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Psychology

Bitcoin Breakdown: Psychology and VolumeBTCUSD has put on a show finding new highs over the course of two days. What sparked this large move? Well, part of it can be accredited to Tesla announcing that they were buying $1.5 billion dollars worth of Bitcoin. Crypto is no stranger to the wonders of Elon Musk and this was likely a huge pull for a lot of investors. There is a lot that can be taken away from this rally and there are some observations I made and would like to focus on, volume and psychology to be exact. 1st Observation: Volume on the break of 40k. Last time bitcoin had a large run up, 40k was hit and blown through very rapidly and prices quickly made their way to 42k within the same night. We see similar volume in both of these situations where the prevailing demand creates these long green candles and the volume to match it. 2nd Observation: Pullbacks at Psychological Price Points. While 40k had no problem being broken as price has experienced buying there prior to this run, it is interesting that at 42k, the former highs, Bitcoin began to experience some turbulence (see 2. on chart). Buying took prices more than $1,000 over former highs, but there is brief moment where the rally looked as though it might have been coming to an end. A huge pullback occurs and the price of Bitcoin briefly breaks under 41k. Shortly after, there is some absorption from buyers to take the 15 minute candle back up where it closes above the former highs. Going back to January 8 when these highs were made, there was a similar psychology surrounding 40k, price broke above 40k briefly only to then have what appears to be a rally ending downturn, followed by a quick buyback. Conclusion: The prevailing bullish sentiment towards Bitcoin continues to astonish me, and as I watch this rally in awe, I only hope to guess what is to come next. However, what can be observed can be the edge needed to make wise decisions while investing and trading. In the wise words of Warren Buffett, "Risk comes from not knowing what you are doing."
BITSTAMP:BTCUSD
by crawfordpaul
2
Market moves and it's PsychologyThere's a great image available if you just search in Google - look for "The Wall Street Cheat Sheet" - Markets move in cycles, which is built on human emotions. There's plenty of research available on this. If you look into anything like Elliott wave theory, Gann fans & boxes, Wyckoff or simply Fibonacci, you will find (in the end) it's all based on the psychology of human behaviour. Driven by greed, fear, stress and euphoria. Understanding this will help with the very fundamentals of trading. With proper risk management applied, traders can profit from the market with a shoddy Hit rate. Providing their edge is accompanied by good risk management. How often have you been in a losing trade & moved the stop loss? Added to the position? Or in a winning trade, bailed and seen the price move another 10, 20 or even 100 pips in your direction??? Below is a set of images breaking down the market moves in simple terms. For clarity ***This is NOT an in-depth breakdown of strategy, it's not the correct application of Elliott, nor Wyckoff. It's a simple post to get you, the trader thinking beyond just the trade ***. This image above shows the emotions as per the Wall Street cheat sheet. (Go google) Apply some logic to the chart - Look under the hood. Here you will see a basic Elliott wave structure playing itself out. This can then be broken into smaller pieces, like this below; It's almost like going from a Telescopic view down to a magnifying glass. You can see the price move up & consolidate, price move up and consolidate. This is all about timing. Trying to breathe with the market, or at least understand a little of it's cycle. Same applies on the way down. Again, there's a lot of information available on the Bear moves over the Bull moves and how they have different characteristics. But not for this post. Now let's look inside the top - the consolidation of the peak. Think of as simply as - some people have made enough profits from the move up & are selling their positions in vast quantities. There is some great content available on Wyckoff and the theory of composite man. But even at a simple level the basics can be explained as follows; 1) Buyers climax - Profit targets hit. 2) Automatic reaction (lots of selling at the same time) 3) A move to the upside to fool people into going long & collect liquidity at a better price for a move down. 4) Range bound moves - market manipulation (collecting positions ready for the short) 5) weakness - a first test to see the response of the market - also to push back long collecting stops of the eager beavers shorting. After this there are a couple of concepts - but you get the idea by now. You will see this type of structure if you zoom in a timeframe or two. Inside of the structure you will see the list above and how it relates on a chart. Like I said, this is not an in-depth strategy or breakdown of Elliott or Wyckoff. It's just putting the pieces together and to show how powerful tools can be to understand the market cycles. Obviously there's much, much more to understand before you jump into a trade using either Elliott or Wyckoff. But I hope this helps. Please feel free to send questions & like the post below. Disclaimer This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
BITSTAMP:ETHUSDEducation
by Mayfair_Ventures
37
