Is it true, you can trade without indicators and candlesticks?

[Prawnsandwich]

Originally Posted by DionysusToast
PS - you have missed the point entirely. Of course the DOM can be manipulated, that is the point. The manipulation occurs for a reason. Please keep up.

As usual you are trying to change the point of the discussion. Of course the manipulation occurs for a reason, otherwise it would not be manipulation would it. That was not my point however.

You said candles were useless because they could be manipulated. I responded, that the logical follow on to your argument was that if the method / instrument could be manipulated then it was useless, and that this would have to also to apply to DOM. Simple logic.

Of course, your argument does not hold up in either case . Neither are useless. Again, to be clear, I never said that DOM was useless because it could be manipulated.

Thus far, all of your posts on this threads are attacks on me. You have failed to actually come up with any defence of your TA or attacks on my assertion that it is not enough. I have detailed various ways DOM/T&S can be interpreted and how that can give a chart only trader a skewed view.

No - they are not attacks on you . They are responses to your ridiculous assertions that charts / TA / candles don't work and nobody is profitable from their use.

At the end of the day though, you have brought into a faith. There ARE a lot of books on TA as books make more money than TA does. There are a lot of bibles too and a lot of Korans, in fact thousands of books on all kinds of religions. By your measure the sheer quantity of books/preachers means they must all be right. I think you need to get the Mullahs and the priests together and work on world peace.

Ehh, I hate to break it to you buddy but there is only one Koran and one Bible. Maybe, just like you have "the skills to review the huge domain of TA which nobody on this planet has managed to do" (paraphrasing I know ), you have some secret religious knowledge of all of these thousands of bibles and korans out there....maybe you are some kind of prophet...sent forth to cast the evil that is TA into the darkness....

You have mentioned posting a chart to "show me how to daytrade" but you backtracked on that and we both know why that is.

Again, I have to correct your usual misrepresentation of what has been posted already. I never said I would post a chart. I said that I could, but that I couldnt be arsed as I didn't want to show you how to daytrade..therefore no backtracking took place.......now, I could cut and paste the relevant quotes again, but I wont bother as its all there already in the thread for anyone to see.....

On the other hand, I have presented my reasoning & examples and for you I will provide yet another.

The implication being that I could not support my position with any examples. Again, simply not true. I gave you the example of your mentors system (Mr. Charts) , and I also gave an basic TA interpretation of a chart in post no. 126.

Again, your just making stuff up.

The breakout - TA Traders Trap
At the high of day, there are many games in play. We already know that the ES is a 'faders' markets and it like to put in reversals at high of day/low of day, pre-market high/pre-market low. This makes these areas prone to 'gaming'. You will often see false size on the ask to convince people that the time for a reversal is at hand. People will go short and then the size will flip to the bid, price will run through the high - often just a few ticks and take out people's stops. Whilst showing size on the ask, the flipper will be buying. When he pushed price through the high and gets out, he knows he has 2 types of TA traders buying his shares. These are the new shorts getting out and the breakout traders getting in.

At this point, the 'flipper' will quite possibly be done with his 5000 contract trade and retire to the humidor.


This will be repeated a few times, which is why, even though it's a faders market, you will see the ES pierce it's high/low 2 or 3 times before turning around and going for the high/low on the opposite end of the range. Look at a chart, it is there.

So you accept that this type of activity shows up on a chart....you state that TA traders get caught out here....not entirely true, as mainly inexperienced TA traders with no knowledge of the market would be more likely to get caught out.

Failed break-outs / range reversals are one of the most common and simple TA set-ups.....I'm not going to go into all the detail here, but PozzyP has a good thread setting out this approach.....so again no point in reinventing the wheel...

Now, don't get me wrong (or misrepresent me), everyone knows that tape reading / DOM, can be an effective tool in playing the type of action you described above....

Now,it's not only the TA traders getting run over in this way. Sometimes, these big boys take on each other. The only thing these big fish have to worry about is bigger fish. Often you will see someone holding a price level which means they sit there on the ask (at high of day) absorbing all of the buying. This is often done without any iceberging or spoofing, it's just a load of size sitting there for all to see that doesn't move when trades hit it. This most often leads to a reversal but there are times when someone will take this guy on. When this guy gets run over, he has to cover. The problem though, is that he's been building a large position, so when he gets out, he does it with size.

