Wait for your setup to show up | stockbee

11/19/2010

Wait for your setup to show up

Wait for your setup to show up (reproduced from members site)

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Define your setup in great detail. Do all the thinking when you decide to trade a setup. Convince yourself that you can make money using this setup logic. Research your setup in microscopic details.Then master it.
Effort involved is one time.
After that just wait patiently for your setup to show up and then pounce.
As against that what do you see  day in and day out.
Brownian motion.
Someone says Bollinger band, every one runs for them.
Someone says 20 day MA everyone runs in that direction.
Someone says pivot point again and then there is a mad scramble to get scan for it.
Someone does a webinar on Worden then everyone runs to copy that.
Someone says short a stock if it trades 20 days above 20 day MA and then everyone runs after it.
In the process you are just flirting from one idea to another and from one setup to another, without getting in to depth of any one thing. Besides that just copying setup does not help if you do not understand the structural logic behind the setup. 
Lot of traders are chasing mirage instead of mastering a setup.
They trade 20 different setups in 20 days and go no where.
And then they wonder why they are not making money or why they do not have confidence.
Learn from this very good observation by Ed Seykota on setup
The lizard ... just hangs around on the rock ... and waits and waits and waits ... for his pattern to show up ... and when a bug comes along, he makes his move, right from the gut, without thinking about it. Moral: When trader becomes that automatic, then he, too, can hang around on a rock and catch a lot of bugs.

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