I am going back thru the course. It seems I I am constantly doing that as I it helps to really singe into my mind the concepts and principles. I don’t think I am that far off with what you’re teaching as I have never been a technical analysis/chart person. I’ll look at the charts, and I do know how to recognize candlestick patterns and such…but I have never given them much credit other than to perhaps see what the “techies” are thinking and possibly up to (like, say, a pin bar at support).
One thing I do throughout the day is constantly flip thru various newsfeeds via RSS. In fact, here is a picture of my current lineup…
I read these as they are updated thoughout the day…along with IFR/Oanda’s newsfeed, plus several other news sites like Blooomberg. Maybe it is overkill (info. overload) but at least for the moment I feel comfortable constanlty absorbing what these news sources have to say. I think it gives me a sense or feel of how the markets could possibly unfold. What do ya think?
I tried to structure the course and show you my strategies, but also the larger principles and philosophy behind them, so that you can keep going back over and over again and discover new things. Sort of like Paul Tudor Jones saying he discovers something new every time he re reads Reminisces of a Stock Operator. So that even if you don’t necessarily follow my habits or strategies exactly, you understand the philosophy and underling principles behind the markets and can use that information to forge your own path.
For example, there are a lot of chart pattern and price action traders that believe that all the news is already shown in the chart, so they don’t have to follow any information flow. So they just study their charts and nothing else. Such traders will almost never be able to elevate their game to a higher level.
With the lessons in the Mastery Course, I hope people now understand that the news is not always in the chart and price action patterns, and that the best traders plug themselves into the information flow, they are always betting on a scenario and have expectations attached to their trades. You have to learn how to incorporate the information that does not exist on the chart.
I believe everyone will develop their own style as to what and how much information flow they use. They will each have their own sources that they go to and interpret. So you have your various newsfeeds in RSS. Other people may only like IFR. Other people may like some other blog. I don’t think Soros and PTJ use the exact same sources of information. Everyone has their own beliefs about what information is important and what sources they plug themselves into and how they use that information.
I do interpret a lot of information over the course of the day. I have gotten really good over the years at skimming articles and isolating the key phrases and sentences of them. Usually I start off with Bloomberg and make my way to Reuters, etc. But there can be a lot of rehash, so the process goes faster and faster. I am constantly looking for information on what Is currently moving the markets, what is priced into the current moment, what are the closest scenarios to the current market moment, how the market is responding to news, etc. I am constantly going over my scenario sheets in my mind, and figuring out which battle of scenarios is going to win.
As Paul Tudor Jones said:
The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge. Because I think there are certain situations where you can absolutely understand what motivates every buyers and seller and have a pretty good picture of what’s going to happen. And it just requires an enormous amount of grunt work and dedication to finding all possible bits of information.
That is coming from someone who says he made well over half his money from technical analysis.
And as Ray Dalio said:
It all comes down to who is going to buy and who is going to sell and for what reasons.
My relationship with the information flow of life and the markets has evolved over the years. In the beginning I was terribly afraid of the information flow and stayed away from it. Even when I first learned about order flow trading I stayed away from the information flow because I could not possibly comprehend it and organize it. My knowledge of the principles and vocabulary and jargon was nowhere near sufficient. It is more than sufficient now, but I certainly did not start that way.
Then as I delved more into news trading, I figured out that the information flow was a very important component. Which is why one of the quotes I created was: Order Flow + Information Flow = $$$
I fell in love with the information flow as I reread the Market Wizards books, especially the interview with Bill Lipschutz, Bruce Kovner, Michael Steinhardt, etc. I felt that was a key component of the missing link. They were masters of interpreting the information flow, while I was afraid of it, so that was a key reason why they did so well and I was struggling.
So I set out on quest to master the information flow.
Initially it was difficult because I would try to interpret hundreds of articles on IFR. And the articles consisted of everything from technical analysis commentary, stop rumors, ichimoku, news releases, exotic barriers, vanilla options, forex option volatility, etc. It just got so overwhelming for me. It was just taking so long to interpret every single piece of information from IFR. My fear of the information flow was returning and I thought I would never figure it out. I would spend hours every day hunting for every single stop loss information across the internet. It was taking up a lot of my time. I was spending hours and taking a lot of action, but it was not intelligent action. I felt that I had to figure out how to take smarter action and have smarter habits.
Somehow, I was able to redouble my efforts and I eventually told myself that I should not possibly be spending equal amounts of time on every piece of information. I had to develop some sort of strategy and principles to guide me in knowing what information was important and what was irrelevant. I had to figure out what market beliefs were preventing me from interpreting the information flow properly. I had to develop a powerful market philosophy to guide me.
And it was very difficult. You just don’t know what you don’t know.
But eventually I developed my proprietary news impact release strategy. That laid very strong foundations for me to continue my journey to master the information flow. I was finally able to figure out what news calendar information mattered and what did not.
Everything has been a gradual progression from that.
After my development of the news impact recording strategy, I had to figure out all this global macro information. That was another hurdle I had to cross. And it was very painful, even with my solid news trading foundations. I had to go read books such as Inside the House of Money, The Invisible Hands, The Alchemy of Finance. I don’t know if you ever read them, but boy are they kind of tough to read, at least initially. Especially, if you are lacking in a powerful market philosophy. So I had to further develop my concept of the information flow, sentiment, expectations, scenarios, global macro, sensitivity, liquidity model, etc.
I figured out that I should move more towards a global macro volatility mindset – in the form of the ODVE, MDMM, and GM moves.
I figured out that the stops and barriers were really not that important in the market as I used to believe they were. I discovered that Soros didn’t really care too much about stops and option barriers, because he was playing the game at a whole different level. Soros developed mindset and trading strategies to operate at a whole new level. He knew about the information flow, volatility, expectations, sensitivity and scenario based trading. Even though he may not come right out and say it in his books, those are the principles he uses. Not every top trader knows how to explain what they do in an easy to understand way.
I figured out that I should develop the “Scenario Sheets” for every financial instrument listing both bullish and bearish scenarios.
Even after I did that, it felt like information overload at times.
With all that pain, came another nugget of wisdom: That the market could not be focusing on 20 different scenarios on any given day. The market can only focus on 1-5 key scenarios and elements during the day. I felt so much joy when I figured that out. It solved so many of my problems and false beliefs and put me on a higher plane of market understanding.
So now my days are spent isolating what the key scenarios will be at any given moment in time. I do keep a lot of scenarios in the back of my mind, but I want to focus like a laser on the key elements on any particular trading day or series of trading days. So my interpreting of the information flow and daily habits are heavily centered on that.
I hope I cleared up part of my journey to how I got to where I am. I tried to include a lot of it in the Mastery Course, but I may have forgotten a few steps along the way. I have many things written down in my 1,000 – 2,000 pages of notes and journals. And I will be going over them in the future and creating blog posts on them so you can further understand the life and trading journey and fill in any missing gaps in your knowledge.