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When Random price action appears confusing trader, it reveals a control
point in time which is a sign that the outside interference has interrupted the
flow of data this is reflected within the price action.
You can embrace the apparent random behavior and use it to your
advantage in making lower risk trades or you can ignore it and concentrate on
continuously developing your money management skills. I am not prepared to risk
my money at a level that my money management plan indicates. So I embarked on a
long and very slow hunt to develop tools that can scan and pinpoint the new
parameter that emerge within the confused price action.
As with all systems nothing is quite certain without confluence and no
trader should take a chance without it.
Putting it bluntly retail traders are just cannon fodder for the so
called smart money that operates outside the market. I don’t know who exactly
is responsible but there is a controlling hand or computer program that steers
the market in a systematic way that has an underlying consistency, they are
using both random and predictable inputs. This combination is certainly aimed
at confusing traders and generation brokerage. It is a human condition to seek
out the order in what you are observing and if you see order then you will
participate as a trader in the market. I think that some traders ignore the
obvious confusion displayed on the chart as their focus is heavily geared to
marking big dollars. Hence they lose their capital and are out of the
game.
The market is controlled by external interference; it’s as simple as
that. They leave there mark on the market so watch out for the signs, if you
have a data glitch or a disconnect or something out of the ordinary occur, it’s
more often a result of interference so beware and review your position before
it’s too late.
I see trading as a numbers game with a different set of rules from any
other I have seen.
What makes it so difficult in developing a trading system that works
consistently is the fact that the market moves that you see are, at the same
time being described by the numerical data that it produces in each time frame.
You cannot measure the market on a chart correctly while at the same
time the market is measuring and describing its position within the whole.
Timing is equally important to price and direction of the markets movement if
you are to avoid being stopped out of your trade. This is one of the biggest
problems that most traders face as they don’t know how to time their entry. So
be patient and wait wait wait if you can you will increase your odds of risking
less and making more profit. Hence if you are trading a 4 hour chart then you
will need to monitor it for least 8 hours a day or longer in order to get a
well timed trade.
I trade off charts however I don’t place much importance to the
previous candles as I’m mainly focused on the market as a whole and the
position data that is generated. It’s the equivalent to price action however it
the numerical data side of the game but with the added advantage of confluence
from the same data package.
What is random behavior to one person may in fact not appear to be
random to someone else.
If is appears to occur without method and you cannot relate any of your
indicators to it then you assume it is random and that every other trade sees
it as random as well. This is certainly not the case as far as I am concerned. Most
would call what they see as random behavior and rightly so, however if they
found the external source that was supplying this data then it would of course
be re defined as predictable and part of the market mythology.
As I don’t know who EXACTLY who is steering the market’s direction
using both random and predictable imputes I will call him the “ONE “
Let’s say that the one is responsible for setting the direction of the
market over the longer TFs which filter down through all shorter time frames.
Hence in the shorter time frames less data is needed in order to determine a
low or high. In addition it is more important to check the time more often in
the shorter time frames to see if the market has topped or bottomed out, if so
this would be a signal that the one has appeared in a higher TF perhaps the
daily or 4 hr chart, and a clear signal that a move is on.
The one is in fact represented by a SINGLE candle on the longer term chart;
this is the Candle that we all need to be able to recognize. A good trader need
to be able to recognize the ONE or in his words the Smart Money.
My next article will explain and reveal how to unlock the meaning
behind random market behavior.
