sulong
I do not scrounge from the internet, I search for information.
Surely we look to find a standard definition rather than each of us compile our own. My definition of prolonged, sudden etc would be obtained from the dictionary, that's what a dictionary is for.
I appreciate we are not in the playground and I take my work seriously but I mange to retain my sense of humour, yours is obviously different.
As I cannot be certain that you will not disapprove of future posts and not wanting to cause disruption, I will cease posting on your thread and become a viewer only
Regards
bracke
I do not scrounge from the internet, I search for information.
Surely we look to find a standard definition rather than each of us compile our own. My definition of prolonged, sudden etc would be obtained from the dictionary, that's what a dictionary is for.
I appreciate we are not in the playground and I take my work seriously but I mange to retain my sense of humour, yours is obviously different.
As I cannot be certain that you will not disapprove of future posts and not wanting to cause disruption, I will cease posting on your thread and become a viewer only
Regards
bracke
I've been reading Murphy and on page 100 he says,
"1. A pre-requisite for any reversal pattern is the existence of a prior trend.
2. The first signal of an impending trend reversal is often the breaking of an important trendline."
A similar view is expressed by Vic Sperandeo. Take a look
www.dacharts.com/123.htm
reversal
(as described by Vic Sperandeo in "Trader Vic: Methods of a Wall Street Master")
1. trend line broken
2. lower high in an uptrend, or a higher low in a downtrend.
3. break below the previous low in an uptrend, or above the previous high in a downtrend
At point 3 the reversal is confirmed and everybody's brother is getting short. A stop run often follows to re-test the penetration at point 3. Quicker traders may get short at the X, or even closer to the 2 based on other indicators (divergence, fibonacci retracement, bollinger band touch, etc.)
"1. A pre-requisite for any reversal pattern is the existence of a prior trend.
2. The first signal of an impending trend reversal is often the breaking of an important trendline."
A similar view is expressed by Vic Sperandeo. Take a look
www.dacharts.com/123.htm
reversal
(as described by Vic Sperandeo in "Trader Vic: Methods of a Wall Street Master")
1. trend line broken
2. lower high in an uptrend, or a higher low in a downtrend.
3. break below the previous low in an uptrend, or above the previous high in a downtrend
At point 3 the reversal is confirmed and everybody's brother is getting short. A stop run often follows to re-test the penetration at point 3. Quicker traders may get short at the X, or even closer to the 2 based on other indicators (divergence, fibonacci retracement, bollinger band touch, etc.)
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how would you distinguish between this and a retracement?
I will demonstrate my point by the use of diagram in 123 reversal
www.dacharts.com/123.htm
Do you see the blue horizontal line, at the point of last swing high? From
there to 4 bars down is the retracement/pullback ( as I see it) I think Murphy is saying the
same thing as per my previous post. Volume should play part here.
From the bottom blue horizontal line to 3 bars up @ point 2 is the re-test of the previous
high. The reversal begins @ point 3 when the price fails to take the last high out and
starts to push down.
dbphoenix said:
I will demonstrate my point by the use of diagram in 123 reversal
www.dacharts.com/123.htm
Do you see the blue horizontal line, at the point of last swing high? From
there to 4 bars down is the retracement/pullback ( as I see it) I think Murphy is saying the
same thing as per my previous post. Volume should play part here.
From the bottom blue horizontal line to 3 bars up @ point 2 is the re-test of the previous
high. The reversal begins @ point 3 when the price fails to take the last high out and
starts to push down.
dbphoenix
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zippy said:I will demonstrate my point by the use of diagram in 123 reversal
www.dacharts.com/123.htm
Do you see the blue horizontal line, at the point of last swing high? From
there to 4 bars down is the retracement/pullback ( as I see it) I think Murphy is saying the
same thing as per my previous post. Volume should play part here.
From the bottom blue horizontal line to 3 bars up @ point 2 is the re-test of the previous
high. The reversal begins @ point 3 when the price fails to take the last high out and
starts to push down.
Yep, seen it many times. In fact, I go into this in the Trendlines chapter of my e-book.
There are, however, problems.
For one, if one is to follow this definition, all of the major indices had confirmed trend reversals months ago, yet here we are at new highs. Oops.
For another, what is the individual who wants to short "early" to do since the reversal is not a confirmed reversal until the swing low is breached, and even then not always? Maybe it won't be a reversal. Maybe it'll be a retracement after all, and when is he supposed to buy?
yet here we are at new highs
I believe we reached the new highs because of the American elections and Bush re-elected
Can we not use this definition and come up with a set-up, write our rules around it , sim trade it to see how successful it can be. It all depends on the timeframe we select or feel comfortable with. I would personally choose 5 min, 3 min and 1 min together with the daily for directional guidance.
I believe we reached the new highs because of the American elections and Bush re-elected
Can we not use this definition and come up with a set-up, write our rules around it , sim trade it to see how successful it can be. It all depends on the timeframe we select or feel comfortable with. I would personally choose 5 min, 3 min and 1 min together with the daily for directional guidance.
dbphoenix
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zippy said:I believe we reached the new highs because of the American elections and Bush re-elected
Can we not use this definition and come up with a set-up, write our rules around it , sim trade it to see how successful it can be. It all depends on the timeframe we select or feel comfortable with. I would personally choose 5 min, 3 min and 1 min together with the daily for directional guidance.
The reason why we're at new highs doesn't matter since the trader can't foretell the future.
But as for creating a setup, defining it, determining tactics and so forth, that's been the task all along, yet here we are at 150 posts and not much farther ahead.
