Wall Street fecha semana sem rumo. Grandes tecnológicas pressionam

[Cem pt]

Sistema "Cobra" - Gráfico Diário do Milho

Caro TF:

Tens toda a razão, aquela sessão de anteontem anulou por completo os pequenos lucros que vinham a ser acumulados neste cereal desde há sensivelmente 1 mês atrás e hoje finalmente o sistema no gráfico diário disparou um sinal de venda de verdadeira rendição, o que associado a um sinal ainda de compra na escala semanal significa que acabou de passar a neutro no Milho.

A volatilidade está abusadoramente elevada no Milho, o que pode ser facilmente detetado no gráfico dos indicadores através da diferença no afastamento entre o indicador branco e o azul.

Nos restantes futuros sobre cereais registou-se também ontem uma alteração com o Trigo a passar no sistema global de neutro para vendido.

Apenas a Soja se mantém comprada mas mesmo assim com a respetiva posição global a dever-se ao sinal comprado na escala semanal, visto que na diária temos nesta altura um sinal neutral a revelar alguma indecisão ou alguma alteração próxima que esteja prestes a chegar.

Abraço e BN.

[trend=friend]

Diria que a Cobra já se engasgou com este afundanço do milho. Impressionante...

[trend=friend]

Muito obrigado, Cem!

Parece-me que o café já vai então um pouco à frente do que esperava... Tenho assistido a alguma hesitação no arranque no Trigo e no Café (as duas com o maior lag, a par do Copper, mas este é de outro campeonato). Parece que a cafeína ajuda a partir mais rápido

O açúcar, sim, foi logo das primeiras a par da Soja

Um abraço

[Cem pt]

Caros amigos:

Obrigado pelas simpáticas mensagens.

Reconheço que os futuros dos índices acionistas sao os que captam a maior atençao da maioria porque mais de 95% do pessoal que se dedica de alguma forma aos mercados interessa-se quase exclusivamente por açoes.

No entanto partilho uma opiniao muito particular há muitos anos que a grande volatilidade que se materializa em crashes de grande amplitude, se verificam quase exclusivamente nos mercados acionistas.

Pelo que se estivermos mais de 4 vezes alavancados em índices de futuros e com posiçoes contrárias ao movimento do mercado num cenário catastrófico em que haja uma correçao superior a 25%, aí poderíamos dizer adeus à totalidade do capital investido, tantos anos a acumular que nao servirao para nada!

Daí que na minha carteira privada apenas dedique 10% do capital a futuros de índices, e de preferência selecionando um que tenha a menor volatilidade possível, pelo que esta justificaçao talvez responda ao facto de ter escolhido para o efeito o Euro Stoxx 50 e o resto do risco estar espalhado por uma grande panóplia de ativos de futuros, de preferência bastante líquidos.

Quanto ao que se passa com as eventuais posiçoes da “Cobra” noutras "commodities" que nunca referi, pus por curiosidade o sistema a trabalhar para ver o que se passava em dois desses futuros: o Café e o Açúcar.

Os sinais em ambos os casos resultam em posiçoes compradas em futuros, já que na escala diária como na semanal as tendências ascendentes sao um ponto bem comum, aliás coincidentes com o que se passa em quase todo o conjunto universal de matérias-primas uma vez que o índice geral indicativo das "commodities", o denominado TRJCRB, se encontra com um sinal inegavelmente positivo ou ascendente, um bom augúrio que o mundo nao vai entrar em recessao ao contrário do que vaticina a maioria dos analistas.

Ficam entao 2 gráficos significativos em ambos os casos: o gráfico diário do Açúcar e o semanal do Café, que mostram a ocorrência das respetivas posiçoes longas no sistema “Cobra”.

BN.

Sistema "Cobra" - Gráfico Diário do Açúcar

Sistema "Cobra" - Gráfico Semanal do Café

[trend=friend]

Caro Cem,
Excelente contributo numa área não suficientemente explorada por estas bandas.
A cobra pronuncia-se quanto ao café? Arriscaria um "neutral" não muito diferente do trigo, mas se tiveres data...
Abraço

[lobus3101]

Viva Cent ,

Sou um dos teus seguidores o que de resto ,é normal aqui no Caldeirão.

Todavia nos últimos tempos não segui este teu tópico porque o titulo não me despertou atenção ...mas hoje ,coloquei-o em dia todo inteirinho

Assim os meus agradecimentos por mais este excelente ( o que já é normal) teu contributo e partilha .

Só tenho pena que não tenhas disponibilidade para postares com mais frequência.

Cent se me permites , deixava uma sugestão :

Para intervires mais frequentemente e não gastares muito tempo ,que todos sabemos ,que não tens, por vezes deixares apenas uma informação sobre os vários ativos desta forma, não te obrigando a gastar tanto tempo (?) :

- DAX: curto.
- Euro Stoxx: curto.
- S&P: longo.
- EuroDollar: neutro.
- IeneDollar: longo.
- Crude Oil: longo.
- Natural Gas: longo.
- Gold: longo.
- Silver: longo.

Cent se estou a dizer alguma coisa que ,não queiras ou não possas fazer...deixo já as minhas sinceras desculpas e mais digo que, o que vais postando aqui, já é "Bem Bom".

Grande abraço e,
Muito obrigado.

[Cem pt]

Sistema "Cobra" - Gráfico Diário do Petróleo

Já há bastante tempo que nao atualizo os sinais da “Cobra” nos diversos futuros que tenho vindo a referir, a vida profissional muitas vezes impede-me de arranjar tempo disponível para vir aqui ao forum.

Daí que registe o posicionamento atual em cada um deles:

- TRJCRB: longo.
- PSI: curto.
- DAX: curto.
- Euro Stoxx: curto.
- S&P: longo.
- EuroDollar: neutro.
- IeneDollar: longo.
- Crude Oil: longo.
- Natural Gas: longo.
- Gold: longo.
- Silver: longo.
- Corn: longo.
- Wheat: neutro.
- Soybeans: longo.

O gráfico que deixo é de uma das commodities mais populares, o Petróleo.
Apesar da “pancada” ou correçoes que o Crude Oil tem estado sujeito ultimamente, o certo é que os indicadores continuam a apontar para um cenário em que nos encontramos firmemente em tendência ascendente.

Sistema "Cobra" - Gráfico Semanal do Petróleo

Obviamente essa tendência na escala semanal é ainda mais acentuada, uma vez que o indicador branco que representa o caminho real da "Cobra" se encontra neste caso acima do seu caminho previsível, representado pelo indicador azul.

BN

[Cem pt]

Sistema "Cobra" - Gráfico Diário do Ouro

O sinal de passagem de vendido a neutro no Ouro que pode ser observado no gráfico diário, associado ao sinal de comprado que se mantém inalterado na escala semanal, significa a promoção global na carteira de neutro para comprado no metal amarelo, com ordem a executar na abertura de amanhã.

Por curiosidade refiro que cada Mini-Futuro do Ouro negociado equivale a 50 dólares por ponto, o que significa que atualmente o valor em risco de cada futuro destes representa 1.265 pontos x 50 dólares/ponto = 63.250 dólares. Atendendo à sua volatilidade histórica e ao conjunto das performances dos sistemas de trading utilizados o Ouro permite que utilize na minha carteira pessoal uma alavancagem de 5,13 em relação ao seu valor de subjacente.

Também na data de hoje o sistema deixou de estar neutro num dos câmbios que vai controlando diariamente ao alterar a sua posição global no câmbio do IeneDollar, passando igualmente de neutro para comprado a favor dos futuros da moeda japonesa.

BN

[Cem pt]

Sistema "Cobra" - Gráfico Diário do índice de commodities TRJ CRB

Fica um gráfico diário com os sinais do sistema no índice TRJCRB que representa a generalidade das grandes commodities a nível mundial.

Uma leitura possível é que o grande bear market de quase 2 anos de duraçao que “rebentou” com muitas empresas ligadas às mercadorias, incluindo petrolíferas e mineiras, aparentemente terá terminado no início do corrente ano, talvez um prenúncio de que a recuperaçao acionista de muitos mercados, que provavelmente continuará ao longo deste ano através de um bull market em curso nos principais índices acionistas, se deva a este “leading indicator” que representa a recuperaçao dos preços das matérias-primas.

O presente sinal de compra que se verifica neste índice é o mais longo em duraçao de 2013 para cá, já lá vao entretanto 3 meses de posiçoes compradas e quase 3 meses e meio de apariçao de um regime tendencial ascendente (materializado pela barra verde vertical).

BN

[Cem pt]

Sistema "Cobra" - Gráfico Semanal do PSI

Um caso curioso de sinais aparentemente estranhos dados por este sistema acontece com o nosso índice PSI-20.

Ao contrário de muitos que advogam que o melhor é fugir do mercado nacional, o sistema “Cobra” é da opiniao que vale a pena apostar nesta altura em Portugal.

