This seems to be the perennial "obvious" that isn't so obvious. Here are some boilerplate questions that might steer you in the right direction. Do you know: What to trade? How much to trade? When to trade (that is, when not to trade)? When to exit the trade (when you're right and when you're wrong)? Some further considerations. How are you: Identifying the market (trend or range) so you can trade the correct strategy for the current condition? Finding good setups to increase your winning probability? Finding a low-risk/high-reward entry point? Building a position sizing model to achieve your objectives? Protecting yourself from losses with a stop loss?
wisdom is fantastic provided that basics are not forgotten what is your objective in trading NEVER FORGET THAT. it is to enter a move that will continue and what will continue? a move that is strong. so far so good. now what is strong? you must answer that question. if you cannot, then find something else to do. if you decide you want to enter how do you do that ?. enter anywhere or wait for it to get weaker -a pb - and then enter. according to traditional TA buy above the high of a bull bar and sell below the low of a bear bar.
also if there is a breakout out of something, you have to assume that it is continuation of that something. until the BO is confirmed than you can trade the BO. it is all very well talking of continuation, reversals ranges and their definitions but all that should not confuse you from your objective of trading
Sorry, but my job here isn't to teach. I'm just sharing information I find it useful (or what I would show my younger noob self if I had the chance). Perhaps this might stimulate the imagination for some traders to carry the torch on their own. Anyway, you're more than welcome to share anything you like.
Padu, the last thing you wanna do in this business is to reveal your hands to the entire world. Whatever your "objective" is, I suggest you lock it up and throw away the key. Otherwise, you will lose it. I assure you.
Since @padutrader was so kind to bring up the subject of momentum, here's a snippet from Linda Bradford Raschke in New Thinking in Technical Analysis: Trading Models from the Masters (2000) New momentum highs or lows can be made in a trending environment or on a breakout of a trading range environment in which the initial thrust can be the beginning of a whole new leg up or down. New momentum highs or lows can also indicate a trend reversal if there is a countertrend impulse following a long sustained trend. Any time a market makes a new high, look to buy the first pullback. Any time a market makes a new low, look to sell the first reaction up. There are two types of "failures" to look out for. The first is the failure that occurs at the end of a sustained trend. It occurs when the market fails to make a new leg up or down in a trending environment. It is a warning of a loss of momentum, but it does not indicate a trend change in and of itself. The second type of failure occurs in a trading range environment in which the market is consolidating following a sustained move. Once initial support and resistance levels are established, the market could be said to have formed a “chop zone.” If the market penetrates one end of the zone but then closes back inside the zone, the odds are that it will then test the other side of the zone. The best “failures” are the ones that immediately reverse the breakout of a previous swing high or low, indicating “price rejection.”
The importance of intermarket analysis John Murphy The basic premise of intermarket analysis is that all markets are related. In other words, what happens in one market has an effect on another. Commodity prices and bond prices usually trend in the opposite direction. (Commodity prices and bond yields usually trend in the same direction.) Bond prices usually trend in the same direction as the stock market. Rising bond prices are good for stocks; falling bond prices are bad for stocks. (Falling bond yields are good for stocks; rising bond yields are bad for stocks.) The bond market usually changes direction long before stocks do; therefore, the bond market is a leading indicator of potential trend changes in stocks. Commodity prices usually trend in the opposite direction of the dollar. A rising dollar is bad for commodities; a falling dollar is good for commodities. A rising dollar is normally good for U.S. stocks and bonds because it is noninflationary. A strong currency attracts foreign money into a country’s stock market. On a macro level, the four interrelated markets are the commodity, currency, bond, and stock markets. It is not unusual for technical analysts to supplement their stock market analysis with consideration of currency trends (to see where global money is flowing), commodity prices (to gauge inflationary trends), bond charts (to see which way interest rates are moving), and overseas markets (to measure the impact of global market trends). Market analysts have long understood the impact of interest rates on stocks, for example. Rising interest rates have historically been bad for stocks, especially those in certain rate-sensitive market sectors. Interest rates are affected by the direction of commodity prices. Rising commodity prices are usually associated with rising inflation, which puts upward pressure on interest rates. The direction of commodity prices is affected by the direction of a country’s currency. A falling currency, for example, usually gives a boost to commodities priced in that currency. That boost reawakens inflation fears and puts pressure on central bankers to raise interest rates, which has a negative impact on the stock market. Not all stocks, however, are affected equally—some stock groups get hurt in a climate of rising interest rates, while others actually benefit in a climate of rising rates. Global markets play an important role in intermarket analysis as well. For example, the collapse in Asian currencies during 1997 caused a corresponding collapse in Asian stock markets, which had a ripple effect around the globe. Fears of global deflation pushed commodity prices into a free fall and contributed to a worldwide rotation out of stocks into bonds. What started as a downturn in Asian currencies in the summer of that year eventually caused a serious downturn in the U.S. stock market several months later. During 1999, the opposite scenario played itself out. A sharp rise in the price of oil at the start of that year pushed interest rates higher around the globe as inflation fears resurfaced. A recovery in Asian stock markets also contributed to global demand for industrial commodities like copper and aluminum. The subsequent rise in commodity prices reawakened inflation fears and prompted the Federal Reserve to embark on a series of rate hikes in the middle of the year. That, in turn, had a negative impact on the sectors of the U.S. stock market that are especially sensitive to interest rate direction.
Who are You? Linda Bradford Raschke SFO Magazine August/September 2003 Both experienced and aspiring traders spend a great deal of time trying to recognize patterns in the markets – charts and indicators on multiple time frames, seasonal tendencies around specific times of the month or year, sentiment and flow of funds data. Clearly, there are many different ways to skin a cat. By analyzing patterns, a trader is looking for a compelling reason to initiate a trade or to exit an existing one. Markets are monitored for subtle shifts in the basic supply-and-demand equation, and once an “initial condition” is detected that indicates a spot where there is a probable edge, the game simply becomes a matter of setting up an entry trigger, defining initial risk and then learning how to manage a trade properly in response to the market’s actions. The trader manages the trade by watching for confirmation or non-confirmation. But why is it that it never seems to play out so simply in real life? After all, it is just a numbers game, and it really doesn’t take long to learn the basic rules. Perhaps it is because trading normally is ten percent learning about the market and 90 percent learning about you. Unfortunately, if a trader doesn’t know himself, the markets are a very expensive place to find out. If traders were to spend half as much time studying their own behavioral patterns as they did studying the markets, the benefit to the bottom line would be much greater than having unlimited access to every course, video, system or technical book ever written on the markets. Let’s look at some common patterns that lead to unforced errors. Consider the trader who has been diligently monitoring a market for a particular setup and, for whatever reason, the initial trade is missed. He then makes a reactive spontaneous trade out of frustration for having missed the first one. The market has had a good run, and his account is at a new high. The trader then proudly marvels at the gains he’s made and proceeds to get sloppy and complacent, leading to an extended draw down period. He misses an exit spot for a winning trade and lets a winner turn into a loser. Out of frustration, he then averages down in the hopes of at least trying to get back to even. Many bad behaviors are the result of emotional reactions. However, some are simply the result of bad habits. The goal is to make trading as automatic as possible and, so, the ultimate goal should be to create winning habits. As Socrates put it, “We are what we repeatedly do. Excellence, then, is a habit.” Read the rest of the article in the PDF...