# Entry Strategy



## R0n1n (28 May 2007)

Hi guys, this morning I was about to do jump in to CTX and was looking at the chart for it when I noticed the dropping volume, and did not make an entry. I did document it (I always take screenshot of my entry and exit) A the time I was looking at the chart the price was 12.60.

What I wanna know from you guys is: Was I right ? What would you have done ? How do you make an entry and on what basis ( I mean what triggers you look for)


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## Lachlan6 (28 May 2007)

Gday Ron1n. My personal strategy of entering intra day, is to find a nice entry point from the daily then to look during the day at the 5 minute candlestick. I WILL NOT enter a new trade before 10:30 every day, and I never break this rule no matter what. If I was to go long, I only buy into a strong trend on the 5 minute, with minimal pull backs, and only enter if the buy side in the market depth is strongly supporting the stock. For shorting, vice versa. 

For example, I entered a short trade in (WDC) this morning at $20.25. Did so because Daily chart showing obvious weakness, especially the break below the 200 day EMA today. Then my trigger point was $20.25 which triggered earlier. Finally the sellers were very strong and the 5 minute was trending strongly down, so I jumped in. Its a matter of fine tuning everything I spose. Cheers.


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## R0n1n (28 May 2007)

Lachlan6 said:


> Gday Ron1n. My personal strategy of entering intra day, is to find a nice entry point from the daily then to look during the day at the 5 minute candlestick. I WILL NOT enter a new trade before 10:30 every day, and I never break this rule no matter what. If I was to go long, I only buy into a strong trend on the 5 minute, with minimal pull backs, and only enter if the buy side in the market depth is strongly supporting the stock. For shorting, vice versa.
> 
> For example, I entered a short trade in (WDC) this morning at $20.25. Did so because Daily chart showing obvious weakness, especially the break below the 200 day EMA today. Then my trigger point was $20.25 which triggered earlier. Finally the sellers were very strong and the 5 minute was trending strongly down, so I jumped in. Its a matter of fine tuning everything I spose. Cheers.




Why the 10:30 rule ? is it cos of the day traders/instutional buyers ?


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## CanOz (28 May 2007)

If your plan is to enter the break of an ascending triangle, and place a stop below support for a low risk setup, then i would have stuck to your plan. If high volume is a condition of you taking the trade, then you need to consider that too.

Does high volume make it more successful? These are things that you can test for, if your so inclined.

Cheers,


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## Lachlan6 (28 May 2007)

Just because pre 10:30 is a little early in the day and you get a better idea of what the stock/market is going to do after 10:30. When I first started up, I found that I had some trades which I entered before 10:30 only to be stopped out intra day. Very frustrating.


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## >Apocalypto< (28 May 2007)

CanOz said:


> If your plan is to enter the break of an ascending triangle, and place a stop below support for a low risk setup, then i would have stuck to your plan. If high volume is a condition of you taking the trade, then you need to consider that too.
> 
> Does high volume make it more successful? These are things that you can test for, if your so inclined.
> 
> Cheers,




From what I read you want to see decreasing volume on bullish cont triangles with higher vol on the break out.


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## CanOz (28 May 2007)

Trade_It said:


> From what I read you want to see decreasing volume on bullish cont triangles with higher vol on the break out.




Yeah, you would think that it would certainly be a more bullish breakout...but until it breaks support, could it still be a valid opportunity? Maybe it will be by the EOD?

The more i see discussions on this type of thing the more i'm migrating to the EOD camp.

Cheers,


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## motorway (28 May 2007)

The volume on the last few bars
Is suggesting little interest from the buyers
To particpate at higher prices..

Seem to suggest some more ranging 


You seem to like bollinger bands ?

what are they telling you ?

They are giving a signal atm

motorway


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## R0n1n (28 May 2007)

motorway said:


> The volume on the last few bars
> Is suggesting little interest from the buyers
> To particpate at higher prices..
> 
> motorway




Motoryway, that is exactly what my thoughts were when I looked at the volume.


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## tech/a (28 May 2007)

When making an entry into anything,you need to ask *"What am I wanting to do?" *

If you dont answer "Get onto a trend" your not in the right field!
There are 3 places to do this both long and short.
How good your entries are (Relative to both Win rate and Risk reward ratio/drawdown) will be dependant on stop and exit. Regardless of timeframe you trade in.

Above we are seeing debate on the Vehical being used to gain entry and elsewhere exit.This can be debated endlessly.
*Point is it doesnt matter.*

What *does matter* is that you *KNOW* how your entry/stop and exit combination performs. You can guess/dedate and Argue a zillion different Indicators,Variables and Patterns,but without knowing how *your application *of these tools within your trading methodology (win Rate R/R ratio/Initial and peak to Valley drawdown), will likely perform---you may as well *guess* each.

With all due respect to those contributing---your missing the target!


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## >Apocalypto< (28 May 2007)

motorway said:


> The volume on the last few bars
> Is suggesting little interest from the buyers
> To particpate at higher prices..
> 
> ...




Motorway,

Agree with you low vol on the break out period, with a doji candle showing indecision. not very convincing buyer interest at all. In defence it still closed above resistance and made it a possible support.


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## CanOz (28 May 2007)

tech/a said:


> When making an entry into anything,you need to ask *"What am I wanting to do?" *
> 
> If you dont answer "Get onto a trend" your not in the right field!
> There are 3 places to do this both long and short.
> ...




With all due respect Tech, we're discussing entries, why can't we discuss just entries? 

I realise we should never take our eyes off the other more important parts of a trade, and i also realise that all things should be able to be tested.

Cheers,


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## R0n1n (28 May 2007)

tech/a said:


> When making an entry into anything,you need to ask *"What am I wanting to do?" *
> 
> If you dont answer "Get onto a trend" your not in the right field!
> There are 3 places to do this both long and short.
> ...




tech/a the reason I asked was to know if I am right about the trend forming for CTX, but the doubts about Volume was stopping me and hence my thread to ask for advice. 

*Can u explain what confirms as a trend ? and what do u you use to confirm it .. like Price Action ...*

Being new to trading (just 6 months) i am open to all suggestions and ideas...and another reason for asking about Entry is whith out an entry I have no trade  

Can someone point me to a good Candlestick help site please, there are zillions out there but I know u guys would have bookmarked some gems..


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## tech/a (28 May 2007)

Because you have no basis on which to determine whether an entry coupled with you stop and exit stratagy has any profitable merit.

Its like discussing parachuting and just talking about jumping out the plane!


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## CanOz (28 May 2007)

tech/a said:


> Because you have no basis on which to determine whether an entry coupled with you stop and exit stratagy has any profitable merit.
> 
> Its like discussing parachuting and just talking about jumping out the plane!




Ok, we should make it clear that there are a few things that will make a good entry.

One that i know, is risk. We should be discussing entries with a view of how much we will lose if it is unsuccesful. You cannot deny that it will be a vital factor in the overall profitability of the trading system.

So can we agree that we should be discussing entries from a low risk point of view? Obviously, without further testing we cannot know what entries will turn out to be winners vs losers.

