If You Can Draw A Straight Line (You Can Become A Successful Trader)

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dbphoenix

Legendary member
Given the newfound popularity of "trading price", and as slogging through my old threads is a punishment I wouldn't inflict on my worst enemy (well, yes, maybe him:)), I offer the following as a result of my never-ending efforts to make all this as simple as possible.

Straight Line Approach, The​

Keep Your Hands And Feet Inside The Stochastic
Until Your Oscillator Comes To A Complete Stop


Charts are among the most mysterious aspects of the financial markets that the beginning trader will face. For many people, charts look like a child's experimentations with a Spirograph. But charts are really nothing more than stories, using symbols rather than words, like algebra uses symbols instead of numerals (yes, I know that words and numerals are technically symbols, but you know what I mean). They are a bit like the storyboards used in producing movies and cartoons, except we use dots and lines rather than drawings or photographs. Understanding the stories these charts are trying to tell can make you money. Or, at the very least, save you what could become a great deal of money.

Many technicians and technical analysts sabotage their own case by making the subject of charts and charting so elaborately complex as to be ludicrous. More than a few beginners have visions of wizened old crones with palsied hands, stroking – in a vaguely obscene way – ancient leather pouches filled with dessicated chicken bones which they scatter onto pitted and scarred tables while muttering invocations to Chaikin, Bostian, Donchian.

These technicians then explain the results of their analyses much as Lewis Carroll might, by pointing out how brillig the pattern is, and how the slithy toves are gimbleing in the wabe, while over here (they point), the borogroves are mimsy, which indicates a possible outgrabe by the mome raths, unless of course the Bandersnatch whiffles, in which case . . .

It's just not that hard.

A chart is a visual representation of transactions. The results of these transactions are depicted by either a line which will look like a map of the Pacific Coast Highway, or by a bar which represents the opening price (the little notch on the left side of the bar), the low for the day (the bottom of the bar), the high for the day (the top of the bar) and the closing price (the little notch on the right of the bar). At the bottom of the graph you'll usually also find volume bars which will tell you how many transactions were completed that day.

But beyond all this, a chart is a visual representation of buying and selling behavior on the part of investors, not just a tally, and this behavior creates patterns, like ranges, or "boxes". Thus if you approach this from the viewpoint of psychology and sociology rather than cut-and-dried mathematical models, you'll have a leg up. These patterns do not exist in nature. They are created by the buying and selling dynamic.

(for the rest, see the pdf attached below)
 

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M

member275544

made me want to draw trend lines all over again and I gave them up years ago
great piece, cheers DB
 

tar

Legendary member
If you can differentiate between green and red you can become a successful trader .
 

counter_violent

Legendary member
Oh goody....this document demands serious study, from newbies all the way up to seasoned campaigners.

Welcome back DB....( assuming you are back ! )
 

dbphoenix

Legendary member
I should say that a chart helps those who can read it or rather who can assimilate what they read. The average chart reader, however, is apt to become obsessed with the notion that the dips and peaks and primary and secondary movements are all there is to stock speculation. If he pushes his confidence to its logical limit he is bound to go broke.

There is an extremely able man, a former partner of a well-known Stock Exchange house, who is really a trained mathematician. He is a graduate of a famous technical school. He devised charts based upon a very careful and minute study of the behaviour of prices in many markets -- stocks, bonds, grain, cotton, money, and so on. He went back years and years and traced the correlations and seasonal movements -- oh, everything. He used his charts in his stock trading for years.

What he really did was to take advantage of some highly intelligent averaging. They tell me he won regularly -- until the World War knocked all precedents into a cocked hat. I heard that he and his large following lost millions before they desisted. But not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish.

And all a man needs to know to make money is to appraise conditions.

--Jesse Livermore
 

dbphoenix

Legendary member
Oh goody....this document demands serious study, from newbies all the way up to seasoned campaigners.

Welcome back DB....( assuming you are back ! )

Thanks for the compliment. At least it took serious writing. If one is to get the most out of it, then, yes, it does demand serious study. Whether it gets it or not is another matter.

There've been times when I've thought I've wasted the last fifteen years, but then if I hadn't done what I did, I wouldn't have come to the realization that reading Wyckoff was not enough for those who were new to it. Not nearly enough. Much less studying it, which few people were willing to do. Nor was my insistence on journals productive. Why? Because I never addressed the fear. I never realized -- until a couple of years ago -- just how bad it was. And over the past fifteen years, it's gotten much worse. One can go on about trading plans until he turns blue, but if the trader is paralyzed by fear when the time comes to hit the Transmit button, the trading plan is useless. And I'm sure that the average trader has come to understand this, which is why so many of them have abandoned the whole trading plan notion, if they ever put one together in the first place.

So I came up with the SLA. Training wheels for the beginner, the way back for the damaged trader. It's specifically designed to build confidence, to generate success. Not that it always has the desired effect. There's still the fear. And if the fear is immobilizing, then I know nothing this side of therapy which will improve the situation, and I don't have the time to go there. The trade who needs it is really better off just quitting.

However, even some damaged traders are beginning to work their way back, and good for them. I hope they stick to it, though it's really up to them, depending on how much they want it.

Hope you enjoy it.

Db
 
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barjon

Legendary member
Good to see you db.

