The Reasons We Follow An Algorithmic-Systematic Approach To All We have been trading and investing in markets for decades since the early 1980s. Experienced and successful traders and market participants tend to remember their losses and mistakes instead of victories. Profits feed the ego; losses are teachers for those who realize that valuable lessons come from adversity instead of triumph.
Everyone has an opinion- The only objective measure is the current price
The trend is your only friend- News, experts, and all other information are subjective
Trading and investing can be stressful
A plan and discipline are the building blocks for success
You have to be in to win- Drawdowns are a part of any trading or investing system
A batting average of .300 is good enough to get a professional baseball player into the Hall of Fame in Cooperstown, New York. Each time a future hall of Famer steps up to the plate, a success rate of below 30% is good enough for infamy. Trading and investing are similar. No one is correct in their market calls all of the time. When approaching any market, there are always three potential outcomes, a profit, a loss, or a breakeven. The success rate of calling a market correctly takes a back seat to other factors. We have seen market participants who have had the foresight to call the market correctly 75% of the time and still wind up losing money. Conversely, a seasoned trader can be right 20% of the time and still make an overall profit.
I usually write about specific markets on Trading View, but it is essential to look at the methodology, mindset, and path to growing capital over time this week. We follow an algorithmic-systematic approach to trading and investing. Our models come from decades of experience and the knowledge gained from mistakes that led to losses. We all have the same goal; to make money and grow our capital. The route to achieving the goal is what separates the winners from the losers.
Everyone has an opinion- The only objective measure is the current price
I am sure we have all heard an “expert” or pundit tell us that the current price of an asset is wrong. They may provide many compelling and convincing reasons, but they are 100% wrong when challenging a price level.
An asset price at any moment in time is always the correct price for one objective reason. It is the level where buyers and sellers meet in a transparent environment, the market. The “experts” and pundits take a subjective leap of faith when using the terms expensive or cheap. Too many variables establish a price. The only accurate measure of value is the current price itself.
The trend is your only friend- News, experts, and all other information are subjective
Prices are snapshots. Trends are the living and breathing extension of price action. Many market participants become junkies, watching each news event, “expert” forecast, and other exogenous events that could push asset prices higher or lower. They make investment or trading decisions based on what they hear and see. The approach is flawed for three significant reasons:
Trading off what one sees and hears is stale before it reaches our ears and eyes. Others have seen the news or forecast before us, and some had seen it before it appeared on a medium for all to see.
The translation of an event, forecast, or news item is purely subjective as it assumes, we will make a correct analysis. The expression “buy the rumor and sell the news” or the converse runs counter to even the most complete analytical decision-making approach.
Finally, reacting to any stimulus involves a primary human response, emotion. Emotions are a trader or investor’s worst enemy. They trigger responses and decisions based on fear and greed, a deadly duo that increases the chances of mistakes, miscalculations, and irrational behavior.
A market’s trend is purely objective as it reflects the path of least resistance of a price based on market consensus and sentiment. Prices tend to move to levels on the upside and downside that can defy logic, run counter to reason and are not rational. Trend following blocks out logic, reason, and rational thought and favors one of the leading theories of physics. Newton’s first law states that a body at rest will remain at rest unless an outside force acts on it, and a body in motion at a constant velocity will remain in motion in a straight line unless acted upon by an external force. Trend following embodies Newton’s first law of physics. Asset prices reflect the market’s sentiment, which is the inertia that drives those prices. If Sir Isaac Newton were a modern-day trader or investor, his mantra would be the trend is your only friend as it is compatible with his first law. The physical sciences are objective.
Trading and investing can be stressful
We have found that decision-making creates stress. When we buy or sell an asset based on anything but the market’s trend, we make a subjective judgment. The attempt to buy at the bottom or sell at the top is a value judgment that runs counter to logic as it implies the sentiment and current prices are incorrect, a fatal flaw. Sometimes some market participants get lucky, but that only reinforces a strategy that leads to future mistakes. Picking tops or bottoms in a market is a strategy that rewards the ego as it gratifies that one called the market correctly. However, ego and vanity lead us down a dangerous path. In the 1997 film, The Devil’s Advocate, Al Pacino, the actor who played Satan, said, “Vanity-definitely my favorite sin.”