Cheers,


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## rowes (28 May 2007)

> Can someone point me to a good Candlestick help site please, there are zillions out there but I know u guys would have bookmarked some gems..





Heres a couple i like,

There is Steve Nison's - http://www.candlecharts.com/

and Stephen Bigalow's - http://www.candlestickforum.com/


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## nizar (28 May 2007)

tech/a said:


> Because you have no basis on which to determine whether an entry coupled with you stop and exit stratagy has any profitable merit.
> 
> Its like discussing parachuting and just talking about jumping out the plane!




Agree with tech here.
Theres no such thing as a good entry.
A good entry for one system may not be for another.

Another thing to remember is that *few entries beat random entry.*

Iv seen a random entry system backtested and returned 30%+ annualised.
And the exit was one of two:
*A 1 year time stop
*100% gain exit.

So the exit wasnt great (at least in theory) as it went against the saying of cutting losers short and letting winners run.

So what was key here?
Universe and money management. 2 factors which in my opinion are more important than entry.

If you want to improve a system look at money management not tweaking the entry.......

(Wheres Michael when you need him?)


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## Lachlan6 (28 May 2007)

Couldnt agree more Nizar. Money management is everything. An excellent book to read on the subject is 'Trade your way to Financial freedom', by Van Tharpe. A must read in my opinion if you are serious about trading. Make it mechanical, and dont overanalyse entries, because they are only a SMALL part of the overall trade.


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## CanOz (28 May 2007)

nizar said:


> If you want to improve a system look at money management not tweaking the entry.......
> 
> )




Nizar, does this thread say that? 

I thought we were talking about entry strategies?????? 

*Quite honestly i'm interested in what others like to use as entry's!*

*I don't care if they're profitable or not, (at this stage) *that we know we can determine through testing with exits, money mgt. etc.....later on...

Ron1n started a thread for entry's...why can't we just discuss them without getting wound up in the great debate about wheather or not they're the most important part of trading?

Anyone here understand my point?

Cheers,


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## tech/a (28 May 2007)

I've seen many discussions just like this. As will most who have been involved in trading for a while.

Like all most traders start to discuss Entry/Exit/Money Management/Risk and stop loss when they are either disillusioned with returns or have copped a fair loss. Those that are profitable dont care until it happens to them. Sometimes years down the track.

Most look at the tools that make up a methodology,the components,few look at the application of all the components together---which is what they will do in their well thought out plan.

Then they will go out and trade that plan without knowing how the combination of well intended componentry actually perform over the years.
Worse they have no idea when its likely to fail and it may well fail from day 1.
They could also be trading brilliantly for a few years and not know wether the drawdown they are in should be ridden out or capitulated!
*Many GOOD methods get ditched through FEAR.*
Frustration abounds as the best placed entries/exits/stops and Money management *STILL* fail to give a consistent return.


*Solution REGARDLESS of the NUTS and BOLTS of a method/the plan,you must know if the plan is long term profitable,and what its performance numbers are.*

To do anything different is time wasting and fruitless.
Those that have been or are on that path will totally understand.

So if your serious you'll have to invest in good testing software and the many hours to become proficient in design and testing systems.

Read Adaptive Analysis Pages 1-50 all will become clear/er.


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## motorway (28 May 2007)

> Agree with tech here.
> Theres no such thing as a good entry.
> A good entry for one system may not be for another.
> 
> Another thing to remember is that few entries beat random entry.




totally disagree..

entries in harmony with the flow of demand and supply
Vs in opposition with the flow of demand and supply

Is Why in another type of flow
So many drown.

With no entry there is no risk or reward

*When an entry presents itself
Then risk and reward can be computed..*
And If it does not meet our requirements
We can refrain and wait for the next entry

Can not walk through  wall unless there is a door

A stock that trends strongly for 3 years
You want entries that are with that flow

Now risk reward is paramount

But until the opportunity presents
there is nothing to compute..

random entry could only be as good

If you have NO analytic skills
and can not recognize trends
emerging from ranges

So I focus on the entry
I lie in wait I don't force
opportunity knocks

then I compute where the stop would be
what upside I could expect

all clicks GO..

motorway


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## nizar (28 May 2007)

Ok motorway, im not arguing with you.
Your one of the professionals of the market, doing much better than me.

Thanks for your contribution.


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## tech/a (28 May 2007)

> Anyone here understand my point?




*Yes I certainly do*!

But cant you also see that you'll end up with countless entries all as good or bad as the way they are applied in *COMBINATION* with other factors.
Really quite pointless.----its not where the money is---enrty/exit/stops/Money management and the combination of them all.

*The money is *with the positive expectancy and the *NUMBERS* generated in testing 1000s of portfolios or singular charts.

Its the NEXT step evidently a small % of people take.


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## CanOz (28 May 2007)

tech/a said:


> *Yes I certainly do*!
> 
> But cant you also see that you'll end up with countless entries all as good or bad as the way they are applied in *COMBINATION* with other factors.
> Really quite pointless.----its not where the money is---enrty/exit/stops/Money management and the combination of them all.
> ...




So let me get this straight, you really don't give a "flying rats ass" if your entry is a low risk entry or not? In your opinion a low risk entry won't matter in the long run whether or not your system is profitable or not? What your saying is low risk or high risk, once you consider and test the other factors, it doesn't matter, and you've tested this?

Cheers,


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## tech/a (28 May 2007)

*Give me a low risk entry an example of*---I'll bet its got everything with stop placement and little to do with the entry mechanism itself.
And in answer to your you dont give a rats---in some cases tested ---no I dont!

Motorway I know and agree (to a degree)with what your saying but will answer when I have more time.Why do these indepths always start when i have meeting after meeting!!.


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## >Apocalypto< (28 May 2007)

motorway said:


> totally disagree..
> 
> entries in harmony with the flow of demand and supply
> Vs in opposition with the flow of demand and supply
> ...




Great Reply Motorway,

Tech I see what your saying there is no such thing as a sure entry low risk.
I totally agree with that.

Each entry and trend is unique in my opinion.


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## CanOz (28 May 2007)

tech/a said:


> *Give me a low risk entry an example of*---I'll bet its got everything with stop placement and little to do with the entry mechanism itself.
> .




Ok, heres an example, "OOPS" LONG. Stop buy just over the low 1 bar ago, then stop loss, at open today.

Low risk.

Cheers,


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## R0n1n (28 May 2007)

motorway said:


> *When an entry presents itself
> Then risk and reward can be computed..*
> And If it does not meet our requirements
> We can refrain and wait for the next entry
> ...




Motorway couldn't have put it better.

I know what Tech is saying is right, even a well planned entry can be blown away if no defined money management, position sizing and exit strategy is used.

Lemme ask my question again with an example. Look at BSL below, do you think I would have bought it on 14th of this month? *NO.* But of course, some here will just hold on to it and eventually it will turn around and rise, but thats not me. 

On the other hand lookup the chart of QAN. I entered on 23rd and I am still hanging on. 

