I received the following thoughtful email from a reader and former SMB student the other day:

Steve,

From your recent email:

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Simple chart set ups are just opportunities for you to consider a trade.  They are not a signal to just make a trade.  Skill is needed to determine when an excellent risk/reward is present.  Skill is needed to know when to load up, get out of a position that isn’t working, and lighten up a position in the money.  Other factors like Reading the Tape and Intraday Fundamentals are most helpful to make better trading decisions.
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It’s what you learn after you think you know it all that counts!

I’m going through an interesting period in my own trading.  For the past year I’ve traded primarily eminis complimented with some equity trading.  My emini playbook worked great in the 3rd and 4th quarters of 2011 in the wide whippy chop that the markets experienced.  The last month the markets have had a much different personality.   What do you know, my emini playbook doesn’t work very well when the daily NQ range is 15pts!  So I’ve shifted in the last couple of weeks back to stocks in play where there is much more opportunity for intra-day gains.  The leverage is not as great but the opportunity is tremendous.  My trading log is full of entries about the changes in market personality and the impact on my strategies/setups and my playbook is being updated to reflect what plays work best in what market types.

One of the best things about working in the markets is that there is *always* something new to learn.

To your point, there is no such thing as a simple setup that prints money.  Basic technical analysis is like learning the alphabet, important in its own right but the alphabet doesn’t write a great story by itself.

Best,
Bruss