.
If no one understands a word I'm saying I wouldn't be surprised.
It underscores the one fundamental truth
That trading is all about psychology and also its very hard to succeed
consistently.
Trading isn't about indicators, although price itself is only an indicator
if you think about it.
Fundamental news is also only an indicator - and not a very reliable one.
I get back to the garish Red and blue arrow indicators. We all wish it was that simple.
But we all know it really isn't.
Even when you have the best of the best indicators you are not necessarily any better off.
After trialing hundreds of systems and indicators I believe I probably do have just about
the best of the best - but that may not be such a big deal
It is very, very subtle!
So subtle that sometimes you think you are imagining things that aren't really there!
and here's the problem -
if your wife has just left you and you've just lost your job - that doesn't alter your perception
of whether a blue or red arrow has just appeared.
Yes you may be so upset you click the buy button instead of sell, that can happen even when
you are not upset.
but you could actually still carry on trading if all you had to do was buy at blue arrow,
sell at red arrow.
Except trading really isn't that simple.
It does require a great deal of clarity of thought.
Only this weekend have I understood to a much greater extent why traders work out or go running
before trading.
Its something I've got to think about seriously.
Clarity is King!
I'm sure that can't be original - its just a bit too profound!
but seriously, clarity is everything.
I have been overworking a bit the last couple of days and I must take a break
but I've learnt so much
Not so much about indicators, but just how subtle the nuances can be
and precisely why, not just major life changes, but even a bad mood can make
trading nigh on impossible
because it isn't a choice between red or blue arrow.
it's multiple choices, and sometimes we get it, and sometimes it gets murky
and we doubt our judgement, if not our sanity.
The two sample set ups above were just two of scores I've analysed. I am convinced
beyond any shadow of a doubt that my commentary on them is sold and real.
But I also know full well that tomorrow or next week I could re read them
and view them as the ramblings of an imaginative but clueless newbie.
and should I start to view the situation in that negative light -
it will show up in my results! just as sure as night follows day.
I could be on the threshold of becoming a trading genius, or I might indeed
be the Forex version of the village idiot.
This is why trading is all about psychology
Total belief that I have an edge, and total belief that I will succeed.
But things like self doubt and self sabotage do get in the way.
So many times I've read traders analysis of their trades and I really
wonder what planet they're on
it's as if they are imagining things that simply aren't there, or reading
so much into the most subtle difference in candlewick size etc.
But professional traders who are consistently profitable do see very
subtle nuances that are simply lost to the rest of us.
Trading actually is a very subtle skillset.
Ok, trading the news isn't always that subtle, but generally speaking.
The last set up I analysed on cable really set all this thought process in motion.
a nice little winner in hindsight ( aren't they all! )
but it was so darn subtle!
The way it would read is as if I'm looking at a nice move and trying to backfit
the most inconsequential series of events ( or non events ) so that I can say -
'See, all you need to become a genius trader is the ability to read the most
subtle, almost invisible clues that various indicators give ( or appear to give )
and then have the genius ability to connect all the dots to read what the
charts are trying to tell us''
All in a rather self congratulatory sort of way.
When absolutely nothing could be further from the truth
I really believe that since I've renewed my enthusiasm for trading after a bad period
that I am really on to something now.
but I am just so used to the emotional peaks and troughs caused by all such 'aha' moments.
One thing to look for in confluence of indicators is to make sure that they are not actually
using the very same data to give a signal as that's hardly confluence.
The indicators I use don't always agree by any means, and when they all do it is often a
very good sign, and all we need is an edge, not an invincible Holy Grail.
So here is my analysis of a set up I didn't actually take on Cable.
It truly makes perfect sense to me. It is not in any way intended to sound like some
real Pro in order to impress. I really have no interest in that, there is no profit in
self delusion.
Yes this one worked out quite well, and even if it had failed I still believe my reasoning
to be very well founded, but possibly only in my mind.
So we have a congested period on Cable as seen by the lack of histogram on Ewaves.
Price will break out, but which way. No one can actually know that
But are there any clues that indicate where the probabilities lie?
Well of course the biggest indication is that I can actually see that the price went up
so already my analysis is hardly unbiased.
During this congested period there were actually two breaks of AIMS and probably
both would have resulted in a nice profit
I am trying to be as candid as possible here
But I want to present my case for why the first break of AIMS was an invalid set up,
despite likely being profitable.
I don't think it would usually have been that profitable, and anyone taking that
trade would basically have been more lucky than anything else.
I see absolutely no reason to have entered at that break of AIMS
Break of AIMS on it's own is largely inconsequential, it's not a basis for an entry.
But if you are eager to trade the set up you are liable to 'delete' or 'distort' the
information in front of you.
