barjon
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SOCRATES said:
Socrates
You often talk about the ability to react in a nanosecond but, unless scalping, is that really important? Acting decisively rather than fast was always my problem to begin with. Many's the time I planned to enter at 1533 (say) only to shy away wanting just a bit more confirmation with the result that I either missed the trade ("damn, it's 1545 now and I've missed the boat") or got in too late and just as the move was finishing.
jon
Salty Gibbon
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Brilliantly put and worthy of printing in large bold font and pinning to the wall above my computer screen alongside the famous Mr Charts equation - " Maximum Method plus Maximum Discipline = Minimum Stress".
Sounds like you've got a hell of a day on your hands but I suppose it is preferable to having sex on some chilly, windswept beach with North Sea winds blowing up your .... better leave it there.
SOCRATES
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Acting both fast and decisively go hand in hand ~ it is not good trying to cultivate one without the other. This applies to everything in trading, as it does in life. Dithering is disempowering.barjon said:
When you are driving a car, for example, and you have the opportunity in traffic to make a manouvre like for example, taking a turning through a gap, you COMMIT to do so, because, if you don't the consequences may be that at best you would confuse other drivers and at worst you could cause an accident. This is why drivers who dawdle along think they are being prudent when in reality under certain circumstances they become obstacles, a danger to other drivers.
This concept of COMMITTING applies in every timeframe, whether with equities, futures, options, forex or any other instument actively traded in a liquid market.
Back later, neighbours dropped in for coffee...
pttrader,
There are immediately problems that occur with some of the thinking within this post.
1...what about corrupted data?
2...the use of the words, ....."most likely", "usually", "most" these are words that are directly equivelent to chart set-ups, 123 reversals "usually,mostly, most likely" do XYZ.
3...VALUE, and the closeness of the numbers within financial markets are not CORRELATED in any shape or form for the vast %age of time. You will have gross overvaluation, gross undervaluation, and parity ......parity represents a small fraction of time, and is difficult to calculate with any accuracy.
Until the trend ends, or encounters a correction, etc. The problem with a system as described by yourself is that you will still require an opinion on direction and duration, as reversion to the mean may very well take place, but only to a point far outside your original entry.
Price manipulation happens consistently by market makers as this is an easy way for them to make money, and this in itself will play havoc with a numbers system. (For verification see article in this weeks Economist regarding criminal prosecution of Citibank m/m manipulation)
The point here is if you use market data, you will be manipulated, whether it be via a chart, price, whatever........your ability to be paid rests in the skill that you have in correctly calling direction and duration based on sentiment, manipulation, and momentum.
You have entered a game of as Keynes described beauty contest judges, trying to identify not the most beautiful girl, but the girl the other judges judge as the most beautiful.
Cheers d998
There are immediately problems that occur with some of the thinking within this post.
1...what about corrupted data?
2...the use of the words, ....."most likely", "usually", "most" these are words that are directly equivelent to chart set-ups, 123 reversals "usually,mostly, most likely" do XYZ.
3...VALUE, and the closeness of the numbers within financial markets are not CORRELATED in any shape or form for the vast %age of time. You will have gross overvaluation, gross undervaluation, and parity ......parity represents a small fraction of time, and is difficult to calculate with any accuracy.
Until the trend ends, or encounters a correction, etc. The problem with a system as described by yourself is that you will still require an opinion on direction and duration, as reversion to the mean may very well take place, but only to a point far outside your original entry.
Price manipulation happens consistently by market makers as this is an easy way for them to make money, and this in itself will play havoc with a numbers system. (For verification see article in this weeks Economist regarding criminal prosecution of Citibank m/m manipulation)
The point here is if you use market data, you will be manipulated, whether it be via a chart, price, whatever........your ability to be paid rests in the skill that you have in correctly calling direction and duration based on sentiment, manipulation, and momentum.
You have entered a game of as Keynes described beauty contest judges, trying to identify not the most beautiful girl, but the girl the other judges judge as the most beautiful.
Cheers d998
I will answer your points brought up one by one.
1) I use EOD data and very seldom have I gotton corrupted data. Very seldom has it every caused me any problem in my trading. Maybe 2 times in several years.