Wall Street facing a new trading reality of Pump&DumpSubject: Wall Street and regular retail investors facing a new paradigm of market Pump&Dump schemes on their playground for the first time. Disclaimer: This Article and any Attachments to this article (if any), are not a Financial Advice and should be treated with decent criticism and a common sense. The Author of this Article is not a Qualified Financial Advisor, is not a Qualified Professional Trader, does not occupy any positions in Financial sector, does not share any Financial Interests within any Financial Institutions or individuals. The Author of this Article does not hold nor accept any financial and/or moral liability and/or responsibility whatsoever, for any events of gaining and/or losing any goods and/or capital as a result of consulting this Article. The Author of this Article takes it to his personal discretion whether or not to provide any additional confirmation and/or clarification on the contents of this Article except for those stated within the Article. This Article is only a representations of Authors’ individual opinion on a relevant Subject. Authors opinion does not represent an opinion of TradingView platform, and the Author is not affiliate with TradingView platform and any of TradingView employees by any means. If you disagree with all or any of Disclaimer statements above, and/or if you do not accept all or any of Disclaimer statements above, you should stop further reading on this Article. I. Introduction . Good day, TradingView community. It’s been a while since I’ve joined the platform, but I’ve never took my chance to participate in any discussion within this community. With recent financial events going really viral on media, and being a part of my favorite subject, I’ve decided to finally give it a try. And before you say something like: - “Hey, it’s easy to talk about this after everything is over!”, I will immediately appeal to you, claiming that: - No, it is not over, and there will never be an end to this. It is simply the first time your regular Jon Doe has found out about something like this from his newspaper, but it’s been going on for many years, happens at this exact moment you are reading this article, and will continue to happen in future. II. How did I get here ? I’ve started my way in financial world and markets somewhere back in 2016, when I’ve discovered the markets for first time ever. It took me two years of “looking over the fence” here and there before actually participating, and boy when I got in – I got in REALLY BIG! Well, not THAT big as you might imagine it, but it was certainly a good and valuable amount of cash for me at that point. So, I got my money on my brokers account, and guess what was my first goal? Duh! Of course, I want to flip that bad boy into some crazy 100x gains RIGHT NOW! If only I knew, hehe. The first thing that got into my attention were Crypto currencies. I’ve been so obsessed with the potential gains and ease of access and the variety of the markets, like, there were HUNDREDS of opportunities with hundreds of various coins happening every single second – I thought back then. And I got in. I did not just open a position, I got 100% of my account into Stellar. Why Stellar? Really, I don’t know. At that time, I did not know anything about charting or risk management, or money management, or had any trading strategies set in place – I got nothing. I just looked at the price graph without clearly understanding what’s going on, and just bought it. You probably heard already about the “beginners’ luck”, don’t you? Oh yeah, I got mine as well! Somehow that purchase has made me TWO HUNDER US DOLLARS IN PROFIT in a manner of few months! Oh boy, that amazing feeling of making the money from trading for the first time ever! But that was just the beginning. That was just the predator tasting the blood for the first time ever, and you already know what’s going to happen next – there is absolutely no force in this universe that will make you stop at this point! At this point of time, you are an immortal demigod, you feel like now you own this place, now you own the market, you have cracked the code to an infinite wealth and prosperity! III. As greedy as a pig . But what is two hundred dollars? Well, I can probably pay some small portion of my monthly bills with that, or get a monthly sub with TradingView and some pizza, but it’s really nothing special, come on. I WANT MORE! AND I WANT IT RIGHT NOW! So... I’ve started looking! I’ve started looking for any possible ways to double or triple my deposit the fastest way possible! I’ve started reading various financial web-sites, and forums, and communities, and eventually I’ve ended up in Telegram messenger communities, various free and paid “Signal groups”, and “Pump&Dump” groups (I’ll just call ‘em “P&D”, okay?). I’ve been getting into this so rapidly and with such excitement, that in a manner of weeks I’ve been probably exposed to every known scammer and P&D group ever existed at that time. I’ve been participating in pretty much everything. A shower of losses could not stop me no matter what, because of that ongoing euphoria from the first winner I’ve made! First, I’ve lost roughly 30% of my account, but you think that would stop a market demigod? Hell NO! Get that cash flow running! I’ve refilled again and again, maintaining the initial deposit value. But that’s gambling – some might say. Yeah, probably it was the gambling at that point, but you don’t really understand that when it’s happening in real time. And at some point, it