Best Thread Why You Are Failing - and What You Need to Do

[steven46]

Hello

I wish I could be more diplomatic about this. "Fibs" work inconsistently, because they are not in use by
the institutions that control the markets. They do NOT use them

One should define what they mean by "turning points". If you mean reversals that is one thing. If you mean
continuation (in the direction of a previous trend) after a pullback, that is another completely different thing.

When professionals evaluate the strength of a trending move, they generally use a volume profile tool. This
tool shows the amount of volume behind a move using bars that extend to the right. The longest bar is called
the POC (point of control). At these points, you can look to see which way price moved, and that is called a "tell"
because it "tells you" that most of the volume was either buying or selling. Its that simple. Once you identify
prices where buyers or sellers were dominant, you wait for price to return, and when it does, you can (generally)
count on those participants (buyers or sellers) to return to defend their previous positions. On Youtube, a trader
known as TraderDale shows how this works in great detail, for forex traders. Like me, he comes from an institutional
background, and his information is reliable.

Good luck

 

[FX4Newbies]

Got it. I check out the right one then. Also, any ratio which works best for you?

Hi Simon54.

Yes...there are levels that are spot on. However, the placement of the tool determines where the levels fall, and remember, these levels are on the chart in advance of price action. That means that the understanding for proper placement (application) is more important than "following a level" per se.

 

[FX4Newbies]

Hello

I wish I could be more diplomatic about this. "Fibs" work inconsistently, because they are not in use by
the institutions that control the markets. They do NOT use them

One should define what they mean by "turning points". If you mean reversals that is one thing. If you mean
continuation (in the direction of a previous trend) after a pullback, that is another completely different thing.

When professionals evaluate the strength of a trending move, they generally use a volume profile tool. This
tool shows the amount of volume behind a move using bars that extend to the right. The longest bar is called
the POC (point of control). At these points, you can look to see which way price moved, and that is called a "tell"
because it "tells you" that most of the volume was either buying or selling. Its that simple. Once you identify
prices where buyers or sellers were dominant, you wait for price to return, and when it does, you can (generally)
count on those participants (buyers or sellers) to return to defend their previous positions. On Youtube, a trader
known as TraderDale shows how this works in great detail, for forex traders. Like me, he comes from an institutional
background, and his information is reliable.

Good luck

Hi steven46,

Thanks for your input. Yes, there are traders who focus on Volume. Anna Coulling comes to mind. I will certainly have a look at Trader Dale.

Whether institutional traders place Fibs on their charts or not, price action, from my humble experiences, continue to confirm them like clockwork. Also, if the market movers so-to-speak don't use them, but they continue to check out, then that gives them even further credibility, indicating an innate reliability and accuracy.

There are many reasons why this could be the case...why they work. I won't go into them all here. But I can assure you, based on what I have seen in every market that I have tested, the response of price to Fib levels is nothing short of amazing!

 

[steven46]

By all means continue on as you were

For those who may be interested in learning something new.

Institutions control the markets (all of them including Forex). The do not use fibs, at least not
in the way that retail traders use them. For example, at 50% Fib levels, institutions know that there
are resting orders (liquidity) there. For that reason, they will move price above/below the 50% Fib
in order to activate those orders. Professionals who elect to trade using "footprint" charts quickly
see the response and they bring in their own buy or sell orders to put pressure on the other side.
This is the concept of "trapped traders". To put it simply, institutions are always looking to trap
others INTO a bad position (so that they have to give up) or OUT OF a good one (so that they are
hesitant to get in late) OR have to chase, and this provides the fuel for the late stage trend move.

After considering for a moment I do have one last thing to say. Comments like "this works like
clockwork" should cause readers to be suspicious. What I have learned over time, is that
NOTHING works "like clockwork". Professionals know this, and they employ systems that have a
statistical edge. Casinos do the same, and they make significant profit, even in the absence of
a "clockwork" tool (like fibs). Its a lesson that can be learned easy or hard, traders choice.

Good luck

 

[FX4Newbies]

By all means continue on as you were

For those who may be interested in learning something new.

