I find it fascinating chatting with new traders in this industry. Typically when they come to me they've moved beyond the Holy Grail indicator and systems dream and have come to recognise that it's time to develop some skill instead. Skill in real-time reading of price action and market sentiment. What amazes me though, is the number that still hold some belief that once they learn price action, then the game will be easy.
Here's a reality check. It doesn't get easy. You just get better!
Sure, there are days when everything sets up perfectly and you're dancing in perfect step with the market.
But there are also days when you're completely out of sync and just tripping over your own feet.
And then there are the majority of days which fit somewhere in-between these two extremes, where you just do the best you can despite your imperfect decision making.
Let's look at one of these days. A day when I struggled to maintain confidence in my read of the market; and a day in which I struggled to execute well.
The result was a good profit (considering my poor performance). But it was messy. None of the trades were held for any significant distance, despite a nice trend.
The session was a recent FOMC day. I don't trade post-FOMC. It's 5am. Seriously… there's a limit to how late I can stay up.
I do trade the market prior to the FOMC though… but this is carried out with CAUTION.
My expectation for a session leading up to a significant news event is for a higher probability of a narrow range quiet market.
If that is what the market provides, then I have no interest in trading. Hindsight may well show there was opportunity available at the edge of the range structure, but I'd rather sit on the sidelines and survive to trade another day. A good result would be quick recognition of the narrow range environment, and NO trades.
However, if the market can show some directional conviction, then I'll trade this for as long as the directional move lasts and for as long as I have a good feel for the bias. And more often than not with reduced position size.
Here's the 5 minute chart (Higher Timeframe chart) which shows the session open through till just after midday (which is all I trade).
Let's examine the 1 minute Trading Timeframe trend within the first hour (and just beyond) and see how it was managed.