happened. A huge devastating SINGLE trade loss of -60% of my entire account! I’ve got many losses at that point, but never did I have such a huge loss over night on a single trade. You think that would stop me? Nope, it didn’t. Instead, I’ve started getting involved into even more risky schemes to double that remaining deposit and get back what I’ve lost. Until finally it was over for me. I’ve been sitting there with barely 5% remaining on my account and thinking that my way in trading is now officially over. That was it. My first even blown-up trading account, huge depression and the lost of faith in trading. IV. Something doesn’t feel right … But, wait. There’s something weird going on here. Whenever I try to tell other people that I’ve lost all my money with scammy group administration, my messages are getting deleted from the public chat and instead this whole place is spammed with some weird positive reviews with some random people endlessly talking about making a fortune here! What? How is that possible?! Who are those people?! And I try again. And again. And again. And all of my messages are being deleted nearly instantly without any clarification, until I’m getting banned and removed from the group all together! Ooh! So that’s what’s going on here! So that’s how you are luring new people in! You are using bots to spam positive reviews and you delete and block anyone who are your actual victims! And you ALSO pay to other groups to advertise you for money to get more and more fresh meat and money into your pockets! Now I get it. Now it’s all perfectly clear to me. I’m taking out those tiny remains of my capital back to my bank account and I give my word to myself to not touch the trading terminal until I actually learn this thing… The year is 2019. V. Present time . Oh wow! Some random stock is going so viral on the media, that I’m getting a news article about US Equities in a crypto news feed! Oh boy, I’m definitely going to check that out. My god! What are those? I’ve seen those before! Those HUGE PILLARS OF P&D! What? This can’t be real? This is a US stock market! A “social media group” is standing behind all this? Waaaaait a minute! I’m getting into that social media named “R” around Jan 27, and what do I see? Jesus Christ, the place is literally flooded with BUY-BUY-BUY spam! Not a SINGLE topic talking people into some common sense or managing their risks! EVERYTHING that goes against group agenda in getting instantly deleted! Hohoho! I know that. I’ve seen that. I’ve been there myself. I’ve lost all my money there. And now this thing is everywhere – on Twitter, on YouTube, on TV. Wow! They’ve really grown-up at this stage! Hmm, let me try to set up and account, and to actually talk to people there, who claim to be taking loans to get into this P&D and risking their life savings. What? My posts are getting deleted for violating the “community rules”? My account is issued with warnings and gets blocked from ever posting to that group? Ha! I’ve really seen that somewhere already! VI. In conclusion . Schemes are always the same. Bots and censorship are always the same. It’s been happening in Crypto markets for many years now, and finally it got its hands to Wall Street. Media is now making a really big of a deal from something that has existed for so long, but has never touched your average Jon Doe via newspapers or TV. I’m transparent and I’m honest about my stupid actions, and I’m not shy of my losses. But I’ve learned my lesson. I’ve learned it the worst and the hardest way possible at the very beginning of my trading experience. Really glad I was able to recover and to get to the current point of my trading career. But how many of those victims will recover? How many of those victims will learn something or get the message? I’m really sad to see a lack of trading educational materials on risk management or trading psychology. And if there are any, people don’t care about them. People just read things that claim to make them rich overnight and nothing else matters. I’m generally grateful to everyone investing their time into reading on my story and my thought on the current situation. Thank you very much for reading! I have many stories to tell and a lot of true experience to share. Please, let me know in the comment section if articles like this one are even worth of your time and if you would like to read more from me on the subjects of trading psychology and risk management? Regards
NYSE:GME
by REKT04K
GME Pure RETAIL Manipulation at its best !!!I really feel bad for all the newbies in here getting sucked into these scams. Really... there is so much misinformation out there hurting people's lives. I've been a trader for over 15 years and this is probably the biggest scam I have ever seen in my trading career. Do you guys really think you can manipulate the markets ? Think twice... big money wants you to think you can, the media wants you to think you can... in reality you cannot. The majority of the hedge funds and institutional entities have very deep pockets and are manipulating the crap out of the markets and you. Don't fall for this. You will never over power big money unfortunately, but you can still be a profitable trader through study on yourself and hard work. This game is rigged and will always be, accept that. The hedge funds are not your worst enemy... unfortunately you are, the same why I am my worst enemy as a trader. The only way to trade profitably in todays market is to learn how markets are being manipulated.
