Welcome and thank you for visiting!

The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
* My posts are also re-published by several other websites and I have no control as to when their editors do so, or for the accuracy in their editing and reproduction of my content.
* In answer to this often-asked question, please be advised that I do not post articles from other writers on my site.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...please read my full Disclaimer at this link.


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Thursday, September 27, 2012

A Trading Hazard of Being in a State of "Before-My-Time"

Today's BC comic strip reminded me of a trading hazard...one of being in a state of "Before-My-Time." As a daytrader, being able to foresee setups and trading them prematurely without confirmation of high probability of success can, more often than not, lead me to a trading failure.

That has been, and continues to be, one of my challenges which I'm constantly working on to refine and perfect...the challenge of interpreting data in real-time action (includes news-related data) and trading it without being too early (or too late)...so I continue the search for the "solid middle-ground entry" (the "optimal level in between too early and too late").

The structure around such a middle-ground entry has to be built on:
  1. my method
  2. my real-time observations
  3. my forecast
  4. my upside and downside probabilities of success (minimum ratio of 2x +'s to -'s for each)
  5. my risk vs. reward assessment (minimum ratio of 1:2 to tie in with #4)
  6. my trading platform and order method used to enter a trade to achieve the best entry price
  7. my entry execution (my level of commitment and confidence ratio needs to match #4 & 5) 
  8. my trade management skills in real-time assessment of the trade's progress to target (includes monitoring or adjusting, but never increasing, my stop-loss)
  9. my recording of the trade in my Trading Journal, which includes my reasons for entry, what went right or wrong, what I could have done differently,  my net profit/loss, etc.
  10. my enjoyment of the rewards! (the best part of all!)
Without the benefit of this solid structure being in place on every trade I enter, my potential profits, and, worse still, my capital, are in jeopardy, along with my ability to effectively monitor such a poor trade because of an increase in anxiety.

Since every price point contains a success probability, it's up to me to figure out whether it fits in with my trading plan. As world-renowned Psychologist, Dr. Robert Anthony, has said, "It's not that you'll believe it when you see it...it's that you'll see it when you believe it." When I'm "in flow" with myself, generally, I can then be more comfortable with being "in flow" with the markets and am more open to a correct interpretation of what they're telling me. Each one of us has the ability to know what we need to know at any given time and if I don't believe that of myself, I'll miss the signals that are given freely to me and the answers that I'm looking for. If I keep getting the same results in my trading, it's because I keep making low-probability-of-success trades...it's my job to figure out where and when it's a high(er) probability and also when it becomes a lower probability because of time decay. Like a trend in trading (up, down, or sideways), all things age and begin to sag, wear out, and lose their appeal...once that's been recognized and begins to accelerate (with some sort of confirmation), this seems to be the optimal time for entry. It's still possible, however, to trade before then, but I have to be prepared to accept the consequences, less favourable as they may be, and consider the costs to me in the process.

As an aside, and going off topic for a moment, I've discovered that one of the perks of growing older has been the discovery and accumulation of knowledge along the way...the trick is, trying to remember it! (The truth is, that's the main reason I've kept a Trading Journal, and then started Blogging, as well. I'm happy to add that other unanticipated benefits of Journaling and Blogging have popped up along the way!)

The quest continues...the prospect of the rewards (in whatever form they, ultimately, appear) keeps me going...