Here's how MightyOne made me a profitable trader

[john.bujak]

I have never started a topic thread on Kreslik before. I have always kind of hung out in the background, learning what I could from espip, dragon33, TRO, and MO. Ultimately, it was MO's technique of managing space that made me profitable. In this thread, I am going to present "my" trading method based on MO's teachings.

A long time ago, MO made a list of the ideas that guide his trading. Since my method is really MO's method, I thought it would be useful to list those ideas.

A few caveats before I continue: I am not professing to be an expert on MO's trading method. I also am not speaking for MO in this thread. These are reiterations of MO's teachings from the past (as I understand them) that made me a profitable trader. MO's ideas and trading style may have changed since I learned his methods. What I am trying to say is: This is not the definitive guide to how MO trades. If you want to learn from the master, MO still posts on this forum. Seek him out and ask him directly.

MO's trading ideas:

1. Body in the direction of profit, wick in the direction of loss; if price is closing higher than something then it is not going lower.

2. S/R is a line that price may cross as long as it is home in time for dinner.

3. There is only ONE highest high or lowest low & price will move a hundred or hundreds of pips from one daily or greater extreme to the other. If this is so, then what is stopping you from making hundreds of pips?

4. A zero-line is the idea that if you can see loss then you can see profit.

5. Anything beyond a scalp and you are waiting for a range expansion (time and/or price); since this is statistical, the focus must shift from candles to a gamble that price will indeed expand to completion in the desired direction.

6. In order of importance: space, value, pips. Space contains initial risk. Value is position sizing, and a pip is only as valuable as space + value.

Digest this initial post. The concepts are important. You may not understand them now, but, like me, you will have an "ah-hah" moment when all of these concepts make sense. When they do, you will have the key to profitability.

[MightyOne]

You are profitable by your own strength and courage.

I do appreciate your kind words though


The top 3 things that make you profitable are:
1. position sizing
2. stacking
3. money management

If you can do those three things that it is almost impossible to fail.

[john.bujak]

MightyOne

You honor me with your presence on this thread. I cannot thank you enough for your selfless contribution to the success of others.

[john.bujak]

ENTRIES:

Let's continue with a discussion of market entry. In my opinion, most traders place way too much importance on entry technique. I have come to accept TRO's maxims on trading, specifically (and I am paraphrasing here): (1) trading is guessing; (2) the only thing a trader can control is how much he potentially loses on a trade; (2) whether or not you make money on a trade has nothing to do with the reason you entered the market.

MO encouraged entries based upon an idea (a guess) of where the market might go next. He had some general principles:

1. You must trade away from a long term pointy place.

The ultimate goal is to trade larger time frames. In order to survive market swings it is important to place your stop loss beyond a long term change of market direction. Almost always, these changes of direction are marked with a volume/exhaustion spike. Check your favorite currency pair. Open up a 4 hour or daily chart. Look at how many changes in market direction occur after a big spike evidenced by a big wick on the higher time frame candle.

2. You must add to your position in the direction of profit but never risk more than your initial risk on the trade.

This may not make sense initially, but you can accomplish this goal by using MO's method of managing space. I will write a lot more about this later as it is the main key (in my opinion) to becoming a profitable trader. You need to get used to adding to your position size every time you move your stop in the direction of profit. If you do this, each additional pip gained will be worth more. By continuing to add to your position each time you move your stop in the direction of profit, your pips become more and more valuable over time. In this way, you can increase the profit potential of your trades without increasing your initial risk.

MO expressed that a person should add complexity to his/her trading style in 8 years to NEVER. He recommended only two charting styles to the novice trader: (a) Heiken-Ashi, and (b) line chart through price bars. He encouraged traders to forget about Japanese candlesticks and drawing multiple lines all over their charts. The only thing you want to know is if price is going up, closing above "something" or going down, closing below "something." The "something" referred to was an important support/resistance level.

I am quickly realizing that trying to communicate the important concepts related to my trading style is going to take a lot of time. Before going further, I am going to take some time to organize the presentation of information. I may need to break it down into smaller pieces with some illustrative examples in order to help others make sense of what I am trying to impart.

[prochargedmopar]

Thankyou.
Good stuff.

#5 from your first post is a killer to put into practice.

May be the most important aspect though.
I don't know as I'm not yet profitable.

[john.bujak]

I learned last night that my father is seriously ill. I am going to travel in order to assist with his care and to be there for my family during this difficult time. I will need to take a hiatus from the boards until the condition is resolved. I wish everyone much success in my absence. I will check in upon my return.

[MightyOne]

I learned last night that my father is seriously ill. I am going to travel in order to assist with his care and to be there for my family during this difficult time. I will need to take a hiatus from the boards until the condition is resolved. I wish everyone much success in my absence. I will check in upon my return.

I will pray for his recovery.

[elkin.fernandez]

We, in our church, are praying for your father recovery.

All that you need to trade is a horizontal line but trading is more than a horizontal line.

You need:
1. an idea and a plan to execute that idea
2. proper position sizing
3. proper money management
4. a sense of how price moves, what people are thinking, and the average results of their actions.
5. the concept of harmony and momentum
6. to believe in the idea in the face of bitter results
7. to stack (it's foolish not to).
8. to trade to targets and not through targets.

MO

That could help a little.

Just Trade It (JTI)

[BambinoFlex]

ENTRIES:

Let's continue with a discussion of market entry. In my opinion, most traders place way too much importance on entry technique. I have come to accept TRO's maxims on trading, specifically (and I am paraphrasing here): (1) trading is guessing; (2) the only thing a trader can control is how much he potentially loses on a trade; (2) whether or not you make money on a trade has nothing to do with the reason you entered the market.

MO encouraged entries based upon an idea (a guess) of where the market might go next. He had some general principles:

1. You must trade away from a long term pointy place.

The ultimate goal is to trade larger time frames. In order to survive market swings it is important to place your stop loss beyond a long term change of market direction. Almost always, these changes of direction are marked with a volume/exhaustion spike. Check your favorite currency pair. Open up a 4 hour or daily chart. Look at how many changes in market direction occur after a big spike evidenced by a big wick on the higher time frame candle.

2. You must add to your position in the direction of profit but never risk more than your initial risk on the trade.

This may not make sense initially, but you can accomplish this goal by using MO's method of managing space. I will write a lot more about this later as it is the main key (in my opinion) to becoming a profitable trader. You need to get used to adding to your position size every time you move your stop in the direction of profit. If you do this, each additional pip gained will be worth more. By continuing to add to your position each time you move your stop in the direction of profit, your pips become more and more valuable over time. In this way, you can increase the profit potential of your trades without increasing your initial risk.

MO expressed that a person should add complexity to his/her trading style in 8 years to NEVER. He recommended only two charting styles to the novice trader: (a) Heiken-Ashi, and (b) line chart through price bars. He encouraged traders to forget about Japanese candlesticks and drawing multiple lines all over their charts. The only thing you want to know is if price is going up, closing above "something" or going down, closing below "something." The "something" referred to was an important support/resistance level.

I am quickly realizing that trying to communicate the important concepts related to my trading style is going to take a lot of time. Before going further, I am going to take some time to organize the presentation of information. I may need to break it down into smaller pieces with some illustrative examples in order to help others make sense of what I am trying to impart.

#2 Finally makes sense. Thank you for sharing this. I don't see any more posts but hope all is well.

[TheRumpledOne]

#2 Finally makes sense. Thank you for sharing this. I don't see any more posts but hope all is well.

Please elaborate. Thanks.