NYSE:GME
by LiquidityTracker
5
Should I Hold Longer Or Close With Profits....?Hello Traders 🙋‍♂️ I wanted to go over a valuable lesson in market psychology that I have learned repeatedly in my own experience. This is not an 'end all be all' strategy , advice, or lesson but perhaps an idea that you can take and make it what you want in your trading analysis. Its really easy to theorize about markets and what they should do, wether its a pattern your following, indicator, or institutional concepts. We can all look at charts and spot gigantic moves and think "WOW! Imagine those profits you could have had!" , in fact we can see this daily in our pursuit of our trading goals. But the reality is that in the exact moment of being in profits nothing is guaranteed! How many times have you said to yourself "Self - I'm holding this trade till the end of time" when your up 20 pips, only to have to smash back down and either stop you out at break even, or even worse, go negative and hit your stop loss? My guess is that if your reading this (or writing this) then the answer is all too often 🤣 So here is a solution... Psychology 1) Just agree with yourself that consistent and steady profits is better then "what if" 2) Find your signature exit for how you trade - "When do I know for certain I should close all positions" Practice & Reality Since its pretty easy to catch 20 pips in the FX world you should capitalize on this and take it over and over and over , compounding your profits, and minizing your losses (assuming your strategy is profitably) and to satisfy our greed and "what if" then leave a small partial open to see what happens, which leads me to the third and final part of this solution.... 3) Close 90% of your position at 15-20 pips - Move stop loss to break even & Leave 10% open for "What If" and to satisfy our greedy side. Making this agreement with yourself can and will increase your profits! I have written this statement 1) as a note to self after this week I "Could have had" 65+ pips , and 2) as an idea to myself others that its ok to make a living picking and chipping away at the huge mountain of gold in front of us piece by piece, rather then all at once I hope you find this useful, if you do please give a thumbs up and follow for more!
by renegadeforex
2
Psychology For AllLet's face it COVID has been challenging for many people and someone reading this might need a pick me up! This is a different post related to the noise coming from the media. I am here to share three stories related to trading and investing... stories of success trusting your gut not the noise. My Bitcoin Story... In 2017 I tried the online game second life, not by choice but was doing research regarding the construction of these virtual communities. A player showed me how she was building homes for people and being paid in Bitcoin. I was blown away and was always searching for a side hustle. I began to build and collect BTC as a hobby and something I began to enjoy (always was a gamer..still am lol). I was fascinated by the DW at this same time. I did not invest in stocks and did not even have a trading account at this time... only GIC... I only bought and received bitcoin. I never ever thought Bitcoin would appreciate the way it did. Since then I sold my BTC at 18,000. I have bought back twice since then once in 2019 when it went oversold, and again during the COVID sell-off. FYI I am out for now but still own my second life coins I cherish as a memory now. A year or so ago, the motley fool paid service issued a "sell" alert on TSLA when the share price was around $175. Anyone familiar with the Motley SA services knows it is pretty rare they issue a sell alert in the paid services. I sold my shares a year and a half later for over $1,000 before the split. Citron, here is a story. I have owned many shares of Shopify since the beginning as I felt I knew this area well. At around $190 Andrew Left short Shopify “Left is so convinced that he is right about Shopify that Citron has pledged to donate $200,000 to the Robin Hood Foundation, a charitable organization if Shopify is trading over $200 in 12 months.”.... lol my shares are in a better place now well over $1,100. These guys play dirty do not listen to any free information. Still have yet to see the donation... My biggest gains have always involved some Pepto and lost sleep. It is always easy to look back and pump your ego but I look at my journals and this was far from the case at those exact times. Think outside the box, trust the process, and most importantly trust yourself over everything and everyone! People will always hate on you if you win or lose. Sadly jealousy is the most overused emotion. “Failure will never overtake me if my determination to succeed is strong enough.”
NYSE:SHOPEducation
by KML6
XRP/usd Local work Everything on the graph is very accurate. Look at the accompanying ideas to understand the whole trick, the scale of the number of participants and, of course, the genius of this game. When a player-operator plays with himself, it is physically impossible to lose, since the loss of either side will be a win for himself. Only the planned finish and the end of the game are important. 1522215 Few of the average market participants understand that, as a rule, this cunning wolf is the victim of news manipulation.
