They are pieces of personal concepts and thoughts, discussions found on BMT, etc., I have revisioned and summarized.
Don't obsess too much on trying to work out 'who' is doing what. I used to do that too.
It's the lesson you want to draw from the result, that is what's important.
When price is rising, you want to be a buyer(smart money will do this).
If the market is rising its because of 'them' getting it going. If its up and you get long you are 'with' them.
If you decide to stand in front of them while they are in the process of business you'll get done over and over again.
If you are long the market and working the long side is paying you, then you'll continue doing that.
People that take the majority of the money on offer do just that.
Retail lose money, not because they short a rising market, its because after initiating their position they are not LISTENING to the market telling them they are wrong.
Instead of playing defense and looking for a reduction or scratch they ramp the bloody thing up and pile more cars on.
If I short a rising market 3920 and 10 min later its trading 3870,then based on feedback, I’m doing well.
At this point, I know based on market feedback that I'm on right side of the current move and can look to press the advantage, but I will also play good defense.
That means I “keep listening” to the market.
If I short a rising market 3920 and 10 min later its trading 3950, then based on feedback, I’m not doing well.
I am on the defense right away and looking to flatten out. I could pick an area to get that done and scratch out.
I will certainly not look to add to a run away market. This is absolutely not listening to market feedback, but self destruction plain and simple.
That, in the end is the difference between someone who makes it and someone who doesn't.
Whenever you enter a trade, say to yourself that your not entering it to make money, your entering it to get feedback.
WHETHER YOU MAKE MONEY OR NOT WILL DEPEND ON YOUR RESPONSE TO MARKET FEEDBACK AFTER YOU'VE ENTERED.
You respond to feedback positively(for/in your own best interests). If you do this over and over every day, you WILL make money.
Making money will be a by-product of the above behaviour. Its a guarantee.
One of the reasons that retail traders tend to fade the market is that a lot of the time, this approach actually works.
Choppy days, rotational days, rangebound days, etc. The problem is that when this approach doesn't work (trend days for instance), adding to a losing position will get you absolutely killed.
I think that there is an art to listening to the market, and it's not as easy as it sounds. It's especially hard on choppy days.
Sometimes you have to endure a few quick stop outs before you realize that the market is just bouncing around aimlessly that day and there really is no "right side" to be on.
If you could identify those days in advance, you'd be a much more successful trader than you are now!
The trick is to relate the current market with your position, but do so with little or no emotional attachment or response. Feeling is destructive, doing is the only thing important.
It is difficult because when we put money on the line we are now attached emotionally.
Try to understand the understated below, and you'll master the markets:
you'll find out what type of day you're in by “participation”. If you cannot tell, it simply means you are not active enough in trade.
A scalper for example, will be able to discern better the market condition than a trader who is swing or position trading.
Try being more active as an exercise and you'll find out what i mean.
You'll feel flow better by actively participating.
This works because you have yourself (static reference point) and current market (fluid reference point).Through these two points, you'll receive constant feedback.
The more points you actively create, the better feedback you'll receive.
The more feedback you're receiving, the better you'll be able to feel market condition.
And that's how you do it.
Basically, by YOU and I creating static reference points (positions), we create context.
What the market tells you while you're in the market (positioned) and what it tells you while you're out of the market are worlds apart. Chalk and cheese.
Yet, funny enough its just the market, its in the same state, its at the same price.
If I told you that the euro is trading at 3826, can you, by me giving you that information, discern how I'm performing, how well I'm doing?
If I now tell you that I'm long 3715 and the Euro is trading 3826, can you now discern how well I'm doing?
What about if I told you I opened that position 4 years ago? What if I now told you I placed that position on 22 mins ago?
Other static reference points are used too, like todays high, yesterdays low, todays open etc.
These are all static reference points, but they do not tell us how well we are trading.
The only static reference point of any value, is we ourselves.
Participation is the king of edges.
That is where all edges are born, but it is also an edge in itself.