Reducing stress comes from following the path of least resistance. We use an algorithmic, systematic approach to trading based on models that remain long during a bullish trend and short during a bearish one. We never miss a significant trend as we are constantly long or short the assets in our portfolio. We do not adjust our risk positions on an intra-day basis. We only reverse risk positions based on closing prices at the end of a session and execute the position at the start of the next session. Our proprietary models come from decades of trading and investing experience in a wide range of markets across all asset classes. We never look to sell tops or buy bottoms. We are long at the top and short at the bottom. However, we tend to capture significant trends, taking the filet mignon out of price trends. We have found that our mechanical approach, with a better than even-money win rate, reduces stress as it takes any decision-making out of the equation. The only job is to follow the rules, always remaining in the markets on the long or short side and reversing positions based on the model’s instructions.
A plan and discipline are the building blocks for success
Emotions lead to impulsive behavior. Acting on impulse leaves little or no time for planning and throws discipline out of the window. Albert Einstein said that the definition of insanity is doing the same thing repeatedly and expecting a different result. Impulsive decision-making is the root of Einstein’s insanity definition.
Any risk position in any market must have a plan, which is simply balancing the financial risk versus the potential reward. Before pressing the buy or sell button, we must establish risk parameters for trades or investments when not following an algorithmic approach.
The discipline is following the plan. Many market participants run into problems when a risk position goes against them, and they have no plan for risk and reward, or they modify it to allow them to stick with a wrong decision. Turning a short-term trade into a long-term investment is a common mistake. The mistake comes from a subjective call that the market price is incorrect.
A way to prevent this is to remind yourself that the market price is always the correct price. We are often wrong; the market is never wrong.
You have to be in to win- Drawdowns are a part of any trading or investing system
We are constantly long or short the highly liquid assets in our investment portfolio because we never know when a significant trend will begin. Being in a risk position that follows trends is the only way to catch the bulk of a bullish or bearish trend.
Drawdowns or losses are a part of life and any trading or investment approach. A choppy market near the high or low end of a trend will result in short-term losses. However, that is the price for capturing the long-term trend. There is no free lunch in life, and the same goes for trading and investing. The goal is always the same for every market participant, to make money over time and build wealth and our nest eggs. The strategy is what separates winners from losers. We take a long-term systematic approach and do not veer from the path. We know that drawdowns are a part of any investment or trading approach. We are in it to win it on a long-term basis.
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Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
Patience
10 TIPS TO BECOME A PROFITABLE TRADERThe tips that I am about to give you can completely change your results as a trader and it can help you to start becoming a PROFITABLE TRADER or if you already is a profitable trader it can help you to increase your "win rate".
1 - Never blindly trust in the Moving Averages or any other indicator that you have set in your chart, it only takes a big spike on Bitcoin's price, or a lack of attention of your part to a bigger trend for you to be stoped in your trade.
2 - Always check your Moving Averages and other indicators in different time frames (1H, 4H, 1D, 1W), different time frames tell different stories.
3 - Identify the trend (Up, Down, Consolidation). Always look for the bigger picture.
4 - When all the MA in different time frames are giving you the same direction it's a positive sign for you to trade in the direction of that trend (but that's not the only way to use it and you need to take other indicators in consideration).
5 - DON'T EVER get in a trade just because the price went up or down 10% - 100%, first see the bigger picture (1M, 1W, 1D, 4H), then check your other indicators. Not doing it will make you lose a lot of money (constantly).
6 - Don't "FOMO" is your trades, that will make you lose a lot of money, patience is one of the most important attributes to become a profitable trader.
7 - ALWAYS check the Bitcoin chart before getting in a trade, if Bitcoin is close to a strong support and end up not holding on it and the price goes down it's very likely that other pairs of coins will go down as well.
8 - Don't get in trades that you are not sure about it, it's not worth it, sometimes you maybe right, but in the long term you will not be a profitable trader.
9 - You need to know the "Why" you are getting in that trade, and the "When" (exact moment that you will get in or out of the trade).
