# Improving Chart Analysis



## barney

Hi there all, Only been here for a short time. Thanks to those (you know who you are) who have given me good advice so far.

I posted the following response in the CSR thread, but thought hardly anyone will read it there, and I would really like to get the opinions of you experienced traders as to whether I am on the right track with chart analysis.  So I would really appreciate if anyone could have a look at Fridays chart on CSR and put my analysis (be it brief) of what it tells us, to the test.

Please feel free to be critical cause I dont want to keep stuffing up and losing money (I am pretty good at that if anyone wants some tips!!!  ) Here is a copy of my post:- Thanks, Barney. (Geez I wish I could trade the way I play guitar...........)



> I'm only new here and still a beginner with charts etc. but I figure if I put my opinions out there for people to judge, then it is kinda putting my money where my mouth is so to speak
> 
> Here goes: I think the chart on CSR looks to give a hint of possible reverse I like the rate of change (price) spiking off the bottom on good volumes and the ADM (negative) Index starting a downturn. Also the Bollinger curve has "opened its mouth" with an initial downturn. From what I read, this initial downturn is often a "false" signal with the sp often reversing Yesterday's sp did reverse a little (Monday or Tuesday will probably tell the story better)
> I reckon CSR back to $3.15 before end of next week (unless of course the market in general fails)
> 
> Any comments from you guys who are way more experienced than I am, as to whether I am making sense, and/or are there other factors I should be looking at to give me a better assessment?? Cheers to all


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## stink

Hey Barney,

I am by no means an expert mate, but what are you trying to do with this trade? I only have a small chart to look at so havent got a complete view but to me it looks still to be in a downtrend? I have never been short so i dont know the in's and outs of a short position but because of the high turnover i imagine thats what people are doing with this stock??

I have no tools to apply to the chart so am just looking at the 1year chart and monthly volume, for me i wouldnt go near this due to my inexperience but yeah some of the more experienced may have a short view on this one?

Regards Stink


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## tech/a

I agree with stink.

This chart gives no indication that the current bearishness is over.
It is possible that it is in an accumulation phase however if price falls below the most recient low then this is still in trouble.
Even slight bullish moves will only see CSR trade in a sideways manner in my veiw.

There are better prospects.


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## happytrader

Hi Barney

Many of the best traders I know are muso/performers so you are in good company.

As for CSR chart analysis, if you are intending to go long why not wait patiently till the end of this quarter to look for entry. That way you can see where the stock traded and position yourself for the next quarter when it is likely to trade those areas again. Maybe if you take a peak at www.bigcharts.com and type in, au:csr, time - all data, frequency - quarterly you will see what I mean.

Cheers
Happytrader

Disclaimer: These are merely my opinions and nothing else.


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## barney

Thanks to all for the replies. Actually Porper in the CSR thread gave me similar opinions.  I was probably trying to "get cute" with CSR thinking I might have been "seeing" into the future.....BAD IDEA!!......... I read (after I had already posted )  that the price of sugar is down 25% and even though CSR made a healthy profit this year it was down on market expectations..........so the fact that all you guys picked the chart correctly shows me Ive got a lot to learn....One of my favorite quotes re trading so far.........."Trade what you see,not what you feel" (I was trying to "feel CSR")..   In saying that, maybe when it hits its bottom, there might be some nice profits onthe way back up.


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## barney

happytrader said:
			
		

> Hi Barney
> 
> Many of the best traders I know are muso/performers so you are in good company.
> 
> As for CSR chart analysis, if you are intending to go long why not wait patiently till the end of this quarter to look for entry. That way you can see where the stock traded and position yourself for the next quarter when it is likely to trade those areas again. Maybe if you take a peak at www.bigcharts.com and type in, au:csr, time - all data, frequency - quarterly you will see what I mean.
> 
> Cheers
> Happytrader
> 
> Disclaimer: These are merely my opinions and nothing else.





Thanks H/T,  Yeah Ive been lucky enough (when I was a fair bit younger!!)  to "support" some of  Australias best known bands (unfortunately our band/bands never got any where special...but good fun)..... I have no trouble cutting some nice riffs on the old Les Paul, but this trading is really testing me out. Cheers.


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## hardmoney

This stock would'nt even make my watchlist until it took out about  $4.50.
Looks like a dog to me.



HM


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## stink

Hi Barney,

It sounds to me like your overcomplicating your entry criteria? Up until very recently i was doing the same thing, had to have this signal or that and then i wondered why i found it so difficult to make a decision. 

So far from my very recent readings and postings on this forum i have worked out that the entry means bugger all really, i am comfortable that i could pick hundreds of potential trades quite easily. A few basic rules that i have started to adopt.
1. Get a big picture, go back to weekly and monthly charts, whats the trend doing? Once you see that its purely your experience that shows you an opportunity. If its in a long term down trend, i am staying away from it, no if's no buts, i dont care if everyone says its the trade of the year.
2. Find a suitable entry based on whatever tools you use, it doesnt really matter its what your comfortable with. I read this from Nick Radges book, i then went and tested the theory, i applied a whole lot of different indicators over the same stock and well they generally all say the same thing.
3. Trade your plan, once your in the trade adhere to your money management principles to the letter, no exceptions.
4.Review your plan. Why because as you learn your plan will evolve, i have changed mine about three times purely because i basically started making it complicated and now its quite simple really.
5. Dont jump into leveraged instruments to early.

Lastly mate, the above is not advice and most of it comes from others both here and in books etc. the main thing is you dont have to create an elaborate plan to trade successfully.

Regards Stink


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## barney

stink said:
			
		

> Hi Barney,
> 
> It sounds to me like your overcomplicating your entry criteria? Up until very recently i was doing the same thing, had to have this signal or that and then i wondered why i found it so difficult to make a decision.
> 
> So far from my very recent readings and postings on this forum i have worked out that the entry means bugger all really, i am comfortable that i could pick hundreds of potential trades quite easily. A few basic rules that i have started to adopt.
> 1. Get a big picture, go back to weekly and monthly charts, whats the trend doing? Once you see that its purely your experience that shows you an opportunity. If its in a long term down trend, i am staying away from it, no if's no buts, i dont care if everyone says its the trade of the year.
> 2. Find a suitable entry based on whatever tools you use, it doesnt really matter its what your comfortable with. I read this from Nick Radges book, i then went and tested the theory, i applied a whole lot of different indicators over the same stock and well they generally all say the same thing.
> 3. Trade your plan, once your in the trade adhere to your money management principles to the letter, no exceptions.
> 4.Review your plan. Why because as you learn your plan will evolve, i have changed mine about three times purely because i basically started making it complicated and now its quite simple really.
> 5. Dont jump into leveraged instruments to early.
> 
> Lastly mate, the above is not advice and most of it comes from others both here and in books etc. the main thing is you dont have to create an elaborate plan to trade successfully.
> 
> Regards Stink





Good onya Stink, Appreciate the advice....makes a lot of sense.....I think I'm just a bit edgy cause I got burned pretty bad with a couple of bad decisions and now my capital is so tight I cant afford to make any more wrong moves........Just trying to learn at the moment.......Lots of good advice around here which helps......... Cheers bud.


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## stink

Glad i could help mate,

Dont take my word for it, you need to prove this for yourself as do all traders i believe.

You will need to get that worry under control mate, if your constantly worried then dont put your money in. I have paper traded enough now to feel comfortable myself to put ssome $ in, i know there will be times i lose and i know how many losses i can take so i am comfortable that i can now make educated decisions and keep my money well protected.

Some say you cant learn until you have put your money into the market, i think thats rubbish you set yourself up to fail. Why would you do that?

Sure you will never know everything and you will make the wrong decisions sometimes but you have to accept it as all part of the business.

Regards Stink


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## barney

hardmoney said:
			
		

> This stock would'nt even make my watchlist until it took out about  $4.50.
> Looks like a dog to me.
> 
> 
> 
> HM




I agree unequivocally, and dont take this the wrong way cause I'm not trying to be sarcastic (not in my nature), I repect that I will never probably understand the market to the degree you and many others in this forum do, but if we had all shorted CSR at the start of april we'd probably all be wearing big grins right now.    (Sure you'd agree that just cause they dont go up doesn't mean you cant make money out of them   )  All the best.


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## wayneL

CSR - Keep an eye on sugar prices


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## Freeballinginawetsuit

My charting analysis didn't mean much today!. Most of my trailing stops got hit when I expected a bit more in them yet.


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## barney

wayneL said:
			
		

> CSR - Keep an eye on sugar prices




Hi Wayne, Unfortunately I had already posted my (poor) chart analysis on CSR just prior to reading about the 25% drop in sugar this year..........What is your "gut feel" on sugar over the next few months (I believe CSR had a fair bit wiped out due to heavy rains in Q/land) Cheers.


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## wayneL

barney said:
			
		

> What is your "gut feel" on sugar over the next few months (I believe CSR had a fair bit wiped out due to heavy rains in Q/land) Cheers.




It would be a guess, but here are sugar prices going back to 1980. Sugar certainly can get cheaper...but it can also get on hellava lot more expensive too.


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## barney

wayneL said:
			
		

> It would be a guess, but here are sugar prices going back to 1980. Sugar certainly can get cheaper...but it can also get on hellava lot more expensive too.




Thanks Wayne, Point taken......worth keeping an eye on for sure (as you mentioned earlier).............still learning........Barney.


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## coyotte

Based on today's LOW (11/9) and C/B rules  CSR would have to close above Thurs High  (a new low would mean new High calc)  before  a Long entery.

But the last 3 breaks below the Bollinger Bands imply that a retrachment could be in the offering  -- If it approached BUT does not break the C/B level , then @ that point you have SHORT set-up 


Cheers


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## barney

coyotte said:
			
		

> Based on today's LOW (11/9) and C/B rules  CSR would have to close above Thurs High  (a new low would mean new High calc)  before  a Long entery.
> 
> But the last 3 breaks below the Bollinger Bands imply that a retrachment could be in the offering  -- If it approached BUT does not break the C/B level , then @ that point you have SHORT set-up
> 
> 
> Cheers




Hey there Coyotte, (you're not a muso are you, you keep late hours as well?!)

Thanks for the above analysis....
PS I have just read an old thread started by you in Trading Plans........I am going to bring it to the "front of the queue" again cause for newbies like me there are some "pearls of wisdom" in there......Cheers.


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## barney

Hi Guys, Just wondering whether my initial "gut feel" on CSR might not have been too bad (I was starting to question myself re what I was seeing), but I am kinda happy that this stock did reverse, cause thats all I was trying to pick,(the reversal after the long downturn) I thought I was a day or so early on the prediction, and that turned out correct .......I may have just got lucky of course!! .....It may well drop back into its bearish pattern............ I dont hold the stock btw......... 
Interesting that it still managed to reverse after the 25% drop in sugar prices......???
At least it gives me a little more confidence in the way I am "seeing" the indicators.......and thats all I am after atm.  Cheers all.


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## coyotte

Barney:

Sorry -- it's NOT about prediction ---- it's about understanding what the 
 " chart " is saying


Cheers


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## barney

coyotte said:
			
		

> Barney:
> 
> Sorry -- it's NOT about prediction ---- it's about understanding what the
> " chart " is saying
> 
> 
> Cheers




Yeah I appreciate that Coyotte (I am trying to understand),  I was only trying to "predict" so to speak, because I am fairly new to reading charts, and just trying to get a bit of a handle on what I have learnt so far........ (and I wanted to put myself on the "chopping block" by "getting in early"....certainly would not have put money on at that stage...)  I realise there is a lot to learn about all this stuff, but I was just happy that, with my limited understanding, I MIGHT/maybe not have been seeing something that was worthwhile doing more testing on.........(and maybe I just got lucky, and what I thought I could see wasnt even there!!)
All I can do at this stage is study/read up on what the different indicators are likely to be telling me and try and incorporate that into a broader look at what the market/a particular stock is doing in general (Tell me if this is not the right way to go about it cause I need to know.) 

In saying that; from a totally "no knowledge" point of view, I reckon that my "interpretation" of charts is improving............but if you can recommend any good reading material to kick me along a bit, that would be appreciated. Cheers.


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## tech/a

There is a million things that could be said about what you are doing as a Tech/analysts.
Infact your description of price action on CSR is really a commentry which most people new to analysis seem to write up.

(1) Trade in the direction of the trend.
(2) Dont try to pick reversals before they occur.Wether that be a high or a low.
(3) Dont formulate your analysis to support a "Feeling" you have.In the case of CSR it appears you believe its a prime candidate for a buy---you think its cheap.You have found analysis and interpreted in a way that supports your veiw*.(((Interesting that it still managed to reverse after the 25% drop in sugar prices......???---------my initial "gut feel" on ------etc)))*

All technical analysis can do is supply a possible entry and or a possible exit,stop level.Wether it is accurate is dependant of future price action.
However analysis,technical or Fundamental or both is only a very small part of the business of trading.Ive seen brilliant Technical Analysts fail and the same with Fundumental analysts.
Jack Shwagger wrote many books on analysis and failed miserable trading futures.


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## coyotte

Barney :

Read Guppy's " Share Trading "  --- for a background.

Wilson's " Bussiness of Share Trading " & " The Next Step " ----- for a how to approach.

Then the Bible  Edward's  book " Technical Anaysists of Stock Trends " ---- for Patterns.

Try the incredible charts forum --- heaps of info there and a helpful crew.

Read and understand the above and thats really all you need --- the rest is either "window dressing" or stalling tactics on your part.

 Cheers


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## barney

Thanks Coyotte for the reference books, appreciate that and will get on to it.........and Tech,  I should stress I wasn't looking to buy CSR at a low price, I was kinda "testing the water" since I purchased Incredible Charts, to see if what I was "seeing" was going to happen.........I thought that it might be ready for a reversal ( I was actually trying to "pick it " before it happened", which I realise its "not the correct" way of doing it, but I was just experimenting with a "theory"......What I see now (and again I could be totally wrong) is a stock in "limbo land " for a short period, but with what has happened in the past months, it does look like the general trend would more likely be downwards than upwards....... I realise I am only at "entry level" chart analysis, but I figure by "making a statement" on the forum, I will be subject to "judgement" by those that know, and that actually "teaches" me more about my choices than just "telling myself" ......hope that makes sense.........PS I am determined to "get better" at all this stuff and atm I am experimenting and learning;  Thanks for the comments/advice, Barney


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## coyotte

Barney :

When it all boils down a stock can only be doing one of two things -- either  it is  in a TREND or it is moving SIDEWAYS .

From the above there is then 3 basic trading methods 


1: Trend Trading --- Trending

2: Breakout  ----- Sideways but can also be within a trend

3: Reversal   ----    Trending 

The first is the easiest method to learn and can last for years , also contained within the tread will be other two methods .


Breakout Trading is harder and more concerned with patterns  ---- more suitable to short term 1 to 5 days .

Reversal  Trading is the hardest of all and requires experience ( CSR is a Reversal Trade )



You have really got to come back to what T/A is based on and  that is "Crowd Phycology " --- you are trying to FOLLOW the crowd (not lead them) .
This where the add ons like Gann , Elliott Waves etc fall down , they are trying to get out in front of the pack .
This style of thinking is more suitable to Punters --- they must keep their knowledge to themselves in order to obtain higher odds -- with T/A it is exactlly the opposite the more the crowd agrees , the better for you .


Best to pick a sector you like eg: Materials, Financials and have a watchlist of around a dozen stocks in this sector ---- learn about the sector --- what F/A  effect it ? --- learn the F/A of the selected stocks --- then go back and try and find how each of these stocks are traded --- some are quite simple and  respond to M/A others Trend Lines ---- get to understand each stock, if a stock for eg  : responds to Fiboncci numbers, well so be it , this is what this particular crowd is doing , so just follow  


The hand full of traders that I personly know have all been down the same track --- started SIMPLE, went on to make it complicated , then came back to a few KISS  methods , only then was a substanable profit possible .

What I'm about surgest was not possible when I started in the early 80s , but if I was kicking off now , I would :

1: Download Incedible Charts ( free software & data )
2: Same with Egoli 

3: Open a $1000 account with IG-Markets ( $1 brokerage , no min balance )


Now treat this account as a fully fledged trading acount , with all the money managment principles both Guppy & Wilson surggest.


This means that basiclly:

1: Max Position Size of any one trade = 20% of Account 
    = $200 max amount of CFD position (not margin)


2: Max Loss = 2% of account 
    = Stop loss Max = $20 

So if done correctlly you are actually only risking $20 (plus gaps etc) 


This way you are putting " MONEY" at risk , which will bring out the flaws in your nature ---- these must be over come before you can procced .

The hardest thing most traders have to learn is to take a loss at the predetermined Stop ---- not easy when you are starting out

Start off Tread Trading --- Wilson lays it all out ---- and practice, practice practice .

Trading is really quite simple , don't get sucked in with all the add ons , though like most of us you probably will !




Best of Luck 
Hope it goes well for you

Coyotte


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## Bobby

coyotte said:
			
		

> Barney :
> 
> When it all boils down a stock can only be doing one of two things -- either  it is  in a TREND or it is moving SIDEWAYS .
> 
> From the above there is then 3 basic trading methods
> 
> 
> 1: Trend Trading --- Trending
> 
> 2: Breakout  ----- Sideways but can also be within a trend
> 
> 3: Reversal   ----    Trending
> 
> The first is the easiest method to learn and can last for years , also contained within the tread will be other two methods .
> 
> 
> Breakout Trading is harder and more concerned with patterns  ---- more suitable to short term 1 to 5 days .
> 
> Reversal  Trading is the hardest of all and requires experience ( CSR is a Reversal Trade )
> 
> 
> 
> You have really got to come back to what T/A is based on and  that is "Crowd Phycology " --- you are trying to FOLLOW the crowd (not lead them) .
> This where the add ons like Gann , Elliott Waves etc fall down , they are trying to get out in front of the pack .
> This style of thinking is more suitable to Punters --- they must keep their knowledge to themselves in order to obtain higher odds -- with T/A it is exactlly the opposite the more the crowd agrees , the better for you .
> 
> 
> Best to pick a sector you like eg: Materials, Financials and have a watchlist of around a dozen stocks in this sector ---- learn about the sector --- what F/A  effect it ? --- learn the F/A of the selected stocks --- then go back and try and find how each of these stocks are traded --- some are quite simple and  respond to M/A others Trend Lines ---- get to understand each stock, if a stock for eg  : responds to Fiboncci numbers, well so be it , this is what this particular crowd is doing , so just follow
> 
> 
> The hand full of traders that I personly know have all been down the same track --- started SIMPLE, went on to make it complicated , then came back to a few KISS  methods , only then was a substanable profit possible .
> 
> What I'm about surgest was not possible when I started in the early 80s , but if I was kicking off now , I would :
> 
> 1: Download Incedible Charts ( free software & data )
> 2: Same with Egoli
> 
> 3: Open a $1000 account with IG-Markets ( $1 brokerage , no min balance )
> 
> 
> Now treat this account as a fully fledged trading acount , with all the money managment principles both Guppy & Wilson surggest.
> 
> 
> This means that basiclly:
> 
> 1: Max Position Size of any one trade = 20% of Account
> = $200 max amount of CFD position (not margin)
> 
> 
> 2: Max Loss = 2% of account
> = Stop loss Max = $20
> 
> So if done correctlly you are actually only risking $20 (plus gaps etc)
> 
> 
> This way you are putting " MONEY" at risk , which will bring out the flaws in your nature ---- these must be over come before you can procced .
> 
> The hardest thing most traders have to learn is to take a loss at the predetermined Stop ---- not easy when you are starting out
> 
> Start off Tread Trading --- Wilson lays it all out ---- and practice, practice practice .
> 
> Trading is really quite simple , don't get sucked in with all the add ons , though like most of us you probably will !
> 
> 
> 
> 
> Best of Luck
> Hope it goes well for you
> 
> Coyotte



Hello Coyotte,

Liked your post, but care to add that bit more for the many rabbits here    

Bob.


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## coyotte

Bobby :

There isn't a great deal to add.
I've said it all before on this forum in various threads.

What amazes me it the difficulty people seem to have with trading now 
with --- real time prices , real time volume ,market depth (up to L3) , instant transaction , top of the line charting software, multitude of books & courses,etc etc ------ the only thing I seem to be able to put it down to is information overload !

When I started out in the early 80s the only book readily advailble in Oz was small paperback put out by the Financial Review based on trend lines and POG.

Used a Lotus 123 SpreadSheet , TeleText for prices and a Phone Broker for trades (only gave the current Sell/Buy) @ around a days wage for brokerage
and that would probably be after a 20min wait on hold !


Went on to Purchase the Top line Software of the time MetaStock , done the courses , read the books and joined the sevices ----- 90% of it was a waste of time and trading capital.

Gann --- never left details of his method and ended up a pauper anyhow !

Elliott Waves ---- O/K where does the 1st Wave start ? -- every practitoner has their own subjective starting point .

Fibonacci --- have nothing against the mysteries , but get real --- this only works because a sizeable crowd believe it works .


But despite all the above disadvantages , the small trading group I was with managed to make better returns than the "buy & hold " F/A investors at the time --- Charting as T/A was called was looked on as being for weirdos.


Then along came Guppy , I had already read Edward's work , but this is not a "how to trade" in the sense that Guppy's " Share Trading " is .

At the time Money Manegment (stops, position size and targets) were only vague concepts ---- Guppy cleared all this up in detail ---- this was the turning point for T/A in Oz.


But now the real problems came to the surface ---- Exercising the Stop.
It was after reading Guppy that it dawned on me that the TRADE is the "2% of Capital" and nothing to do with the POSITION size.


The whole profit/loss calulations must be swung around that 2% --- which would be old hat now but not at the time.

But this was the turning point for me and I suspect a lot of other traders at the time --- mediocre profits turned to small but persistant & sustianable  compounding profits over the long term.



As to stocks :

I have stayed with the Gold sector over the years along with the base metals, by doing this over time the sector becomes second nature to you --- far easier than trying to nut out a whole market .


OXR would have to be one of the easiest stocks I've ever traded , if you bring up a LOG chart the trading channels are just so obvious --- this is a stock that appears to be  traded on  LOG Trend Lines and Candle Rejection Tails --- MAs , Bollinger Bands are not really suitable .



PSV is one stock I follow but can not Short 

excellent stock to learn from, with plenty of volitillity , heaps of patterns, Trending, Breakouts , reversals and retracements.

A log chart of PSV reveals a UP Trend Line going back over 3yrs BUT the key to this stock is the 20 d EMA  , notice every time its breached to the down side the stock continues it's decline ---- use this along with a  ADX -20d and the UP tread line and Count Back for a Long Position (must Close above C/B)

This is a Reversal Trade within a Trend.

Not really all that hard , just remember each stock has it's own character and what applies to it does not necessarily apply to another stock.

Have included a 6mth chart of PSV, don't know if it uploaded.

   Cheers


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## Bobby

Thanks Coyotte,

Good stuff !

Regards Bob.


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## Magdoran

barney said:
			
		

> Yeah I appreciate that Coyotte (I am trying to understand),  I was only trying to "predict" so to speak, because I am fairly new to reading charts, and just trying to get a bit of a handle on what I have learnt so far........ (and I wanted to put myself on the "chopping block" by "getting in early"....certainly would not have put money on at that stage...)  I realise there is a lot to learn about all this stuff, but I was just happy that, with my limited understanding, I MIGHT/maybe not have been seeing something that was worthwhile doing more testing on.........(and maybe I just got lucky, and what I thought I could see wasnt even there!!)
> All I can do at this stage is study/read up on what the different indicators are likely to be telling me and try and incorporate that into a broader look at what the market/a particular stock is doing in general (Tell me if this is not the right way to go about it cause I need to know.)
> 
> In saying that; from a totally "no knowledge" point of view, I reckon that my "interpretation" of charts is improving............but if you can recommend any good reading material to kick me along a bit, that would be appreciated. Cheers.



Hello barney,


Just thought rather than duplicating the many discussions on T/A approaches that you might find the following threads of interest.  My comments in “testing a mechanical plan” may “resonate” with you since the analogy used is the process of learning music.  Have a read and see what you think:


•	“Books on Technical Analysis”, 
•	“Good TA books: Any suggestions?”, 
•	“Testing a mechanical plan”, 
•	“Is T/A based on hope?”
•	“$5000 to $50000 in two years - let the odyssey begin”

Have a look at all the different views and make up your own mind.  I suspect if you explore long enough you will find some works which will give you some solid grounding.  Best of luck!


Regards


Magdoran


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## Magdoran

Hello coyotte,


While I have no issue with you talking with authority in the areas you are well versed in such as Guppy, Wilson, and Edwards, I do have an issue with you making sweeping statements which are both factually incorrect, and are flagrant misrepresentations of alternative approaches.

I have no issue with you logically analysing any method that you have studied and commenting on your observations of the pitfalls and limitations of different techniques. Just be thorough about it, and not sloppy - the wonky conclusions you draw from false premises beggers belief.  You are so biased against Elliott and Gann, but is this based on a hunch, or is it based on actual experience using them?

I suspect you have never studied Elliott Wave theory or Gann in much depth if at all, have you?  If you have, then a more detailed critique would be in order.  Otherwise would you accept that you’re making emotional generalisations based on a gut feeling and not much more?  Would you also accept that these bodies of knowledge are actually quite involved and that just like technical analysis as a field in itself, there are many competing schools even within these disciplines.



			
				coyotte said:
			
		

> Gann --- never left details of his method and ended up a pauper anyhow !
> 
> Elliott Waves ---- O/K where does the 1st Wave start ? -- every practitoner has their own subjective starting point .
> 
> Fibonacci --- have nothing against the mysteries , but get real --- this only works because a sizeable crowd believe it works .



Gann:
According to the wise sage Coyotte, Gann never left details of his method. How then could an “add on” possibly be devised based on no method?  Why do I have a library full of Gann originals detailing many techniques?  This statement is just false. 

Coyotte, please list precisely which works of Gann you have read, and then give a brief synopsis as to why you reject each method.  Essentially which techniques have you researched, and why do you think that they don’t work?  (By the way, I reject quite a few of the techniques myself, so you might find that I actually agree with your appraisal assuming you’ve actually read the works, and interestingly so did Gann as he developed.  Don’t forget, the entire surviving works span a lifetime of rethinking and refining a perspective).

Elliott:
So, Coyotte, you are also an expert in Elliott Wave theory too.  Can you please list which works on Elliott Wave you have studied, what you understand to be the core concepts of the theory, and then explain why you reject these concepts.

Fibonacci:
Are you really telling me that you don’t use any kind of retracement approach, or extensions?  Fine if you don’t, but please outline why you think this approach doesn’t work.



			
				coyotte said:
			
		

> You have really got to come back to what T/A is based on and  that is "Crowd Phycology " --- you are trying to FOLLOW the crowd (not lead them) .
> This where the add ons like Gann , Elliott Waves etc fall down , they are trying to get out in front of the pack .
> This style of thinking is more suitable to Punters --- they must keep their knowledge to themselves in order to obtain higher odds -- with T/A it is exactlly the opposite the more the crowd agrees , the better for you .




Coyotte you seem to talk with significant authority about Elliott and Gann.  Why then if you understand them do you misrepresent them?

The concept of forecasting (which is probably a misnomer) is like a project management discipline - you assess the risks with a risk management plan looking at probabilities and assigning risk mitigation approaches for contingencies (this is what you do with methodologies like Prince 2 or Rational Unified Process in IT implementations).

Essentially extensions and retracements (such as the Fibonacci approach) are aiming to make estimates of where support/resistance in price is likely to be, and assess probabilities.  All you’re doing is measuring statistical deviations with a tool.  It isn’t that big an ask really.  Add to this pattern analysis, and you use this as opposed to lagging indicators such as moving averages and oscillators used by the Guppy/Wilson schools.

Come on coyotte, they really aren’t that different.  The trigger process is actually quite similar, but one looks primarily at the pattern and probability, the other uses lagging indicators for the entry and exit signals, that’s the core difference (Guppy does use patterns sure, but look at the trigger techniques).

Both approaches attempt to identify a trend, and trade it.  The idea is once you’ve mastered looking at charts and patterns, you can use your preferred approach.  If you want to use a moving average, wave structure, or a retracement system, trend lines, whatever, the key thing is to establish an entry criteria, and then determine a trading plan to establish exit criteria either on stop or profit, isn’t it?

Coyotte, while I have respect for your capability in trading using your method, I don’t think that you have ventured much out of this body of knowledge.  I have a lot of Guppy books on my shelf, and trialled his methods, and found that they didn’t work effectively enough for me for what I was trying to do.  But I recognise that it is horses for courses, and that it works for you.

I look forward to your in-depth response as to why each technique of Elliott and Gann should be rejected.


Regards,


Magdoran


----------



## barney

Hey there Coyotte and Magdoran,  (Geez I hope I haven't "started a fight" here.  :shoot:    :badass: )

Seriously, I appreciate all the comments I get from those  far more advanced than I am, and I try and take it all on board. I like the "KISS" theory that you put forward Coyotte  (another thread) and you have obviously developed a successful trading plan, and anyone who has been able to do that should be respected by we "L" platers.  I take note of, and will look deeper into all your advice/comments. 
Magdoran, (I liked the "resonate" quip, you are obviously "switched on" to subtleties)  Your knowledge of  technical things is obviously far reaching and hopefully I can learn more about that. (Unfortunately  I might be too old to put it into practice by the time I work it all out!!)   I will follow up on those threads (have already been to one previously) that you recommend, and thanks for your advice. 

Now dont you two get into a "scruff" over Gann or Elliott or anyone else, cause you have both helped me, so I'm happy (I'd be a lot happier if I picked "better" stocks of course     All the best


----------



## Magdoran

barney said:
			
		

> Hey there Coyotte and Magdoran,  (Geez I hope I haven't "started a fight" here.  :shoot:    :badass: )
> 
> Seriously, I appreciate all the comments I get from those  far more advanced than I am, and I try and take it all on board. I like the "KISS" theory that you put forward Coyotte  (another thread) and you have obviously developed a successful trading plan, and anyone who has been able to do that should be respected by we "L" platers.  I take note of, and will look deeper into all your advice/comments.
> Magdoran, (I liked the "resonate" quip, you are obviously "switched on" to subtleties)  Your knowledge of  technical things is obviously far reaching and hopefully I can learn more about that. (Unfortunately  I might be too old to put it into practice by the time I work it all out!!)   I will follow up on those threads (have already been to one previously) that you recommend, and thanks for your advice.
> 
> Now dont you two get into a "scruff" over Gann or Elliott or anyone else, cause you have both helped me, so I'm happy (I'd be a lot happier if I picked "better" stocks of course     All the best



Hello barney,


Ironically your name seems quite prophetic, doesn’t it?

Just make sure you “duck” as the pool ques, beer glasses and bar chairs fly!

Coyote has a lot of valid points he makes, but I think I might have rattled his cage a bit too much recently… look what happens when he howls out of his kennel!

Wha hoooo Were-wolves in T/A-dom!  Hang on a minute while I find that high pitched whistle to drive him nuts!

Seriously though barney, good luck in the search, I actually agree with coyote’s advice about finding approaches that aren’t too complex…

And no, you just asked questions, it’s just the nature of the peanut gallery (including yours truly – I’m a cleanin’ mah six shooter).

I’ll sign off now with a major 7th chord!


Cheers


Magdoran

P.S. Love the graphic!


----------



## wavepicker

> Elliott Waves ---- O/K where does the 1st Wave start ? -- every practitoner has their own subjective starting point .




This depends entirely upon the degree of trend you are looking at.

Obviously you have not studied or practiced EW very much to make such a nonsense remark



> Fibonacci --- have nothing against the mysteries , but get real --- this only works because a sizeable crowd believe it works .




Ahhhh so you say this method works!!! Did you know that both EW and Fibs are interconnected? Estimations of future projections and retracements of wave structures are determined in large by fibonacci ratios. So here you are canning EW because it's too hard to determine a starting point and because it's subjective and on the other hand saying that fibs work, because the crowd follows them. Seems to me you don't know where your coming from Coyotte. Did you know that the EWT is graphic representation of mass mood. ie "The crowd" The impluse 12345 and corrective abc's are actually fibonacci multiples, did you know that??

It may be hard for you to see because simply don't understand. 

Probably good for to stick to your lagging Moving averages and other lagging indicators if that works for you. In my opinion MA's are used incorrectly by most traders anyways. For that matter they don't even know what an MA is a representation of, let alone how to use it properly. 

Coyotte, What you gotta realize is that it ain't the trading system that makes or breaks a trader. There are traders making and losing $$$ out there using many systems. The main differences between succesfull and not so succesfull traders are psychological. A system that generates a higher expectancy can give ou a better edge YES. But it ain't the deciding factor.

Cheers


----------



## wayneL

***pulls up a chair, six pack of Stella and a bowl of nuts***

This is getting interesting


----------



## barney

wayneL said:
			
		

> ***pulls up a chair, six pack of Stella and a bowl of nuts***
> 
> This is getting interesting




Hey, I'm just new around here, and I take no responsibility for what may or may not be about to happen, but Wayne.............that was funny....... (I have had a couple of beers though!!!!)   Geez this is a great forum :bier:


----------



## wavepicker

Glad to be helping supply the entertainment for your viewing pleasure!!
hehe

opcorn: ??


