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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: Robert Graham who wrote (22438)	3/25/2000 10:03:00 AM
From: Robert Graham	Read Replies (2) of 42787

A couple additional quick comments for now. My formula for success in trading: setups + trade management (including trade selection) + money management (including initial stop loss placement and management) + trader psychology = success over a series of trades. I stress that success is over a series of trades, for at a given starting point, there can be two or more losing trades before a successful trade is hit. After all, the trader is trading probabilities. There is a difference between prediction and anticipation by the trader in this context of what the market is looking to do next. As you move down the above list, these items become more important for success with day trading, where the setup traded is of least importance, and trader psychology represents the most part of a traders success. This is the management of the psychology of the trader themselves. A trader with this recipie can take an approach that yields only 30% winners and still be profitable. Note where fundamentals do not even enter the picture. My formula for understanding the market: money flow + technicals + sentiment = price movement. I have talked amply about this in past posts a while back. This relationship is self-evident to me. My formula for trade selection: market (how it is trading) + selection of time frame + setup (for the current market) + price action (to determine entry and initial risk) = good selection of a trade. Also size of the setup as it compares to how slow the market is trading is important to help determine the time frame it should be traded in and the type of entry to be used. And proportionality of the setup helps to determine if a setup is nearly complete and about ready to trigger. Talking about size and proportionality, this is essentially how price compares with time. This is a Gann type of observation, along with matching the size of setup to the speed the market is trading. I found Gann to have made a key observation of the markets when he related price to time. How one takes advantage of this relationship is up to the trader. I use this more on an intuitive level. It helps me determine what setups will resolve well enough for trading purposes with some that likely will not resolve at all, and even if a top or bottom will hold and not be challenged soon after it has been put in. I think much can be learned from Gann's market observations, even though as mentioned earlier I am skeptical of there being a mathematical treatment of this topic. But I must say sometimes the market does behave with a very explicit structure and looks to me like I am observing the moving gears in a clock. Bob Graham

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