I need some clarification on some strategies ...Candlesticks and PA

[magisana]

Can someone tell me is there a difference, probably a stupid question, but are they the same thing or different... Aren't candlesticks just PA?? I am confused...

What about chart patterns, are they focused on using Candlestick or both bars and candlesticks...

Also another thing... support and resistance..
Say the price has been moving up (4hr just for eg) so your in a up trend. Is a breakout strategy when price moves above a level of previous support/resistance? How do you establish your exact entries? I am starting to recognise different patterns, but I don't really know how I am supposed to judge my entries and how long to hold the position for until profit. Do I wait for a pull back before entering...
Can someone please recommend a book on this so I can get the clarfication I need.
Also I am not fussed on having various MA all over my prices as I find it to hard so I want to focus on maybe only a couple of indicators for confirmation, but mainly use PA ... Anyone doing this?

 

[tomorton]

Good question to ask because I think there will be lots of possible interpretations here. For me, yes, candlesticks are the best picture of PA. After that, 'swing' bars (HL bars coloured according to Rivalland: blue for higher bars, red for lower, orange for inside, black for outside). Point & figure would be my third reference. I look at very few indicators, and I suspect PA enthusiasts will agree here, that's the point. I use EMAs to confirm trend direction and strength and RSI to keep from entering buying potentially overbought/sold markets.

Most chart patterns will be easily recognisable whether you're displaying candlesticks or OHLC bars, it depends more on what you're used to. I find dark cloud cover, dojis etc. easier to recognise with candlesticks but some do this well enough from OHLC bars if that's what they're used to. These are invisible from HL bars of course.

Larger scale patterns like head & shoulders with months of construction should show up whatever you use.

On s/r, I hate to buy at the highest recent price / sell at the lowest. Quite often this marks the start of a retracement, and the exit will be a long way off. I prefer to buy just after the retracement seems to have ended with price re-finding trend direction, with the extreme of the retracement as the stop.

There are many good books available, but I find I have given them too much creed over the years. Far better to take in all you can from actual traders writing here about the same markets you trade today, not, say, the S&P as it was 20 years ago. Buit no doubt some suggestions will come in.

 

[magisana]

thanks for the reply tomorton.... so you are saying the you would enter a trader after a retracement as occured first and then started to continue with the orginal trend...

Also you confirm entry using the RSI? What does it mean when you check for the overbought area etc...

Good you possibly give me a picture eg and point out a trade, that would be really helpful.

Also I am interested in Point and Figure, but can you tell me whether this would be best used on a higher time frame?

What about scalping? I am still trying to decide whether I want to be in and out of a trade the same day as i will have to start with a small account, or whether I should try Swing Trading.. which one is the least stressful in your opinion. ( I was thinking that scalping, If i could find a suitable method and with practice that I would be able to grow my account more quickly and rely on compounding and then once my account has grown, slow down the pace and do swing trading, as I have 3 little children to take care of during the day, I am worried about being distracted whilst in the middle of a trade)

 

[tomorton]

On entry - Yes, e.g. find a strong uptrend, wait for it to retrace for 3 or more days (I am a swing trader). On next day that it breaches previous day's high while not breaching previous day's, go long, using the previous day's low as stop. Reverse this for shorts obviously. Price at entry should now of course be lower than it was 3 or so days ago, but rising again, and stop should be not much more than a single day's range away.

Use of RSI - I curently use 8-day RSI ('Simple'). If this is above 50/100 when I wish to go long, I try to let the trade go, wait for the next opportunity: vice versa for shorts.

Example - Dow 23/09 reaches high 9918 in a beautiful uptrend, then retraces over 7 days to 02/10 to low 9430.1. Next session the index breaches the 02/10 high 9524.8 but does not breach 9430.1 Go long on 05/10 at a bit above 9524.8 with 9430.1 as stop.

P&F time-frame - I have never seen this used for intra-day charting, but maybe somebody else here can comment on this.

Scalping - I don't do intra-day stuff (no time, too stressful, too hard to not fiddle with open positions), but a caution on terminology - scalping is only one type of intra-day, and very few people are strictly scalpers. Intra-day trading is not any easier than multi-day, though its possible that if you're really good you could start with microscopic capital that would not be viable for multi-day and work it up to a good sum. But that would demand very very fine trading indeed. Whatever you do, make sure you have a stop and make it automatic if you must leave the screen with a short-term trade on.

 

[magisana]

Ok so If I am looking to learn more about day trading then it can be called various things, such as scalping, short term trading, etc.. correct? Got it, so I'll start to do some research on that also. I do have to consider the fact that I can't be at the computer at all times, however I trader Forex because the time zone for London is good for me... ( kids are sleeping) so I still might be able to make it work. Now I just need a solid method and practice practice practice. think I'll be doing alot of reading. Thanks so much for the example.

 

[t2wfx]

I do have to consider the fact that I can't be at the computer at all times

I think intraday or swing trading is better suited for you. You just need (on average) 30 to 60 minutes to analyze the market and open a trade base on your analysis. Come back and the end of the day or tomorrow, check your results and repeat...

 

[magisana]

I think intraday or swing trading is better suited for you. You just need (on average) 30 to 60 minutes to analyze the market and open a trade base on your analysis. Come back and the end of the day or tomorrow, check your results and repeat...





I think that you may be right, I guess everyone figures this out in there own time after trying a few ways. Thanks for the advice.:cheesy: