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  1. #1
    Veteran Member Ammeo's Avatar

    Why Common Sense is more important than any indicator.. !!!

    Its something told again and again by experienced traders and investors as why common sense should always be preferred over any strategy and indicators....
    You just take a bigger risk because u think it can cover all your previous losses and in the end have even bigger loss on it and it ruins everything for u or u jump into something just because u heard someone else bought or sold it ...this is never gonna work

  2. #2
    Junior Member

    Indeed... !!!

    Quote Originally Posted by Ammeo View Post
    Its something told again and again by experienced traders and investors as why common sense should always be preferred over any strategy and indicators....
    You just take a bigger risk because u think it can cover all your previous losses and in the end have even bigger loss on it and it ruins everything for u or u jump into something just because u heard someone else bought or sold it ...this is never gonna work
    I tend to agree with this. At least this summer I used common sense. All my trading has been based on that. I was looking at pricing, volatility swings, I didn't even need indicators. That is because, when trading real binaries, the entire trading war is with their assumptions reflected in pricing, rather than nailing the market itself. Recently I started to use MT4 charts with Bollinger Bands, but that's only for viewing (because I can't see both DAX & FTSE at the same time with Dealbook Web), not for deciding. The economic calendar is very important, as it dictates about some of the critical moments of the day, but common sense is primary.

    Common sense made my first edge, and it helped me reshape my edge. If I get touched in 14 out of 15 trades, then it's certainly that the market historical vola is higher, and given the size of the loss, the pricing is too bad and requires another approach. There is no indicator to tell that. The market is spiking out of the Bollinger Band, it can continue on that, or it can turn back. Indicator doesn't say a thing : I made mistakes and traded against the Bollinger Band's evidences, because the price was maximal and time to expiry was minimum (last second to push the button). Of course it was a mistake: but trading at small prices causes horrible losses. The tick chart and price swings tell about the market mood and the levels when to take a trade, but the final decision when to push the button is based on common sense. This is why, while working to repair my edge, I was feeling that each of the bad trades was bad even before pushing the button - because the price was maximum and time to expiry was minimum, though I knew the price, even maximal, is quite small given the volatility and I will experience a new loss. (To explain this paradox: the broker grays out the buy price and leaves only the sell quote signaling me that it doesn't want to pay more, thus forcing me to act). When this happened, my edge was gone. My trading was sinking into gambling territory and I had no idea how to repair it for weeks. Something inside me told me it was a wrong approach, and all I could do was stay away from possible trades - a decision that was pretty much correct - but at the same time I knew that shying away from trading is not gonna make the buck. In the end, after horrible weeks of equity rollercoaster I discovered that there were some things I was doing correct, especially in the summer, when I was recovering fast, but these situations are very rare - from none to 2-3 on a trading day. I managed to kill my compulsive desire to trade when the conditions seemed right, but success probabilities were too small, even for the small size of the possible loss, and I've discovered that my trading has improved. Now I see good prices to trade and I feel ho desire to trade unless all conditions are met. One trade a day, even one trade in three days, that makes a buck is still better than going down 200 euros in a day and recovering 150, with the hope that tomorrow I lose about 100 and make 150. Now I'm doing way better, and if I can do it in the current conditions that means it's very good, because it couldn't be worse in terms of pricing...
    Last edited by fxeconomist; 12-12-2012 at 07:54 AM.

  3. #3
    Junior Member allanrock's Avatar
    I also agree with Ammeo. After long hard work, a lot of tests, trials and errors I found that the best way for me personally to trade the market is not by using indicators and a fancy technical analyzes but to focus directly on the price action. It is also very important to look and find the support and resistance levels. When ready with that I closely watch the market behaviour when the price comes close to these levels. It will give me the most important information on what is going to happen in the near future.

  4. #4
    Veteran Member Ammeo's Avatar
    Quote Originally Posted by fxeconomist View Post
    I tend to agree with this. At least this summer I used common sense. All my trading has been based on that. I was looking at pricing, volatility swings, I didn't even need indicators. That is because, when trading real binaries, the entire trading war is with their assumptions reflected in pricing, rather than nailing the market itself. Recently I started to use MT4 charts with Bollinger Bands, but that's only for viewing (because I can't see both DAX & FTSE at the same time with Dealbook Web), not for deciding. The economic calendar is very important, as it dictates about some of the critical moments of the day, but common sense is primary.