BITFINEX:XRPUSD
by SpartaBTC
13
Your Ultimate Trader Personality Test! Would You Pass It?Here is a test that you can start with to know if you are psychologically ready to become a forex trader. 1- Do you get angry when you lose a game? Do you seek revenge? If yes, then chances are you will get even more emotional when you lose a trade especially that your money is at stake. Moreover, you will blame the news, president trump, your strategy, or even your friend who called you while you are monitoring the trade that lost. If you’re going to be a successful trader, you will have to learn to love taking a loss. Of course, you are not going to be happy to have a losing trade, but you will understand that losses are part of the process and you should be happy to be out of the market when the trade no longer represents a profitable opportunity. Revenge trading comes from one thing and one thing only, blaming the market for your loss. But let’s think about this realistically. Who is responsible when you have a loss? Of course, the correct answer is you. The market didn’t cause you to have a loss. Then when you seek revenge for the loss you received, you are actually trying to get revenge against yourself. The best fighter is never angry. ~ Lao Tzu 2- Do you think you are always right? Ego always wants to be right. In the markets, we as traders are not seeking to be right or wrong; we are seeking to make money. Your ego is your biggest enemy when it comes to trading. Because when you get too confident in your trading, you will not follow the rules as per your trading plan when believing that you are too good and that most of your trades will end up winning no matter what. If you let ego control your decisions in the markets, you will end up in a pool of losses with nothing learned but psychological and emotional pain. If you know a trader with an ego through the roof, he is not a trader, you may call him analyst, or instructor, or even a scammer, but not a trader. Know what you know and know what you don’t. And no matter how good you think you are, remember to stay humble, for if you don’t, the market will do it for you. 3- Do you fasten your seatbelt every time you drive? If you don’t fasten your seatbelt, means that you think that you are too good to make an accident. Hopefully, you will not make any accidents, but we both know that one accident can ruin your life especially if you weren’t wearing a seatbelt. We would rather call ourselves Risk-Managers not only Traders. As the only thing we have control on is our risk. The market can go anywhere. Professional traders think Risk, not Reward. No matter how good is your trading strategy, if you don’t manage your risk well and find ways to put the odds in your favor, you will not make it in trading. Trading without a stop loss is like driving without your wearing a seatbelt. One trade can blow your account. 4- Are you a follower? As a trader, you should never copy or follow blindly other trader’s analysis on social media or trading networks. You chose forex to be your own boss, why do you insist on being a follower? Moreover, do not doubt your strategy, entry, just because your fellow traders offline/online disagree with your position direction. The odds of being right aren’t with the crowd. The only way to make money, in forex or trading in general, is to trade by yourself and to be in full control of your account by following a well-defined trading plan that you implement objectively like a robot. You’re the one in charge of your trading. You alone are responsible for your success or failure as a trader. It is not the market… nor another trader… nor the trading system… nor the government or its news releases that are responsible. Develop your own trading style that suits your personality, time, and expectations and follow it with full focus. “If you don’t design your own life plan, chances are you’ll fall into someone else’s plan. And guess what they have planned for you? Not much.” ~ Jim Rohn 5- Can you wait for the green traffic light? To achieve success in forex trading, the first step would be to develop a good trading strategy with well-defined set of rules and to follow it objectively. Having the discipline to follow up your trading plan/rules is the surest way to build your trading career and make consistent profits over the long term. Self-discipline is NOT a trait that you are born with. Anyone can practice self-discipline, but it isn’t as easy as it sounds. “Just like Rome wasn’t built in a day” Nobody becomes successful overnight. It takes time, strategy, discipline, and consistent trading until your efforts pay off. The market pays you to be disciplined. Be disciplined every day, in every trade, and the marker will reward you. If you decide to trade without any rules, I promise you will not be successful. Freedom is good, but you need to have what I call “structured freedom.” 6- Are you usually committed to diet/gym? Are you into long-term relationships? The successful trader stays focused and sticks to his system/methodology. Just like you get married. You chose to spend the rest of your life with your partner, knowing that you may find someone better, smarter, more beautiful… but you are done searching. (Unless you want to cheat on your partner) Stop searching, for new methodologies. If your strategy is profitable. Then focus on it, master it, and repeat. You have got a money machine. Do not change methodologies week after week. Have you ever been in a marathon or planning to? Consistency and Determination is the key. Choosing to learn from your own mistakes rather than giving up is what determines a winning mindset. Just like trading, you pace yourself to win the long-distance trading race. Successful trading is supposed to be boring. 