Deixo o gráfico da escala mais alargada semanal, onde o sinal é ainda neutro num regime lateral que terá sido detetado através da barra amarela vertical, desde 18 de março para cá.

Face ao sinal neutral semanal atrás apontado é óbvio que a posiçao de compra global no PSI se deve ao facto de ocorrer nesta altura um sinal comprado na escala diária, que terá sido disparado no final de maio e que se mantém daí para cá apesar do regime na escala diária se definir, tal como no semanal, por um comportamento “sideways” na tentativa de aproveitar os níveis de base de suporte que atualmente vao sustentando o mercado na casa dos 4800 pontos.

Já que falamos de índices acionistas, aqui ficam também outros posicionamentos aconselhados pelo “Cobra” à data presente, dos quais na minha carteira pessoal só sigo o caso do Euro Stoxx 50:

- DAX: neutro.
- Euro Stoxx: comprado.
- S&P: comprado.

BN

[Cem pt]

- Amigo Arrobas:

O “trader” citado pelo Carl Futia, refiro-me ao Ziad Masri, de facto indica que atendendo à grande incerteza dos mercados não aconselha a utilização de sistemas de trading, que no passado terá testado e usado mas no final não lhe deu resultados satisfatórios.

Na teoria do que afirma está simplesmente a procurar substituir condições de compra e venda dadas por indicadores técnicos por conceitos de leitura e análise do contexto posicional da leitura das cotações de acordo com time-frames diferentes e por atuações de ocorrência de determinados fractais.

Sucede que aquilo que ele está a dizer não é mais que provavelmente alguma insuficiência em caraterizar por algoritmos matemáticos ou estatísticos mais robustos que obviamente dão algum trabalho em procurar e programar, para poderem ser passados a sub-rotinas de programas através de um sistema de trading, para procurar captar a essência dos conceitos que são enunciados.

Permite-me já agora utilizar as próprias palavras numa outra comunicação do Ziad Masri para saber o que quer ele dizer com essa coisa do “contexto” dos mercados:

When I say context, I mean it from a dual perspective: direction and volatility.
In general, a move is more likely to continue if it’s in line with the larger time-frame bias. This is the direction part.
So make sure you’re looking at the bigger picture chart and aligning yourself with the larger bias. This will decrease the number of times you jump on board a momentum move only to watch it reverse.
In terms of volatility, you’re less likely to get chopped up if you only take momentum trades during generally elevated volatility environments.
There are numerous ways to gauge the volatility environment, but it can be as simple as looking at the previous few days and seeing what kind of ranges you’re getting and whether short-term momentum is following through. If not, you’re going to get chopped up trying to trade this way. Respect the context, and you’ll minimize it.

Tirando esta questão de usar ou não um sistema de trading, que eu procuro colocar na simples questão de não se ter dado ao trabalho de programar porque se vai meter por atalhos onde vai perder um tempo que provavelmente não está para perder, todos os restantes pontos focados naquelas duas comunicações fazem muito sentido na minha ótica.

Porque uso dois sistemas em vez de um? Porque segui duas correntes com poucos pontos em comum em cada um deles, umas vezes um deles retorna melhores resultados em determinadas circunstâncias e noutro tipo de comportamentos o outro resulta melhor. Assim, sendo ambos relativamente lucrativos, se lhes tirar a média das decisões comuns corremos menos riscos e erramos menos vezes, uma vez que em caso de dúvida ficamos mais tempo de fora a aguardar decisões consensuais, o que está dentro do caminho que qualquer “trader” de carater semiprofissional minimamente consciente pretenda seguir.

Ambos os sistemas têm como denominador comum a questão das acelerações e contrações da volatilidade, que no meu ponto de vista, através da sua interpretação correta de conceito em regimes laterais e direcionais, acaba por incorporar a principal razão da previsão de curto e médio prazo dos swings que o mercado poderá sofrer em seguida, algo que devemos procurar seguir sem pestanejar em termos probabilísticos, se queremos fazer algum dinheiro de jeito nesta atividade fascinante do trading.

Quanto à plataforma do “software” não é de forma nenhuma necessário que seja do “Metastock” ou de outra qualquer plataforma comercial conhecida de Análise Técnica.

Bastará programar as condições dos disparos dos sinais em Excel e continuar a negociar nos mercados de acordo com aquilo que acreditamos, isso será suficiente. Simplesmente o problema surgirá quando quisermos complicar um pouco mais as equações e chegarmos à conclusão que o Excel será uma ferramenta boa… mas insuficiente! Daí a vantagem em ter do nosso lado auxílios mais poderosos, rápidos e cujas ideias possam ser testadas e avaliadas nos mercados para verificar se resultam, ou não! E isso o Excel não consegue fazer, infelizmente.

Espero ter ajudado, bons negócios.

Sistema "Cobra" - Gráfico Diário da Prata

Outra das “commodities” que não voltou mais a sair duma posição neutra é a Prata.

A razão desta neutralidade resulta do sinal comprado existente na escala semanal e do sinal de venda que foi disparado no gráfico diário (ver acima) e que se tem mantido inalterável desde 12 de maio até à data presente.

Um regime de tendência ascendente, materializado por uma barra verde vertical, só voltará a aparecer desde que, no gráfico do meio dos indicadores, a linha branca passe acima da linha azul e esta por sua vez aponte num sentido ascendente. Estamos ainda um pouco afastados desse eventual cenário, apesar da subida da Prata nas últimas duas sessões.

[JohnyRobaz]

Caro cem PT, presumo então que não concordas em absoluto com esse trader que citaste, visto que segues com disciplina sistemas de trading testados e validados, e que suponho que não actualizes nem relativizes durante o tempo em que os estás a usar. Para mim, que sou um iniciado nos mercados, isto teria que ser um hobby, obviamente, mas percebo que para ti já seja mais que isso. Porque usas dois sistemas e não apenas um? (supondo que cada um já funciona de uma forma para tendências e de outra para lateralizações...)
Achas que é essencial ter um software de trading (tipo Metastock)? Ou será que é igualmente possível desenvolver sistemas para trading diário em Excel, por exemplo?

Abraço!
JR

[Cem pt]

Caro amigo Arrobas:

Thanks pela tua intervençao, vou ser sincero contigo: possuir um bom sistema de trading em que acreditemos só é possível depois de o termos usado na negociaçao dos mercados reais por um período mínimo de 2 a 3 anos para comprovar a sua eficiência em garantir lucros razoáveis anuais, em funçao de testes anteriores que garantam probabilisticamente a sua futura performance face a terem resultado bem no passado em mercados que tenham passado por comportamentos distintos de tendências e lateralizaçoes.

Depois de confiar num bicho destes, tudo se torna mais fácil para garantir uma forma de estar nos mercados em que a automatizaçao e a disciplina fazem o resto porque sabemos que obedecer às ordens destes sistemas de trading acabam por constituir nao um hobby engraçado e com a adrenalina das incertezasa que daí poderiam resultar mas sim um bom negócio que a longo prazo pode vir a ser o grande negócio de toda uma vida.

Iniciei-me nesta coisa dos sistemas de trading nos anos 90 e acho que o melhor investimento que fiz foi ter comprado nessa altura uma das versoes iniciais do Metastock e de ter lido o respetivo manual de instruçoes, que ensinava a programar indicadores e sistemas de trading na ótica do utilizador.

Creio ter valido a pena porque já em plenos anos 90 passei a negociar nos mercados baseado exclusivamente em sistemas de trading da mesma forma que faço hoje, apenas com a diferença de que os atuais sao mais performantes em relaçao aos que usava nesssa altura que eram exclusivamente tendenciais e hoje sao mistos mas ainda assim maioritariamente tendenciais,

O certo é que separei sempre o dinheiro da vida do dia-a-dia com os ganhos da profissao normal e o dinheiro que nos anos 90 destinei exclusivamente ao trading, no qual só uma única vez mexi esporadicamente daí para cá para retirar perto de 30% desse capital de trading para outras necessidades familiares.

Recordo-me que comecei a conta de trading com pouco menos de 1.000 contos em 1996, perto de 3.500 Euros, e ao virar do século essa conta de trading tinha já perto de 2.000 contos só a negociar com açoes portuguesas (10.000 Euros), embora eu reconheça que nessa altura fosse fácil ganhar dinheiro porque bastava comprar qualquer coisa e aguardar, qualquer sistema simples de médias móveis era suficiente porque nessa década incrível dos anos 90 tudo subia.

Atualmente a conta global de trading está distribuída por 3 corretoras e Bancos diferentes e lá vai seguindo, como devo dizer? Razoavelmente bem, com um capital folgado de 6 dígitos que foi atingido há 3 anos atrás, com o objetivo de tentar ficar milionário (1.000.000 Euros) entre 2020 a 2025 usando exclusivamente os sinais de 2 sistemas de trading e aplicando métodos de money management para ir controlando o risco de alavancagem dos contratos de futuros da carteira.