----------



## barney

Magdoran said:
			
		

> Hello barney,
> 
> 
> Ironically your name seems quite prophetic, doesn’t it?
> 
> Just make sure you “duck” as the pool ques, beer glasses and bar chairs fly!
> 
> Coyote has a lot of valid points he makes, but I think I might have rattled his cage a bit too much recently… look what happens when he howls out of his kennel!
> 
> Wha hoooo Were-wolves in T/A-dom!  Hang on a minute while I find that high pitched whistle to drive him nuts!
> 
> Seriously though barney, good luck in the search, I actually agree with coyote’s advice about finding approaches that aren’t too complex…
> 
> And no, you just asked questions, it’s just the nature of the peanut gallery (including yours truly – I’m a cleanin’ mah six shooter).
> 
> I’ll sign off now with a major 7th chord!
> 
> 
> Cheers
> 
> 
> Magdoran
> 
> P.S. Love the graphic!





Major 7th,  One of my favorites (when I'm in the mood to be sensitive!)  Did you realise that Midnight Oil use quite a few Major 7th's ?? (I'm sure you did). Actually, some people do call me Barney in "real life" (not Barnsey)  Believe me (or not) but my band (when I was younger) supported "Cold Chisel" and "Midnight Oil"  and a host of others... ( I wont keep naming them cause you will think I am skiting) Musically, I can mix it with the best, but "Trading"....now thats another story.........(would you mind if I finished with a simple 7th chord....cause I am an old  "Deep Purple" child of the 70's....and love the rock "Blues"...with attitude of course!! :guitar: ) Cheers.


----------



## wayneL

barney said:
			
		

> Major 7th,  One of my favorites (when I'm in the mood to be sensitive!)  Did you realise that Midnight Oil use quite a few Major 7th's ?? (I'm sure you did). Actually, some people do call me Barney in "real life" (not Barnsey)  Believe me (or not) but my band (when I was younger) supported "Cold Chisel" and "Midnight Oil"  and a host of others... ( I wont keep naming them cause you will think I am skiting) Musically, I can mix it with the best, but "Trading"....now thats another story.........(would you mind if I finished with a simple 7th chord....cause I am an old  "Deep Purple" child of the 70's....and love the rock "Blues"...with attitude of course!! :guitar: ) Cheers.




Midnight Oil "Blue Sky Mine" 

http://www.youtube.com/watch?v=srDfpziUewE


----------



## wayneL

Hey we got everything ready now... seating, beer, munchies, music....

lets get on with the show


----------



## wayneL

Question for wavepicker:

Do you think the wedge pattern on the SP500 from July This year til now, qualifies as an ending diagonal?




At least one E-Wave blogger I know thinks so.

Thoughts?


----------



## barney

wayneL said:
			
		

> Midnight Oil "Blue Sky Mine"
> 
> http://www.youtube.com/watch?v=srDfpziUewE




Wouldn't I like to pick a few "Blue Sky Miners" of my own!?  Off topic but what do you think of CQT's prospects as a "blue skyer"??

Also off topic, but Midnight Oil will go down in OZ history as one of the greatest   "socially conscious" bands of all time.....and rightly so!   :topic  (thought if I put the smiley in, I wouldn't get into trouble)


----------



## barney

wayneL said:
			
		

> Hey we got everything ready now... seating, beer, munchies, music....
> 
> lets get on with the show




I can be a little more candid now I've been here for a few weeks...........Definition of Wayne........................."Pot stirrer"/ scalawag/rabble- rouser/agitator................or he is just simply "bored" and looking for some "cheap" entertainment....................T or F.........


----------



## tech/a

*Wave.*

I personally believe Elliot has good credibility.Always have.Its one on the few forward looking techniques (Steidlmayer/Frank D being the others) which have any reliability in analysis.Worth learning.

Fib appears everywhere in nature,and has its place in the markets.As a stand alone indicator---not much value.

*Magdoran*

As expected your just out to nail anyone who doesnt agree with Gann.
Its a common ploy of Gannists to turn the arguement back on the instigator of doubt.
Rather than ask which aspects of Gann the poster disagrees with I'd really like to see practical demonstrations of this quote below.



> The concept of forecasting (which is probably a misnomer) is like a project management discipline - you assess the risks with a risk management plan looking at probabilities and assigning risk mitigation approaches for contingencies




My personal thoughts on Gann analysis is that I dont believe it can be practically applied to trading to make a consistent profit.I'm yet to see a practical demonstration---in realtime.If your saying it cannot be used as STAND ALONE analysis then fair enough.Its good for amusement value only.

*This is the 3rd time Ive asked in this thread.*


----------



## RichKid

tech/a said:
			
		

> *Wave.*
> 
> I personally believe Elliot has good credibility.Always have.Its one on the few forward looking techniques (Steidlmayer/Frank D being the others) which have any reliability in analysis.Worth learning.
> 
> Fib appears everywhere in nature,and has its place in the markets.As a stand alone indicator---not much value.
> 
> *Magdoran*
> 
> As expected your just out to nail anyone who doesnt agree with Gann.
> Its a common ploy of Gannists to turn the arguement back on the instigator of doubt.
> Rather than ask which aspects of Gann the poster disagrees with I'd really like to see practical demonstrations of this quote below.
> 
> 
> 
> My personal thoughts on Gann analysis is that I dont believe it can be practically applied to trading to make a consistent profit.I'm yet to see a practical demonstration---in realtime.If your saying it cannot be used as STAND ALONE analysis then fair enough.Its good for amusement value only.
> 
> *This is the 3rd time Ive asked in this thread.*




Tech,

I have to say I've heard you state that positive view on EW before, so I vouch for you there in case anyone thinks Tech is casting EW and some forms of Gann in the same class. 

Also, the impression I get from what I've seen of Magdoran's explanations is that Gann is not used as a "STAND ALONE" tool by him- but I may be correced on this. (However, to go on to dismiss its benefits if it's used in conjunction with other tools is another issue and Mag would probably say it has helped him make consistent profits). 

Another point to note is that many market technicians use a mixture of different forms of analysis (eg EW & traditional TA or volatility/statistical studies and general swing trading tactics or price cycle and fundamental studies), that in itself does not suggest that any one form of analysis should be dismissed but rather that its complementary aspects should be valued. 

btw, I don't use Gann atm but I would like to have a look at it later.

I just don't want to see apparent disagreement over something that you both actually agree on, apart from that let the debate continue.

Also gents, let's keep it civil please, no need for character assassination. 

Great thread so far....


----------



## Magdoran

tech/a said:
			
		

> *Wave.*
> 
> I personally believe Elliot has good credibility.Always have.Its one on the few forward looking techniques (Steidlmayer/Frank D being the others) which have any reliability in analysis.Worth learning.
> 
> Fib appears everywhere in nature,and has its place in the markets.As a stand alone indicator---not much value.
> 
> *Magdoran*
> 
> As expected your just out to nail anyone who doesnt agree with Gann.
> Its a common ploy of Gannists to turn the arguement back on the instigator of doubt.
> Rather than ask which aspects of Gann the poster disagrees with I'd really like to see practical demonstrations of this quote below.
> 
> 
> 
> My personal thoughts on Gann analysis is that I dont believe it can be practically applied to trading to make a consistent profit.I'm yet to see a practical demonstration---in realtime.If your saying it cannot be used as STAND ALONE analysis then fair enough.Its good for amusement value only.
> 
> *This is the 3rd time Ive asked in this thread.*



Hello tech/a,


I get the impression you are a kind of latter-day crusader, the Adelaide version of a “Spanish inquisitor”, torturing victims along the way in the name of your religion – “tech/a-ism”.  I’ve seen you impale unsuspecting “heretics” in the past who did not bow down and worship the “one true god” and burnt them at the stake.

I really don’t think I fit your classic definition of a “heretic” straw man version of a “Gannist”  - some one engaged in a “hocus pocus smoke and mirrors” money making sham, mixed with arcane secret society meetings in clandestine catacombs akin to the “Priory of Scion”.  

In fact, I reject that label when it applies to me since I’m more of a hybrid trader, and make a distinction between those who immerse themselves in the whole mystique of Gann, and those who are essentially technical analysts who use some tools pioneered by Gann – big difference (it’s like saying bunyip and I are the same because we are both technical analysts.  Sure, we have similarities, but there are important distinctions too).

I’m primarily a chartist – you know, look at a chart with open high low close bars and volume. Then I have a vocabulary of technical analysis patterns – ranging from candlestick patterns (ala Bigalow and others), basic patterns like gaps, double tops/bottoms, head and shoulders and all that stuff (but I have refined notions of these things), then pattern of trend in different time frames (daily, weekly, monthly).

I was into Elliott Wave analysis long before exploring Gann concepts.  I see wave structure as an integral part of my technical analysis “vocabulary” to be used when appropriate.  My Elliott Wave theory is heavily influenced by Prechter and Frost.  So I’d be happy to wear the Elliott Wave tag as much as Gann, as much as being a straight chartist.  I’m all of these.  They are a “fusion” (like that barney!).

Then I have bolted on some Gann concepts onto this foundation instead of using moving averages and oscillators.  It’s really not that hard to pick up the basic techniques when it comes to McLaren influenced concepts of division of the range – essentially extensions and retracements, very similar to the tools Radge uses with Fibonacci extensions and retracements, but with slightly different increments.  All you’re doing is measuring statistical deviations with a tool.  It isn’t that big an ask really.  Add this to pattern analysis, and you are able to make estimates of where support/resistance in price is likely to be, and assess probabilities.

It’s like I said, just look at project management discipline - you assess the risks with a risk management plan looking at probabilities and assigning risk mitigation approaches for contingencies (this is what you do with methodologies like Prince 2 or Rational Unified Process in IT implementations).

Add to this again when appropriate the concept of time cycles (using Gann squares), and you can measure trends using similar concepts to price extensions and retracements, but on the time axis (again, a bit like Frank Dilernia).  This is very helpful for position trading derivatives with a time element.

You seem to think Dilernia and Rage are OK with what they do – Radge makes EW/fib based forecasts, and Dilernia uses a time based approach.  So you seem to have accepted that you can use techniques to forecast using price, and time, don’t you?  So what’s the big deal?  This isn’t rocket science…

I think you have scarified too many victims on the alter of “tech/a-ism”, and I question your preconceived notions about Gann until you make the effort to study it rather than just become this enraged bull in a china shop every time you see the word “Gann”.  You can give up on this tact of trying to frame me as an evil “Gannist”.  There is a big distinction between various users of any style of T/A.

This isn’t “the Revenge of Sith”, and I’m not trying to seduce you to the dark side.  Every time you feel the rush of blood to your head, maybe you should see a hypnotherapist, or see the film “Anr Management” and start singing “I’m so pretty”. (Oh, I’d love to see that!)


Yours in praise and worship of the holy saint tech/a



Brother Magdoran


----------



## wavepicker

wayneL said:
			
		

> Question for wavepicker:
> 
> Do you think the wedge pattern on the SP500 from July This year til now, qualifies as an ending diagonal?
> 
> 
> 
> 
> At least one E-Wave blogger I know thinks so.
> 
> Thoughts?




Hi Wayne,

an ending diagonal is an impulse whereby waves 1,3,5 each subdivide into 3's.
Therefore if this is an ending diagonal it is probably not finished as yet. I actually was bearish on this pattern some weeks ago(via some posts I sent to Magdoran and Richkid), but it continues to subdivide and that may well be the wrong assumption.

That is where some extra work is in order to clarify ambigious wave counts needs to be done IMO, before jumping the gun and assuming an ending diagonal and double top combo, only to get stopped out.

 There are 2 cycles in the S&P which are consistant back to the low of 2002/2003. They are the 20 week cycle and the 32 weeks cycle. Both these bottomed the approximately 20/21st July. If that is the case, then being quite reasonable length cycles, that would imply a rally of 10-16 weeks before they reach a crest. We are now 9 weeks in from that low. Therefore based on this, there is a good chance this rally may lead to new marginal recovery highs in the weeks ahead. That means about the 1st week of November for the larger of these 2 cycles to reach a peak. Of course there are other smaller cycles in play as well.

Although E waves can be a great tool, but they too have limitations and gaps. That is why it's necessary IMO to use other tools to help quantify wavecounts and potential EW patterns.

Hope that helps


----------



## Magdoran

wayneL said:
			
		

> ***pulls up a chair, six pack of Stella and a bowl of nuts***
> 
> This is getting interesting




Hope you had a good seat for the show...  exit stage right!


Mag
P.S. Was that you I could hear crunching away back stage?


----------



## tech/a

> Yours in praise and worship of the holy saint tech/a




Well thanks for that.

Now you were going to demonstrate the use of Gann in the following.



> It’s like I said, just look at project management discipline - you assess the risks with a risk management plan looking at probabilities and assigning risk mitigation approaches for contingencies




Looking forward to it.


----------



## Magdoran

barney said:
			
		

> Major 7th,  One of my favorites (when I'm in the mood to be sensitive!)  Did you realise that Midnight Oil use quite a few Major 7th's ?? (I'm sure you did). Actually, some people do call me Barney in "real life" (not Barnsey)  Believe me (or not) but my band (when I was younger) supported "Cold Chisel" and "Midnight Oil"  and a host of others... ( I wont keep naming them cause you will think I am skiting) Musically, I can mix it with the best, but "Trading"....now thats another story.........(would you mind if I finished with a simple 7th chord....cause I am an old  "Deep Purple" child of the 70's....and love the rock "Blues"...with attitude of course!! :guitar: ) Cheers.



Yup, barney,


lurv maj 7ths - even the minor version is fun too...


Really, you supported Cold Chisel, and Midnight Oil!  Wow, what a buzz!

I did see Midnight Oil at the old Sandringham Commodore before they were famous, and Garet was punching holes in the ceiling which at the time we thought was so funny.  This big bald lanky guy gyrating around the small stage.

What fun, I played in some bands, but nothing like backing such big names.  I used to play lead and rhythm, but I’m pretty rusty now.  Can still play, but no where near as nimble.  I still have an electric and acoustic, but they get dusty these days…

Are you still playing professionally?


Mag


----------



## barney

Magdoran said:
			
		

> Hello tech/a,
> 
> 
> I was into Elliott Wave analysis long before exploring Gann concepts.  I see wave structure as an integral part of my technical analysis “vocabulary” to be used when appropriate.  My Elliott Wave theory is heavily influenced by Prechter and Frost.  So I’d be happy to wear the Elliott Wave tag as much as Gann, as much as being a straight chartist.  I’m all of these.  They are a “fusion” (like that barney!).




Hey "Mag", I don't wish to get between you and tech "tearing each other apart", but I gotta say.........I reckon you would be one crazy s.o.b.!! (And I mean that in the nicest possible way :southpark )  You and Tech as far as trading, are speaking a different language to me, but you certainly gave me a grin tonight   
"Fusion"...you are speaking my language now ........in a word (Al Dimeola.... :guitar: well two words!) 
Now you guys get back to it cause I am learning some good stuff here, and being entertained in the meantime.....well done!


----------



## Magdoran

barney said:
			
		

> Magdoran said:
> 
> 
> 
> 
> Hello tech/a,
> 
> 
> I was into Elliott Wave analysis long before exploring Gann concepts.  I see wave structure as an integral part of my technical analysis “vocabulary” to be used when appropriate.  My Elliott Wave theory is heavily influenced by Prechter and Frost.  So I’d be happy to wear the Elliott Wave tag as much as Gann, as much as being a straight chartist.  I’m all of these.  They are a “fusion” (like that barney!).
> 
> 
> 
> 
> 
> Hey "Mag", I don't wish to get between you and tech "tearing each other apart", but I gotta say.........I reckon you would be one crazy s.o.b.!! (And I mean that in the nicest possible way :southpark )  You and Tech as far as trading, are speaking a different language to me, but you certainly gave me a grin tonight
> "Fusion"...you are speaking my language now ........in a word (Al Dimeola.... :guitar: well two words!)
> Now you guys get back to it cause I am learning some good stuff here, and being entertained in the meantime.....well done!
Click to expand...


Ohhhh, so funny barney!

I could hear the Carpenters singing “can’t we stop, hurting each other…” – I’m killing myself!  Then I hear the alien song they sang and think of tech…


Regards


Magdoran

P.S. You know, it’s funny, but talking with a fellow muso brings all the crazy wild days back to me, such fun!


----------



## Magdoran

tech/a said:
			
		

> Well thanks for that.
> 
> Now you were going to demonstrate the use of Gann in the following.
> 
> 
> 
> Looking forward to it.



Awwww Come on techie!


I think those aliens must have abducted the real you (the ones the Carpenter’s were singing about), the replacement’s far to civil…

Can’t even get a growl out of you these days…


Yours in mirth


Magdoran


----------



## barney

Magdoran said:
			
		

> Yup, barney,
> 
> 
> lurv maj 7ths - even the minor version is fun too...
> 
> 
> Really, you supported Cold Chisel, and Midnight Oil!  Wow, what a buzz!
> 
> I did see Midnight Oil at the old Sandringham Commodore before they were famous, and Garet was punching holes in the ceiling which at the time we thought was so funny.  This big bald lanky guy gyrating around the small stage.
> 
> What fun, I played in some bands, but nothing like backing such big names.  I used to play lead and rhythm, but I’m pretty rusty now.  Can still play, but no where near as nimble.  I still have an electric and acoustic, but they get dusty these days…
> 
> Are you still playing professionally?
> 
> 
> Mag





Yeah Mag, still doing a bit Only part time now days in a duo on mid north coast...nothing to get excited about.........still do some session work on a few gospel albums over the last few years ......I enjoy that cause I have to "create" something out of nothing......thought you must have been a muso.......I've still use my 70's Les Paul black beauty .........I like  min 7ths more than maj 7th's too!! .....anyway I'm off topic so I'm out of here!! Cheers :topic


----------



## lesm

Magdoran said:
			
		

> Awwww Come on techie!
> I think those aliens must have abducted the real you (the ones the Carpenter’s were singing about), the replacement’s far to civil…
> 
> Can’t even get a growl out of you these days…




The trip to the UK must have mellowed him, but it's still early days yet. Just keep mentioning the Gann word or maybe even the R word.  

I have some extra munchies to add to WayneL's in case we need them.

Magdoran, I believe I have seen you describe your approach before or part of it on another forum (about 12 months or so ago). At the time I thought it may have been it bit of an overly complicated approach rather than a KISS based approach. I believe in keeping it simple and only use complexity when it is required.

Are you still using the same approach or have you refined it more through time?

A lot of information is in the chart itself, without being overly complex and too many squiggles of any form don't really change the basic information in the chart. 

Cheers.


----------



## It's Snake Pliskin

wayneL said:
			
		

> Midnight Oil "Blue Sky Mine"
> 
> http://www.youtube.com/watch?v=srDfpziUewE




Wayne I want to hold hands again someday.  

If the entertainment gets boring check the dancing out on this one:
http://www.youtube.com/watch?v=81Wg9jE79-A&mode=related&search=

Pete Garret at his best. :dance:


----------



## tech/a

Magdoran said:
			
		

> Awwww Come on techie!
> 
> 
> I think those aliens must have abducted the real you (the ones the Carpenter’s were singing about), the replacement’s far to civil…
> 
> Can’t even get a growl out of you these days…
> 
> 
> Yours in mirth
> 
> 
> Magdoran




*Its pretty easy to pick those who have nothing to contribute.
They have nothing to contribute.*


----------



## Magdoran

lesm said:
			
		

> The trip to the UK must have mellowed him, but it's still early days yet. Just keep mentioning the Gann word or maybe even the R word.
> 
> I have some extra munchies to add to WayneL's in case we need them.
> 
> Magdoran, I believe I have seen you describe your approach before or part of it on another forum (about 12 months or so ago). At the time I thought it may have been it bit of an overly complicated approach rather than a KISS based approach. I believe in keeping it simple and only use complexity when it is required.
> 
> Are you still using the same approach or have you refined it more through time?
> 
> A lot of information is in the chart itself, without being overly complex and too many squiggles of any form don't really change the basic information in the chart.
> 
> Cheers.



Hello Les,


Congratulations by the way on that stellar pick of AUM, what a winner that was!

Kind of you to bring some food to the party… just make sure you keep your neck a safe distance away from Wayne at night!

Interestingly I have a lot of respect for Tech, even though I’m rattling his cage at the moment.  I do genuinely salute his efforts on RC and take my hat off to anyone who goes public like that.  It takes big kahunas.

Yes, that was me posting on RC around a year ago, and the core ideas are still there, but you’re right, it has been refined as I try to get the approach to maturity, but I’m juggling expanding my derivatives knowledge on the one front and trying to marry the two disciplines on the other.

The problem is that while it looks complicated (and in a sense I’d call it involved), at the heart of it, it is quite straight forward.  But there is a check list of things to do, kind of like the process of checking a plane at the airport – maintaining it.  It’s a bit like learning to drive, you’ve got to steer while applying the accelerator and changing gears… Once you get the hang of it, it becomes a lot more straight forward.  But it does take time to work it out because there are subtleties that aren’t obvious…

Agreed about the information in the chart.  I often start by looking at a straight bar chart with volume and nothing else.  Then I have a series of things I look for, and do the due diligence depending on the pattern I see, to determine the type of trend, and what tools to use.

Here’s a recent example that I sent off to wavepicker on Friday 22 of August for Brent Crude oil futures.  The first one identified a time and price point where I projected Brent would be on the 6th of September (acceptable error factor +/- 1 day), the target price was $66.23.

The strategy was to enter short, and exit half the position at this price level or exit half around the 6th of September.  As you can see, the low price hit $66.11 on the 7th of September.  The stop loss was set at $75.15 (although it would have to close above this level).

Where I was wrong was that I expected a bounce here, and was looking for a higher low to go long if it looked like it was going to retest the high.  This clearly failed, so the long strategy is no longer in contention currently.

Hope this makes sense.


Regards


Magdoran

P.S. I couldn’t trade this because I hadn’t found a suitable instrument to trade Brent with that I’m happy with.

P.P.S. Tech, while you have many qualities, persuasion is not one of them...


----------



## Magdoran

tech/a said:
			
		

> *Its pretty easy to pick those who have nothing to contribute.
> They have nothing to contribute.*




Whoa, it's a moby dick!  Reel reel reel...


----------



## It's Snake Pliskin

Magdoran said:
			
		

> Whoa, it's a moby dick!  Reel reel reel...


----------



## Magdoran

Snake Pliskin said:
			
		

>



Snake!


You know, Reeling in a big fish...

I can't make it too easy for Tech now can I?


----------



## Magdoran

Snake Pliskin said:
			
		

> Wayne I want to hold hands again someday.
> 
> If the entertainment gets boring check the dancing out on this one:
> http://www.youtube.com/watch?v=81Wg9jE79-A&mode=related&search=
> 
> Pete Garret at his best. :dance:




Now that was a band to see LIVE!


----------



## It's Snake Pliskin

Magdoran said:
			
		

> Snake!
> 
> 
> You know, Reeling in a big fish...
> 
> I can't make it too easy for Tech now can I?




Ah, I see. Thanks for the interpretation.

Magdoran, 

I have learned that participating on forums this is the only one where I have been attacked for not posting live, system proof etc information that may be of a private nature (though not by tech). I continue to comment only but never ask for proof that someone is profitable or whatever.

However, for the purposes of learning and communication I see nothing wrong with doing it, though I choose not too. 

My experience with Tech is to take him on and he is really a sweety at heart.

Tech and Mag thanks for the entertainment.

Midnight Oil is great!  

Snake


----------



## barney

Magdoran said:
			
		

> Here’s a recent example that I sent off to wavepicker on Friday 22 of August for Brent Crude oil futures.  The first one identified a time and price point where I projected Brent would be on the 6th of September (acceptable error factor +/- 1 day), the target price was $66.23.
> 
> The strategy was to enter short, and exit half the position at this price level or exit half around the 6th of September.  As you can see, the low price hit $66.11 on the 7th of September.  The stop loss was set at $75.15 (although it would have to close above this level).
> 
> Where I was wrong was that I expected a bounce here, and was looking for a higher low to go long if it looked like it was going to retest the high.  This clearly failed, so the long strategy is no longer in contention currently.




Hey Mag, so you actually forecast the drop in oil almost to the day/price!? Thats impressive ..........just out of curiosity, what do you think the short term/longer term future of oil price might be ...... ??


----------



## It's Snake Pliskin

tech/a said:
			
		

> There is a million things that could be said about what you are doing as a Tech/analysts.
> Infact your description of price action on CSR is really a commentry which most people new to analysis seem to write up.
> 
> (1) Trade in the direction of the trend.
> (2) Dont try to pick reversals before they occur.Wether that be a high or a low.
> (3) Dont formulate your analysis to support a "Feeling" you have.In the case of CSR it appears you believe its a prime candidate for a buy---you think its cheap.You have found analysis and interpreted in a way that supports your veiw*.(((Interesting that it still managed to reverse after the 25% drop in sugar prices......???---------my initial "gut feel" on ------etc)))*
> 
> All technical analysis can do is supply a possible entry and or a possible exit,stop level.Wether it is accurate is dependant of future price action.
> However analysis,technical or Fundamental or both is only a very small part of the business of trading.Ive seen brilliant Technical Analysts fail and the same with Fundumental analysts.
> Jack Shwagger wrote many books on analysis and failed miserable trading futures.




Barney,

This is a post you should read many times.


----------



## It's Snake Pliskin

Freeballinginawetsuit said:
			
		

> My charting analysis didn't mean much today!. Most of my trailing stops got hit when I expected a bit more in them yet.




Unfortunately for those who don`t yet realise it: charting analysis doesn`t mean much by itself. The expectation to be right taints the ability to think irrespective of the chart.  

This is not an attack on your coment above Freeballer.  So please don`t come out to get me


----------



## barney

Snake Pliskin said:
			
		

> Barney,
> 
> This is a post you should read many times.





Yeah Cheers Snake,  :iagree:  So much to learn...so little time!!........I never studied this hard when I was at school!!!...........enjoying it, and appreciate everyones help........


----------



## lesm

Hello Magdoran,

Thanks for your respone.



			
				Magdoran said:
			
		

> Hello Les,
> 
> Congratulations by the way on that stellar pick of AUM, what a winner that was!




Thanks, been having a good few months lately, with some very nice returns. Have another system besides the one I use for the monthly competition that is really working out well.



> … just make sure you keep your neck a safe distance away from Wayne at night!




He'll probably be too busy with his girlfriends.  



> Yes, that was me posting on RC around a year ago, and the core ideas are still there, but you’re right, it has been refined as I try to get the approach to maturity, but I’m juggling expanding my derivatives knowledge on the one front and trying to marry the two disciplines on the other.




Yes, trying to marry disciplines together is fun, but can be rewarding if it pays off. 



> … Once you get the hang of it, it becomes a lot more straight forward.  But it does take time to work it out because there are subtleties that aren’t obvious…




Only looked at what you posted at the time fairly quickly, but sometimes the first reaction to an approach and how it comes across eaves an impression. The subtleties and refienments are always the interesting part.



> ..... and do the due diligence depending on the pattern I see, to determine the type of trend, and what tools to use.




Assume from the above that you are undertaking some form of pattern analysis on the price and possibly the volume, as well. Take it that you may have also undertaken some (statistical) analysis on various patterns and the probability of the expected follow-on behaviour or expected direction of the trend. 



> Where I was wrong was that I expected a bounce here, and was looking for a higher low to go long if it looked like it was going to retest the high.  This clearly failed, so the long strategy is no longer in contention currently.




c'est la vie, we can't always be right.



> Hope this makes sense.




Overall what you have described makes sense. It appears that you are setting a starting point for the analysis at a number of bars in the past. Interested in the box in the top diagram, as it does not appear to have a bottom, whereas the box in the second diagram does have a bottom. I take it that the box is placed over the area of the selected target price, which is possibly a measured move.

I assume that Gannalyst draws the grid boxes and diagonal lines based on the selected starting point.

It appears that you have selected a price target or time-based exit to close out 50% of the position. I assume that the remaining 50% of the position would be closed out if the anticipated bounce and reversal to the long side had occurred.

By suitable instrument I take that to mean an ETO.

Cheers,
Les.

PS: I have been meaning to get back to the Four Fears thread for some time. Reading Douglas's "Disciplined Trader" and "Trading in the Zone" at the moment. On the psychology front there are some overlapping views that align with the "Phantom of the Pits", which I have found interesting. One of the Phantoms views that I am interested in is related to trade confirmation. In that, rather than focussing on stop losses or exits being hit is actually considering trade confirmation and use that as part of the basis, as to whether to continue with a trade or not. Another topic for discussion. Positive reinforcement rather than negative reinforcement.


----------



## Magdoran

Snake Pliskin said:
			
		

> Ah, I see. Thanks for the interpretation.
> 
> Magdoran,
> 
> I have learned that participating on forums this is the only one where I have been attacked for not posting live, system proof etc information that may be of a private nature (though not by tech). I continue to comment only but never ask for proof that someone is profitable or whatever.
> 
> However, for the purposes of learning and communication I see nothing wrong with doing it, though I choose not too.
> 
> My experience with Tech is to take him on and he is really a sweety at heart.
> 
> Tech and Mag thanks for the entertainment.
> 
> Midnight Oil is great!
> 
> Snake




Hi Snake,

I know what you mean.  I don’t really like to post after the event for the reasons you raised, but I did actually email this out on the day to a few ASF people, they know who they are, and they know this was done ahead of time.

But I’ve posted charts with key points before.  All I’m dong here is illustrating the mechanics at a high level.

Glad you enjoyed the show!

And yes, Midnight Oil was a premium Aussie band!


Regards


Magdoran


----------



## Magdoran

barney said:
			
		

> Magdoran said:
> 
> 
> 
> 
> Here’s a recent example that I sent off to wavepicker on Friday 22 of August for Brent Crude oil futures.  The first one identified a time and price point where I projected Brent would be on the 6th of September (acceptable error factor +/- 1 day), the target price was $66.23.
> 
> The strategy was to enter short, and exit half the position at this price level or exit half around the 6th of September.  As you can see, the low price hit $66.11 on the 7th of September.  The stop loss was set at $75.15 (although it would have to close above this level).
> 
> Where I was wrong was that I expected a bounce here, and was looking for a higher low to go long if it looked like it was going to retest the high.  This clearly failed, so the long strategy is no longer in contention currently.
> 
> 
> 
> 
> 
> Hey Mag, so you actually forecast the drop in oil almost to the day/price!? Thats impressive ..........just out of curiousity, what do you think the short term/longer term future of oil price might be ...... ??
Click to expand...


Hi barney,


I wish I could do this all the time, but it is only in limited circumstances you can do this.  Also, the accuracy swings around a lot.   You’re only dealing in probabilities, and the market will do what it will do.  This is not a fool proof system at all.  Even when all the ducks line up for your system the trade can go very wrong very quickly.

The trick is having a failure criteria, and exiting with discipline.

My longer term projections are much less accurate currently, and this is something I’m working on…

Not sure what's going on currently, actually working on it now as we speak.

Regards


Magdoran


----------



## Magdoran

Snake Pliskin said:
			
		

> Unfortunately for those who don`t yet realise it: charting analysis doesn`t mean much by itself. The expectation to be right taints the ability to think irrespective of the chart.
> 
> This is not an attack on your coment above Freeballer.  So please don`t come out to get me



Snake,


Really good point, and I find Douglas’ axioms are a cornerstone to my trading.

It’s taking action when you’re wrong that makes the difference – recognising it, and minimising the downside.

Regards


Magdoran


----------



## lesm

Snake Pliskin said:
			
		

> Unfortunately for those who don`t yet realise it: charting analysis doesn`t mean much by itself. The expectation to be right taints the ability to think irrespective of the chart.




Snake,

So true..oh so true.

The analysis is the easy part, it's what follows on from there that is important.

The wrong mindset is detrimental to anyone in the market.

*"The Best Winner, is the Best Loser" - Phantom of the Pits.*

Cheers.


----------



## Magdoran

lesm said:
			
		

> Hello Magdoran,
> 
> Thanks for your respone.
> 
> 
> 
> Thanks, been having a good few months lately, with some very nice returns. Have another system besides the one I use for the monthly competition that is really working out well.
> 
> 
> 
> He'll probably be too busy with his girlfriends.
> 
> 
> 
> Yes, trying to marry disciplines together is fun, but can be rewarding if it pays off.
> 
> 
> 
> Only looked at what you posted at the time fairly quickly, but sometimes the first reaction to an approach and how it comes across eaves an impression. The subtleties and refienments are always the interesting part.
> 
> 
> 
> Assume from the above that you are undertaking some form of pattern analysis on the price and possibly the volume, as well. Take it that you may have also undertaken some (statistical) analysis on various patterns and the probability of the expected follow-on behaviour or expected direction of the trend.
> 
> 
> 
> c'est la vie, we can't always be right.
> 
> 
> 
> Overall what you have described makes sense. It appears that you are setting a starting point for the analysis at a number of bars in the past. Interested in the box in the top diagram, as it does not appear to have a bottom, whereas the box in the second diagram does have a bottom. I take it that the box is placed over the area of the selected target price, which is possibly a measured move.
> 
> I assume that Gannalyst draws the grid boxes and diagonal lines based on the selected starting point.
> 
> It appears that you have selected a price target or time-based exit to close out 50% of the position. I assume that the remaining 50% of the position would be closed out if the anticipated bounce and reversal to the long side had occurred.
> 
> By suitable instrument I take that to mean an ETO.
> 
> Cheers,
> Les.
> 
> PS: I have been meaning to get back to the Four Fears thread for some time. Reading Douglas's "Disciplined Trader" and "Trading in the Zone" at the moment. On the psychology front there are some overlapping views that align with the "Phantom of the Pits", which I have found interesting. One of the Phantoms views that I am interested in is related to trade confirmation. In that, rather than focussing on stop losses or exits being hit is actually considering trade confirmation and use that as part of the basis, as to whether to continue with a trade or not. Another topic for discussion. Positive reinforcement rather than negative reinforcement.