Institutions control the markets (all of them including Forex). The do not use fibs, at least not
in the way that retail traders use them. For example, at 50% Fib levels, institutions know that there
are resting orders (liquidity) there. For that reason, they will move price above/below the 50% Fib
in order to activate those orders. Professionals who elect to trade using "footprint" charts quickly
see the response and they bring in their own buy or sell orders to put pressure on the other side.
This is the concept of "trapped traders". To put it simply, institutions are always looking to trap
others INTO a bad position (so that they have to give up) or OUT OF a good one (so that they are
hesitant to get in late) OR have to chase, and this provides the fuel for the late stage trend move.

Good luck

Hi again,

I am SOOO glad you mentioned how the market tries to trap traders, which is one of the reasons a trader needs to be cautious entering trades in those quieter times...dead zones I call them...when there are not as many traders. Consolidations can also be very messy. Just think...a slew of stop losses top and bottom. Which ones to take out first?

Yes...yes...traps are set to get you into bad positions or out of good ones. VERY TRUE!!!
Glad you raised those points. Retail traders NEED to hear it.

As I said before, I will take a look at Trader Dale. I am always open to how other people see the market, but I also know what works for me...and has worked for 12+ years and counting.

Something I like to tell traders....trade with 2 hats on: your retail hat and then that of the big boys!

Sun Tzu ....Art of War

If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.

Take care!

 

[steven46]

Remarkable that I anticipated all the things that you are so glad about

I have given this subject a bit more thought. If on one hand a person claims
that Fibs (or any trading tool) "work like clockwork", and I respond that it definitely
does NOT work, how is my argument any better really? It isn't. After all who am I?
So I suggest that struggling traders consider the following, as a way to prove to themselves
whether using a specific tool or strategy works. My revised comment follows

Traders who may be struggling to find success may want to consider the following.

1) Institutions use statistical analysis. They look at either a "tool" or "system" that they
are considering, and they measure its performance over various time periods. The
picture they generate often looks like a "bell shaped curve". At each end are "outliers".
On the one side, big success ("works like clockwork") and on the other side ("doesn't work
at all"). This is one measure of how these firms evaluate the possibilities. The time periods
may vary, but the minimum number to create a valid (statistically significant sample size)
is probably from 40 to 100 trades, using a specific tool or system. What are the percentages
of successful to unsuccessful trades?

2) Institutions also evaluate the performance of their employees. They measure how skillfully
their traders enter, manage and exit to produce profit (or loss) during specific time frames.
This is how they evaluate "talent" or "skill". The bottom line is that they believe that money
can be made in a variety of ways, depending on the combination of right tools and adequate
skill or talent. Both have an influence on the bottom line. This is more difficult to estimate
but one has to simply ask, "how well do I know this tool (or system) and how it is used"
I ask my students to assign each trade a confidence level from 0% to 100% prior to the outcome
then compare (honestly of course) to reality. How often are you right as a percentage of the
total sample size?

So if one wants to consider using ANY specific trading tool, the best way to proceed is to
take the time to trade (sim) using the tool, and evaluate the results over various time periods.
It may sound daunting, but if a struggling trader were to do this, they would discover that
what works "like clockwork" one month, may change to "doesn't work at all" the next month
or the reverse.

If you take the time to do this, you will find out pretty quickly whether you can make money using
any specific tool or strategy. As my mentor used to say "If you can't make it work on paper, how
will you make it work once the bell rings"?

Good luck

 

[FX4Newbies]

I agree with evaluating the method a trader uses.

Several years ago, a trader whose "job" it was at the time to find really good systems told me the same: backtest your method so you can know its reliability. He went on to say that most traders didn't want to take that time to do the work, to backtest the method they were using to trade. He was surprised when I did it. He ran several stats on my results... Monte Carlo, Expectancy, Sharpe etc... At the end of his testing, he wanted to know more about my method.

A question for you...how do you define skill vs talent? Do you consider one more important than the other?

