Looking for Perfection ???

'The stock-market includes some of the most brilliant minds and some of the deepest pockets on Earth. Arguing with this group is dangerous business, and it has to be done very cautiously.There is no certainty, only odds. Here you have two goals—to make money and to learn. Win or lose, you have to gain knowledge from a trade in order to be a better trader tomorrow. Scan your fundamental information, read technical signals, implement your rules of money management and risk control. Now you are ready to pull the trigger. Go!"

---Dr. Elder Alexander

Following newspaper reports and TV channels,one gets enamoured by "break-outs" and "break-downs". These two terms get so deeply ingrained into our mindset that despite being "the cause" of a retail trader's accumulated losses, one never stops looking for them to enter fresh trades. Losses are blamed on luck as it was a pure bad-luck that when I entered the long side of a trade on "break-out"(or short side of trade on "break-down"),it turned out to be a "false break-out"(or "break-down").Has anyone kept a detailed record of losses caused by "false" break-outs/breakdowns vis-a-vis profits generated by the "real" ones ?

Second in my list is cross-overs---- 5/10 emas cross-over being the most common.While at smaller t/f(upto an Hour),it may be a good idea to initiate trade on these x-overs, waiting for it to happen on Daily charts would only give some "butter-milk" while cream would be usurped by smarter ones who "catch it early".

Third ,and though not the last one but I would keep it at that, is the lure of buying Out of Money(OTM) Options that proves to be the nemesis of many a retail traders.

I have mentioned these three reasons as the major mental-blocks of retail traders as during my discussions with fellow traders in my brokers' place, on FB groups & blogs --- these are the most debated points, so much so that in real life interactions I have stopped raising them --- 

:-)

Then what guides me in my trades?

Primarily same things which guide any other trader--

1. Trendlines(channels);

2. Momentum indicators like RSI,Stochastic & MACD;

3. EW labels.

Then how am I different?

Let me try to give brief explanation--rest will be done by my trade - illustrations as we move along---

In trendlines,I see instead of break-outs/breakdowns, the potential of reversal---and momentum indicators (through overbot/oversold levels & divergences) and EW counts help me in calculating my odds for/against such reversal. 

If such a reversal happens, it gives me major gains but if it doesnot ,my losses are very limited.

And thats what trading in stock-market is all about ---maximizing gains and minimizing  losses.