2) The words "usually" "most likely" "most" ARE NOT equivelant to saying that that a chart pattern "most likely" will do so and so. Why is it not equivelant? Simply because basing a forecast on a grafical picture that prices have formed IS NOT the same thing as using numbers that exactly represent price action. Why? Because you will be subjective in determining a chart pattern and that subjectivity will "spill" over into any forecast. However, numbers are 100% objective empirical data. I don't have to think a stock made a low price of 13.50. I can "know" for a fact it did so. However, I may "think" a triangle is forming because I seem to "see" it but someone else sitting right beside me see's something else. And remember the forecast WILL be based on what is "seen" in a pattern. Just look at post 1,2,4, 5, 7,8,10,11, 12, 13, 20 to see how different people looking at the SAME chart see different patterns and remember if they trade with patterns they see then their forecast will be based upon what ever pattern they "see". That is why I say chart reading is too subjective and we have proof of it right here in this thread. You yourself said in post 30 "Technical Analysis as a whole, incorporating all the individual methodologies espoused still shows approximately a 50% expectancy. That is to say, it will either succeed, or fail."
A good 50/50 method would be to flip a coin. Heads I go long. Tails I short. I heard of a guy in the US that had fame for being quite an astute trader. You know his method? Swing a pendulum. If it swings one way go long. The other way sell or short-sell. However, you know what "really" was the success in his system? At the end of the day if a position wasn't profitable he kicked it out before the close. If it was profitable he kept it. So, his success really was he cut his losses and let his winners run. Now I can tell you this from experience you can trade successfully off numbers and and have a much higher rate of success than 50%. Of course numbers will be off when manipulation comes into the market and I will deal with that in a minute. When I say my "usually" is "NO WAY equal to the "usually" in chart reading" it is because one is based on something very subjective and the other is based upon something exact - a number. Think about this. Linda Bradford Rascke once said "The best indicator of price is price itself". Price is thus a leading indicator of near term future price (say for the next session). And one of the best I might say!
3) When I say value I am not talking about "true" what I am talking about is what people are willing to pay for something. I bought a new Avalanche. Sticker price was over 43,000.00, if I remember correctly. Of course, I bargined and used a 4000.00 rebate and ended getting the truck for 33,930.00 or somewhere near that price. Now I DO NOT think the truck is truely worth even 30,000.00 but I wanted it. I was willing to pay the price. I see value simply as what someone is willing to pay for something. When I said "value" that is what I meant. I am not talking about true value of a stock from say the perspective of fundamental analysis. If my truck example implied that then I was wrong for leaving that impression and you were right in your criticism. I should be clearer in the terms I use. NOw, if I were investing long term you can be sure I would be very interested in "true value" however, I am just along for a short ride so I define value in any stock as any price people are willing to pay for it. I don't care if it is "truely overvalued" at the price they pay for it I am only concerned with the "immediate" value. The reason price works as a good indicator for tommorrows price action is simply because price reflects "immediate value" but not necessarily true value from a fundamental analysis standpoint. Therefore please understand when I say "value" I am saying "immediate value-what someone is willing to pay at this moment". That being said and understood then it should be VERY clear that price and immediate value ARE in fact 100% correlated. Price IS IMMEDIATE VALUE, at least for someone, because that someone just bought it at that price. And all of this is empirical and can be measured EXACTLY and postulated onto a senario for tommorow. Nevertheless, manipulation must be taken into account. I will deal with that in a minute but first the lets look at your comments about the trend.
When a trend starts the numbers will show it. When it tops the numbers will show it. When it goes down the numbers will show it. The numbers show everything that actually happens to a trend along with any corrections. Now the numbers DO NOT neccesarily tell you "why" it happened but numbers can and do show exactly what happened. Numbers can be used to not only see a trend but to also measure the velocity of the trend. As velocity slows down chances are the trend will soon begin to slow. Just like an airplane that is taking off - the thrust and momentum carry it is a certain direction at a certain speed (velocity is speed in certain direction). In the case of the airplane UP is the direction. However cut back on the throttle and velocity will slow but the plane is still headed UP. The trend is still up. Nevertheless, cut back enough on the throttle (gas) and the plane will make a trend change and start down. Now speed, velocity, momentum of price in a trend can all be measured mathematically. Volume also is a number and acts as the gas (the throttle if you will) and it also can be measured for it is a number. I say a correct application of price numbers correlated with volume numbers and individual transaction volume numbers along with Bid/ASK price AND size can all help one to determine where prices are "most likely" ( and I mean more than 50%)to go. Along with the many averages such as averages of daily range, average high/low price etc can all help. And keep in mind these are ALL numbers not subjective patterns. And when I say "most likely" I mean more than 50%. More like 80% or above. At least that has been my experience in real trading not papertrading. Now a word about manipulation.