Como deverás compreender esta história de negociar com sistemas de trading deixou há muito tempo de ser um mero hobby porque em termos médios os retornos ultrapassaram inclusive os ganhos que extraio da profissao normal e por isso encaro esta atividade como um dos pontos centrais da atividade diária que vou atualizando e controlando a seguir aos jantares e que já nao vou largar por razoes óbvias.

BN


-----

Sistema "Cobra" - Gráfico Diário do EURUSD

Sistema "Cobra" - Gráfico Semanal do EURUSD

Na sessao desta 6. feira o par EuroDollar deu um grande puxao para cima, quase 2% de valorizaçao, o que face à baixa volatilidade histórica deste câmbio poderia ter provocado alguma mudança de sinal.

Mas nao! O sistema de trading mantém-se estável de fora, ou neutro, mediante a constataçao do sinal se manter vendido na escala diária e comprado na semanal.

O tipo de comportamento deste papel é muito ingrato, torna a negociaçao muito difícil para qualquer trader que siga tendências, como é o caso da estratégia principal do “Cobra”.

Eventualmente será muito proveitoso para os swing traders, mas quem ia suspeitar de tal comportamento? Pode-se ver bem no gráfico semanal que o par tem negociado desde há 15 meses para cá (!) num range razoavelmente apertado entre os 1,04 e os 1,17. Uma estratégia de comprar na zona dos 1,06/1,07 e vender nos 1,14/1,15 teria dado bons retornos a quem tenha vindo a usar estes níveis de referência.

Nao admira portanto que de março do ano passado para cá os lucros neste par cambial tenham estancado. Com toda a probabilidade um novo sentido estável só virá a ser de novo estabelecido quando a cotaçao romper em alta os 1,17 ou em baixa os 1,04.

Embora seja quase evidente constatar que o mercado nesta altura está praticamente “sideways”, a sensibilidade amplificada dos indicadores internos do “Cobra” indicam que o EURUSD se encontra em regime tendencial descendente no gráfico diário, com o indicador azul do meio virado para baixo, indicando o caminho previsível das cotaçoes para os próximos dias mas com o gráfico semanal a indicar precisamente o oposto, com tendência ascendente e com o tal indicador azul do sentido expetável das cotaçoes a apontar para cima.

Na dúvida, “get out” e por isso estou e estarei de fora a aguardar por melhores dias.

[JohnyRobaz]

Caro Cem pt, desde já agradeço o teu enorme contributo para malta como eu que frequentamos o Caldeirão em busca de conselhos que nos orientem na nossa iniciação aos mercados.

Aproveito para dizer também que li o teu post sobre o Carl Futia, e que de facto é uma forma de ver o trading pouco comum na literatura que já me dediquei a ler, e mesmo nas pessoas que vejo por aqui. A questão da disciplina e da gestão do risco, e de ter um sistema, parecem ser os fundamentais. Mas de facto se fosse tão fácil e certo assim, 95% dos traders não perdiam dinheiro. Agora, uma coisa é estar nos mercados como modo de vida, outra é como part-time. E como part-time, julgo que poderá compensar ter um sistema que nos permita perder pouco tempo e ganhar algum dinheiro, apesar de o retorno não ser tão alto.

De qualquer forma, parecendo-me a mim seres tu um trader que se baseia em sistemas (automáticos), como encaraste essa opinião desse trader? Concordas? Ou nem por isso?

Abraço,
JR

[Cem pt]

Sistema "Cobra" - Gráfico Semanal da Soja

Entretanto nos futuros da Soja a posição comprada consolida-se cada vez com mais força.

Basta atentar no gráfico com o que se passa nos indicadores do sistema “Cobra” na escala semanal, onde dentro da elipse que foi marcada se pode ver o indicador branco (o caminho real da cobra) a afastar mais e mais do indicador azul (o caminho teórico que devia ser seguido).

Na prática esta constatação significa simplesmente que a volatilidade da Soja se encontra a subir de semana para semana, confirmando assim que a aposta na tendência ascendente é a posição mais segura neste cereal.

BN

[Cem pt]

Este post sai um pouco do contexto do tópico do sistema "Cobra", cujos alguns exemplos tenho aqui vindo a mostrar, no entanto parece-me que o assunto do trading pode igualmente ser mais abrangente e interessante se tocarmos noutras áreas que interessam muito a quem gosta de negociar os mercados e sobretudo interessa a quem está focado em ganhar dinheiro nesta atividade fascinante, coisa que infelizmente a maioria não consegue. Mas se não o consegue gostaria certamente de saber os porquês!



Há pouco tempo assisti a um webinar promovido pelo Metastock dum trader profissional canadiano que vive e atua à data presente no Dubai.

Aliás, penso que não estarei a fazer publicidade mas apenas a informar para efeitos de curiosidade, quem quiser assistir à mesma apresentação a que assisti creio que o poderá fazer através deste link, se ainda estiver ativo este webinar:

http://traderbroadcast.opentrader.com/a ... mpaign=e01

A apresentação foi bastante interessante e o trader em causa até mostrou provas da sua conta pessoal numa corretora no Canadá que subiu em 3 anos de 30 mil dólares iniciais para perto de 500 mil dólares. Quando passou os 100 mil dólares passou a viver nos Emiratos para não ter de pagar impostos sobre as mais-valias.

O que me chamou a atenção é que o trading deste indivíduo era todo baseado em day trading com futuros, onde mais de 95% dos participantes perdem dinheiro, e como a sua rentabilidade em 3 anos era quase de 1500% a minha curiosidade era muita para saber que métodos utilizava ou como conseguia este trader fazer tanto dinheiro numa modalidade em que eu particularmente acho muito difícil ganhar dinheiro de forma consistente através do day trading.

É claro que este webinar era também uma espécie de aperitivo em que no final propunha, a quem quisesse aprofundar os métodos e estratégia empregues (apresentou na comunicação 5 exemplos diferentes de setups, e aliás bem interessantes, acrescento eu, porque fazem todo o sentido em função da do tipo de trading em que também acredito), que poderiam inscrever-se num curso de trading que ele promovia com perto de 60 lições, com um custo de cerca de 6.000 dólares, e sem que o método inclua um sistema de trading automático. É tudo discricionário e com base no contexto de time-frames de mercado e onde as ordens são colocadas pacientemente em zonas de suportes (nas compras) e resistências (nas vendas) claras e sempre a favor da tendência dominante detetada de um prazo mais longo do que aquele que está a ser negociado, a fim de ter sempre o controlo das probabilidades no lado dos bulls e bears em que vai apostando.

Foi numa pequena pesquisa posterior sobre este trader, para avaliar da sua credibilidade, que encontrei um conjunto de 2 posts da autoria dum trader chamado Carl Futia que acho valer a pena deixar aqui à vossa atenção porque todo o seu conteúdo merece ser bem apreendido numa perspetiva de melhorar a abordagem que cada um de nós faz ao trading dos mercados.

Aqui fica para o vosso conhecimento e ponderação, vale a pena ler a totalidade do texto apesar de ser um pouco longo e de estar em inglês:



Part I


________________________________________
Why do most traders fail? Change your ways. Now.

(includes subtantial parts of a post by Ziad Masri)


edited by Carl Futia

I am someone who trades for a living. I have less than 10 years experience but I feel that the mental energy, time, and effort I have put into trading is enormous. I think I have had success because I did the REAL HARD WORK, work that most people want to avoid.

Hard work isn't reading a trading book, applying to a broker, opening a chart and spending hours back testing an EMA crossover. It isn't sitting for 12 hours per day testing the crossover on different markets and then sitting 4 hours waiting for the signal to emerge because in the back test your found it to be 'high probability'. If you are doing this you're wasting your time, spinning your wheels without moving. You are avoiding the truth of trading.

Here is the truth of trading. A trader must learn to identify the direction of the market's trend in the various time frames which are relevant to his trading goals. But the trend direction is often ambiguous. So a trader must learn to face trend ambiguity and thrive in it. Trading is not about clarity. It is not about setups and signals - not about EMA crossovers, three-higher closes for entries, waiting for pin-bars at support.

These sorts of setups and signals may work for a small number of successful traders, but for most aspiring traders they are useless. Why? Because they are NOT the essential part of the trading process. Traders who use setups and signals successfully have already built a mental map of market behavior. Such a map identifies the market's condition and trend in the various time frames which concern him. The current position of the market on this map determines the value of a setup and signal in particular contexts. The way such mental maps are developed is difficult to explain.

Here is what I mean. I could explain a specific setup of mine to you, one that is extremely easy to follow. But I couldn't explain how I interpret the time and sales window and compare it to order flow and market action. And it is this latter interpretation that determines whether or not the trend direction is favorable to the setup. This skill at interpreting time and sales in the context of market action is one I have developed by watching the market carefully and by taking hours and hours of notes on its behavior.

