NQoos ;-)   

TRADING NAKED

Master  your  setup. Master  your Self

 

the interpretation and application of price action concepts

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We all share a similar path in Trading. Even though you may not be a consistently profitable trader now, you can chose to enjoy the path. This alone may make the difference in your success.

 

 

CONTEXT IS EVERYTHING


back to trade philosophy


This is from one of my early trading course manuals.

Input

 

Use tools to 'read' market

I

Output

Develop an accurate opinion of what market is likely to do.

 

Now on to signals. Using signals are what everybody wants to jump into right away. They are easily mechanized and easy to point out. However, trading signals mechanically without having developed the skill to read the market context is like being blindfolded, spun around, and then told to hit the target! Sure, it is fun to 'pull the trigger' and get into a trade, but you sure as heck won't hit any target, except by chance. But that's what everybody wants to do..."/ want to shoot the gun!! I don't want to spend the time and effort to learn how to aim. I just want to fire this baby. Let's get at it!". When I first started with Arthur, I was so frustrated that he would take this signal, yet pass another that seemingly had the same setup. Well I finally figured it out. Learn how to aim. When you learn how to aim, you start hitting the target much more often than not. Arthur is very skilled. It's like he has a scope!

Signals take the output of step 1 above and translates that into a specific moment in time when we should enter.

 

Input

Opinion of what market will likely do.

I

Signal

I

Output

Exact time to enter (pull the trigger)

If you apply signals mechanically without having first developed the skill to read the market context, the picture becomes

 

Input

I

No clue as to what the market will likely do next.

I

There's a Signal!

I

Output

Yea! I get to fire the gun! (Probably pointed back at yourself)

I

Result

Trading death.

 

 

and more.............

 

I am a student of Arthur's. Early on in his instruction, I felt I discovered a key that unlocked the door to trading success for me. Maybe it will for you. I'll share it with you and you can decide. When I first started with Arthur, I tried to mechanize his stuff. That didn't work for me. The light bulb came on when I changed paradigms from mechanical to intuitive. Rather than trading the signals in the background of the price action, I began to try and trade the price action using the tools Arthur taught as guideposts to keep me from getting to far off course.

I divided the things Arthur was teaching me into 2 parts...market reading tools (or just tools for brevity) and signals. First tools. Tools are guideposts to help you understand the price action. They are like eyeglasses that help you see clearly what is happening in the market. Some of the most beneficial tools to me have been, in order of importance:

1) Keeping track of trends via the Trend Turn tool.

2) Counting bars that make higher highs, or lower lows, during a move to help judge the age of a move.

3) Constantly monitoring swing highs/lows to know where to expect support and resistance.

4) Drawing trend lines, triangles, and other very basic chart patterns.

There are others...these are only examples. Careful application of tools will aid you in seeing clearly the context of the price action. As Arthur repeatedly says, "Context is everything". Trading the signals without mastering the art of reading the market context is putting the cart before the horse...-nothing good happens.

The output of being able to read the market context accurately will be a net bias of what you are looking to do. I use the term 'bias' because no one can know what the market will do next...you can only form an opinion as to what is *most likely* to happen. If you are currently flat, there are 3 choices...you can be looking to go long, short, or stay flat. A bias to stay flat is usually due to a foggy context picture...the market is not telling you, or you are not yet skilled enough to discern what the market will likely do. Hence, you stand aside until the picture becomes clearer.

 

I have always advocated learning to trade by being a discretionary trader. I continue to support this style of trading. This entails methods which may have rules but the rules also can become discretionary. It is how I was taught and stated above from my old manual. As I was taught "CONTEXT IS EVERYTHING". Thus, as I have said before just reacting to signals is not my way. I am always thinking. When the setup appears it is weighed in the context of my bias of the present market. Yes, I always have a bias. That bias is not based on having a signal to go long. The signal should be congruent with my contextual bias. If I have no bias then I don't trade the signal or if I choose to take the trade I view the trade as a lower percentage trade.

Buffy and others refer to this as a roadmap. What is the roadmap inferring. If it is inferring (context) "go long" and your long signal then appears then REACT. The context can also give you a bias for targets. Once the trade is on and more information becomes available things can change resulting in a decision to take profits sooner or later than you original plan.

Besides your psychology which tends to keep you where your at in your trade performance its not learning the CONTEXT that may be holding you back. Learning a setup is the easiest part. Remember you just need one setup. After you have it you must learn to evaluate context and improve your psychology.

 

 

 

 

expect miracles, they are everywhere.............. God is good all the time

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