONE KILL, says of the sniper: “In stalking the enemy like big game hunters, these marksmen live out the philosophy that one accurate shot, one bullet costing a few cents, fired with deliberate surgical precision is more deadly and more effective against an enemy than a one thousand-pound bomb dropped indiscriminately” (2).
Let’s contrast, then, the symptoms of over trading as described above and the discipline of the sniper. According to the Sniper Training Field Manual No. 23-10, successful sniping is based on:
1. highly accurate rifle fire against enemy targets
2. the development of basic skills to a high degree of perfection
3. repetitiously practicing the basic skills until mastered
4. highly specialized training to ensure maximum effectiveness with minimum risks
Due to his detailed training for a specific task, the sniper is confident in his ability to perform his sole duty: to kill the enemy with one bullet under stressful conditions over and over again. Building confidence, then, is a product of consistent behavior and sustained success.
In like fashion the trader builds confidence by staying focused on a highly accurate, rules based methodology via repetition. This methodology has proven to be highly successful when followed with a high degree of perfection, thereby, ensuring maximum return with minimum risks.
In other words, follow strict rules that provide a high probability of success and in so doing you will have the confidence to carry out your plan under various market conditions. The result will be a rising equity curve.
Come join optionsXpress host Jim Rouzan and special guest Ross L. Beck for part II a three-part series on the Gartley Trading Method. Part II is entitled "The Gartley Trading Method: Exits and Money Management." This series is based on Ross’ new book The Gartley Trading Method: New Techniques to Profit from the Markets Most Powerful Formation. Part III will be presented on March 7th. This is an event that you will not want to miss! To register for Part II of the series, click here.
Posted by Ross Beck on February 7, 2011 at 10:19 AM in Books, Carley Garner, Commodities, Elliott Wave, ETFs, Fibonacci, Forex, General, Investing, Jeff Greenblatt, Oil, Options, Risk Management, Stock Market, Systems Trading, Technical Analysis, Video, Webinars | Permalink | Comments (0) | TrackBack (0)
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Jason Jankovsky, in The Art of the Trade, gives us four basics on doing real technical analysis. Jankovsky says "that the true trader, the consistent winner, is not concerned with any price or where prices started from. He or she is concerned with what it takes for people to believe strong enough, and with enough commitment, that they will place their capital at risk." So, with that in mind, the four basics:
1. A price chart is simply "a pictorial representation of the sum total of all the market's belief structures." No matter what we believe the chart does not lie.
2. "Because every potential trader in every market is seeing it differently, every printed price will mean something different to everyone." Our entry may be someone else's opportunity to exit and vice versa. We should always remember this the next time we believe we have a sure thing.
3. Prices eventually have to stop their forward progress, in either direction. "When every potential trader has executed for an entry, in any time frame, the market is vulnerable. When no one is doing anything, and what's been done is done, prices must stop."
4. No matter what indicator we use "every technical indicator designed is based solely on combining or dividing prices in some way." Volume and open interest, however, "chronicles the true state of what is happening inside the minds of the market participants."
As I always say and as other believe, trading is not difficult, it is the trader who makes it so. Jankovsky confirms what we already know.
See you later...IN THE CROSSHAIRS!
Let's not argue whether trading is, by its very nature, gambling. Let's save that for another day. Instead, let's focus on the gambler who happens to trade and the possible ramifications of such behavior.
1) The Gambler Trades Through Earnings Reports: If you are a trader (as opposed to an investor) and decide to hold a stock/option position through earnings you are gambling. Due to the very nature of earnings reports your position could gap down or up; therefore, you are choosing to take a big chance (e.g., gamble) on what that stock will do post earnings. Sure, you could get lucky and win big, but you could also lose big. Long term success in the stock market is not about luck, but about skill. There will always be another trade on another day. Think before you trade making sure the odds (i.e. the probabilities) are with you, not against you.
2) The Gambler Trades Without A Plan: If you make your trading decisions based on the morning news, on the latest CNBC story, on a new strategy not yet tested, or on a market that you have never traded, then you are gambling. The successful trader has an army of stocks to trade, the weapons suited for that army, and a time tested trading strategy in place before a position is considered. When everything is going according to plan then and only then will it be time to pull the trigger.
3) The Gambler Goes ALL IN and Risks Losing It All: If you trade ALL IN, believing your trading edge is 100% foolproof, then you are a gambler. There is no sure thing in the stock market. There are just too many variables and too many traders who can and will disagree with your perfect signal. The disciplined trader trades a small percentage of his account balance and believes in probabilities, not a sure thing, knowing that trading is not about being right but about making money.
It is best to leave gambling to the casinos where the house has the advantage. In trading, the trader who has the focus, patience, and discipline to follow a strategy will have the advantage over those who don't every time. We trade the trader, not the market and when we make money it is usually when we trade against the gambling trader.
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