It’s great while it lasts, right? That feeling of beginning a trading career and the prospects of a prosperous future.
Taking off the rose colored glasses for a moment we see another picture.
80% of all day traders quit within the first two years. After just five years, only some 7% are still standing.
More telling is the psychology behind this and of who is most likely to go down in flames. I believe that some findings of research in our sister field of stock trading may shine the light on a reason.
Take this finding, for example.
Investors with a large differential between their existing economic conditions and their aspiration levels hold riskier stocks in their portfolios. (1)
This spotlights that for psychological reasons unhealthy shortcuts are undertaken in favor of rational approaches to learning what must be learned and disciplining better choices. Yes the shortcut mentality is strong when drive is high.
It’s understandable that there is going to be an urgency about wishing to improve. Trading careers are started on this and it’s my contention that many end on this.
This urgency seems to pervade many Forex forums. There are many members exhibiting desperation to obtain the latest killer strategies or robots. There is a clamoring for any information which will help part-time traders reach their goal of full-time careers.
The urgency grows as the losses eat away at their equity. It’s NOT going to make them eager to take TIME to learn ANYTHING!
Since releasing STAR it’s had some fantastic praise but also a fairly sizeable number of criticisms on the learning curve being steeper than other systems. Most of these came from when STAR was released as an ebook back in 2008. Since the training has been made all-video with additional pictorials and resources these comments dropped dramatically. They did not all disappear however.
It’s still a concern for me because of my desire to inform traders foundationally. Many have been lulled by advertisers who only use instantaneous hype and the net result is a lack of healthy respect for the complexity of markets.
If for over 400 years of the TA GAMES, the market is the one with the winning record Every Single Year then you’ve gotta respect that, don’t you?
The older comments still generate many questions to support about traders wondering, “Will I be able to do this”. Of course anyone who is willing to become a student again can do this because STAR is much easier than all the work the trader had to put in to learn all about accounts and trading generally.
But the fear and the shortcut approach and the hurry is palpable.
I get that because I don’t want to do any more than I have to in order to accomplish something either. Heck if it wasn’t for me wanting to develop some shortcut tools STAR would never have been developed. They were developed long after I had gained millions of chart views and suffered several busted account pains from my early career. So yeah I really do get it.
You know there is another side of the coin on learning curves, however, which I see but others may not ever have the opportunity to view with the same unique perspective I have, being a system developer and talking with thousands of traders over the years.
There is, as you know, a terrible failure rate in all trading. Reloading of accounts and ultimate quit for the vast majority.
Yet somehow all these same traders do not give themselves or their results a ‘review’ – they simply pack it in.
What about this “system” – the system of failure? It is indeed a system since there is a near universal outcome from using ‘it’ (TA).
What about the effort expended there? What about the endless searching going on?
With the effort used to learn STAR you have opportunity. Is STAR perfect? No, but it has a consistent edge needed in a system.
The other thing it has is its foundation. It’s built on things which never change and it uses evergreen market features.
Once the steps and criteria are learned your search is over and you can apply STAR to all market conditions with 100% objectivity at any term.
So to give you a better overall sense of what it might be like to use STAR in its current version, here is an outline for a setup and trade for Gold.
Here is a line from our watchlist which is just a basic record of the parameters by which you could examine a trade setup listed on a single line. Of course to anyone not familiar with the tools and process it is going to look cryptic so don’t worry about the terminology of the headers. This is just how we list them so I thought you might like to see that too.
To View Any Images Larger Just Click/Tap On Them
So here’s the skinny: There are 3 tools correlated to 3 basic steps.
First we want to map our 1st tool to the speed signature of a double move (we’ll match our market’s speed).
Why a “Double Move” and just what is that? There is a pic below which will show the what. It’s such an EXTREMELY BASIC THING. But first the why (patience, now trader friend).
Despite the consensus that experts claim, that there are thousands of formations in markets, there are in fact only THREE!
These are called Motive, Corrective and Running Corrective. Is this just “yet another opinion”?
Well as I mapped exactly what occurs in a running correction it exposed a precise set of movements which answered the author of Elliott Wave, R.N. Elliott’s most vexing dilemma. That was the unknown surprise and random appearance of what he called “extensions” of waves.
