Something what matters in trading

Time to get to work again. Great days in Amsterdam and big thanks for all friends there. Queens day was fast and furious and will be remembered for loong time. Now, back in Prague I am getting ready for upcoming trading sessions. Since my sleeping deficit was so huge I needed to rest for some time and I wasn’t able to trade fully. Tomorrow I will be watching only T3 strategy so no trading on VFI is expected and VFI can be expected during the morning session on Friday. Since I don’t have any trades to post I would like to speak about something what really matters in technical currency trading.

Everyone these days is talking about price action, volume, pa, blah, blah, blah. But do these people really know what that means? I use this word also very often but I think there can be found even better synonym = sentiment. I do not have anything against indicators except one thing – they can easily describe past but they have a lot of problems with future. And that’s the problem. People desperately want to trade the future but not the actual moment! Of course we all need targets, visions and predictions but if we focus too much on future we can become blind to the present. For that reason I find technical indicators too slow and not very reliable. On the other hand if 51% of the world (which is impossible since the flows aren’t based on indicators) is watching MACD indicator with the same settings then we can have a long term probability on our side but of course that would never happened. So the closest as we can get to this utopia might be through sentiment indicators which are:

• supports/resistances -> sentiment decision making
  
• moving averages
  
• speed of price in terms of time development

I know this has been discussed about billions times but unfortunately the things which are discussed so many times over and over again are the ones which are the hardest to follow. For the moving averages the best timeframe is hourly chart (same internationally for all time zones) with settings like (50; 100; 200).
We all know supports/resistances but sometimes it is not enough to just enter in once the level is broken. And that’s where previously mentioned sentiment comes in. Next time you are going to watch strong level move to one minute chart (with some good feed provider) and just watch the ticks vs. minute charts. Do it twice a week (1hour) for several months. After every session write down your observations and I can guarantee you that you will be able develop a new skill to your trading arsenal: sentiment decision making.
Third on my list is “speed of price in terms of time development”. This can be followed through candlesticks patterns but also through a simple observation of price in time. What I mean by the observation of price in time? It is the type of trade which is near some important level (either dynamic{MA} or static{S/R}) and near this level the price is developing slowly in one direction for longer period of time and then in one quick move is all the previous development absorbed in the opposite direction.

My conclusion is that no static approach is applicable from long term perspective and every trader should constantly extend the trading skills not by reading the books but by observing the markets, writing comments and testing the ideas which makes the most sense to him/her. Or do you think that the top notch hedge funds and banks are watching some RSI indicator which was developed in the 80’s? 😉