The first example is a breakout. The second example is a breakout with volume confirmation. What the tape will show you is a flurry of exit orders, not consistent buying which is why you know there is no additional interest in moving higher. A textbook TA trader will not see this and may see breakout + volume and get stopped out as the market goes looking for interest in the opposite direction.

An experienced trader will wait for pullback and retest of the break-out level and then continuation in the direction of the break-out before entering.....

Of course, an inexperienced / poor TA trader will likely get stopped out in these kind of situations. Likewise, an inexperienced DOM reader will constantly get whipsawed / chopped around if not familiar with the particular market, participants, or the gamesmanship that goes on ...

It boils down to the experience and proficiency of the individual trader, not that use of DOM negates or is superior to TA...which appears to be the point you are making...

 

[Prawnsandwich]

Similarly, the answer in the search for a set of mechanical rules to trade might be that discretion is not so scary or difficult. It just appears that mechanical rulesets should be the easy, less emotive route. This is not the case.

Nobody on this thread said that TA should be applied only in a purely mechanical sense, without any interpretation or discretion....although, there are many methods of trading using TA, ranging from algorithm based high frequency trading, to more interpretative methods which view TA more as an art than a science....where discretion is part and parcel of the methodology.....where experience gained from looking over many thousands of charts becomes part of the methodology...hence the oft repeated concept that a trader should take a methodology, adapt it and make it his own....

And not all TA "text books" advocate purely mechanical approaches....even Elders methods take on board an element of interpretation / discretion...

Can I ask DT, did you take a purely mechanical approach during your TA phase ?

 

[Prawnsandwich]

I think the answer to that has to be "the story". For instance, if you become expert in finding beaten down stocks ready to pop back up to the upside, you'd need to first find stocks that had been beaten down. This is in the price change. Then you'd need to figure out if there has been an overreaction or not - that is all down to the story itself - why has the stock been sold/shorted ? Is it a stable company with little debt that can weather a storm ? Is there a lot of shares short which would add to upside pressure ? Has it dipped below a point at which institutions had to dump it (and conversely may buy again when it rises). There's so many variables but all stories are different, you just have to weigh up the situation and figure out if a pop is likely.

What if the carry out the above exercise, (which to me appears to be fairly vague and generalized) complete your analysis, enter your position, only for the overall market to plunge, taking your position with it...sort of renders it all worthless ?

Also, not so sure that share price would necessarily correlate with the above factors in the short to medium term, and in the long term you are subject to the larger market and economics...we all know of companies where share price bears little relation to the value as per earnings or the potential of the company..

Anyway, the TA trader would argue that the signs of the potential pop you are referring to would likely show up on the chart in advance, either through insider buying / insider trading/ institutional accumulation etc..

If you had a good opportunity like this, you'd be one of the people buying before the chart-only traders brought. You will have the chart-only traders coming in at various points to sell to on the way up. You will not be the bag-holder.

You may get in early, but there is also increased risk of you being wrong...you would have to be confident that your analysis of the company was robust...

Would you have access to information that market insiders or institutionS would have, or would you be relying on Yahoo Finance, CNN, CBS Marketwatch etc for your info.

How long do you hold your position waiting for the pop, months, years ?

Chart traders would only enter when a move is definitely happening, with experienced traders probably seeing the signs relatively early, and can enter with with increased probability of a successful trade, and clear definition of risk....

Now obviously there are those who will buy at a top / after the move has happened...but I would suggest that a lot of these would be participants who have little of no knowledge of charting / TA / trends / tops etc etc. ...maybe who have heard that the company was a "value play "on Motley fool or Yahoo Finance...

At the high of the day, large size sits on the ask side. Smaller size on the bid side. This makes the market look weak. New shorts enter the market with a stop loss (i.e. buy orders) above the high. Breakout traders also have buy orders above the high. At this point, we know that if we buy below the high, we can sell to those people with stops/new buy orders above the high.

So - the ask side has more size than the bid, people are selling and the person who has size on the ask side is buying up all the contracts being sold - but with an iceberg order on the bid side. The bid side looks smaller but if you compare actual trades with the order size, you will see actual trades way outnumber the size at the bid.

