I want to initiate a discussion on the various decision points that we face while trading. Most of us have gone through various setups and methodology and have come to the conclusion that holy grail doesn't exist. There never will be a easy trade and every trade has a equal chance of going wrong no matter how strong the signal is.
It all boils down to aligning with the market direction, identifying low risk opportunity and trade/risk management.
Getting the market bias right is sometimes very difficult and the best of us get it wrong sometimes. Mostly we blame it on the lack of discipline or lack of proper planning or bad execution but end result is mostly the same. After every trading day we constantly search for the missing piece in our trading style. Our intuitions are always proven wrong by the market and somehow we end up fighting a losing battle.
I think it all comes down to decision points. Its a matter of knowing what to do and then having the guts to do it when the time comes.
There are 6 ‘types’ of day identified by using the Market Profiling technique.
* Normal Day – Not as common as the name might suggest. Typified by early entry of other-frame buyers or sellers creating a large initial price range. The action then wanders back and forward during the day in standard auction fashion as buyers and sellers struggle to get the upper hand.
* Normal Variation on Normal Day – Less extreme initial price action, as if the other-frame buyers/sellers are waiting and watching in order to build their conviction. Then the market mnakes a more dramatic move followed by standard 2 way auctioning to the close.
* Trend Day – One side of the other-frame is in control right from the open, and for the whole day. A succession of higher highs/lower lows forms. Experts have determined that this day type shows a high level of directional confidence throughout the day. The initial range is often narrow.
* Double Distribution Trend Day – This is a variation on a trend day. Looks similar to a normal variation on a normal day, except more time is spend wandering in the first range while the other-frame buyers/sellers build up conviction to make the market move. Something ‘changes’ mid session to cause a change in conviction – perhaps insider news or a report.
* Non Trend Day – Often looks like a Trend day at start (narrow range). Then meanders with no conviction in a range bound area. Often seen before a big news announcement as the market waits to see whether it should jump up or down.
* Neutral Day – Like a non-trend day, except other-frame buyers and sellers are active, they just happen to agree on value (broadly speaking). Traders say this day type is characterized by range extension beyond the initial balance during the session as the two sides test the edges of each other’s tolerances. Has 2 variations – “Neutral Center” in which price closes near the open (no resolution between buyers/sellers), and “Neutral Extreme”, one side wins, closing either up at the top of the range, or down at the bottom.
It all boils down to aligning with the market direction, identifying low risk opportunity and trade/risk management.
Getting the market bias right is sometimes very difficult and the best of us get it wrong sometimes. Mostly we blame it on the lack of discipline or lack of proper planning or bad execution but end result is mostly the same. After every trading day we constantly search for the missing piece in our trading style. Our intuitions are always proven wrong by the market and somehow we end up fighting a losing battle.
I think it all comes down to decision points. Its a matter of knowing what to do and then having the guts to do it when the time comes.
There are 6 ‘types’ of day identified by using the Market Profiling technique.
* Normal Day – Not as common as the name might suggest. Typified by early entry of other-frame buyers or sellers creating a large initial price range. The action then wanders back and forward during the day in standard auction fashion as buyers and sellers struggle to get the upper hand.
* Normal Variation on Normal Day – Less extreme initial price action, as if the other-frame buyers/sellers are waiting and watching in order to build their conviction. Then the market mnakes a more dramatic move followed by standard 2 way auctioning to the close.
* Trend Day – One side of the other-frame is in control right from the open, and for the whole day. A succession of higher highs/lower lows forms. Experts have determined that this day type shows a high level of directional confidence throughout the day. The initial range is often narrow.
* Double Distribution Trend Day – This is a variation on a trend day. Looks similar to a normal variation on a normal day, except more time is spend wandering in the first range while the other-frame buyers/sellers build up conviction to make the market move. Something ‘changes’ mid session to cause a change in conviction – perhaps insider news or a report.
* Non Trend Day – Often looks like a Trend day at start (narrow range). Then meanders with no conviction in a range bound area. Often seen before a big news announcement as the market waits to see whether it should jump up or down.
* Neutral Day – Like a non-trend day, except other-frame buyers and sellers are active, they just happen to agree on value (broadly speaking). Traders say this day type is characterized by range extension beyond the initial balance during the session as the two sides test the edges of each other’s tolerances. Has 2 variations – “Neutral Center” in which price closes near the open (no resolution between buyers/sellers), and “Neutral Extreme”, one side wins, closing either up at the top of the range, or down at the bottom.