How To Make Money Trading The Markets.

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Old Sep 7, 2008, 10:56pm   #49
 
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ATR = average true range
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Old Sep 8, 2008, 12:01am   #50
 
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Originally Posted by Freeman.ayres View Post
Mr. Charts
I have been wondering what the meaning of T&S and ATR are?
Also, what kind of info do you get from Level2 (i don't even know what that is)?
I undertand that "microanalysis" is not part of your intention in this thread, so can you tell me where can i find more info about it? (just curious).

I appreciate the time you spend answering our questions.

Freeman
Hi Freeman,
T&S = time and sales. That shows you the trades printing off (deals actually done), their size, price and time.
ATR is as superspurs (thanks superspurs) says. It is a measure of the difference between the high and low of a candle and is usually defaulted over the previous 14 time periods.
Level 2 shows you orders in the order book on the buy and sell side. I haven't the time to describe the structure in more detail as it would take quite a while, but you can google it.
As I said earlier I use my own phrase "micro-analysis" as a shorthand to refer to the way I synthesise level 2 orders, buy/sell pressures and T&S. It's no use googling that.
There is no book or web site which will describe it in detail I'm afraid, only me.
Most people have the fallacious belief that's it's just about what market makers do, but that is only a small part and is full of spoof orders. With knowledge and practice you can often spot the spoofs. Also there is usually not the primary and secondary axe operating in the same way they used to. Other types of trading behaviour and programs have reduced the effectiveness and usefulness of what people think of as classical level 2 interpretation.
The reality is that it has developed and so you need to know how to use it here and now. Books are out of date by the time they are printed and those of us who use the techniques don't broadcast the details too widely as we like to keep the strong edge it gives us.
I realise this answer is not comprehensive and not as helpful as you would like, but I hope you understand.
Richard
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Old Sep 8, 2008, 12:04am   #51
 
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Originally Posted by nghislainf View Post
Hi Mr Charts,
still waiting for an answer, I sent you an email...
Thank you
I replied to all your six points in an email at 15:08 Sunday......so you didn't have to "wait" more than a few hours for my replies.....
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Old Sep 8, 2008, 10:29am   #52
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Hi Mr Charts,
Sorry but I received no email from you, I even checked the junk mail...
Thank you anyway...
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Old Sep 8, 2008, 1:21pm   #53
 
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Originally Posted by nghislainf View Post
Hi Mr Charts,
Sorry but I received no email from you, I even checked the junk mail...
Thank you anyway...
Just sent it again - please email me to acknowledge receipt.
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Old Sep 8, 2008, 3:33pm   #54
 
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Mr. Charts started this thread Lovely move on this pattern of mine on HUN
Will post chart when time
What a great day's trading today !
Richard
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Old Sep 8, 2008, 3:53pm   #55
 
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Originally Posted by Mr. Charts View Post
So what about ATR?
I use it in my personal trading as a rough guide to risk.
The higher the ATR is in the time frame I'm trading, the greater the potential risk as price is more likely to leap around. Stocks with ATRs of say up to 5c do move slowly and READABLY, ATRs up to 8c a little faster and are very slightly more difficult to read, 12c faster still and 20c+ really quite fast and dangerous.
Of course you can reduce position size accordingly with a higher ATR and that's fine, but again for me I know that the higher the ATR the more unpredictable a move can be and I prefer READABLE stocks I know I can exit from at the time of my choice at the price on my screen and not a price which has leapt away 10c, 20c, 30c in a second or two. I don't feel I'm in control in that situation, but that again is my risk averse personality. Others will differ and that's fine. Nothing is "right" per se, it's what works for the individual and their personality and above all what makes consistent money for them every day in all market types.
Richard.
Nice thread Richard.

As I'm here, it's dumb question time. You refer to te ATR in cent terms, rather than as a % of the price? A stock with at ATR priced at $100 is far less volatile than a 20c ATR on a $10 stock. Do you not factor this in?

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Old Sep 8, 2008, 5:12pm   #56
 
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Mr. Charts started this thread I assume you mean do I normalise.
I'm not a mathematical trader and I merely use ATR as described to very roughly filter out very volatile stocks. Of course low ATR stocks can suddenly have huge range expansion.
Thinking in terms of "cent" movement is a powerful disincentive for me personally to trade higher volatility and higher priced stocks where risk is greater.
If I see the ATR is 8, for example, then I tend to think from pure experience over many years that I could very quickly get an 8c move against me if I'm trading on a 1 min candle. If the ATR is 24 then I know I could easily get it moving away from me by 24c. It is nothing more than a very rough rule of thumb and is not really mathematically based. Some might find such an approach abhorrent, but it has worked well for me for many years. If I'm looking at a longer time frame than 1 min then that ATR number is less significant.
If one of my set ups is there on a high priced high ATR stock and is triggered then I will sometimes take the trade but with a smaller position size. However that is unusual.
I tend not to trade higher priced stocks as I really like them to be readable on level 2 even if it's simply the ebb and flow; I also want them to have tight spreads. These conditions apply much less with higher priced stocks with higher ATRs. For me that increases risk and I minimise that as much as possible in my stock choice and trading.
I hope that has explained the way I use ATR better. I don't use it the way most people do, but then I don't trade the way the vast majority do.
Richard
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