I am looking at some Assistance from Traders on Whipsaws...,
With All your experience as Traders can you please Guide/Suggest "Is It Possible to ForeSee Whipsaws Arriving Like Tsunami.....? "
Please Note I am NOT looking at " How to Handle Whipsaws ? "
Knowledge to Foresee Whipsaws Can Be of Great Help to a Trader Isn't it ?
I did bring this Up to Couple of Seniors when we had the Chat room...., Blame My Memory cannot recollect the discussions ...
If Some of you are able to ForeSee/Predict Whipsaws..., Could you Kindly Explain how this is done ..This can be of Great Help/Assistance to Me and Other Traders from Making Good Profits OR Getting Saved from Huge Losses.
Thanks In Advance to All who would Post here with Suggestions On How to Foresee Whipsaws ...,
Good Question.
After crunching data for 141 years starting from 1870 cotton prices, here is my conclusion:
You can not predict whipsaws. Infact there is nothing called prediction in the market. It follows a fixed 'major' psychological pattern.
The major pattern is fixed like the current downtrend in nifty but how it travels down in a downtrend is variable which we say volatility. The road map is fixed but how it travels differs.
In a major downtrend market, i prefer to play short. In whipsaws, the mark to market stats in my account is changing..thats all. But i am not in deep loss or in deep gain in whipsaws. Simply the numbers in my account are changing.
Why traders loose in whipsaws?
The number 1 reason is they want to take very trade. This is possible if you can time the market 'perfectly' but it is impossible to time the market perfectly. If traders learn to go after 'quality points', they will be highly profitable.
Over a period of time with practice, they can even pile on leverage to trade quality points. 'Quality points' is very important, not the quantity of points.
So you can not predict whipsaws. You have to absorb them, not to trade them. Absorb them while you are playing in the favour of major trend. Sooner or later, the market will travel in the major trend.
Practice, Practice, Practice. The brain rewire itself after lots of practice and a trader gets very comfortable with whipsaws or drawdowns just like doctor gets comfortable with blood. I personally believe 1000 hours of repeated practice can make anyone a great profitable trader.
How can one predict what is is going to happen the next moment? It is impossible. No one can do it. The cricket batsmen is 'reactive'. You bowl at him and within milliseconds, the neocortex and cerebellum in his brain scan patterns and sends signals through spine cord to play a short.
Chess grandmasters are 'reactive'. They have memorized 1 lakh patterns in their long term memory through years of repeated practice. Within milliseconds, the brain scans the patterns and give them a possible move. They are not predicting what the next move of opponent will be.
This is the greatest transformation i did of myself as a trader through lots of practice. I went from prediction to reaction. In a major downtrend, i have learned and still learning to be able to recognize whipsaws and temporary bounce back but not to trade them.
