This may surprise many readers, but the process here will generally NOT be focused on the discussion of exact entry points, ironically the path most retail traders are convinced is where the “secret” lies and stay on until they go broke. Setups, believe it or not, aren’t where consistent success in any trading is rooted. We will be trying to get you to see that what you are trading now in terms of specifics for entry and exit is probably fine. If you are losing money the culprit is almost certainly either non contextual or otherwise rigid “pattern” based thinking, poor risk management, unreasonable profit expectations from a limited bankroll, over trading, or a some combination of the aforementioned. We will most likely be able to help you at least zero in on whatever it is, but only YOU can correct it. I suppose the content is geared for intermediate traders and up, but only because we won’t be talking about any rudimentary stuff. We assume that the readership has basic chart reading skills and understands terms like momentum, exhaustion, absorption, order flow, divergences, price action, etc. Not that beginners can’t also benefit from what is here, it is just that they need to get the basics elsewhere so we don’t get bogged down. We have a very limited amount of time to devote to this so we want to keep it focused.
If you read nothing else here and/or navigate away from this page in the next few minutes never to return, please finish reading and digest this section as your very life as a trader depends on it. The majority of newer retail traders are probably going to lose money. Regardless of what the percentages are the ones that do tend to have one thing in common; relentless attempts at formulating a trading plan solely focused on finding the one best way to enter and exit the market mechanically. If you are one of these traders a good first step is to move your focus away from things that really don’t matter and in many cases are downright destructive. A singular focus on where to enter while ignoring the context of how the risk model and trade management scheme interacts with those entries is THE amateur mistake. Just knowing that is a prerequisite to putting you on the path to becoming a great trader. In short, most pros aren’t obsessed with timing entries or winning all the time. They grind it out. In contrast, most losing retail traders are trading time based patterns and time based indicators optimized by some measure of time. Such patterns are random and don’t mean anything. If they work at all it is just luck really. A broken clock is right twice a day. They don’t come from market information directly and time by its very nature is a lagging indicator. The market doesn’t know what a minute is, so if you use a minute chart that is fine, but make sure you are using it to see price only and not trading based on when some bar opens or closes. Ever hear the saying that if you sit down at a card game and in 15 minutes can’t figure out who the sucker is, you’re it? Same thing here. You don’t want to be one of the suckers. Decide ahead of time what you want to see happen at whatever your entry point is in order to take the trade, and plan on sticking to your plan and trusting what you have discovered when you created the methodology. It may sound difficult at first, but once you get the hang of it you will find it quite easy.
Next: What do you trade?