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This thread is only serious, if you are talking about pattern recognition failure of the human brain. As an alternative to your random lines I can just create a chart from a truly random price series, and every seasoned analyst will show you trendlines and areas of support and resistance on the chart.
Our brain reduces and organizes information to memorize it. It is not the real picture which is stored, but a projection. Every projection shows some regularities which are misinterpreted by our brains as being non-random.
However, building a strategy off random lines is child's play and a waste of time.
Yeah the point is not creating a strategy around a random chart.
The point is how we react or perceive the random lines. If we remove the word random, and replace it with some fancy name, a lot of people would be wanting to know where they can download this new indicator.
At least for me -- and maybe I am the only one -- it makes it even more clear that the emphasis is less about "why" price is doing something, and more about simply "what" price is doing. The why is so unimportant, whether it be a pivot or a random line, a CCI indicator or MACD, all of that makes no difference because those things are no better than random.
So if the reason "why" to enter a trade is almost random, then all the importance is on what you do after the trade. I had reached similar conclusions well before creating this thread. And maybe I am imposing those prior conclusions on the thread itself, since no one is really agreeing with me.
Mike regarding this aspect, how do you handle a trade that gives you just enough ticks and then reverse giving you the choice to exit at break even ? Do you exit at break even or do you change your bias and reverse your position ? see example. This is a good case to illustrate the importance of what we do once in a trade. This is a fine line that decides if we make some profit or not.
You can't always be right. When you enter a trade you should know your exit point ahead of time, the point in which you are wrong about the trade. I don't think it has too much to do with breakeven stuff (being right and wrong), the breakeven discussion is more of a money management tactic, and one I don't use.
first that trade was a horrible trade you entered on a pullback against the trend i would never suggest anyone to take a trade like as its putting you into a contertrend trade late your asking for a losing trade when you do that,your 2nd entry should have been your trade not the first trade...sharky
We all need a 'why' to enter. It is a bit worrying that a lot ( but I dont believe all) of the whys ( lines, indicators changing color etc) are no better than random given how much time we sweat over them lol. But the thing with a why is that it gives us some confidence to enter and to manage the trade according to our rules so it is very important subjectively even if it doesnt stand up to objective scrutiny.
I think you misread me. I was not talking or even referring to being right or wrong. My comment pointed out that the line is fine between a profitable or losing trade and what separates both is how you react to a given situation. In other words, that's what you do in a timely fashion that determines your results. For the same situation or price action two traders could get two different results even if they enter at the same place and in the same direction.