Hello Les,


Quick answers:

Yes, the pattern is the key, recognising the type of trend (also in different time frames) is central, and yes the derivative part of the equation deals with standard deviation.

The square is totally configurable, and has many calibrations – price/time and intervals for gradations, and a range of set angles in the box are available (or individual angle scan be used such as “zero angles” (from major lows) and true trend lines (from major highs) for confirmation).  Yes, Gannalyst does all of this, as do other packages like Ganntrader.

As for the partial exit, my rules follow McLaren’s system of exiting half the position at points either in price or time, or both where you expect support for short positions, or resistance for long positions.

This is really important with options since time is a factor, and the delta can really move around a lot, so gains can be lost quickly if profits aren’t taken, and the underlying moves against you after moving favourably.

The second half would then be exited when the trend was at risk.  A higher low or other pattern which put the trend into doubt would have been a trigger to exit the second half.  Or at the next time and/or price target.  The next step would be to re-enter the position on a counter trend if the pattern was right, or enter a reversed position of a signal to trade the other direction (in this case long) was triggered.

My thinking was the dominant trend for oil at the time in the weekly was bullish.  So I was trading a counter trend in the weekly, and the bearish trend in the daily, but recognising the secular trend was bullish.

Wave count in this case had indicated a possible completion at the high, and was looking for an Elliott ABC (or McLaren “2 thrust”) correction.

Yes, I prefer options so I can put together a limited risk strategy with good reward characteristics.  If liquidity or risk are issues I have problems with an instrument.  I have a lot of misgivings with CFDs (the risk levels are sometimes 20 times greater depending on the viability of options selections – liquidity and volatility can be problematic though with options).

Thanks Les, I’d be very interested in the "Phantom of the Pits" text, never heard of it, but if it’s on a par with Douglas, I’d be very interested in it.  I’m very interested in the concepts of positive vs negative reinforcement.


Great to hear from you les.


Best Regards


Magdoran


----------



## coyotte

wavepicker said:
			
		

> Coyotte, What you gotta realize is that it ain't the trading system that makes or breaks a trader. There are traders making and losing $$$ out there using many systems. The main differences between succesfull and not so succesfull traders are psychological. A system that generates a higher expectancy can give ou a better edge YES. But it ain't the deciding factor.
> 
> Cheers




Thanks wavepicker , you just verifyed what I've been saying all along --- you can'nt trade succesfully untill you "can get YOU together"-- trading bring out  the faults in your approach to money managment ( greed, fear , advoidance , deniale , procrastation  --- its all there ), better rectify these early with small $$$ amounts than blow the bank  ---- any mug can select a up treading stock or even breakouts , the ART of trading comes in to knowing when to fold.
Where do you get the idea that I use MAs & Indicators from ?
I am basically a short term "pattern trader " with Wormald's TT Grid as a verification tool 
For the Investment Portfolio I treat it more in the style of Weinstein, with GMMAs and ADX --- but thats not Trading in the sense reffered to  here (I presume )


Don't want to turn this into a ego thing , but if you check out the OXR thread from post 299 to Last you will see I've been spot on with OXR all along  and that was based on a Simple Method for THAT stock. 




Magdoran :

Spot On  --- have never studied Gann or Elliott but have  a basic knowledge of Fibonacci .

Rejected these midway through :
Though  I concead Yogiinoz seems to pick em, 

Quite a few years ago the guy running SITM  picked the LOW/DATE of the SPI , some of the press ran snip bits about this  and SITM was everwhere ---
checked out what they where on about and it was their new u beut version of Gann ( no onelse could apparentlly figure it out) , they offered a 3 mths trail of their newsletter , some freinds and myself took up the offer on a rolling basis for around 18ths .

The point that consistantlly came over from their subsribers who where writing about their progress was " well we failed this year but , will take more courses to find out why " must have been that bloody Jupitor misalignment.
Some of these people appentlly had been with SITM  for several years and could still not get it right .

The Financial Reveiw ran a few short snips about SITM and Gann and revealed the facts --- none of this was ever retracted that I know of .



As for Elliott :
Have been poking around the deceased KITCO forum for many years and the posters there whom had the greatest consistancy , insisted that POG trade in  two Channels and if you use a Wormald Grid , you find that these guys knew what they where talking about.

But when ever POG broke these channels , out would come all the Elliott Practioners --- fair enough , but each one would be posting different  versions of the same situation --- Elliott probably Knew what he was on about but that knowledge would appear to have been corrupted ( same with Bollinger ---Authers keep corrupting this) .

Then along would come the occasional Gann's follower --- these by far where the worst of all ! --- PREDICT a price on a specified date --- WOW !!
Must have been a cloud over the SUN , that buggered it up 
Out of curiosity how does Gann work now with Pluto being downgraded



From the above obsevations , whilst not being stuck in a rutt, but using what I know to work and building on it ,    to anyone just starting out in Short Term Trading ,  I could in all honesty only recommend  a Method based on Patterns & Trend Lines backed up with a min amount of suitable indicators  for the style of trade in question , As for a total newbie -- Learn Trend Trading ( M/T - L/T ) FIRST  !!!

 Like I have been D/T & S/T since CMC hit Oz ,  



Sorry 
End of Subject


----------



## barney

coyotte said:
			
		

> Thanks wavepicker , you just verifyed what I've been saying all along --- you can'nt trade succesfully untill you "can get YOU together"-- trading bring out  the faults in your approach to money managment ( greed, fear , advoidance , deniale , procrastation  --- its all there ), better rectify these early with small $$$ amounts than blow the bank  ---- any mug can select a up treading stock or even breakouts , the ART of trading comes in to knowing when to fold.
> Where do you get the idea that I use MAs & Indicators from ?
> I am basically a short term "pattern trader " with Wormald's TT Grid as a verification tool
> For the Investment Portfolio I treat it more in the style of Weinstein, with GMMAs and ADX --- but thats not Trading in the sense reffered to  here (I presume )
> 
> 
> Don't want to turn this into a ego thing , but if you check out the OXR thread from post 299 to Last you will see I've been spot on with OXR all along  and that was based on a Simple Method for THAT stock.
> 
> 
> 
> 
> Magdoran :
> 
> Spot On  --- have never studied Gann or Elliott but have  a basic knowledge of Fibonacci .
> 
> Rejected these midway through :
> Though  I concead Yogiinoz seems to pick em,
> 
> Quite a few years ago the guy running SITM  picked the LOW/DATE of the SPI , some of the press ran snip bits about this  and SITM was everwhere ---
> checked out what they where on about and it was their new u beut version of Gann ( no onelse could apparentlly figure it out) , they offered a 3 mths trail of their newsletter , some freinds and myself took up the offer on a rolling basis for around 18ths .
> 
> The point that consistantlly came over from their subsribers who where writing about their progress was " well we failed this year but , will take more courses to find out why " must have been that bloody Jupitor misalignment.
> Some of these people appentlly had been with SITM  for several years and could still not get it right .
> 
> The Financial Reveiw ran a few short snips about SITM and Gann and revealed the facts --- none of this was ever retracted that I know of .
> 
> 
> 
> As for Elliott :
> Have been poking around the deceased KITCO forum for many years and the posters there whom had the greatest consistancy , insisted that POG trade in  two Channels and if you use a Wormald Grid , you find that these guys knew what they where talking about.
> 
> But when ever POG broke these channels , out would come all the Elliott Practioners --- fair enough , but each one would be posting different  versions of the same situation --- Elliott probably Knew what he was on about but that knowledge would appear to have been corrupted ( same with Bollinger ---Authers keep corrupting this) .
> 
> Then along would come the occasional Gann's follower --- these by far where the worst of all ! --- PREDICT a price on a specified date --- WOW !!
> Must have been a cloud over the SUN , that buggered it up
> Out of curiosity how does Gann work now with Pluto being downgraded
> 
> 
> 
> From the above obsevations , whilst not being stuck in a rutt, but using what I know to work and building on it ,    to anyone just starting out in Short Term Trading ,  I could in all honesty only recommend  a Method based on Patterns & Trend Lines backed up with a min amount of suitable indicators  for the style of trade in question , As for a total newbie -- Learn Trend Trading ( M/T - L/T ) FIRST  !!!
> 
> Like I have been D/T & S/T since CMC hit Oz ,
> 
> 
> 
> Sorry
> End of Subject





As always Coyotte, good advice.....I fit the newbie model (about a year and a half trading )  Its only in the last month or so that I have started to realise just how important the phsycological aspects are, if you are going to be good at this....When the market was a raging Bull, even I was doing ok, with no knowledge, but as soon as it started to "misbehave"  the human traits you mention above started to come into play.  As you say without the self discipline and money management all in place ( and I reckon I'm about 10% of the way there ), in the long term the market will either wipe you out (for me very nearly) or dishearten you so you just dont bother trying anymore. For me, at this stage, I am looking to develop a simple trading plan which incorporates verification by chart analysis, and back that up with "comfortable" money management (which I was not doing before, and still have not got it right yet...but improving).....I can develop the more technical aspects as I learn in the future,......  but your advice I think is spot on. :iagree:  

I know you guys did not need me to ramble on with all that, but there may be other newbies like me reading this, and they need to take notice of what you guys say so they dont make the kind of mistakes I did.....Amen.......That is the end of the sermon......everybody can wake up now........make sure you put your money "in the plate" before you leave!! :engel:    Cheers, Barney


----------



## It's Snake Pliskin

Magdoran said:
			
		

> Snake,
> Really good point, and I find Douglas’ axioms are a cornerstone to my trading.
> It’s taking action when you’re wrong that makes the difference – recognising it, and minimising the downside.
> Regards
> Magdoran




Magdoran,

I have yet to read that book, funny though it sits on my bookshelf  I have neglected myself I know.  

What other influences are there for you?




> Snake,
> So true..oh so true.
> The analysis is the easy part, it's what follows on from there that is important.
> The wrong mindset is detrimental to anyone in the market.
> "The Best Winner, is the Best Loser" - Phantom of the Pits.
> Cheers.




Lesm,

Nice quote!
Sometimes I see the analysis as difficult. Losing is something most will have troubles with. 

Snake


----------



## ducati916

*Gannies* 

*Gann day * is the 22 September [official day], which is also the autumnal equinox, which is also the Jewish New Year.

Statistically, the markets have reversed on this day, more than any other in history.

jog on
d998


----------



## It's Snake Pliskin

ducati916 said:
			
		

> *Gannies*
> 
> *Gann day * is the 22 September [official day], which is also the autumnal equinox, which is also the Jewish New Year.
> 
> Statistically, the markets have reversed on this day, more than any other in history.
> 
> jog on
> d998




Duc are you a closet Gann man?


----------



## ducati916

What are you boys doing up at this ungodly hour?
But in answer to your question, no, I'm not a closet Gannie.
I think I made my point previously, in that I believe Gann stole the work of others, and never ascribed credit to them.

Here's an interesting little snippet;



> Hedge fund Amaranth Advisors sent a letter to investors warning that an energy bet gone wrong will result in massive losses for the fund, CNBC's David Faber reported this morning.
> 
> Amaranth, an $8 billion asset management behemoth started in 2000, was up 22% going into September. But in the letter, it warned that it would be down in excess of 35% year-to-date as it unwinds a disastrous natural gas trade.
> 
> Natural gas prices sank 10% to a two-year low last Thursday, based on another bigger-than-expected rise in inventories that one analysts described as a natural-gas glut.
> 
> The letter assured investors the funds has met every margin call to date, but one has to wonder how investors will react, Faber reported.


----------



## Frank D

Elliot wave, market profile, Geometry, fib trading, and Gann are all similar, they are as good as each other and as bad as each other. It makes no difference which one you use because none of those theories can claim the hype surrounding them.

They all have mathematical components that make up the theories (MP to a lesser extent) but none have mathematical outcomes of claimed success.

What makes them successful is what each individual curve fits around the model. So in fact traders are using secondary components around the primary theory to claim that the theory works, where in fact the secondary component is your primary tool.

Swap the primary theories around and use your exact same trading components and I bet your trading would be the same regardless of which theory you use.

Personally I don’t want to get lumbered under the same conceptual ‘theory’ of the others, even though my TIME base model has mathematical components like the others, my model operates under an expectation of system probability and results, whereas all the others don’t.

I posted the last report on the 13th September in this forum. I write reports on the SPI, DOW, DAX, and Russell 2000.

These are the latest reports I sent out, it might be of interest to some traders and you might pick up a tip or two when trading derivatives, and actually learn more about how statistical aligned markets have become nowadays no matter which market you are trading, and high probability turning points. Not turning points that are descretionary, turning points that are statisitically sound and and have a high expectation with a probably profit objective target and success. 

If you don’t know the concept or theory behind my work it’s not easy to follow, but you should still see the patterns in the market and range movement within day sessions if you have been following the reports.

Report 18th Sept will also help when looking at weekly charts.


www.datafeeds.com.au/AMT15sept.pdf

www.datafeeds.com.au/AMT18sept.pdf

This mornings report

www.datafeeds.com.au/AMT19sept.pdf


*Frank Dilernia*


AMT model and AMT report is owned by Frank Dilernia, and cannot be reproduced without consent. It is only for educational purpose and not trading advice



 © AMT Market Dynmaic model Frank Dilernia

 © OTD OPEN Trading Dynamics Frank Dilernia


----------



## It's Snake Pliskin

Frank D,

Thanks for your posting.



> What makes them successful is what each individual curve fits around the model. So in fact traders are using secondary components around the primary theory to claim that the theory works, where in fact the secondary component is your primary tool.
> 
> Swap the primary theories around and use your exact same trading components and I bet your trading would be the same regardless of which theory you use.




That is an interesting comment you have made. I would like to hear more about it.



> Personally I don’t want to get lumbered under the same conceptual ‘theory’ of the others, even though my TIME base model has mathematical components like the others, my model operates under an expectation of system probability and results, whereas all the others don’t.



...an expectation of system probability and results...  
Are you saying you expect a certain result?



> These are the latest reports I sent out, it might be of interest to some traders and you might pick up a tip or two when trading derivatives, and actually learn more about how statistical aligned markets have become nowadays no matter which market you are trading, and high probability turning points. Not turning points that are descretionary, turning points that are statisitically sound and and have a high expectation with a probably profit objective target and success.
> 
> If you don’t know the concept or theory behind my work it’s not easy to follow, but you should still see the patterns in the market and range movement within day sessions if you have been following the reports.
> © AMT Market Dynmaic model Frank Dilernia
> © OTD OPEN Trading Dynamics Frank Dilernia




What is the concept and theory behind your work? 

Thanks
Snake


----------



## RichKid

ducati916 said:
			
		

> *Gannies*
> 
> *Gann day * is the 22 September [official day], which is also the autumnal equinox, which is also the Jewish New Year.
> 
> Statistically, the markets have reversed on this day, more than any other in history.
> 
> jog on
> d998




I have to say I'm more comfortable with the second sentence than the first one and I like what Frank says about his preference for statistical analysis and measures of certain outcomes. Being able to quantify the probability of particular outcomes really helps imo as you have to intergrate it with the money and risk mgmt side of the business; as opposed to resorting to more esoteric explanations- perhaps pivotal events/festivals and familiar names make more of an impression on the mind than a set of stats? Such things are possibly, for that reason, easier to impose upon the human mind and consequently find ready acceptance amongst those unfamiliar with statistical thought (or those more inclined to incorporate emotion and familiar human experience in their decision making).

btw, are there any outstanding sources or sites you rely on Duc to get specific figures for these pivotal dates and periods? (we have similar figures elsewhere on ASF about X'mas rallies, worst/best months on the ASX and the like)? Or maybe systems testers should just put Gann dates through the griller...


----------



## Frank D

Snake,

I would probably bore you with the details, but this is continued for the SPI today, and hopefully it starts to makes sense regardless of what trader you are.

The important point of any methodology has to be able to be used by everyone no matter what type of trader you are, and be precise in nature so your Risk levels are clearly defined along with the profit objectives.

What each individual trader does with AMT is up to the individual, and that normal curve fits with the type of trader you are.



www.datafeeds.com.au/AMT19sept2.pdf



*Frank Dilernia*

AMT model and AMT report is owned by Frank Dilernia, and cannot be reproduced without consent. It is only for educational purpose and not trading advice



 © AMT Market Dynamic model Frank Dilernia

 © OTD OPEN Trading Dynamics Frank Dilernia 
Today 03:22 AM


----------



## Freeballinginawetsuit

Snake Pliskin said:
			
		

> Unfortunately for those who don`t yet realise it: charting analysis doesn`t mean much by itself. The expectation to be right taints the ability to think irrespective of the chart.
> 
> This is not an attack on your coment above Freeballer.  So please don`t come out to get me




My point too Snake, charts don't mean everything especially in the current market, they are one of the tools us TRADERS use though.

Personally I could have sworn a couple of the oilers were going to take a turn a week back and look what happened!, funny market these last few months!


----------



## ducati916

*Rich Kid* 



> I have to say I'm more comfortable with the second sentence than the first one and I like what Frank says about his preference for statistical analysis and measures of certain outcomes. Being able to quantify the probability of particular outcomes really helps imo as you have to intergrate it with the money and risk mgmt side of the business; as opposed to resorting to more esoteric explanations- perhaps pivotal events/festivals and familiar names make more of an impression on the mind than a set of stats? Such things are possibly, for that reason, easier to impose upon the human mind and consequently find ready acceptance amongst those unfamiliar with statistical thought (or those more inclined to incorporate emotion and familiar human experience in their decision making).




*Statistically* must be one of the most over-used, and incorrectly used concepts in the markets. There are few, if any statistical findings.
There are plenty of *deterministic studies* but these are a far cry from statistical.




> btw, are there any outstanding sources or sites you rely on Duc to get specific figures for these pivotal dates and periods? (we have similar figures elsewhere on ASF about X'mas rallies, worst/best months on the ASX and the like)? Or maybe systems testers should just put Gann dates through the griller...




I have some secret sauses [rustled up in the home kitchen]
jog on
d998


----------



## lesm

ducati916 said:
			
		

> I have some secret sauses [rustled up in the home kitchen]
> jog on
> d998



Mushroom sauce goes well with a 'blue' steak :topic


----------



## tech/a

Duc.

You know as well as I do that the study of Statistical information from the markets is meant to eventually develope a Deterministic algorithm,which is ofcourse my end result.

The grouping together of any statistical study can lead to a deterministic result.Not always but normally the objective.


----------



## lesm

Magdoran said:
			
		

> Yes, I prefer options so I can put together a limited risk strategy with good reward characteristics.  If liquidity or risk are issues I have problems with an instrument.  I have a lot of misgivings with CFDs (the risk levels are sometimes 20 times greater depending on the viability of options selections – liquidity and volatility can be problematic though with options).



Magdoran,

Thanks for the additional information.

Using multiple timeframes, as part of the analysis is an approach that I am familiar with.

Still not fully convinced about CFDs myself at the moment. See the potential for using them on the ASX for playing both sides of the market, but when you read the PDSs and look at the underlying cost structure, futures and options still appear a better way to go at the moment. Will wait and see how the product offerings mature, especially as they become more competitive.

Cheers


----------



## Magdoran

lesm said:
			
		

> Magdoran,
> 
> Thanks for the additional information.
> 
> Using multiple timeframes, as part of the analysis is an approach that I am familiar with.
> 
> Still not fully convinced about CFDs myself at the moment. See the potential for using them on the ASX for playing both sides of the market, but when you read the PDSs and look at the underlying cost structure, futures and options still appear a better way to go at the moment. Will wait and see how the product offerings mature, especially as they become more competitive.
> 
> Cheers



Hello Les,


You’re most welcome.

Re CFDs, you may find my reasoning behind the comparison with options an interesting read in the “The idiots way to options riches” thread (post 12).

In answer to your question on psychology, I found the starting and ending sections of Ari Kiev’s “Trading in the Zone” to have some interesting “add ons” from a totally different perspective to Douglas.  I thought a lot of it was off the mark in the center sections, but some of it was worthwhile, but you have to carve out the good bits.

Regards


Magdoran


----------



## Magdoran

Pattern Analysis and the dilemma of uncertainty and probability:


Hello Les,

I’ve been thinking about one of your questions regarding the statistical analysis of various patterns and the expected probability from these patterns.

With pattern recognition, I think all of us are making our best shot guess, whether we dress it up with algorithms based on moving averages, or if we use the “computer between our ears”.  

I’d argue that analysis is (I suspect necessarily) subjective since it depends on the reasoning process of the individual, their capacity to observe (keenness of senses and mind, experience and access), environmental factors, and the quality and quantity of information available to them, and the time available to process the information and the will to do so productively.

This is a dilemma that I suspect is one of those perennial philosophical conundrums which is to do with the way humanity struggles with understanding the past and trying to second guess the future.  (Duc, you’d know about this).

The core question is “to what extent can we predict future events by studying and understanding the past”.  It’s partly a history question along the lines of the concept that if we don’t learn from the lessons of the past, we are doomed to make the same mistakes in the future.

If you remember Bronowski’s “The ascent of man” BBC program, I remember the inspirational episodes where he talks about humanity standing on the brink of knowledge feeling forwards.  I think trading is like this, we are standing on the brink of price action as it unfolds, feeling forwards.

Douglas talks about not having to know what is going to happen in order to make money if you are employing an edge.  The primary problem of comparing different systems is that there is no objective standard to measure them by, only the current performance.

The term “past performance is no indication of future performance” comes to mind.  What I’m getting at is that even the most robust predictive system in any field is often thwarted by reality.  The rapid fall of France in 1940 seemed impossible until it happened, didn’t it?

So, what’s this all about?  When researching past charts of indexes and commodities, there do seem to be patterns which seem to be repeated.  The dilemma for me is that I do believe every moment in time (every event) is unique, and anything can happen.  So, on this front I think we need to be flexible in our thinking, and I suspect that the creative side of the brain is better at imagining the future based on the plethora of subliminal observations we make.

But I do think that there is information imbedded in charts that can, if recognised, reveal clues about where the market might move to.  Wave theories are about looking at the way markets seem to trend in many markets in many different eras.  Statistics tries to collate past data to extrapolate the potential for future events to unfold.

I think that works like Heisenberg’s uncertainty principle, and the concepts underpinning quantum mechanics and chaos theory are near the mark about recognising the myriad of “tipping points” in events where many different possibilities, and their outcomes lead to what really happens.

Where I’m struggling is marrying the more orthodox statistics with a kind of quantum base.  Some patterns work well in some markets and not others for instance, and then these patterns only work under certain conditions and in certain eras. I have a strong suspicion that the modern day orthodox regimen of back testing has a set of fatal flaws in it, and I am reminded of the logic behind George Soros’ reflexivity thesis about the division between perception and reality, and the whole notion of the self fulfilling prophecy.

Perhaps Frank is the new “Gann” of our age, and I would welcome this if he really has made such a profound break through.  I am currently persuaded that time is one of the most vital elements in trading, and look forward to grasping his perspective.  But I have concerns with Frank’s sweeping certainty that he alone has the key to predict the future in the markets with his time approach, and that no other discipline can do this.  While I respect the work he has done, and would like to study it more deeply, I still come back to this core dilemma, and wonder if he has solved it, or is like the rest of us using his version of the “art of the possible”. 

I suspect no one has a monopoly on forecasting time, and I suspect there are many different tools which are looking at the same thing, but I have no way to measure their respective accuracy (in part because of the uncertainly principle).

Look forward to hearing the responses to these observations


Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> Pattern Analysis and the dilemma of uncertainty and probability:
> 
> 
> Hello Les,
> 
> I’ve been thinking about one of your questions regarding the statistical analysis of various patterns and the expected probability from these patterns.
> 
> With pattern recognition, I think all of us are making our best shot guess, whether we dress it up with algorithms based on moving averages, or if we use the “computer between our ears”.
> 
> I’d argue that analysis is (I suspect necessarily) subjective since it depends on the reasoning process of the individual, their capacity to observe (keenness of senses and mind, experience and access), environmental factors, and the quality and quantity of information available to them, and the time available to process the information and the will to do so productively.
> 
> This is a dilemma that I suspect is one of those perennial philosophical conundrums which is to do with the way humanity struggles with understanding the past and trying to second guess the future.  (Duc, you’d know about this).
> 
> The core question is “to what extent can we predict future events by studying and understanding the past”.  It’s partly a history question along the lines of the concept that if we don’t learn from the lessons of the past, we are doomed to make the same mistakes in the future.
> 
> If you remember Bronowski’s “The ascent of man” BBC program, I remember the inspirational episodes where he talks about humanity standing on the brink of knowledge feeling forwards.  I think trading is like this, we are standing on the brink of price action as it unfolds, feeling forwards.
> 
> Douglas talks about not having to know what is going to happen in order to make money if you are employing an edge.  The primary problem of comparing different systems is that there is no objective standard to measure them by, only the current performance.
> 
> The term “past performance is no indication of future performance” comes to mind.  What I’m getting at is that even the most robust predictive system in any field is often thwarted by reality.  The rapid fall of France in 1940 seemed impossible until it happened, didn’t it?
> 
> So, what’s this all about?  When researching past charts of indexes and commodities, there do seem to be patterns which seem to be repeated.  The dilemma for me is that I do believe every moment in time (every event) is unique, and anything can happen.  So, on this front I think we need to be flexible in our thinking, and I suspect that the creative side of the brain is better at imagining the future based on the plethora of subliminal observations we make.
> 
> But I do think that there is information imbedded in charts that can, if recognised, reveal clues about where the market might move to.  Wave theories are about looking at the way markets seem to trend in many markets in many different eras.  Statistics tries to collate past data to extrapolate the potential for future events to unfold.
> 
> I think that works like Heisenberg’s uncertainty principle, and the concepts underpinning quantum mechanics and chaos theory are near the mark about recognising the myriad of “tipping points” in events where many different possibilities, and their outcomes lead to what really happens.
> 
> Where I’m struggling is marrying the more orthodox statistics with a kind of quantum base.  Some patterns work well in some markets and not others for instance, and then these patterns only work under certain conditions and in certain eras. I have a strong suspicion that the modern day orthodox regimen of back testing has a set of fatal flaws in it, and I am reminded of the logic behind George Soros’ reflexivity thesis about the division between perception and reality, and the whole notion of the self fulfilling prophecy.
> 
> Perhaps Frank is the new “Gann” of our age, and I would welcome this if he really has made such a profound break through.  I am currently persuaded that time is one of the most vital elements in trading, and look forward to grasping his perspective.  But I have concerns with Frank’s sweeping certainty that he alone has the key to predict the future in the markets with his time approach, and that no other discipline can do this.  While I respect the work he has done, and would like to study it more deeply, I still come back to this core dilemma, and wonder if he has solved it, or is like the rest of us using his version of the “art of the possible”.
> 
> I suspect no one has a monopoly on forecasting time, and I suspect there are many different tools which are looking at the same thing, but I have no way to measure their respective accuracy (in part because of the uncertainly principle).
> 
> Look forward to hearing the responses to these observations
> 
> 
> Regards
> 
> 
> Magdoran





Hey Mag, Not trying to butt in here, "but" I like the way you think!! ( I think)..........Now I've only quickly read your post but, my spin on what you are getting at is close to what I think is a very important "overlooked" aspect of "trading"....(correct me if I am on a different wave length to what you are saying )   The Phsycology of how humans think/react is "possibly" the most important aspect in relation to how the "market" operates.  Humans are basically sheep.....  We follow because we (but not everybody) are conditioned to follow the mainstream.........hence the reason why analysis of past data is functionable.....because "most" people were "doing it" (following the trend).........Imo we can either be "victims" of the market force, or use it to our advantage............to follow the trend is sensible, (and often works), but in saying that, we can be quickly caught out in a "reversal" of "sentiment",  if the "big players" (the ones with all the money) "choose" to "change the rules" midstream so to speak.................What I am getting at, (which is only me thinking out a loud after a couple of beers) is that human phsycology imo is very important to market operation, not because we can predict what people will do, but because we can predict what people will do AFTER the "rulemakers" (those with influence; ie. lots of money/access to multi media advertising/ etc. etc. make a decision..........so if we follow a trend which has been "instigated" by "those in power", then our chances of success are "amplified"...........does any of that make sense to anybody???........It does to me, but one of my best friends is a phsycologist, so maybe I'm being "manipulated"..........   Cheers, Barney


----------



## Bobby

Magdoran you beleave every event is unique.
I like that thinking.
You do Not suffer from a esoteric mindset.
I like that also.

You opened up last post   
Keep doing this please, I did like the spontaneity flow of sentence.

Now to Frank, grab a copy of his book & report back your thoughts .

Regards 
Bob.


----------



## Magdoran

Snake Pliskin said:
			
		

> Magdoran,
> 
> I have yet to read that book, funny though it sits on my bookshelf  I have neglected myself I know.
> 
> What other influences are there for you?
> 
> 
> 
> 
> Lesm,
> 
> Nice quote!
> Sometimes I see the analysis as difficult. Losing is something most will have troubles with.
> 
> Snake



Hello Snake,


I mentioned Ari Keiv's book "Trading in the Zone" as another book of interest a couple of posts back.  I'd go for Douglas first, but the Kiev book is mixed - the mid part could be avoided...


Regards


Magdoran


----------



## Magdoran

coyotte said:
			
		

> Thanks wavepicker , you just verifyed what I've been saying all along --- you can'nt trade succesfully untill you "can get YOU together"-- trading bring out  the faults in your approach to money managment ( greed, fear , advoidance , deniale , procrastation  --- its all there ), better rectify these early with small $$$ amounts than blow the bank  ---- any mug can select a up treading stock or even breakouts , the ART of trading comes in to knowing when to fold.
> Where do you get the idea that I use MAs & Indicators from ?
> I am basically a short term "pattern trader " with Wormald's TT Grid as a verification tool
> For the Investment Portfolio I treat it more in the style of Weinstein, with GMMAs and ADX --- but thats not Trading in the sense reffered to  here (I presume )
> 
> 
> Don't want to turn this into a ego thing , but if you check out the OXR thread from post 299 to Last you will see I've been spot on with OXR all along  and that was based on a Simple Method for THAT stock.
> 
> 
> 
> 
> Magdoran :
> 
> Spot On  --- have never studied Gann or Elliott but have  a basic knowledge of Fibonacci .
> 
> Rejected these midway through :
> Though  I concead Yogiinoz seems to pick em,
> 
> Quite a few years ago the guy running SITM  picked the LOW/DATE of the SPI , some of the press ran snip bits about this  and SITM was everwhere ---
> checked out what they where on about and it was their new u beut version of Gann ( no onelse could apparentlly figure it out) , they offered a 3 mths trail of their newsletter , some freinds and myself took up the offer on a rolling basis for around 18ths .
> 
> The point that consistantlly came over from their subsribers who where writing about their progress was " well we failed this year but , will take more courses to find out why " must have been that bloody Jupitor misalignment.
> Some of these people appentlly had been with SITM  for several years and could still not get it right .
> 
> The Financial Reveiw ran a few short snips about SITM and Gann and revealed the facts --- none of this was ever retracted that I know of .
> 
> 
> 
> As for Elliott :
> Have been poking around the deceased KITCO forum for many years and the posters there whom had the greatest consistancy , insisted that POG trade in  two Channels and if you use a Wormald Grid , you find that these guys knew what they where talking about.
> 
> But when ever POG broke these channels , out would come all the Elliott Practioners --- fair enough , but each one would be posting different  versions of the same situation --- Elliott probably Knew what he was on about but that knowledge would appear to have been corrupted ( same with Bollinger ---Authers keep corrupting this) .
> 
> Then along would come the occasional Gann's follower --- these by far where the worst of all ! --- PREDICT a price on a specified date --- WOW !!
> Must have been a cloud over the SUN , that buggered it up
> Out of curiosity how does Gann work now with Pluto being downgraded
> 
> 
> 
> From the above obsevations , whilst not being stuck in a rutt, but using what I know to work and building on it ,    to anyone just starting out in Short Term Trading ,  I could in all honesty only recommend  a Method based on Patterns & Trend Lines backed up with a min amount of suitable indicators  for the style of trade in question , As for a total newbie -- Learn Trend Trading ( M/T - L/T ) FIRST  !!!
> 
> Like I have been D/T & S/T since CMC hit Oz ,
> 
> 
> 
> Sorry
> End of Subject



Hello Coyotte,

Thanks for your honest response, much appreciated.

