"So then how does the little guy make money in this game? How do you know when the big boys are going to take the ball the other way?"
We DONT KNOW! thats why i dont make a move until a breakout occurs, THEN i will follow the big money in the direction of the breakout and use a protective stop in case the breakout fails and goes back into the sideways trading range.
I got snagged last month when GOLD gapped up out of its 3 month sideways pattern...i went with the breakout,,then gold came back down inside the trading range it brokeout from...thats pretty much confirmation that the breakout FAILED and was a fakeout. So i lost money on that trade but i didnt lose big money cuz i got out as soon as i realized the breakout failed.
Nothing is 100%..as far as breakouts go half the time they carry into trending moves and the other half of the time they fail. I usually have a rule of thumb on breakouts..once they breakout on good volume i get in...when the market goes 1 tick above the high of the breakout day i automatically bring my protective stop to breakeven so i have no risk. Because once a breakout occurs the market will usually retest the breakout point then once it goes to 1 tick above the high of the breakout the market simply should NOT come back down below the last reaction low,,if it does its BIG TROUBLE.
I find in my trading that 30% of my trades make me most of my money, the rest of the time i just hope to breakeven on the breakouts that fail. Basically in my trading i bat .400 40% of the time i make money the rest of the time i strikeout. But striking out isnt a bad thing if ya use good money management. I also have another rule on breakouts that by the 3rd or 4th day of being in the profit on a new trade, i bring my stop to breakeven...cuz if that breakout is gonna carry it should move in that direction by the 4th day.
Video series called "Building a better Trader by Glen Ring" are very good dvds. They usually pop up on ebay and you can get a set for 20-30 bucks. I think its the best trading videos out there.
"Nothing surprises me anymore regarding price, i can imagine Gold at 10,000 an ounce or Gold at 10 bucks an ounze, or Corn at $50 or Corn at 50 cents." <~Glen Ring
Yor are right on the money. Traders know when to exit and take profits and minimize looses. I must have been fish hoooked on gold false breakouts three time this year with small losses, but my enegy trades left me up 8% for the year, the HUI is now down 23%. so much for trading vs investing. Good traders always should be up for the year.
Cudo's to you! Someone actually asked a question and is trying to learn something rather than tout their own opinions. You will wind up the smartest trader of all, eventually. Good for you. Why not hunt thru amazon.com with the keyword futures trading and stock trading and chart reading and see if you can find some interesting books to help you solve your question. Stay away from the real expensive ones over $40.00 Most of em are not worth it!