Eventually the size on the ask side disappears and the size on the bid size increases. The size has 'flipped' to the other side. Then people jump in & start buying, price goes through the high and hits those buy orders. The person that was buying has his orders to sell at those levels. He may have gone for 6 ticks but he may have built a 10,000 contract position.

The whole exercise relies on suckers who trade common TA setups.

No. Experienced TA traders will wait for a break of resistance, in this instance the high, a retest, and then continuation of the move. We all know that most break-outs fail.

 

[Prawnsandwich]

Just something to think about. When you have a positive expectancy, this is not a fixed figure, it changes with every trade, so you cannot be certain how large your edge is.

Secondly, and I think more relevant to this discussion. If you use several things: TA + fundamentals + discretion + DOM + others for your trading decisions, you have no clue how much each of those components is contributing to your overall edge. You can't solve the equation to find each component (try to solve the equation t+f+d+m+o=10, where you're not even certain about the 10 ). Also this is YOUR version of TA/fundamentals/discretion/DOM, not anyone elses. Another person may have a different contribution for each component. They may be better at TA than you, but worse at fundamentals.

For these reasons, I think someone who has thought about how to win, and why they win, should avoid generalities such as "this doesn't work" or even "standard textbook TA doesn't work".

The danger is that if you take Dionysus for example. He may have something of importance here, that could add to your success - reading the DOM and reading the 'story'. But his message gets lost because he makes a generalised statement that TA doesn't work. So his message is likely to be ignored by those who know that TA DOES work for them and possibly think that because DT is wrong about TA, then he must be a less developed trader (which may not be the case).

I agree with a lot of the above...but would make the following points :

DTs main point, how he started the thread in response to a newbie query, was that TA and candles don't work...and that nobody was profitable from TA...this is his constant theme on this forum...that he had as much knowledge as anyone on this forum regarding TA and could categorically advise all newbies to ignore EVERYTHING about TA....this is the argument.

Tape reading and DOM then got dragged into the discussion, and we all know that these can be effective tools when used correctly in certain situations ie short term trading / scalping...and can used as a standalone tool or in conjunction with charts..but DT appears to be proposing these as a sole alternative to TA...

I don't see DT as expanding in any particular great detail in relation to Tape /DOM as it is a well known and commonly used method of trading...

 

[Prawnsandwich]

So it is the case with TA. People are married to it without rhyme or reason. Perhaps it is down to the amount of time they put into it. Perhaps it is because they see no other solution. People certainly don't stick with TA because they understand why it should work - you only have to look here to see the "It just works" mentality at play.

Personally, I just enjoy having a bit of a tustle, I don't expect to convert anyone....

Well, maybe the obvious reason why people are "married to it" is that it makes money consistently for them. I know that this is the point which you just cannot appear to accept or grasp, and therein lies the problem.

 

[Prawnsandwich]

Are we talking TA or T&A?

By the sounds of it there wasn't much T & A involved from the friends point of view...

 

[DionysusToast]

Well, maybe the obvious reason why people are "married to it" is that it makes money consistently for them. I know that this is the point which you just cannot appear to accept or grasp, and therein lies the problem.

There is absolutely zero evidence that this is the case, PS.

You yourself said you could post a simple chart to teach me how to trade but have backtracked and made excuses about this. Should we continue to be coy about why this is the case.

What about a pin bar at an important S/R level - does this not convey whether bulls / bears are dominant at that point ? ie buying or selling pressure....

Pins bar in many cases could be a block trade going through away from the current bid/ask. This will create pin bars in lower timeframes and will make TA traders salivate and tape readers reluctant. It is precisely this type of TA that puts you on the wrong side of the market.

By the way I'd post you a simple chart showing you how to daytrade, but I'd prefer to leave you wallow in your own self-agrandised ignorance....

Many thanks for allowing me an opportunity to prove my point....its hugely appreciated , really, but TBH I couldn't be arsed showing you how to day trade using a very simple effective candelstick / bar pattern....and I'm not talking about any complex pattern from Nisson....

Yup - can't be bothered ? Seems like you can be bothered enough to keep posting here but not enough to prove your point. Any further comment by me would be superfluous.

