Hey folks. Happy Friday. Thanks for being here. I want to finish the question with something that kind of ties into yesterday for folks who might even be starting out, and that is, in your experience, is it more consistent to have one black and white entry around your area of value? I think S N R, which might mean support and resistance breakouts moving average, or are having multiple entries around those same areas of value, the more sustainable route? Well, I don’t know. I honestly don’t know. If I was starting all over again, I would probably go back and do what I had already done, which is to pick one method, one ethos, one ideology, and stick with it and gather the data, right? Because if you start putting several months together where you’ve won, but you’ve used 45 different entries, very difficult to look backwards and then say, okay, well, which is it?
You might also be able to say, it doesn’t matter because I have good instincts and I’ve used the right entry criteria for the particular trade at hand. That could be the case too. The truth is, at three months there’s not enough data. Even though emotionally you want that to mean something, it doesn’t. No one’s going to give you an allocation based on three months of track record. So what I would try to do at the same time, I’m speaking out of both sides of my mouth where I’m saying experiment, right? You have to figure out for yourself what you think the right amount of time or the right number of instances are for you to have data that’s statistically significant based on what it is you’re trying to do. I don’t know what that number is because I don’t have enough data here. I don’t have enough understanding whether you trade support and resistance or breakouts or moving averages.
You have to see what the trade offs of all of those are, right? If you’re looking at breakouts, sometimes they break out and they come back. Some people call those incorrectly false breakouts. I don’t know how it could be a false breakout if it actually broke, broke out, because there’s nothing about breakout that says it has to keep coming in order, keep going in that direction in order it to be a legitimate breakout. The breakout to a new high is a breakout. Whether it fails or not is something different. Moving averages can be good, but you have to sit there and wait for them to cross, and sometimes the price on the chart can move a lot faster than the moving average can demonstrate. When you look at most likely closing prices, which go into the moving averages, so you have to have a different emotional makeup to trade the moving average versus looking at straight breakouts. Both can work, but it really depends on who you are as a person. You can get a lot done with support and resistance. Doesn’t matter. Capitalization doesn’t matter whether you’re trading stocks or futures. I know people that trade for small potatoes in between support and resistance. Another style. You really have to see what feels good, what can you do no matter what the circumstances, because then you’ll know that that might be at least
In the short run, something for you to lean on to try which one feels the best. It’s awfully difficult when you know there’s, because there’s people who like to fade moves, which I don’t like to do because you really have to have good timing to understand whether the trend is over in order for you to go the other way. I don’t advocate trading against a trend for any particular asked class in any timeframe. I don’t like the idea of people trying to think that they’re smarter than the market or the participants they’re in because they’re typically not. There are people who can look and see and define what reversals are and see what market tops are, but in my experience, even if those people have made millions, the people who actually traded the directional trend up to the top are the people who are making the real money. So you can make a lot of money. You might think a million dollars is a lot of money. It’s up to you. It could be cultural, it could be your upbringing and where you’re from, but I wouldn’t try to get cute with that because oftentimes those trends can continue and you find yourself short in an upward moving market, you’re going to lose a lot of money quickly. Doesn’t matter if you’re trading minis or micros.
So this is from Jarvis, Jarvis Price, 8, 7, 7, 7, and it was again, a comment on the difference between trading and stocks and commodities. You really have to experiment, and I would start with one and whichever one feels the best, and then kind of go from there. Otherwise, I don’t have enough data to make a suggestion that says, definitively, this is what you should do and kind of go with it. I know eventually you’re going to settle on one thing, and that thing will both be profitable, right, from an expected value standpoint, but it’s also going to feel good to the point where it’s largely effortless for you to pull off both tactically and emotionally. All right, short episode, because yesterday I think I kind of ran a little bit long, but sometimes the questions require me to answer it from several angles, and there’s just no way to tell because the audience is so rich and diverse and pluralistic that it’s difficult to say that there’s any one definitive right answer. So sorry about that. Anyway, I hope you had a great week and you have fun plans for the weekend. Take some time off, get away from the screen. The things that you can learn about trading are oftentimes done when you’re out on a hike or out at the beach, and I hope you have a great weekend, and I look forward to seeing you Monday. Take care.
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