The entire act of trading is simple. Really simple. Really, really simple.
You need the learned skills to identify probable market direction more often than not.
You need the learned skills to identify key price zones that are turning points on a chart.
You need the learned skills to enter, manage risk and make profit decisions from those key price zones on a chart.
Those are the simple acts of trading. If you master those, you win. If you overthink the process and try to complicate things like all humans always do, you will lose. Unless you figure out soon enough how simple trading really is.
It Gets Complicated
Another inane characteristic of humans is the belief that simple = easy. After all, if it’s that simple, it must be easy. Right?
No. Wrong. The complications of trading exist in the mind. During those simple acts of trading repeated over and over again, a lot of things will naturally happen that can drive traders to the point of near insanity.
Sometimes a trade entry attempt will go completely unfilled. Even when the market traded right to the exact tick your order to fill was parked at.
Sometimes a trade entry attempt will only be partially filled from a multiple contracts order.
Sometimes a trade entry attempt will be filled, the initial stoploss order to limit risk will be hit and trade taken out, then price will soon if not immediately reverse an head back towards what was the intended (and profitable) direction.
Sometimes you will be able to re-enter said trade a second time, and sometimes not. Sometimes a second attempt will get filled and summarily stopped out for loss. Sometimes a third and even fourth attempt at the same location will result in losses, too.
Sometimes a trade entry attempt will get filled as desired, market price will advance in your favor to some degree and then stall out in a space between your entry point and profit objective in mind. If you have no profit objectives at all that is fine, sometimes price will simply stall out a slight distance in favor from your entry and it will just sit there for awhile.
Sometimes a trade will fill, advance in favor to some degree and sharply return right back to your initial entry zone. Or further back thru from there.
Sometimes the market, any market, any symbol will make large price moves and never issue a trade-entry signal at all. Doesn’t matter whose or what “system” you use… all will experience blind spots at times during abrupt, large-range price moves.
Any or all of those realities in trading, and more, will soon send aspiring traders down many sideways paths in search of solutions when in fact there are none. It takes a long time to learn, maybe years (and in many cases never at all) before a trader realizes that all those realities in this profession cannot be changed.
Traders immediately go to work back-testing and tweaking and changing their “rules” to incorporate different end results for various random trade instances that just missed fills, just hit stops before working as expected, just missed profit targets before reversing. In the past I have wasted thousands of hours doing exactly that. As have literally millions of other traders before my time, during my time, and in time thru the future until markets and trading cease to exist.
But in the end you realize none of that can ever work, because you cannot curve-fit forward results into the future thru every variable outcome of each single trade sequence at random. Much as you naturally want to, try as you might, you will fail. Because curve-fitting forward results in real time is literally impossible.
You become adept at reading price direction and identifying pivotal price zones on a chart. Then you develop a sequence of trade entry – stoploss use – profit exit decisions. Then you apply that personalized “system” repeatedly thru days, weeks and months ahead.
That’s all, and that is enough. All the variable potential outcomes listed earlier, and more, cannot be eliminated or avoided or cured. You take your trades, they unfold and work out however they do, and you take the next trades. Whatever happens for the entire day, days or week is how the uncontrollable outcome of each single trade all adds up.
You can control your ability to identify probable trend direction. You can learn to identify key price-turn zones on any chart. You can learn to create your own system of trades execution applied in direction of trend at those key price zones. And that, my fellow trader, is everything you can control. Anything else is nothing more than the uncontrollable randomness of your chosen market(s).
There is your simplified truth for the weekend. You can embrace it, dismiss it or eschew it but no matter what, you must accept it in time because the truth is eternal, it can never be changed.
For more daily updates from Austin, visit his blog at Coiled Markets.