It is this experienced recognition of the direction of the current market trend that gives me an EDGE over other traders. Only after I have made this judgment do I start paying attention to setups and signals.

Knowing the direction of the market's various trends tells me whether my setups are likely to be good ones or bad ones. Most aspiring traders can't make these distinctions. To them all setups and signals look the same. When they take a loss after following one all they simply say "oh it didn't work" and moan about it.

These people have not started the really hard work - the work they need to do to be successful traders. They will have to spend weeks or months watching markets trade. They will have to take notes on what they observe and start building a mental map of market behavior. They will have to learn to exercise judgment is assessing the market's condition and trend - and to have confidence in their judgments and the courage to act upon them.

On these forums hundreds of people talk about how to be a profitable trader. But most of them not profitable themselves, at least not to any significant degree.

Speaking as someone who makes A LOT of money from the markets I say that it was never a specific system or price action setup that finally made me consistently profitable. Rather it was my extensive study of market behavior, of the "tells" it gives that help me identify the market's trend. I had to learn to embrace the inherent ambiguity of all market behavior - to learn that there are no certainties, only probabilities. I had to create my own interpretation of everything, even though I used the knowledge I found in books about the market and trading as a starting point.

I am now able to trade without a system, without a detailed plan but with money management. All the guru's say YOU NEED a specific entry and exit plan but I don't use one.

Believe me, the reason MOST traders lose is because they fail to embrace uncertainty. They try to convert the inherent uncertainty of market behavior into something that is a sure thing in the sense that every trade they make will be dictated by a fixed set of rules. They spend fruitless hours trying to find a system of setups and signals that will make money in the markets. They don't learn the $tick relationship to price themselves but instead look online and see what others have found. They are unwilling to do their own thinking . They don't spend the time needed to develop their own skills of market observation and interpretation.

It took me 4 months to become profitable. Many of you won't believe this. But the reason I was able to do it so fast was because I cut out all the crap. You may believe you are working hard - you may have been up for 8 hours last night testing if the strategy you just read about in a trading book is a good one.

But I say you haven't really started doing the hard work yet. Until you do you will remain unprofitable. You won't find the high-probability, profitable setups you seek. To do this you must first study the market's behavior and understand it - learn how to identify the market's condition and trend. Only after you have mastered this aspect of market interpretation that you can you work with setups and signals.

It will be your understanding of the market's trend that turns your setups and signals into high probability, profitable ones. Setups and signals by themselves cannot do the trick - they cannot turn you into a successful trader. They do not incorporate and understanding of the market's trend and condition. They miss something that only your personal judgment can provide.

Let me give you an example that might open your eyes. Have you ever played a shooting game like Call of Duty 4 or Halo 3? The players who are very good at these games haven't got a system, they don't spend up at night thinking about the best place to camp with a shotgun. They practice playing the game. They master it.

The difference between a winner and loser isn't that the winner knows a secret, or paid someone to teach them the secrets, or have a system of using power-ups to beat people. The winners win because they are more skillful, they have learned how to play, they have mastered the game. How did they do this? By playing the game, by being continuously involved in real time competition.

The same is true of good athletes in any competitive sport. They don't plan their moves against their opponents in advance. Instead they play by following general principles they know work most of the time, and they rely on their game experience to make the right play in response to their opponent's action in the context of the specific game situation. Yet despite their skill and experience every great athlete will tell you that he/she fails frequently.

Try hard to think about what this means. I think it demonstrates my point quite clearly. The good players are genuinely skilled. They do not follow mechanical rules in their play, rules that anyone could learn by reading a book. Whoever heard of a football player becoming great by reading a book on football?!! But aspiring traders seem to believe they can become good traders, make good profits, by reading books on trading and checking out the statistics of every setup and signal under the sun! What's wrong with this picture?

A genuinely skillful trader is someone who can apply his knowledge of market behavior in any context, in any environment. In some situations he knows that certain setups and signals are genuinely useful, but in other situation he avoids those same setups and signals like the plague.

CONTEXT! It's all about context. Stop trying to trade on signals and setups that pretend that the market context is always the same. You must instead focus your efforts on identifying the direction of trends. This is inherently an ambiguous and uncertain process. So you must embrace uncertainty! Embrace ambiguity! Accept the fact that you won't get things right every time. But at the same time learn to trust your judgements without the support of a rigid framework of mechanical rules.

Here's the situation as I see it for most users on the forum. You've have been spinning your wheels while thinking that you are getting somewhere. You are trying to learn how to trade in the wrong way.

I see that most aspiring traders focus all their attention on "set-ups" and on finding out which combinations of indicators work. But these people are never going to become profitable. Why? They are following the advice of trading books that say trading is simple and psychology is everything. So they search for set-ups that 'work', and they hope that these setups can take the guess work out of trading. They want to be "disciplined" and have simple rules that guide all their actions in all contexts. But I have got news for you: you CANNOT take the guesswork out of trading!!!

I offer this opinion as someone who started last year with $30,000 and ended with $150,000 without a single losing month. I think I was successful because of the way I went about learning and what I focused on. My learning process was very different from the ones suggested on this forum. I learned that while psychology is huge it is not everything. And while trading is all about simple principles, actually having an edge is NOT simple. It's a myth that you can have a couple simple price or indicator set-ups and make money consistently if only you are disciplined. That's a load of crap. It keeps the dream alive for wannabe traders who never realize what trading is truly about.

Trading is about being okay with ambiguity. It's about tolerating confusion. It's about sitting with discomfort and being at peace with it. It's about not having an exact script of when to trade or not to trade, or what's really a high odds trade, and being okay with that. It's about exceptions to the rules. It's about contradiction. It's about uncertainty.

And yet traders left and right want to make it simple and certain. They want to reduce it to a few simple set-ups to trade with discipline. But the market is not simple. The market is all about uncertainty, and complexity, and ambiguity. Simple set-ups could never capture that, and they can never give you a true lasting edge.

So what's the solution? Is the problem in the simple set-ups themselves? No, it's how they're being used.

The bottom line is that every trader needs to learn to READ the market, identify the direction of the trend which concerns you. This means that simple rules will not do. There has to be a synthesis of different elements (whether they be price action, indicators, inter-market themes or whatever), and real-time interpretation must take place. It has to be all about CONTEXT.

Once you can read markets in an unbiased way you can then choose to employ "simple" set-ups to enter and exit. But the real work will be in learning to READ THE MARKET to see when you should use which kind of set-up. Seeing a hammer or whatever near a support means nothing unless you've identified the broader picture and gotten a sense of the kind of tactics you should be using, and what the odds are for different scenarios unfolding.

Now I know most traders try do this to some extent, but their main focus is on the set-ups. It's not on reading the market from minute to minute, hour to hour, figuring out the odds of it doing this or doing that, adapting dynamically, and thinking of trade ideas from all your observation as the day unfolds. Rather, it's waiting for some simple set-up to pop up and then taking it.

Is it easier emotionally to have clear set-ups to wait for and trade in this simple manner? Absolutely. But who said 'easy' would make you money? If I've learned anything, it's that the market rewards what is hard to do.

It's hard to have ambiguity surrounding your market reads. It's hard being uncertain. It's hard dealing with competing and sometimes conflicting signs. But this is an inevitable part of the trading process. You must stop trying to avoid it by demanding that things to be clear cut.

Yes, I know, it is hard to be disciplined when there's so much ambiguity, so much uncertainty about just what trade to make.

But as a trader it is impossible to eliminate uncertainty. Don't try to avoid it by looking for simple set-ups or some straight-forward, simple, always- right method. Instead, train your mind to deal with the uncertainty.

How can you learn to do this? You must be constantly engaged with the market, always trying (and often failing) to figure out what the market is trying to do (go up or down). You must learn from experience.

In my own case each and every day I would take notes in a journal. I would try to interpret the market's action and try to figure out trades that would take advantage of my analysis. I took note of the ideas that seemed to work and those that did not. I wasn't focused on paper trading, or on recording my emotions, or anything of that sort. Instead I paid strict attention to the market's action and to the information I thought it was giving me about its condition and trend.

Everything in my journal was about my own perception and interpretation of the market's action and what it was telling me about its trend direction.

Day after day, week after week, I kept on making mistakes, wrong calls, being clueless about what was going on, not knowing how I should trade, and not knowing if my views made sense or not. Yet I refused to be discouraged and I continued taking notes and learning.

I would view charts and combinations of historical intraday charts, and I'd note certain behavior. For example, I'd study trend day after trend day and try to notice what they had in common and how I could have picked up on it in real time. Then I'd study range days. Then I'd study a price chart of the ES versus the Advance decline line and see what the relationship was across many different days. Then I'd do the same with the ES and TICK chart. And on and on. Over time, this gave me a feel for the markets, and a certain understanding of how certain days differ and many subtle signs and tells for each type of environment and context.