If you look at my first post in this topic I mentioned I nearly jumped in CTX today, now at 4:25 PM, u can see that it may not have been correct at that point in time. I still donno, and thats why I asked:

How do you make an entry and on what basis (I mean what triggers you look for)

Like motorway says how do u spot that door in the wall?


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## wayneL (28 May 2007)

In this thread I am reminded what I read in "The Way of the Turtle" recently.

_"...In fact some traders believe in there particular style with such fervor(sic) that all others are considered inferior. I hold no such belief. Anything that works, works. Doggedly sticking to a method to the exclusion of all others is foolish."_

Do entries matter? YES... and... NO! eeerrrrr MAYBE!

It depends on the context of the traders method. Let's not be blinded by the success of our own method, biases. I happen to think entries are VERY important. As a swing trader, it is of paramount importance to the expectancy of the trade.

In big trend following systems it might not be important at all. But that begs the question... why have entry criteria then.

The "low risk entry" terminology is one that has been argued at length before, apparently without result. Yes it relates to the position of the stop; that's a given. But thats what technical trading is all about, a visual method of determining what risks to accept and what rewards to shoot for.

The thread is about "Entry" techniques. Let's discuss them and talk about trading systems methods in their entirety someplace else.

Cheers


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## R0n1n (28 May 2007)

wayneL said:


> *The thread is about "Entry" techniques.* Let's discuss them and talk about trading systems methods in their entirety someplace else.
> 
> Cheers




Thank you WayneL. For swing trader what all tools/entry positions do you use?


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## tech/a (28 May 2007)

*Wayne.*
Happy to do so however there are some glaring incorrect and misleading "Facts" which need to be pointed out.



> When an entry presents itself
> Then risk and reward can be computed..
> And If it does not meet our requirements
> We can refrain and wait for the next entry
> ...




Motorway.
There is a VAST difference between a "Percieved R/Ratio" and a positive expectancy.
*Herin lies the downfall of most discretionary traders.*
They believe they are trading a positive expectancy simply by setting a stop level and an expected return level and calling that a positive expectancy of X.

*This is totally/100% and completely incorrect.*
Its clear that most have no idea what positive expectancy is and why you need to KNOW IT.

If they were to trade 200 trades a year over 10 yrs and 20000 portfolios the *RESULTS* (from the setup/stop and return) would tell you what expectancy (return relative to risk) you could expect if you applied the above over and again to trade.

Same for testing ENTRIES. You need to test an entry over many trades over many time periods.

*Wayne* your Brushing the *MOST IMPORTANT *issue in learning to trade consistently profitably-----under the table.
You cannot look at entry in isolation.

If there is onething you'll have learnt I would have thought from "The Way of the Turtle" its the almost fanatical approach that Faith has to testing,even to the point of developing his own tests to measure his trading differently than most.

To just trade with blinkers "Cause its easier" is financial suicide.

Then of course we get to how you turn a 26% a year mediocre trading methodology into a 1300% return over 5 yrs.
Entry??

*I'm not talking about Systems I'm talking about how YOU or ANYONE can find the BEST ENTRY for their Trading platform and KNOW IT*

*Wasting my time again.*


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## wayneL (28 May 2007)

tech/a said:


> *Wayne.*
> Happy to do so however there are some glaring incorrect and misleading "Facts" which need to be pointed out.
> 
> *Wayne* your Brushing the *MOST IMPORTANT *issue in learning to trade consistently profitably-----under the table.
> ...



Tech,

It's not brushing anything under the table.

An entry should of course have relevance to the other "vectors" of a trading plan.

But entry is an integral part of any trading plan and can, and should be discussed in isolation. Radge does it, Faith does, evrybody does if they want to test their ideas.

Of course that idea should then be carried forward to see if it fits withing the entire framework of a complete system. I don't think anyone is suggesting otherwise.

So there is no need to come to such arrogant conclusions as your post above.

If you notice, the OP has a thread on exit strategies as well. Perhaps he is piecing together the components for an overall strategy, I don't know. But FFS let him discuss entries on this thread. That's all I'm saying. The topic of the thread is *ENTRIES*.


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## tech/a (28 May 2007)

Fine I'll leave the topic.


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## motorway (28 May 2007)

> What are "requirements"




I have to be clear what magnitude of move  I am trading
and over what time frame that magnitude will express itself



> Its unknown until traded in this case.
> At best its a calculated guess.




The market is not a pair of dice
There is always the element of calculated guess
The universe of the possible in the mkt has vague limits.
A non random ordering
and a constant fluctuation in the probability distribution



> Wrong---until enough trading results are known there is nothing to compute.




Well I agree with that

But I was talking about a particular entry presenting itself along with 
stop placements and triggering further analysis

The entry determines the risk

I have total control of the entry
I have less than 100% control of risk

reward is dead reckoning .. (I can not make the mkt perform)

Seeing entry is the only thing I have 100% control of
It is where I can make the most influence ..
So entry for Me IS important

motorway


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## motorway (28 May 2007)

> Like motorway says how do u spot that door in the wall?




If you are in a room
and you want to get out 
and you do not know what a door looks like

You probably will be better served by
donning a blindfold
and randomly 
walking in to the walls

If you know what a door looks like
You will be much better served by scanning the surrounds until you
identify a door and simply walk through

A door has a certain characteristics
That can be recognized

Buy setups have certain characteristics
They can be recognized

appearance vs character

Is the market a random probability machine
with no characteristics to identify where the fat tails lie

Or does the mkt move from forced move to forced move
as technical positions are formed and dissipated ?

Is there such a thing as a line of least resistance ?

motorway


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## Sean K (28 May 2007)

tech/a said:


> *Wayne.*
> Happy to do so however there are some glaring incorrect and misleading "Facts" which need to be pointed out.
> 
> Motorway.
> ...



I'm probably out of my zone here because I discretionary trade, and am more an investor. Entries are a very important part of my trading and investing. I would rarely enter a long trade when a stock was in a downward trend, for example. Actually, I don't need to say anything else, it seems quite clear to me how important it is to pick a good entry. Having said that, entries can not be considered in isolation from an overall plan which seems to have been covered, with an exit probably the more important trading mechanism. I can't understand though, why entries can't be considered here, there are low and high risk entries IMO. For example, I look for a stock in a near perfect set up: General upward trend, stochastics moving up through 50, MACD moving up through zero line, stock not approaching significant resistance, RSI under 80 moving up, and the market not about to crash......Probably much better opportunity to buy long than the opposite  Hope I'm not off track here.


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## R0n1n (28 May 2007)

kennas said:


> I'm probably out of my zone here because I discretionary trade, and am more an investor. Entries are a very important part of my trading and investing. I would rarely enter a long trade when a stock was in a downward trend, for example. Actually, I don't need to say anything else, it seems quite clear to me how important it is to pick a good entry. Having said that, entries can not be considered in isolation from an overall plan which seems to have been covered, with an exit probably the more important trading mechanism. I can't understand though, why entries can't be considered here, there are low and high risk entries IMO. For example, I look for a stock in a near perfect set up: General upward trend, stochastics moving up through 50, MACD moving up through zero line, stock not approaching significant resistance, RSI under 80 moving up, and the market not about to crash......Probably much better opportunity to buy long than the opposite  Hope I'm not off track here.




