By Les Schwartz, President
DecisionBar Trading Software
There are many similarities between boxing and trading. Trading is combat, and your success or failure in this battle has a lot to do with your preparation.
Former undisputed heavyweight boxing champion Muhammad Ali, when asked after a fight how he had won, replied,
“The fight is won or lost far away from witnesses – behind the lines, in the gym, and out there on the road, long before I dance under those lights.”
Most traders prepare incorrectly for the trading battles. This is a good thing, as it provides profit opportunities for the rest of us.
For example, most traders begin by learning about a lot of indicators, put those indicators on a chart, and then try to figure out what the market is going to do. This is fundamentally wrong. Here’s an example:
This is a section of five minute chart of EUR/USD. I’ve applied a 20 period simple moving average and the RSI, an overbought/oversold indicator. The RSI is moving down from over-bought territory, giving a sell signal, but the market is above the moving average. What do you think the market will do next?
Here is another section of the same five minute chart of EUR/USD. The RSI is moving up from over-sold territory, giving a buy signal, but the market is below the moving average. What do you think the market will do next?
I’m not going to go on with this because these are trick questions. The successful trader does not concern his or herself with trying to predict the future. This is why most traders lose. The problem is they are asking the wrong question.The correct questions to ask is, “What will YOU do next.” Sure, you can make an educated guess as to what the market will do, but you must know with certainty what you will do.
My DecisionBar Trading Software helps you answer that question, and adds “CLARITY” to your trading. DecisionBar teaches you to trade like a Pro.
Here is another section of the same EUR/USD chart with my DecisionBar Trading Software applied. I get a short (sell) signal at “A.” (The meaning of the signal is completely explained in the DecisionBar Trading Manual. DecisionBar is not a “Black Box.”)What will the market do now? Wrong question again. The software has determined that the market is likely to move down. Whether it will or not remains to be seen. The real question is, “What will YOU do?”In this case, the market will likely look for support at the level of the broken upper pivot “B.” If it does, DecisionBar will give us a warning signal, and if support holds, we will end the trade. If it drops below level “B,” we will look for the market to drop to level “C.”
Here’s how the market evolved. As expected the market looked for support at level “B” and DecisionBar issued a warning signal. The signal is accompanied by a pop-up and audio alert in real time. Had the market moved above the high of the Bar where the warning signal was given, we would have exited the trade.
The market then dropped to support at the lower Pivot, “C,” at which point we have another decision to make. If support holds we will exit. If support doesn’t hold, we will stay in the trade.
The trading day is made up of a series of individual decisions just like these. Successful traders don’t try to guess what the market will do. Instead, the look at the possibilities and decide what they will do.
It is this CLARITY that allows successful trader to calmly pocket big gains and accept small losses, while the would-be trader is sweating bullets over each tick of the chart.
Please visit my website at:
and learn how my DecisionBar Trading software can add CLARITY to your trading.
I’m going to leave you with another quote.
Harry Truman, the 33rd President of the United States, was known to have little patience for B.S. His supporters used to yell, “Give’em hell Harry!” Commenting on this in his later years, Truman said, “I never did give anybody hell. I just told the truth and they thought it was hell.”
Good Trading,
Les Schwartz
President
DecisionBar Trading Software
P.S. In case you were wondering, overbought/oversold indicators only work in trading range markets. They give many false signal in a trend.
Moving averages only work in trending markets. They give many false signal in a trading range market.
DecisionBar Trading Software works in all markets. Please visit my website to learn more:
http://www.decisionbar.com