I would dare to say manipulation takes place in every stock, every day that it is open. Where you have specialists or market makers they will most certainly manipulate. Actually, I am glad you mentioned manipulation for I failed to mention it in my first post. Manipulation is there. But again, the numbers show manipulation. There exist moment by moment manipulation by the market makers and the specialist. Much of that sort of manipulation can be detected by learning to read level 2 screens on Nasdaq stocks, and by reading the Bid/Ask price correlated with size of BID/ASK and the volume of the individual transactions as they take place. Nevertheless, even the maniuplators work within support/resistance zone. Most of the time they don't just shoot a stock way up and then allow it to free fall all the way down (however sometimes they do). You will find that the "insiders" actually create the resistance and support levels. They come in with buying to support a falling stock and will dump supply on the market to stop a rise in price thus creating a resistance level while at the same time making a profit. Why in the world would they "stop" a stock from rising? Simply because the MM and specialist are charged with creating an orderly market. If they were to allow a stock to always shoot straight up and then straight down they would have the investing public afraid to put their money in a stock that is so volatile. Therefore, "smart money" must find a way to keep a market orderly while at the same time making a profit. They do this buy creating resistance/support levels. In other words, they become sellers when the public wants to buy and when the publics thirst dries up resistance is hit because supply (of insiders) overwhelms demand (of public). The price starts down. Guess who is selling on the way down? A scared public. Guess who is buying as it goes down? Smart money! Finally they come in and heavily support the stock buying up eveyrthing in sight. Their demand begins to overwhelm the available supply (of the public) as most of the public has sold (many at a lost I might add) and so the slide down stops right where the smart money wants it to stop at. Now, having said all this consider what I am about to say next: If smart money does indeed creates resistance and support as a mechanism to maintain order in the markets and yet allow them to make a profit then knowing support and resistance levels can be useful. And numbers measure EXACTLY support and resistance levels. As a matter of fact, you can even see how different stocks tend to trade different ways by simply looking at a chart (that is one area I have found charts to be useful in). Stocks seem to have a personality of their own. I suspect it is the way the specialist manipulates the stock. It is a reflection of his maniuplation. So, manipulation does exist and it displays itself in support and resistance levels and this can be measured. As a matter of fact an average of support and resistance numbers can be made and can be VERY profitable in determining at what price a stock is "likely" (and I mean more than 50%) to hit resistance. Also, there are simply days manipulation will run the numbers way out of the norm. All that has to be done on days like that is to plug the "new" empirical data into the software and allow it to recalculate factoring in the extremes in price that took place and give a "new" forecast that takes into consideration the new numbers.
One area we haven't touched on is the emotions. Emotions can and sometime do run a stock way up or way done and there is nothing the MM's or specialist can do to stop it. It has to run it's course until it runs out. In such a case one can plug in the new data and get a new forecast but one must understand that one is assuming more risk even with a new forecast until the emotions have run there course. However, many times more risk translate into greater gains IF you happen to be on the right side. That is why stop losses are neccesary and the discipline use them an overriding behavioural pattern for successful traders. Most traders are unsuccessfull because of a lack of discipline that results in not protecting their capitol. Remember the story of the trader above". His system was simple. The key to his system was discipline!
Have a great day!
Pttrader
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Mr. Charts
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pttrader - an excellent post
I think it was Buffet who said the market is a weighing machine in the long term and a voting machine in the short term.
For short term trading:
Value is not absolute but varies with sentiment as expressed in buying/selling.
Price is merely the meeting point of exchange between buyers and sellers at any one moment.
Reading price change momentum (which does actually often occur without accompanying volume) and reversals is key to trading. Technical analysis alone is insufficient to do this, but is an important factor - as one of several.
Richard
I think it was Buffet who said the market is a weighing machine in the long term and a voting machine in the short term.
For short term trading:
Value is not absolute but varies with sentiment as expressed in buying/selling.
