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Someone asked in the comments, if I add to my first unit and add a second risk unit, do I wait or look for a confirmation and you can see it. I don’t remember the damn video, but it was a video, a comment, and I wrote back, I really didn’t know. I don’t know really today what is a confirmation, because to me, I’m a price action trader. So the price kind of confirms. I don’t need an indicator to tell me something that I can already see in the price you see. So I am a pro trader who doesn’t use any indicators. I don’t use macd for stocks. I’m aware of relative strength for sure, but you can use anchored VWAP to kind of have an idea of where you’re getting in. But typically you should be able to see the trend when you look at the chart if you have to.
Downtime, there is no trend. And at that standpoint, it’s like, why are you putting the trade on? Do you like the action? So I’m not looking to make a couple hundred bucks a day. That’s not worth my time. So you might feel differently. So I don’t look for that emotional bandaid of indicators to kind of help me understand what I can already see in the price. I feel like confirmations, if your P&L is kind of tied to the market price, that’s really all you need to see. If you want to know where you might be able to add a second, third, or fourth or Nth risk unit, you can certainly use ATR that’s been backtested to show that adding at one half ATR is the optimum. You might find if you backtest, it’s different for you, but I tested it at the portfolio level across dozens of instruments at the same time, not one instrument at a time.
And I’ve been able to figure out that half ATR is the best spot. You could also wait for structure because if you’re looking, and I forgot who used the language, either Bill O’Neill or Wykoff, they talk about stage two trends and stuff. Sometimes in those stage two moves, they create little plateaus or some people call them bases because a lot of words for the same thing. You could actually wait in the stage two for something to base and then acquire more at that next breakout to the upside. Me, myself, I don’t like to trade inside of a trading range. To me, that by definition is a trading range is dead money it, it’s a period of time, a range of prices where neither buyer nor seller are in control. So I’ll stay with my original position

And kind of wait it out, but I’m not going to add, I’m not going to try to buy it support and sell it resistance for peanuts. That’s not what I’m doing it for. You might feel differently and want to try that. So test it out and see for yourself. It’s not my cup of tea. I would much rather have bigger positions over a larger move myself. I have very clear goals, and I think goals are important to help you understand the behavior that you take. If you don’t have a strong goal, how do you know what actions to take? Right? You might actually have too little risk. You might be offsetting your winners too soon. You might find that if you look at your goals, you actually need to take stuff home overnight over the weekend because mathematically, there’s no other way to do that.
Now, I don’t want to rehash stuff that I’ve already done, but if you want to go to Trader Mindset on the YouTube channel where you’re watching this, I think somewhere along the top you’ll see a live tab. If you click there, there’s a replay of a live stream that I did where I talked about having a financial goal. What do you need to make? And then if you look at the expected value of a trade, what do you make on average? When you do trade, you can get a rough idea of how many trades you would need to put on with that expected value in order to hit your financial goal. So you might find that helpful, but to me, I learned to feel all my feelings and to appreciate what they’re trying to communicate with me. Most of them were kind of all surrounding and kind of tied into the uncertainty that we need to be with.
I don’t want to say live in because that makes you sound powerless and you’re much more powerful than you think. So the uncertainty is will the name continue to move up? And if not, I have my protective stop in. So it’s like, oh, okay, I’m okay with that. I’m uncertainty. If it goes up, I’ll make a little bit more money. I can adjust my stop hire. If it comes back on me, I’ll get knocked out. But that’s the nature of trading. So I got really, really comfortable with that, and that freed me up energy wise because I didn’t have to sit there and worry. So I knew I was going to put on tens of thousands of trades over the course of my career. So I was like, what do I care about? Any one particular trade? I’m not going to go parading around the office or calling Victor and saying, I just nailed this trade.
That’s great. What are you 14? I don’t need that feedback mechanism. I don’t need him to feel proud of me. I’m doing this for me. So you might find something similar. And if you’ve got several indicators or overlays on your chart, whether it’s, and I don’t even want to get into the names, it might sound like I’m picking on people and I’m not. Try taking some of those off. Just look at the price and really investigate how comfortable are you with dealing with the uncertainty that we need to deal with when we trade? It doesn’t matter whether you’re a scalper or whether you’re a position trader or an investor for that matter. What do you actually think it is? What’s the emotional need? What is your emotional need for the indicator? Because what you think it might be telling you, how do you know? Like someone said to you, one-on-one is two, right?
But can you actually prove it, which is a little bit more sophisticated, and I’m not trying to be a pain in the ass, but most people take these assumptions that certain indicators have certain value, but if you’ve never challenged that, how do you know? You see what I’m saying? Now you’re just saying you can’t time the market. You got to buy and hold. You’re just parroting shit that other people said, and for some reason you believe it’s true. I’m not that kind of guy. I want proof. And it’s not because I don’t trust, it’s because I want to understand the nature of the things that I’m involved with because they in and of themselves will be a feedback mechanism for me, and that could be very, very valuable information. So if there is efficacy on a certain indicator, I want to know under what conditions that efficacy is going to show up.
Because if it’s only once in a blue moon that it’s got to be freaking leap year for it to matter to me. So in that case, it’s a useless indicator. You see what I’m saying? So I wanted to know how any of those indicators going to be valuable to me given my emotional constitution and my trading style. So I found out like ADX – “oh, ADX, it’s been over 70 now for a long time.” Well, that doesn’t mean it’s overbought. You’re not going to see a strong trend that doesn’t have a damn 70 ADX reading. I can see that it’s a strong trend when I observe the chart. I don’t need ADX to tell me because it’s not a trading signal. It’s like heartbeat, okay, you just had a bunch of sugar in salt, so your blood pressure’s a little high. What’d you expect it to be? So that’s the way I look at it. I don’t look at any of them as a panacea. And I would encourage you, if you’re looking at these technical indicators that you’re overlaying your charts on, start to peel them off and build more confidence in yourself and your own ability to read the chart. You might be surprised on how powerful you become.

The post Why a pro trader uses zero indicators first appeared on MartinKronicle.

The post Why a pro trader uses zero indicators appeared first on MartinKronicle.