    Common sense made my first edge, and it helped me reshape my edge. If I get touched in 14 out of 15 trades, then it's certainly that the market historical vola is higher, and given the size of the loss, the pricing is too bad and requires another approach. There is no indicator to tell that. The market is spiking out of the Bollinger Band, it can continue on that, or it can turn back. Indicator doesn't say a thing : I made mistakes and traded against the Bollinger Band's evidences, because the price was maximal and time to expiry was minimum (last second to push the button). Of course it was a mistake: but trading at small prices causes horrible losses. The tick chart and price swings tell about the market mood and the levels when to take a trade, but the final decision when to push the button is based on common sense. This is why, while working to repair my edge, I was feeling that each of the bad trades was bad even before pushing the button - because the price was maximum and time to expiry was minimum, though I knew the price, even maximal, is quite small given the volatility and I will experience a new loss. (To explain this paradox: the broker grays out the buy price and leaves only the sell quote signaling me that it doesn't want to pay more, thus forcing me to act). When this happened, my edge was gone. My trading was sinking into gambling territory and I had no idea how to repair it for weeks. Something inside me told me it was a wrong approach, and all I could do was stay away from possible trades - a decision that was pretty much correct - but at the same time I knew that shying away from trading is not gonna make the buck. In the end, after horrible weeks of equity rollercoaster I discovered that there were some things I was doing correct, especially in the summer, when I was recovering fast, but these situations are very rare - from none to 2-3 on a trading day. I managed to kill my compulsive desire to trade when the conditions seemed right, but success probabilities were too small, even for the small size of the possible loss, and I've discovered that my trading has improved. Now I see good prices to trade and I feel ho desire to trade unless all conditions are met. One trade a day, even one trade in three days, that makes a buck is still better than going down 200 euros in a day and recovering 150, with the hope that tomorrow I lose about 100 and make 150. Now I'm doing way better, and if I can do it in the current conditions that means it's very good, because it couldn't be worse in terms of pricing...
    Wow..u seem to have gone through many phases of trading experiences....It is a hard road indeed ,i sometimes call it a fantasy land and all the traders or wanna traders living in this fantasy...i sometimes wonder how much it is possible to be living happily and self sustained through his/her trading....

  5. #5
    Veteran Member Ammeo's Avatar
    Quote Originally Posted by allanrock View Post
    I also agree with Ammeo. After long hard work, a lot of tests, trials and errors I found that the best way for me personally to trade the market is not by using indicators and a fancy technical analyzes but to focus directly on the price action. It is also very important to look and find the support and resistance levels. When ready with that I closely watch the market behaviour when the price comes close to these levels. It will give me the most important information on what is going to happen in the near future.
    Yes common sense + fundamental technical analysis are enough for trading forex and binaries imo

  6. #6
    Solid Member
    common sense is also important in binary trading. actually its a term of sentimental analysis. You have to be aware of market traders sentiment. Never goes against market Trend.

  7. #7
    Legendry Member willyw's Avatar
    Quote Originally Posted by crimson69 View Post
    common sense is also important in binary trading. actually its a term of sentimental analysis. You have to be aware of market traders sentiment. Never goes against market Trend.
    Yes correct, the market trend is our indicator and our guide. Always follow the trend.

  8. #8
    Veteran Member uj.forex's Avatar
    ONE IMPORTANT THING....

    before entering the market, just think and imagine that you are standing on a trading floor of a stock exchange and considering all the things that a common trader does (fundamentals, sentiment, overall outlook, and technicals)..... just dont see the charts.... think outside the box too, because most moves that happen in the market are assumptive

  9. #9
    Rookie Member
    I have to agree, it is best to build up accounts slowly and consistantly than fast and inconsistantly, because you have to ask yourself, whats going to be better for you in the long term?..I think so long as you as a trader don't take your losses personally and you acknowledge that nobody can be correct 100% of the time and you also stick to the same methodology in trading and follow a system/technique/strategy based on analysis not emotion then you're on your way to becoming a successful trader, assuming whatever analysis you're carrying out puts the odds in your favour of course, which I believe can be done.

  10. #10
    Senior Member Deanfx's Avatar
    Trading slowly is the only way to make profits in the long term frame. It looks very difficult and rare to have a streak of 5 or more consecutive losing trades, but if you trade more it actually is not that rare event. If your risk is let say 10% of your account balance that mean you will wipe out more than 50% of your account in such a streak, and than you will need 100% to recover from these losses. If you follow more strict money management let say 2% per trade such a streak with 5 losses will result in only 10% drawdown which is really not that much.

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