Yes, losses can happen... Part 2

OK, onto if we look at the 5min NQ chart, we can see a very good looking TS3 sell, that did start to decline nicely. However, it reversed and rallied, which was against our anticipation.... As the trade was so far into profit initially, stops should have been at break-even so at least this should have only been a break-even trade.

But then almost immediately we got another sell. But this one resulted in a 1-R loss. So, yes, overall this would have been a losing day.

Yes losses can and do happen, this is what I talk about with the Cyclical Nature of Trading, the good news is that soon the cycle will come round to some profitable trades. Our job is while we are in the losing part of the cycle is to keep the losses small...

Thanks, Steve

Yes, losses can happen...

Hi Everybody,

Something that many amateur traders cannot understand is why a loss can unfold, when everything appears to fall into place perfectly (?). Well, welcome to the real-world, that is why trading is called “speculation” as all we are doing is speculating on a probable future outcome. And probabilities are never 100%. So yes, losses can and do unfold, anybody who tells you otherwise is not a professional trader......

Here is a good example: where yesterday the 15min YM looked to be setting up for a TS1 sell, so we “assumed at the time” that the larger degree trend was down, so were on the lookout for shorter-term sell setups.

OK, onto the 5min NQ chart.

Thanks, Steve

3min YM

OK, now we know the larger degree (15min) trend was up into the “measured move” Typical Wave C WPT, we can look at what Buy setups there were on the 3min YM.

As you can see, we have a nice TS2 buy setup early in the day that reached the Typical Wave C WPT. As the STF was weak we do not use the ATRStop, but as the 15min trend was still up, we could compromise buy simply training the stop 1 tick below the bar lows. This would run the trade as the main trend was up, but not give too much room as the STF was still weak.

The result, a nice +5.3R Profit (ignoring slippage and commission)

As you have seen form all these post, good trading comes from experience and can sometimes be more of an “art” rather than pure “science”. Good traders can amend the basic guidelines depending on how the markets are currently unfolding. This is why I am so against totally “mechanical” systems as they will never have the “finesse” of a good and experienced trader.....

Thanks, Steve

Measured moves

Hi Everybody,

I get a lot of questions from people asking why we can place an ABC count on what is obviously an “impulsive swing” in MTPredictor. Usually we are looking for the ABC pattern to be part of a “correction”, please see this help video:
http://www.mtpredictor.com/help/videos/WaveC-Criteria/WaveC-Criteria.html

But, for the Advanced users among you, the Typical Wave C WPT can be used as a “measured move” as it contains the 1:1 ratio. Very often we get an “impulsive swing” that stops at the 1:1 ratio, or at the Typical Wave C WPT.

Yesterday charts of the 15min YM was a great example of this, as you can see, this nailed the high of the day.

But, as experienced is required to know when to apply this, I only suggest that the more Advanced Users among you consider this.

Thanks, Steve

Cyclical Nature of Trading...........

Later in the day yesterday the picture because a lot less clear as the 3min charts became choppy as they reached 15min resistance levels. This can and does happen. Too many amateur traders “assume” that everything is picture perfect each and every day. Real life trading is simply not like that. I describe it as driving in Fog. Sometimes the fog is dense and you can’t see, but sometimes it is clear and you can see well. Trading is the same, sometimes the pattern is clear and at other times it is not..... This is why “assuming” that you are going to make “x dollars” each and every day is wrong, because some days it will be easy and you have good profits, but then some days you will have losses, and other days will be hard with no trading...

This is the Cyclical Nature of Trading....

Something that all professional traders come to learn and understand. Once you do, then you can trade “in tune” with how the markets really unfold. Please read this PDF:
http://www.mtpredictor.com/support/documents/How%20Profits%20and%20loses%20unfold%20in%20the%20real%20world.pdf

Then you will have a better “expectation” of how Profits and Losses unfold in the real word

Thanks, Steve

Nice TSA3 buy on the 3min Chart

Early in the day we got a good looking TS3 buy on the 3min NQ.... As this was in the direction of the larger degree (15min) up trend, this was a good trade to consider.

As the STF strength band was strong as the first WPT target was reached, standard traders would have swapped to the ATRStop. The result was a nice +2.9R Profit (ignoring slippage and commission).

So far so good. But this is when the nice clear patterns then ran out, and the day got a lot harder as the pattern became less clear later in the day.

Steve

The day started well

Hi Everybody,

The day started well yesterday, with a clear up trend, this can be clearly seen on the 15min NQ where the market was rallying from DP to DP. So early in the day yesterday the larger degree trend was up....

A word of note on using the longer (15 and 60min) charts over the “Roll over period”. When we chart across the Roll Over the longer charts can get distorted because of the price difference between the last and current contract month. This can skew your 15min charts a bit. This is just something to be aware of....

OK, onto the 3min NQ Chart now

Steve