Thats the kinda answer I have been looking for in the last two pages.  thanx Kennas.

Motorway your reply looks more like a poem/puzzle 

Everyone has opinions and we may not agree with em all but we can respect them...
so lets keep those Entry strategies coming..

Oh yes I am working on my system... and hence so many queries...


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## RichKid (28 May 2007)

motorway said:


> I have to be clear what magnitude of move  I am trading
> and over what time frame that magnitude will express itself
> 
> 
> ...



hi motorway, long time no speak!
Good points, taking or not taking a trade is something we can decide on completely alone.
but, if you look at Radge's book Adaptive Analysis and some of the other things he's written about discretionary trading you'll see that he mentions the amount risked as the only thing that you can control. ie you can set a stop at say 10% from the entry and once it's hit you sell at that point (slippage excepted and psychology permitting)- so you can control the position size and the loss you are prepared to take. Fine tuning your entry criteria helps here but in the context of things entries aren't the most important- the exit is, as in the example above, as it's exiting that helps you cut your loss....keeping you in the game by keeping your losses small. obviously we need big winners to mop op the numerous losses and there is an art to pyramiding and not selling prematurely but that's another topic.

PS in terms of entry criteria I normally follow the traditional trading tactics for each pattern, eg- ascending triangle, after the first pullback to the breakout level. cf- some buy on a close above the breakout level- in the case of the ascending triangle it would be the resistance line. Stops can be at the apex of the triangle or the previous swing low.....there are so many methods, I take each chart pattern on its own and see where it fits in with EW invalidation points and the overall trend, the more confluence the better.


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## motorway (28 May 2007)

Ok back to CTX

The bar chart lays out the character of action

We have some higher volume bars that don't making much progress.

So sellers are meeting buyers

sellers are meeting buyers because the price has moved up to find them..

What is happening ?

The price has moved up already ( was there already good buy setups ? )

The current bars ? There are closes at the lows and some near the highs

So Buying is absorbing the supply
or there is distribution happening

what can make it clearer ?

What ever way you can do it 
You have to look at comparative relative strength

here the P&F C. RS chart Vs the XJO

shows strength

I would with the available information
Say that buyers are absorbing the supply

I would be looking for an entry
on a breakout from strength from this zone of "absorption"

( Well what do you think will happen when available supply at the price is absorbed ? )

Or if there is weakness .. dependant on the Price Vol characteristics
I would go long at the 50% retrace

( remember trends are higher highs and higher lows, A higher low is a very good entry point  )

I am leaving aside the placement of stop
or other considerations..

Buy in the absorption area ?
The two scenarios will confirm the character of the action I have posited.
atm I do not have confirmation

supply can confirm a long position 
by the character of the action as price reacts back..
Demand can confirm by breaking out

A breakout from an area of absorption
is a valid breakout less likely to be a trap..

The bars also have rising lows ( except the last one )
They overlap  ease of movement is not evident
one side taking out the other..

But look at the relative strength 


I would judge the lower risk entry is on the reaction back
as a small selling wave is absorbed and dissipated

esp if the relative strength stays strong..



motorway


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## motorway (28 May 2007)

> if you look at Radge's book Adaptive Analysis and some of the other things he's written about discretionary trading you'll see that he mentions the amount risked as the only thing that you can control.




Hi Rich 

I say I can 100% control the entry
but less the risk

I can set a stop
but the mkt can gap down
the stock can be suspended

So I can set the stop position 100%

but does not mean it will be filled

also I would use a logical stop position that
negated the action I had defined
rather than an arbitrary %

So that is why the entry is important
the stop has logical positions ( with wiggle room )

It is possible to have the stop very close to the entry.

Buying CTX on the reaction will mean a tighter stop is possible than
buying on the breakout maybe depending at the time on the setup that presents..

motorway


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## It's Snake Pliskin (29 May 2007)

CanOz said:


> Nizar, does this thread say that?
> 
> I thought we were talking about entry strategies??????
> 
> ...




Can,

I agree for what it's worth. 
the guy wants simple discussion on entries.


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## It's Snake Pliskin (29 May 2007)

Know your risk. 
Get the best entry for it.
Get the best exit for it.

An understanding of the art is essential and involves a lot of hard work to master. 
Discretionary works.
Mechanical works.

Dispense with biases that put your risk at risk of failure.

Entries - love them. :1luvu:
To say entries don't matter is naieve and delusional incompetence. 
In isolation an entry is a tactic, a part of the whole and the other parts are nothing without it - the strategy.


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## tech/a (29 May 2007)

> Oh yes I am working on my system... and hence so many queries...




*See this is what pisses me off.* My discussion has been based around 8 yrs of systems developement,I can see where this guy is going and infact where all of you are making blundering errors.

Yet when quality information hits you between the eyes,this lame blah blah any entry given the right conditions rubbish gets taken for gospel.

Goodluck with your systems developement could have saved you a few years but as I said--Wasting my time.

Now I'll bugger off from this thread.


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## wayneL (29 May 2007)

tech/a said:


> *See this is what pisses me off.* My discussion has been based around 8 yrs of systems developement,I can see where this guy is going and infact where all of you are making blundering errors.
> 
> Yet when quality information hits you between the eyes,this lame blah blah any entry given the right conditions rubbish gets taken for gospel.
> 
> ...



Yeah, everyone is a %$#&wit except Tech/A.


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## Lachlan6 (29 May 2007)

Just read Van Tharpe. Will put it all together. I know on face value the entry seems logically very important and in some ways it is, systems management (in other words not losing to much of your capital) is the basis from which traders become successful. I think the longer you trade the more you realize this.


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## CanOz (29 May 2007)

> See this is what pisses me off.[/B] My discussion has been based around 8 yrs of systems developement,I can see where this guy is going and infact where all of you are making blundering errors.




Frankly, i'm very interested in hearing your views on this Tech, can we do it in another thread? How about System Development, i'd also be keen to hear how you intend on working your way through your new system, step by step, that would be a great learning tool for us.



> Yet when quality information hits you between the eyes,this lame blah blah any entry given the right conditions rubbish gets taken for gospel.




Again, with all due respect, its sometimes the force in which it hits us between the eyes that raises a few hackles.



> Goodluck with your systems developement could have saved you a few years but as I said--Wasting my time.




There are many of us here who would greatly appreciate any and all help in regards to system development, by understanding the other intricate components we can realise how little the entry actually means.