Price is merely the meeting point of exchange between buyers and sellers at any one moment.
Reading price change momentum (which does actually often occur without accompanying volume) and reversals is key to trading. Technical analysis alone is insufficient to do this, but is an important factor - as one of several.
Richard
Thanks Mr Charts for your comments on my post. You also made a valid point. Sometimes momentum does occur without accompanying volume. However, I find a break to the upside or downside "most of the time" without accompanying volume will not last. Many times it is a false break or a gunning of the stops by the "locals". However, that doesn't mean a false break can't be traded. But one must not hold on too long. If there is no volume it will soon be running out of gas. On the other hand, I have seen tremendous volume and NO rise or real decline in price. One can only surmise accumulation or distribution is taking place in such cases. However, when a breakout (to upside or downside) takes place ON HEAVY volume one has a great opportunity to extract a quick and large profit if they can "read the tape" and make their entry at the right moment. It is also important that one understands the "average" volume a stock generally has. Why? because a stock may break out on 300,000 shares. If it normally averages 30,000 shares then for "that" stock this would be more than average volume and could be considered a valid breakout. On the other hand, if you have a stock that averages 800,000 share volume per day and goes to 1,000,000 shares on a price increase then it would be risky to consider that a valid breakout that will sustain itself. However, if it were to breakout on 3,000,000 shares then I would say ride the break for awhile. My point is that in determining if a breakout is "more than likely" to sustain itself one must check to see if it has broken out on quite abit more than "average volume". The breakout tells you "what" happened to price. The volume tells you "how" it happend.
Now I understand that there are stocks that gradually increase in price without any real break on heavy volume. Those are the easiest to trade on support and resistance because as they slowly trend up or down the make new support/resistance levels. And this levels can be quantified thus giving one "a view" for tommorrows session. However, ones capitol may be tied up longer as you swing trade these type of stocks.
You are exactly right when you say "Reading price change momentum (which does actually often occur without accompanying volume) and reversals is key to trading." I would dare say that statement is probally one of the most important things a short-term trader could learn. Now if we look at support/resistance levels we can see that they are nothing more than "key reversal" areas. Also, pivot points are the same thing. Both are key reversal areas. Not always, but "most of the time". Usually way more than 50%. At least that has been my experience.
As far as momentum goes I would say that not only must we know momentum from day to day but also the more immediate momentum that takes place during the trading session. To some degree I have found fib retracemnet levels useful. I have seen breaks to the upside and retracments that stops right at a fib level then starts back up again. I have also seen that if a retracement from a break to the upside breaks below the .618 level then all "bets are off" that it will return to it's intra day high that was made earlier in the session. There again, not always, but the odds favor it won't get back up there. Especially, if this retracement is accompanied with heavy volume. If it is accompanied on light volume it will probally head back up some even if it broke the .618 fib level.
What we are talking about here is "reading the tape" and that is an art that takes time to learn. However, having a system that measures key reversal areas such as support/resistance and pivot points can go a long way to helping on trade short-term especially if you correlate those points with volume ("how" it reached made the reversal point and "how" it reverses). Couple that with some old fashion tape reading and you have some key ingredients to help make "smart decisions". In the end it is discretionary and requires a decision. However, my point is that "what one bases" their decision on is just as important if not more so than the decision itself.
There is one chart pattern I will trade. I will take a long position on a visible break to the downside when I "determine" it has bottomed through tape reading. I find that usually one can sell the long position the same day or by the next day with a profit. Now that is one chart pattern that is easily to read and not subjective. Anybody can quickly "see" a break to the downside.
There again I am simply trading off a "new" support level. It is a simple as that. It is still numbers.
Pttrader
Now I understand that there are stocks that gradually increase in price without any real break on heavy volume. Those are the easiest to trade on support and resistance because as they slowly trend up or down the make new support/resistance levels. And this levels can be quantified thus giving one "a view" for tommorrows session. However, ones capitol may be tied up longer as you swing trade these type of stocks.
You are exactly right when you say "Reading price change momentum (which does actually often occur without accompanying volume) and reversals is key to trading." I would dare say that statement is probally one of the most important things a short-term trader could learn. Now if we look at support/resistance levels we can see that they are nothing more than "key reversal" areas. Also, pivot points are the same thing. Both are key reversal areas. Not always, but "most of the time". Usually way more than 50%. At least that has been my experience.
