Market geometry systems such as Gann, Elliott, Fibonacci, and the like are not reliable because they are often subject to numerous different interpretations. My advice is to steer clear. Astrology-based systems should be avoided entirely. I see absolutely no validity on these methods. Market structure theories such as the Market ProfileTM or Liquidity Bata BankTM have great potential, but they require serious study and analysis before they can be turned into objective trading systems. They are highly complex and beyond the scope. There are other systems as well. These, however, are among the most popular.
Putting It All Together
I f you have survived the last 20 lessons and learned from them, then I truly believe that you have in your possession some of the most powerful tools that a trader can possess. These tools, combined with the discipline and consistency that the setup, trigger, and follow-through structure provide should bring you excellent results. I have spent very little time teaching and preaching to you about the psychological and behavioral pitfalls that can limit your profits or, at worst, cause you to take losses no matter how good your systems, methods, or indicators may be.
Why traders lose
In my over 35 years of trading, teaching, and analyzing markets, I have had literally hundreds of opportunities to observe my mistakes and the mistakes of other traders. Human nature is a curious thing. It is at one and the same time wonderful and sad. It is wonderful because we can do so much with our minds. It is sad because all too often our minds keep us from being successful.
As you can see from the partial list above, there are many things traders can do that will virtually guarantee them losses. The list of positive or winning behaviors is a very short one. Here are the behaviors and procedures you will want to incorporate and internalize in your trading. They will not guarantee success but they will facilitate it!
Use the STF structure for all trades you make . . . or Use a totally mechanical trading system that uses solid rules not open to interpretation.
Be totally organized, by which I mean to know all your trades, all your positions, all your orders at all times. Learn what different order types mean and how they are used.
- Avoid broker opinions and Internet chat rooms.
- Play your own game unless you have a trading partner or partners.
- Avoid reading more than one or two newsletters or hotlines.
- Avoid day trading unless you can do it full-time.
- Diversify your trades across time frames, systems, and markets.
- Plan your trades and trade your plans.
- Begin with sufficient capital.
Now that you have worked through the lessons, take some time to sit back and evaluate the methods within your financial ability, time frame, discipline, and individual psychology. You must enjoy the methods you are using and you must understand them. Unless you do so, you will not want to follow the methods. Take your time, plan your trades, and trade your plans.