--- In [email protected], Dennis Brown <[EMAIL PROTECTED]> wrote:
> I have observed many day traders. What you say is true. However, > there is an art to it that the traders themselves don't even > recognize. It has become second nature to them like riding a > unicycle when they are in the Zone. > > It is a good idea to realize that a new person must develop that art > first or he will just as surely blow up his account. > > Working with indicators does not mean that they have to be lagging > indicators. Leading indicators are also possible to create. After > all that is what you are doing in your mind. ;-) Hi Dennis, I have a little different take on this topic. I don't think of tape reading as an art but a skill you learn from many hours of screen time. It is really pattern recognition, something the human brain is very good at. It requires the same skill set as playing video games. The 1st time you play a new video game, you suck at it. If you play it enough, eventually you get good at it. If you are expert at playing a video game, you cannot teach someone else to be an expert. You can give them guidelines on how to play but if they want to become an expert, they have to put in time playing the game. The same is true for tape reading. ----------------------- Tip for newbies: If you want to learn to tape read here is an exercise that will help. In a demo account take random trades (flip a coin, heads==long, tails=short) and manage them to minimize losses. In the beginning you will feel like a fish out of water but with practice you will learn when to take small losses. ----------------------- The holy grail of trading comes not from super fantastic trade entry but from trade management. Whether you use tape reading, technical indicators or some combination, most trading losses occur when the signal you take is not appropriate for the current market conditions. Markets are constantly changing (bullish, bearish, trending, trading range, congestion, etc). It takes time to recognize when a change has occurred and during that time period losses occur. The allure of cycle based indicators is that they will sense the change in the dominant cycle sooner and thus minimize losses during market transitions. Bill