Now, what is a Wormald Grid?  I’ve never heard of that, sounds interesting...

I’m beginning to see why you have the impression you have reading your experiences with various Gann nuts.  Unfortunately there are a lot of crackpots out there, and in a sector of the finance industry the nutters are often more visible than the really gifted people who are getting on with the business quietly in the background.

I must admit, I usually don’t say much about Gann in most circles because of the tumultuous response from some people who have has experiences similar to yours and the ones you relate.

I’d hate to be tarred with the same brush just because I’m the kind of guy who explores a lot and is open to new ideas, and like a magpie pinches the bits he wants and leaves the rest.

I’ve never really got the astrological stuff, I did read Larry Pesavento’s works amongst others, but it didn’t seem to work – maybe I was implementing it incorrectly, maybe it’s overrated, who knows? - But I try to examine all styles and try to understand them.  This one I admit still eludes me.

I also share your view on the cost of some courses; I don’t think I need to say any more on this.

Part of the problem is that Gann published so many different works over his lifetime, and I believe deliberately planted red herrings to sort out the “wheat from the chaff”.  Some of the early stuff interestingly enough was mechanical, and not unlike the Darvas system from what I can see.  But this was later superseded...

There are a range of techniques Gann wrote about, and others have interpreted these works, but it’s not nice and cogent like reading a Wilson or Guppy book.  It is a dog’s breakfast to piece together. But I still think that there are really valuable tools that you can fashion out of many of the ideas. That’s what it is, a body of knowledge to be absorbed or discarded as the reader sees fit. 

Some of the works are actually really easy to read, and are well thought out and still relevant in my view – some of the ideas are not really highlighted anywhere else outside of Gann revisionists works, so there is some real value that cant’ be found elsewhere.  Some of the insights into commodity markets for instance are still very potent from what I’ve found, a very interesting read.

I’d just like to say, hey, don’t judge a book by its cover. If you have an enquiring mind, what can it hurt to see the materials for yourself... you might be pleasantly surprised.


Regards


Magdoran


----------



## It's Snake Pliskin

Magdoran said:
			
		

> Hello Snake,
> 
> 
> I mentioned Ari Keiv's book "Trading in the Zone" as another book of interest a couple of posts back.  I'd go for Douglas first, but the Kiev book is mixed - the mid part could be avoided...
> 
> 
> Regards
> 
> 
> Magdoran




Magdoran,

Thanks. Mr Kiev`s books are more for the institutional traders but do give some good points. 

Snake


----------



## It's Snake Pliskin

Magdoran



> The core question is “to what extent can we predict future events by studying and understanding the past”.



I don`t think we can. We can only understand where we are at.




> I think trading is like this, we are standing on the brink of price action as it unfolds, feeling forwards.



Good analogy.



> Douglas talks about not having to know what is going to happen in order to make money if you are employing an edge.  The primary problem of comparing different systems is that there is no objective standard to measure them by, only the current performance.



Yes, good point this one. 
Gann vs spoon feeding, how does one compare? Impossible.



> The term “past performance is no indication of future performance” comes to mind.  What I’m getting at is that even the most robust predictive system in any field is often thwarted by reality.  The rapid fall of France in 1940 seemed impossible until it happened, didn’t it?



Yes, a bullmarket 25% vs a bear market -25%.



> So, what’s this all about?  When researching past charts of indexes and commodities, there do seem to be patterns which seem to be repeated.  The dilemma for me is that I do believe every moment in time (every event) is unique, and anything can happen.  So, on this front I think we need to be flexible in our thinking, and I suspect that the creative side of the brain is better at imagining the future based on the plethora of subliminal observations we make.




What are your thoughts on randomness?



> Where I’m struggling is marrying the more orthodox statistics with a kind of quantum base.  Some patterns work well in some markets and not others for instance, and then these patterns only work under certain conditions and in certain eras. I have a strong suspicion that the modern day orthodox regimen of back testing has a set of fatal flaws in it, and I am reminded of the logic behind George Soros’ reflexivity thesis about the division between perception and reality, and the whole notion of the self fulfilling prophecy.




My years of watching Fawlty Towers has prepared me for this: Que?  



> Perhaps Frank is the new “Gann” of our age, and I would welcome this if he really has made such a profound break through.  I am currently persuaded that time is one of the most vital elements in trading, and look forward to grasping his perspective.  But I have concerns with Frank’s sweeping certainty that he alone has the key to predict the future in the markets with his time approach, and that no other discipline can do this.   While I respect the work he has done, and would like to study it more deeply, I still come back to this core dilemma, and wonder if he has solved it, or is like the rest of us using his version of the “art of the possible”.



We may never know.

Good post there Mag.
Snake


----------



## Magdoran

barney said:
			
		

> Hey Mag, Not trying to butt in here, "but" I like the way you think!! ( I think)..........Now I've only quickly read your post but, my spin on what you are getting at is close to what I think is a very important "overlooked" aspect of "trading"....(correct me if I am on a different wave length to what you are saying )   The Phsycology of how humans think/react is "possibly" the most important aspect in relation to how the "market" operates.  Humans are basically sheep.....  We follow because we (but not everybody) are conditioned to follow the mainstream.........hence the reason why analysis of past data is functionable.....because "most" people were "doing it" (following the trend).........Imo we can either be "victims" of the market force, or use it to our advantage............to follow the trend is sensible, (and often works), but in saying that, we can be quickly caught out in a "reversal" of "sentiment",  if the "big players" (the ones with all the money) "choose" to "change the rules" midstream so to speak.................What I am getting at, (which is only me thinking out a loud after a couple of beers) is that human phsycology imo is very important to market operation, not because we can predict what people will do, but because we can predict what people will do AFTER the "rulemakers" (those with influence; ie. lots of money/access to multi media advertising/ etc. etc. make a decision..........so if we follow a trend which has been "instigated" by "those in power", then our chances of success are "amplified"...........does any of that make sense to anybody???........It does to me, but one of my best friends is a phsycologist, so maybe I'm being "manipulated"..........   Cheers, Barney



Hello barney,


Actually the point I was trying to get across was the difficulty in assigning a workable probability to technical analysis patterns and approaches.  I was saying that because all events are unique, and that the outcome of events is based on so many “tipping points” of uncertainly, that any approach is problematic.  Essentially there is uncertainly when considering “to what extent can we predict future events by studying and understanding the past”, suggesting that the past performance of any system is not a guarantee of future performance. 


This then begs the question “how we can measure that one approach is outperforming another”.  The paradox is that you can never get a perfect answer to this, because there is no objective measure in the broadest possible sense, which means that when you boil it down, all any of us can do is to make out best shot guess.

Now, the concept of mass human psychology in the market is another thing altogether, and certainly an interesting one.  In one sense the whole market is driven by the aggregation of the psychology of all the market participants, and to an extent, the organisations with larger funds can have a pronounced influence on price action.

So your question about prediction based on the concept you outlined is subject to the same dilemma, if that makes sense… 

You can go nuts thinking about this stuff too much, the trick is to put it into practical use, but that’s another story!

Time for bed!


Regards


Magdoran


----------



## Magdoran

Snake Pliskin said:
			
		

> Magdoran
> 
> 
> I don`t think we can. We can only understand where we are at.
> 
> 
> 
> Good analogy.
> 
> 
> Yes, good point this one.
> Gann vs spoon feeding, how does one compare? Impossible.
> 
> 
> Yes, a bullmarket 25% vs a bear market -25%.
> 
> 
> 
> What are your thoughts on randomness?
> 
> 
> 
> My years of watching Fawlty Towers has prepared me for this: Que?
> 
> 
> We may never know.
> 
> Good post there Mag.
> Snake



Hello Snake,

In answer to the question: “to what extent can we predict future events by studying and understanding the past”.

The jury is still out for this one, but I do think that past lessons can be instrumental to solving present problems, and humans I think became dominant because we can imagine the future and conceive of effective methods to confront future problems with – essentially the ability to learn, plan, design and implement.

Randomness is a hard question because you can fall into semantic polemics.  I have a hunch order and randomness (depending on how you define it) actually coexist in reality – an analogy would be the uncertain quantum microcosm coexisting and indeed the basis of the world we know.  But in trading terms like the random walk theory, I think it is highly flawed, but that is a paper in itself.

I loved Fawlty Towers, especially the episode with the hamster – nearly had to go to hospital I laughed so hard, almost split my sides!

Yes, the irrepressible Frank... If he is the “new Gann”, I’m sure he will be a billionaire soon, so he won’t have to bother with ASF if he doesn’t want to... Shame he got kicked off RC.


Thanks Snake, interesting questions you raised too – that randomness one is a monster!


Regards


Magdoran


----------



## Magdoran

Bobby said:
			
		

> Magdoran you beleave every event is unique.
> I like that thinking.
> You do Not suffer from a esoteric mindset.
> I like that also.
> 
> You opened up last post
> Keep doing this please, I did like the spontaneity flow of sentence.
> 
> Now to Frank, grab a copy of his book & report back your thoughts .
> 
> Regards
> Bob.



Hello Bob,

So you’d like to see what I make of Frank’s materials?  I read a lot of his stuff on RC, and I think there is a genius at work, but a lot of his logic eludes me.

I recently downloaded some of his papers from this site, and must get and read them.

I wish he’d give us a synopsis…

Glad my musings were of interest!


Regards


Magdoran


----------



## It's Snake Pliskin

Freeballinginawetsuit said:
			
		

> My point too Snake, charts don't mean everything especially in the current market, they are one of the tools us TRADERS use though.
> 
> Personally I could have sworn a couple of the oilers were going to take a turn a week back and look what happened!, funny market these last few months!




What do you mean Freeballing? "In the current market"

I don`t discount their use or their value, just the approach to them - looking beyond right or wrong.


----------



## barney

Magdoran said:
			
		

> Hello barney,
> 
> 
> Actually the point I was trying to get across was the difficulty in assigning a workable probability to technical analysis patterns and approaches.  I was saying that because all events are unique, and that the outcome of events is based on so many “tipping points” of uncertainly, that any approach is problematic.  Essentially there is uncertainly when considering “to what extent can we predict future events by studying and understanding the past”, suggesting that the past performance of any system is not a guarantee of future performance.
> 
> 
> This then begs the question “how we can measure that one approach is outperforming another”.  The paradox is that you can never get a perfect answer to this, because there is no objective measure in the broadest possible sense, which means that when you boil it down, all any of us can do is to make out best shot guess.
> 
> Now, the concept of mass human psychology in the market is another thing altogether, and certainly an interesting one.  In one sense the whole market is driven by the aggregation of the psychology of all the market participants, and to an extent, the organisations with larger funds can have a pronounced influence on price action.
> 
> So your question about prediction based on the concept you outlined is subject to the same dilemma, if that makes sense…
> 
> You can go nuts thinking about this stuff too much, the trick is to put it into practical use, but that’s another story!
> 
> Time for bed!
> 
> 
> Regards
> 
> 
> Magdoran





I'm with you now Mag, its all pretty deep stuff.....interesting to ponder apon to keep the brain ticking over................As for the going nuts............I've already been there and its over rated!!!! :blaah:


----------



## WaySolid

Trading in the Zone - Kiev

I thought I would comment as I think this is one of the worst trading books I have read. It's so bad I couldn't finish it, I kept trying but it didn't get any better.

Amazon.com has a decent review by Justice Little of this shocker which saves me some typing.

On a more positive note I have found value in sourcing material by finding a reviewer who published a review I respected on a certain book then looking at all of that reviewer's work in amazon.com, a top resource that site.


----------



## It's Snake Pliskin

> I loved Fawlty Towers, especially the episode with the hamster – nearly had to go to hospital I laughed so hard, almost split my sides!




Watch this then:
http://www.youtube.com/watch?v=KQimWsPKQR0
The German one does it for me. 
Enjoy!


----------



## Freeballinginawetsuit

Snake Pliskin said:
			
		

> What do you mean Freeballing? "In the current market"
> 
> I don`t discount their use or their value, just the approach to them - looking beyond right or wrong.




Ive charted many breaks or potential breaks or succesful breaks that charted decent momentum but fizzled after a day Snake, in the past few weeks.

Ive also held stocks that the charts said sell, KZL & ZFX ( A MONTH BACK), but they ran 20%.

Charts average out the past, and give an insight to what should  happen in the future. The current market is proving a shocker. If you have a look at BPT a few weeks back it was primed to run, instead it tanked 20% in the next few days.

I am saying that the current market could either break past 5140 and run or maybe tank 200 points to 4700, the charts aren't going to indicate this move Snake, it will come out of left field!

Cheers.


----------



## It's Snake Pliskin

WaySolid said:
			
		

> Trading in the Zone - Kiev
> 
> I thought I would comment as I think this is one of the worst trading books I have read. It's so bad I couldn't finish it, I kept trying but it didn't get any better.
> 
> Amazon.com has a decent review by Justice Little of this shocker which saves me some typing.
> 
> On a more positive note I have found value in sourcing material by finding a reviewer who published a review I respected on a certain book then looking at all of that reviewer's work in amazon.com, a top resource that site.




I do the same. Use amazon for reviews before buying.


----------



## It's Snake Pliskin

> Charts average out the past, and give an insight to what should  happen in the future. The current market is proving a shocker. If you have a look at BPT a few weeks back it was primed to run, instead it tanked 20% in the next few days.




Charts don`t give an insight to what should happen. They only tell you where you are at, and what might  happen given some objective reasoning.

You may have some issues with your indicators or buy sell points. I don`t believe anything is primed to go - it does or it doesn`t. As far as averaging out the past: not sure what you mean here; perhaps moving averages you are referring to.

Snake


----------



## Freeballinginawetsuit

Snake Pliskin said:
			
		

> Charts don`t give an insight to what should happen. They only tell you where you are at, and what might  happen given some objective reasoning.
> 
> You may have some issues with your indicators or buy sell points. I don`t believe anything is primed to go - it does or it doesn`t. As far as averaging out the past: not sure what you mean here; perhaps moving averages you are referring to.
> 
> Snake




What do you do Snake, say a breakout has happened after it has?

Should happen is the same as Might happen to me Snake. Thats the gamble a trader takes, its an educated one

A chart indicates if a stock is going to break, if it doesn't your buy dosen't get executed, SIMPLE. 
Of course I am talking about the MACD and Stochie, also a long retrace on an oversold stock to a stable POR and a crossover into positive momentum that should indicate a strong break. Most are fizzling in the current market and dropping back to their POR

Personally I'm trading SP POR at the moment with a decent head and shoulders, basic bottom picking really!. 

Its working for me and thats really all that matters Snake.

PS  I've got a few buddies that are purely trading on the boards and price volume at the moment, some of these are the richest traders I know and they are having great success, interesting to know your analysis on this one Snake. 
Also would be nice to have a roughy on what sought of amounts you trade.


----------



## Bobby

Magdoran said:
			
		

> Hello Bob,
> 
> So you’d like to see what I make of Frank’s materials?  I read a lot of his stuff on RC, and I think there is a genius at work, but a lot of his logic eludes me.
> 
> I recently downloaded some of his papers from this site, and must get and read them.
> 
> I wish he’d give us a synopsis…
> 
> Glad my musings were of interest!




Greeting Magdoran,

Yes I would like that,  not a great deal on RC, for more info go to datafeeds forum as well.
As for a synopsis ~ keep wishing   

Your musings  are entertaining plus interesting.

 Take care
Bob.


----------



## It's Snake Pliskin

Freeballinginawetsuit said:
			
		

> What do you do Snake, say a breakout has happened after it has?
> 
> Should happen is the same as Might happen to me Snake. Thats the gamble a trader takes, its an educated one
> 
> A chart indicates if a stock is going to break, if it doesn't your buy dosen't get executed, SIMPLE.
> Of course I am talking about the MACD and Stochie, also a long retrace on an oversold stock to a stable POR and a crossover into positive momentum that should indicate a strong break. Most are fizzling in the current market and dropping back to their POR
> 
> Personally I'm trading SP POR at the moment with a decent head and shoulders, basic bottom picking really!.
> 
> Its working for me and thats really all that matters Snake.




Yes I am quite aware of specualtion in its real sense.
I won`t get into hypotheticals Free/b.

Do what works.  
But we are on different planets regarding T/A.
"Might" is the correct word because one does not know. 

Snake


----------



## coyotte

Magdoran :

Wormald Overlays :

These are clear plastic sheets with fixed trend lines , which are placed over the chart ( paper or moniter ).

They are used in conjuction with Bill Wormald's book " Trends & Tripwires " which    has been around since early 2002 .

Based purelly on trend lines and channels .

To quote from Bill's Web Site " Track the Recurring Geometry in Stock Charts "

While not suitable for all styles of trading , I found it to be a natural evelution  to  "trend line -- pattern " trading




Apoligise for the outburst , I should respect the view of others  --- just loath to see some of these parasites ripping  off new traders .


Cheers


----------



## lesm

I have included a link to an extract from Frank's book below:

http://www.dacharts.com/articles/_AnalyMktTrad.htm

This should provide a bit more information on his approach.

With work like Frank's the first thing would be to try and understand the concepts behind the approach before attempting to understand the detail.

Cheers.


----------



## Magdoran

Re Ari Kiev “Trading in the Zone”:  I did say Douglas is the key work I subscribe to, and in answer to Snake’s question it was a minor source of additional psychological views.  

Kiev had some worthwhile concepts if you battled through the less relevant sections such as incorporating the psychological capacity to “get bigger” at the right time for instance – essentially how to get the mindset to add to positions.

I thought though you had to sift through the material to get any benefit, there were a lot of notions in there that I just couldn’t agree with.   But like any work, I’m always careful not to throw the baby out with the bath water.


----------



## Magdoran

coyotte said:
			
		

> Magdoran :
> 
> Wormald Overlays :
> 
> These are clear plastic sheets with fixed trend lines , which are placed over the chart ( paper or moniter ).
> 
> They are used in conjuction with Bill Wormald's book " Trends & Tripwires " which    has been around since early 2002 .
> 
> Based purelly on trend lines and channels .
> 
> To quote from Bill's Web Site " Track the Recurring Geometry in Stock Charts "
> 
> While not suitable for all styles of trading , I found it to be a natural evelution  to  "trend line -- pattern " trading
> 
> 
> 
> 
> Apoligise for the outburst , I should respect the view of others  --- just loath to see some of these parasites ripping  off new traders .
> 
> 
> Cheers



Hello Coyotte,


Thanks for the perspective on Wormald, I’m not familiar with the work.  Staying true to my inquisitive nature (not the “Spanish” kind – “No one expects the Spanish inquisition!”), I will put it on my list to track down at some point, thank-you.

I can relate to your disdain for the rip off merchants, believe me I feel the same way.  I can also understand your comments given your experiences.

I don’t know whether you saw my revision on the thread initiated by Damok where I’d changed my mind, and now think that Guppy/Wilson are actually worthwhile for beginners, (and Watkins for that matter) since I now think that knowledge of all these concepts adds to the individual’s knowledge base, and no matter how they develop, having a range of concepts to draw from may well provide a solid grounding to grow from.

Looking back I think I was too dismissive of these works - in part because I was concerned that straight charting ability can be influenced by different approaches (have a look at my thinking about how to teach people new skills using the music analogy in “Testing a Mechanical Plan”).  But on reflection I can see how this could have come across the wrong way, and could have been approached in a more conciliatory tone.

I was interested in the Edwards book on patterns you were talking about.  I had heard it mentioned a few times in my travels, but haven’t read it yet.  Would you mind giving a brief overview please?


Regards


Magdoran


----------



## nioka

Does anyone know of a chart relating the day of the week to the rise and fall of the market. Is there a "buy Tuesday sell Thursday" effect. Not that I suggest those particular days.???


----------



## coyotte

nioka said:
			
		

> Does anyone know of a chart relating the day of the week to the rise and fall of the market. Is there a "buy Tuesday sell Thursday" effect. Not that I suggest those particular days.???





Weinstein go's breifly into this in his book, US markets so add one day


Mon : Dn 43%
Tue  : Up 51%
Wed : Up 56%
Thu  : Up 52%
Fri    : Up 60%

Major moving days are Fri followed by Mon followed by Wed

Day prior to a P/H UP  --- The day after the P/H down 


Hence I suppose it adds weight to the  Sell on Mondays & Buy on Tuesdays theory  in Ozz 



Cheers


----------



## professor_frink

nioka said:
			
		

> Does anyone know of a chart relating the day of the week to the rise and fall of the market. Is there a "buy Tuesday sell Thursday" effect. Not that I suggest those particular days.???




Nioka,

There is a slight difference, but it's not a huge one. They are calculated on buying the open and selling the close.

For the All Ords(8/84-present day)

Monday- positive   52.59%
Tuesday-            52.10%
Wed -                 53.89%
Thurs-               53.43%
Fri -                   55.25%


----------



## professor_frink

The results come out different if you look at today's closing price compared to yesterday's-

Monday- 49.36% up days
Tuesday- 50.29%
Wednesday- 53.57%
Thursday- 53.11%
Friday- 54.16%

This probably means a bit more than just looking at whether the close was higher than the open.

Hope this helps.


----------



## nioka

professor_frink said:
			
		

> The results come out different if you look at today's closing price compared to yesterday's-
> 
> Monday- 49.36% up days
> Tuesday- 50.29%
> Wednesday- 53.57%
> Thursday- 53.11%
> Friday- 54.16%
> 
> This probably means a bit more than just looking at whether the close was higher than the open.
> 
> Hope this helps.




Thanks for the info. I'll try some paper trades as an interesting exercise


----------



## tech/a

nioka said:
			
		

> Thanks for the info. I'll try some paper trades as an interesting exercise




Waste of time have a look at the skew max 4%
So over whatever period this test took place then youd make $40/$1000 invested. Hardly an edge??
The longer the sample the more you'll find it returns to 50/50.
Also if the trend of the market has been up over many years as it has you would expect there to be a skew towards bullishness.


----------



## nioka

tech/a said:
			
		

> Waste of time have a look at the skew max 4%
> So over whatever period this test took place then youd make $40/$1000 invested. Hardly an edge??
> The longer the sample the more you'll find it returns to 50/50.
> Also if the trend of the market has been up over many years as it has you would expect there to be a skew towards bullishness.



As you say, not a good return on it's own but it could increase the return if taken into consideration with other factors. I have an open mind at this stage.


----------



## tech/a

You are not the first to have studied the idea and wont be the last.

A skew of such a low percentile will have no effect on any other analysis.
You will as your journey progresses come to the realisation that all analysis will over the very long run revert to a 50/50 proposition.

However it is the outliers we must attempt to find.
The 20 mondays in a row that close up,not the 19 that close down to bring the % up back closer to 50/50.So how do you know before hand that this run will occure?---you wont and it doesnt matter---most keep looking for whats not there.

When you finally understand that the analysis has very little to do with profit,will you begin to consistantly profit.

Enjoy.


----------



## nioka

tech/a said:
			
		

> You are not the first to have studied the idea and wont be the last.
> 
> A skew of such a low percentile will have no effect on any other analysis.
> You will as your journey progresses come to the realisation that all analysis will over the very long run revert to a 50/50 proposition.
> 
> However it is the outliers we must attempt to find.
> The 20 mondays in a row that close up,not the 19 that close down to bring the % up back closer to 50/50.So how do you know before hand that this run will occure?---you wont and it doesnt matter---most keep looking for whats not there.
> 
> When you finally understand that the analysis has very little to do with profit,will you begin to consistantly profit.
> 
> Enjoy.




Many years ago I worked out how to win at two up. Heads and tails , a 50\50 chance. BUT most ( about 70% ) people bet on heads. My system was to wait until tails lost twice in a row Then bet on tails. there is always someone in the ring will take it. I never called that gambling I called it investing. I know most things come back to 50\50. The secret will be to work out the times it is out of balance or moving back to balance.


----------



## coyotte

tech/a said:
			
		

> When you finally understand that the analysis has very little to do with profit,will you begin to consistantly profit.
> 
> Enjoy.




Agree with you 100% tech , trouble is as in horse racing, people keep on seaching for the Holy Grail , instead of concertrating on what its all about : Trade / Money Management, am convinced that most never learn and just continue on their road to doom , then turn around claim the Races/ Markets are  rigged


Nioka : if your going to play the stats game , you need thoundsands of sample sets ,over varying time periods ---  quite assure you many have been down that road only to see it fail --- varying circumstances in which you can not be aware of will change the stats dramatically .



Cheers


----------



## nioka

coyotte said:
			
		

> Agree with you 100% tech , trouble is as in horse racing, people keep on seaching for the Holy Grail , instead of concertrating on what its all about : Trade / Money Management, am convinced that most never learn and just continue on their road to doom , then turn around claim the Races/ Markets are  rigged
> 
> 
> 
> 
> 
> 
> Cheers



It's the punters who look for the holy grail. The bookie is the one that understands the odds and collects the punters money by laying the odds so that he very seldom loses.I had an uncle who did very well at that. He always said not to bet it was a fools game but he told me how to play with the odds well in your favour as in the two up. I have done OK with the stock market but always as an investor not as a trader, but I am interested in understanding the odds. I do understand and appreciate your comments.


----------



## Magdoran

lesm said:
			
		

> Interested in the box in the top diagram, as it does not appear to have a bottom, whereas the box in the second diagram does have a bottom. I take it that the box is placed over the area of the selected target price, which is possibly a measured move.



Hello Les,


I figured out what you were talking about in this sentence.  The little blue box is out of the general tools to highlight the junction of the date and the red line I drew on the chart.  The bottom wasn’t showing on one because something else was selected so the bottom was obscured by it.  

These are just manual markers I use when sending charts to other people so they can easily see what I’m talking about.  The red line I manually calculated and deployed.  The blue box I set to size manually to enclose the date and price target.

The Square on the other hand is highly configurable where the time intervals and angles can be modified to suit what you are trying to achieve.  I was using what McLaren interpreted as Gann “Time Angles” – very useful once you know how to use them.


Regards


Magdoran


----------



## MichaelD

Some very interesting thoughts here in this thread.

Magdoran - a simple question. If you stripped away all the complexity that you overlay on your trading would your profitability alter?

To put the question another way - does your entry technical analysis give you an edge over and above the edge conferred by your exit/risk/money management?


----------



## ducati916

*tech/a* 





> However it is the outliers we must attempt to find.
> When you finally understand that the analysis has very little to do with profit,will you begin to consistantly profit.




The outliers, as you refer to them, can be identified through analysis.
The outliers, will, as alluded to, outperform the market averages.

The numbers you put up recently for TT, had something like;
TT +34%
Market +27%

As TT is a mechanical system, that cuts a loss at 10%, in a rising market, which so far has been the case, the trend following nature of TT performs well.

The outliers that would be most interesting are;

Market +5%
Outliers +30%

Market -10%
Outliers +30%

Needless to say, I therefore refute your premise & assertion that *analysis* becomes redundant and in point of fact, becomes the primary factor within identifying outperformance.

jog on
d998


----------



## pacer

Well I dunno what the hell ur all on about....<edit>

Thank you all for the info though......I realy appreciate it and have made a few $$$$$$$ from this site.

Charts are a mystery....but have some meaning when you guys post them...ie if you recon they';re good then i put a little of my pension on them, and make enough to pay for a Brew for the lads down at the club.......and enough to pay for the internet connection, to totaly get on our asses and make me and the old gals at the club a $$$ or two.

Love the mystery of the charts and had a go at a refudable course (Hometrader) but found out that all you have to do is watch the news on tv and guarantee a buck......voted MBL as a winner 2 days ago ...hehe....good luck to alll....*and watch out for us blooody pensioners  when you're riding your bloody bikes you ungrateful bunch of louts !*


----------



## swingstar

pacer, go easy on the :drink:


----------



## pacer

To true my son. tooooooooo  true, C'mon don't give all the secrets away to all these YOUNG fellas, or our pensons will be nill!





			
				nioka said:
			
		

> It's the punters who look for the holy grail. The bookie is the one that understands the odds and collects the punters money by laying the odds so that he very seldom loses.I had an uncle who did very well at that. He always said not to bet it was a fools game but he told me how to play with the odds well in your favour as in the two up. I have done OK with the stock market but always as an investor not as a trader, but I am interested in understanding the odds. I do understand and appreciate your comments.


----------



## pacer

Watch out for me on my scooter MATE!.....and my FRIENDS.....they have scooters too you know......run u down matey......


*

Sorry, I was having a flashback 
*


----------



## tech/a

> However it is the outliers we must attempt to find when trading shorterterm.
> When you finally understand that the analysis has very little to do with profit,will you begin to consistantly profit.




Sorry duc I was less than specific when I posted my quote.I have altered it to be more accurate to what I was saying. 
There are 2 outlier forces in play at times.
The market itself.
The instrument being traded.

What I mean by analysis having very little to do with profit,I dont mean it has nothing to do with it.All it does in my veiw is place you in a position to trade (Entry) and place you in a position to exit.
The real money is in the Compounding and leverage and position sizing.


----------



## tech/a

nioka said:
			
		

> Many years ago I worked out how to win at two up. Heads and tails , a 50\50 chance. BUT most ( about 70% ) people bet on heads. My system was to wait until tails lost twice in a row Then bet on tails. there is always someone in the ring will take it. I never called that gambling I called it investing. I know most things come back to 50\50. The secret will be to work out the times it is out of balance or moving back to balance.




You are fooling yourself if you believe you are beating the odds with this method.

Its known as Martingale,you are presuming that 2,3,4 or more heads in a row increases the chance for a tail to be flipped and if truely martingale youll be adding to your bet each time you have a loss.
Casinos will put you up for as long as you want if you tell them you are going to play martingale whilst at their casino.


----------



## Magdoran

MichaelD said:
			
		

> Some very interesting thoughts here in this thread.
> 
> Magdoran - a simple question. If you stripped away all the complexity that you overlay on your trading would your profitability alter?
> 
> To put the question another way - does your entry technical analysis give you an edge over and above the edge conferred by your exit/risk/money management?



Hello Michael,


You know, I’ve seen some real “wizzer” charts in my time, ones full of stochastics, MACD’s, RSI, ADX, MA’s, EMAs, PC generated Elliott wave counts, trend lines, horizontal support and resistance lines, channels, range projectors, arcs, etc etc….

Believe me, the square is really simple to deploy and calibrate once you know what to look for in a blank chart, and in the right circumstances is very helpful as a tool to calculate and highlight probable areas of support and resistance in time and price.  But the pattern is the key first and foremost.

If you can’t see the trend, and more importantly, understand what counter trends look like, and understand the nature of different types of trend, then all the gizmos in the world won’t make you a better trader.

Can I trade without any tools?  Sure.  I can trade from a straight chart.  Marking a chart so you highlight things so when you come back to that chart later so you don’t forget what you saw, and comparing it to a clean chart can be worthwhile (especially if you manually track a lot of charts rather than scan the market).

But the different tools I employ speed up the analysis, and definitely help with accuracy when trying to figure out probable areas of support and resistance (including in time).  This is critical if you’re using options.  The whole process hinges on time.

So, no, I really don’t think it’s complex at all.  Learning it is, but, just like learning to drive a car, you can’t expect to become a formula 1 driver overnight.  But as you gain experience with anything, your abilities to execute improve (and if they don’t maybe you shouldn’t be in the race).

The squares are just a tool like an MA, MACD.  They can help to reveal vibrations in time and price, that’s all… they just require a conceptual shift in thinking, recognising time as a critical element in the mix…  I suspect that it just looks complicated to a non user, especially if you don’t know the logic behind it.


Hope that makes sense, and this is just my best shot guess like anyone else’s… (Although I’ve spent years on my guessing process like many here, so I suppose yo could call it an “educated guess”).


Regards



Magdoran


----------



## tech/a

> The squares are just a tool like an MA, MACD. They can help to reveal vibrations in time and price, that’s all… they just require a conceptual shift in thinking, recognising time as a critical element in the mix… I suspect that it just looks complicated to a non user, especially if you don’t know the logic behind it.




Never seen this used in a forward trading situation with any accuracy.
Particularly if time and price (The square and its intesection or support/resistance) is named before hand.

Nothing more than a best guess and amusement value.
To be of practical help in trading---"Id like to see that".
Certainly not complicated.


----------



## Magdoran

tech/a said:
			
		

> Never seen this used in a forward trading situation with any accuracy.
> Particularly if time and price (The square and its intesection or support/resistance) is named before hand.
> 
> Nothing more than a best guess and amusement value.
> To be of practical help in trading---"Id like to see that".
> Certainly not complicated.



Brother Tech,


In a broad sense I agree with you, making our best shot guess is all any of us really do.

I believe back testing systems are on the same level as any other approach - using a method to make a best shot guess into the future… sure based on positive expectancy – or being the casino ala Douglas. (note I use the word “believe”).

Some people will swear that running a number crunching algorithm over a piece of chart history will return a percentage probability.  Sure, it does, but for that period of history.  What it doesn’t do is to reveal what will happen in the future, and it is necessarily tied to the unique period of history it was based on.

