Naz
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Grey1
whilst thankfully you are someone on here who understands that you have to have a set methodology with strict rules in order to trade and not be a gambler
i do though hate the fact that you dont get that going long the top and short the bottom are the easiest trades in the world - and both of these have history and maths on their side
and also that level 2 is the result of reaction to price - its lagging - but of course as it is reactive, it is not persistent - but that in know way diminishes its lag and hesitiancy
whilst thankfully you are someone on here who understands that you have to have a set methodology with strict rules in order to trade and not be a gambler
i do though hate the fact that you dont get that going long the top and short the bottom are the easiest trades in the world - and both of these have history and maths on their side
and also that level 2 is the result of reaction to price - its lagging - but of course as it is reactive, it is not persistent - but that in know way diminishes its lag and hesitiancy
Naz
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A quote from Chartman recently on Nasdaq level 2.
" When he says you see the move a minute before it happens on ANY chart is absolutely true. He knows what to look for, has his order in place, ready to hit the button as soon as he sees the AXE make its move. This leaves no room for guesswork. Is it going to bounce? OR will it drop? He knows, while we're still guessing or gambling....."
" When he says you see the move a minute before it happens on ANY chart is absolutely true. He knows what to look for, has his order in place, ready to hit the button as soon as he sees the AXE make its move. This leaves no room for guesswork. Is it going to bounce? OR will it drop? He knows, while we're still guessing or gambling....."
Grey1
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Stevet,,
Quote " i do though hate the fact that you dont get that going long the top and short the bottom are the easiest trades in the world - and both of these have history and maths on their side
"
of course one can go long at any stage while trend is up but my concern is the overall risk of the trade while taking a position in a well established trend.. To be able to resolve the difference between my view and others .. I would like to explain the finer issues in trend trading..
The art of trend trading needs a definition based on birth and exhaustion of the trend., It is simple to say let trend to be your friend but by the time the trend is apparent to the eyes of the traders it has been already finished,, One needs to see the trend well before others see it . TA indicators are TRAPS for traders .. They lag so very much that It becomes redundant to market..
So my point in the above example is this.. When you buy into weakness you are already buying into “Trend to be developed “ well before other traders spot the trend. One might say well is not this catching the falling knife .. The answer is yes it is if you are not doing it right ,..
There are rules in buying into weakness:-
1) Buy into weakness only and only if the next adjacent lower time frame support at least three higher high pattern (well researched concept)
2) The time frame must be chosen in a way so that that price has not move in higher time frame
3) Risk must justify the reward.. (buy well below VWAP )
4) Weakness must be sudden .. Gradual weakness must be avoided at all costs..
Example
1) We are watching stock X in 1 minute time frame
2) Stock X is trading at $20
3) Stock falls 10%
4) Stock is watched on a tick chart ( next adjacent lower time frame ) for signs of three higher highs// with no or very little price rise..
5) We now can assume the trend has been born and would be safe to call the bottom and go long ….
You appreciate that it is not always easy to completely explain ones trading model by using few lines but this is what mine is all about..
PS:- my scanner accommodates all above model and it is not rocket science either.. It however contains years of real trading experience ..
Quote " i do though hate the fact that you dont get that going long the top and short the bottom are the easiest trades in the world - and both of these have history and maths on their side
"
of course one can go long at any stage while trend is up but my concern is the overall risk of the trade while taking a position in a well established trend.. To be able to resolve the difference between my view and others .. I would like to explain the finer issues in trend trading..
The art of trend trading needs a definition based on birth and exhaustion of the trend., It is simple to say let trend to be your friend but by the time the trend is apparent to the eyes of the traders it has been already finished,, One needs to see the trend well before others see it . TA indicators are TRAPS for traders .. They lag so very much that It becomes redundant to market..
So my point in the above example is this.. When you buy into weakness you are already buying into “Trend to be developed “ well before other traders spot the trend. One might say well is not this catching the falling knife .. The answer is yes it is if you are not doing it right ,..
There are rules in buying into weakness:-
1) Buy into weakness only and only if the next adjacent lower time frame support at least three higher high pattern (well researched concept)
2) The time frame must be chosen in a way so that that price has not move in higher time frame
3) Risk must justify the reward.. (buy well below VWAP )
4) Weakness must be sudden .. Gradual weakness must be avoided at all costs..