As far as momentum goes I would say that not only must we know momentum from day to day but also the more immediate momentum that takes place during the trading session. To some degree I have found fib retracemnet levels useful. I have seen breaks to the upside and retracments that stops right at a fib level then starts back up again. I have also seen that if a retracement from a break to the upside breaks below the .618 level then all "bets are off" that it will return to it's intra day high that was made earlier in the session. There again, not always, but the odds favor it won't get back up there. Especially, if this retracement is accompanied with heavy volume. If it is accompanied on light volume it will probally head back up some even if it broke the .618 fib level.
What we are talking about here is "reading the tape" and that is an art that takes time to learn. However, having a system that measures key reversal areas such as support/resistance and pivot points can go a long way to helping on trade short-term especially if you correlate those points with volume ("how" it reached made the reversal point and "how" it reverses). Couple that with some old fashion tape reading and you have some key ingredients to help make "smart decisions". In the end it is discretionary and requires a decision. However, my point is that "what one bases" their decision on is just as important if not more so than the decision itself.
There is one chart pattern I will trade. I will take a long position on a visible break to the downside when I "determine" it has bottomed through tape reading. I find that usually one can sell the long position the same day or by the next day with a profit. Now that is one chart pattern that is easily to read and not subjective. Anybody can quickly "see" a break to the downside.
There again I am simply trading off a "new" support level. It is a simple as that. It is still numbers.
Pttrader
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Mr. Charts
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Pttrader,
Wow - a kindred spirit!
Haven't got time now, but will say more about this ;-)
Richard
Wow - a kindred spirit!
Haven't got time now, but will say more about this ;-)
Richard
pttrader,
Fair enough.
This is where I must disagree. You use as I understand a software program that will form a new forcast of where price "may" go. This is no different to a mechanical system utilising chart patterns as a key to triggering entries or exits. Your system simply takes the "pattern" that you particularly look for, in this case a particular range of price, and spits out an answer for you. Price congestion, breakouts, the "numbers" still form a pattern, they simply are not displayed in a visual form.
The variable we are discussing is the "human" component in trade selection. We are always going to be the weakest link, as we will invariably display all the range of human strengths and weaknesses.
And this is EFFICIENT MARKET THEORY in its purest form. If you believe and subscribe to EMT, and lets face it all short-term traders must by definition subscribe and live or die by it, then so be it. However, EMT is a fallacy that has been condemned even by those that gave birth to it. Needless to say, I consider EMT as intellectually bankrupt.
Regarding value, fine, I can accept your definition. What now is left are simply sentiment, momentum and manipulation.
Sentiment........for short-term traders can turn on a knifes edge as they are reactive to price levels to an extraordinary degree. The greater the discipline, the greater the swings in sentiment. All technical gurus preach discipline,.....stoploss discipline, entry discipline, these are responsible, ironically, for causing much of the chop and whipsaw encountered in daytrading.
I could not disagree more. The numbers will certainly show all the above in hindsite, but not in real time. Notice your duality of tense here. You imply at the beginning of the sentence in real time, ie. present tense, and conclude with past tense, ie. hindsite. The implication is clear, you are confusing what the numbers are and are not telling you. By your own definition, your system will only tell you where the numbers "cluster", that most certainly does not include all the above information.
The "WHY" is vital. Numbers without the "WHY" are pretty much a waste of time. And I do agree, the numbers in your context tell you nothing of the why.
How then do you expect to compete on the playing field with those that know the "why". Do you not think knowing the "why" might help in better decisions?
Reading Level2 screens, at the risk of offending all Level2 advocates....what rubbish. Level2 has a use, and that is for scalping. If you are going to scalp, then Level2 will be of great use. Further than that it will on occasion catch you a big move, but generally you are out with small moves. I have seen any # of posts here,......out now with $0.17 profit etc. Market makers know there is a subculture of Level2 useage, and can manipulate their book accordingly.
Regarding support/resistance levels, they play a lot of games around these levels.
I'll have to finish this later.
Cheers d998
Fair enough.