I submit, however, that the timeframe and bar interval aren't all that important. A swing low is a swing low after all.
In any case, you've got the right attitude. I hope you're persevering as well as curious.
erierambler
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sulong said:Erie,
I just wanted to put my own thoughts in this.
Retracements come in all shapes and sizes, and in a number of locations of the price charts.
Each of us can start by making just a few parameters in which all perceived retracements are confined.
After that, we need to recognize that all ret's are not created equal, so then we tighten up our parameters, to only encompass those ret's that have a higher success rate, that all of them combined.
We can do this by adding "what came before" and volume to the mix, and then weeding them further.
At some point, we need to decide if we want to participate in all ret's with a 50% success rate or more, or maybe only those with a 60% or more success rate, or 75%...whatever.
When we get to this point of deciding, we know whats an important ret, and what is not.
After all, a retracement is only a way for price to seek continued participation.
PS. I see db already responded, but I'm posting this anyway.
Sulong
If a retracement is a continuation strategy after leaving a range, then one would use a retracement strategy every day until the uptrend/downtrend line is broken, correct ? Would you relate the retracement to the open of each day or to a longer term chart with reaction highs and lows(say 30min)? I have some time this weekend to go over my charts .It would be interesting to compare results.
erie
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zippy said:I believe we reached the new highs because of the American elections and Bush re-elected
The reason I use TA is so that I can know, "Are things going along the same as before or has something changed?" I can' t know why people or computers are buying or selling, I can only see what is happening now. Recognizing that a trend or a range is occuring is not for the purpose of prediction, unless you put the big "if" in front of your prediction. "if things continue as they are, then....) The most useful moment comes when something unexpected appears on the chart and you can surmise that the market is in turmoil (because of financial news or weather change or an election or whatever) and may offer you an opportunity to get in at the start of something big.
Sulong has been leading us in an excellent discussion of what to do when the price moves up out of a sideways range (sometimes called a channel if it goes on long enough).
JO
erierambler said:
Erie,
I'm having trouble trying to figure out how to word my response in a way that will not cause more confusion than it's worth. If I'm not clear, let me know.
I think the core question here has to do with the quality of the trend, and the quality of a potential break.
When I'm doing my weekend studies, I'll make a note of the trend line stage for each potential pullback/retracement.( I'm assuming you know the principals of stage 1,2, or 3 trend lines?)
And then compare the results, success / failures, to each other on each stage.
(Are the stop outs more often on s1 than on s2? how about s3?, how often did s1 lead to a s2, compared to how often it stopped at s1. ect...)
As far as a TL break, for me, I look at how deep is the break, and how many bars it takes to recover, if it does.( helps me distinguish between a break and a poke)
As far as the daily/30m charts, I'm not so clear on what you're asking.
What I do, is look at 5m charts for my entry setups, if a setup is getting close ( with in the next 5 - 10 m's,) then I switch down to a 1 min chart, to look for my actual entry.
Just change my 5m into daily, and 1m into 30m, if that suits you, and check it out.
I thought I will bring this chart to the group's attention. It has all the ingredients of 123 reversal and much more.
http://charts.dacharts.com/2004-11-17/NQoos16.png
Master one set-up - Own it!
http://charts.dacharts.com/2004-11-17/NQoos16.png
Master one set-up - Own it!
zippy said:
Zippy,
Thanks for the chart, and your previous description of a 1-2-3 reversal.
I can't seem to find your 123 marks on your chart, or the place you believe is the best entry point. Am I missing something?
If you don't mind, would you mark the conditions for entry, with the entry on the chart?
It'll help if we are all on the same page, ie.. we all know by looking, which areas you are referring to, when you say 1-2-3.
erierambler
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sulong said:
Sulong,
Are you looking at the Trend Lines on the 5min only for the day ,or are you looking at the trend lines for the entire swing until a reversal? With regards to your retracement strategy ( now I know you have one, i thought you were trying to figure one out), I just wondered if you measured the actual retracement on the opening price for the day. (since you only daytrade)
We may be looking at different setups.
I'm looking at the retracement/continuation from the open, a possible pullback to a potential support point . For example today at 9:30 after the five minute bar price retraced to 1564 , which was important from the 15th as well, no follow through to the downside, then continued up.
I will be looking for a strategy ( don't have one defined yet), to trade a retracement from the opening price.
hope that 's not more confusing LOL
erie
nytetrader
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Well, I wonder, how diverse do I need to be at a minimum? And what is the maximum and minimum amount of money that I should put in any qiven stock? Obviously, I know that you can put a lot more into bluechips than penny stocks, but where are the threshholds?
erierambler said:
Erie,
Look through your charts and find a situation that looks perfect to your eye, for what you have in mind for a ret.
And break it down into pieces, what came before the setup, then the setup that makes you sit up in your seat, and then your entry trigger.
Post it all here, with the goal of making a "how to trade this ret in 5 easy steps".
sulong said:
Sorry I presumed that you would be able to locate 1-2-3 reversal on Nqoos' chart. I identified
1-2-3 on it but as you can see he was demonstrating other set-ups. Each to their own, eh?
Here are my comments on the chart, please advise if you agree. Thanks for your inpurt Sulong,
much appreciated thread.
www.charts.dacharts.com/2004-11-18/nqoos-1-2-3-reversal3.png
As a matter of courtsey I'm going to send an e-mail to Nqoos to inform him that I posted his chart on this forum.
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erierambler
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sulong said:
Sulong,
Easier said then done , but will take a shot at it this weekend.
erie