Example
1) We are watching stock X in 1 minute time frame
2) Stock X is trading at $20
3) Stock falls 10%
4) Stock is watched on a tick chart ( next adjacent lower time frame ) for signs of three higher highs// with no or very little price rise..
5) We now can assume the trend has been born and would be safe to call the bottom and go long ….
You appreciate that it is not always easy to completely explain ones trading model by using few lines but this is what mine is all about..
PS:- my scanner accommodates all above model and it is not rocket science either.. It however contains years of real trading experience ..
Grey1
ok, i guess my point is based on futures - where a key strategy is to for example buy when markets are high and holding high level ranges as part of consolidation - and the reasons are experience, maths and history - and again today transpired to be a great example
part of the point is that most are always watching for the market to rollover - but when it does roll over - its always clear - you dont need to forecast it
but for some time now it has only been a market to go for quick shorts and to buy on pull backs
but of course go short once the market finally turns over,
and stay short whilst the market is dumping on its new lows in targeting new lower lows -
and i dont use technical indicators for trend analysis - i just use intra-market price to judge wether the key players are playing to the long or short side - and if they switch - i switch
i dont like pure stock plays, but use stock action to trade stock derivatives for the leverage, and also to get an edge - though the low current volatility is taking the edge off the edge big time!
and yep - L2 is just a support tool
ok, i guess my point is based on futures - where a key strategy is to for example buy when markets are high and holding high level ranges as part of consolidation - and the reasons are experience, maths and history - and again today transpired to be a great example
part of the point is that most are always watching for the market to rollover - but when it does roll over - its always clear - you dont need to forecast it
but for some time now it has only been a market to go for quick shorts and to buy on pull backs
but of course go short once the market finally turns over,
and stay short whilst the market is dumping on its new lows in targeting new lower lows -
and i dont use technical indicators for trend analysis - i just use intra-market price to judge wether the key players are playing to the long or short side - and if they switch - i switch
i dont like pure stock plays, but use stock action to trade stock derivatives for the leverage, and also to get an edge - though the low current volatility is taking the edge off the edge big time!
and yep - L2 is just a support tool
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vwap that grey uses is an intra-day methodology utilising intra-day data
vwap can apply to whatever time scale you choose - with a resultant different vwap value, but using eod data would not provide the inputs that vwap requires to calculate the vwap figure, or the trade entry figure
it is the deviation from vwap which is key for grey's methodology to work, coupled with entering the trade when grey feels his chosen deviation entry level has been tested, found support and the price will now return to the vwap
there are quite a few methodologies that could be used to take further advantage of these inputs, but grey has something that works for him - and he is sticking with it
vwap can apply to whatever time scale you choose - with a resultant different vwap value, but using eod data would not provide the inputs that vwap requires to calculate the vwap figure, or the trade entry figure
it is the deviation from vwap which is key for grey's methodology to work, coupled with entering the trade when grey feels his chosen deviation entry level has been tested, found support and the price will now return to the vwap
there are quite a few methodologies that could be used to take further advantage of these inputs, but grey has something that works for him - and he is sticking with it
grey 1
Re: trend
I look for breakouts from visual consolidations, and then watch the ADX on the time frame I am trading. If it is above 30 and rising that gives a strength of trend indication. Probably a bit wishy washy for your more statistical definitions, but has worked ok for me for 4 yrs in futures and 7 years in equities.
Strong believer in "the trend is your friend until after the bend". Anticipating market tops in strong trends is suicide, better to wait until afterwards - the market high in 2000 came on one day after a bull run that lasted thousands of days - not a good betting propostion IMO.
High beta stocks, totally agree they fall faster than low beta ones - but in stocks in the last 10 yrs, the big moves haven't been in the low beta utilities - it's a balance of risk and reward.
Makes sense to reduce risk but since your maximum risk is on entry, there's not much point strangling a trade before it gets the chance to move properly in your favour to compensate for the initial risk. I used to move my stops too quickly and got stopped out only to see the move happen as expected - painful.
But very tricky to judge, experience seems the best helper.
Re: trend
I look for breakouts from visual consolidations, and then watch the ADX on the time frame I am trading. If it is above 30 and rising that gives a strength of trend indication. Probably a bit wishy washy for your more statistical definitions, but has worked ok for me for 4 yrs in futures and 7 years in equities.