Cheers,


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## RichKid (29 May 2007)

motorway said:


> Hi Rich
> 
> I say I can 100% control the entry
> but less the risk
> ...




hi Mw!
yes I agree, that's why having small position sizes at the outset is important, anything can happen in the market...my language was loose about the stop- I don't use an arbitrary stop % as I'm a technical trader- it has to correspond to a strong logical stop (eg EW invalidation point or a pattern failure point or below a pivot level), I adjust the position size to suit the max amount 'risked'. Sometimes you can cover several invalidation points with one stop- so when you're wrong you're wrong on several points and you know it and there are no regrets. btw, I work out my ideal stop point first and then look for an entry level, my guess is that many people would do this.

Nice analysis with CTX, certainly is showing strength.

btw, there are a number of threads on system testing and development on ASF, with many contributions by tech and other mechanical systems traders.


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## rowes (29 May 2007)

Hi,

Heres some of the things i use to determine an entry, some of you may agree some may not.

I watch for candlestick reversal patterns coupled with stochastics.
I double check the chart i'm viewing which defaults at 6mnths (this just suits me and my timeframe) - but I also check the chart over alonger period to make sure i am not missing anything in terms of trends, support and resistance.
I take previous support and resistance into account.
I take into account the major moving averages like 50,100,250 SMA as these can quite often become targets for support and resistance.
I listen to the finance report in the morninig news, reason being alot of other people do so when the US has a crap day quite often we do to, this could change my mind on weather to take that position on that day or not.
I take into account the last few days trading, whats does the volume tell me?
I also take into account *MY* last fews days, if i have been busy with work and my kids have been driving me crazy then i'll wait untill i am sure i'm ready 

I like to keep things pretty simple.
there are some other things i also take into account but these are some of the main things i do when selecting my entry. 

cheers


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## Chorlton (29 May 2007)

tech/a said:


> I've seen many discussions just like this. As will most who have been involved in trading for a while.
> 
> Like all most traders start to discuss Entry/Exit/Money Management/Risk and stop loss when they are either disillusioned with returns or have copped a fair loss. Those that are profitable dont care until it happens to them. Sometimes years down the track.
> 
> ...




Hi Tech/A,

IMO, "Exits" are probably more important (together with the use of good Money Management) than "Entries" when it comes to developing & using a reliable trading strategy. Interestingly, I have also read in a couple of books (by different authors) that random based signals can offer similar odds to that of a specific entry signal.

However, surely Money Management (as well as Position Sizing, etc) should also include focusing on those trades which offer the best Reward:Risk ratio's?  If this is the case, then Entries have to be an integral part of this. Afterall, isn't one of the important aspects of a system, to focus on "low-risk" set-ups?

Also, you mentioned the importance of "knowing" ones own system with regard to drawdowns, performance, etc. This obvious makes perfect sense, but can I ask how you would personally confirm this?  If you rely on backtesting, then don't you run the risk of "curve-fitting" the system to previous data??

Just interested in your thoughts....\

Kind regards,

Chorlton


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## It's Snake Pliskin (29 May 2007)

hijacked!


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## motorway (29 May 2007)

> I have also read in a couple of books (by different authors) that random based signals can offer similar odds to that of a specific entry signal.




I have noted the comments of Buffet
regarding the efficient Market Hypothesis

That says random entry is as good as it gets..
because all analysis is valueless...

And any price is the best price..

Buffet sees such a belief producing huge opportunities

For those that can discern real value...



Ok .. I see something similar here...As regard technical signals
If everyone believes the entry is unimportant or a consideration that can make little difference.. How much opportunity for those who can discern ?

what is an entry ?

To Me it is not moving averages, MACDs , RSI , higher highs
even Elliot waves ?

Do you think the Buffets and the Soros's etc etc
Skilled operators of all sizes use such "entries"  ..........If they do , They only use them to identify where they should be fading the crowd..

But where ever their entry is ( or is not ) will show up on the tape
and will be where We see demand absorbing supply and overcoming it


There is appearance 
and there is character..

If you had to find a scientist from a group of strangers
and you only could use aspects of appearance

Short hair / long hair
wears glasses 
introverted
wears a suit 
untidy appearance

You would need to back test all those entry points
and maybe decide that a random selection would be as good.
Keep picking and discarding ( stop loss ) until you find one..


However if you talk to that scientist observe Him
and know what the characteristics of a Scientist are.
How one behaves... You just wait to you find one and then  you select one..

The working of demand and supply
has been back tested since the dawn of civilization

It works

When those who know more than You start buying , With conviction..

That is Your ( Well My ) entry

regardless of what any technical signal might be saying
They will at best follow along
at worst mislead you

up and down are unimportant

Is there accumulation or distribution
That is important
demand overcoming supply
Even done under cover
Will move prices UP

Extensive accumulation will move prices up a lot
trends will emerge and gather followings

The earlier We ( I ) identify  accumulation and distribution
The lower the risk the greater the rewards

The random entry is better, is the EMH of trading..
For the equivalent of the Buffets in the trading world it should produce marvelous opportunities..

Money management is very important
It is Part of the entry
initial position size 
Pyramiding 
Exits

If identifying accumulation is the basis of the entry
Identifying distribution is the basis of the exit

demand and supply

operates on all time frames
and developing the skills to judge character

Is what I think will make the difference..



motorway


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## ducati916 (29 May 2007)

In relation to purely technical entries you can consider the following. 



> I got a call from a friend of mine who trades at Goldman. Anyway, he started telling me all the things he does in order to place trades and there was a common theme.
> 
> Figure out where the market is going and trade with the market. When you do this, your margin of error will grow a lot wider and your losses a lot smaller.
> 
> ...



jog on
d998


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## motorway (29 May 2007)

ducati916 said:


> In relation to purely technical entries you can consider the following.
> 
> 
> 
> ...






> But where ever their entry is ( or is not ) will show up on the tape
> and will be where We see demand absorbing supply and overcoming it




 We will see the flow of funds showing up in the changes in the relative performance of stocks sectors and mkts...

" market trends are sustained by a process of rotation"

Before a sector or a stock starts going up
It stops going down..

When did energy stocks start going up ?
When they stopped going down relative to other stocks and sectors ?


A good post duc.

It points to an important areas of analysis..
And also the top down Vs the bottom up analysis
Use both .

In such information are  entry and exit pointers


motorway


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## Kauri (29 May 2007)

For mine a random entry in no way measures up againt a planned entry. 
  For a truly random entry put the share page of your paper in a Budgie cage... the first share "hit" is the one to trade...
  Write *long...short* on paper and put that in there... let the budgie decide trade direction....
  Enter and manage that trade....
  Do it 100 times... compare the results to your planned entry trades...
  After all... most of the random entry dialouges I have read *assume* they are trading in the direction of the market... why???
  Take my only long term holding.. IVC.. pick a random entry anywhere in the past and trade it *short*... best of luck.. 

  Buffet as I understand it does care about entries... he does the numbers on prospective co's and finds what he calculates to be undervalued ones with good/exceptional growth potential. 
  If he identifies one at $5 that he believes should be $15 he will possibly buy in, if it is at $12 he probably wont. The *exact entry price* he is not concerned about, the general price he is. 