As for set-ups, I didn't use any predefined ones. I just formed trading ideas and then tried to get in at good trade locations. Even this, which is the art of execution, can be quite complicated. I started realizing that in some environments it's best to wait for pullbacks, in others I need to get in at market or I'll be left in the dust. In some contexts I can buy low and sell high. In others I have to buy high and sell higher.. And so on.

I became consistently profitable in a timeframe of a few months by doing this. But of course before that I had read 30 or 40 books and so I had a lot of background in technical analysis. I had also worked a lot on my psychology and personal issues. But all of this was in conjunction with a method of learning and trading the markets that was contrary to what the general wisdom says about simple set-ups and exact rules.

In the end you have come to a personal realization. Take a look at your trading career thus far. Do you truly believe that if you just learn to focus and take all of your set-ups then your equity curve will reverse and you'll be a consistently profitable trader? Do you think a few simple set-ups could make you rich?

I don't mean to imply that you need complex mathematical models. Far from it. What I do mean is that you must develop a mental map of market contexts and the experience and skill to tell where the market currently is on that map. This will take time, effort, and lot's of frustration to develop. And you won't be able to do this if you spend the whole trading day simply waiting for set-ups to materialize. That just won't cut it.

Right now your learning curve is stagnant because you're not truly involved with the markets and their behavior. You are acting like a statistician who is separate from the market. Your day is wasted in waiting mode. You are not in the observing and absorbing mode. Because you fear loss you aren't willing to experiment. This means that you aren't making mistakes and failing regularly, which is what you need to do to learn quickly.

So I think you need to make a mental shift. If the path you have followed hasn't brought you to your goal, try my path instead! Prepare to face uncertainty and ambiguity, the essence of financial markets. But don't be afraid. The market isn't out to hurt you. Success in trading requires the ability to be at home with ambiguity and uncertainty, to be able to take a market stance while accepting the fact that you cannot predict the future with any degree of certainty. This is what trading is about. This is why it is an ART. Once you change your focus and your learning process everything, including success, becomes possible. Until then it'll be a distant dream that keeps appearing to be so close and yet stays so far away.

So you need to re-align your thinking and get involved with the markets. Get a trading simulator and trade. Take losses. Make mistakes. Be clueless. Don't be afraid of it. It's okay, that's the only way you'll progress. And trust me, you will progress.

Face these challenges. The stuff you have heard about learning setups and applying discipline comes from gurus who cannot trade, who give advice based on their failed ventures.

These challenges most people find difficult to face. This is why most are not successful. If you can't do this profitable trading will remain a forlorn hope of yours.

I wish you all good luck and I hope some of you find this helpful. This is what I am giving back to the trading community, I hope someone of you have an epiphany over what I have said.

When I was in the 'holy-grail' search mentality, a friend explained all this to me. I took what he said to heart, and I believe this is why I am consistently profitable today. This the only real secret I can pass along to you as traders.
Good luck!

The Truth About Trading - Part II

How Amateurs Approach the Market.

edited by Carl Futia

(original source unknown)


________________________________________
This post is for people who are struggling with their trading, not being profitable and finding themselves working extremely hard to no effect.

I found very interesting a recent post 'Who uses stop losses?' and the various replies about how stops are necessary, professional, business-like, etc. That post and the ensuing comments confirmed what I already knew: the retail trading crowd thinks and acts like a flock of sheep.

Books and information about trading all say the same things. They emphasize money management, tell you that it is stupid to average down, tell you to use stop losses, risk 1% of your account, and other common propaganda.

The interesting thing is that people who talk about the value of stops, money management, etc. appear to have gotten their ideas from a book. This include the authors of those same books! It is a never ending process, a constant recycling of bad ideas. I think that those who write trading books that explain how to trade aren't particularly good traders themselves. Why?

I think you must embrace uncertainty to succeed as a trader. Those who write books, teach seminars and so forth are just trying to find a way to make money with certainty because they can't trust their own trading to do it or because they cannot live with the ambiguity and uncertainty of constant involvement with the market.

These ideologies that trading books offer are accepted as trading wisdom in the community of amateur traders. I was fed all this when I was learning to trade.

But I got lucky. A very successful trader told me early on in my career that 95% of traders fail. Therefore, to succeed he said that you have to do the opposite of what they do, you have to think outside of the box. I've always tried to think in a unique and different way from other traders and I believe this is in large part responsible for my success.

All across the internet and in all books about trading you will find the following assertions:

§ High probability setups + Discipline = Success


§ Always use stop loss orders. Have a specific risk-reward ratio in mind. Know exactly what you will risk in every trade


§ It is stupid to have a risk-reward ratio of less than 1:1


§ It is stupid to aim for very high win percentages


§ The entry price is the most important detail.


Almost all amateur traders buy into this ideology. Why? These rules produce the illusion of certainty in the market place. You know your risk and that's it. There is no chance of becoming emotional because you failed to use a stop and therefore busted out you brokerage account. You don't have to worry about having to explain to your husband, wife, or friends that you are not as big an idiot as you seem to be, that trading is still something worth doing.

But in the market certainty doesn't exist. Any rule that produces the illusion of certainty just makes it easier to fail as a trader.

Admittedly I went through a phase of having a set risk-reward ratio (1:2) and risking 1% of my account, thus calculating my position size must be (x). My stop loss was frequently hit. I was going nowhere fast.

I printed off all the trades I ever did and analyzed them in detail, trying to find what went wrong. I came to some conclusions.

1. I'm buying high, I'm buying on a higher close, buying in a late signaled uptrend rather than buying on falling price.

2. Price is volatile. My stop is getting hit. I can't forecast price fluctuations with enough precision to be able to place a 5 pip stop loss.

I concluded that using a stop loss represented my effort to predict the market's short run fluctuations, to treat the market as if its movements were certain. But I couldn't do it.

I tried to move away from this idea and explore how I could trade without a stop loss.

During this learning process the fact 95% lose was a uppermost in my mind. Whatever traders who were losers wrote I would turn on its head and try to do the opposite. This was my way of thinking outside the box. And I believe that you shouldn't follow the flock.

I began to see trading as an art instead of as pure calculation. It is less about certain maths and more about movement.

It's about watching the market dance, letting it move up and down without placing too much significance on any particular jiggle.

I decided that I just wanted to take a piece of these constant fluctuations and not try to predict them.

I concluded that trading is not about having a certain risk-reward, not about applying the same risk to every opportunity, not about exiting at a pre-determined level. It is about making adjustments as the market produces new information, as it moves move around on your mental map of its behavior.

It's extremely hard to make money from the common wisdom you find in trading books. But if you look past such "wisdom" you can see trading doesn't have to be so complicated and time-consuming.

Volatility can produce profits for you without you having to be a prophet! All the prop firm traders I know who are successful understand and base their methods on this insight. All the successes I have had in trading arise from this observation.

Professional traders win by applying their own judgment and experience to judge the market's position on their personal market maps and then letting the market's natural volatility work for them. They don't waste their time back testing strategies.

So how can you change your current quest to trade for a living?

1. Read my previous post about how to learn to trade, I seriously think if traders learn to read the markets, they will be successful. Read the market, take in the new information is gives you each hour and each day.

2. Try to escape from common wisdom and general public beliefs. Start thinking outside the box, Start looking into volatility, high win percents and try get past your human fears and uneasiness with ambiguity. Don't use hard stops.

3. Average down and pyramid as a planned tactic with risk management.

4. Enter when price is falling.... In an uptrend.

I strongly believe averaging down if done as a planned strategy and not as an effort to deal with a loss is an easy way to profit... That is from personal experience and it is expressed in my account balance.

Thanks for reading. Hope this helps.

Part I


________________________________________
Why do most traders fail? Change your ways. Now.

(includes subtantial parts of a post by Ziad Masri)


edited by Carl Futia

I am someone who trades for a living. I have less than 10 years experience but I feel that the mental energy, time, and effort I have put into trading is enormous. I think I have had success because I did the REAL HARD WORK, work that most people want to avoid.

Hard work isn't reading a trading book, applying to a broker, opening a chart and spending hours back testing an EMA crossover. It isn't sitting for 12 hours per day testing the crossover on different markets and then sitting 4 hours waiting for the signal to emerge because in the back test your found it to be 'high probability'. If you are doing this you're wasting your time, spinning your wheels without moving. You are avoiding the truth of trading.

Here is the truth of trading. A trader must learn to identify the direction of the market's trend in the various time frames which are relevant to his trading goals. But the trend direction is often ambiguous. So a trader must learn to face trend ambiguity and thrive in it. Trading is not about clarity. It is not about setups and signals - not about EMA crossovers, three-higher closes for entries, waiting for pin-bars at support.