Why not move on & do what I have done? I have shown clearly how the use of TA will trap you on the wrong side of the market in the short term. You have done nothing to defend TA except say there's a lot of it so it must be right.

For a start - why not say WHY you think a particular aspect of TA works & if why you think it's applicable to all markets in all timeframes. Why not get specific ?

Let's say for a second that candlestick patterns worked. Why would quants & arbitrage trading exist ? For a laugh perhaps ? Why go to all the bother of complex statistical trading models when in actual fact you just need a few red & green candles to evaluate the markets and you can trade outright positions with impunity, oh yes... of course, pin bars need to be included too.

Of course, you can continue to believe that there's a simple, easy to follow, mechanical edge in the market that hasn't been exploited to death by the billionaires at Goldman despite being around for hundreds of years.

 

[DionysusToast]

I agree with a lot of the above...but would make the following points :

DTs main point, how he started the thread in response to a newbie query, was that TA and candles don't work...and that nobody was profitable from TA...this is his constant theme on this forum...that he had as much knowledge as anyone on this forum regarding TA and could categorically advise all newbies to ignore EVERYTHING about TA....this is the argument.

Tape reading and DOM then got dragged into the discussion, and we all know that these can be effective tools when used correctly in certain situations ie short term trading / scalping...and can used as a standalone tool or in conjunction with charts..but DT appears to be proposing these as a sole alternative to TA...

The reason it is so important is because it is through these methods that you see how people take advantage of those trading on TA alone. It is used to illustrate the point. You only have to watch it day in, day out to realise the gaming going on that is not even touched upon in the TA literature.

II don't see DT as expanding in any particular great detail in relation to Tape /DOM as it is a well known and commonly used method of trading...

LOL @ well known & commonly used.

Tape reading is indeed well known but it there is very little useful information in the public domain on it.

Of course, you are free to point the readers towards all of the useful literature and information out there on Tape reading as it applies in 2010.

Of course, Pin Bars it isn't...

 

[wallstreetwarrior87]

I
I don't see DT as expanding in any particular great detail in relation to Tape /DOM as it is a well known and commonly used method of trading...

Virtually everything that is written in relation to the above is rubbish. All you will be able to obtain is information such as:

Size on the bid = lots of buyers

Pulling the bids is a spoof etc

No sh*t sherlock!

However it serves a beneficial purpose; investigate what has been written, understand it but dont buy into it! Work all the possibilities out for yourself and you will be miles ahead of your opponents with regards to understanding what is going on.

The TA that everyone is talking about is a result of this, but without understanding the foundation it means nothing more than fancy pictures, patterns, candlesticks or whatever you want to call them.

That is the reason why pure TA traders struggle to achieve high strike rates compared to traders who trade form understanding the whole picture.

 

[Prawnsandwich]

The reason it is so important is because it is through these methods that you see how people take advantage of those trading on TA alone. It is used to illustrate the point. You only have to watch it day in, day out to realise the gaming going on that is not even touched upon in the TA literature.

Well first off you yourself have said that L2 / tape is not applicable to longer time frames than scalping / active day trading....theres a lot of trading that goes on outside these relatively limited timeframes...

LOL @ well known & commonly used.

Tape reading is indeed well known but it there is very little useful information in the public domain on it.

I'm finding it funny that you find this funny, but then go on to effectively contradict yourself in your next breath by agreeing that "it is indeed well known". And it is commonly used by active daytraders / scalpers.

Level 2 and T & S comes as standard with direct access brokers and retail brokers..... the likes of TD Ameritrade provide it as standard to all the newbie retail traders who no doubt spend hours every day watching the ladder move up and down trying to make sense of it all, thinking they can interpret the block bids coming in on the bid / ask.....

Of course, you are free to point the readers towards all of the useful literature and information out there on Tape reading as it applies in 2010.

Well you apparently are the expert on the matter on this forum (along with TA), so are you saying that there is no useful info out there on the topic ? In the whole wide world and interweb ? Is that what you are saying, that you effectively have some secret insights into the subject ?

Of course, Pin Bars it isn't...

Really ? Golly gosh - thanks for that insight

 

[wallstreetwarrior87]

Just to play devils advocate;

If anyone can find, or has found anything about tape reading above and beyond the obvious, then this thread would be a good place to post it.

