HOW TO DEVELOP THE TRADING MINDSET
VIII
OVERCOME RANDOMNESS (BIGGEST PROBLEM)
What is Randomness..??
Oscillators creates randomness. Anything which produces mixed results in same given scenario creates randomness.
Example – We see a stock going from Rs. 100 to Rs. 900 in 4 years. Stock moved 9 times from its starting point. During the same time the RSI of the stock kept moving between 30 and 70 (several times even dipped above and below it). Many times RSI was at 30, but on few occasions it turned and went up and sometimes it kept falling. This creates randomness.
It makes it very difficult for a trader to recognise the pattern as results coming out are different everytime
Similar things are observed in Moving averages, Bollinger bands, Super trend, Stochastic, William-R and many more like this. These are used for different reasons which were discussed in details in our Advance Learning – II series
SOLUTION TO THIS PROBLEM
- USE A SYSTEM WHICH HAS SAME DESIGN ACROSS TIME FRAMES
- USE A SYSTEM WHICH WORKS WITH SAME RULES ACROSS TIMEFRAMES
- THIS WILL BRING STABILITY AND WILL EVENTUALLY HELP IN TRAINING OF THE SUBCONSCIOUS MIND
- ONE CAN USE ANY SETUP, ANY CHART, ANY STUDY TO FILTER THE STOCKS AND APPLY THE SYSTEM TO THAT CHART TO PLAN ENTRY, RIDE AND EXIT.
EXCELLENCE = SYSTEM