Now if you are trying to determine the end of a wave and it can ‘EXTEND’ on you without notice it kind of takes the confidence out of it for you. As a result of my mapping I’ve found the solution and it is the first new Elliott wave RULE in over 70 years.
It shows that there are NO surprise extensions, just an exact behavior that certain waves do every single time. If you’re into Elliott Wave you can pick up my book. It’s still free as of now and you can get it at newelliottwaverule.org as a pdf download.
What about the Double Move though? Well there are Four Important Things about them.
- One is that they are everywhere.
- Secondly is that they are the Largest Single Component COMMON To All Three of the Possible Market Formations. That’s why they’re everywhere. You won’t run out.
- The third thing is that at the end of EVERY double move is a REVERSAL! That’s a big thing.
- Fourth is that they are fractal (self-similar at different scales). That means there are double moves inside the double moves so you can use them at any term you wish. They’re always building, in both fast and slow areas and both bull and bear.
This is why you’ll use STAR exactly the same way in all market conditions.
So let’s continue with a look at how you’ll apply this new technology.
We observe a swing pivot that has a double move to the right of it. See how the move has 2 stages in the same trend and a noticeable counter trend consolidation or correction breaking in the middle?
Now you’ll use your first tool to attempt a matchup for our criteria which will accomplish the speed matching. The Traitset Tool is loaded and the speed multiplier is adjusted to see if we can make that happen.
The speed multiplier is simply a global variable we can adjust which will globally change the period settings of all the indicators on our tool at the same time. You’ll press F3 key in your MT4 and a line will appear for the symbol of your chart when a tool is loaded that uses this.
Every technical analysis (TA) compares technicals which are fixed to a market which is dynamic.
Just leaving it at that has a weakness which accounts for an industry wide fail rate of 95%.
The weakness is that the market has a very healthy rate of variability. It has both scale differences and speed changes. Speed changes are not mentioned in TA and since it’s over 400 years old there is no pardoning this ignorance.
It is on every chart you’ve ever seen but you don’t have any training or a weapon for it. Speed is how far prices travel in how much time. When the speed changes your technical setup simply ignores it and applies a universal bliss and “HOPES” it works consistently. Stats say it doesn’t.
On the chart above you see many areas of fast and slow. What is your plan for handling it?
Scale can be handled somewhat by changing timeframe but when looking at what speed changes does once a timeframe is chosen, it’s apparent you have been issued a pen-knife and sent into a modern urban war zone.
Do not the stats of failure speak loudly enough for you to evolve your TA?
So rather than allow the variability caused by speed changes to run your results and make ruin of your account and a slow steady death of your trading career, why not evolve your TA?
Is it too much trouble to learn a new thing, a system with sufficient complexity to match a market?
I’m glad dentists don’t take the approach traders do. Maybe they just learned steps but they take the care necessary for the scope of each patient’s varied needs and don’t look for “easy” at all costs. That sounds like it would be a recipe for failure (and a bunch of patient pain).
By matching the market first at the local speed the analysis can go ahead and be fixed but it is a comparative that’s relevant to that area.
You’ve matched your market. You’ve evolved your TA.
Because the market has such variability it takes several indicators to create the diversity needed to cut through the market noise and yield a LOCK onto the speed signature. It is actually a fairly basic approach although I admit that to the first time observer it looks daunting. I’ve seen worse.
So you’ll load a STAR tool that will allow you to find a uniform set of criteria we call a Traitset. This is simply a set of 8 criteria which must all comply at once to be valid. You will adjust the global speed multiplier until you have the slowest speed possible while maintaining all eight.
You find the criteria compliance by indicator readings showing within the definite two stages of the double move.
The following chart shows the indicators of the Traitset Tool which you will use for criteria of the first step which will give you your speed. In this setup a speed multiplier of 0.604 was found to be the slowest speed at which all 8 criteria were valid. (At 0.605 something went out of spec.)
At that setting you arrived at, all indicators on the template have had their period setting modified by a factor of 0.604 and that of course modifies their appearance (in this case faster than the indicator’s standard setting of 1X it’s nominal period).
No this is not rocket science. A little math that you do not have to calculate has been combined with an evolved concept of working with the market.
