The Price Action Trader

Six Elements to Trading Success When it comes to trading, other than a trader's internal makeup, there are 6 key quantitative factors you should be analyzing and closely tracking when determining the viability of a system. These metrics act as a barometer of whether you are succeeding or not.  The six elements I learnt after reading the book, Trade Your Way to Financial Freedom taught by the late Dr. Van Tharp in his book Trade your way to financial freedom are outlined as follows: Reliability - What percentage of time do you make money? A fact about trading is that you can have a win rate of 40% and still make money in the long run. The viability of a method is a combination of payoff and probability, of course, also considering how often you trade. A higher winning rate will sustainably boost your profits but this must be supported by a higher R per winning trade. The relative size of profits compared to losses when traded at the smallest possible level. You want your losses to...

 A classic chart pattern runs the risk of failure when unfavourably  located within the bigger picture                                                       Strong signs of contrarian aggression within a correction should instill suspicion if positioned in  line with  the break. Potential companions may view the correction with less appetite. When is such a position it is best to embrace a better safe than sorry principle. Overrule the instinct of flight and judge the situation purely on technical grounds.  The first pullback to the moving average after a breakout is typically the strongest to trade, but it has to be supported by additional confluence. If you are regularly caught in ventures that are okay on the onset yet rather questionable in hindsight, chances are your perception of odds is affected by your desire to trade. W...

Missing a true opportunity due to lack of vigilance, persistence, and preparation can be as harmful to your full cycle P&L as taking unnecessary large losses. Automaticity, coupled with experience is the difference between master and novice. Get there through practice, contemplation, and absorption of patterns. Invest in proper form and technique. Having a learned discipline, fluidity, and focus in one area, the mind then has a foundation for advancing to more challenging areas with a sense of structural familiarity. Mounting danger signs should be noted and heeded and risk control for the sake of avoiding severe losses is half the battle if not two-thirds of it. It’s rarely a mysterious technique that drives us to the top, but rather a profound mastery of what may well be a basic skill set. Profitability over an extended cycle will be the cumulative result of good decisions made and bad decisions avoided on a compound basis over time. The more that form and technique are perfecte...