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.We have touched on how the group dynam-ics of thought and action play out within specific time frames, andwe are about to draw all this together into a deeper understanding ofhow to get better positioned for a change in price.In other words, weare about to learn how to make sense of what is happening outside ofyou, the individual participant.This chapter is devoted entirely to you, the individual trader,because without understanding how you come to conclusions, youwon t see things differently than losers do when they participate.Alarge part of understanding how you think before placing yourself atrisk concerns thinking in probabilities.This is a lot deeper than thesurface agreement that says: Yes, I know nothing is for certain in themarkets.This chapter is about learning to view what is happening inthe market from a completely different viewpoint than typical mar-ket participants.You will need to dig deeper into your thinking astime goes on because whether you can see it now or not, you likelyhave a lot of conflict in your thinking that prevents you from gaining119P1: OTAJWBT329-c14 JWBT329-Jankovsky July 9, 2010 12:27 Printer: Yet to come120 EXPLOITING MULTIPLE TIME FRAMESthe best insights from your analysis.This is true even if you are learn-ing to use multiple time frames well to uncover where time compres-sion is creating a change in the order flow.This chapter is about whatis happening inside of you, the individual participant.Inside you, youcan deal in probabilities within the eventual certainty of the orderflow.Order comes from chaos, according to my friends in the busi-ness of particle physics.Earlier, we discussed the relationship between observation andevaluation.Losing traders are always trying to answer the ques-tions What does this mean, and what do I do to profit? when doingtheir analysis.In other words, they re making an evaluation.Winningtraders are more concerned with fully understanding what is happen-ing rather than trying to answer the questions What does this mean,and what do I do to profit? Winning traders already know with com-plete certainty that a change in price one way or the other way iscoming.They are trying to find the best time/price relationship theycan to go against what is most likely the last group of potential losersentering the market.In this process, it is critical to understand thatwinners are not evaluating things in the same way as losers are.Win-ners are using their understanding of the market structure, the factthat losers are in there somewhere, prices can t go one way forever,their understanding of human nature as it is disclosed when speculat-ing, and how they see things personally to come to a deductive placein their reasoning that answers a different question: What is morelikely moving forward?Winning traders don t need to answer What does this mean, andwhat do I do to profit? because they understand and accept that spec-ulation is a game of unknowns until prices actually move.In fact, themore winners understand the concept of order-flow change, the lessanalysis they need to do.If the market runs out of buyers, then a re-versal lower is certain.What analysis needs to be done? You makemoney in a declining market by being short.Once prices start moving, winners are interested in asking differ-ent questions either to maintain a winning position or find one.Theyare not trying to figure out where prices will go next because theyknow that once prices are moving no matter where they gothey will draw in other traders who will eventually be on the wrongside.If prices reach a significant level quickly, that only means therewas a deeper urge to action to get positioned quickly an urge that islikely fear, greed, or hope.Winners want to answer the question WillP1: OTAJWBT329-c14 JWBT329-Jankovsky July 9, 2010 12:27 Printer: Yet to comeThinking in Probabilities 121that continue or will that change? thereby creating an opportunitythat includes one of the 12 choices to participate.The questions win-ners ask are different from the questions losers ask; therefore, theycreate opportunity differently.ASKING BETTER QUESTIONSThe basis of developing a thinking method grounded in probabilitiesrather than certainties is the art of asking the right questions whendeveloping your trading presence.By asking open-ended questionsthat help you discern things like market structure, order flow, andwhere the losers will be forced to liquidate, you place yourself in aposition to see and observe what is happening rather than trying toanswer the question Where will prices go?Let s look again at how losers are attempting to participate.Forthe most part, losers are focusing on things outside themselves toanswer the various questions that are grounded in evaluation.Hereare some typical loser questions that I have discovered: What does this price change mean? Which way will the market go? Where should I take profits? What is the news? When will the price rise/fall? How do I do better analysis? Am I missing anything? Who can I trust to get me better data?If you think through the psychology of these questions, you willsee that they center on things that are perceived to be outside thecontrol of traders.They are very much centered on underlyingthoughts that focus on gaining a sense of certainty about how to par-ticipate.Those sorts of questions show that traders are more con-cerned with finding a winning trade than understanding what createdthe market in the first place.If you add on top of this sort of thinkingthe additional illusion that technical analysis will answer the questionWhich way will the market go? you can begin to see why trading isso difficult for most people.P1: OTAJWBT329-c14 JWBT329-Jankovsky July 9, 2010 12:27 Printer: Yet to come122 EXPLOITING MULTIPLE TIME FRAMESMost traders want to find a higher degree of certainty about whatthey are doing, and they believe that higher degree of certainty willcome from outside of themselves.They believe they need to learnmore or do more to improve their results.They often are focusedmore on how their equity changes from day to day than on what iscreating the price change they are attempting to profit from.This isone reason why they will always wait for  confirmation before plac-ing a trade.They must be certain that a trade potential exists.Typical winning traders are more concerned with how they seethings personally form the information they choose to let into theirthinking.They know that bullish and bearish information/opinionis never ending, and they don t care which the  right opinion is.Winners know that they can win more often if they make their goalfinding the losers rather than trying to predict where the price willgo.Winners watch price and what it means to other participants; theydon t care what the price is or where it goes only that they are onthe right side of the price change when it happens.Winners often havetwo or three scenarios of what might happen in the market and areprepared to act on any number of plans based on what is most likely.Often this involves using multiple time frames to discern the underly-ing market structure, and each scenario will have a probability.Winners psychology is different from that of losers.The ac-tions taken by winners are different from those taken by losers.Winners are doing their best to think in probabilities, and they cometo their conclusions from a different stream of thought than do losers [ Pobierz całość w formacie PDF ]