7- Do you finish your popcorn before the movie starts? For example, if you are not usually patient as a human, chances are, you will not be patient while trading. As a trader, 90% of your time is waiting. That’s why you need to be patient. First, you have to wait for the setup to form, and once you are in a trade, wait for your trade to hit stop loss or take profit. “The stock market is a device for transferring money from the impatient to the patient.” ~ Warren Buffett In brief, everyone can be a forex trader, but not anyone. Successful traders are made not born. To be a successful trader, you need to work on developing yourself as a trader in many aspects like risk management, problem-solving, flexibility and trading psychology. To be able to work on your trading psychology, first, you need to start from the core and work on your human psychology. Thank you for reading the entire article. You are awesome! ~Rich
COINBASE:BTCUSDEducation
by TheSignalyst
48
Book Review: Trading in the Zone by Mark DouglasSome say that trading is 10% mechanical and 90% psychological. One of my mentors once said "The simpler we make trading, the more profitable it seems to be." and it was a profound statement to me at the time... It was one of those "I heard the exact thing I needed to hear at the exact time" moments and it changed the way I traded. It is in our nature to over-complicate things because we have been conditioned to think that profitable ventures must be complex ventures from a very early age. How many times have we heard "You can't do that... only rich people get to _____." "You'll never be able to get _____ without a college education and years of hard work (working for *someone else*!)." And of course, "If trading were so easy, everybody would be doing it." We are surrounded by negative ninnies nullifying our natural need to succeed. Well, I believe trading indeed is easy, but becoming a trader... now that indeed is the hard part. In an earlier article I talk about Backtesting and its importance in determining if your trading system works, answering the question "Can this system generate a *reliable* income week after week?" Once you determine that, the question is "Can I work the system?" And that question, my fellow traders, is all about psychology. (And the point of the book at hand: Trading in the Zone.) This article rounds out what I believe will be my two most important book reviews. In my previous review of Price Action Breakdown I highlighted the processes of technical analysis as presented by the author. Using Supply and Demand we can find the movement of money in the markets and reliably place trade after trade right behind the big institutions who move those markets. There are many ways to trade using a Supply and Demand methodology. I myself came up with my own method which I call Sabre which I formulated from my years of experience standing on the shoulders of giants, following rules, managing risk, and "sharpening the saw" as the late great Steven Covey would say. However, no matter how good a system is, if not followed properly, (and in some cases if not followed to the *letter*) even the best 'systems' will produce mediocre or even negative results. For instance, there are plenty of great weight loss and weight management 'systems' out there (Keto, Paleo, Atkins, Whole 30, ...) but if one does not have a good psychology, they won't "work the system" even though they know that "the system works." It isn't until a person's *psychology* is right (i.e. that the PAIN of being overweight/unfit is greater than the perceived pain of following a system) that they will follow a prescribed system of weight management or fitness. Mark Douglas opens his book on this very topic, saying that "The consistent winners think differently from everyone else." It's not smarts, or market analysis, or a super-duper indicator that separates the successful from the unsuccessful, but one's State Of Mind , and primarily a state of mind that thinks in probabilities . Trading, says Douglas, is very similar to a casino. The only difference is that we need to think like the person behind the table dealing the cards, not the rube playing the cards. Once you get behind the table, then you can play with the Law of Large Numbers by your side: you don't care how many hands you lose... you just know that overall in the course of 100 deals / shuffles / spins that you will come out ahead if you have an edge - a system that allows you to play where the odds are stacked in your favor. For instance, if you have a trading system that is only right 30% of the time, but your winners consistently generate a minimum of 5R of profit, are you going to be upset that seven out of every ten of your trades are losers? You shouldn't be, because for every 7R in losses (7 losses x 1R) you will generate at least 15R in winnings (5 wins x 3R). Your main goal then would to find as many trades as possible to get into each and every day! (If you are not familiar with the method of trading in "R", or 'aaRrrrrr' as we pirates call it, you can review my " Trade like a Pirate " article...) The essential ingredient in developing this successful probabilistic mindset is to indeed, have a successful trading system, an edge that overall in the game of large numbers will allow you you rake in more winnings than are drawn out by your losses. And