Printable View
Quoting: All these people succeed because: Their strategy is based on a real advantage, one that relies on exploiting recurring inefficiencies in price behavior. They accept losses and come out quickly from them (while novices try to avoid them or recover emotionally from them
Exactly, that's it... I wish the others, especially the new ones, would stop opening threads looking for the holy grail or at least be more creative with the titles for that "eternal search." And since we are, the title of this thread could be answered as: "search for eternal life"...
Quoting: All these people succeed because: ...... Excellent post. I laughed, but with respect.
"Real advantage" = is based on exploiting recurring inefficiencies in price behavior. Look at the graphics, look at them again... and again... until you see something that is repeated. If there is news impact, as it happens in this forum, that can give clues. Keep the graphics clean, you don't need to fill with lines all. The price will move without importing your drawings. Thousands of hours in front of the chart and trading becomes relatively simple... but only when you find YOUR advantage. The sad thing is that it can take years to identify your advantage and believe in it. And the saddest thing: it has to be yours. It doesn't help to take any system of a thread and copy it. It can inspire you, but it won't belong to you. When you know your advantage and its probability, calculating optimal leverage is easy. I adjust it with the consecutive losses expected and the drawdown maximum. And then you will sleep calmly. "Domin your system". But in the end it's just about playing with your advantages. The price is not going to stop just because you put on a daily.
"Recurring inefficiencies in price behavior"... what exactly does that mean?
Quoting: "Recurring inefficiencies in price behavior"... what does that mean exactly? Good question. To answer it you have to define what is efficiency. There are many ways to see it, we would need pages. Inefficiency is related to the advantage in trading. For example, many use mobile media as a way of measuring efficiency, and deviations as inefficiency. A simpler example: Renko graphics. They have a statistical property: the probability of continuation and reversal can be calculated. A typical Renko graph has a 2:1 ratio in favor of continuation. That means that, in theory, 2 out of 3 blocks are of continuation and 1 of reversal. If in practice the continuation blocks are more than 66%, you can say that that that this time frame is inefficient, more trend-wise than normal. If they are less than 66%, then the market is more efficient in trend, but more inefficient in reversion. Once you detect that inefficiency, the challenge is to turn it into a cost-effective and sustainable strategy that covers trading costs. I hope that this will help.
Great post. I wish they would have engraved points 2 and 6 on my head when I started. I’m like a dog chasing cars.
Quoting: "Recurring inefficiencies in price behavior"... what does that mean? That is your advantage, and it must be based on the movement of price, not on managing money or inventions like martingala. For example: if on Friday at the close there is a big Gap in the GER30 and on Monday it opens with low liquidity, the day can end up in an alcista or bassist candle with a certain probability. Why? Because that Gap was created when there was no volume. Maybe there was war, catastrophe or a ridiculous declaration from a central banker. Mondays have low volume, and can be easily manipulated. Is it a fixed rule? No. But if Y > 50%, you already have something. Another widely used example (although it does not always serve)
The majority of those who seek the "holy grail" what they want is an excuse not to think. Something that tells them "buy here and win", effortlessly, without analysis, without suffering. But that does not exist. It never existed. And the faster you understand, the faster you can work on a real advantage. Because yes, there are winners, but not because they have magic, but because they repeat themselves a profitable routine until tiredness.
The problem of many is that they are more busy finding the perfect indicator than understanding the market. They click on everything that shines like gold. But if you don’t understand why the price moves, it doesn’t matter how many oscillators you put. You’re going to keep coming in late and coming out worse.