Aye, sticking to your trading plan is dead easy on paper, harder when you've got a bit of cash on the line and often extremely difficult when you've got more cash on the line than is comfortable.
 

dbphoenix

Legendary member
Good to see you db.

Aye, sticking to your trading plan is dead easy on paper, harder when you've got a bit of cash on the line and often extremely difficult when you've got more cash on the line than is comfortable.

Here's something to chew on:
 

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timsk

Legendary member
Hi dbp,
In your previous incarnation on T2W, I wondered if the phoenix part of your username had any significance. In line with classical mythology, clearly it does!

Welcome back.
Tim.
 

dbphoenix

Legendary member
Hi dbp,
In your previous incarnation on T2W, I wondered if the phoenix part of your username had any significance. In line with classical mythology, clearly it does!

Welcome back.
Tim.

Actually, Whack-A-Mole would be more accurate . . .
 

Pat Riley

Established member
Keep Your Hands And Feet Inside The Stochastic
Until Your Oscillator Comes To A Complete Stop

That made me laugh. I'd only had a conversation earlier today with a colleague about technical analysis and he'd said there was a bit of mileage in the old stochastic. It's all smoke & mirrors ta me, but when she showed me the entry and exits for directional traders I almost thought it looked like a good deal.

Nothing is ever perfect all the time, especially with summer trading volumes, but I suspect Mr. B has the germ of a good idea if yer willing to put in the effort.

Good man. How's that dry desert air?
 

dbphoenix

Legendary member
That made me laugh. I'd only had a conversation earlier today with a colleague about technical analysis and he'd said there was a bit of mileage in the old stochastic. It's all smoke & mirrors ta me, but when she showed me the entry and exits for directional traders I almost thought it looked like a good deal.

Nothing is ever perfect all the time, especially with summer trading volumes, but I suspect Mr. B has the germ of a good idea if yer willing to put in the effort.

Good man. How's that dry desert air?

Mr. B?
 

dbphoenix

Legendary member
These threads aren't going to do anyone much good. Most of the charts are gone, so many of the comments refer to stuff that is no longer there. Plus one has to elbow his way through all the trolls.

I suggest just skipping all that and focusing on what I uploaded to post #1. Plus spending a lot of time away from T2 isn't exactly fair to T2.
 

BSD

Veteren member
Hey DB kudos for a job well done !!!

That should help some people along on their path to financial freedom.

I seem to recall that we had our altercations in the past, but that musta been down to semantics or web ego or whatever, as we certainly seem to trade in a similar style, buying the first dip in a new uptrend, selling the first rally in a new downtrend.

Where you use trend lines I use moving averages, plus stochastics to gauge pullbacks, but essentialy the price action on what we're doing is based on is the same.

Good stuff that always has worked, and always will, because it's simply aligned with the way price moves in never ending cycles.

On a different topic.

I really owe an enormous amount to good old Buffy (and Nqoos excellent site as well), and all her outstanding teachings and common sense lectures on trading, money management, price action etc.

Unfortunately when I was starting out in the late 90's I never actually got in contact with her, just read all the stuff she wrote over on her site.

Now trying to put that to rights I sent her an email a couple of weeks ago to give her a heart felt Thank You for all she did for me.

She really is a fantastic person !!!

Unfortunately I never got a reply, and also haven't seen her post anything new in ages.

Do you have any idea if she's OK ?

Thanks mate and all the best to ya.

:)
 

dbphoenix

Legendary member
Quite honestly, except for Albert, I really don't remember the altercations, much less what they were about. I hope that by a certain age one gets past all that. And a number of people have died, which leads me to believe that many of us are older than we appear to be. That as much as anything else led me to put this book together. I suspect that many younger people think the internet is forever, but those past middle age know quite well that many sites simply blink out, never to be heard from again. And what happens to everything one has written? Some sites, like The Motley Fool, become an industry, and will likely be going strong when we're all been scattered over the Grand Canyon.

As for Buffy et al, once I got past patterns and indicators, I lost track of a lot of people. I get emails occasionally from people I haven't heard from for years, but the internet isn't what it used to be, and a lot of sites have become toxic, and one begins to forget why he/she began posting in the first place. God knows how old NQoos is, or what arrangements he's made, if any, for someone to take over his site when the time comes.

You were right, though, to at least try to contact Buffy. Another bit the dust just a few months ago, and I hope he understood how grateful his fans were. As nobody writes letters anymore (what's a "letter", Daddy?), it takes only a few minutes to email someone and let them know they're appreciated. Even though they might not respond, the emails are nonetheless appreciated, even if only by those who are left behind.
 

BSD

Veteren member
Well said DB.

And great karma to you for having put that really excellent book together.

That's what Buffy and Nqoos did for me in the day, and that's what you're doing for the next generation and you, like them, put a lot of time and effort for free into that really great project, giving others the tools to get to where they want to go !!!

That book of yours really has everything anyone could ever need to make it as a net profitable trader.

And before that disappears in the depths of T2W at some point I think it would be an excellent idea to add it to the sticky threads or the article section here where it can always be found with ease.

Not quite sure who else passed away recently you're alluding to, but I was aware that Judy wasn't exactly young anymore when I discovered here some 15 odd years ago, but you may remember our TheBrambles here who has passed away far too early.

Anyway, it's great there are people like you willing to give so much to others out of sheer kindness.

Best,

Markus
 
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