How should I use the information here?


Our pre-market plan sheets and educational example charts will be posted everyday after the close. We suggest that you trade as you normally would, keeping your own journal of course, and then stop by and pick up our daily materials. Go back to your own charts, trades, entry/exit methods, etc.. Since we use a lot of volume metrics in our analysis, we recommend Investor R/T along with the AMS Delta Print plug in tools for charting. You can also use the playback feature to study price action and order flow in real time so to speak after the session. However you go about it though, you should try to  study what we present in each example section of the action and compare it with what you were thinking or doing to cement your own ideas into future actions. You will notice that we will admit to and learn from all of our mistakes in our posts as well.  Try to digest what we were thinking vs. what you did and notice repeating themes. Retail traders just like to over complicate the process and suck in too much negative energy. Everyone is always saying how “hard” trading is. You won’t hear that around here. We focus on positive thinking only. Over time you will start to see that whatever you are doing is probably fine at its core and you just have to refine your thinking a bit and focus on risk and bankroll management rather than entry/exit minutia.

We can’t stress enough that great trading is about keeping the focus on general macro market context and building a risk management model around it that grinds out a small but consistent edge. Most traders in the losing part of the bell curve are doing what? They are trying to identify patterns which will help them WIN all the time. The vast majority of pro traders rarely win much more than 50% of trades and many much less than that. The key of course being that when they win they win much more on average then when they lose. Its about making money, not winning as often as possible to feed your bitter ego (lol). Professional traders are the polar opposite. They have dynamic yet clearly defined risk and capital management, a deep understanding of probability and other gambling concepts, and a total command of their own psychology. You have to move to this way of thinking and trading or you will have a very difficult time being profitable. You would be surprised how many seemingly “obvious” winning strategies to the naked eye will be proven losers by back testing. Our research firm has coded virtually every typical indicator based intraday strategy ever talked about or sold on the internet – and so have dozens of other quants. Guess what? Without either the aide of discretion, or a risk management strategy that actually creates most if not all of the edge, none of the single market intraday strategies we’ve tested has ever backtested profitably over a ten year period or more without significant ongoing optimization (curve fitting).

In sum, whatever your rules are – trend lines, divergences, price action, tape reading, etc. they are all more than capable of being the foundation of a profitable strategy. But the caveat to that is that you must come to terms with the fact that any one trade event no matter what you do is a gamble in terms of its probability of winning or losing. Too many moving parts to ascertain. You must gamble folks. At the end of the day you have to choose long or short and where, but edge is something you see over groups of events not trade by trade. In time you will come to realize that pro traders aren’t working with anything different than you. Your specific entry and exit criteria regardless of what it is will get you in and out of the same trades and need not be constantly scrapped in search of the “next greatest thing” to come down the pike.

Next: How should I NOT to use the information?

 Posted by at 1:53 pm