TraderInterviews.com: Well, in somewhere along the line in your trading evolution, you made that transition. You probably started out with the herd, and then at some point realized something and the chart is telling you how to get in front of that herd. Can you identify what that was or can you explain what you’re seeing that the herd is not seeing yet?
Derek: I think well, this is going to be the two of my own horn. I mean, I’ve been doing this more than 20 years, and I was educated by Harvey Houtkin who basically is one of the creators of electronic trading in the world, but he goes back in a time where we didn’t have a lot of tools. I mean, we were looking at time sales, and we had very little charts. So we really had to be more instinctive and your intuitive nature, we always say that your gut reaction is usually the thing. Medical research has proven that the brain has more information in it than you can verbalize and resuscitate, so that gut reaction is more than just a gut reaction. Harvey really taught us that. Plus, he taught us, as a new trader, Harvey taught me what I call the foundation of trading. There are only seven things that can happen. There are only seven market events that can take place. So, again, it goes back to not predicting but anticipating anywhere you’re in the market. There are a couple two or three things that can happen from where we are now, so you’re anticipating the possibilities, reacting to that reality. I’ve taken that a step further in my progression and what I have done is and I don’t want to take full credit for this, but with a programmer and some guys of some pretty good technical study, we have built on technology looking at pure price. So I don’t care about time. I don’t look at anything time based. I only look at price movement so maybe it take me back to the tape reader. In the old day, they’re showing the guy reading the ticker tape. What’s he doing? He’s looking at time sales. When I first started trading, the only technical indicators we had was time sales. You can’t deny the price. Time is completely strict out. I’m like, “Huh.” I don’t look at a five-minute chart. I don’t look at an average chart. I don’t look at a four-hour chart. I don’t care, and as a trader, a trader shouldn’t care about how long or short it’s taking for the movement to happen. What traders care about is price. So does it take 20 minutes, take two minutes, take two days? I don’t care. I want to know what’s happened to the price. So I’m a pure price trader because time is irrelevant. I used the analogy when I was a stockbroker. A client never called me and said, “Hey, I want to get out of my position.” Or, “Let’s buy this stock, and let’s go ahead and get in it, $35.72.” That’s not what they say, it’s 50, it’s 100, it’s 75. We’ve looked at the figure. In currency trading and we’ll figure how to support our exitence. Why? It’s a round number. That’s a psychological thing. Well, somehow, psychologically, the chart thinks people came up with time. So, they look at five-minute charts, 10-minute charts, 50-minute charts, hourly charts, and daily charts. It has nothing to do with it. You got to break it down to what is happening to the price because within the day, you’re making your decisions. Your decisions should be based on price not time.
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