These sorts of setups and signals may work for a small number of successful traders, but for most aspiring traders they are useless. Why? Because they are NOT the essential part of the trading process. Traders who use setups and signals successfully have already built a mental map of market behavior. Such a map identifies the market's condition and trend in the various time frames which concern him. The current position of the market on this map determines the value of a setup and signal in particular contexts. The way such mental maps are developed is difficult to explain.

Here is what I mean. I could explain a specific setup of mine to you, one that is extremely easy to follow. But I couldn't explain how I interpret the time and sales window and compare it to order flow and market action. And it is this latter interpretation that determines whether or not the trend direction is favorable to the setup. This skill at interpreting time and sales in the context of market action is one I have developed by watching the market carefully and by taking hours and hours of notes on its behavior.

It is this experienced recognition of the direction of the current market trend that gives me an EDGE over other traders. Only after I have made this judgment do I start paying attention to setups and signals.

Knowing the direction of the market's various trends tells me whether my setups are likely to be good ones or bad ones. Most aspiring traders can't make these distinctions. To them all setups and signals look the same. When they take a loss after following one all they simply say "oh it didn't work" and moan about it.

These people have not started the really hard work - the work they need to do to be successful traders. They will have to spend weeks or months watching markets trade. They will have to take notes on what they observe and start building a mental map of market behavior. They will have to learn to exercise judgment is assessing the market's condition and trend - and to have confidence in their judgments and the courage to act upon them.

On these forums hundreds of people talk about how to be a profitable trader. But most of them not profitable themselves, at least not to any significant degree.

Speaking as someone who makes A LOT of money from the markets I say that it was never a specific system or price action setup that finally made me consistently profitable. Rather it was my extensive study of market behavior, of the "tells" it gives that help me identify the market's trend. I had to learn to embrace the inherent ambiguity of all market behavior - to learn that there are no certainties, only probabilities. I had to create my own interpretation of everything, even though I used the knowledge I found in books about the market and trading as a starting point.

I am now able to trade without a system, without a detailed plan but with money management. All the guru's say YOU NEED a specific entry and exit plan but I don't use one.

Believe me, the reason MOST traders lose is because they fail to embrace uncertainty. They try to convert the inherent uncertainty of market behavior into something that is a sure thing in the sense that every trade they make will be dictated by a fixed set of rules. They spend fruitless hours trying to find a system of setups and signals that will make money in the markets. They don't learn the $tick relationship to price themselves but instead look online and see what others have found. They are unwilling to do their own thinking . They don't spend the time needed to develop their own skills of market observation and interpretation.

It took me 4 months to become profitable. Many of you won't believe this. But the reason I was able to do it so fast was because I cut out all the crap. You may believe you are working hard - you may have been up for 8 hours last night testing if the strategy you just read about in a trading book is a good one.

But I say you haven't really started doing the hard work yet. Until you do you will remain unprofitable. You won't find the high-probability, profitable setups you seek. To do this you must first study the market's behavior and understand it - learn how to identify the market's condition and trend. Only after you have mastered this aspect of market interpretation that you can you work with setups and signals.

It will be your understanding of the market's trend that turns your setups and signals into high probability, profitable ones. Setups and signals by themselves cannot do the trick - they cannot turn you into a successful trader. They do not incorporate and understanding of the market's trend and condition. They miss something that only your personal judgment can provide.

Let me give you an example that might open your eyes. Have you ever played a shooting game like Call of Duty 4 or Halo 3? The players who are very good at these games haven't got a system, they don't spend up at night thinking about the best place to camp with a shotgun. They practice playing the game. They master it.

The difference between a winner and loser isn't that the winner knows a secret, or paid someone to teach them the secrets, or have a system of using power-ups to beat people. The winners win because they are more skillful, they have learned how to play, they have mastered the game. How did they do this? By playing the game, by being continuously involved in real time competition.

The same is true of good athletes in any competitive sport. They don't plan their moves against their opponents in advance. Instead they play by following general principles they know work most of the time, and they rely on their game experience to make the right play in response to their opponent's action in the context of the specific game situation. Yet despite their skill and experience every great athlete will tell you that he/she fails frequently.

Try hard to think about what this means. I think it demonstrates my point quite clearly. The good players are genuinely skilled. They do not follow mechanical rules in their play, rules that anyone could learn by reading a book. Whoever heard of a football player becoming great by reading a book on football?!! But aspiring traders seem to believe they can become good traders, make good profits, by reading books on trading and checking out the statistics of every setup and signal under the sun! What's wrong with this picture?

A genuinely skillful trader is someone who can apply his knowledge of market behavior in any context, in any environment. In some situations he knows that certain setups and signals are genuinely useful, but in other situation he avoids those same setups and signals like the plague.

CONTEXT! It's all about context. Stop trying to trade on signals and setups that pretend that the market context is always the same. You must instead focus your efforts on identifying the direction of trends. This is inherently an ambiguous and uncertain process. So you must embrace uncertainty! Embrace ambiguity! Accept the fact that you won't get things right every time. But at the same time learn to trust your judgements without the support of a rigid framework of mechanical rules.

Here's the situation as I see it for most users on the forum. You've have been spinning your wheels while thinking that you are getting somewhere. You are trying to learn how to trade in the wrong way.

I see that most aspiring traders focus all their attention on "set-ups" and on finding out which combinations of indicators work. But these people are never going to become profitable. Why? They are following the advice of trading books that say trading is simple and psychology is everything. So they search for set-ups that 'work', and they hope that these setups can take the guess work out of trading. They want to be "disciplined" and have simple rules that guide all their actions in all contexts. But I have got news for you: you CANNOT take the guesswork out of trading!!!

I offer this opinion as someone who started last year with $30,000 and ended with $150,000 without a single losing month. I think I was successful because of the way I went about learning and what I focused on. My learning process was very different from the ones suggested on this forum. I learned that while psychology is huge it is not everything. And while trading is all about simple principles, actually having an edge is NOT simple. It's a myth that you can have a couple simple price or indicator set-ups and make money consistently if only you are disciplined. That's a load of crap. It keeps the dream alive for wannabe traders who never realize what trading is truly about.

Trading is about being okay with ambiguity. It's about tolerating confusion. It's about sitting with discomfort and being at peace with it. It's about not having an exact script of when to trade or not to trade, or what's really a high odds trade, and being okay with that. It's about exceptions to the rules. It's about contradiction. It's about uncertainty.

And yet traders left and right want to make it simple and certain. They want to reduce it to a few simple set-ups to trade with discipline. But the market is not simple. The market is all about uncertainty, and complexity, and ambiguity. Simple set-ups could never capture that, and they can never give you a true lasting edge.

So what's the solution? Is the problem in the simple set-ups themselves? No, it's how they're being used.

The bottom line is that every trader needs to learn to READ the market, identify the direction of the trend which concerns you. This means that simple rules will not do. There has to be a synthesis of different elements (whether they be price action, indicators, inter-market themes or whatever), and real-time interpretation must take place. It has to be all about CONTEXT.

Once you can read markets in an unbiased way you can then choose to employ "simple" set-ups to enter and exit. But the real work will be in learning to READ THE MARKET to see when you should use which kind of set-up. Seeing a hammer or whatever near a support means nothing unless you've identified the broader picture and gotten a sense of the kind of tactics you should be using, and what the odds are for different scenarios unfolding.

Now I know most traders try do this to some extent, but their main focus is on the set-ups. It's not on reading the market from minute to minute, hour to hour, figuring out the odds of it doing this or doing that, adapting dynamically, and thinking of trade ideas from all your observation as the day unfolds. Rather, it's waiting for some simple set-up to pop up and then taking it.

Is it easier emotionally to have clear set-ups to wait for and trade in this simple manner? Absolutely. But who said 'easy' would make you money? If I've learned anything, it's that the market rewards what is hard to do.

It's hard to have ambiguity surrounding your market reads. It's hard being uncertain. It's hard dealing with competing and sometimes conflicting signs. But this is an inevitable part of the trading process. You must stop trying to avoid it by demanding that things to be clear cut.

Yes, I know, it is hard to be disciplined when there's so much ambiguity, so much uncertainty about just what trade to make.

But as a trader it is impossible to eliminate uncertainty. Don't try to avoid it by looking for simple set-ups or some straight-forward, simple, always- right method. Instead, train your mind to deal with the uncertainty.

How can you learn to do this? You must be constantly engaged with the market, always trying (and often failing) to figure out what the market is trying to do (go up or down). You must learn from experience.

In my own case each and every day I would take notes in a journal. I would try to interpret the market's action and try to figure out trades that would take advantage of my analysis. I took note of the ideas that seemed to work and those that did not. I wasn't focused on paper trading, or on recording my emotions, or anything of that sort. Instead I paid strict attention to the market's action and to the information I thought it was giving me about its condition and trend.