What I do is to make an “educated guess” about what might happen, and formulate a derivative strategy with the best risk to reward characteristics balanced with my best shot assessment of probabilities for success that I can devise with my abilities.

I assert that this is really what you are trying to do, but with a different method.  The fact you punch some numbers into a computer and set up some parameters with an algorithm is still guessing.  Sure, it’s a sophisticated guess, but nothing more.  To wheel out the old clichÃ©, “no one has a crystal ball”. 

So the question is, is there a qualitative difference in styles?  Well, to be honest, I only have suspicions because I don’t think it’s possible effectively assess all the different approaches to a truly objective level.  Why?  Because the veracity of the data is in question.  There are commercial imperatives involved, and people and organisations will not be truthful:  they will skew, distort, and omit data, sometimes in an effort to publish disinformation as a strategy, or to hide financial situations, or for countless other human reasons.

So what I’m saying is, how are you going to meaningly assess anything in a highly competitive arena, and how can any hypothesis be proven in an academic sense.  I’m arguing that you can’t.  So what we’re left with is opinion, belief and gut feeling, and nothing more.  Sure, some opinions are more rigorous, and coherent, but they are based on the best shot guess of the individuals involved.  

I see it as a marketing exercise between competing “sects” of financial “styles”, or in a sense a hearts and minds competition between competing financial “religions”.  Yes, I’m saying it is all based on belief at the core, and that different groups have preconceived notions.  An edge then is to perceive this and use it to your advantage.

The market is like a giant chess game, and it is how each player manoeuvres on the field in the long run that I would argue is the real test. 

Hence I keep saying, if it works for you, great!  We all have our own personal journey, don’t we?  The trick is not to fall for a self fulfilling prophecy (just look at Soros’ arguments in “The Alchemy of Finance” and you’ll know where I’m coming from).

I freely admit that I may be totally deluded about everything I perceive, it is entirely possible.  But it is possible we are all deluded in our own special unique way.  I don’t believe anyone is omnipotent, brother tech.  So, all any of us has is our own belief to guide us, and that is what is happening here.

I really think it is more like different marital arts schools trying to do the same thing but in their own unique way.

In which case I’d argue that all the methods are for amusement value, not just the ones you like to pick.  So your approach is for amusement value too, in the broadest sense, isn’t it?  

That may be more profound a realisation than you were expecting. It is something for you to mull over in those quiet reflective moments.


Regards


Magdoran

P.S.  I do think the approach can at times be very accurate, but not always - you have to know how to use it.  A lot is dependant on the skill of the individual, and you have seen this style demonstrated on other forums, and dismissed these too.


----------



## nioka

tech/a said:
			
		

> You are fooling yourself if you believe you are beating the odds with this method.
> 
> Its known as Martingale,you are presuming that 2,3,4 or more heads in a row increases the chance for a tail to be flipped and if truely martingale youll be adding to your bet each time you have a loss.
> Casinos will put you up for as long as you want if you tell them you are going to play martingale whilst at their casino.



Never play casinos. A percentage out for the house spoils the odds. @ up is a back yard game


----------



## Magdoran

MichaelD said:
			
		

> Some very interesting thoughts here in this thread.
> 
> Magdoran - a simple question. If you stripped away all the complexity that you overlay on your trading would your profitability alter?
> 
> To put the question another way - does your entry technical analysis give you an edge over and above the edge conferred by your exit/risk/money management?



Hello Michael,


Just reread the second part of your question, and this morning’s answer was the last thing I belted out off the cuff before heading off for a meeting this morning…

To answer the question more fully, yes I think both the entry, but more importantly the exit gives an extra edge, especially using options.  Especially partial exits, where your target is hit, but the underlying reverses, so if you doubled, even in the worse case scenario you should at minimum break even.

The exit half is based on an assessment where the underlying is in your estimation likely to counter trend if you are right, or reverse if you are wrong.  This is a McLaren based concept to take profits and reduce risk.  If you are right and the underlying continues in your direction, you are still in half the position.  You can add to the position on counter trends if you like, or stay with the half until the trend is at risk, or if you are trading with options, exit on time, or both.

Please be aware though that this is a work in progress, and that I’m still 2-3 years away from collating the results (maybe even 5 years away), so my estimations are coloured by subjective judgements.  I cannot measure the extent that my bias is colouring my view, but being aware of it I hope will compensate sufficiently not to cloud my judgement (too much! Ha! – Cracks me up when Soros said that his notion that everything has a flaw, may itself be flawed – love this paradox!).

So yes, in many cases, not using the right tool could reduce the edge.  I believe this to be true, but my view may be coloured (when you get these things right there is an emotional aspect, and time will test this theory out for me personally).

Let me just say in conclusion though that I know people who have done very well out of the market for many years that have been using this kind of approach, they are few, but I tell you, when you see some of their work, you sit up and take notice!


Regards


Magdoran


----------



## tech/a

Magdoran said:
			
		

> Brother Tech,
> 
> 
> In a broad sense I agree with you, making our best shot guess is all any of us really do.




If in actual fact you are attempting to place a time and price on a methodology then yes.The result I will argue is looking for a definative start and finish level.
Here we are different



> I believe back testing systems are on the same level as any other approach - using a method to make a best shot guess into the future… sure based on positive expectancy – or being the casino ala Douglas. (note I use the word “believe”).




There is a difference.The start is known and the finish is not and not important in any singular case.
The difference lies in the testing of an application of parameters,entry,Exit,Stops,exits,Position sizing,Leverage,that when tested on a universe and preferably universes,grouping portfolios together, returns a consistant profit (Expectancy).REGARDLESS of the individual performances both in time and price.



> Some people will swear that running a number crunching algorithm over a piece of chart history will return a percentage probability.  Sure, it does, but for that period of history.  What it doesn’t do is to reveal what will happen in the future, and it is necessarily tied to the unique period of history it was based on.




On an individual basis this is true,however if you have a beginning in time it could be agrued that during the course of the complete life of a singular chart that X results were likely based upon the results against the parameters tested.



> What I do is to make an “educated guess” about what might happen, and formulate a derivative strategy with the best risk to reward characteristics balanced with my best shot assessment of probabilities for success that I can devise with my abilities.




Certainly nothing wrong with this approach.



> I assert that this is really what you are trying to do, but with a different method.  The fact you punch some numbers into a computer and set up some parameters with an algorithm is still guessing.  Sure, it’s a sophisticated guess, but nothing more.  To wheel out the old clichÃ©, “no one has a crystal ball”.




At the time of punching in untested "idea" yes. But given results and I try to make them exhaustive then no. This leaves me with a blueprint which I can template to actual trading---a map if you like.
I made such a map in 2002 with the published method.I had no idea of forward results.Now in 2006 it has proven to be as the blueprint suggested it would.
I have 2 others not for public viewing that I trade and a few from others who have made up other methodologies.ALL have remained within their blueprints and all have returned in the upper Quartile of their Montecarlo simulations---Bullmarket you say.---Yes it has been but we did not know this at the time of formulating our blue prints.



> So the question is, is there a qualitative difference in styles?  Well, to be honest, I only have suspicions because I don’t think it’s possible effectively assess all the different approaches to a truly objective level.  Why?  Because the veracity of the data is in question.  There are commercial imperatives involved, and people and organisations will not be truthful:  they will skew, distort, and omit data, sometimes in an effort to publish disinformation as a strategy, or to hide financial situations, or for countless other human reasons.




True but to me its of no interest what is presented to analyse only price---I dont care if its percieved as high or low accurate or in accurate,complete or in complete,its the conglomerate of tested result which regardless of how and by which stock and over which time period,which will determine the methodology I will and do trade.



> So what I’m saying is, how are you going to meaningly assess anything in a highly competitive arena, and how can any hypothesis be proven in an academic sense.  I’m arguing that you can’t.  So what we’re left with is opinion, belief and gut feeling, and nothing more.  Sure, some opinions are more rigorous, and coherent, but they are based on the best shot guess of the individuals involved.




I'm argueing that you dont have to.  



> I see it as a marketing exercise between competing “sects” of financial “styles”, or in a sense a hearts and minds competition between competing financial “religions”.  Yes, I’m saying it is all based on belief at the core, and that different groups have preconceived notions.  An edge then is to perceive this and use it to your advantage.




I agree your methodlogy is just as valid TO YOU as mine is TO ME.
I feel mine is "More" definative than yours,I have traded in a similar manner to you but results were to mixed and the effort to much!



> The market is like a giant chess game, and it is how each player manoeuvres on the field in the long run that I would argue is the real test.




Test for what? success---then yes I suppose. 



> Hence I keep saying, if it works for you, great!  We all have our own personal journey, don’t we?  The trick is not to fall for a self fulfilling prophecy (just look at Soros’ arguments in “The Alchemy of Finance” and you’ll know where I’m coming from).




I dont have a belief,just a blueprint,you could argue that because i trade the blueprint then I have a belief in that it works.Hmmm y-e-s but I would not believe it to the point of continuing to trade it if results fell out of the "known" results in the blueprint---simply because testing never returned such results. So its not BLIND faith.



> I freely admit that I may be totally deluded about everything I perceive, it is entirely possible.  But it is possible we are all deluded in our own special unique way.  I don’t believe anyone is omnipotent, brother tech.  So, all any of us has is our own belief to guide us, and that is what is happening here.




Belief,is intesresting belief is based upon evidence that we accept.
Experience can help,it tends to confirm,even cement beliefs.



> I really think it is more like different marital arts schools trying to do the same thing but in their own unique way.




Having been a Wing Chun student I certainly have respect for other styles.



> In which case I’d argue that all the methods are for amusement value, not just the ones you like to pick.  So your approach is for amusement value too, in the broadest sense, isn’t it?




No I dont agree we all look for practical use.If there is no practical use percieved or evident then it to me is amusement in the trading arena. 



> That may be more profound a realisation than you were expecting. It is something for you to mull over in those quiet reflective moments.




I have mulled over this question for the 13 yrs Ive been trading and will I'm sure mull,discuss,ponder and investigate and learn as life continues.


Regards


Magdoran



> P.S.  I do think the approach can at times be very accurate, but not always - you have to know how to use it.  A lot is dependant on the skill of the individual, and you have seen this style demonstrated on other forums, and dismissed these too.




At times?? Well in all the time Ive seen this presented as an analysis method youd think I would have seen a practical demonstration of "Accuracy".
I havent yet.
Gann to me is the technical equivelent of the Da Vince Code

Tech


----------



## Magdoran

tech/a said:
			
		

> If in actual fact you are attempting to place a time and price on a methodology then yes.The result I will argue is looking for a definative start and finish level.
> Here we are different
> 
> 
> 
> There is a difference.The start is known and the finish is not and not important in any singular case.
> The difference lies in the testing of an application of parameters,entry,Exit,Stops,exits,Position sizing,Leverage,that when tested on a universe and preferably universes,grouping portfolios together, returns a consistant profit (Expectancy).REGARDLESS of the individual performances both in time and price.
> 
> 
> 
> On an individual basis this is true,however if you have a beginning in time it could be agrued that during the course of the complete life of a singular chart that X results were likely based upon the results against the parameters tested.
> 
> 
> 
> Certainly nothing wrong with this approach.
> 
> 
> 
> At the time of punching in untested "idea" yes. But given results and I try to make them exhaustive then no. This leaves me with a blueprint which I can template to actual trading---a map if you like.
> I made such a map in 2002 with the published method.I had no idea of forward results.Now in 2006 it has proven to be as the blueprint suggested it would.
> I have 2 others not for public viewing that I trade and a few from others who have made up other methodologies.ALL have remained within their blueprints and all have returned in the upper Quartile of their Montecarlo simulations---Bullmarket you say.---Yes it has been but we did not know this at the time of formulating our blue prints.
> 
> 
> 
> True but to me its of no interest what is presented to analyse only price---I dont care if its percieved as high or low accurate or in accurate,complete or in complete,its the conglomerate of tested result which regardless of how and by which stock and over which time period,which will determine the methodology I will and do trade.
> 
> 
> 
> I'm argueing that you dont have to.
> 
> 
> 
> I agree your methodlogy is just as valid TO YOU as mine is TO ME.
> I feel mine is "More" definative than yours,I have traded in a similar manner to you but results were to mixed and the effort to much!
> 
> 
> 
> Test for what? success---then yes I suppose.
> 
> 
> 
> I dont have a belief,just a blueprint,you could argue that because i trade the blueprint then I have a belief in that it works.Hmmm y-e-s but I would not believe it to the point of continuing to trade it if results fell out of the "known" results in the blueprint---simply because testing never returned such results. So its not BLIND faith.
> 
> 
> 
> Belief,is intesresting belief is based upon evidence that we accept.
> Experience can help,it tends to confirm,even cement beliefs.
> 
> 
> 
> Having been a Wing Chun student I certainly have respect for other styles.
> 
> 
> 
> No I dont agree we all look for practical use.If there is no practical use percieved or evident then it to me is amusement in the trading arena.
> 
> 
> 
> I have mulled over this question for the 13 yrs Ive been trading and will I'm sure mull,discuss,ponder and investigate and learn as life continues.
> 
> 
> Regards
> 
> 
> Magdoran
> 
> 
> 
> At times?? Well in all the time Ive seen this presented as an analysis method youd think I would have seen a practical demonstration of "Accuracy".
> I havent yet.
> Gann to me is the technical equivelent of the Da Vince Code
> 
> Tech



Father tech,

Lord of the priory of Tech-on (Scion???), the vibration codes are still safe from your clutches! (what fun it is to joust with you!). 

Hey, I didn’t know you did Wing Chun.  There are so many hidden facets to you tech, and you play your hand so close to your chest sometimes.  Wonders will never cease!  Glad the analogy hit the mark.

So, belief… Quite a topic really.  Gets down into some rather heavy philosophy (Descartes for instance, let’s avoid Satre…).  Actually belief can also not be based on experience or evidence.  Oddly it can exist in the face of strong evidence…

The blue print that you have is static.  But you have a belief in the approach you have taken.  It is a roadmap, just like the one I create too, the difference is how they are generated.  I put my trust in my head to do it over the computer.  That’s the difference.  I’m not saying you don’t use your intelligence, you clearly do that.  But we are doing it in quite different ways.  

Which one is better, I really don’t know (or care about – again - whatever works for you). I actually suspect that each can be very profitable in their own right, and each will have their flaws and advantages (we could cover these but we’d be here for a long time).

I think that there is an important distinction to be made between using a computer to crunch numbers using an algorithm, and actually using the “computer between your ears” by actually researching and looking at charts with your own eyes.  I believe (and this is only a hunch) that the capacity for the human mind to imagine and create when harnessed correctly should outperform static linear programming hands down.  

Computers don’t really think, and they can’t innovate like we can.  The potential for us to use our intuition and subliminal/subconscious minds is the driving force that elevated humanity to where we are now.

I suspect that there are patterns in markets that are not obvious at first glance, and that computers are not capable of being cognisant in ways humans can.  So, while your PC crunches numbers, my brain is taking snapshots and storing them in ways the PC never can.  So when I’m confronted with a barrage of information, I stand a real chance of doing the detective work like Sherlock Holmes, and intuitively recognising aspects you will miss.  That is a significant difference I believe.  

Tech, I don’t think you see the market the way I do.  It is a conceptual paradigm difference – and because you can’t see it, you don’t think it’s there.  If you want to “see” it, it’s all in McLaren’s Time Factor DVD – but you have to totally rethink the whole way you perceive markets to do so.

I can see why you feel that your approach is more definitive than mine.  Clearly to you it is.  And I mirror this feeling, but ultimately I think our aims are similar, but there are some distinctions I’ve outlined.  Where we differ is I enjoy spending the time looking at the puzzle of the market (I used to play chess, guitar, ran companies etc – just love the challenge).  I’m prepared to put the effort in required.  You have chosen a path the works for you.

When you examine a period of history, and run one test, certainly a second and third run may yield a perspective on how you could have played the entries and exits better, and maybe after running 10 or 20 iterations you may come up with an optimal result – for that period.

What I’m arguing is that the whole rationale behind this approach has a significant flaw.  It is using a static piece of history that was unique in order to calibrate your system parameters (such as entry criteria, exit criteria, position size, and leverage).

Another key difference is that I am using a different financial instrument to you, and I would argue that there is a symbiotic link between the way a system works, and the instrument used.  This is actually a significant difference between our approaches since addressing time for me is of vital importance when using options.

When I look at the risk to reward parameters of an option, and assess the probability, I’m also setting parameters, and in a sense aiming for a positive expectancy just like you are.

As you know, I respect what you have done.  I salute the fact you built a system and put it on public display.  And it was no small effort to get to where you are now, with a mature, robust system.  I also know that it is not blind faith at all.  You have excellent businesses acumen. But I do think that your intuition is a major drive in everything you do.  You are a very driven person, with a bedrock of adverse experiences to draw on that spur you forward. 

You also know that I’m still in the work in progress stage, and it will take a long time to complete.  I understand why you don’t want to venture into a body of knowledge which requires a complete paradigm shift, the effort would be too much, and by the time you got it, you may just have well used your current approach.  I think you’re making the right choice.  I perceive that you will probably never change your point of view on this subject since your perception is so hard wired into your psyche.  I respect that, and I suppose that in a defacto sense we will continue to agree to disagree on this matter.

The good thing is that we put on a good show for others to watch, and I hope it inspires them to think originally about what they are doing, and recognise that there is a smorgasbord of choice in the market place.


Regards


Magivinci


----------



## barney

You are right Mag, You and Tech do put on a good show!! I enjoy reading both your "stuff" .......some seriously deep info here!.......... I like "deep" also,  but I always revert to "simplistic", cause thats just me..........keep it coming guys........
PS Mag, do you have a chess rating, or purely for enjoyment?.........Have a friend who is a V. good player (phsycologist......but don't hold that against him!  ), Cheers, Barney


----------



## pacer

A lot of big words to say.......???????.....KISS.....Keep It Simple Stupid

Opinions are just that ..... opinions...what counts are the results!

Queen to Rook4

Love a game of chess...and the stock market....lucky I diddnt go short on coles.....w3ent long on MBL instead...


----------



## barney

pacer said:
			
		

> A lot of big words to say.......???????.....KISS.....Keep It Simple Stupid
> 
> Opinions are just that ..... opinions...what counts are the results!
> 
> Queen to Rook4
> 
> Love a game of chess...and the stock market....lucky I diddnt go short on coles.....w3ent long on MBL instead...




Well done on the MBL.......(my phsyco friend is also!) ............

We must be near an end game otherwise Q - R4 is a bit passive....(of course you may have my King pinned down the flank in which case I resign before I get into too much trouble!!.. Cheers mate, Barney.


----------



## Magdoran

barney said:
			
		

> You are right Mag, You and Tech do put on a good show!! I enjoy reading both your "stuff" .......some seriously deep info here!.......... I like "deep" also,  but I always revert to "simplistic", cause thats just me..........keep it coming guys........
> PS Mag, do you have a chess rating, or purely for enjoyment?.........Have a friend who is a V. good player (phsycologist......but don't hold that against him!  ), Cheers, Barney



 I used to play people who were around the 2000 level... they would kick my butt, but I'd give them a good run for their money...

Mag


----------



## barney

Magdoran said:
			
		

> I used to play people who were around the 2000 level... they would kick my butt, but I'd give them a good run for their money...
> 
> Mag




My friend is rated over 2000 but not sure how much; would have to check with him..........You sound a bit like me .........I can put up a good fight, but the "depth" of knowledge/understanding that the "better" players have is too big a hurdle to overcome when the position gets tight...or loose for that matter!)

Tell you what I did once though; I challenged my friend to a game via email............... I had downloaded this pretty good "computer" chess programme, and simply let it "make my moves" for me............It picked up a "combination" after about 20 moves in which could not be defended, and put "me" in a winning position............He never forgave me for that (he wasn't paying that much attention cause he knew he could beat "me" easily, but I had the "secret" advantage!!..............These are the things which you "must" do to your friends to keep them humble!!!...........Not that he needs humility; he's a top bloke........knows lots of big words, like yourself!!  ...........Reckon you two would have very interesting converstions esok:


----------



## lesm

tech/a said:
			
		

> At times?? Well in all the time Ive seen this presented as an analysis method youd think I would have seen a practical demonstration of "Accuracy".
> I havent yet.
> Gann to me is the technical equivelent of the Da Vince Code



This is one the interesting facets related to Gann practitioners, whether explicitly or implicity stated, there is an inference of a high degree of accuracy in the approach.

No caveats related to the accuracy, confidence levels or potential error on the prediction are usually provided. Yet, they are most likely aware (or one would think they might be) that they are not always going to get it right. In a similar manner to a number of areas of T/A, some practitioners just recite the respective mantra.

When you look at the academic research related to trading, it is interesting that the researchers dispute that Gann is actually an effective trading method. Yet, like a number of areas, there are apparently some successful practitioners.

Questions have been raised over the years as to the veracity of Larry Williams methods. Research conducted by chaos mathematicians have validated that his methods will work. In more recent research work, there are questions as to the vaibility of technical analysis or its effectiveness as we move into the future. It will be interesting to watch this and see what the future brings


----------



## lesm

Magdoran said:
			
		

> I figured out what you were talking about in this sentence.  The little blue box is out of the general tools to highlight the junction of the date and the red line I drew on the chart.  The bottom wasn’t showing on one because something else was selected so the bottom was obscured by it.




Magdoran,

Thanks for the update and the clarification. I thought that may have been the case with respect to the box, Just wanted to make sure.

There were elements of the chart that were easy to work out. It was just a question of clarifying which parts were actually being done via Gannalyst settings.

Cheers.


----------



## tech/a

*Lesm*

We are on the same wavelength.

I'll go a little further and as a technical follower say that over time the best you can expect from a technical application wether it be Oscillator,Price,Patterns,Time analysis,Fundamental--you name it is a 50?50 proposition.

So why consider ANY analysis.

Because in the makeup of any statistical results there will be many many occurences of average nature and there will be outliers both for and against your analysis.

As an example in a coin toss there will be many tails followed by a head.
Less of 3 tails followed by a head less again of 10 tails followed by a head,and ofcourse a myriad of combinations in between.

In short term analysis its the 3 in a row we attempt to "analyse"
Longer term its the 10 in a row.

What I see are practitioners in EVERY field that are convinced that their analysis finds the outliers EVERYTIME,with every trade.Failure upon failure hits trader upon trader when success is so near if only they developed methodologies that *werent dependant on being CORRECT.*

Analysis isnt an exact science and never will be.
90% of traders trade all sorts of analysis as if it is.
90% fail.

Outliers come rarely you wont know when they are about to perform,*analysis will put you in a position*,to take advantage of an outlier move but wont guarentee that the trade youve just taken will be the one.

Numbers tell us that its going to be out of the norm for larger outliers,so as *Radge says*, prove-disprove-prove-disprove.


----------



## ducati916

*tech/a* 



> Outliers come rarely you wont know when they are about to perform,analysis will put you in a position,to take advantage of an outlier move but wont guarentee that the trade youve just taken will be the one.




With true statistical data, outliers, are formed in the bell curve distribution, and measured via standard deviations, thus, the large outliers tend to be rather infrequent.

However, the market, is not statistical.
The market is deterministic.
Thus, outliers exist in the *fat tails* and are much more frequent.

Analysis, correctly performed, will identify the outliers that generate the outsized returns, and far exceed the 50/50 proposition.
Hence, the %winners will be high, and the %return will be high.
Thus your expectancy, will be high.

TT is not an *analysis based model...........it is a money management model* Fundamental valuation models are analysis models, with a discretionary money management element.

jog on
d998


----------



## tech/a

Why then Ducster is it that if I remove all analysis (leaving only random buy and random sell,all M/M parameters remain) it fails dismally?


----------



## ducati916

tech/a said:
			
		

> Why then Ducster is it that if I remove all analysis (leaving only random buy and random sell,all M/M parameters remain) it fails dismally?




Depends how you classify analysis.
New highs, hardly classifies as analysis, but, if you call it analysis, then removing it would cause the entry and exit, to become random.

I classify the chart pattern, [new highs, 180 EMA exit] as money management. In fact, I would argue that *technical analysis* is a misnomer, and that technical analysis is simply pattern based money management.

jog on
d998


----------



## Realist

lesm said:
			
		

> When you look at the academic research related to trading, it is interesting that the researchers dispute that Gann is actually an effective trading method. Yet, like a number of areas, there are apparently some successful practitioners.




I'm sure if there were as many dartboard theory users there too would be some successful practitioners as well.


----------



## tech/a

> I would argue that technical analysis is a misnomer, and that technical analysis is simply pattern based money management.




Thats an interesting comment,infact it could be a sound analogy of Systems developement using tech analysis.
I'll ponder!


----------



## tech/a

Realist said:
			
		

> I'm sure if there were as many dartboard theory users there too would be some successful practitioners as well.





Actually you maybe interested to know that they have proven mathamatically that it doesnt matter how many monkeys you place at any number of type writers,you'll NEVER get the complete works of Shakespear typed out.

So while you may get a word or so or even a sentance typed out,so the Dart board/Gann practitioner may have a profitable trade or a string of profitable trades.Over time----never the complete works of Shakespear.

I'm sure you get my drift.

By the way lookforward to seeing the Crows knock off Sydney next week.
If we are not good enough then Westcoast will do the job.
2 best sides in the comp playing in a few hrs.


----------



## Magdoran

lesm said:
			
		

> This is one the interesting facets related to Gann practitioners, whether explicitly or implicity stated, there is an inference of a high degree of accuracy in the approach.
> 
> No caveats related to the accuracy, confidence levels or potential error on the prediction are usually provided. Yet, they are most likely aware (or one would think they might be) that they are not always going to get it right. In a similar manner to a number of areas of T/A, some practitioners just recite the respective mantra.
> 
> When you look at the academic research related to trading, it is interesting that the researchers dispute that Gann is actually an effective trading method. Yet, like a number of areas, there are apparently some successful practitioners.
> 
> Questions have been raised over the years as to the veracity of Larry Williams methods. Research conducted by chaos mathematicians have validated that his methods will work. In more recent research work, there are questions as to the vaibility of technical analysis or its effectiveness as we move into the future. It will be interesting to watch this and see what the future brings



Les raises some really interesting points, and I will try to address these as best I can with what I currently know and understand.  Let’s focus on technical analysis without delving into system concepts such positive expectancy (which is an important piece of the puzzle, but too vast a subject to deal with here).

So let’s consider the question, just how viable is technical analysis really?  This begs the question about the broad applicability between modes of market approaches such as Fundamental Analysis, Technical Analysis, and bodies of knowledge like the Random walk theories, Reflexivity, and a host of other perspectives.  It may well be that technical analysis and any or all the other modes are necessarily flawed.  If so, the question then is, are any modes of any use, and if so, to what extent can they be utilised when dealing with market decisions? Let’s focus on technical analysis.

Discussing this kind of subject can get very messy very quickly because there are problems with semantics, building blocks of concepts, levels of knowledge and understanding, and a broad range of different interpretations of the various “churches” of technical analysis (examples – Elliott, Gann, Darvas, Guppy/Wilson, Williams, and a whole host of different classifications too long to list – chose the ones most people are familiar with from recent discussions).

Technical Analysis is as much an art as it is a science, since it is not scientifically robust in the conventional sense, and relies on the capacity of the individual to interpret the available information.  Different methods have been devised out of using discrete combinations of techniques which are welded into schools of thinking.

So, I would argue that to really appraise any approach is problematic because there are so many variables to contend with.  Individual capacity, a plethora of interpretations, competing criteria etc.  I think at the core, if you believe that markets trend (the antithesis of random walk), and that trends can be detected and observed, then technical analysis could conceivably be viable.  The next step though is to devise methods to determine the trend and devise strategies to take advantage of trends.  This is where it gets tricky because over time different technical analysis “schools”/”churches” have developed.

An example of a division within a body of knowledge for example may be a “school” of Elliott Wave Practitioners who subscribe to Fibonacci extensions, and a “school” that either didn’t accept this component, or used a different increment (say a Gann styled eights and thirds approach for extensions and retracements).  All schools though in this example may well agree on the basic concept of wave structures and labelling.  

Then there may be other schools within the “Elliott” camp that do not agree on the labelling protocols, and have devised their own regimen.  This is what revisionism is all about, taking a body of knowledge, and then revising portions of it to fit the individuals or “school’s” research and findings (often though trial and error in the market).  The belief is that the original works, while they may be valued, are not considered perfect, and are not beyond modification.

What generally happens though is that most people incorporate pieces of knowledge depending on their makeup (some will be less willing to deviate, and others will be magpie like taking bits and configuring their own custom approach). 

So when venturing into discussing “Gann”, it is important to recognise that the techniques pioneered by W.D. Gann spanned a lifetime, and that the original works while often coherent as units in themselves (although some of these are highly ambiguous) are not coherent as a complete body of knowledge.  In fact it has been raised that Gann discarded much of his earlier works, or made significant modifications to them.  

Part of the problem is that Gann did not leave a unifying comment or publish a holistic explanation of the body of works (that I know of – although people like Yogi claim that he did), which left more questions than it answered. This leaves the door wide open for a lot of speculation, revisionism, and interpretation.  So, it becomes easy to rip pieces of Gann out of context, and make all sorts of claims and build a myriad of different approaches.

Hence using the term Gann is problematic.  It is problematic because there are so many different perceptions about Gann, either from those people who have actually studied the works and those who haven’t. Those who haven’t often have a coloured view based on whoever they have come in contact with, or the materials they have had access too.  This often leads to preconceived perceptions of what Gann is, and is often a false or greatly distorted view.

Within the broad group of people who have accessed any kind of Gann concept/material/revisionist knowledge, there are those who claim to be Gann guru’s/practitioners who have only studied a small component of the original works.  

There is a broad cross section of people ranging (and I’m generalising here) from people who seem to be almost religious Gann “nutters” to people who adopt a particular style of Gann, and those that take specific components and techniques and incorporate them into their own approach.  So, there can be a kaleidoscope of interpretations and revisionist points of view just within the group of people who have examined Gann.

So, it is within this understanding of the multifaceted nature of Gann as a body of knowledge, which is quite open to interpretation, that I will address Les’ comment on the use of the term “accuracy” in the next post to flesh out an interpretation of what is specifically meant to try to clear up some semantics.  This will be within the context of the established backdrop of the problems with examining technical analysis broadly, and the perspective of the nature of different schools of technical analysis.  



Magdoran


----------



## lesm

Magdoran said:
			
		

> Pattern Analysis and the dilemma of uncertainty and probability:
> 
> With pattern recognition, I think all of us are making our best shot guess, whether we dress it up with algorithms based on moving averages, or if we use the “computer between our ears”.




A question here is, do we see what we want to see or can we discern repeatable patterns in a deterministic manner that is consistently repeatable? 

The computer between our ears is very powerful and by learning and understanding market behaviour and the ability to identify patterns that are immediately discernable is within its capabilities. We have natural inbuilt neural network, we just need to learn to use it effectively. The more we look at something the more likely we are to run the risk of seeing what we want to see. What we see in the first couple of seconds (or less) of looking at a chart is most likely the correct interpretation.

The more we study patterns enables us to determine their reliability as a method for determining, which way the market or an individual stock might move. We can gather information, which we can use to develop a probalilistic mathematical model to reduce the guess work. Afterall, probability is a mathematical approach to dealing with  uncertainty. We can refine and monitor the model through time, as there are no gurantees that a particular pattern will not fail through time or at particular times due to changes in market behaviour/dynamics.



> I’d argue that analysis is (I suspect necessarily) subjective since it depends on the reasoning process of the individual, their capacity to observe (keenness of senses and mind, experience and access), environmental factors, the quality and quantity of information available to them, and the time available to process the information, including the will and committment to do so productively.




Magodran - I accidentally changed some of the words in the above quote.

A question here is that in performing analysis and developing methods aren't  we attempting to move from the purely subjective approach to being more objective or if possible more quantitative, within reasonable bounds?

The more highly subjective the analysis is the more likely we have increased the risk of failed trades. Our testing should remove an element of the subjectiveness. Monitoring going forward should enable us to better quantify and confirm whether we have positive approach or not.

But in real terms, the analysis is only the starting point, as it is how we conduct and manage the trade once we are committed that is important.

I recall a comment from a well-known and respected trader on another forum along the following lines. For a system he developed he stated that he couold train a group of traders how to use is system and expected the following outcome:
1. One subgroup would trade the system better than he could
2. One subgroup would trade the sytem at the same level as he could
3. One subgroup would trade the system worse than he could or make a loss.

A lot of time is spent on the initial analysis and time needs to be spent in looking at the overall approach, as analysis is not necessarily the point where we may lose the game. We can have a winning system, but still lose money.