  I believe everyone uses entries, whether they realise it or not..
  the fundamentalist works out a value at which he thinks he can buy at or below real value... as opposed to buying at overvalue..
  techies use MA's.. RSI's... Stochs... Comp RSI.. patterns...P+F...waves...candles...vol...etc.
  I happen to use E/W to define the trend and identify (to me) low risk entry points... and back it up with shape, range and vol characteristics of the price bars... (I have unashamedly stolen this from Nick Radge and incorporated the theory into my trading  ). Seems to work for me, probably wouldn't for someone else..
  Have suspended my trading on 24Hr spot FX etc while I try to find a confirming method to back up my E/W as the vol seems pretty irrelevant.. the market is spread worldwide and getting accurate vol is impossible.. also it seems to be counted in trades.. a vol of 2 might be 1 trade of $100,000 and 1 trade of $1,000,000...


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## rowes (30 May 2007)

When it comes to entry do what works for you.

There are different styles and methods for different goals.
Buffets entry criteria doesnt help me if i am short term swing trading, random entry is not going to give me my edge either, i am sure my usal indicators wouldnt really matter and random would be fine if i was holding for 10 years.

not much good fishing for kingfish with a rig setup to catch baramundi


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## motorway (30 May 2007)

rowes said:


> When it comes to entry do what works for you.
> 
> There are different styles and methods for different goals.
> Buffets entry criteria doesnt help me if i am short term swing trading, random entry is not going to give me my edge either, i am sure my usal indicators wouldnt really matter and random would be fine if i was holding for 10 years.
> ...




It depends what you are measuring

I have a good article on this point

The longer the time frame ( 10 20 40 years ) 
Returns converge to the average

Think of a funnel narrowing as time passes

However what converges are returns measured has a % per annum

From this perspective entry is unimportant..

But even Buffet says that it is price paid that determines your return
and makes the difference..

The amount of $$ you have at the end of the time period 
is like a funnel with it's open end expanding as time passes
returns measured as $$ diverge depending on the amount of trend captured
( better entry, better exit )

what looks like a small edge in % terms when stated has a % per annum

When compounded over time will mean many many more Dollars held

When investing the price paid determines the return ( and is again where you have 100% control ) ( Buffet puts it as waiting for the perfect pitch )

With trading entries matter, because a small edge is what makes the difference.
At the end of the day better entries and exits will make all those extra dollars..

motorway


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## motorway (30 May 2007)

motorway said:


> Ok back to CTX
> 
> The bar chart lays out the character of action
> 
> ...




What makes forum works are constructive discussions
where people make an effort to take things  forward...

CTX was put forward as an example

So here is an updated chart
above I said ahead of time what I would need for entry

Has not happened just yet
Came back to the 50% retrace
but with a wide spread abrupt bar

not the narrow spread exhaustion bar I was seeking

close was off the bottom

Mkt was giving a context of background weakness

So it is unfolding OK

Vol is subsiding

the small down wave I was looking for
is reacting back and dissipating

The amount of spread in the bar however qualifies that

I need to keep watching the relative strength
and the overall market
as well as the CTX action itself

As it is turning out a buy in the absorption area was not optimal as I surmised


On the point of discretionary, mechanical and systematic.

This chart is drawn in a systematic non-discretionary manner
the 50% retrace line is where it has to be
The trend lines could not be drawn anywhere else.
( they have to be valid )

However the buy signal can occur on any bar
and hence evades coarse mechanical definition

It is about the character of the action
not the appearance the what of the action

The volume at the high 
tells us that many where buying on false signals
A failed breakout....

lets see what unfolds
If we can buy a tick from the bottom
So much the better..



motorway


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## Edwood (31 May 2007)

here's a practical example for short term entries Ronin - Dax tonight.  straight away it was under the 1day MA (560min on a 1min chart).  breaking down with lower lows, so short entries only

however very strong +ve divergence started showing so you know a long is coming.  safest place to enter is probably on the 1day MA cross & from there plenty of long entry signals above the 1day with higher highs & lows & you can keep moving your stop up.  

I longed around 7,690 but closed for a small loss when I went to bed - can't sit up all night every night!  for me the set up presented, I went in before the 1day because I was looking for a scalp - in this case it turned into a nice swing but of course you don;t know that in advance!

there are loads of potential entry signals around - you just have to find some that work for your overall style

all the best

Ed


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## R0n1n (31 May 2007)

thanx a lot Motorway and Edwood. Its nice to see the thinking behind the entry parameter. Motorway your trendline work is great.


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## Edwood (31 May 2007)

no worries

yep trend is key Ronin - as someone said the other day you don't get far trying to swim up a river


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## R0n1n (31 May 2007)

Edwood said:


> no worries
> 
> yep trend is key Ronin - as someone said the other day you don't get far trying to swim up a river




Edwood, whats the second indicator that you have used on your chart...?


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## Edwood (31 May 2007)

just a normal MACD setting + a 50 period MA - the general rule is to only buy when price is above both the 50 period MA & the 360MA, and to sell when  pice is below both

however like any rule there are exceptions!


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## motorway (31 May 2007)

> Wyckoff’s “Reverse Use of Trendlines”
> By Hank Pruden, Ph.D., Golden Gate University
> Jerry Schellenger’s excellent presentation to the TSAA in February 2001 (If You Can Draw a
> Straight Line, You Can Make Money in the Market) can be extrapolated and magnified by
> viewing it through the prism of Wyckoff’s Reverse Use of Trendlines.




http://www.tsaasf.org/images/stories/newsletters/tsaa newsletter spring 2001.pdf


Some basics on trend lines

motorway


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## Sean K (31 May 2007)

kennas said:


> I'm probably out of my zone here because I discretionary trade, and am more an investor. Entries are a very important part of my trading and investing. I would rarely enter a long trade when a stock was in a downward trend, for example. Actually, I don't need to say anything else, it seems quite clear to me how important it is to pick a good entry. Having said that, entries can not be considered in isolation from an overall plan which seems to have been covered, with an exit probably the more important trading mechanism. I can't understand though, why entries can't be considered here, there are low and high risk entries IMO. For example, I look for a stock in a near perfect set up: *General upward trend, stochastics moving up through 50, MACD moving up through zero line, stock not approaching significant resistance, RSI under 80 moving up, and the market not about to crash*......Probably much better opportunity to buy long than the opposite  Hope I'm not off track here.



As another example of an entry set up I look for is the current MTN chart. It is not perfect by any means, but there are a few indicators and chart picture which are indicating a good entry to me. I have indicated on the chart what is good, or not, and where I'll be entering. Obviously, as has been discussed, there's plenty of other more complex entry indicators out there, I just use these for the moment. Must say, this chart could be different by this afternoon, so it's something I would review in detail. Must also say, that while these basic indicators are useful, they are lagging, and I would normally just use them as confirmation of the price action. To me, the break through $5.50 short term makes this a good entry. The 'traders' can now smash me. LOL 

PS, not saying this WILL happen, waiting for the entry. If it doesn't happen, I wait.....


