Vibratrading transcends conventional grid and scale trading and it frees the directional trader from the shackles of maintaining positive expectancy. Vibratrading’s greatest advantage over conventional methodologies is that it need not be concerned with risk/reward ratios, win/loss ratios, expectancy or optimization. The number of winning or losing trades is of no relevance whatsoever. This obviates the need for any statistical trading edge in order to achieve profitable consistency.
The Profitable Art and Science of Vibratrading is especially suitable for traders looking for another way to trade the markets profitably without the problems of losing money every time a stop loss is hit. No knowledge of technical analysis is required as all entries and exits are objective and require no guessing or price prediction.
One of the key aspects of trading (and the most frustrating) is that it’s impossible to predict the future. Since no trader can possess any absolute knowledge as to the future direction of price, one obvious option is to employ a ‘‘Martingale’’ strategy which keeps you increasing your bets until you eventually win. Unfortunately, since we don’t know exactly how long any particular losing streak will last, and since most of us lack unlimited funds, this strategy is destined to fail, resulting in the total loss of our capital.
If we could work out exactly when that streak would end, of course, we would never lose, because we would know well in advance the precise amount of funds required to survive the streak and eventually produce a win, or a gain in capital. Even though the risk to reward ratio may be extremely low, especially on the very last bet, the trader would still come out on top. Imagine if traders could enter the ﬁnancial markets knowing exactly where the Martingale ‘‘limits’’ reside. Even if the price remains below the traders’ entry level indeﬁnitely, they would have the ability to coast through the losing streak to success.
I have adapted the high-risk and high-investment method of scale-trading to a safer, more powerful and adaptive tool: Vibratrading. Vibratrading is based on generating returns in the market from price oscillations, or vibrations. It is also implemented with reference to the concept of boundedness, which helps the trader or investor understand the type and degree of risk associated with any particular trading technique or mechanism. Trading according to the rules of boundedness is what separates vibratrading from conventional scale trading. Boundedness is all about capital preservation, which includes the strict avoidance of all capital depleting mechanisms like stop losses, long options or initiating net short positions.
More speciﬁcally, boundedness is deﬁned as the condition in which the ﬁnal account equity will be equal to or greater than the initial account equity, should price retest the initial price entry level. For example, a ‘‘vibratrader’’ enters the market at a certain price. After a number of trades, the market returns to the initial price level. If the methodology caused equity to fall below its initial value, then that methodology is said to be unbounded. All trading strategies and mechanisms are categorized as either bounded or unbounded. The vibratrader has a choice to implement either trading mechanism within the vibrational construct, but this must be done with full understanding of the risks involved in choosing an unbounded methodology. These strategies can be used in conjunction with various diversiﬁcation techniques to accomplish what most traders and investors previously thought impossible.
- Challenges to Conventional Trading and Investing
- Understanding the Basics of Order Entry
- The Objectives of Vibratrading
- Controlling Risk in Vibratrading
- The Mechanics of Equity-Based Price Action
- The Mechanics of Securitization and Monetization
- The Principles of Boundedness
- The Mechanics and Dynamics of Vibratrading
- Pyramidal-Based Vibrational Mechanisms
- Diversification in Vibratrading
- Volatility Matching
- Putting It All Together, Finally!
- The Vibrational Vehicles
- Comparison with Other Trading Systems
- Profiting from Non-Vibrational Flatline Price Action
- Summary of Vibratrading
The Profitable Art and Science of Vibratrading: Non-Directional Vibrational Trading Methodologies for Consistent Profits By Mark Andrew Lim pdf