Everything in my journal was about my own perception and interpretation of the market's action and what it was telling me about its trend direction.

Day after day, week after week, I kept on making mistakes, wrong calls, being clueless about what was going on, not knowing how I should trade, and not knowing if my views made sense or not. Yet I refused to be discouraged and I continued taking notes and learning.

I would view charts and combinations of historical intraday charts, and I'd note certain behavior. For example, I'd study trend day after trend day and try to notice what they had in common and how I could have picked up on it in real time. Then I'd study range days. Then I'd study a price chart of the ES versus the Advance decline line and see what the relationship was across many different days. Then I'd do the same with the ES and TICK chart. And on and on. Over time, this gave me a feel for the markets, and a certain understanding of how certain days differ and many subtle signs and tells for each type of environment and context.

As for set-ups, I didn't use any predefined ones. I just formed trading ideas and then tried to get in at good trade locations. Even this, which is the art of execution, can be quite complicated. I started realizing that in some environments it's best to wait for pullbacks, in others I need to get in at market or I'll be left in the dust. In some contexts I can buy low and sell high. In others I have to buy high and sell higher.. And so on.

I became consistently profitable in a timeframe of a few months by doing this. But of course before that I had read 30 or 40 books and so I had a lot of background in technical analysis. I had also worked a lot on my psychology and personal issues. But all of this was in conjunction with a method of learning and trading the markets that was contrary to what the general wisdom says about simple set-ups and exact rules.

In the end you have come to a personal realization. Take a look at your trading career thus far. Do you truly believe that if you just learn to focus and take all of your set-ups then your equity curve will reverse and you'll be a consistently profitable trader? Do you think a few simple set-ups could make you rich?

I don't mean to imply that you need complex mathematical models. Far from it. What I do mean is that you must develop a mental map of market contexts and the experience and skill to tell where the market currently is on that map. This will take time, effort, and lot's of frustration to develop. And you won't be able to do this if you spend the whole trading day simply waiting for set-ups to materialize. That just won't cut it.

Right now your learning curve is stagnant because you're not truly involved with the markets and their behavior. You are acting like a statistician who is separate from the market. Your day is wasted in waiting mode. You are not in the observing and absorbing mode. Because you fear loss you aren't willing to experiment. This means that you aren't making mistakes and failing regularly, which is what you need to do to learn quickly.

So I think you need to make a mental shift. If the path you have followed hasn't brought you to your goal, try my path instead! Prepare to face uncertainty and ambiguity, the essence of financial markets. But don't be afraid. The market isn't out to hurt you. Success in trading requires the ability to be at home with ambiguity and uncertainty, to be able to take a market stance while accepting the fact that you cannot predict the future with any degree of certainty. This is what trading is about. This is why it is an ART. Once you change your focus and your learning process everything, including success, becomes possible. Until then it'll be a distant dream that keeps appearing to be so close and yet stays so far away.

So you need to re-align your thinking and get involved with the markets. Get a trading simulator and trade. Take losses. Make mistakes. Be clueless. Don't be afraid of it. It's okay, that's the only way you'll progress. And trust me, you will progress.

Face these challenges. The stuff you have heard about learning setups and applying discipline comes from gurus who cannot trade, who give advice based on their failed ventures.

These challenges most people find difficult to face. This is why most are not successful. If you can't do this profitable trading will remain a forlorn hope of yours.

I wish you all good luck and I hope some of you find this helpful. This is what I am giving back to the trading community, I hope someone of you have an epiphany over what I have said.

When I was in the 'holy-grail' search mentality, a friend explained all this to me. I took what he said to heart, and I believe this is why I am consistently profitable today. This the only real secret I can pass along to you as traders.
Good luck!

The Truth About Trading - Part II

How Amateurs Approach the Market.

edited by Carl Futia

(original source unknown)


________________________________________
This post is for people who are struggling with their trading, not being profitable and finding themselves working extremely hard to no effect.

I found very interesting a recent post 'Who uses stop losses?' and the various replies about how stops are necessary, professional, business-like, etc. That post and the ensuing comments confirmed what I already knew: the retail trading crowd thinks and acts like a flock of sheep.

Books and information about trading all say the same things. They emphasize money management, tell you that it is stupid to average down, tell you to use stop losses, risk 1% of your account, and other common propaganda.

The interesting thing is that people who talk about the value of stops, money management, etc. appear to have gotten their ideas from a book. This include the authors of those same books! It is a never ending process, a constant recycling of bad ideas. I think that those who write trading books that explain how to trade aren't particularly good traders themselves. Why?

I think you must embrace uncertainty to succeed as a trader. Those who write books, teach seminars and so forth are just trying to find a way to make money with certainty because they can't trust their own trading to do it or because they cannot live with the ambiguity and uncertainty of constant involvement with the market.

These ideologies that trading books offer are accepted as trading wisdom in the community of amateur traders. I was fed all this when I was learning to trade.

But I got lucky. A very successful trader told me early on in my career that 95% of traders fail. Therefore, to succeed he said that you have to do the opposite of what they do, you have to think outside of the box. I've always tried to think in a unique and different way from other traders and I believe this is in large part responsible for my success.

All across the internet and in all books about trading you will find the following assertions:

 High probability setups + Discipline = Success


 Always use stop loss orders. Have a specific risk-reward ratio in mind. Know exactly what you will risk in every trade


 It is stupid to have a risk-reward ratio of less than 1:1


 It is stupid to aim for very high win percentages


 The entry price is the most important detail.


Almost all amateur traders buy into this ideology. Why? These rules produce the illusion of certainty in the market place. You know your risk and that's it. There is no chance of becoming emotional because you failed to use a stop and therefore busted out you brokerage account. You don't have to worry about having to explain to your husband, wife, or friends that you are not as big an idiot as you seem to be, that trading is still something worth doing.

But in the market certainty doesn't exist. Any rule that produces the illusion of certainty just makes it easier to fail as a trader.

Admittedly I went through a phase of having a set risk-reward ratio (1:2) and risking 1% of my account, thus calculating my position size must be (x). My stop loss was frequently hit. I was going nowhere fast.

I printed off all the trades I ever did and analyzed them in detail, trying to find what went wrong. I came to some conclusions.

1. I'm buying high, I'm buying on a higher close, buying in a late signaled uptrend rather than buying on falling price.

2. Price is volatile. My stop is getting hit. I can't forecast price fluctuations with enough precision to be able to place a 5 pip stop loss.

I concluded that using a stop loss represented my effort to predict the market's short run fluctuations, to treat the market as if its movements were certain. But I couldn't do it.

I tried to move away from this idea and explore how I could trade without a stop loss.

During this learning process the fact 95% lose was a uppermost in my mind. Whatever traders who were losers wrote I would turn on its head and try to do the opposite. This was my way of thinking outside the box. And I believe that you shouldn't follow the flock.

I began to see trading as an art instead of as pure calculation. It is less about certain maths and more about movement.

It's about watching the market dance, letting it move up and down without placing too much significance on any particular jiggle.

I decided that I just wanted to take a piece of these constant fluctuations and not try to predict them.

I concluded that trading is not about having a certain risk-reward, not about applying the same risk to every opportunity, not about exiting at a pre-determined level. It is about making adjustments as the market produces new information, as it moves move around on your mental map of its behavior.

It's extremely hard to make money from the common wisdom you find in trading books. But if you look past such "wisdom" you can see trading doesn't have to be so complicated and time-consuming.

Volatility can produce profits for you without you having to be a prophet! All the prop firm traders I know who are successful understand and base their methods on this insight. All the successes I have had in trading arise from this observation.

Professional traders win by applying their own judgment and experience to judge the market's position on their personal market maps and then letting the market's natural volatility work for them. They don't waste their time back testing strategies.

So how can you change your current quest to trade for a living?

1. Read my previous post about how to learn to trade, I seriously think if traders learn to read the markets, they will be successful. Read the market, take in the new information is gives you each hour and each day.

2. Try to escape from common wisdom and general public beliefs. Start thinking outside the box, Start looking into volatility, high win percents and try get past your human fears and uneasiness with ambiguity. Don't use hard stops.

3. Average down and pyramid as a planned tactic with risk management.

4. Enter when price is falling.... In an uptrend.

I strongly believe averaging down if done as a planned strategy and not as an effort to deal with a loss is an easy way to profit... That is from personal experience and it is expressed in my account balance.

Thanks for reading. Hope this helps.

[Cem pt]

Sistema "Cobra" - Gráfico Diário do Gás Natural

Tipo Madalena arrependida, os futuros do Gás Natural geraram em 3 sessões 3 sinais e posicionamentos sucessivamente diferentes através do gráfico diário, pelo que em termos de rapidez o “Cobra” não se pode queixar que não vire depressa de posição de um lado para o outro.

