Those who have read post 1 will of course be in a better position to understand the topic than those who haven't. Those who have been curious enough about it to actually work with it – or at least play with it – will be in a better position still. Those who have read it will also understand that the SLA/AMT is essentially an interday approach, beginning as it does with an examination of the weekly chart, through the daily, to the hourly. The examples provided in post 1 employ hourly "bars", or intervals. Applying the SLA/AMT to an intraday environment requires an understanding of the difference in dynamics: there are obviously many more trading opportunities presented and therefore trading decisions that must be made employing a 1m interval than when employing a 60m interval.
The basic SLA/AMT presented in post 1 is a primer. Training wheels for the beginner. Rehab for the damaged trader. The beginner will learn discipline, patience, all the good stuff below. The damaged trader will, one hopes, find his way back to a disciplined and professional approach, assuming he was ever disciplined and professional in the first place. If he wasn't, then it may provide him with a reset and reboot. A way back. The damaged trader will find it vastly more difficult to start over. But it can be done.
If one wants to be a winning trader (and who doesn't), there are certain characteristics that one must either have or acquire. Fortunately, the SLA/AMT addresses all of them.
1.
Losses. One must accept the fact that he is going to incur losses, no matter what bar interval he chooses. The task is not to avoid loss but rather contain it. The SLA/AMT is designed not to prevent loss but to keep losses minimal.
2.
Preparation. Doing nothing before the beginning of the session in anticipation of exciting, new experiences pretty much guarantees that those experiences are not going to be pleasant. No, one cannot know for sure what is going to happen, but he can know where he is with regard to whatever extremes are in his neighborhood, probably ranges. If he hasn't reviewed at least the weekly, daily, and hourly charts before his session, he has no one to blame but himself for what happens. If he
has reviewed these charts, he will have a clearer notion of where and how far price may go, which may help him stay in a trade rather than jump out simply because price has gone against him a tick or two.
3.
Planning. The SLA/AMT is its own plan. But if it isn't followed, if it's "tweaked", it can't be expected to function properly. Yes, there are minor decisions that must be made on the fly if one is truly reading price and not just being led on a leash, but as one gains familiarity with price behavior, these decisions become matter of course, like slowing down at a Yield sign. Larger changes, however, will most likely require
at least minimal testing. Changing something just because "it seems like a good idea" is not likely to yield the desired result. As for ignoring the rules altogether, well . .
4.
Discipline. Without discipline, whatever you do will result in failure. The SLA/AMT, however, forces you to be disciplined. If you keep fighting it, like hitting the snooze button over and over again, it will fold its arms and lean against the wall, waiting for you to pull yourself together. If you are a beginner, but especially if you're damaged, it is essential that you follow the rules. Yes, you will have to decide what, for example, constitutes a "break" of a line: a tick, two ticks, a point or two. But not five. Not ten. Not half your account (an hourly interval, of course, requires a bit more leeway than a point or two). And you must do this every single occurrence. Otherwise the SLA/AMT is no better than that trading plan you got in your mailbox from Profits 'R Us.
5.
Patience. The best trades are found at the extremes, either of range limits or channel limits. If you're nowhere near one or the other, you have nothing to do but watch (and don't try to be clever and draw teeny-tiny ranges and teeny-tiny channels in teeny-tiny bar intervals to rationalize and justify your lack of patience).
- Learn to use inaction as a defense against your tendencies toward impulsive action, e.g., "revenge trading", or fear of "missing it", or "making up" for that loss.
- Don't get irritated or angered or feel like a martyr when waiting.
- Regard patience as a central pillar of your strategy. Don't assign it a secondary or lesser role.
- Don't be impatient about patience. One part of your brain is telling you to be patient while another is saying, "What's taking so long?" These must work it out and learn to live together.
- Begin by being patient, but don't forget to stay patient. The important thing is not whether you are controlled and disciplined at the start of your session, but also at the middle, the end, and all points throughout. (from Zen and the Art of Poker)
One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do. Most people always have to be playing; they always have to be doing something. They can't just sit there and wait for something new to develop. I wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime. Even people who lose money in the market say, 'I just lost my money, now I have to do something to make it back.' No, you don't. You should sit there until you find something.
–Jim Rogers
6.
Record-keeping. It is essential to collect and maintain records of your end-of-session reviews (you are of course doing end-of-session chart/trade reviews). If you do not keep track of what you did right and what you did not-right and the results of each, you won't be looking at early retirement any time soon. Avoid, however, the I'm A Useless Sack drama. Focus instead on what you saw correctly, what you missed that you should not have missed, what you missed that the greatest trader on the planet would have missed, which trades were made according to plan and which weren't (along with why, so that you can avoid the same behavior in future).