> The core question is “to what extent can we predict future events by studying and understanding the past”.  It’s partly a history question along the lines of the concept that if we don’t learn from the lessons of the past, we are doomed to make the same mistakes in the future.
> 
> If you remember Bronowski’s “The ascent of man” BBC program, I remember the inspirational episodes where he talks about humanity standing on the brink of knowledge feeling forwards.  I think trading is like this, we are standing on the brink of price action as it unfolds, feeling forwards.
> 
> Douglas talks about not having to know what is going to happen in order to make money if you are employing an edge.  The primary problem of comparing different systems is that there is no objective standard to measure them by, only the current performance.
> 
> The term “past performance is no indication of future performance” comes to mind.  What I’m getting at is that even the most robust predictive system in any field is often thwarted by reality.  The rapid fall of France in 1940 seemed impossible until it happened, didn’t it?
> 
> So, what’s this all about?  When researching past charts of indexes and commodities, there do seem to be patterns which seem to be repeated.  The dilemma for me is that I do believe every moment in time (every event) is unique, and anything can happen.  So, on this front I think we need to be flexible in our thinking, and I suspect that the creative side of the brain is better at imagining the future based on the plethora of subliminal observations we make.
> 
> But I do think that there is information imbedded in charts that can, if recognised, reveal clues about where the market might move to.  Wave theories are about looking at the way markets seem to trend in many markets in many different eras.  Statistics tries to collate past data to extrapolate the potential for future events to unfold.
> 
> I think that works like Heisenberg’s uncertainty principle, and the concepts underpinning quantum mechanics and chaos theory are near the mark about recognising the myriad of “tipping points” in events where many different possibilities, and their outcomes lead to what really happens.




You have posed an interesting question to which there are potentially a myriad of answers or views.

If we consider the market to be a dynamic system (breaking this down we could consider whether it is a linear or non-linear system) with a range of variables that affect its dynamics, can we then develop a model that would enable us to predict its behaviour with an acceptable level of confidence?

An interesting problem and due to there being a range of variables not a simple one. What is required is a simpler model that can use key variables, as well as the ability to self-learn.

Even if a 'fuzzy-logic' based approach is used, to maintain its effectiveness a capabilty would be required to add or remove facts through time. An interesting area of AI research.

Of course we know that chartists simplify the approach on the basis that all information currently known to buyers and sellers is reflected in the price and ignore any/all other information.

In simple terms, the futures markets are probably an easier environment to model as opposed to the stock markets.

In terms of comparing systems, without being able to identify a control to use as a reference point it will not necessarily be able to objectivley compare systems and consideration would need to be given to determining the time frame that the comparison would conducted over. As performance charateristics may change through time and be affected by market conditions and changes.

One would expect that any reasonably effective system should perform better than random to be claimed to have an edge.



> Where I’m struggling is marrying the more orthodox statistics with a kind of quantum base.  Some patterns work well in some markets and not others for instance, and then these patterns only work under certain conditions and in certain eras. I have a strong suspicion that the modern day orthodox regimen of back testing has a set of fatal flaws in it, and I am reminded of the logic behind George Soros’ reflexivity thesis about the division between perception and reality, and the whole notion of the self fulfilling prophecy.



The trick here is can you identify the elements where the methods complement each other and bring those elements together in a workable manner.

Reliable or effective testing will always be an issue, as well as the ability, knowledge and experience of individual testers.



> But I have concerns with Frank’s sweeping certainty that he alone has the key to predict the future in the markets with his time approach, and that no other discipline can do this.  While I respect the work he has done, and would like to study it more deeply, I still come back to this core dilemma, and wonder if he has solved it, or is like the rest of us using his version of the “art of the possible”.




There are an untold number of ways to trade the market and do it successfully. The danger with sweeping certainties is that it leaves the author open to challenge and the question of, can the method survive the long term or does it only work in a particular type of market environment or conditions. Only time will tell.



> I suspect no one has a monopoly on forecasting time, and I suspect there are many different tools which are looking at the same thing, but I have no way to measure their respective accuracy (in part because of the uncertainly principle).




Agree. No one appears to have collared the market yet, but some do better than others.

Not sure if I waffled a littel bit, but think I caught most of the main.

I actually prefer whiteboards for discussing these type of topics.

Cheers
lesm


----------



## lesm

Realist said:
			
		

> I'm sure if there were as many dartboard theory users there too would be some successful practitioners as well.



The good thing about that approach is that traders and investors can both use it.

Another one is the blindfold and pin, again fully shareable across both camps. 

Cheers.


----------



## Sean K

lesm said:
			
		

> Another one is the blindfold and pin, again fully shareable across both camps.
> Cheers.




Funny, the Dart Board and the Astrologer regularly beat the financial wizards in the stock picking comps in the Sunday rags......


----------



## Magdoran

lesm said:
			
		

> This is one the interesting facets related to Gann practitioners, whether explicitly or implicity stated, there is an inference of a high degree of accuracy in the approach.
> 
> No caveats related to the accuracy, confidence levels or potential error on the prediction are usually provided. Yet, they are most likely aware (or one would think they might be) that they are not always going to get it right. In a similar manner to a number of areas of T/A, some practitioners just recite the respective mantra.
> 
> When you look at the academic research related to trading, it is interesting that the researchers dispute that Gann is actually an effective trading method. Yet, like a number of areas, there are apparently some successful practitioners.
> 
> Questions have been raised over the years as to the veracity of Larry Williams methods. Research conducted by chaos mathematicians have validated that his methods will work. In more recent research work, there are questions as to the vaibility of technical analysis or its effectiveness as we move into the future. It will be interesting to watch this and see what the future brings



Les raised a good point; it would be so much easier to convey all these concepts visually with a white board.  Since we don’t have that luxury of real time interactivity, the best I can do is to explain things as best I can.  Also, this is in part why it is extremely difficult to get the message over in this medium.

Another point struck me recently when reading the Duc, tech and sails discussions on the trading the SPI thread when it came to Gann.  Sails made some really salient point on this today.  

I think that sometimes using a label can ascribe preconceived notions into a discussion, so let’s take all the emotion out of the word “Gann”, and focus on the areas I have an interest in which excludes the astrology component which I neither understand or practice (see Yogi for this).  

My primary technical analysis influence is based on my interpretation of McLaren’s perspective of the market: essentially combining the geometry of the markets and vibration theory with a contextual interpretation of technical analysis patterns and wave theory.

Markets don’t tend to move in straight lines.  They vibrate.  Vibration theory works on two levels.  There are vibrations/cycles running through all markets at all times, and then there are shorter term “vibrations” that have a more localised effect.

In straight technical analysis doctrine there are recognised technical patterns (e.g. Double tops/bottoms, gaps, reversal bars, islands etc).  Some schools many have different interpretations of patterns (or use a form of exception handling with defined conditions which alter the interpretation of the meaning of the pattern) based on a contextual approach which modifies the taken for granted mainstream understanding.  

In my discipline each pattern is considered in a dynamic contextual framework.  It’s kind of like in chess when you use a combination of moves, the individual pieces move is considered in the context of the overall game, the same is true for particular patterns in context with other related patterns in different time frames, and recognising the sum of the whole when observing several patterns within a larger structure.

McLaren goes into a lot of detail about context. Here is a simple example as an illustration:  The concept of “double bottoms” is commonly known.  Most newbies learn that an underlying (stock or other) will rally from a double bottom (there are other notions some analysts venture like the range of the subsequent rally based on the price ratio to the first counter trend).  

Within the context of a trend, McLaren places more emphasis on a double top in a downtrend, and double bottom in an uptrend.  This is actually more far reaching than it might at first seem.  Combine a whole host of these interrelated patterns in different time frames, and consider the potential for quite different interpretations to be made using a raft of revised conventions.

The use of the term “accuracy” seems to be a point of contention.  I suspect this is partly due to semantics and different understandings based on different schools of discrete knowledge, and what is commonly known and understood by the term in one school, is radically different in another.

Ok, so in the next post I’ll go into detail on this subject in the context of the comments above.


Regards



Magdoran


----------



## Sean K

Magdoran said:
			
		

> My primary technical analysis influence is based on my interpretation of McLaren’s perspective of the market: essentially combining the geometry of the markets and vibration theory with a contextual interpretation of technical analysis patterns and wave theory.
> 
> Markets don’t tend to move in straight lines.  They vibrate.  Vibration theory works on two levels.  There are vibrations/cycles running through all markets at all times, and then there are shorter term “vibrations” that have a more localised effect.




Can you post some chart analysis with these 'vibrations' markets on them Magdoran? Or, is it just wave counts in Elliot? 

Cheers,
kennas


----------



## Magdoran

lesm said:
			
		

> This is one the interesting facets related to Gann practitioners, whether explicitly or implicity stated, there is an inference of a high degree of accuracy in the approach.
> 
> No caveats related to the accuracy, confidence levels or potential error on the prediction are usually provided. Yet, they are most likely aware (or one would think they might be) that they are not always going to get it right. In a similar manner to a number of areas of T/A, some practitioners just recite the respective mantra.
> 
> When you look at the academic research related to trading, it is interesting that the researchers dispute that Gann is actually an effective trading method. Yet, like a number of areas, there are apparently some successful practitioners.
> 
> Questions have been raised over the years as to the veracity of Larry Williams methods. Research conducted by chaos mathematicians have validated that his methods will work. In more recent research work, there are questions as to the vaibility of technical analysis or its effectiveness as we move into the future. It will be interesting to watch this and see what the future brings



Ok, let’s deal with the semantics and possible meanings when using the term “accuracy”.

For example, let’s look at the concept of the “accuracy” of price projections.  This is based on the technique of using price range projections to estimate possible (probable) support/resistance in price for extensions and retracements.  

For example Nick Radge was recently using this technique of projecting a range upwards to estimate probable areas of resistance in price for the XAO.  He was using Fibonacci increments and used a method to establish exact price levels where he thought resistance might be met.  Interestingly, Yogi did the same thing, but using Gann based increments.  Both of them were not far off the mark in their estimations.

I have seen people use retracement and extension tools using specific methods well in advance of an event to identify support and resistance levels which have been hit almost (and sometimes) to the cent, and this ends up being a high or low in a drive (maybe a counter trend pivot). Given good technical analysis skills, the practitioner of this approach can forecast price levels in advance.

Certainly there is no guarantee the price projection will be right, but it is assessing where the underlying may reverse in a swing counter trend.  This is where pattern recognition is key.  The challenge for the practitioner is to assess the probability of where these areas are, based on their experience, and their understanding of how the underlying may trend.

The same kind of approach can be employed in projecting time points, but this is more involved since the pattern you are looking for is time based, and based on observable vibration patterns in the market.  If people really want to know about this in detail, it is fully explored in McLaren’s Time Factor work.  The charts I recently posted is an example of how this may work.  Have a look at the charts, and see how the 24th of September is marked as a key date for Brent Crude (maybe even Light Crude too).

However, there are exceptions based on the pattern of trend, and there is the concept that “pitch can overcome support/resistance in time”.  So, crude may not stop at this level based on time support in this case.

I have attached a Crude Oil chart as a working example of using the time approach.  If pitch is too great, it will scream through my projected time support point.  If it does this, it tells us a lot about the momentum of the trend. However, I though out of interest that I’d put the chart up and see how it goes.  

I’ve identified two dates since the pattern could be a day out, but usually one date is sufficient +/- one trading day, but with this particular vibration, I could swing the overlay one more day forward and it still lines up, so there is some ambiguity by a day here.  The two time points are markers of where I’d expect a trend/counter trend activity to occur, but a lot will be based on the patter.  The 30th October is the next key date.  Sorry, best I can do for today.  But let’s see how this pans out.

The accuracy concept is not about the method working all the time, it doesn’t.  It is like a moving average crossover (which is a trigger), bit projecting points is a little different.  It is about assessing where support/resistance might be in time and price based on the evidence in the chart.  When it works in the right circumstances (McLaren covers this in detail), the projections can be very accurate to the day, sometimes to the cent.

Let me make this clear though, it is usually the case (from my experience – some practitioners may do much better, or worse) that you can often only get either price or time projections from a pattern, and not both.  It is rare to get a really good time and price projection, hence I’m often trading the time, or the price.  When I project both, invariably one is wrong, while the other is close (if of course it pans out the way I thought it would).

Just think about it this way, if it doesn’t trend the right way, time to get out.  If it does, like a tech blueprint, you have a battle plan for your trading of where to take profits.  As you can see from the previous charts, it hit near my mark, then kept on going.  I don’t have a crystal ball, but like in a battle, it’s about playing an educated hunch about the enemy’s strength and movements.

So, in reality I may realise I should take profits on a certain day, or at a certain price.  Also, you can look at a pattern, and if it confirms a vibration project how the underlying might move, and set up failure criteria based both on pattern with price or time or both.

What people have to understand is that it is not 100% accurate.  It never will be.  The idea is that if you can get fairly accurate estimations though when you do get it right, and increase your overall expectancy using options for instance, you only have to really hit the big number 1-3 times out of 10, and cut the invalid versions often enough to get an overall positive result.  You just can’t calculate what that will be, because there are too many variables.  But I bet you tech’s system in choppy conditions like it has been isn’t living up to its bull market figures either…

Also, some people will argue that if you draw enough lines on a chart some will turn out to be a pivot. I don’t agree.  I have worked with this kind of tool extensively, and in my best judgement I don’t think that these points are random.  But I accept that some will not agree.  It is really up to the individual to trial or not at their pleasure. It works for me, and for others who are significantly better practitioners than I am.

So, I hope that gives a different perspective on the term accuracy, which I think is often used in different context to mean quite different things.

Regards


Magdoran


----------



## Sean K

Magdoran, why is 24 Sep and 31 Oct marked on the chart? I can't see your explanation for this. 

I would mark this because it looks like a support level hit in the past at $60. That's why it's going to bounce from these levels, not because of any vibrations.....


----------



## Magdoran

kennas said:
			
		

> Magdoran, why is 24 Sep and 31 Oct marked on the chart? I can't see your explanation for this.
> 
> I would mark this because it looks like a support level hit in the past at $60. That's why it's going to bounce from these levels, not because of any vibrations.....



Hello Kennas,


Sure, you might think that - only price is in play here, right?

But I had these time points projected before the 11th of August based on the vibration pattern.  I even posted the Brent version of this chart on this thread.  Does that count for anything?

Coincidence?  Sure it is, (but one I find that keeps recurring for the top end practitioners who use this style – but that’s just my opinion and experience.  Of course it is entirely possible that we are all deluded.  Frank no doubt will accuse me of “curve fitting” what ever that means.  I really can’t see how he isn’t curve fitting too with projections if this is the case.  This is a forward projection; I’m not going back in time and re-jigging this chart.  I even posted the Brent version of this on this thread… lucky guess huh?).

The dates are based on locating the vibration in context of the pattern, and the time points are generated based on calibrating the square in line with the pattern according to a set criteria (a bit like the way EW practitioners have criteria for specific wave patterns).

Anyway, thanks for pointing out that support levels work.  Fully agree here, price levels are important and can be projected as possible areas of support and resistance.  Imagine what you can do though if you can do this with time.  Imagine having both time and price line up.  Would that be useful?  

Regards


Magdoran

P.S. Don’t forget, Crude may fly through projected resistance with a vengeance if the pitch down is too strong.


----------



## Magdoran

ducati916 said:
			
		

> *tech/a*
> 
> 
> 
> With true statistical data, outliers, are formed in the bell curve distribution, and measured via standard deviations, thus, the large outliers tend to be rather infrequent.
> 
> However, the market, is not statistical.
> The market is deterministic.
> Thus, outliers exist in the *fat tails* and are much more frequent.
> 
> Analysis, correctly performed, will identify the outliers that generate the outsized returns, and far exceed the 50/50 proposition.
> Hence, the %winners will be high, and the %return will be high.
> Thus your expectancy, will be high.
> 
> TT is not an *analysis based model...........it is a money management model* Fundamental valuation models are analysis models, with a discretionary money management element.
> 
> jog on
> d998



You know Duc,


You never cease to amaze me in terms of your capacity for pulling far reaching concepts out of your hat.

This is one of them.  I actually have a pet theory I’m working on that most conventional market approaches don’t factor in the fat tails, and the +/- 4+ standard deviation “black swans”.

Interestingly, that’s something I aim to capture if possible.  Those big blow off moves in a short space of time… trick is to recognise them and time it right…

Nice idea about T/A really being a money management approach.  Have to think about that one, but it looks right to me at first glance.


Magdoran


----------



## Magdoran

tech/a said:
			
		

> Actually you maybe interested to know that they have proven mathamatically that it doesnt matter how many monkeys you place at any number of type writers,you'll NEVER get the complete works of Shakespear typed out.
> 
> So while you may get a word or so or even a sentance typed out,so the Dart board/Gann practitioner may have a profitable trade or a string of profitable trades.Over time----never the complete works of Shakespear.
> 
> I'm sure you get my drift.
> 
> By the way lookforward to seeing the Crows knock off Sydney next week.
> If we are not good enough then Westcoast will do the job.
> 2 best sides in the comp playing in a few hrs.



And of course our tech is the modern day “paywrite”.  Put him in front of a keyboard and look what you get!


----------



## Magdoran

lesm said:
			
		

> Magdoran,
> 
> Thanks for the update and the clarification. I thought that may have been the case with respect to the box, Just wanted to make sure.
> 
> There were elements of the chart that were easy to work out. It was just a question of clarifying which parts were actually being done via Gannalyst settings.
> 
> Cheers.



Hello Les,


Hope it all makes sense...


Mag


----------



## Sean K

Magdoran said:
			
		

> Hello Kennas,
> 
> Sure, you might think that - only price is in play here, right?
> 
> Coincidence?  Sure it is, (but one I find that keeps recurring for the top end practitioners who use this style – but that’s just my opinion and experience.  Of course it is entirely possible that we are all deluded.  Frank no doubt will accuse me of “curve fitting” what ever that means.  I really can’t see how he isn’t curve fitting too with projections if this is the case.  This is a forward projection; I’m not going back in time and re-jigging this chart.  I even posted the Brent version of this on this thread… lucky guess huh?).
> 
> *The dates are based on locating the vibration in context of the pattern, and the time points are generated based on calibrating the square in line with the pattern according to a set criteria *(a bit like the way EW practitioners have criteria for specific wave patterns).
> 
> Anyway, thanks for pointing out that support levels work.  Fully agree here, price levels are important and can be projected as possible areas of support and resistance.  *Imagine what you can do though if you can do this with time.  Imagine having both time and price line up.  Would that be useful?*
> 
> Regards
> 
> Magdoran
> 
> P.S. Don’t forget, Crude may fly through projected resistance with a vengeance if the pitch down is too strong.




Mag, I still don't quite get the reference to:

"dates are based on locating the vibration in context of the pattern, and the time points are generated based on calibrating the square in line with the pattern according to a set criteria". 

Have I missed something you posted previously in regard to vibrating? 

And:

"Imagine what you can do though if you can do this with time.  Imagine having both time and price line up.  Would that be useful?"

Yes, this is my aim with TA. This is what Gann combined with Elliot and standard TA principles should provide. If it all comes together at a point, then I think you'd have a pretty good trade position.....Or, is this the Holy Grail, unachievable? Should we just stick to darts?

kennas


----------



## Magdoran

kennas said:
			
		

> Mag, I still don't quite get the reference to:
> 
> "dates are based on locating the vibration in context of the pattern, and the time points are generated based on calibrating the square in line with the pattern according to a set criteria".
> 
> Have I missed something you posted previously in regard to vibrating?
> 
> And:
> 
> "Imagine what you can do though if you can do this with time.  Imagine having both time and price line up.  Would that be useful?"
> 
> Yes, this is my aim with TA. This is what Gann combined with Elliot and standard TA principles should provide. If it all comes together at a point, then I think you'd have a pretty good trade position.....Or, is this the Holy Grail, unachievable? Should we just stick to darts?
> 
> kennas



Hello kennas,


Ok, did you miss something? - Only a few years of studying this stuff.  Sorry, I ran out of time, so unfortunately I gobbledegooked it with jargon…  It’s pretty hard to condense the whole thing into 2 sentences…

This is it in a nutshell:  first you need to be able to grasp how markets trend, develop an understanding of patterns of trend, understand how counter trends work – especially in different time frames, grasp time cycles/vibration theory, study lots of charts in lots of markets from early records to current charts.

Then you need to learn about time and price squares and how they can be used.  The time and price increments are configurable; hence they are both selected with a specified time cycle, and calibrated in terms of price units to time units (a ratio).  This also determines the various angles available.  It is also possible to select which angles are drawn in the square.  There is a whole raft of different approaches possible in terms of how these are implemented depending on your personal preference.

The pattern in the chart is the starting point.  How it has been trending is important, where and when highs and low have come in is taken into account in relevant time frames (daily/weekly etc).  Depending on the individual price divisions can be examined (“division of the range” – retracements and extensions).  

But the key is to recognise the cycle running beneath the obvious bars in the chart.  You sort of have to look beyond the chart – kind of like those weird 3D pictures that were around.  You sort of stare at them till you get you eye in, then suddenly the 3D picture leaps out at you – it’s kind of similar.  

In dealing with time, each cycle theoretically has unique harmonics that run through the underlying.  There is usually a dominant cycle, but there can be minor cycles that are evident too.  Sometimes key increments in the cycle tend to be more prevalent, but each cycle has its own characteristics.  In a way a lot of Elliott theory parallels the logic behind this approach.

Sometimes there just isn’t a clear cycle, sometimes time is totally irrelevant.  Sometimes there is no pattern, or there is ambiguity, or if there are patterns there you may not have the right mindset to see them – all possible.

I only trade what I can see.  Sometimes time is irrelevant in some trends and patterns so you just ignore it. Some wave structures are so clear that you can trade them alone (not saying it will do what you think it will, but you can certainly get an edge if you know what you’re doing– wavepicker does this very well with pure Elliott Waves combined with some straight McLaren charting concepts – non Gann). Some patterns are sufficient to trade from.  But this all comes with experience.  Also, there’s no guarantee that even when things line up, that the market will trade the way you think it will.  Often it won't, and that’s where having clear cut failure criteria and contingency planning comes in.


Hope that made better sense.


Regards,


Magdoran


----------



## Magdoran

lesm said:
			
		

> A question here is, do we see what we want to see or can we discern repeatable patterns in a deterministic manner that is consistently repeatable?
> 
> The computer between our ears is very powerful and by learning and understanding market behaviour and the ability to identify patterns that are immediately discernable is within its capabilities. We have natural inbuilt neural network, we just need to learn to use it effectively. The more we look at something the more likely we are to run the risk of seeing what we want to see. What we see in the first couple of seconds (or less) of looking at a chart is most likely the correct interpretation.
> 
> The more we study patterns enables us to determine their reliability as a method for determining, which way the market or an individual stock might move. We can gather information, which we can use to develop a probalilistic mathematical model to reduce the guess work. Afterall, probability is a mathematical approach to dealing with  uncertainty. We can refine and monitor the model through time, as there are no gurantees that a particular pattern will not fail through time or at particular times due to changes in market behaviour/dynamics.
> 
> 
> 
> Magodran - I accidentally changed some of the words in the above quote.
> 
> A question here is that in performing analysis and developing methods aren't  we attempting to move from the purely subjective approach to being more objective or if possible more quantitative, within reasonable bounds?
> 
> The more highly subjective the analysis is the more likely we have increased the risk of failed trades. Our testing should remove an element of the subjectiveness. Monitoring going forward should enable us to better quantify and confirm whether we have positive approach or not.
> 
> But in real terms, the analysis is only the starting point, as it is how we conduct and manage the trade once we are committed that is important.
> 
> I recall a comment from a well-known and respected trader on another forum along the following lines. For a system he developed he stated that he couold train a group of traders how to use is system and expected the following outcome:
> 1. One subgroup would trade the system better than he could
> 2. One subgroup would trade the sytem at the same level as he could
> 3. One subgroup would trade the system worse than he could or make a loss.
> 
> A lot of time is spent on the initial analysis and time needs to be spent in looking at the overall approach, as analysis is not necessarily the point where we may lose the game. We can have a winning system, but still lose money.
> 
> 
> 
> You have posed an interesting question to which there are potentially a myriad of answers or views.
> 
> If we consider the market to be a dynamic system (breaking this down we could consider whether it is a linear or non-linear system) with a range of variables that affect its dynamics, can we then develop a model that would enable us to predict its behaviour with an acceptable level of confidence?
> 
> An interesting problem and due to there being a range of variables not a simple one. What is required is a simpler model that can use key variables, as well as the ability to self-learn.
> 
> Even if a 'fuzzy-logic' based approach is used, to maintain its effectiveness a capabilty would be required to add or remove facts through time. An interesting area of AI research.
> 
> Of course we know that chartists simplify the approach on the basis that all information currently known to buyers and sellers is reflected in the price and ignore any/all other information.
> 
> In simple terms, the futures markets are probably an easier environment to model as opposed to the stock markets.
> 
> In terms of comparing systems, without being able to identify a control to use as a reference point it will not necessarily be able to objectivley compare systems and consideration would need to be given to determining the time frame that the comparison would conducted over. As performance charateristics may change through time and be affected by market conditions and changes.
> 
> One would expect that any reasonably effective system should perform better than random to be claimed to have an edge.
> 
> 
> The trick here is can you identify the elements where the methods complement each other and bring those elements together in a workable manner.
> 
> Reliable or effective testing will always be an issue, as well as the ability, knowledge and experience of individual testers.
> 
> 
> 
> There are an untold number of ways to trade the market and do it successfully. The danger with sweeping certainties is that it leaves the author open to challenge and the question of, can the method survive the long term or does it only work in a particular type of market environment or conditions. Only time will tell.
> 
> 
> 
> Agree. No one appears to have collared the market yet, but some do better than others.
> 
> Not sure if I waffled a littel bit, but think I caught most of the main.
> 
> I actually prefer whiteboards for discussing these type of topics.
> 
> Cheers
> lesm



Hello Les,


I have been mulling over your post whenever I have had a chance.  There is a lot of ground to be covered here, and will take some time to address.  

You have raised some interesting perspectives, and rather than deal with them in an off the cuff fashion, I’d prefer to consider then for a while and perhaps deal with your points in separate posts…

YAWN! Time for bed now!

Regards


Magdoran


----------



## lesm

Magdoran said:
			
		

> I have been mulling over your post whenever I have had a chance.  There is a lot of ground to be covered here, and will take some time to address.
> 
> You have raised some interesting perspectives, and rather than deal with them in an off the cuff fashion, I’d prefer to consider then for a while and perhaps deal with your points in separate posts…
> 
> YAWN! Time for bed now!




Magdoran,

I came to a similar conclusion after responding to your post that it may be more beneficial to break out the various points and address them more fully. 

Short quick answers at times can tend to oversimplify or confuse. Sometimes the devil is in the detail or we don't provide enough information and raise more questions.

Will be interested in your response(s).

Cheers
Les.

PS: Have you had the opportunity to start reading the Phantom of the Pits (POP)?


----------



## tech/a

> Analysis, correctly performed, will identify the outliers that generate the outsized returns, and far exceed the 50/50 proposition.
> Hence, the %winners will be high, and the %return will be high.
> Thus your expectancy, will be high.




Ducster youve used the words *WILL IDENTIFY*,*simply it WON'T*
All analysis can do is place you in a *percieved*position to take advantage of a *possible*outlier move.You and I have proven this with our own methods.There is a vast difference to my "Blueprints" and yours and Moggie's but I'll approach this later.




> Discussing this kind of subject can get very messy very quickly because there are problems with semantics, building blocks of concepts, levels of knowledge and understanding, and a broad range of different interpretations of the various “churches” of technical analysis (examples – Elliott, Gann, Darvas, Guppy/Wilson, Williams, and a whole host of different classifications too long to list – chose the ones most people are familiar with from recent discussions).
> 
> Technical Analysis is as much an art as it is a science, since it is not scientifically robust in the conventional sense, and relies on the capacity of the individual to interpret the available information. Different methods have been devised out of using discrete combinations of techniques which are welded into schools of thinking.
> 
> So, I would argue that to really appraise any approach is problematic because there are so many variables to contend with. Individual capacity, a plethora of interpretations, competing criteria etc. I think at the core, if you believe that markets trend (the antithesis of random walk), and that trends can be detected and observed, then technical analysis could conceivably be viable. The next step though is to devise methods to determine the trend and devise strategies to take advantage of trends. This is where it gets tricky because over time different technical analysis “schools”/”churches” have developed.




All of this is interpretation and application of analysis in a discretionary manner,and if trading in that way all of the above comes very much into play.




> A question here is, do we see what we want to see or can we discern repeatable patterns in a deterministic manner that is consistently repeatable?




And herein lies the dilema of any discretionary trading.




> I recall a comment from a well-known and respected trader on another forum along the following lines. For a system he developed he stated that he couold train a group of traders how to use is system and expected the following outcome:
> 1. One subgroup would trade the system better than he could
> 2. One subgroup would trade the sytem at the same level as he could
> 3. One subgroup would trade the system worse than he could or make a loss.




I would argue here that the "System" is a method of discretionary application to a chart or charts.If a single loss could be recorded by following a methodolgy then it is not a mechanical method. The only caveat (Not knowing the method) would be that I presume he is speaking about trading the method by various people over the same timeframe.
Taking T/T as an example and other tested systems like the other 2 I trade and the 4 different methods disclosed to my by others,not one of them traded over the 3-4 yrs I have had the opportunity to trade and observe have ever been in the position to ne a nett loser.

*Why because there is no discretion.*




> Ok, let’s deal with the semantics and possible meanings when using the term “accuracy”.
> 
> For example, let’s look at the concept of the “accuracy” of price projections. This is based on the technique of using price range projections to estimate possible (probable) support/resistance in price for extensions and retracements.
> 
> For example Nick Radge was recently using this technique of projecting a range upwards to estimate probable areas of resistance in price for the XAO. He was using Fibonacci increments and used a method to establish exact price levels where he thought resistance might be met. Interestingly, Yogi did the same thing, but using Gann based increments. Both of them were not far off the mark in their estimations.




The question of accuracy is only of minor importance when a tested plan has the final blueprint.It is NOT totally foolproof as there can and will be times as history goes on that due to the rule of large numbers the system/s will eventually trade both above and below their blueprint.Sure this would represent system failure but even now system failure would still see all systems I am aware of walk away with tremendous profit. New data causing failure would simply then be added to the developement of a more robust method which would then do the cycle again.Mind you if it failed to the upside I would still continue to trade.




> Just think about it this way, if it doesn’t trend the right way, time to get out. If it does, like a tech blueprint, you have a battle plan for your trading of where to take profits. As you can see from the previous charts, it hit near my mark, then kept on going. I don’t have a crystal ball, but like in a battle, it’s about playing an educated hunch about the enemy’s strength and movements.




There is a *VAST* difference in the two "Blueprints".
Mine is a blueprint of the application of the identical analysis over 1000s of trades over a given period. The result is "The BLUEPRINT".I monitor future perfomance of my trades (accumulative) against it. Individual trades are of little consequence.
Had you applied your "Blueprint" to 1000s of trades and had those results tabulated to form a record of what could be expected applying this "Discretionary" approach on those trades then we would both have a similar print.

My interest in the discussion is the PRACTICAL application of your methodologies---both Moggies and Duc's in bettering the overall results of trading in general.

To date and it is still a work in progress from Duc's part Ive not seen any tangible results that would suggest improvement over that which I have adopted.Duc's aim is to return better than 30% a year over 3 yrs.Which is approx T/Ts average un leveraged performance.
Its *not* a competition,and my running of the method was/is for debate just as we have here today.Win lose or draw,I/You We all can benifit from these discussions while it does its thing in the background.
Same with Duc's.
Moggie can you show a practical demo of your use of your analysis using an option trade (Your prefered instrument)?

No need to go to the whys and wherefores a simple "Analysis tells me price will go to here over this time period so Im taking this trade"---,or a few trades.Would be interesting.


*As an aside * Yogi has had some great success with his method,Ive seen it.
However I wonder what his "Blueprint" would look like over 1000 trades.
How consistent are methods?


----------



## Sean K

Magdoran said:
			
		

> Hello kennas,
> 
> Ok, did you miss something? - Only a few years of studying this stuff.  Sorry, I ran out of time, so unfortunately I gobbledegooked it with jargon…  It’s pretty hard to condense the whole thing into 2 sentences…
> 
> This is it in a nutshell:  first you need to be able to grasp how markets trend, develop an understanding of patterns of trend, understand how counter trends work – especially in different time frames, grasp time cycles/vibration theory, study lots of charts in lots of markets from early records to current charts.
> 
> Then you need to learn about time and price squares and how they can be used.  The time and price increments are configurable; hence they are both selected with a specified time cycle, and calibrated in terms of price units to time units (a ratio).  This also determines the various angles available.  It is also possible to select which angles are drawn in the square.  There is a whole raft of different approaches possible in terms of how these are implemented depending on your personal preference.
> 
> The pattern in the chart is the starting point.  How it has been trending is important, where and when highs and low have come in is taken into account in relevant time frames (daily/weekly etc).  Depending on the individual price divisions can be examined (“division of the range” – retracements and extensions).
> 
> But the key is to recognise the cycle running beneath the obvious bars in the chart.  You sort of have to look beyond the chart – kind of like those weird 3D pictures that were around.  You sort of stare at them till you get you eye in, then suddenly the 3D picture leaps out at you – it’s kind of similar.
> 
> In dealing with time, each cycle theoretically has unique harmonics that run through the underlying.  There is usually a dominant cycle, but there can be minor cycles that are evident too.  Sometimes key increments in the cycle tend to be more prevalent, but each cycle has its own characteristics.  In a way a lot of Elliott theory parallels the logic behind this approach.
> 
> Sometimes there just isn’t a clear cycle, sometimes time is totally irrelevant.  Sometimes there is no pattern, or there is ambiguity, or if there are patterns there you may not have the right mindset to see them – all possible.
> 
> I only trade what I can see.  Sometimes time is irrelevant in some trends and patterns so you just ignore it. Some wave structures are so clear that you can trade them alone (not saying it will do what you think it will, but you can certainly get an edge if you know what you’re doing– wavepicker does this very well with pure Elliott Waves combined with some straight McLaren charting concepts – non Gann). Some patterns are sufficient to trade from.  But this all comes with experience.  Also, there’s no guarantee that even when things line up, that the market will trade the way you think it will.  Often it won't, and that’s where having clear cut failure criteria and contingency planning comes in.
> 
> Hope that made better sense.
> 
> Regards,
> 
> Magdoran




Thanks for the time you've put into these posts Mag.