Strong believer in "the trend is your friend until after the bend". Anticipating market tops in strong trends is suicide, better to wait until afterwards - the market high in 2000 came on one day after a bull run that lasted thousands of days - not a good betting propostion IMO.
High beta stocks, totally agree they fall faster than low beta ones - but in stocks in the last 10 yrs, the big moves haven't been in the low beta utilities - it's a balance of risk and reward.
Makes sense to reduce risk but since your maximum risk is on entry, there's not much point strangling a trade before it gets the chance to move properly in your favour to compensate for the initial risk. I used to move my stops too quickly and got stopped out only to see the move happen as expected - painful.
But very tricky to judge, experience seems the best helper.
madasafish
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Grey1
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DAX,
Quote "I look for breakouts from visual consolidations, and then watch the ADX on the time frame I am trading. If it is above 30 and rising that gives a strength of trend indication. Probably a bit wishy washy for your more statistical definitions, but has worked ok for me for 4 yrs in futures and 7 years in equities. "
Since ADX has worked for you SUCCESSFULLY for last past 11 years. then I feel you should be using it and not be distracted by other's views in trading techniques..
ADX was one the first indicators we looked into many many years ago and failed times and times to give any edge to myself as a trader ..
As far as break out from congestion is concerend , I like that strategy a lot...
Quote "I look for breakouts from visual consolidations, and then watch the ADX on the time frame I am trading. If it is above 30 and rising that gives a strength of trend indication. Probably a bit wishy washy for your more statistical definitions, but has worked ok for me for 4 yrs in futures and 7 years in equities. "
Since ADX has worked for you SUCCESSFULLY for last past 11 years. then I feel you should be using it and not be distracted by other's views in trading techniques..
ADX was one the first indicators we looked into many many years ago and failed times and times to give any edge to myself as a trader ..
As far as break out from congestion is concerend , I like that strategy a lot...
madasafish
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ZigZag
its not so much the methodology that has to work - but also you need to believe in it as well - otherwise you will second guess it or not quite nail it as it needs to be nailed exactly - grey believes 100% in his methodology - so it works for him - if someone else used vwap - it may not work for them as they would not apply themselves to the entry or exit point exactly and consistently
find an eod methodology that works - make sure you believe in it 100% and go for it!
its not so much the methodology that has to work - but also you need to believe in it as well - otherwise you will second guess it or not quite nail it as it needs to be nailed exactly - grey believes 100% in his methodology - so it works for him - if someone else used vwap - it may not work for them as they would not apply themselves to the entry or exit point exactly and consistently
find an eod methodology that works - make sure you believe in it 100% and go for it!
ZigZag
Totally agree with you on that. You have to be absolutely confident in your methodology with an exit point/stop if you are wrong...and you can be sure you won't be right all the time.
I know a couple of traders who specialize in just one pattern...I don't like it and have have failed with it...BUT, they make a truly enviable income.
I use my own patterns and they work for me...I can recognize them, have confidence in them, get out when I'm wrong, hang on when I'm right.
All TA methods have some degree of success...and it's a lot closer than you think. You can use price action alone and can be extremely successful if you're good at it.
Plus, over time you'll be able to recognize the character of price moves in your chosen market(s) and add a level of discretion to your indicators which will filter out a lot of marginal trades.
Totally agree with you on that. You have to be absolutely confident in your methodology with an exit point/stop if you are wrong...and you can be sure you won't be right all the time.
I know a couple of traders who specialize in just one pattern...I don't like it and have have failed with it...BUT, they make a truly enviable income.
I use my own patterns and they work for me...I can recognize them, have confidence in them, get out when I'm wrong, hang on when I'm right.
All TA methods have some degree of success...and it's a lot closer than you think. You can use price action alone and can be extremely successful if you're good at it.
Plus, over time you'll be able to recognize the character of price moves in your chosen market(s) and add a level of discretion to your indicators which will filter out a lot of marginal trades.
Steve,dax. Absolutely agree. Confidence in your method is critical to success. Steve, I have developed my own method which has evolved over several years. THe key word is evolved. I believe markets evolve/change therefore your trading plan/s must follow. Im always in research mode seeking out different ideas on how to improve. Regards
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