This tick chart shows a short trade on the S&P 500 today. It is a perfect manifestation of my trading style. It shows a set of "parallels" as taught in Phillipe Cahen's book. It also shows entry and add-on points by using fractals (the red down-pointing arrows) as prices cross back below the Exponential Moving Average. It also shows how the Klinger volume indicator is used as a leading indicator, showing a divergence and bottom to the trade. I have noticed that with highly liquid trading instruments at the end of a strong move in the market, even after a top or bottom is formed, there is typically another test of that bottom that allows me to exit gracefully and very close to that bottom as it is tested. This was a good example of that as well, although the screen capture doesn't adequately show the test of the bottom that occurred following my copying the chart.Not all trades are this perfect. The vast majority aren't. So why even show such perfect trades? Because we can still learn sound principles from them, if we approach them from that perspective. We are striving to learn trading principles, not just trading methodologies. We want to learn to feel and respond to the market's movements, not just learn a cookie-cutter technique. We want to trade dynamically, not statically.
This is why it is so critical for traders to learn to trade dynamically rather by the static text-book examples we see in books and trading courses. This is also the reason why most trading courses are only marginally useful. They only provide students with examples like this one -- that are perfect. The authors and teachers will scour the charts until they find just one chart that fits what they are teaching. Despite that fact that they have had to search far and wide to find that one picture-perfect example, they will lead the reader or student to believe that all they need to know is their one, simple trading technique or methodology.
Since most trades aren't perfect and don't fit the precise static picture of the trades in the books or training, most traders fail because they aren't trying to fit their square trading methods in the round hole of the financial markets. They are trying to take that one picture of the perfect trade and find the one very rare example of that trade in the markets.