I've been studying this stuff for a little while too, but I still can't define what you mean by vibrations. Are you just saying it's the underlying trend in price? I can see the trends when they are there, am I seeing the vibrations even though it's not in 3D? Yet. Perhaps a bit of LSD would help me there.


----------



## Morgan

I would be interested to hear people's thoughts on how company fundamentals overlay into chart analysis.
I feel technical chart analysis tends to 'disregard' that we are actually trading a real-life physical company (selling services or products) and not just a line on a chart.
From a technical standpoint, do we just assume that everyone in the market knows everything about a company all of the time? I find this hard to grasp, as (without wanting to allude to insider trading) in that case everyone would be a buyer, or everyone would be a seller. 
This brings me to my personal conspiracy theory- 'does the market know who I am?'. In theory, the market should be broad enough and deep enough to not even notice my measly buying and selling. Yet how often do others notice, that just after you buy into a long and strong uptrend, the company calls in the administrators the next day after you take up your position?
Or after you cannot take the pain any longer and offload your stock in an unloved downtrending biotech, only to have them shortly after announce (insert major medical breakthrough of your choosing)?


----------



## Magdoran

lesm said:
			
		

> Magdoran,
> 
> I came to a similar conclusion after responding to your post that it may be more beneficial to break out the various points and address them more fully.
> 
> Short quick answers at times can tend to oversimplify or confuse. Sometimes the devil is in the detail or we don't provide enough information and raise more questions.
> 
> Will be interested in your response(s).
> 
> Cheers
> Les.
> 
> PS: Have you had the opportunity to start reading the Phantom of the Pits (POP)?



Hello Les,


Yes I have been reading the Phantom of the Pits, thank-you.  I liked the reference to Sun Tsu, I read the Art of War many years ago in my teens, and this kind of “wisdom” has served very well.

I’m a great believer in using these kinds of tactics in the field – the idea of the “Chen” obvious move, and using the “che” (I call it sneaky move).  I think a lot of competitive areas are like this, you try to keep your competitor focused on your obvious Chen moves while the real thrust comes from the “che” move.  

“POP’s” tactics on the trading room floor reminded me of people like Krieger in the late 80s and early 90s using hedging tactics to disguise his real intentions to outmanoeuvre his opponents.

As for dealing with posts, I think we’re on the same page here.

Have a lot on today, so we’ll see how we go…


Best Regards


Magdoran


----------



## barney

Morgan said:
			
		

> I would be interested to hear people's thoughts on how company fundamentals overlay into chart analysis.
> I feel technical chart analysis tends to 'disregard' that we are actually trading a real-life physical company (selling services or products) and not just a line on a chart.
> From a technical standpoint, do we just assume that everyone in the market knows everything about a company all of the time? I find this hard to grasp, as (without wanting to allude to insider trading) in that case everyone would be a buyer, or everyone would be a seller.
> This brings me to my personal conspiracy theory- 'does the market know who I am?'. In theory, the market should be broad enough and deep enough to not even notice my measly buying and selling. Yet how often do others notice, that just after you buy into a long and strong uptrend, the company calls in the administrators the next day after you take up your position?
> Or after you cannot take the pain any longer and offload your stock in an unloved downtrending biotech, only to have them shortly after announce (insert major medical breakthrough of your choosing)?





I may be a little out of my depth on this thread, but firstly, everything you said (MAG) a couple of posts back actually made "perfect" sense (except for a little unsuredness on the "vibrations" as well)...........The more I study what you guys say/talk about, the "simpler" the "complexities" become if that makes sense, so thanks for the "enlightenment" I am receiving.

Morgan, I am also curious re the "guys" (plural) response, on how the "real life" part of trading is/can be formulated into the equation(s).  I respect that the charts etc give a great depth of statistical "behaviour" to base our trading plans/judgements on etc., but it seems  to me that, no matter how good our analysis is of past events, the "uncertainties" of the world in general will always make it difficult to "trade into the future"  Now don't you guys get stuck into me just cause I'm new..........I am still agreeing that analysis is a brilliant concept, and I am becoming "obsessed" with looking at charts etc......(thats all your fault(s) (plural again) ............but I do think that Morgan's point on "real life" is of great importance For eg. The sp on might be sailing along nicely on an oil producer (not atm  when...bang .......hurricane from nowhere wipes them off the planet.........sp drops 20-30-40% .....the point is we cannot formulate that into a chart!........I wont ramble on any more cause there is far better knowledge to be gained by me reading,not writing ! :bowdown: ...........But in essence, I guess my question is..........would it be any more or less successful by simply "trading after the event" so to speak (which may require a lot of patience/sitting around...........rather than trying "see into the future" from past events/analysis.........Personally I like to trade, so I would not want to "sit around" waiting for the next "tidal wave"..........but any opinions regarding this would be interesting...... :dunno: Cheers, Barney.


----------



## tech/a

Barney.

Good to see your well on your journey.



> but it seems to me that, no matter how good our analysis is of past events, the "uncertainties" of the world in general will always make it difficult to "trade into the future"




Absolutely correct.The trick here is to trade in such a way that even these uncertainties (Which are rare events) have minimal effect on your bottom line over the long run.You cant filter them out or pre empt them.However you can minimise impact even like that of an 87 crash.



> But in essence, I guess my question is..........would it be any more or less successful by simply "trading after the event" so to speak (which may require a lot of patience/sitting around...........rather than trying "see into the future" from past events/analysis




This is just as risky as any other "analysis" take the 87 crash,it wasnt until 1994 that price returned to pre crash levels.
Some analysts would have avoided the crash,both technical and fundamental by simply not being in the market.
Others would have minimised impact by diversification (Not having ALL investments in stock) or by having minimised holdings.
Many of course would have been caught. ( I took a hit in 97 before I knew what I knew now!).We must make sure that in an event such as 87/97 that we will not be wiped out. Survival is of utmost importance.


----------



## barney

tech/a said:
			
		

> Barney.
> 
> Good to see your well on your journey.
> 
> 
> 
> Absolutely correct.The trick here is to trade in such a way that even these uncertainties (Which are rare events) have minimal effect on your bottom line over the long run.You cant filter them out or pre empt them.However you can minimise impact even like that of an 87 crash.
> 
> 
> 
> This is just as risky as any other "analysis" take the 87 crash,it wasnt until 1994 that price returned to pre crash levels.
> Some analysts would have avoided the crash,both technical and fundamental by simply not being in the market.
> Others would have minimised impact by diversification (Not having ALL investments in stock) or by having minimised holdings.
> Many of course would have been caught. ( I took a hit in 97 before I knew what I knew now!).We must make sure that in an event such as 87/97 that we will not be wiped out. Survival is of utmost importance.





Thanks Tech, Good advice as always............Just out of curiousity.........say I had $100,000 to invest (which I don't, but thats another story)........How much of that capital would be considered "sensible" to have "tied" up at any one point in time?  ie. Is there a ballpark ratio of shares to cash on hand that is recommended, or do you just "play" the current market of the time, how you see it?  ....I'm guessing you'll say its relative to the "strength" of the market at the given moment in time? For eg. Now would probably not be a great time to have all your money tied up because a) There is uncertainty with no firm direction and b) Due to this uncertainty, there may be some "bargains" to be had by remaining "liquid/flexible"??  Is that on the right track?? Cheers, Barney ("L" plater in action......keep well clear :1zhelp:


----------



## tech/a

Its a question that everyone should ask themselves.
Everyone will be different.
Those who are starting out on the journey of accumulating wealth for the future are at more risk than others due to smaller capital bases.

The following is my personal view and not meant to be advice to you or anyone.

In the beginning its best in my veiw to establish a base.
Most wont do this as the desire to accumulate wealth is stronger than the understanding that they dont have to do this in a year or 5 even 10 yrs.

Personally again my first aim would be to have a base established in either Property or longterm growth type stocks.
Wealth unfortunatley grows slowley and the old adage "Money makes Money" is so so true.Once you get going the growth is exponential (Or can be if applied wisely).

To the $100K.
If I didnt have a home then I would be slow in my investment into growth stocks taking say 1/3rd and waiting for that to grow to 1.5 times or so the initial capital base of $33K until I invested more even in the same successful stocks.
Eventually the aim would be to hold all growth stocks over a long period with enough capital growth in my investments to weather most storms.

If I had a home then I would put it there and re draw the 1/3rd and do the same.
Never putting myself at risk of ruin ( well to the best of my ablility).

As your capital base becomes larger than you can split off capital to diversify OR *more importantly * maximise capital in one area where obvious opportunity exists.
Even so I would not place ALL capital in one opportunity.

I have been to 80% geared in property and it wasnt very comfortable.
However it has paid off and I realise as everyone does when they find an opportunity,that it wont go on forever.There comes a time with all investments that we should crystalise the profit and get ready for the next opportunity.
This will vary from person to person,and timing will always be an issue.
Getting it mostly right is far better than getting it horribly wrong.
A balance of a little fear and a little greed generally means we can grab that in the middle---worthwhile profit.


----------



## barney

tech/a said:
			
		

> Its a question that everyone should ask themselves.
> Everyone will be different.
> Those who are starting out on the journey of accumulating wealth for the future are at more risk than others due to smaller capital bases.
> 
> The following is my personal view and not meant to be advice to you or anyone.
> 
> In the beginning its best in my veiw to establish a base.
> Most wont do this as the desire to accumulate wealth is stronger than the understanding that they dont have to do this in a year or 5 even 10 yrs.
> 
> Personally again my first aim would be to have a base established in either Property or longterm growth type stocks.
> Wealth unfortunatley grows slowley and the old adage "Money makes Money" is so so true.Once you get going the growth is exponential (Or can be if applied wisely).
> 
> To the $100K.
> If I didnt have a home then I would be slow in my investment into growth stocks taking say 1/3rd and waiting for that to grow to 1.5 times or so the initial capital base of $33K until I invested more even in the same successful stocks.
> Eventually the aim would be to hold all growth stocks over a long period with enough capital growth in my investments to weather most storms.
> 
> If I had a home then I would put it there and re draw the 1/3rd and do the same.
> Never putting myself at risk of ruin ( well to the best of my ablility).
> 
> As your capital base becomes larger than you can split off capital to diversify OR *more importantly * maximise capital in one area where obvious opportunity exists.
> Even so I would not place ALL capital in one opportunity.
> 
> I have been to 80% geared in property and it wasnt very comfortable.
> However it has paid off and I realise as everyone does when they find an opportunity,that it wont go on forever.There comes a time with all investments that we should crystalise the profit and get ready for the next opportunity.
> This will vary from person to person,and timing will always be an issue.
> Getting it mostly right is far better than getting it horribly wrong.
> A balance of a little fear and a little greed generally means we can grab that in the middle---worthwhile profit.





Thanks again Tech, just put that all in the personal computer (the one between my ears!)   I lost quite a bit not long back through lack of education, and thinking this was an "easy game to play!" ...or probably more to the point, just "not thinking!"  My longer term plan is to "earn" back what I lost so I can post on this forum with some hopefully "useful" advice to help the unwary (like I was).  I expect it to take a while, but with a little luck and a lot of planning etc who knows??.......................one of the main things this forum has helped me with particularly, is making more DISCIPLINED decisions. Many times over the last few weeks instead of "jumping in" on a trade like I would have done previously, I've learned to sit back and ask myself WHY am I going into this trade?, and if I can't prove to myself why it is a good trade, then I have "walked away" .........still dont get 'em all right, (and I trade a lot less) but even if I get it wrong, I am happy that I had sound reasons for entering in the first place. Anyway I've taken up enough space here.....I'm going to do some "real" work  :run:  Cheers, Barney.


----------



## Magdoran

barney said:
			
		

> I may be a little out of my depth on this thread, but firstly, everything you said (MAG) a couple of posts back actually made "perfect" sense (except for a little unsuredness on the "vibrations" as well)...........The more I study what you guys say/talk about, the "simpler" the "complexities" become if that makes sense, so thanks for the "enlightenment" I am receiving.
> 
> Morgan, I am also curious re the "guys" (plural) response, on how the "real life" part of trading is/can be formulated into the equation(s).  I respect that the charts etc give a great depth of statistical "behaviour" to base our trading plans/judgements on etc., but it seems  to me that, no matter how good our analysis is of past events, the "uncertainties" of the world in general will always make it difficult to "trade into the future"  Now don't you guys get stuck into me just cause I'm new..........I am still agreeing that analysis is a brilliant concept, and I am becoming "obsessed" with looking at charts etc......(thats all your fault(s) (plural again) ............but I do think that Morgan's point on "real life" is of great importance For eg. The sp on might be sailing along nicely on an oil producer (not atm  when...bang .......hurricane from nowhere wipes them off the planet.........sp drops 20-30-40% .....the point is we cannot formulate that into a chart!........I wont ramble on any more cause there is far better knowledge to be gained by me reading,not writing ! :bowdown: ...........But in essence, I guess my question is..........would it be any more or less successful by simply "trading after the event" so to speak (which may require a lot of patience/sitting around...........rather than trying "see into the future" from past events/analysis.........Personally I like to trade, so I would not want to "sit around" waiting for the next "tidal wave"..........but any opinions regarding this would be interesting...... :dunno: Cheers, Barney.



Hello barney,


It suddenly occurred to me that this is in the beginner area… woops, and here we are really getting into the deep end.  Easy to do when you have some capable people around.

Have a look at the threads I posted up where there are some discussions.

The consensus view came up with a range of texts to consider – focus on Technical analysis here (money management which is important others can recommend, although Van Tharp’s “Trade your way to Financial Freedom” is commonly used).

One that was generally agreed on was Stan Weinstein’s “Secrets for profiting in Bull and Bear markets” (a really good general primer that spells out the building blocks, and it reads well).

Other Authors generally mentioned by the different posters for technical analysis were alphabetically: 

Bigalow,
Bedford, 
Darvas, 
Edwards, 
Guppy, 
Prechter and Frost,
Radge, 
Schwager, 
Watkins, 
Wilson, 

Have a read through the various threads I mentioned in my first post on this thread, and consider which approaches you feel more comfortable with, and have a look at each area you want to in turn.  I suggest you take you time, and try not to overdo it and get swamped with too much information.  

Try to give yourself enough time to absorb the ideas you are accessing, and recognise that it is a long journey in this field. Recognise too that it is highly competitive in the market, so please consider paper trading a lot at first, and if you do want to trade, do so with very small positions at first.  

If you have capital you want to invest wisely, consider locating an expert financial advisor that you can trust (beware of advisors who gain from steering you into an approach with a trailing commission – they must disclose this by law).

 Vibration Theory:
Concepts like vibration theory is way too advanced for a beginner.  It is also very unorthodox, and a very small percentage of the market use or understand this perspective.  In fact it is little known even in T/A circles.  While this is something that will only confuse you now, and probably for at least a couple of years, I’ll give a brief comment on it for future reference and for those who are curious reading this:

Vibration theory operates on two distinct levels. Firstly the cycles that run through all markets at all times (like the seasons, commodity cycles, economic cycles, etc…).  Secondly, localised cycles that have a limited time horizon.

Think about the string on your guitar when you strike it.  It vibrates as certain intervals (look at music theory and the relationships of harmonics – vibration theory is very much like this).  When you hit all 6 strings, depending on how they are tuned and which notes are playing, you will get a range of notes that interact with each other.  If you have a dominant note, the harmonics related to that note have a bearing on the tonal quality.

Also, think of a pond with a range of ripples. If you drop a large rock with force, it will make large concentric ripples, while a smaller stone thrown closer to the observer may make smaller ripples in the scheme of the pond, but appear larger from the observer’s perspective.

Consider that the two ripples merge at a given point. The “high” wave hitting a trough from the other ripple, may cancel each other out, or significantly reduce the effect of the other. But when two “highs” or “lows” coincide, the resultant peak or trough may be exaggerated.

I think markets work a bit like this, but the ripples are numerous (interest rate moves, weather effects – cold winters = higher energy consumptions, supply and demand for numerous commodities, collective wage rates, tax rates, capital injections, government regulations, mergers and acquisitions, - the list goes on – essentially everything that effects all markets).

Another view of the market could be conceived along the lines of how gravity and motion work.  Imagine a group of asteroids each with their own trajectory, and the way different levels of gravity from a range of bodies might modify their movement, and how collisions may affect them to.

So, vibration/cycle theories recognise markets generally don’t trend in a straight line, but vibrate, and they do this through time.  Part of the concept is to locate and use the harmonics if you can identify a potential cycle. Note though that this is open to interpretation, hence it is not an easy subject to deal with.  Also, a lot of the process has to do with pattern recognition, but pattern recognition in a macro context – actually looking for smaller basic patterns in particular combinations (again a bit like chess combinations) making up larger patterns.

Using the guitar analogy, if you have a chord, the harmonics all work out nicely.  Add in some discord, and it can wash over the dominant note, and obscure it’s harmonics.  This is kind of the “white noise” of the market.  The idea is to try to locate patterns with tradable market harmonics, and compensate for random noise and filter it out.  Easier said than done.  

This is where the “3D picture” trick comes in - to use your imagination somewhat like seeing many moves deep in chess, and intuitively screening out the flawed combinations of moves.  Like in chess where you use your intuition to narrow down the options, and focus on the really elegant combinations, the idea is to screen out the noise.  Maybe it’s like innovating/jamming live with others, you hear the melody before you play it, it’s kind of like that if that makes any sense. (Doing my best here to explain it with words – a white board in person would be a different story).


Ok, forget all that, and focus on the simple basic concepts, and find approaches you feel comfortable with.  Read what you can, and explore each step when you’re ready.  Be careful not to rush things - learning this art takes time, and you have smorgasbord of choice. 

Good luck with your journey, there are many wise voices here.  If you get your head around a lot of it, it will give you a solid grounding to move forward!  



Regards


Magdoran


----------



## Magdoran

tech/a said:
			
		

> There is a *VAST* difference in the two "Blueprints".
> Mine is a blueprint of the application of the identical analysis over 1000s of trades over a given period. The result is "The BLUEPRINT".I monitor future perfomance of my trades (accumulative) against it. Individual trades are of little consequence.
> Had you applied your "Blueprint" to 1000s of trades and had those results tabulated to form a record of what could be expected applying this "Discretionary" approach on those trades then we would both have a similar print.



Hello tech,


You raised some interesting perspectives here.

Agreed this isn’t a competition, it’s a comparison, and an examination of the smorgasbord of choice available in the market.  So to add to your comments:

Yes there is a vast difference between the two “blue prints”, certainly due to the points you raised, and to some extent because some of our primary structural approaches are based on polar opposite end of the spectrum.  (Kind of like the difference between your approach and the Duc’s).  

Key input variables that are different are:  Time frame, financial instruments, method of determining probabilities, Technical Analysis approach, method of delivering positive expectancy, time allocated to the process.

T/T is a long term approach using margin lending unhedged (unless you have changed this), based on probability determined by a custom calibrated back testing regimen and a trading system utilising a version of a positive expectancy approach utilising an orthodox technical analysis methods.  Is that a fair encapsulation?

Points of difference then is shorter time frame, using options and other derivatives, probability manually determined, unorthodox hybrid technical analysis, manually calculated (floating) positive expectancy…

Because of the time frame difference, the shorter term “blueprints” are designed to be more immediate and flexible to deal with fluid market conditions.  Rather than focus on screening out the swings in the market for the long term, the idea is to take full advantage of these and trade both the trend, and the counter trend if an opportunity which fits a criteria is identified.  Also, all of this is done within an overriding strategic plan, but it has points of flexibility imbedded in it along the lines of the way RUP (Rational Unified Process) is configured.

What I’m saying is that a lot of the larger profits came from trading counter trend moves (bearish positions) in a raging bull market.  Why?  Because entering a put with low volatility at a key point can make significant returns in a very short space of time, and gets an added bonus from an increase in volatility.

So my trading approach aims to benefit from direction, magnitude of the move, and from the double benefits of the “slingshot” effect when the underlying moves very quickly augmenting the returns from volatility and delta. But this approach is very intensive, and not a put the trade on and walk away variety.  It is also highly technical and not suitable at all for beginners.


Regards


Magdoran


----------



## Magdoran

kennas said:
			
		

> Thanks for the time you've put into these posts Mag.
> 
> I've been studying this stuff for a little while too, but I still can't define what you mean by vibrations. Are you just saying it's the underlying trend in price? I can see the trends when they are there, am I seeing the vibrations even though it's not in 3D? Yet. Perhaps a bit of LSD would help me there.



Hello kennas,


Hope it’s been of some inspiration.  Have a read of the comments above about vibration theory, hope this helps…

Now, I’ve got a funny story about LSD from my Uni days.  I knew a guy who was a chemistry freak - this guy knew chemistry inside out and I think went on to make quite a name for himself overseas.

But he was a wild guy, way too oversexed, a consummate party animal, and a substance fiend.  He was also not into respecting authority.  

So, one day he hatched a plan to make some LSD on campus, and invited a few people over to his place.  Well, I was my normal punctual self and rolled up late (thankfully), to find a small room full of about 10 people.

They were all looking at the walls and the ceiling, and making oooh and ahhh noises.  “Wow man, we just dropped a trip!”.  So out of amusement I sat down and watched  the fun.

Then I noticed a can of coke was being handed around.  As each person took a sip, they went “wow, this is AMAZING” and passed the can to the next person in the circle.  Well, the can did the rounds, and finally the person next to me passed the can to me.

I fell over laughing.  It still had the lid on!


Mag


----------



## tech/a

Moggie.

I certainly agree with what your saying.
Yours is a different style of trading to my own.
Each suits each.
Would still like to have you walk through an example.
Think my knowledge of options will be enough to at least follow you.
Natenberg is a good author on the topic,another curiosity--options.


----------



## lesm

barney said:
			
		

> .......................one of the main things this forum has helped me with particularly, is making more DISCIPLINED decisions. Many times over the last few weeks instead of "jumping in" on a trade like I would have done previously, I've learned to sit back and ask myself WHY am I going into this trade?, and if I can't prove to myself why it is a good trade, then I have "walked away" .........



Barney,

Regardless of the way you trade, if you can remember the above point/question you are moving in the right direction.

Good luck going forward.

Cheers.


----------



## barney

Hi guys, (Been out working...late reply!)  Thanks Mag thanks Tech and thanks Lesm, for the info/advice/support etc.............Its funny, but I feel like I am getting a "handle" on some of what you guys speak........... I know I am still a "KISS" kinda guy (thank you Coyotte) and I have learned a lot from so many others (too many to mention, but you know who you are), but the concepts of understanding  are increasing!!  The "market" is a big "washing machine" of business............Good companies do well and "bad companies" we try and steer clear of  (the band was good but!!).... We try and invest in the good Co.'s when they are having a short term downslide but showing signs of recovery, (or "short" them when they are achieving above future expectations) (simple explanation, but thats me!)

So from what you say Mag, the more we can understand the "workings" of the market in general, the more chance we have of jumping on a "trend" The "vibrations" are trends within trends so to speak!?, but the overall trend is the most important....If the vibrations take the trend off the apparent path for a short time, we don't need to be concerned???.......................Can I ask you guys, who obviously have great deal of confidence in your trading choices.............do you only set "wide" stop losses on your trades cause you respect that the "vibrations" may "set off" an uneeded early exit???  ,or do you still accept that the "vibrations" may stop you out? (and maybe just buy in again at a lower level...hopefully?)..............Just on vibrations this last week for eg. ..........I have "shorted" ROC (not a lot of shares but just testing the water so to speak)...........My perception was that Oil was going to drop a little further (based on the current chart/news/vibe etc), Now I understand thAT this could quite easily reverse, but I was backing the "trend", and if it goes against me I can wear that, cause I think my logic is sound??? I've kinda lost what I was trying to say/ask, but basically, if you assess the market logically, and apply sound money management, overall you should do OK??...........and if not ...........then find a logical reason why it went against you and "learn"  from that .................Does that sound sensible??.....any advice ????..........Cheers, Barney.


----------



## coyotte

Barney:

in reply to your last post see my last post (today) in "trading plans"

Cheers


----------



## barney

coyotte said:
			
		

> Barney:
> 
> in reply to your last post see my last post (today) in "trading plans"
> 
> Cheers




Hey there Coyotte, Thanks for the referral,  I gather you are saying that the stop loss should be set "regardless" of "emotional" attachment to the sp??..........Just wondering though, whether "MAGS" "vibration" concept (if we were reading the signals correctly)  would "allow" us to "give" a little more width, with respect to setting off the stop loss???...........I ask this cause I short sold AWE the other day, but when they rose my "stop" was hit...... by lunchtime next day I would have been well in front !!................Maybe its more to do with my exit "mathematics" ???............more study required!!   Cheers Barney.


----------



## coyotte

Barney :

No !

What I am saying is that the STOP is a LAST RESORT .
Classic STOPS positions for OXR when it failed on May 15th would generally been triggered to late --- C/B was May 9th low , C/B + ATR around 3.30 , The UP Trend Line March 17 + April 13 had not been breached ---- so the only one that was any way applicable was the C/B -- BUT as you would not Know (though could have made a pretty good judgement) if the price was going to CLOSE below the C/B on May 15th for a May 16th Exit -- all the classic STOPS would have seen you caught in that down gap !

But from April 20 th OXR was showing signs that trouble may laying ahead with the consistant breaching of the upper bollinger bands (20*2 spl) .

By May 5th it was becoming obviouse with low vol , compressing price, diverging ADX +P , diverging TMF (money flow) , continueing on to upper candle tails.

This is point I'm coming at about having only a limited amount of stocks , that so as to allow your full concertration .

Go back and study this period of OXR  , there are many lessons to be learned.

Don't know about viabrations and that stuff , prefer to just let a few basic methods mature in there own way !

By the why have you bothered takng a look at Guppy's " Trading Course CDs "
for around $350 for the CDs and $100 for the appropiate books you have a Full Training Course from Short to Long Term Trading for under $500 , would keep anyone busy for a year.

Chears


----------



## coyotte

Barney :

I hope you did not close a position because a STOP had been breached during the course of trading ?

A STOP is only TRIGGERED  if the CLOSE breaches the STOP  , then regardless the position should be closed the following day .


Cheers


----------



## barney

coyotte said:
			
		

> Barney :
> 
> I hope you did not close a position because a STOP had been breached during the course of trading ?
> 
> A STOP is only TRIGGERED  if the CLOSE breaches the STOP  , then regardless the position should be closed the following day .
> 
> 
> Cheers





Hi Coyotte,  Re the previous post on OXR......... I have had a look at your rundown on it and did "learn" from it..............Seems a nice "repetitive" chart to follow..............I do like your idea of becoming proficient at one "slice" of the market (particularly at my learning stage)....makes good sense ( I still like the in depth stuff that Tech and Mag talk about as well cause it keeps the brain working...........be a while  b4 I'm up to speed with it all though!)

Re the "stop " on AWE......I had short sold it on day 1.....Had to work next morning so I set a "stop- loss" at a certain  price (CFD transaction, but I set the "buy" order at "their quote" instead of "market" which meant (I did not realise when I set it!!) it "bought" at 4 cents higher than my "set" price on open, so  I "stuffed" that up in two ways............ New to CFD's, so am only "dabbling" in small amounts atm till I sort it out...............Thanks for your help, Barney.


----------



## Magdoran

barney said:
			
		

> Hi guys, (Been out working...late reply!)  Thanks Mag thanks Tech and thanks Lesm, for the info/advice/support etc.............Its funny, but I feel like I am getting a "handle" on some of what you guys speak........... I know I am still a "KISS" kinda guy (thank you Coyotte) and I have learned a lot from so many others (too many to mention, but you know who you are), but the concepts of understanding  are increasing!!  The "market" is a big "washing machine" of business............Good companies do well and "bad companies" we try and steer clear of  (the band was good but!!).... We try and invest in the good Co.'s when they are having a short term downslide but showing signs of recovery, (or "short" them when they are achieving above future expectations) (simple explanation, but thats me!)
> 
> So from what you say Mag, the more we can understand the "workings" of the market in general, the more chance we have of jumping on a "trend" The "vibrations" are trends within trends so to speak!?, but the overall trend is the most important....If the vibrations take the trend off the apparent path for a short time, we don't need to be concerned???.......................Can I ask you guys, who obviously have great deal of confidence in your trading choices.............do you only set "wide" stop losses on your trades cause you respect that the "vibrations" may "set off" an uneeded early exit???  ,or do you still accept that the "vibrations" may stop you out? (and maybe just buy in again at a lower level...hopefully?)..............Just on vibrations this last week for eg. ..........I have "shorted" ROC (not a lot of shares but just testing the water so to speak)...........My perception was that Oil was going to drop a little further (based on the current chart/news/vibe etc), Now I understand thAT this could quite easily reverse, but I was backing the "trend", and if it goes against me I can wear that, cause I think my logic is sound??? I've kinda lost what I was trying to say/ask, but basically, if you assess the market logically, and apply sound money management, overall you should do OK??...........and if not ...........then find a logical reason why it went against you and "learn"  from that .................Does that sound sensible??.....any advice ????..........Cheers, Barney.



Barney,


Forget even thinking about vibration theory at this point, it will only confuse you – it is highly unorthodox, and in the wide scheme of things very obscure (despite the fact I think it works and use it to trade is a choice I have made based on refining my T/A approach over a number of years, and under the mentoring of some very advanced players – you need to find your own way first).

Unfortunately in the process of this thread ranging into involved T/A discussions, I was trying to describe the charts I put up from the discussion with Lesm.  Apologies, this stuff really isn’t for beginners at all, and it is highly controversial.  In T/A, my “magpie” style is very unorthodox, and heavily customised to my personal preferences, and definitely a minority perspective (my straight charting style is more mainstream, and the Elliott Wave component is pretty much orthodox Prechter and Frost  - although even this is not in the majority in technical analysis circles).

You really need a solid understanding of basic T/A concepts first.  That’s why I’m suggesting that you consider studying the range of books listed in the previous posts.

Look at the whole gamut of styles, Lesm is an outstanding chartist, Coyotte for example is a Guppy/Wilson practitioner, tech/a is one of the foremost long term system traders, wavepicker is a an Elliot Wave practitioner, Wayne is a consummate options trader, Ducati is a gifted Fundamental analyst for example.  There are others of course.  All of us have developed a style that we feel comfortable with.  Each has wisdom you may choose to draw from.

The concepts that are of use to you is about trying to work out what the main trend is, and realising that in a bullish trend you get “pull backs” – counter trends.  The idea is to buy on the pull backs.  Same with bear trends.  Sell on the bullish counter trends.  Sounds easy.  It isn’t.  

Also, don’t forget that there are players out there that deliberately try to run stops.  For instance they may push the price down by shorting the market, and do so until there is a big buy order at a level they are satisfied with, and close out their short position.  They then go long, and push the price up, hoping to force those with short positions to cover.  Then they sell as the short covering intensifies and the buyers get greedy…

This can be in any time frame, and it is like a huge game of chess as conflicting agendas and strategies play out in the market.

By understanding “trends” and how stocks etc pull back, you can learn how to minimise the situation Great Pig posted on recently where he sold right at the end of a counter trend, only to see the underlying fly up well into the original direction he thought it would go.  A common experience for many, and one you need to understand the dynamics of.  Even with this understanding, you can still get caught out by the stop running tactics.  But if you understand how this works, you stand a better chance of avoiding getting stopped out, and can actually profit from it…


Regards


Magdoran


----------



## It's Snake Pliskin

Barney how about you reveal what you do now and the helpful can state their opinions on it  to point you in the right direction. 

Regards
Snake


----------



## barney

Hi Mag,  Don't worry, I certainly won't try to trade using the "vibration" theory!!..........Just trying to keep it simple atm, with a passing interest in the "deep" stuff

PS So much for my theory on ROC dropping with the oil price.........any slant on that??.........I'm in that position of "should I "buy" out my short position or wait to see if the sp/Oil continues to drop further?............more dilemmas....really thought it would drop today after oil took another dive in US last friday  Cheers


----------



## coyotte

ROC

Notice the high Vol Sell off on thursday --- warning for SHORTS
If ROC -- CLOSES above 3.50 -- above C/B  --- I would close tomorrow

$3.50 also appears a  to be the resistance level at this point in time.