Personally I think we will be waiting along time.

You need to know why anyone would want to use it in the 1st place. High level reading of orderflow goes way beyond level 2, DOM etc

But because there is an obsession with it, this area should be at least looked into.

 

[megamuel]

Without trying to start any arguments, DT has given an example of how he uses tape/DOM to trade and unless I have missed anything PS has not said how he uses TA to trade. I've been trying to learn to trade now for 2 years, always by using technical analysis and I'm not at the stage where I am able to trade it profitably yet. In fact, I am staying out of the market until I believe I can. Recently I've been having doubts about the effectiveness of technical analysis. Notice I say doubts - I still have some belief! The main reasons for my doubts are:

1. Everything I have tried doesn't work! Ok, I know its not saying much as I've only touched the surface but it does contribute to my doubts. I've tried methods of my own, from books, websites etc. and haven't found anything that works.
2. The professional traders don't seem to use technical analysis or even charts. Its mainly retails traders and we all know the statistic of their success.
3. The only people that appear to post winning trades on this website are all vendors and lets face it. Why sell anything if you can make consistent money from the markets. Same with books. I spend good money on the book, apply strict discipline to the method in the book. Doesn't work. Feel robbed. Even "Mastering the Trade" which everyone raves about - show me a method in there that actually works.

Anyway, there is still a part of me that wants to believe TA works. I'll keep plugging away for now at least. But my question to you PS is - can you give an example of when TA can be used profitably?

Sam.

 

[SH-101]

can you give an example of when TA can be used profitably?

I have no intention of getting involved in another TA-vs.-non TA debate - at the end of the day there are countless ways of approaching the markets and everyone needs to find their own way - but I've been running a journal for a while of live trades based on TA at http://www.trade2win.com/boards/trading-journals/88326-spreadbetting-forex-using-ta.html

I say in the first post that I won't reveal my methods, which isn't exactly true. I don't reveal every aspect of each trade but I do show screenshots showing the basic reasoning behind each trade. My approach is based on a combination of trend, support/resistance, and divergence. Aside from one or two, every trade is called in advance.

 

[Prawnsandwich]

Without trying to start any arguments, DT has given an example of how he uses tape/DOM to trade and unless I have missed anything PS has not said how he uses TA to trade. I've been trying to learn to trade now for 2 years, always by using technical analysis and I'm not at the stage where I am able to trade it profitably yet. In fact, I am staying out of the market until I believe I can. Recently I've been having doubts about the effectiveness of technical analysis. Notice I say doubts - I still have some belief! The main reasons for my doubts are:

1. Everything I have tried doesn't work! Ok, I know its not saying much as I've only touched the surface but it does contribute to my doubts. I've tried methods of my own, from books, websites etc. and haven't found anything that works.
2. The professional traders don't seem to use technical analysis or even charts. Its mainly retails traders and we all know the statistic of their success.
3. The only people that appear to post winning trades on this website are all vendors and lets face it. Why sell anything if you can make consistent money from the markets. Same with books. I spend good money on the book, apply strict discipline to the method in the book. Doesn't work. Feel robbed. Even "Mastering the Trade" which everyone raves about - show me a method in there that actually works.

Anyway, there is still a part of me that wants to believe TA works. I'll keep plugging away for now at least. But my question to you PS is - can you give an example of when TA can be used profitably?

Sam.

First off Megamuel sorry to hear about your difficulties with the markets...obviously there are many in the same boat, and it takes many a lot longer than 2 years to get consistently profitable..

I think that your approach of stopping what you are doing till you sort things out is a good move, rather than to continue to lose money....though perhaps you could consider trading on a demo or with a very small account instead of just staying out of the market altogether as it takes much practice as we all know...

By the way its just not true that the professionals don't use charts or TA....

Having said that, I'm not sure that DT has provided specific examples of how he trades using Order Flow / DOM, but rather has expounded generally on some of the messing about that goes on amongst the participants...

Now, I could go on at length here about various general TA trading strategies - range break-outs, range reversals, trend following etc etc, in the same way that DT has discussed Tape /L2, but that would be to miss the point, and there are obviously a huge amount of approaches....and there are some good threads on this forum

As I have said on a few occasions already I am not prepared to set out how I trade or what my "edge" is, for the reasons I noted. I did give some examples of TA methods.