10 - You don't need to get into every single trade opportunity that you see, it's better to trade less with more quality trades than to trade a lot but making poor trading decisions.
The tips above are simple to understand and to apply and for some can sound really easy and common but unfortunately a lot of Traders are not practicing it or are not aware of it and not following this simple tips can lead you to failure really fast.
You will not necessarily become a profitable trader just by following this tips, but learnings and applying this tips is the beginning to a glorious path!
I'm using ADA/USDT as an example, the intent is not to predict if the price will go up or not, if the price goes 100% up or down tomorrow it doesn't make any difference. The purpose of the post is to open your eyes to see the big picture of things, to see that sometimes some indicators if not used correctly are not very helpful to our trades, to identify a trend despite the spikes of price, to understand that there are several thinks to be taken in consideration before getting in a trade, is for you to understand that patience is a key aspect to our success. My desire is that you understand that you need to be meticulous in all your analysis, trade less, win more.
Most common mistakes in tradingHello my friends today i want to talk with you about most common mistakes in trading from my experience (any market but specially in crypto)
And after reading this i hope you will avoid them
1- Not Patient Enough :
I think this is one of top major reasons for failure in cryptomarket
Most newbies in this Field are thinking they will be rich in few days thats completely wrong ...Any old trader here will tell you how the patience will paid off
2- More Than You Can Afford To Lose :
only risk what you can afford to lose ...
more than that will lead to alot of mistakes and you may close your position after any small drop before reaching stoploss point and thats wrong my friends
3- Not Using Stoploss :
Stoploss is important but i recommend manual stoploss by candles closing not automatic one to avoid manipulation in market.. if you dont know difference between manual and automatic read my previous idea about it
4- Over Trading :
Alot of trades every day wont make more money ...instead, it will make you more stressful and staring at charts all day resulting in more mistakes
👉Fewer in numbers and higher in quality trades per week or even month are enough
sometimes best thing you can do is not trading at all when market is uncertain
5- Emotional Trading :
Both fear and greed play big role in the market movement
When you see most of people are greedy you should start taking profits partially ..and also try to avoid selling during panic sells
6- Revenge Trading :
Like using all wallet to buy one coin (all in) or doing high leverage postion to recover losses fast usually end in liqudation or big lose and leaving market completely
This market need you to be flexible
7- Ignoring Your First Plan
alot of very good plans and managements from start but you continusoly change it by listening to other random people opinions
trust in your self and trust in chart
no problem from taking advices from more experience people but you should trust in yourself first by have your own view and own plan
How many mistakes you find yourself doing it ...choose the number from above and tell us in comments
The 3 Types of Trades (Bad, Good and Great!)In this video we go over the 3 types of forex trades, the bad, the good and the great!
These tips are short and direct, but hopefully they are a wake up call to help you to start focusing on the good and great trades by being patient and disciplied!
I also go over our XAUUSD long trade!
Happy trading all <3
Trading Plan that will help you become consistently profitableIn my trading career beyond having a strategy (actually multiple depending on market state and asset class) to base my trades on nothing has ever been as important as having a Trading plan. In this post I want to share with you my personal trading plan to help you create a set of rules that will help you stick to your plan and keep your emotions in check so that you can actually follow your trading strategy and become a consistently profitable trader.
Something that was and still is key for me is the following realization:
Never get attached to your opinion or view of why something should happen. The market is in fact always right and based on nothing but irrationality since its made by humans so the movements of the market do not have to make sense and at more times then not will not make sense.
Trading is simply a mind game. Markets are a result of mass psychology which leads to exploitable edges. Mastering your own psychology is key to keep following the strategy that defines your edge.
So now without further ado my trading plan template that has helped me so much over the years and I hope will help you as well:
**General Rules**
1. Never enter a trade without a plan (TP,SL)
2. Once you are in a trade stick to the plan
3. Its ok to be wrong its not about being right its about making money
4. Be patient do not act on FOMO
5. Do not chase the market
6. Let your winners run and cut your losses short
**The 5 fundamental truths**
1. Anything can happen.
2. You don't need to know what is going to happen next in order to make money.
3. There is a random distribution between wins and losses for any given set of variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
5. Every moment in the market is unique.
**Rules of consistency**I AM A CONSISTENT WINNER BECAUSE:
1. I objectively identify my edges.
2. I have predefined risk of every trade.
3. I completely accept risk or I am willing to let go of the trade.
4. I act on my edges without reservation or hesitation.
5. I pay myself as the market makes money available to me.
6. I continually monitor my susceptibility for making errors.
7. I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them.
**Risk and Money Management**
Do not increase the standard trade size before you doubled the account.
