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Direct MessagesDate/Time: Thu, 16 May 2024 04:51:22 +0000
Post From: Custom Market Profile Chart
| [2018-08-07 05:55:24] |
| DogBone01 - Posts: 14 |
|
WT, thank you for creating it. I'm trying to get it as close to my WindoTrader display as possible; it's getter there. I am grateful you spent the time effort and energy to make it and posted it publicly. Regarding not using break out coloring (or any other coloring/indicator/etc), it's for 2 main reasons, the most important is psychological. Our minds are easily duped into fixating on visual objects, especially when we focus on them. Even displaying lines/zones on a chart should be carefully considered and kept to a minimum. Anything displayed in front of us has the ability to cause our minds to solely focus on that one data point, and stop considering all other relevant information, including the current context of the market. This takes our minds away from reading the order flow in the market, causing a long list of errors in decision making, bias, and judgment (from Daniel Kahneman's lifelong work "Thinking, Fast & Slow"). For example, if we display break out coloring, and the market starts to breakout above a horizontal reference, the chart will change the color appropriately and our minds will get fixated on that one scenario, causing us to only consider taking a long break out trade. This will work until the market prints a look above and fail, where a fade trade now has higher odds of working. Once the coloring has changed, our minds will not consider the opposite trade (look above and fail) and will cause us to stay solely focused on the upside breakout trade. This is where many traders can get into trouble, allowing the endowment effect to take control of their trading, trying over and over to take another long breakout trade, and they will continue to do so as long as their chart's breakout trade color is being displayed. This entire sequence of events happens without the trader ever considering it could be a look above and fail, due to that one data point of a color that changed on their chart. I believe the key to becoming consistently profitable in the markets is to fist study how the markets work and move, and then study how our minds work and learn how to take advantage of that information. Professional traders are killers, and they understand how our minds work, and will take advantage of it every chance they get. The second reason is due to simplicity and what I call the "process of subtraction". The more we remove from our charts, the more we are able to read the context of the market and just react to what we are seeing. For example, if we think a long breakout trade above a horizontal reference has higher odds of working, we take that trade when it presents itself, then get back to reading the order flow of the market, monitoring for continuation as Jim Dalton teaches. Then if the market prints an excess high with a rapid move back down, we immediately flatten our position, take a step back, and consider if the odds have changed from a breakout trade to a look above and fail. If we believe the odds are now higher for a look above and fail trade, we immediately execute that fade trade, then get back to reading the order flow of the market, monitoring for continuation. Forgive me if this seems confusing. It's hard to effectively write this type of stuff. Trade 'em well, DogBone01 |