For those who may decide to backtest and find that their method's reliability changes from month to month, or maybe every 90 days, it might be a good sign to look more closely at it and refine it some more.

 

[steven46]

Hello

Thanks for your question

Up to a point, skill can be learned however
talent is different, either you are born with it
or not. This of course is just one opinion.

It also occurs to me to say, that (again in my
opinion), talented people learn quickly. That may
in fact be the essence of talent, that is to say, a
talented person may excel because they have the ability
to learn more quickly than others. Finally it seems
that talented people seem to have the ability to see
possibilities that others do not. I hope that helps.

I have trained people who were not particularly talented
and seen them develop into highly trained and accomplished
traders. The talented people simply get there sooner.

I find that testing is important for the trader as well as for the
evaluation of the tool or system. Through the testing process
the trader generally improves his/her skill set. They may notice
some detail that makes a significant difference in how the tool
works. For example, trading using virtually any volume based
system works differently when significant economic news is
pending. That seems to be because the institutions respond
much differently if the result of an economic report is considered
to be a surprise. This is also true seasonally and yesterday's
S&P Futures Market displayed that difference as institutions
decided to sell off responding to Tax Concerns and to protect
profits/and reduce risks. As mentioned in my index journal
(a professional approach...) this is well known and was created
largely by automated systems written by skilled (and talented)
persons.

As regards "refinement" of a system, I have found that most
retail traders lack both the skill and talent to make any real
constructive change to basic systems. Institutions hire persons
with advanced degrees in finance, math, science, and they have
difficulty as well, it is complex. THIS is one place where talent
makes a difference, and that is why institutions routinely pay
highly talented persons who do this work nine (9) figures.

I hope this helps somewhat.

 

[FX4Newbies]

Hello

Thanks for your question

Up to a point, skill can be learned however
talent is different, either you are born with it
or not. This of course is just one opinion.

It also occurs to me to say, that (again in my
opinion), talented people learn quickly. That may
in fact be the essence of talent, that is to say, a
talented person may excel because they have the ability
to learn more quickly than others. Finally it seems
that talented people seem to have the ability to see
possibilities that others do not. I hope that helps.

I have trained people who were not particularly talented
and seen them develop into highly trained and accomplished
traders. The talented people simply get there sooner.

I find that testing is important for the trader as well as for the
evaluation of the tool or system. Through the testing process
the trader generally improves his/her skill set. They may notice
some detail that makes a significant difference in how the tool
works. For example, trading using virtually any volume based
system works differently when significant economic news is
pending. That seems to be because the institutions respond
much differently if the result of an economic report is considered
to be a surprise. This is also true seasonally and yesterday's
S&P Futures Market displayed that difference as institutions
decided to sell off responding to Tax Concerns and to protect
profits/and reduce risks. As mentioned in my index journal
(a professional approach...) this is well known and was created
largely by automated systems written by skilled (and talented)
persons.

As regards "refinement" of a system, I have found that most
retail traders lack both the skill and talent to make any real
constructive change to basic systems. Institutions hire persons
with advanced degrees in finance, math, science, and they have
difficulty as well, it is complex. THIS is one place where talent
makes a difference, and that is why institutions routinely pay
highly talented persons who do this work nine (9) figures.

I hope this helps somewhat.

Hi steven46,

Based on your points about skill vs talent, wouldn't the emotional make-up also affect their progress? A talented person with some serious fears to overcome could actually not succeed, if they are not able to work through those issues. How is that kind of criteria factored into the trader's assessment...and at what stage? Don't the mental-emotional evaluations come first, before the training to learn to trade?

 

[steven46]

My experience is limited in this area

Top tier institutions hire psychologists who screen out persons who have emotional issues
2nd tier firms do the same, persons who cannot control their emotional response to risk
are not deemed suitable for work at this level.