It may be overly simplistic but that's actually why most traders fail, they are not
seeing reality, - they are reading the charts through the lens of fear or greed
So with that in mind, let us assume I am keen to take this set up as a valid entry
We have a break of AIMS and more!! we have confluence! The Aroon indicator,
highly acclaimed as a veritable licence to print money, also is giving a very
decisive cross up blue over red..
Subtle.PNG
and it gets better, further confluence of MACD, the signal line has crossed up over
the blue line
A confluence of three indicators! What are we waiting for?
Simply put, things may not be quite as they appear.
The MACD looks rather flat. actually worse than flat. if you expand the Aroon/MACD
to full page you will see the blue line is flat, and whilst the signal line has crossed up,
under closer zoomed in inspection we see it has just started to turn down again.
so when it hits the blue line one of two things are likely to happen, a cross down
through blue, a very bearish sign obviously, or what has been called a repulsion,
where the signal line sort of bounces off rather like a dodgem car at the fair.
That would mean a continuation, except the direction is flat, so in other words
the MACD is telling us absolutely nothing at all! Yes, it did technically cross, but
its flat, and we don't know what the signal line is about to do. so MACD has
to be discounted at this point.
This only leaves us with QQE ADV, ( an RSI derivative )
Again, at first glance the Blue signal line has crossed up over the buffer zone
and is above the red line. So again, just like initially the MACD appeared to
be signalling Bullish but in reality it wasn't telling us anything at all.
Again, a much closer inspection enlarging the window and using the crosshair
tool we see what we thought was a valid break of buffer zone was an optical illusion
- its what we wanted to seee!!! the signal line has only just managed to break the
upper line and briefly moved sideways but at the very point that Aroon is crossing up
through red, QQE ADV is crossing right down through the buffer zone including
crossing down over red which is a very compelling exit on a bullish move, not an
entry signal to go long!!
So in reality QQE ADV and MACD are confluent negatively!
Are you with me so far?
We patiently wait for the set up to form, finally to our delight ( which is an emotion )
we get our break of AIMS, and that is absolutely confirmed by MACD having
crossed up and QQE ADV having just broken through the central buffer zone.
But that wasn't the reality of the situation at all! as we have seen.
It was what we wanted to see.
So not surprisingly straight after that break of AIMS price reversed to the downside
which was basically want these two indicators were telling us was likely to happen.
Aroon got it wrong on that occasion, it isn't infallible and needs filtering which
we simply didn't get this time.
Had we taken the trade we might have had a lucky win as it did reverse again
to the upside but there was no basis for assuming it would do this.
But now look what happens
A second break of AIMS with the Aroon again crossing up over red, but this time
QQE ADV the signal line is decisively crossed up through central buffer at a nice angle
looking set to continue, and MACD signal line has now turned up, after a repulsion
from 'bumper car' hitting of blue line, this time signalling a continuation to the upside.
so the two break of AIMS were really quite different. The first, price immediately
reversed, the second went on splendidly for about 100 pips and here is the truly happy
ending to this interminable yarn - at the peak of the move the QQE ADV crossing down
over red. Yes, only one exit signal but a very powerful one. so we could have got out
leaving almost nothing on the table!
So why would we conveniently have acted on this signal this time when previously
we ignored it when it was variance with the other indicators?
Good question, and there is actually a very good answer too.
If that downward cross had come in isolation early on in the move I would certainly
have stayed with the other two more Bullish indicators
but after such an impulsive 100 pip move, nearly all Bullish blue candles, to see
QQE ADV suddenly reverse down through red spells only sudden death!
Seriously, I would have got out in an instant in that situation, despite Aroon
and MACD seemingly blissfully unaware that anything was amiss.
Again with familiarity, the QQE ADV can get you in and out of trades with
precision timing, but as always, you have to know how to use it, and when
to use it.
But you see what I mean about subtle nuances? just a little bit of bad psychology and
it would have been very easy to have missed all the clues and taken that first break of AIMS
and isn't this unquestionably the most boring post I've ever written?
Forex Trading in many ways is boring. That's why so many opt for Binary options it's exciting.
Its glorified gambling.
I believe all the above is more or less the type of thought process that is essential to even
have a chance of success in this game
There is no quick fix, no red or blue arrows.
Yes, most mentors are great marketeers and also try to keep enthusiasm high - and that's great.
I'm enthusiastic about trading. I'm always creating new templates, always tweaking systems
and I love all that.
But there is a lot of tedious hard work involved to really get it right on a consistent basis.
That's why so few stay the course on these forums, even after paying etc. when they find out
that the superficial, fun approach isn't consistently profitable they move on to find a 'better'
system somewhere else.
Which is also why out of so many hundreds, only a tiny minority start a journal and keep at it.
Its just not a fun thing to do.
Yet it is the single most profitable thing they could do.
You do not have the required permissions to view the files attached to this post.