1. The maximum amount you are allowed to lose in a day is $XXX.
2. The maximum amount you are allowed to lose on any single trade is $XXX.
3. The maximum number of losing trades in a row you are allowed to have in a day before you stop trading is three.
4. The maximum number of losing trades you are allowed to have in a day before you stop trading is five. (You may have had a win or two between losses, but there is a time to stop trading.) The maximum number of losing trades in the same direction you are allowed to take in a day before you stop trading is three.
1. If you are up $XXX on a single trade, you will put a profit floor of $XXX underneath the current price to protect a portion of those profits.
2. If you are up $XXX on a single trade, you will take the money and close out the trade.
3. If you are up $XXX for the day, you will take the rest of the day off, stay away from the trading screens, and do something you enjoy doing—other than trading
!4. If you are up $XXX for the month, you will put a profit floor of $XXX underneath the month's profits to protect a portion of those profits. If you are up $XXX for the month, you will take the rest of the month off, stay away from the trading screens, and do something you enjoy doing—other than trading! Take a vacation, sleep late and read books, or do something else fun.
JOURNEY SOUTH?The most important part of trading - especially with true trend-following - is stalking your prey very very carefully. The next is controlling loss.
Trend followers suffer heavier controlled losses - but also enjoy far greater gains - than those who rely on targets-based methods of trading. It is certainly not for 'everybody'. Only about 20% of all traders are true trend followers. Trend continuity trading is not trend-following.
Of high importance with 'stalking' any particular trend - because losses can be heavier - is the entry point. For example the ideal entry point in the chart snapshot would have been close to 26000. Anything much lower than that means risking heavier losses.
I'm often asked if A, B, or C instrument is heading north or south. Most traders when they ask this sort of question are not thinking in terms of time frame. They're mainly looking at price and thinking R:R ratio. In trend following all you can do is control the loss. You do not know how much you may eventually gain. That's why it's very scary! But this is not a tutorial on trend following techniques or strategy.
Overall though, one just has to pick a trend control loss and follow on that chosen time frame. It could be a lowly 1 min trend to a higher 1H trend - whatever you want so long as you can take the loss without flinching. I almost never get involved with higher than 1H trends these days.
For those new to trend-following, from my experience, a simple 5 min trend can take up to about 2 days before it reverses. A 15 min trend can last several days. 1H trends can last a couple weeks. Of course, they can be very short lived too.
Trend followers will also use harmonic patterns and other methods to assess key entry points. So 'we' don't have a problem with other methodologies. We'll use anything to get a pound of flesh out of the markets. But following the trend is the big thing.
Disclaimers : This is not advice or encouragement to trade securities. No predictions and no guarantees supplied or implied. Heavy losses can be expected. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
How high can Frontken (0128.kl) go?- Frontken has been on an Uptrend for some time. I did write about it months ago (click on the link below).
- In the recent chart, we see that the price is trying to break Resistance @ RM1.67.
- At the time of writing, we see an LC breaking through this Resistance at its 3rd attempt.
- If this is a genuine break, volume must be high and price will then do a pullback just above the Resistance line.
- One should not trade based on emotions. Let's wait and see the progress after few days.
There are mainly 3 phases in the so called Price ActionThe very same day you learn to read your graphics correctly, you will certainly know it because your Bank Account
will always be bigger than before.
Your only JUdge will be the merciless Dollar value. Anything else can be considered as illusions.
It is very easy to cheat everybody, including ourselves, however we cannot cheat the Filthy Dollar $ value.
Here, it seems like if ... WHATEVER YOU WANT TO BELIEVE .... it is here in front of your own eyes.