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## motorway (31 May 2007)

motorway said:


> http://www.tsaasf.org/images/stories/newsletters/tsaa newsletter spring 2001.pdf
> 
> 
> Some basics on trend lines
> ...




Here is the CTX chart

You can see the normal use of trend line
and the reverse use..
( and accurate parallels )

Their interaction will reveal price patterns and
changes in volatility

Draw valid lines and see what is revealed
Don't look for patterns and then draw lines to then fit what You think you see

appearance Vs character

Keep lines sensitive
to what Is happening

They provide accurate context
for the price & Volume action to unfold

motorway


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## R0n1n (31 May 2007)

motorway said:


> Here is the CTX chart
> 
> You can see the normal use of trend line
> and the reverse use..
> ...





Great work everyone.. maybe I will start posting some of my reading on various charts using trendlines, RSI and MACD. Then you guys can hammer me with ur expert opinion...


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## nomore4s (31 May 2007)

kennas said:


> As another example of an entry set up I look for is the current MTN chart. It is not perfect by any means, but there are a few indicators and chart picture which are indicating a good entry to me. I have indicated on the chart what is good, or not, and where I'll be entering. Obviously, as has been discussed, there's plenty of other more complex entry indicators out there, I just use these for the moment. Must say, this chart could be different by this afternoon, so it's something I would review in detail. Must also say, that while these basic indicators are useful, they are lagging, and I would normally just use them as confirmation of the price action. To me, the break through $5.50 short term makes this a good entry. The 'traders' can now smash me. LOL
> 
> PS, not saying this WILL happen, waiting for the entry. If it doesn't happen, I wait.....




Kennas, do you wait for EOD confirmation on a set up like this especially with a stock like MTN which seems to have quite large swings


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## Sean K (31 May 2007)

nomore4s said:


> Kennas, do you wait for EOD confirmation on a set up like this especially with a stock like MTN which seems to have quite large swings



Yep, I would with MTN, you are right. I'd especially never try to catch it early in the day. This is a yo yo!! For a longer term break up, I'd be looking for the resistance to turn support for confirmation, but you miss some gains waiting. Would also depend on the depth and volume at the time. Many a time the stock just jumps and you completely miss it. I suppose, once the buy is made it's then a matter of managing the position, which is another story of course.


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## Edwood (31 May 2007)

Ronin - if you'd bought on a cross of the 1day from below, and sold on a cross from above - take a look at potential points for ASX200 / SPI / XJO for the last 3 days

Ed


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## R0n1n (31 May 2007)

Edwood said:


> Ronin - if you'd bought on a cross of the 1day from below, and sold on a cross from above - take a look at potential points for ASX200 / SPI / XJO for the last 3 days
> 
> Ed




Edwood, expain a bit more.. remember I am fairly new to the game. Maybe a chart would help a lot ...

My previous experience with stocks has been for long term holding and that too on my full time trader friends recomendation. I remember when he told me to buy RIO at 70, I made him swear on his mother that it was undervalued   lol . I am still holding it.


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## disarray (31 May 2007)

thanks motorway and kennas for the chart analysis. its educational to see the methods and processes of more experienced players and it gives noobs like me confirmation or new ways to look at things. much appreciated (and to other chart posters as well).


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## tech/a (31 May 2007)

This is MTN.
The analysis is VSA Volume spread Analysis similar to that which Motorway has spend copious hrs explaining (In a Charting package.).

If trading in a discretionary manner and looking for an entry its my belief that you need a number of confirming indicators before you take a trade.
For short term trading VSA is very powerful.

In this chart we have a number of confirming indicators.
The identification by the software of climatic selling action.The GREEN rectangle.Followed by a 2 bar pattern,Selling and climatic action (The commentary of which isnt shown here.). The  Diamonds have turned Green indicating a change to bullish.(You'll also see Red and White Diamonds).

The Buy signal is a break out of the Trend Channel.(Top blue line).
My stop is $5.04 My Price target is around $6.74 Approx 4:1 R/R.
However I will use the VSA analysis to exit.
Thought as MTN is being discussed and from my view looked like a reasonable trade.

Software is TradeGuider.


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## Dutchy3 (31 May 2007)

This is a great thread and I don't want to be left out.

Here's what I look for:

Volume accumulation on the whites (ringed in blue)
Attempts that fail with black candles on lighter volume
At least two of those
Big white on increase in volume breaking the down-trending tops
The bottoms need to be flat - or very close to flat

Oh - My first concern is that I need to know when I'm wrong. For this one it will be a close below 14 so I set my position size accordingly ....

and .... over 10 years of doing the same thing over and over ... so if its not boring then I'm at risk of running down my capital ... for excitement look elsewhere ....


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## tech/a (31 May 2007)

Dutchy?
You in this trade?

I see this as a great Watchlist entry as there is sound accumulation---one day it WILL blast off OR fail.Would give great R/R.


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## Dutchy3 (31 May 2007)

Hi tech

Yep

taken a few positions ... STOP 14 

also have NDO .... and had a run from WPL ... the oliers have potential yet ... look the goods to me


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## Sean K (31 May 2007)

Dutchy3 said:


> Hi tech
> 
> Yep
> 
> taken a few positions ... STOP 14



Looks good Dutchy, and I like what you said.

It's an entry set up I look for, but not yet a buy to me. I'd be waiting for a clear break through .165 and then a larger position on a break through .17. 165 looks like short term resistance and it could still fail, IMO. Must say, the white candle looks good. This is just a view of the price action however, I haven't looked at any of my indicators. 

I'll be watching this one closely. 

(Perhaps this should be linked to the potential breakout thread?  )


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## R0n1n (1 June 2007)

great posts guys, I have started using trendlines as well and will start posting the charts for analysis tonight... Dont have Amibroker/Quotetracker here at work .. lol...


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## R0n1n (1 June 2007)

ok.. here is a the chart of CSM with trend lines that I got a friend to do and mail it in. Is it right ?

aso have attached a clean line chart if anyone wants to draw the right one.. Can also post a candlestick one.


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## Sean K (1 June 2007)

kennas said:


> As another example of an entry set up I look for is the current MTN chart. It is not perfect by any means, but there are a few indicators and chart picture which are indicating a good entry to me. I have indicated on the chart what is good, or not, and where I'll be entering. Obviously, as has been discussed, there's plenty of other more complex entry indicators out there, I just use these for the moment. Must say, this chart could be different by this afternoon, so it's something I would review in detail. Must also say, that while these basic indicators are useful, they are lagging, and I would normally just use them as confirmation of the price action. To me, the break through $5.50 short term makes this a good entry. The 'traders' can now smash me. LOL
> 
> PS, not saying this WILL happen, waiting for the entry. If it doesn't happen, I wait.....



Well, maybe lucky. Entry solved, now what do I do?


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## tech/a (1 June 2007)

Kennas

I was going to follow it here using the VSA analysis above if interested.
I can explain things as we go.


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## Sean K (1 June 2007)

tech/a said:


> Kennas
> 
> I was going to follow it here using the VSA analysis above if interested.
> I can explain things as we go.