This is where I must disagree. You use as I understand a software program that will form a new forcast of where price "may" go. This is no different to a mechanical system utilising chart patterns as a key to triggering entries or exits. Your system simply takes the "pattern" that you particularly look for, in this case a particular range of price, and spits out an answer for you. Price congestion, breakouts, the "numbers" still form a pattern, they simply are not displayed in a visual form.
The variable we are discussing is the "human" component in trade selection. We are always going to be the weakest link, as we will invariably display all the range of human strengths and weaknesses.
And this is EFFICIENT MARKET THEORY in its purest form. If you believe and subscribe to EMT, and lets face it all short-term traders must by definition subscribe and live or die by it, then so be it. However, EMT is a fallacy that has been condemned even by those that gave birth to it. Needless to say, I consider EMT as intellectually bankrupt.
Regarding value, fine, I can accept your definition. What now is left are simply sentiment, momentum and manipulation.
Sentiment........for short-term traders can turn on a knifes edge as they are reactive to price levels to an extraordinary degree. The greater the discipline, the greater the swings in sentiment. All technical gurus preach discipline,.....stoploss discipline, entry discipline, these are responsible, ironically, for causing much of the chop and whipsaw encountered in daytrading.
I could not disagree more. The numbers will certainly show all the above in hindsite, but not in real time. Notice your duality of tense here. You imply at the beginning of the sentence in real time, ie. present tense, and conclude with past tense, ie. hindsite. The implication is clear, you are confusing what the numbers are and are not telling you. By your own definition, your system will only tell you where the numbers "cluster", that most certainly does not include all the above information.
The "WHY" is vital. Numbers without the "WHY" are pretty much a waste of time. And I do agree, the numbers in your context tell you nothing of the why.
How then do you expect to compete on the playing field with those that know the "why". Do you not think knowing the "why" might help in better decisions?
Reading Level2 screens, at the risk of offending all Level2 advocates....what rubbish. Level2 has a use, and that is for scalping. If you are going to scalp, then Level2 will be of great use. Further than that it will on occasion catch you a big move, but generally you are out with small moves. I have seen any # of posts here,......out now with $0.17 profit etc. Market makers know there is a subculture of Level2 useage, and can manipulate their book accordingly.
Regarding support/resistance levels, they play a lot of games around these levels.
I'll have to finish this later.
Cheers d998
Mr. Charts
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T333 is absolutely correct.
Level 2, T&S and "reading the tape" is about understanding in detail what is happening and seeing three dimensionally. It is invaluable for many different time frames and different types of trading and that is understood by the many people here who use it. For us, it is beyond "debate", it is simple fact.
Richard
Level 2, T&S and "reading the tape" is about understanding in detail what is happening and seeing three dimensionally. It is invaluable for many different time frames and different types of trading and that is understood by the many people here who use it. For us, it is beyond "debate", it is simple fact.
Richard
Your missing the point. Chart patterns ARE subjective. Numbers aren't!. If you forecast with something that is subjective you can and will have a low win rate. Chart patterns facilitate what you call the "human component". Numbers cater to actual facts. Now, I had much rather make a forecast with my basis of that forecast being actual facts than with a subjective chart pattern that "I think" I see that forming from actual facts. See, the pattern did form from the facts but what you "see", that is, the pattern your mind sees, IS quite subjective and IF you base your forecast on the subjective pattern then you are NOT basing it on the facts (the actual numbers) but on the visual display that you mind sees of the real facts. There is a WORLD of difference between the two. As proof I call you to again look at the posts made in this thread over the same pattern: Posts 1,2,4, 5, 7,8,10,11, 12, 13, 20. Now each person is going to base their trading strategy on what pattern they see! Who is right?? However numbers can't lie. For instance, I can't say I see that the stock made a high of 14.56 today and you say I see it made a high of 16.98 today. One of us is wrong! Why? because this is a measurable fact! Now base any forecasts off a "measurable" fact and you have just increased your probabilities. Take as your reference point subjective data and by definition you decrease your posibilities of being right.
That my friend is your opinion! Price itself IS the best leading indicator that I have come across. Much better than pattern reading. I doubt you have seriousley used a system that forecast future price based on recent price (and I am not talking about grafical representations of price but price itself) movements or you wouldn't be saying what you are saying.