Knowing that there are mainly 3 phases in the so called Price Action, it might help. We seem to be here in the
CONSOLIDATION PHASE, then we have the next one where the price moves UP and DOWN cautiously ...(sort of)...
Then we wait for the fabulous TRENDING PHASE. .
You get on board at the right time and jump out of the wagon at the exact location and you will find yourself in
Wonderland. ........................ Good luck.
AUDNZD: Emotions In TradingLet me know what you guys think about my german accent - Im working on it. Hope you enjoy the video.
TRADING PSYCHOLOGY MIND HACK - IMPROVE YOUR PATIENCE / VIDEOHey TV,
In this video I cover an easy to apply mind hack that will help you STOP exiting your trades too early. You know, those trades where you think it's gonna run against you so you bail out only to see it head to your target later on!
As always likes and comments are appreciated. Stay safe out there :)
P.S. Please check out my other educational videos linked below.
WHALE TRACKS !! A CASE STUDY. ISP is an Italian bank that has really taken a beating this year. Under all metrics it is a really weak institution.
What I wish to demonstrate today is how whales operate and hopefully how to take advantage of it.
Before I continue I'd Like to state two Axioms I take with me anytime I chart
1) A body in motion stays in motion unless an external force acts on it
2) Don't trade or look for the bottom , always wait for it and act on the weaker price action
Ray Dalio put a huge net short position on this bank , before the Italian fixed crisis and the Turkish mayhem that had a bleed over on the whole of the EU.
It is the actions of institutions that guide us , not our hypotheses. With that said are you willing to go long , short or wait? What are the positions in the market , who are in control of the market . Where and how does that change.
Those are the questions that I ask price , and I use its answer to give me a position.
HAPPY WEEKEND.
Patience, discipline and a bit of judgementOne of the big issues for many traders is simply patience.
In this video I'm showing how one set up could have taken 63 days to deliver around 500 points. What's the rush? Let the charts work for you.
Patience and discipline takes time to develop, of course. Do the time. Take the time. Let time work for you.
Sometimes a bit of judgement is required. But whatever we do, minimising loss is the big issue.
Taking an affordable chance (or loss) is sometimes necessary - as in this game there is no certainty. My own methods therefore do not rely on 'confirmations'.
Importantly in this 6H chart, one need not check the trade more than once or twice per week.
Trend following is not easyTrend following is not easy because:
1. Finding trends requires a high level of attention to detail.
2. Removing disbelief as an emotional response.
3. Having lots of patience.
I explain a few difficulties I've encountered.
Patience vs TradingPatience is a great quality in trading. Why ? Simply because it helps you not ceeding to impulsivity and it helps you decreasing mistakes.
Patience in trading is similar to patience in poker. A good poker player will wait hours to get the best hand possible. He will wait for a very good pair like AA or KK instead of risking losing with weak pair like 44 or 66.
Of course having AA or KK is not a guarantee of winning but you get a much higher probability to do so.
In trading you face the same problematic. Sometimes the market doesn't give you anything, no info, no pattern. In this case, you should close your laptop and do something else. Really !!!
The more you trade, the more you are exposed to make big mistakes. I used to make scalping for a time but I quickly realized that it was not for me. Staying all day in front of a laptop waiting for an opportunity, no, many opportunities to get 2 to 10 pips only. Some traders are very good scalpers but I am not. I am a swing and day trader. I look for 30 to 20,00 pips on each trade.
You really need patience to get 1000 pips profit ! And obviously I have a dedicated account for this kind of investment. Why ? Because, after having made 100 pips, the temptation is huge to take my profit and close the trade. On this account you only have very long term trades where potential is 500 to 20,000 pips !
Patience is also a quality when you do not see any opportunity on the market. You are frustrated, you want to feel the adrenaline of trading. Calm down, stay cold. The market always gives opportunity, It will happen very soon trust me but at this moment, use this time to improve your skills, reading, learning, analysing or simply deconnecting totally from trading.
Think how you feel good without the stress of a losing position when you are always looking after your smartphone to check the price.
Be patient, wait for the optimal opportunity wen you can sell high and buy low. The opportunity which gives you the best risk-reward.
Patience vs trading ? No !
Patience = Trading !