Yep, no drama, but this thread should perhaps be left to 'entry strategy'. I have my own unique plan for MTN which is a whole other story. ie, Hold and hope it goes to the moon!!!! LOL.  Seriously, further discussion on this trade might be better in the MTN thread, or another. Not sure which one. Suggestions?


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## tech/a (1 June 2007)

I'll stick it in the exits thread !


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## motorway (4 June 2007)

R0n1n said:


> ok.. here is a the chart of CSM with trend lines that I got a friend to do and mail it in. Is it right ?
> 
> aso have attached a clean line chart if anyone wants to draw the right one.. Can also post a candlestick one.




Is it right ?

A loaded question 

It is right when it does what you want it to do..

trend lines are like the straight edge of the carpenter.
Skillfully put at the right junctures they are very powerful tools

My answer would be sort of..

trends are waves of movement
higher highs higher lows

They run into counter trends

These junctures can be defined by price and volume signatures

Normal use requires two reactions of equivalent magnitude ( Very important )
That is how a carpenter uses his straight edge
across two high points ( Not just one )

the reverse use requires evidence of that counter trend

here is how I would draw for CSM

The red normal use are picking up two reaction lows of similar magnitude
The reverse use is originating at the high volume that turned the trend back down and linking up with the current action..

Should already have bought CSM
next entry if action confirms is at the three zones of possible support

or after evidence of absorption ( of the supply that the reverse trend line has been formed from ) and a breakout at even  steeper angle of trend..

motorway


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## Chorlton (5 June 2007)

motorway said:


> Normal use requires two reactions of equivalent magnitude ( Very important )
> That is how a carpenter uses his straight edge
> across two high points ( Not just one )
> 
> motorway




Hi Motorway,

By  "Magnitude" are you referring to Volume???   ... and if so, am I right in assuming that you are looking for a similar price level with similar volume for drawing your trend lines?

Thanks in advance,

Chorlton


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## motorway (5 June 2007)

Chorlton said:


> Hi Motorway,
> 
> By  "Magnitude" are you referring to Volume???   ... and if so, am I right in assuming that you are looking for a similar price level with similar volume for drawing your trend lines?
> 
> ...




In an uptrend Two reaction lows of similar PRICE magnitude
defines the normal use of trend line
That defines the degree of trend..immediate intermediate medium long
you are defining
when action of a certain character makes that definition doubtful
Then that wave of action is in some way completed

The reverse use brings in the volume qualification
In an uptrend it would be the area where supply as evidenced by volume
stopped the trend 

You should draw the reverse use when ever warranted but not try to force it

The two together will reveal all sorts of price patterns
And show volatility contracting and expanding
The names of the patterns means zip
*They can be continuation or reversal* It is the *character of the action.. *The how the lines are crossed.
That is what matters .

eg

The lines on Beach reveal a lot of information
contraction of volatility
Is that a rising wedge ? ( does not matter )

The character of the action
price , volume, range of the bars, thrust , reaction ( held above 50% level )

point to volatility falling as supply was absorbed

Now We will see what the character of the action at the upper ( overbought )
trend line reveals..

keep the trend line sensitive to the degree of move You are following
and to the action itself.. watch out for changes in speed..
Focus on the Character and not just appearance.


Some basic Wyckoff 101


motorway


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## motorway (5 June 2007)

I am getting some PMs

So it only looks like I am talking to myself 

here is CSM

updated

stocks go down to go up
because the "public" sell when it has gone down and buy after it has gone up

BUT trends are not straight lines they are waves

smarter money is on the other side of the trades

Wyckoff said that in looking to go long
focus your analysis on the down waves of action
You want to be in step with the smarter money

Of a series of errors He identified in the average trader
the most serious was being out of step with this wave like motion

Someone thought CSM was a good buy at the top
There is a high vol bar 

But what has happened ?

What does the last bar suggest
Is CSM in a downtrend ?

Not at this stage it is in a clear uptrend..

But I don't see a buy setup at the moment
atm I think it is going to have to go down in order to go up..

It is all waves that " last as long as they gather a following... Volume is following "

The trend lines give the action a frame of reference
So We can detect change in the speed, the angle of trend...
and the changing demand supply relationships..

motorway

PS It is only an example and for discussion..  The next bar of action is  new information that could change .. everything  and it is an online reply to a few PM's


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## chops_a_must (11 August 2007)

I use a combination of pivot points and fibonacci levels for entries... and exits for that matter.

I use the fibonacci retracement/ extension levels for "general" timing and confirmations of when to and when not to enter trades.

I use the pivot points for exact entries and exits. I have found it extremely accurate, often buying in near day lows or getting out near day highs. It also stopped in its tracks the habit I first had when I started out trading/ investing; that of "chasing" a share when making my mind up to buy a share at an "arbitrary" price originally.

I have found these to be great strategies. I hope this helps. 

Cheers,
Chops.


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## motorway (11 August 2007)

> Should already have bought CSM
> next entry if action confirms is at the three zones of possible support
> 
> or after evidence of absorption ( of the supply that the reverse trend line has been formed from ) and a breakout at even steeper angle of trend..




CSM gives a good demonstration of focusing on context

And among other things trend lines help give context




> next entry if action confirms is at the three zones of possible support




If you update the chart... What happened in the vicinity of $2.70
and what was the context ?

Prices then moved up and reacted off the reverse supply line

( As We might expect ? )

But what was the "character" of the reaction ?

Price Backs up into  a narrow range
and Jumped through that line at ~ 3.30/3.35

Then there was "absorption"  







> or after evidence of absorption ( of the supply that the reverse trend line has been formed from )




at the ~~ 3.45 level


What gives the context is the trend lines ( When you have the two sets operating You get all sort of volatility patterns displayed )

And the relative strength of thrust and reaction

( No retracement at the reverse supply line rising bottoms of the bars )

some key words

ease of movement ( thrust / reaction )
change of behavior 

seen in context

The buy at ~2.70 was a primary Wyckoff Buy set Up
( Of which there are 8 along with corresponding 8 short setups )


motorway


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## nomore4s (11 August 2007)

Thanks MW, good timing have just read the article on reverse support lines, lol.

This gives a very good working example, yet more to ponder


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## nomore4s (11 August 2007)

MW, there also looks to be a new set of reverse trendlines formed at the last high. 
Thoughts on this?

By the looks of the last bar supply looks like it is drying up? Of course that could change on Monday.


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## tech/a (11 August 2007)

Hmm

New toys.


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## motorway (11 August 2007)

> The entering of the opposing
> force is the rationale for starting the trend line along the resistance points in an uptrend. Under these reverse circumstances
> support would be expected to enter at a different level and indeed the entire
> upward trend channel would shift to a different angle of ascent or stride.
> ...





Yes We now have a logical and sensitive
trend channel framing the action and giving context.

helping Us define the trend and the position in the trend..

From a certain position process unfolds

positions are defined in terms of technical strength and weakness

overbought /oversold..

Context, recognising it
and getting enough of it
is important..

motorway


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