As regards retail or amateur traders, they have two choices. They can de-sensitize themselves
by repeated exposure to stimulus (by continuing to trade small or to trade sim) or then can
observe how a skilled trader reacts in the environment they want to trade in. Friends who have
watched me trade have remarked that it seems "easier" (for them) to manage the stress when they
understand the larger context (I generally explain before I take a position). Also they see that I am
extremely well prepared, often letting them know what the odds of success are going to be BEFORE
taking a position. The problem for amateurs is that they either 1) don't know how to prepare or 2) are
not willing to do the work. Ultimately it is successful repetition that provides the solution amateurs are looking
for (but almost never find). The bottom line is "once you find someone who knows how to perform any
skill-based task, then continue to observe and copy what they do, until you can do it yourself"


Good luck

 

[FX4Newbies]

My experience is limited in this area

Top tier institutions hire psychologists who screen out persons who have emotional issues
2nd tier firms do the same, persons who cannot control their emotional response to risk
are not deemed suitable for work at this level.

As regards retail or amateur traders, they have two choices. They can de-sensitize themselves
by repeated exposure to stimulus (by continuing to trade small or to trade sim) or then can
observe how a skilled trader reacts in the environment they want to trade in. Friends who have
watched me trade have remarked that it seems "easier" (for them) to manage the stress when they
understand the larger context (I generally explain before I take a position). Also they see that I am
extremely well prepared, often letting them know what the odds of success are going to be BEFORE
taking a position. The problem for amateurs is that they either 1) don't know how to prepare or 2) are
not willing to do the work. Ultimately it is successful repetition that provides the solution amateurs are looking
for (but almost never find). The bottom line is "once you find someone who knows how to perform any
skill-based task, then continue to observe and copy what they do, until you can do it yourself"


Good luck

Hi again...

Yes, the services of a psychologist who trades or someone along those lines can help. There are also some online evaluations.

As far as retail traders go, here is a Profile Assessment they can use:

Tharp Trader Test

tharptradertest.com

NOTE: I am not recommending any trading method there.

Secondly, retail traders need a method that works: either one they personally developed or one they were taught...but, it should be backtested. I do work with traders online for free (in a structured/sequential style of teaching)* to get them started with developing a method... regardless of the way they would like to go. Sometimes their current method just needs tweaking. BUT a quality method is a MUST!!

Edit: See parenthesis here*.

 

[steven46]

Remarkable

I would not be using an online service for psychological
screening. There is too much variability in professional skill
to trust an unknown service. I assumed this would be
obvious. Apparently not.

As regards people working with traders free of charge, I would
remind you of the old saying "you get what you pay for".

 

[FX4Newbies]

Remarkable

I would not be using an online service for psychological
screening. There is too much variability in professional skill
to trust an unknown service. I assumed this would be
obvious. Apparently not.

As regards people working with traders free of charge, I would
remind you of the old saying "you get what you pay for".

I didn't think you would be inclined to use such a tool in a professional environment. By the way, it was actually created by a professional in the field. It is a very effective tool that retail traders can use to get their feet wet.

Do people always get what they pay for? Sometimes yes, sometimes no. Sometimes more, sometimes less. And there are those who have learned to give back...so payment is not required, but value is still exchanged. And that is what counts in the end.

 

[steven46]

You miss the point.

I will simplify

What matters in term of delivery of psychological evaluation
is both the basic skill set of the professional AND personal
chemistry. The latter doesn't happen with an online service

As to whether value is received from a person offering free
services, I will continue to suggest that offers of free consultation
are essentially worthless. In professional circles, a person offering
consultation needs to provide background (education), and
references. You provide neither.

 

[FX4Newbies]

You miss the point.

I will simplify

What matters in term of delivery of psychological evaluation
is both the basic skill set of the professional AND personal
chemistry. The latter doesn't happen with an online service

As to whether value is received from a person offering free
services, I will continue to suggest that offers of free consultation
are essentially worthless. In professional circles, a person offering
consultation needs to provide background (education), and
references. You provide neither.

Like I explained earlier, the online service is a good starting point for retail traders "to get their feet wet". At least they will understand some basics about themselves. From there they can choose to go further with a professional trading psychologist.

Those that I have worked with know my professional certifications as they relate to the markets and trading. In my opinion, that certainly isn't required here.