as my favorite quote from Douglas says, "Once you learn to identify patterns and read the market, you find there are *limitless* opportunities to make money." Our primary job as traders, then, is to manage risk , that our edge only allows us to take trades that meet the demands of our system, and we take every trade that meeds those qualifications. It is a rare thing, however, to find a "trader in training" willing to think that way... the beginning trader wants to find out how to be right all the time. They want to experience certainty in an environment which is random, which will lead to ultimate disappointment. Think of trading like flipping a coin, (a random event): If you can get someone to play with you where for every time the coin comes up heads they have to pay you $300 and for every time it comes up tails you have to pay them $100, would you play? Of course! Because you know that at the end of the day the money is going to consistently flow in your direction, that overall for every 2 flips you have the expectation of making $200, if 50% of the time it comes up heads (making $300) and 50% of the time it comes up tails (losing $100). If you had a magical money machine that would play with you, with these kind of odds, would you simply flip that coin 5 times and call it a day? If I could make a friendly assumption, I would say that you would sit there in front of that machine flipping that quarter hour after hour until that machine ran out of money! We traders, however, aren't playing a person. We are playing the market . And the market has (for all practical purposes) unlimited piles of money. And if we have an "edge" that pays us 3R for every time we have to pay the market 1R what would you do? You will take every...single...trade... that comes your way that meets your criteria. An amateur at a poker table might walk away because he lost all of his winnings. The market won't run out of money and will play along with you as long as you desire – at least until you reach your goals. Douglas summarizes his point saying that we will be a consistently profitable trader if we can "learn how to redefine your trading activities in such a way that you truly accept the risk, and you’re no longer afraid." And that "the consistency you seek is in your mind , not in the markets." If we want to be "In the Zone" and make ourselves available to this infinite opportunity flow, we need to develop a carefree state of mind that doesn't have any expectation about any individual trade except that "something will happen." Our goal is not to win or not to not lose, but to "get in the water" - to put on every trade that represents our edge and wait for that "something" to happen. And if your trade happens to be a loser, then get excited because that means you are that much closer to a win. With this carefree, probabilistic mindset, "losing" trades will never again produce a negative emotion. In fact, "If every loss puts you that much closer to a win, you will be looking forward to the next occurrence of your edge, ready and waiting to jump in without the slightest reservation or hesitation." Trading, according to Douglass, is ultimately a "pattern recognition numbers game." As long as we insist on "having to know" what will happen with any particular trade we will experience stress and have unfulfilled expectations. When we begin thinking (and acting) in probabilities and a series of trades, we will begin to develop an "unshakable belief in our consistency as a trader." I've recently heard it said that "Trading is one of the most amazing, rewarding, and enriching professions there is. But I wouldn't wish it on anybody!" For the most part, trading is highly psychological. As Yoda said, "You must unlearn what you have learned." What makes one a successful doctor, engineer, lawyer, Fill-in-the-blank.... those skills will contribute *nothing* to being a better trader. Finally, just like one trip to the gym won't make you healthy and fit, a single read of this book won't give you a strong mental edge to complement the technical edge of your trading system. I make it a habit to read/listen to this book at least once per quarter alongside Price Action Breakdown . Take notes. Apply. Rinse. Repeat. That's my one bit of advice for you: Don't just read this book once... read it regularly ... Like with the Napoleon Hill's book Think and Grow Rich ... If you ask anyone if they've ever read it and they said yes, ask them "How many times? Because you obviously aren't rich yet!" Even Napoleon Hill stressed that you should read his book over and over if you are going to exercise your "thinking meat" and make it stronger and stronger day by day. (By the way... you should read that book as well... but that's a review for another day.) Trade well! -Anthony
Education
by ocaptain
25
an educational representation of "pulling the trigger"This is an example of trading ltf of a htf level. We can try and fail more than once, but the idea is keeping loses minimal when we're wrong, keeping our position on the right side, defining clear rules for pulling the trigger and let it flow on the right time. 1) the level is broken, first try. short from 24775. and the stop is 1hr close above the level. a few bars later, invalidated. stay aside. 2) a mini HH. not enough for a long, but watch for the reaction when we come back to our level. 3) broke once again and closed below the former dip. so we can change our bias and trigger the second try with 4, short from a retest of our level. 4) pull the trigger, and our stop is the latest swing high.