A nova valorização de hoje nos futuros do Gás convenceu o programa a abandonar o contexto de mercado lateral, que vigorava desde 24 de maio, para passar de novo a mercado tendencial e ascendente (barra verde vertical).

Desta forma, com o sinal de compra na escala diária associado ao sinal igualmente comprado no semanal, o Gás Natural passa de novo no “Cobra” de neutro para comprado.


BN

[Cem pt]

Sistema "Cobra" - Gráfico Diário do Gás Natural

O caso do Gás Natural, como tinha previsto na 6ª feira, é um exemplo muito curioso deste sistema de trading pois apesar dos futuros do GN terem disparado hoje no final da sessão mais de 5%, o sistema “Cobra” acabou mesmo assim de assinalar um sinal de venda (!) na escala diária pelo facto de considerar no âmbito do programa que se encontra junto ao topo dum canal mais ou menos horizontal num regime de comportamento lateralizado, o que significa, face ao sinal comprado na semanal, que acabou de dar um sinal de saída para neutro nesta “commodity” energética.

----------

Sistema "Cobra" - Gráfico Diário do DAX

A sessão de hoje marca também outra viragem no posicionamento da “Cobra” no DAX, uma vez que no gráfico diário o sinal passou de comprado a neutro.

Associado também a um sinal neutral na escala semanal, o sistema de trading aconselha assim a ficar de fora a partir de amanhã na abertura da Bolsa em Frankfurt.

BN

[Cem pt]

Sistema "Cobra" - Gráfico Diário do Gás Natural

Caros amigos:

Sorry pelos nomes escolhidos no post, se calhar nesse dia acordei com os azeites! Prometo que num próximo sistema de trading que venha a desenvolver irei tentar escolher uns nomes mais simpáticos.


-----


Outra “commodity” que vai mantendo um sinal estável comprado, desde 18 de março na escala semanal e a partir de 29 de março na diária, é o Gás Natural.

Ficam em anexo os sinais da “Cobra” no gráfico diário onde se pode detetar que, apesar do sinal continuar virado para cima, apareceu nesta semana no dia 24 de maio uma alteração de um regime tendencial ascendente para lateral, através da visualização da linha vertical amarela no gráfico.

Se olharem para o gráfico do meio, que representa os indicadores críticos do sistema de trading, face ao facto da linha branca do caminho da “Cobra” ter passado acima da linha azul, que seria o caminho previsto das cotações ou da “Cobra” calculado pelo programa, será de esperar um disparo a muito curto prazo de um sinal de venda quando o indicador branco virar o seu sentido para baixo. Vai ser interessante!

Evidentemente que se tal vier a suceder o sinal global a adotar nos futuros passará a neutro nesse cenário (vendido no diário e comprado no semanal).

[Vagaroso]

Não me leves a mal mas o nome escolhido para o tópico é absolutamente horrível.

Qq uma das duas palavras deixa-me nauseado, então as duas juntas...

apoiado

que tal o espermatozóide feliz

[Celsius-reloaded]

Não me leves a mal mas o nome escolhido para o tópico é absolutamente horrível.

Qq uma das duas palavras deixa-me nauseado, então as duas juntas...

[Cem pt]

Sistema "Cobra" - Gráfico Diário do S&P 500

No caso do S&P 500 o sinal neutral que existía no gráfico diário há alguns dias acabou de passar novamente para comprado.

De qualquer forma o facto de nao ter havido alteraçao na escala semanal, que continua com um sinal positivo, significa que no global o índice americano vai retornando por enquanto no sistema da “Cobra” uma posiçao comprada.

BN

[Cem pt]

Sistema "Cobra" - Gráfico Diário do Ouro

Amigo Long Term:

Indubitavelmente um artigo interesante o que aquí trouxeste.

Independentemente das motivaçoes ou perspetivas dos grandes ou pequenos especuladores, porque dos comerciais sabemos os seus objetivos defensivos, partilho da opiniao que a médio e longo prazo será o grupo dos grandes especuladores, os vulgarmente chamados tubaroes, que arrecadará a fatia de leao dos lucros nesta guerra dos futuros.

Portanto é nesse grupo que se deverao observar como e de que forma tentam condicionar os mercados das commodities, pelo que os sistemas de trading ou formas de negociaçao deverao seguir preferencialmente esse tipo de movimentos.

-----


No final da sessao de hoje houve uma mudança de posiçao no Ouro.

Apesar de se manter uma posiçao comprada na escala semanal, na diária o sinal mudou de neutral para vendido, pelo que no sistema da “Cobra” a nível global o Ouro passaria no final da sessao de hoje de comprado a neutral.

Deixo o gráfico diário com o respetivo sinal.

BN

[LTCM]

Do conjunto de todas as “commodities” existentes em carteira, aquela que na minha opinião poderá conter ainda um bom potencial de valorização a curto ou médio prazo deverá ser a Soja (Soybeans) que aqui fica com os sinais do sistema da “Cobra”, quer na escala diária quer na semanal.

Tratando-se de ciclos anuais de sementeiras e colheitas marcadas por quantidades dependentes das previsões meteorológicas, tradicionalmente os máximos anuais costumam verificar-se no verão algures entre julho a setembro, pelo que eventualmente na Soja ainda poderemos ter mais cerca de uns 3 meses de valorizações pela frente.

BN

We know of very few commercial entities or traders that were positioned last month to reflect much possibility that soybean prices at CME might be far too low. Plenty of different explanations have been offered as to the source of last month’s abrupt price explosion of grains and oilseeds prices. These can be roughly divided into two groups, “game theorists” and “statistical analysts.”

Game theorists view price movement as competition between big-money speculators. The CFTC publishes a detailed breakdown of the net positions of several different classifications of participants – grain companies and farmers, speculators, etc. Imagining these weekly figures to be an X-ray of the inside scoop, game theorists scrutinize speculator positions in particular, assigning it heavy weight in price forecasting.

Big speculative position shifts always occur in conjunction with big price moves. But to imagine one can finger a short speculator as the culprit in recent CME upsurge ignores crucial distinctions between different types of financial markets. The NYSE trades title and ownership of the underlying instruments, while futures contracts represent only the marginal risk of price change. In the former, a strictly limited number of shares exists to trade, while in futures no practical limit on open interest exists.. So it’s relatively easy for a suddenly expanded volume of futures offers or bids to draw a counter – unless a fundamental change, sometimes hard to pinpoint, has occurred. Not until contract expiration does a futures contract transition into 100% ownership of cash grain in an elevator – the reality underlying the derivative.

So while it’s axiomatic that big price moves accompany big position shifts, correlation is not causality.

The statistical analysts try to get in focus the recent past of world trade and crop production, and extrapolate that into forecasting price change. Everyone has free access to the same, if voluminous, data. The USDA’s many publications issue from extensive internal expertise including multiple field agents in every state and agricultural attaches in most foreign embassies. The International Grains Council in London and the U.N.’s Foreign Agricultural Organization in Rome each issues independent assessments. Every country of major stature in grains trade has an official agency that regularly quantifies agricultural production and trade: Instituto Brasileiro, Eurostat, Statistique Canada, etc. Private consultants bundle these and offer opinions, lobby groups and individual companies issue research, brokerage houses weigh in with their views and recommendations. Private weather forecasters abound, but similarly all start with the identical data.

As it is said, ask ten economists and receive twelve different opinions. To some a glass is half-empty, to others the message from the same mass of evidence is that it’s half-full. Analysts were all well aware that the combined total of Brazilian, U.S., Argentine, Paraguayan soybean production was very large and regarded that as the absolute determinant. What most missed was that the total of sales and shipments from these countries indicated demand growth so great as to equal this production, forming a trajectory that future production growth would be unable to match. Why? Mostly because government policies in Argentina and the U.S., two of the three big shippers, constrain farmers’ ability to change in response to price signals representing world food requirements.

But the simplest explanation of April’s sharp soybean rally is a paraphrase of the incomparable Mark Twain, whose obituary ran in newspapers while he was still quite healthy: The rumors of the death of the world economy are greatly exaggerated.

[Cem pt]

Sistema "Cobra" - Gráfico Diário da Soja

Sistema "Cobra" - Gráfico Semanal da Soja

Do conjunto de todas as “commodities” existentes em carteira, aquela que na minha opinião poderá conter ainda um bom potencial de valorização a curto ou médio prazo deverá ser a Soja (Soybeans) que aqui fica com os sinais do sistema da “Cobra”, quer na escala diária quer na semanal.

Tratando-se de ciclos anuais de sementeiras e colheitas marcadas por quantidades dependentes das previsões meteorológicas, tradicionalmente os máximos anuais costumam verificar-se no verão algures entre julho a setembro, pelo que eventualmente na Soja ainda poderemos ter mais cerca de uns 3 meses de valorizações pela frente.

BN