My goal for being here is to assist traders who want to trade to win. They can certainly choose however they would like to make that happen...whether through books, online platforms, trading websites, trial and error etc. It's up to them.

Do take care.

 

[Simon54]

Hi Simon54.

Yes...there are levels that are spot on. However, the placement of the tool determines where the levels fall, and remember, these levels are on the chart in advance of price action. That means that the understanding for proper placement (application) is more important than "following a level" per se.

Absolutely! it is on how you placed the tool and about understanding context not blindly following the levels. How'd you decide where to place them?

 

[FX4Newbies]

Absolutely! it is on how you placed the tool and about understanding context not blindly following the levels. How'd you decide where to place them?

Now that is a loaded question for the simple reason that the trader really needs to understand market structure, trend behaviour and price action/movement. They also need to be very clear about the time-frames they are looking at and why, and be clear about what info they are trying to extract from the chart(s) with their analysis. And, if that's not enough, it also depends on the particular Fib tool the trader is using.

Sad to say I have seen a few videos online where the user was jerry-rigging the tool to make it fit price. Some may describe it as form-fitting of sorts. Not an accurate way to use any tool. If a trader who doesn't understand what to do, follows such a video, very likely they will get wrong results and blame the tool instead of the user.

 

[steven46]

So here is one of your previous posts regarding Fibs

----------------------------------------

"Whether institutional traders place Fibs on their charts or not, price action, from my humble experiences, continue to confirm them like clockwork. Also, if the market movers so-to-speak don't use them, but they continue to check out, then that gives them even further credibility, indicating an innate reliability and accuracy.

There are many reasons why this could be the case...why they work. I won't go into them all here. But I can assure you, based on what I have seen in every market that I have tested, the response of price to Fib levels is nothing short of amazing!"

-------------------------------------

You are being asked about how the tool is placed and what are the levels. And your response is to deflect ("now that is a loaded question")
All fib tools provide the same levels, which one (or which ones) work "like Clockwork"?

A simple answer would be appreciated. I think we would all like to know.

 

[FX4Newbies]

So here is one of your previous posts regarding Fibs

----------------------------------------

"Whether institutional traders place Fibs on their charts or not, price action, from my humble experiences, continue to confirm them like clockwork. Also, if the market movers so-to-speak don't use them, but they continue to check out, then that gives them even further credibility, indicating an innate reliability and accuracy.

There are many reasons why this could be the case...why they work. I won't go into them all here. But I can assure you, based on what I have seen in every market that I have tested, the response of price to Fib levels is nothing short of amazing!"

-------------------------------------

You are being asked about how the tool is placed and what are the levels. And your response is to deflect ("now that is a loaded question")
All fib tools provide the same levels, which one (or which ones) work "like Clockwork"?

A simple answer would be appreciated. I think we would all like to know.

Hello steven46,

I am very clear about the question asked, and I was just as clear and deliberate in the full answer I gave.

"All fib tools provide the same levels." Yes some levels are "universal". Actually, the user puts in or selects the levels they would like to use.

Secondly, as stated before, the levels are important of course, but more importantly, is the trader's understanding of how to properly apply the tool. Until that is achieved levels mean very little.

For those reasons and others I will not be providing a listing of levels here. Just so you know, I have PDF listings of the levels that work for me, for each of the 6 tools on MT4....along with the "how to's". I'm very meticulous about what I do because the market for the most part, in my opinion and experience, is very exacting...even with news!

 

[Simon54]

Now that is a loaded question for the simple reason that the trader really needs to understand market structure, trend behaviour and price action/movement. They also need to be very clear about the time-frames they are looking at and why, and be clear about what info they are trying to extract from the chart(s) with their analysis. And, if that's not enough, it also depends on the particular Fib tool the trader is using.

Sad to say I have seen a few videos online where the user was jerry-rigging the tool to make it fit price. Some may describe it as form-fitting of sorts. Not an accurate way to use any tool. If a trader who doesn't understand what to do, follows such a video, very likely they will get wrong results and blame the tool instead of the user.

Truly, I feel it is all about understanding the market structure.