I'm afraid I cant just provide you with a profitable trading strategy, just like that.....and none of us know whether DT is profitable with his order flow trading....

In terms of the discussion, again I have to come back to the main argument - DTs assertion that all of TA / charting is useless and doesn't work...which is just nonsense

Best of luck with your trading..

 

[redart]

By the way its just not true that the professionals use charts or TA....

None of them?
edit: I see you've fixed it!
I was confused there for a second, given your stance thus far!

Im in a similar boat to Megamuel although have been 'in the game' even longer than him without any consistent, encouraging success. However, im not very clever, so im a bad example of what's possible from using TA (or anything for that matter!)

I would love to know what DT (who I think is a smart chap and I like his posts) thinks of the success enjoyed by various posters on this forum over the years (some quite recently) who post realtime journals and do rather well over the long haul who claim to employ simple TA to make their trading decisions?

Theres too many to mention and my mines a little blank at the monent after a day of hard labour with a sledge hammer, but SH-101, chilltrader, Gamma, LordFlasheart all spring to mind.

If memory serves me correct, these are people who have posted lots and lots of realtime calls (im not including certain posters who just tell us how good they are and use TA but never post realtime calls)

 

[Prawnsandwich]

None of them?
edit: I see you've fixed it!
I was confused there for a second, given your stance thus far!

Im in a similar boat to Megamuel although have been 'in the game' even longer than him without any consistent, encouraging success. However, im not very clever, so im a bad example of what's possible from using TA (or anything for that matter!)

I would love to know what DT (who I think is a smart chap and I like his posts) thinks of the success enjoyed by various posters on this forum over the years (some quite recently) who post realtime journals and do rather well over the long haul who claim to employ simple TA to make their trading decisions?

Theres too many to mention and my mines a little blank at the monent after a day of hard labour with a sledge hammer, but SH-101, chilltrader, Gamma, LordFlasheart all spring to mind.

If memory serves me correct, these are people who have posted lots and lots of realtime calls (im not including certain posters who just tell us how good they are and use TA but never post realtime calls)

Lucky I spotted that one - would have appeared slightly self-defeating after all the guff...

 

[Prawnsandwich]

There is absolutely zero evidence that this is the case, PS.

You yourself said you could post a simple chart to teach me how to trade but have backtracked and made excuses about this. Should we continue to be coy about why this is the case.

This is getting very repetitive - refer to previous responses.

Pins bar in many cases could be a block trade going through away from the current bid/ask. This will create pin bars in lower timeframes and will make TA traders salivate and tape readers reluctant. It is precisely this type of TA that puts you on the wrong side of the market.

Yup - can't be bothered ? Seems like you can be bothered enough to keep posting here but not enough to prove your point. Any further comment by me would be superfluous.

Why not move on & do what I have done? I have shown clearly how the use of TA will trap you on the wrong side of the market in the short term. You have done nothing to defend TA except say there's a lot of it so it must be right.

I have pointed out to you that your mentor, Mr. Charts, uses a simple TA strategy on this very forum...., which you continue to choose to ignore...

For a start - why not say WHY you think a particular aspect of TA works & if why you think it's applicable to all markets in all timeframes. Why not get specific ?

Let's say for a second that candlestick patterns worked. Why would quants & arbitrage trading exist ? For a laugh perhaps ? Why go to all the bother of complex statistical trading models when in actual fact you just need a few red & green candles to evaluate the markets and you can trade outright positions with impunity, oh yes... of course, pin bars need to be included too.

Some variety in the world is allowed...everyone doesn't have to do the same thing.

Of course, you can continue to believe that there's a simple, easy to follow, mechanical edge in the market that hasn't been exploited to death by the billionaires at Goldman despite being around for hundreds of years.

Who says it isnt ? Thats the point - BSD has previously provided you with voluminous evidence of millionaire traders utilizing simple TA...anyone can do a search for the thread..

 

[Shakone]

Let's assume TA doesn't work and by TA I mean any analysis of past price, right up to the present time. So assume that past price has no effect on the future price.