I can't believe you said the above! You must know little about "tape reading" to say the numbers can't show you in real time. If you know how to tape read you can see the top being made before it is made. The EOD data granted is after the fact and does show what the trend did all day. It is in live trading you do the intraday tape reading. You must combine any system of forecasting based upon EOD data with actual market action the next day. You do this with tape reading. Those real time numbers (price, time, volume) do in fact make definite indications of tops being made and trends stopping. I do this just about every day I trade stocks or futures so for me this is not theory but fact. It can be done and is being done by people every day the market is open. I suggest you study tape reading some!
Now as far as the "why". What are you? A fundamentalist that is trying to convert over to technical analysis? My friend there is no way in the world you can possibily know all the reasons a stock goes up or down. You only have 3 elements to work with. Time, price, and volume. That is all you can measure. You can't even really go by news. I have seen bad news make a stock go up and good news make it go down. The ONLY thing you can measure are time, price, and volume. Do you realize that the president of a company could decide to buy his wife a 70,000.00 car so he dumps 70,000.00 worth of his stock on the market. He creates supply. How can you possible see that coming? You can't read the minds and intents of every player in a stock. You can't possible know all the "whys" of price but you can know exactly PRICE. And you can measure the "time" it took to reach a price and you can also see "how" it reached that price by looking at the volume. So don't tell me the numbers without the "why" are a waste of time. I simply DO NOT care to know the "why"! Don't need to! All I need is to know a stock is moving and "how" it is moving. Also, don't kid yourselve. Do you think the MM's and specialist have the time to study all the reasons a stock is moving or going to move? They themselves don't even know all the reasons it moves. Now they do have the power to move a market because of their "deep pockets". All we need to do to make money is jump on board and ride their coattail. Most of the time, you have to trade with the smart money not against them.
I can see you know little of level2. If you call seeing how the MM are stacking up on a stock rubbish then I must say you HAVE to be an investor trying to turn technical. Don't you think the markets makers are looking at level 2? If smart money considers it important shouldn't we? They even have level 3 for crying out loud! Something we don't have.
As far as games being played around support and resistance all I can say is learn the games and you can make some money! I do it!
Have a great day!
Pttrader
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SOCRATES
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May I topically interject to say, that Chartman is quite correct in adopting the posture that he does. I do not view it as tongue in cheek. I view it as very sensible. This is because it is would be unwise to allow anyone to misconstrue what is being discussed in an open forum or otherwise.ducati998 said:
This is because many individuals are not capable of taking responsibility for their own very actions. Therefore, in this regard, people have to be protected from themselves, and the caveat that Chartman inserts does speak volumes, but not the way you might imply.
The volumes that it speaks relates to people getting fanciful ideas about that which they know little and then, as a consequence of knowing very little, which means not knowing ALL the facts, then going and doing something they ought not to do, and which the poster did not intend in his post they ought to do or otherwise.
For this reason also it is very unwise to give any tips, for example. The tip taker is apt to blame the giver if the tip does not meet with his expections, and may resort to saying it was his idea anyway if it does.
This applies to most things in life. Therefore it is best for people to be left to their own devices in this regard, but the originator of a view has the right to protect himself against the misuse of that view, which, after all , is his own, and nobody elses'.
In a free society everyone is entitled to have a view and indeed to express it publicly if he wishes, but for the reasons stated above, it has to have a rider attached to it sadly in the case of sensitive topics to prevent abuses of goodwill, kindness and helpfulness.
You made this quote above on post #88. However, I say daytrading is very unprofitable if you don't know what you are doing. But is can be VERY profitable if you know what you are doing. The problem is most jump in without much of a clue as to what they should do.
Pttrader
SOCRATES
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This is an Axiom. An axiom is a fundamental truth. And I agree with you on the point you make. The difficulty is that aspirants jump in contaminated by assumptions.
These are not applicable to the huge obstacle course that awaits them.
The obstacle course has a perfected methodology contained within it to ensure that those not fit cannot and will not complete all the tests that await them.
In the end analysis, the successful ones succeed, not because they are cleverer or wealthier than the others, but because they are possessed of the right character, which is what neither money can buy or cleverness bestow.
These are not applicable to the huge obstacle course that awaits them.
The obstacle course has a perfected methodology contained within it to ensure that those not fit cannot and will not complete all the tests that await them.
In the end analysis, the successful ones succeed, not because they are cleverer or wealthier than the others, but because they are possessed of the right character, which is what neither money can buy or cleverness bestow.