by priceactionTR1
1
Single Color Candles VS. Multi Color Candles - PsychologyJust wanted to pay your attention to a phenomenon called: Visual Perception in Psychology. Your brain is always looking for patterns, it craves patterns! So why use camouflage on your charts? When you are using multi-color candles/bars, you are decreasing your ability to detect patterns, it is just science. Your brain looking for patterns, one of the qualities of a pattern is similar colors. Similar colors, signal to your brain "same object", different colors signal to your brain "different object". That is why animals use camouflage to hide from predators, and also, why it is used in the military to "blur" tanks and soldiers. Which one of the texts on the left chart is easier for you to read? The one with the same color? or the one with the alternating colors? Imagine you need to read a book, that each letter is in a different color! When you look at the drawn channel, your brain instantly sees a channel. But when you are looking at the Blue-Red drawing channel, you first see the Blue parallel line, and then the Red lines, and then your brain make effort to combine them to create the object "channel". It is a fact worth remembering for the next time you want your brain to instantly see: head and shoulders, channels, trendlines, triangles... What is your experience? which is better?
BITSTAMP:BTCUSD
by ZoharCho
7
NZDJPY - long- Pure chart readingSome recent large volume has come in showing the interest from the buyers. A sharp move up compresses time for any sellers in this area which I believe will make them more probable to exit if they get the chance on a retrace into their entry areas. Trapped sellers are probably to become buyers. Recent buyers are probably to buy again. Identify large volume areas where there are multiple instances of probable outcomes to help predict a reaction. Pure chart reading. Price should have a harder time moving down rather than moving up as there is no trouble ahead for this trade idea. No indicators just pure chart reading of the participants behind the price structure and their more likely behaviours.
Long
by sparklin
ShawnZ SELL signal 4 hour chart@Chartmojo shares the ShawnZ Bollinger Band Indicator with us many times a day, ShawnZ didn't invent Bollinger Bands, but they really seem to work... When Price crosses the standard deviation plot lines and then comes back they carry weight. Notice the 4 hour SELL signal, and last week was a "complex counter trend, corrective wave in Elliot". Wave 2 is a simple ABC and wave 4 is complex, 5 waves, but still an ABC, This is not a 4th wave, but it may well turn out to be the B wave of a large ABC down.... most of the people in the chat room love to try and predict the future, but the actual fact is nobody can predict with certainty what will happen in any given moment... The measurable, complex 5 waves, don't always perfectly match Elliot's rules in cases like this, it is 50% possible they turn into a pattern to go up to new all time highs again... I will be honest with everyone, I am not the greatest trader of all time, not by a long shot, sometimes I make idiotic noob mistakes in execution, but for some reason God gave me a gift of interpreting charts, a visual intelligence, combined with intuition, which makes my predictions come true way more than most. The proof is when you look back at my 75+ "My Ideas" there is one notable exception when I went long too early in September, but you know what after enough time that prediction came true and we went up in 3 or 4 days as much as we went down in 2 weeks... Is it bragging or arrogance when we talk about our gifts? I don't think so, especially if we also share our weaknesses.... I don't take credit for often being right, God get's all the credit for making me, just like He made all of you with your gifts and weaknesses. I am going to leave neutral on this Idea, because as a Trader I am always ready for both cases, up or down, and can flip in an instant if needed... I am looking for a short, but if they decide to rally up to new ATHs again they won't do it without me. The Trend is your FRIEND. Good Luck, Kauai Dave One day I want to open a room, again... I had a room called Kauai Dave's Daytraders, later KD's Trendtraders with over 5000 people in it, 3500 joined the day I opened it on TCNet let me know if you would join. I would focus on helping people with their trades, and sharing my opinions realtime for 60 minutes or 90 minutes at the CASH Open... You have all seen me trade real time in the room, and being the person I am I really get off on helping traders who appreciate my help, those who want to argue with me get put on ignore.
CME_MINI:MNQ1!
by dryanhawley
GBPAUD - PSYCHOLOGY: The Importance of being ADAPTIVEPART I. You name it, adaptive, reactive, flexible are all synonyms for the same thing. The IMPORTANCE of trading psychology is pivotal to a traders' success. For example, in this chart, you can see I am looking for longs and shorts. The KEY thing is I don't have a bias. Having a bias can cloud a traders' vision. When the price arrives at one of my level's I simply look for a setup on the lower TF. Even if neither of these options gives me my ideal set up ok... MOVE ON. I will reset. The next trade is always around the corner. Chart work.
Education
by LokaForex