So yesterday's highs and lows, or recent swing highs and lows, won't contain any stops just beyond, nor will those stops be hunted, because previous price is irrelevant. Same for intraday. No point hunting stops, because people wouldn't put them under nearby swings, because past price is irrelevant. And there definitely wouldn't be anyone waiting to jump on the breakout, because there's no point. Breakout of what? A meaningless past price?

Of course, nobody cares whether the S&P has been going up for the past 6 months or not, or where the yearly highs or lows are, or what the trend is, or where it closed yesterday. Traders don't even have that info on their screens because it is all irrelevant. Nobody panicked on the 6th May, when it dropped like a lead balloon, nobody observed the speed price was dropping and thought, crap, I better not go long, and nobody in the subsequent days thought it was either a bargain, or that they needed to get out on a bounce. It can't be a bargain unless it is a bargain relative to past price, but we know that doesn't mean anything.

Those that entered a large trade several days ago long (or several hours), and price moved significantly down in the meantime, don't care. That's past price movement. Irrelevant. Nor do those who were short and have seen price go significantly in their favour. That wouldn't affect their decisions at all.

The options trader who has a large position and wants to hedge himself, doesn't care that price has moved dramatically and so has his delta. That's all past price, he's not going to adjust his position in the underlying is he, because of some past price movement.

When big news breaks and price of a currency has shot up 100 pips in 5 minutes, and looks to be going even higher...well again, that's the last 5 minute bar, or several 1 minute bars, and that's not going to affect what anyone does. There is no way anyone looking at that could think it is more likely to go up than down.

 

[Jason101]

Without trying to start any arguments, DT has given an example of how he uses tape/DOM to trade and unless I have missed anything PS has not said how he uses TA to trade. I've been trying to learn to trade now for 2 years, always by using technical analysis and I'm not at the stage where I am able to trade it profitably yet. In fact, I am staying out of the market until I believe I can. Recently I've been having doubts about the effectiveness of technical analysis. Notice I say doubts - I still have some belief! The main reasons for my doubts are:

1. Everything I have tried doesn't work! Ok, I know its not saying much as I've only touched the surface but it does contribute to my doubts. I've tried methods of my own, from books, websites etc. and haven't found anything that works.
2. The professional traders don't seem to use technical analysis or even charts. Its mainly retails traders and we all know the statistic of their success.
3. The only people that appear to post winning trades on this website are all vendors and lets face it. Why sell anything if you can make consistent money from the markets. Same with books. I spend good money on the book, apply strict discipline to the method in the book. Doesn't work. Feel robbed. Even "Mastering the Trade" which everyone raves about - show me a method in there that actually works.

Anyway, there is still a part of me that wants to believe TA works. I'll keep plugging away for now at least. But my question to you PS is - can you give an example of when TA can be used profitably?

Sam.

HI Sam,

I Love your honesty, can you imagine how simple and a delight T2W would be if everyone here was so honest.
Vendors would open threads with "I can not make any money trading so I will sell you my methods instead." Most Veteran members would open with "I can not trade so I am hanging around here, I've been here so long people think I know what I am doing, I love the kudos."

Had a look at your journal link.

I honestly believe that trading is not about "Mastering the Trade" (incidentally I thought it was a completely sh*t book.) but I think its about mastering your mind. (and then having a big enough account to do what you know you can do. - To have a large enough account to trade only a tiny % of it is SO important. Trading any ware near 10%, If you have 10 bad trades out of 16, you have all but blown your account.)

I don’t think it is about a system that works, there is no Holy Grail, I think it is about a system that works for you.

Have you looked at swing or position trading it may suit you better. More time to plan and do the right thing.

Smart Live Markets offer 10p a pip SB, with no time limit and MT4. This would allow you to trade with real money at PROPER position sizing and would release you from the fear that imposes a stop loss that is to tight. If you wanted to try longer time frames, a day stop loss would only cost you £8 on some currency pairs.
Then you can increase your size when ready.

You are young, do not live for trading. Get on with your life, job plans and women plans. Trade part time as a hobby, if you develop as a trader, then you can move yourself forward naturally without forcing it.

Good Luck

Jason

 

[Jason101]

hasnain, you tw*t, crawl back under your rock, scum.