"Common sense" in Technical Trading

Discussion in 'Technical Analysis' started by metatrader54, May 16, 2019.

  1. I've traded for quite a few years now, I am starting to feel that common sense is a huge part of my strategy and what led to my profitability.

    For example, if you see a trend, you only look for trades in the same direction, if it is consolidating, you try to setup trades that are in confluence with the structure. If you see something changing in the charts, you stay out.

    "Common sense" may be experience? A feel for the charts? Knowing when to look for longs and shorts or both? Or is it learning to read the trend an art that is learnt with experience and cannot be 100% mechanically "strategized"? When I look at a chart, I know if a buy or sell would be good or even staying out of sometimes what I call a mess, no clear structure.

    Sometimes it's so simple I'm not sure why I took quite some time to become profitable, jumping from systems to systems, when actually it's the ability to read long/short/both or stay out?

    I trade in the Forex markets.

    What do you guys think?
  2. Turveyd


    Tradng with the trend is the only real advantage.

    And clusters, where market fails to make news highs/lows for a while, tight SL, bigger profit.

    Issue is, its easy to see counter trend trades, market runs up 50pts, great try to reverse it, get crushed as it goes 50 more, where as you should be going market is kinda slow but uptrend so go long, then you can ride the 50, while risking 15 say, but a lot of trust is required to do that. No trust required at all for the stupid counter trend trade.

    That’s why 98% of people lose, your realising this, so your on the right track :)
  3. expiated


    When I was growing up, my dad would repeatedly admonish me to “use your common sense!” It was only when I got older that I realized how unfair he was being, because what he was calling common sense really came down to experience. (I never repeated that phrase with the students I taught nor with the stepchildren I helped raise.)

    As I began to develop a “feel” for the charts (between 2011 and 2015) I began seeking to quantify what I was recognizing intuitively (from 2015 to the present), eventually concluding that the only way I could represent what I felt I was seeing graphically was to learn how to code my own indicators. (Actually, that happened in 2014.)

    So for me, learning to read the trend was an art acquired with experience that I subsequently “mechanized” but must still perform manually due to the limitations of software in terms of faithfully replicating my processes as well as my limited knowledge of computer programing.

    This quest was essentially completed in March, and yet, even within the last three hours, I found myself making another subtle refinement to my one-minute charts to more precisely track the intraday trend. The bottom line is, my charts now paint a crystal clear picture to inform me as to what I ought to do, so that, for example, I knew exactly when, in light of historical data and statistical probability, it made sense for me to buy EURAUD (an hour ago @ 1.6188) and sell NZDUSD (about the same time @ 0.6580).
    Last edited: May 16, 2019
    matthewyoung likes this.
  4. Much to the disbelief of most, proper understanding/application of "Price TA" works in all markets and all time frames.

    You're on the right track.

    KISS, baby!
    birdman likes this.
  5. expiated


    In my case, it was only by “borrowing” what I found useful from Nick McDonald’s trend flow strategy, Scott Barkley’s target trading techniques, ideas similar to Scott Carney’s harmonic pattern trading, A.J. Monte’s buy and protect approach, and Anne-Marie Baiynd’s target rich trade system (among others) that I was finally able to develop my own reliable system for reading long/short/both or stay out (if I understand you correctly).
  6. If you see a consolidation, do you get in during it, or wait for the trend to resume?
  7. Trade the extremes with the previous trend, at least that's me.
  8. gaussian


    Systems trading isn't discretionary trading. Systems trading requires discipline to listen to the system even if it appears it isn't going to work on this trade.

    It sounds like you don't have enough self control to manage systems trading. There's nothing wrong with that, discretionary traders usually admit they don't have enough self control for systems trading - but do not discredit systems traders by simplifying trading into the tautological statement "its about reading long, short, or both".
  9. I actually do have a lot of self control, in both risk management and psychology, I use a system to enter trades, that never changes, but I believe some discretion should be used, there's absolutely no 100% system/pattern, that can be used for every single scenario, most of my trades I use a fixed system, but sometimes there are weird trends, or consolidations, so not 100% discretionary or mechanical.
    Turveyd and Risepoint1879 like this.
  10. Turveyd


    Agreed, although some 'might' be able to come up with a completely mechanical system which just makes a profit, your better off, manual trading but via pre defined methods that keep you on the straight and narrow.
    #10     May 17, 2019