Price Action Trading: Intuition or Quantitative?

Price Action Trading: Intuition or Quantitative?

In financial markets, traders have various tools and techniques at their disposal. Some rely heavily on mathematical models for complex tasks like pricing derivatives. However, when it comes to trading volatile stocks, the unmatched capability of the human brain stands out.

Time and again, I've delved into countless charts, identifying thousands of recurring price patterns. These patterns are not just guides to potential gains; they're also critical for controlling risk. After all, in the realm of trading, the only thing we can truly master is risk. Get that right, and the gains tend to follow.

Now, let's talk about our brain. While powerful computers and AI have made significant strides, they often fall short when confronted with the infinite combinations and permutations inherent in trading. Our brains have an innate ability to sift through this vastness, making distinctions between transient trends and lasting shifts, much in the same way nature selects for advantageous traits in the Darwinian process.

Mathematical models can sometimes fail in this complex, ever-evolving environment, but the human intuition, refined by years of experience and observation, remains steadfast.

Backtesting remains integral, allowing me to test strategies across diverse market conditions, refining and reinforcing my instincts. The recent past (volatility) in markets often provides valuable clues about the future (volatility) but it's the synthesis of patterns, historical data, and human discernment that truly defines trading success.

As an independent trader, I am always long volatility. Because being a long volatility trader is just following the natural path of financial markets whose role (don’t forget it) are to fund the economy. No economy has ever be funded by investors and traders only being short the trend of economic progress….

Maybe the power of the brain is to talk realized, not implied…

Just my guess…

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