Mr. Charts
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Indeed.
Some cannot see. Some choose not to see. Some see but cannot accept. Some think themselves too clever to see. Some will never see, for they see only themselves.
Those who see, are those who care and respect and have sense and sensitivity.
They possess "The Right Stuff" and will fly.
Richard
Some cannot see. Some choose not to see. Some see but cannot accept. Some think themselves too clever to see. Some will never see, for they see only themselves.
Those who see, are those who care and respect and have sense and sensitivity.
They possess "The Right Stuff" and will fly.
Richard
pttrader,
Continuing right along,
Lets look at some of the "whys" now I agree that you will never know all the whys, but being aware of at least some of them is illuminating.
1..The need to create volatility......The owners of the Exchange, NYSE,AMEX,NASDAQ, all charge per share traded on their exchange. The higher the volume of shares traded, the more profitable their business, volatility creates volume, therefore market makers will artificially create volatility if it is not already present. This volatility creates volume and is enhanced by stoploss discipline of daytraders.
2...Replenishment of inventory;.......Market makers need to maintain inventory, like any other business. I get an order from Mr Buffett for 60M shares of XYZ, I need to find 20M shares, what do I do........drop the price, create selling pressure, buy up at the lower prices, and deliver to Mr Buffett at a profit a little higher.
3.....Your example, simply demonstrates that you indeed know little of the "whys", under SEC regulations, an insider selling stock must provide advance dates of his selling and provide reasons for the sale. This information is public.
The "whys" just keep on going, but without belabouring the point you are obviously in the dark in this regard.
And there it is.....you are not interested. The market makers are in a very different boat to you or I, they will have the order flow which confers a huge advantage to them, they have the infrastructure and networks of their institutions behind them, with the old boy networks, but I wouldn't classify them as the smart money.
Trying to convert to T/A........no, in case you still haven't realised I consider T/A too high risk. I much prefer to make money consistently and safely.
Agreed, and this was my point......all the studies show that for the MAJORITY it is a losing proposition. Some will be successful. If you are one of the success stories, then congratulations.
Cheers d998
Continuing right along,
Lets look at some of the "whys" now I agree that you will never know all the whys, but being aware of at least some of them is illuminating.
1..The need to create volatility......The owners of the Exchange, NYSE,AMEX,NASDAQ, all charge per share traded on their exchange. The higher the volume of shares traded, the more profitable their business, volatility creates volume, therefore market makers will artificially create volatility if it is not already present. This volatility creates volume and is enhanced by stoploss discipline of daytraders.
2...Replenishment of inventory;.......Market makers need to maintain inventory, like any other business. I get an order from Mr Buffett for 60M shares of XYZ, I need to find 20M shares, what do I do........drop the price, create selling pressure, buy up at the lower prices, and deliver to Mr Buffett at a profit a little higher.
3.....Your example, simply demonstrates that you indeed know little of the "whys", under SEC regulations, an insider selling stock must provide advance dates of his selling and provide reasons for the sale. This information is public.
The "whys" just keep on going, but without belabouring the point you are obviously in the dark in this regard.
And there it is.....you are not interested. The market makers are in a very different boat to you or I, they will have the order flow which confers a huge advantage to them, they have the infrastructure and networks of their institutions behind them, with the old boy networks, but I wouldn't classify them as the smart money.
Trying to convert to T/A........no, in case you still haven't realised I consider T/A too high risk. I much prefer to make money consistently and safely.
Agreed, and this was my point......all the studies show that for the MAJORITY it is a losing proposition. Some will be successful. If you are one of the success stories, then congratulations.
Cheers d998
pttrader,
Well goddamn!....I reckon its a 50/50 call.
Tosh.......and the reason is, that for the numbers to reveal FACTS, they must have a context. The context that you are examining them under is the context of the MARKET, which we are both agreed upon can and is manipulated. Therefore by definition these numbers have no validity on which to base your conclusions.
Cheers d998
Well goddamn!....I reckon its a 50/50 call.
Tosh.......and the reason is, that for the numbers to reveal FACTS, they must have a context. The context that you are examining them under is the context of the MARKET, which we are both agreed upon can and is manipulated. Therefore by definition these numbers have no validity on which to base your conclusions.
Cheers d998
