If you've ever wondered why your entry seems to come under pressure most of the time, regardless of whether you take a breakout entry or a pullback?
Well, having been in a similar position and scratching my head for four years I decided to finally look and consider a comment that was made to me at the start. That market movement is random. I wouldn't accept it at first, it couldn't be as I could see many trades that would have been successful in the historic charts (1st mistake, dont just look for success but look for where you would have failed).
I've spent the last six months or so looking at how the charts form using various bits of software that I've written, one of which looks at the instances of a consecutive number of bars forming in the same direction and then from that working out the probablity of the next bar being in the same direction as its previous. The reason for choosing this is that the decisons that we make on selecting an entry is where to put it, in which direction and what is the target. I looked at how bars developed over four different time-frames on Euro/$ and compared the results to a random generated pattern. I looked at the whole data available to me on my charts and also at a specific period from top to bottom of a 500 pip down move.
The results are pretty clear. The bars develop in the same way as the random pattern, even in the down move (which did surprised me). The chance of the next bar following in the same direction is about 50/50.
So why am I doing this? Well I'm hoping that any newbie looking for answers as to why they're struggling can see the true nature of the markets and dont make the same mistake as me by trying to ignor the obvious.
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