This is a pic post-trade so the assist labels (which can help you validate the traits automatically) are no longer relevant and I’ve turned them off so they are not showing their output. These can display the traits as valid or no good (like “VALID 1st STAGE”).
As soon as the last trait has been built by the market and you’ve obtained your speed it will remain in the MT4 terminal and once the market puts in a reversal of specific depth we call a pullback, you’ll load the Pullback Tool and perform your 2nd of the three steps.
The design of the Traitset is that once complete it demonstrates the characteristics consistent with the minimum for Trend Exhaustion.
This Pullback Tool also has a group of indicators that work at the speed which was set. This tool will allow you to balance the scale of the former trend in the traitset with the potential change in trend scale of the possibly new, reversed trend should a new one be underway.
You’ll be looking to get in after the reversal at an early, low drawdown retracement. Each new trend will actually choose a new scale so it is important to your initial take profit and best entries and sense of the scope of the new trend for your system to be aware and handle this transition.
You will be wanting to avoid jumping out of large moves coming off small ones that got you thinking small.
The next pic shows the initial Pullback Tool view at the SPEED of the original Traitset Trend. It’s showing that indeed in this case the SCALE of the original Traitset Trend has become expanded prior to a retracement. The tool has suggested that there be a scale adjustment which you will be able to execute with a change in speed. It supplies you with that new speed here.
The old speed was W1 X 0.604 and the adjustment for a new scale is presented to you, W1 X 1.780.
Once you have adjusted your speed according to the tool’s prompting you will have the proper pullback evaluation speed which has accomodated a new trend scale for the next and final step of obtaining a signal. The pic below shows the pullback evaluation at the adjusted scale of W1 X 1.780 (this is the value the tool gave you at the first evaluation view and you simply made the adjustment with the F3 key as before).
The purpose of this Pullback Tool is to select the correct Signal Chart to load.
At the new scale you will get a crossing of color matched pairs of moving averages (MA’s). This will show on the tool as highlighted colors telling you which is the first signal chart to load in the 3rd and final step.
The signal chart will get loaded to begin the signal reading process.
This is our final tool called an X-Factor Tool. The X-Factor is not just one tool but a set of templates which as a group form a Fibonacci Family of ratio factors of a single setting. Scale will be accommodated with these variations as well as balance between old and new trend forces.
The Pullback Tool will tell you which one of the X-Factor Family to load.
Notice in above pic in lower window beneath the tool’s “Pullback Tool” label, that Green and Blue are color bracket highlighted. We load the X-Factor which gets color highlighted furthest to the right.
In this case it is the Blue 1.236 X-Factor. This first X-Factor is called the Signal Chart.
Below is the Blue 1.236 X-Factor Signal Chart. There was also a color matched Green X-Factor and also criteria specified to look for possible signal negations.
In that process a negation criteria was found and that can lead to a No Trade result. These are just common objective criteria of indicator readings.
This is called a FLAG and has the meaning that a programmer might give to a data comparison which flips a switch for a changed condition. This can result in a No Trade unless a counter switch is also found and the FLAG gets UNSET.
That happened in this case – we had both criteria. A flag was combined with a flag unset and the trade signal became automatically changed from looking for trigger on the Purple MA to trigger on Lime MA.
Variations occur within retracement zones as well and the Flag/Flag-Unset filter system prevents some 3-to-1 of potential false reversal signals.
Again this is done with a very small set of collect and combine mechanical criteria to protect your account.
This trade signal proceeded to change from the Purple to the Lime MA as trigger line and land distinctly on the Blue 1.236 X-Factor signal chart as seen below.
Looking at that chart without STAR it would take nerves of steel to enter where the STAR trigger came.
The incredible accuracy is apparent in our signals. Only speed adjusted, scale accommodated systems can do this. (Oh yeah I shouldn’t use a plural there because only STAR does this stuff).
All STAR signals look pretty much the same, whether on the Lime or Purple. That’s because all of the signals have had their data matched to the local speed first and only then apply a fixed analysis.
I hope you can see through the method enough to understand that this is the entire goal of STAR…
TO MATCH YOUR MARKET.
Learning the 3 steps and the small set of criteria for each is much easier than the road you’re on.
1 – Kumar: Who Gambles In The Stock Market?