Just how I would Play it ---- you must make your own judgement !


Cheers


----------



## barney

Snake Pliskin said:
			
		

> Barney how about you reveal what you do now and the helpful can state their opinions on it  to point you in the right direction.
> 
> Regards
> Snake




Thanks Snake,  Atm I confess to not having a definite trading plan (still working on what works for me if that makes sense)

What I might do is post in "steps" as to where I'm at because to go through everything would take too long at one go (and I'm a slow typer!!  

(Bearing in mind I prefer short to medium term trading over long term investing...thats just my nature) .....My first step) Finding suitable  stock!! .........This can be difficult at times!... things I look for (if I'm buying)......quality Co.'s which have been in a downtrend, but showing signs of reversal........Check things like analysts reports; logical reasons why the stock has been down (eg general market sentiment for that sector etc.) Profit reports (not that I understand them that well...........that might be an interesting point that could be brought up.........the most significant things to look for in a Co's Annual/half yearly etc. report ....obviously large(r)/small(er) than expected profits....  but are there other important things to look for?)........
Anyway if the Co. shapes up as a possibility, then I like the chart to "reassure/confirm" my judgement.  Chart wise (and I'm finding the charts, when coupled with sound judgement, seem to give "predictable" trends. The indicators I am finding most useful so far are Stochastic (look for both the %Kand%D showing uptrend from oversold level............... The Directional Movement System... any strong move by either the positive or negative seems to be reliable.......The MACD + histogram...any "postive" movement/divergance is useful to back up other indicators. Also like the Bollinger curves (eg  "blowing out"higher on a general uptrend seems to be a  good buy signal)  Also check the rate of change on price and new one today..the positive volume index...

Now what happens after I think I might be on to something and I put my money (whats left of it) into the stock, it then proceeds to do the exact opposite of what I thought    (well not all the time!!) and that would lead me to stage 2.............dealing with a stock open position.............(I'll wait for any comments to this point cause I'm probably boring everyone! PS For a short sell most of the above would obviously be the opposite attack)

PPS. Re ROC, (I agree with Coyotte after looking at the chart tonight) If the price of oil goes up overnight my short sell on ROC looks very shakey!  ...fingers crossed,......... although the short term oil price looks/looked? like it could drop some more, any comments appreciated,   Barney.


----------



## Magdoran

Ok, even though this is in the beginners area, I thought I’d illustrate some T/A in the ongoing example, in the Crude oil estimation with the 24th as a significant time point.

This is showing up in the pattern as potential support in time.  If there was a second half of a short position, it should have been exited overnight.  Not time to go long unless you’re a high risk player in my view, but a contrarian style may embrace this as the time.  

Playing the short term high exposure game here long in my view is highly risky in capitulation moves, the underlying can spike down very deeply, and if you’re trading CFDs, clean out your account - unless you have very deep pockets, or trade very small positions.

This is where it gets interesting.  We have a very fast move down from the major high.  The pattern in the daily is bearish, but the pattern in the weekly is bullish.  Time for great care.

The counter trend rally from here will give some clues about what might happen.  I would expect a 1-4 day counter trend up.  If this is all there is overnight, and it continues bearishly, this is very bearish.  The weaker the bullish response, the higher the probability of a capitulation move down – essentially a very fast high momentum panic move.

However even if we get a strong bullish drive up, this can still turn and should retest the current low.  To slow the move down, or see a bullish resumption, the longer a counter trend lasts the better for the bulls, but not necessarily, the nature of the pattern has a bearing on this too.  Certain patterns are bearish, so time alone has to be in context with the pattern.

A higher low to last night's low could pan out in a variety of ways:
•	An Elliott styled “ABC”pattern (McLaren “two thrust”), and resume bearishly.
•	Consolidate and go sideways around this level (accumulation/distribution depending on the pattern).
•	Rally and resume bullishly with higher lows.

So, the pattern after a higher low would give clues about what Crude Oil will do if we get one.

Also, using the cycle theory, the next key increment is 30th October.  Depending on the immediate pattern out of last night's bar, if crude gives a bullish signal, this would be the time point to exit at least half the position.  If a bearish continuation, this would be a significant time point.  If consolidating, this becomes a time point of note based on the pattern. 

Please not though this is only being used as an example for illustration, it is not a recommendation to trade.


Regards


Magdoran


----------



## tech/a

Moggie I just wish to clarify the thinking behind this and looking at it from a practical trading point of view I will bring up points as we go along.Thanks for the example.



			
				Magdoran said:
			
		

> in the Crude oil estimation with the 24th as a significant time point.




This I believe is yet to be proven as significant and at this time you would have halved any short position but not yet taken a long.



> This is showing up in the pattern as potential support in time.  If there was a second half of a short position, it should have been exited overnight.  Not time to go long unless you’re a high risk player in my view, but a contrarian style may embrace this as the time.




As above. 



> Playing the short term high exposure game here long in my view is highly risky in capitulation moves, the underlying can spike down very deeply, and if you’re trading CFDs, clean out your account - unless you have very deep pockets, or trade very small positions.




So basically no position.



> This is where it gets interesting.  We have a very fast move down from the major high.  The pattern in the daily is bearish, but the pattern in the weekly is bullish.  Time for great care.
> 
> The counter trend rally from here will give some clues about what might happen.  I would expect a 1-4 day counter trend up.  If this is all there is overnight, and it continues bearishly, this is very bearish.  The weaker the bullish response, the higher the probability of a capitulation move down – essentially a very fast high momentum panic move.
> 
> However even if we get a strong bullish drive up, this can still turn and should retest the current low.  To slow the move down, or see a bullish resumption, the longer a counter trend lasts the better for the bulls, but not necessarily, the nature of the pattern has a bearing on this too.  Certain patterns are bearish, so time alone has to be in context with the pattern.




So again not in a position from analysis to do anything.



> A higher low to last night's low could pan out in a variety of ways:
> •	An Elliott styled “ABC”pattern (McLaren “two thrust”), and resume bearishly.
> •	Consolidate and go sideways around this level (accumulation/distribution depending on the pattern).
> •	Rally and resume bullishly with higher lows.




I think you have covered every possiblity so again the analysis has just alerted us to the fact that this could be a point in which a further set up will occure which should see a trading opportunity arise---what that is yet will take time to develope.



> So, the pattern after a higher low would give clues about what Crude Oil will do if we get one.




As above.



> Also, using the cycle theory, the next key increment is 30th October.  Depending on the immediate pattern out of last night's bar, if crude gives a bullish signal, this would be the time point to exit at least half the position.  If a bearish continuation, this would be a significant time point.  If consolidating, this becomes a time point of note based on the pattern.




So depending on what developes from the next few days which will give us a trading opportunity (If it doesnt consolidate) decisions about that trade taken should be addressed on 30/10 



> Please not though this is only being used as an example for illustration, it is not a recommendation to trade.




I dont see a trade yet but know what you mean.


Is this a fair assesment?


----------



## Sean K

barney said:
			
		

> PPS. Re ROC, (I agree with Coyotte after looking at the chart tonight) If the price of oil goes up overnight my short sell on ROC looks very shakey!  ...fingers crossed,......... although the short term oil price looks/looked? like it could drop some more, any comments appreciated,   Barney.




Well Barney, my    is that ROC is tracking oil to some extent and will find support at this level as oil has. It's clear on the charts when you correspond the support and resistance lines. 

ROC support around $3.20 at the same time oil support at $60.00. On the up, resistance at $3.75 and $4.15 which will correspond with oil at $68.00 and $72.00. Approximately....IMHO


----------



## RichKid

*Moderator's Note: 
Ladies and gentlemen, if you could keep closer to the topic in certain posts it would be great, it's good to illustrate the theory discussed with real examples but if it becomes too closely related to a stock it may be best to post in the thread for that particular stock. Thought I'd mention it before things go off on a tangent as this is quite a big thread as it is- thanks!*


----------



## tech/a

Rich.
I personally think the exercise is relevent to "Improving Chart Analysis".

Crude has been selected but could have been anything.
Both Moggie and Kennas are using examples which are correlated.

Pretty hard to look at tech analysis ideas without the chart.

Actually most times I see charts where you cant see the price action for analysis!!! hahahaha.


----------



## Sean K

RichKid said:
			
		

> *Moderator's Note:
> Ladies and gentlemen, if you could keep closer to the topic in certain posts it would be great, it's good to illustrate the theory discussed with real examples but if it becomes too closely related to a stock it may be best to post in the thread for that particular stock. Thought I'd mention it before things go off on a tangent as this is quite a big thread as it is- thanks!*




Sorry RK. I'm not interested in the actual oil price or ROC, just wanted to display some chart analysis with support and resistance lines to make it relevant. I thought it interesting that this basic analysis fits in with Mags more complex vibrating ones.


----------



## Duckman#72

barney said:
			
		

> I confess to not having a definite trading plan (still working on what works for me if that makes sense)
> 
> What I might do is post in "steps" as to where I'm at because to go through everything would take too long at one go (and I'm a slow typer!!
> 
> (Bearing in mind I prefer short to medium term trading over long term investing...thats just my nature) .....My first step) Finding suitable  stock!! .........This can be difficult at times!... things I look for (if I'm buying)......quality Co.'s which have been in a downtrend, but showing signs of reversal........Check things like analysts reports; logical reasons why the stock has been down (eg general market sentiment for that sector etc.) Profit reports (not that I understand them that well...........that might be an interesting point that could be brought up.........the most significant things to look for in a Co's Annual/half yearly etc. report ....obviously large(r)/small(er) than expected profits....  but are there other important things to look for?)........
> Anyway if the Co. shapes up as a possibility, then I like the chart to "reassure/confirm" my judgement.  Chart wise (and I'm finding the charts, when coupled with sound judgement, seem to give "predictable" trends. The indicators I am finding most useful so far are Stochastic (look for both the %Kand%D showing uptrend from oversold level............... The Directional Movement System... any strong move by either the positive or negative seems to be reliable.......The MACD + histogram...any "postive" movement/divergance is useful to back up other indicators. Also like the Bollinger curves (eg  "blowing out"higher on a general uptrend seems to be a  good buy signal)  Also check the rate of change on price and new one today..the positive volume index...
> 
> Now what happens after I think I might be on to something and I put my money (whats left of it) into the stock, it then proceeds to do the exact opposite of what I thought    (well not all the time!!) and that would lead me to stage 2.............dealing with a stock open position.............(I'll wait for any comments to this point cause I'm probably boring everyone! PS For a short sell most of the above would obviously be the opposite attack)




I know exactly what you mean Barney. I go through the same process with mixed success. I am envious of those that appear to have captured a "tried and true" system and follow it exactly. I look at everything you have mentioned and more but I can't honestly call it a plan - more a "rough guide". The more I learn and the longer I stay on the ASF the more nebulous my "plan" appears to become. 

I bought Market Analyst 6 months back and while I use it every second day I can't help but feel that I am not using it anywhere near its full capabilities. Particularly the scanning processes. I am just looking up random stock charts at present - like Barney has said. 

I look at bits and pieces of F/A, bits and pieces of T/A. I use a buy and hold strategy for my superannuation fund, short term trading strategy (incorporating Rozella's dividend plan) in my own name. I'll tend have a chop at any share in any sector from BHP right through to penny dreadful tech stocks. It's like the more I learn the more I want to do and try out and incorporate. It seems that I'm trying to become a jack of all trades and master of none. I really get dispondent sometimes that althought I know a lot more than I did a year ago it doesn't seem to be corresponding to my portfolio results.   

Maybe I need to have 3 different trading plans. One for my superannuation fund. One for my dividend trading plan and one for my short term trades.  
I don't know what this post can offer except to say to Barney that there are others out there that feel the same way and that not everyone on the ASF has got there act together - even if it sometimes feels like it from reading the posts. Probably an appropriate moment to thank Snake, Tech, Kennas and others for sharing and persisting in trying to assist the plebs like me. 

Duckman


----------



## Magdoran

tech/a said:
			
		

> Moggie I just wish to clarify the thinking behind this and looking at it from a practical trading point of view I will bring up points as we go along.Thanks for the example.
> 
> 
> 
> This I believe is yet to be proven as significant and at this time you would have halved any short position but not yet taken a long.
> 
> 
> 
> As above.
> 
> 
> 
> So basically no position.
> 
> 
> 
> So again not in a position from analysis to do anything.
> 
> 
> 
> I think you have covered every possiblity so again the analysis has just alerted us to the fact that this could be a point in which a further set up will occure which should see a trading opportunity arise---what that is yet will take time to develope.
> 
> 
> 
> As above.
> 
> 
> 
> So depending on what developes from the next few days which will give us a trading opportunity (If it doesnt consolidate) decisions about that trade taken should be addressed on 30/10
> 
> 
> 
> I dont see a trade yet but know what you mean.
> 
> 
> Is this a fair assesment?



Hi Father Daffy,


Aha, so my nickname is Moggie!  I wondered who you were talking to before.  Good name, because cats catch and eat ducks! Miowwww!

Ok, the original technical work locating the vibration was done around the 11th of August and the confirmation came in on Monday 21st of August (using Brent Crude primarily because the pattern was clearer given that it was trading when light Crude wasn’t while NYMEX was closed).

The nominal short entry date was set for 22-24 of August based on a 2-4 counter trend entry from the 18th August low.  Stop loss would have been set at a close above $75.15 (there is a reason for how this is arrived at that is proprietary). (Note prices are for Brent not light crude – they do correlate, but are different).

The partial (half) profit exit was set for 6th September +/- 1 trading day, and at the target price of $66.23 (Brent).  Miscellaneous partial (or full if required) profit exit was pattern based (essentially a range of defined false break patterns – mainly McLaren based).

Once the underlying traded to the partial exit, the way it traded beyond this time/price point was to determine what action would be taken.

If the underlying continued bearishly, then the time factor was to be the ascendant method of determining risk to the bearish trend in the daily chart, not price.  The target date was 24 of September.  I did not have a viable price target (although the chart I posted with the Light crude increments would have been the method I would have used, but the time factor was critical based on my interpretation of the time cycle).

Failure criteria for the remaining half position of the short: a low followed by a higher low. Stop for the second half triggered by a close above $65.82 (Brent).

If the underlying had bounced on the 6th September +/- 1 trading day, then the failure criteria for the remaining half of the short would have been:  a confirmed higher low after 6th September, failure to trend down after 4 trading days, close above $70.81 (Brent).

If a higher low had come in after 6th September, this would have generated a long entry, but with tight stops and tight partial exits, or looked for a long on the next counter trend pull back based on the pattern.

If the underlying had bounced +/- 1 trading day from the 6th September, and a counter trend failed, and the bearish drive continued, this would have generated an entry for another short based on the pattern, confirmed by a close below the 6th +/- 1 trading day low. Same time target would apply.

The 24th September time is a key date in the cycle I have identified.  If my estimation is correct (which is always in doubt until the event has played out), then the bearish drive in the daily chart is at risk, hence at least half the position should be exited.  Since this would have already happened near the 6th September, then the second half would be exited.

If the underlying continues bearishly, then a re-entry of the short is possible under specific counter trend criteria (again core McLaren style).

Also, you can’t bemoan exiting half at time/price points where the trade is at risk.  If you get it wrong, then you can lose on what should have been a profitable trade.  Exiting half protects against losses in this way, and allows full confidence in allowing the second half to trade out if it is a winner.  This is how the big winners are allowed to trade, and the losers are often still profitable.

In addition you can’t bemoan only making 60-80% (or less) of a drive if you can keep the losers small.  I’m a great believer that top and bottom picking is high risk trading (another “McLarenism”).  The trick is to pick up the lions share if possible.

So as of today, yes, no position now, since the trend is at risk.  Waiting for the next development.  But if the 24th is a key date, this tends to suggest that the cycle is correct, and means that the October 30th date may be a very significant date, depending on how the pattern unfolds over the next few days.  

This may lead to a trading opportunity which is driven by an array of inputs that can’t be covered yet until the event unfolds over the next few days.  How it trades will tell us a lot about potential opportunities.

There are a range of trades though on the table if you are a more aggressive trader using this style. I’m a lot more conservative, preferring confirmation, and defined areas with a high probability (my definition).  

If you were a contrarian, you could go long here, and assume a rally into 30th of October, and set failure criteria (I wouldn’t recommend this, but there are players I know who do this kind of trading – successfully using their kind of positive expectancy, because when they get this kind of trade right, they usually really clean up).

If you were convinced the downside was still on, you could either add to the short now, or wait for a 1-4 day counter trend to do so, and aim for sub $50 price targets (see the 75% target on the chart above – this is a logical extension down at $47.90 – Light Crude price, if your market view was for a capitulation move down).

But this is all based on personal style and interpretation.  I’m outlining what I’d do.  Talk to contrarian thinkers using this style of trading, or more aggressive practitioners, and you may get different trading plans.  Some don’t use partial exits.  Some enter on the key date...  Horses for courses.

But the options of money management and trading plan implementation is as varied in this kind of style as it is in any other approach.  A lot depends also on the instrument you are using, position size, length of trade (you can use this approach in weekly charts for instance – same concept, longer timeframe).

What I’m trying to illustrate is the foundations of the T/A perspective, and to give an example of how a trading plan might be constructed around this information.  Hope this has been of interest...


Regards


Magdoran


----------



## RichKid

Hey guys

In relation to my last post about sticking to topic, things are fine as is as your recent replies suggest you understand, I was concerned the thread may go off on a tangent, as long as we can integrate the current topic with the charts as we have done so far it's fine, just be conscious of the issue that's all, this type of general topic can easily get sidetracked. 

There is no reason to avoid carrying on a specific charting method on a specific stock in the relevant stock thread; if it's posted here to compare that method to other methods discussed herein then by all means keep it in this thread, eg oil or the ROC comparison- maybe several types of analysis can be applied to the same stock/market and we can see where the similiarities and disparities occur.

Keep the good stuff going....


----------



## tech/a

Moggie.

From a purely bar analysis opportunity given the 24th and the obvious reversal bar I would have thought long at the high of the reversal bar--stopat the base of the reversal bar and---short the reverse.

1/2 half the position first followed by the other half after the position covers cost of loss if position reverses.

Dont get me wrong I see that your analysis is a "Work in progress" and positions are opened and closed dependant of confirmation or dismisal.

What I'm seeing is no different to Radges Prove,disprove,prove,disprove analogy of Analysis (His being Elliot in the analogy).

The difference between you and me is I analyse the results over time of the prove disprove of a set of criteria.
Have you records of multiple trades both winners and losers.
Even better records of failures that you never take?


----------



## tech/a

Duckman



> I look at bits and pieces of F/A, bits and pieces of T/A. I use a buy and hold strategy for my superannuation fund, short term trading strategy (incorporating Rozella's dividend plan) in my own name. I'll tend have a chop at any share in any sector from BHP right through to penny dreadful tech stocks. It's like the more I learn the more I want to do and try out and incorporate. It seems that I'm trying to become a jack of all trades and master of none. I really get dispondent sometimes that althought I know a lot more than I did a year ago it doesn't seem to be corresponding to my portfolio results.




You'll be happy to know Ive been there. Most of us have or are there. Some never have the guts to try!

Try to become an expert in one form of trading at a time.As your super is in longterm I would suggest longterm. It is by far the easiest to master. (well thats what I found).
I know I go on a lot about having a "Blueprint" but for newbies I feel its a must .Without one you'll zig in and zag out without EVER knowing if the way you trade is longterm profitable regardless of timeframe traded.

If its any help most at one time or another suffer from analysis paralysis.
Getting it wrong turns us into a manic analyst analysing WHY.

I find the best technical analysis to be the simplest.
You couldnt call my system formulas anything but BASIC.

My short trem discretionary "Fun" trading is pretty well bar chart analysis.
I do however have some nifty tools which find me "trending" breakouts 10 mins into trading each day.Some are outstanding,some I get on and others I miss.

But in these 2 areas I'm as proficient as I need be,I'm returning waht I would expect and at times better than expected.Always looking for improvement but no longer searching for "How is it done".

*Hints.*

(1) Look for stocks which are over $ and under $5 for best opportunity at doubling in price.(Good start for a universe to trade).
(2) Dont trade without a stop and if short term make it tight as you'll get it wrong more often than right and for gods sake when its triggered *SELLLLLLL.*
(3) Record EVERY TRADE so you can build up an expectancy to how your trading. Risk/reward (How much is your average loss IE stopped out V your average win--exit?) What are your strings of losses? 5 1% losses and 1 10% win is fine!
(4) Be *RUTHLESSLY DECISIVE*,make that decision NOW,right OR wrong,buy or sell.
(5) Short/term trading---if its not* OBVIOUS * and screaming *BUY BUY BUY*,then its not for you.
(6) If you think buying enthusiasms starting to fail---YOUR NOT ALONE!
Take your profit and RUN.
(7) HOPE is not a stratagy its a liability!
(8) If you miss it there will ALWAYS be another trade. If you dont trade tommorow or next week,there will be another opportunity--dont chase it!

Finally--Its not the analysis or winning trades that will make you wealthy *its the way you use your and other peoples money!*Etch this into your grey matter and UNDERSTAND it.Research how others do it,it is THE factor in wealth creation.

See anything about indicators/oscillators or analysis of any kind above???
Ponder then on WHY!


----------



## lesm

Hi Magdoran,

Have been following your posts and tech/a's comments.

Appreciate you taking the time on explaining your approach in more detail.

The only point I would pick up on that tech/a made previously, is the following:



> This I believe is *yet to be proven as significant * and at this time you would have halved any short position but not yet taken a long.




On what basis do you determine that it is significant?

I have gone back over the three charts on Brent provided so far and with your descriptions it has all fallen into place. Similar to tech/a, I don't see a lot of difference from other approaches.

It would appear that the Gannalyst settings and the timeframes/cycles you are using enables the projection to be made based on the point of intersection with a 'key date" hence, the projected price is determined. (Purely an assumption on my part, but if you determine the slope of the line and extend it beyond the known price information then you are in a position to forecast/predict a potential price and possible target date). The second parallel line, using an offset from the first, would enable a second projected price and date to be determined.

I could be up a tree here, but just making sure that I am understanding what I am seeing on the charts. Again, there other approaches that use similar techniques.

Still intrigued by the term 'key date', but this may be one of the Gann elements.

I assume that the stop loss is either a derived or calculated value depending on the proprietary element of your system. Respect your IP, a yes or no would be ok, no need to say more than that.

Cheers,
Les.

PS: He could have called you maggie for magpie. At least you can eat ducks, but not moggies or maggies.


----------



## Magdoran

tech/a said:
			
		

> Moggie.
> 
> From a purely bar analysis opportunity given the 24th and the obvious reversal bar I would have thought long at the high of the reversal bar--stopat the base of the reversal bar and---short the reverse.
> 
> 1/2 half the position first followed by the other half after the position covers cost of loss if position reverses.
> 
> Dont get me wrong I see that your analysis is a "Work in progress" and positions are opened and closed dependant of confirmation or dismisal.
> 
> What I'm seeing is no different to Radges Prove,disprove,prove,disprove analogy of Analysis (His being Elliot in the analogy).
> 
> The difference between you and me is I analyse the results over time of the prove disprove of a set of criteria.
> Have you records of multiple trades both winners and losers.
> Even better records of failures that you never take?





			
				tech/a said:
			
		

> From a purely bar analysis opportunity given the 24th and the obvious reversal bar I would have thought long at the high of the reversal bar--stopat the base of the reversal bar and---short the reverse.
> 
> 1/2 half the position first followed by the other half after the position covers cost of loss if position reverses.



Yes, that’s exactly what a counter trend play is, and do it all the time.  If you’re really good with the time points, and you’re really aggressive, you may even look to go long at the open.

I was trying to illustrate trading with the trend rather than get into the nity gritty of counter trend trading, which is an art in itself, and contrarian in its nature.  Some people find it hard enough just to get their head around the short side of the market...



			
				tech/a said:
			
		

> What I'm seeing is no different to Radges Prove,disprove,prove,disprove analogy of Analysis (His being Elliot in the analogy).



Absolutely, it’s a solid approach which works.  Were you expecting something radically different?  I’d draw the analogy of a chess game, in many circumstances there are a finite set of actions available, yes there are added elements in the market, but many robust approaches will share common elements.



			
				tech/a said:
			
		

> The difference between you and me is I analyse the results over time of the prove disprove of a set of criteria.



No, I don’t agree here, I definitely do consider the criteria, and am still working through the collating process connected with this.  I literally look at charts all day (and night) analysing both real time charts, and historical charts, looking at the entry and exit criteria in secular bull, bear and consolidating markets. 

But I often do this manually deliberately rather than set scan criteria since I actually store the charts I’ve looked at in my head.  Sure, I use a range of scanners for quick reviews of overnight trading, but the real learning comes from tracking an underlying for a few years, like oil for instance and other commodities and indexes, and currencies for that matter.



			
				tech/a said:
			
		

> Have you records of multiple trades both winners and losers.
> Even better records of failures that you never take?



I recently had to buy a bigger back up unit and upgraded the old external hard disk to a storage role since my library of information out grew my two SATA 120 gig drives.

So yes, I have lots of records in an ever growing file.  The problem is to figure out an effective way to analyse it all better than I’m doing at the moment.  That’s partly why it will probably blow my 3 year target into something more like 4-5 years to satisfy my own high bar for excellence.

Believe me, when I’m done it’ll probably be just in time for the next iteration!  Oh what fun!  Probably why I end up posting here so I don’t go nuts! (aside from phone conversations and emails!).

Magsy!


----------



## Magdoran

lesm said:
			
		

> Hi Magdoran,
> 
> Have been following your posts and tech/a's comments.
> 
> Appreciate you taking the time on explaining your approach in more detail.
> 
> The only point I would pick up on that tech/a made previously, is the following:
> 
> 
> 
> On what basis do you determine that it is significant?
> 
> I have gone back over the three charts on Brent provided so far and with your descriptions it has all fallen into place. Similar to tech/a, I don't see a lot of difference from other approaches.
> 
> It would appear that the Gannalyst settings and the timeframes/cycles you are using enables the projection to be made based on the point of intersection with a 'key date" hence, the projected price is determined. (Purely an assumption on my part, but if you determine the slope of the line and extend it beyond the known price information then you are in a position to forecast/predict a potential price and possible target date). The second parallel line, using an offset from the first, would enable a second projected price and date to be determined.
> 
> I could be up a tree here, but just making sure that I am understanding what I am seeing on the charts. Again, there other approaches that use similar techniques.
> 
> Still intrigued by the term 'key date', but this may be one of the Gann elements.
> 
> I assume that the stop loss is either a derived or calculated value depending on the proprietary element of your system. Respect your IP, a yes or no would be ok, no need to say more than that.
> 
> Cheers,
> Les.
> 
> PS: He could have called you maggie for magpie. At least you can eat ducks, but not moggies or maggies.



Hello Les,


How are you?  Thanks for the POP document.  Still looking through this, it’s been a busy couple of days...



			
				lesm said:
			
		

> On what basis do you determine that it is significant?




It’s based on a combination of time cycle theories and my interpretation of them in this case.  This date if my interpretation is correct is either the termination of a cycle, or a key harmonic in a longer cycle (maybe you would call it an inflection point).  

But the price action/pitch is important too, and in the case of fast moves, time can sometimes become irrelevant because the momentum is so great.  In this case it may just continue on.



			
				lesm said:
			
		

> I have gone back over the three charts on Brent provided so far and with your descriptions it has all fallen into place. Similar to tech/a, I don't see a lot of difference from other approaches.




Absolutely, were you expecting some mystical incantations in Gannese? Hahahaha!  No, like everyone keeps saying, I keep it simple.  But I’ve added some dimensions that are not obvious even from the charts you are looking at.  Please, if you can absorb this style and replicate it with ease, please do.



			
				lesm said:
			
		

> It would appear that the Gannalyst settings and the timeframes/cycles you are using enables the projection to be made based on the point of intersection with a 'key date" hence, the projected price is determined.




Yes, true overall, but the “key date” (do you mean origin date?) which is my term trying to emphasis that some harmonics are important than others in a cycle (50% in some cycles for instance and in price can be very important).

If my pattern interpretation is sufficient, then the 24th is a significant date in the cycle I have perceived.  The price is another matter.  In this case the square is not working harmonically in price, but is in time.  Hence in this case I’d trade more based on time than have a price target.

The fact that the underlying counter trended bullishly on this day, and it may well be an important low for a specific time is consistent with the projection.

To utilise this approach you need to accept that markets have discernable cycles and subscribe to vibration theories.  If you don’t, then a logical position would be to say that the apparent correlation is purely coincidental, and that the whole process is a self fulfilling prophecy.  I accept that this may be true, hence I’m researching it.  

Currently, my best shot guess is that it is not coincidence that drives this.  Having seen some masters at work, and having hit returns I would never have believed possible, I tend to be persuaded to continue in this direction while it works, and continue to push the boundaries refining the approach. 



			
				lesm said:
			
		

> (Purely an assumption on my part, but if you determine the slope of the line and extend it beyond the known price information then you are in a position to forecast/predict a potential price and possible target date). The second parallel line, using an offset from the first, would enable a second projected price and date to be determined.




The time angles in the square (diagonal lines) are like guideline channels, and help to throw the pattern into sharp relief.  Some of the angles have relevance to specific patterns, and can be useful in these circumstances.

The projection can be time or price based, or both, and in part are dictated by the pattern of trend.  The parallel line was just something I manually marked the chart with based on price projections on another chart to highlight the time and price target for the people I sent the chart around to. 



			
				lesm said:
			
		

> I could be up a tree here, but just making sure that I am understanding what I am seeing on the charts. Again, there other approaches that use similar techniques.




Sure.  This isn’t rocket science.  The basic building blocks of T/A usually are similar.  But this is just one simple example in a post trying my best not to complicate it so the core concepts are easily understood.  Also, the range of options I would argue are limited, so many different approaches will often share a lot of common ground.  The time aspect though I have seen in a minority of approaches.



			
				lesm said:
			
		

> Still intrigued by the term 'key date', but this may be one of the Gann elements.




Sorry, that’s me trying to put concepts into English, and failing.  The 24th is as above, the potential termination of a cycle (if you accept the theory), or a key harmonic in another cycle.  Essentially where you would expect a lot of support to come in from a time perspective, but variable based on the pitch of the trend.



			
				lesm said:
			
		

> I assume that the stop loss is either a derived or calculated value depending on the proprietary element of your system. Respect your IP, a yes or no would be ok, no need to say more than that.




Stops have several inputs to select them, partly technical, partly money management, partly outsmarting the opposition, and an added component.



			
				lesm said:
			
		

> PS: He could have called you maggie for magpie. At least you can eat ducks, but not moggies or maggies.




Oh dear, does that mean we have to invite “Brother Duck” for dinner?

By the way Les, what was your user name on RC?


Regards


Maggie/Moggie/Magsy/Mags

P.S. Still mulling your epiphany. M


----------



## Duckman#72

tech/a said:
			
		

> Duckman
> 
> 
> Try to become an expert in one form of trading at a time.As your super is in longterm I would suggest longterm. It is by far the easiest to master. (well thats what I found).
> 
> See anything about indicators/oscillators or analysis of any kind above???
> Ponder then on WHY!




Thanks for the comments Tech - that's good advice. My trading strategies are all over the place and I do need to concentrate on improving my profitability one step at a time. Brings it home to hear someone else say it.

I appreciate your time

Duckman


----------



## It's Snake Pliskin

barney said:
			
		

> Thanks Snake,  Atm I confess to not having a definite trading plan (still working on what works for me if that makes sense)
> 
> What I might do is post in "steps" as to where I'm at because to go through everything would take too long at one go (and I'm a slow typer!!
> 
> (Bearing in mind I prefer short to medium term trading over long term investing...thats just my nature) .....My first step) Finding suitable  stock!! .........This can be difficult at times!... things I look for (if I'm buying)......quality Co.'s which have been in a downtrend, but showing signs of reversal........Check things like analysts reports; logical reasons why the stock has been down (eg general market sentiment for that sector etc.) Profit reports (not that I understand them that well...........that might be an interesting point that could be brought up.........the most significant things to look for in a Co's Annual/half yearly etc. report ....obviously large(r)/small(er) than expected profits....  but are there other important things to look for?)........
> Anyway if the Co. shapes up as a possibility, then I like the chart to "reassure/confirm" my judgement.  Chart wise (and I'm finding the charts, when coupled with sound judgement, seem to give "predictable" trends. The indicators I am finding most useful so far are Stochastic (look for both the %Kand%D showing uptrend from oversold level............... The Directional Movement System... any strong move by either the positive or negative seems to be reliable.......The MACD + histogram...any "postive" movement/divergance is useful to back up other indicators. Also like the Bollinger curves (eg  "blowing out"higher on a general uptrend seems to be a  good buy signal)  Also check the rate of change on price and new one today..the positive volume index...
> 
> Now what happens after I think I might be on to something and I put my money (whats left of it) into the stock, it then proceeds to do the exact opposite of what I thought    (well not all the time!!) and that would lead me to stage 2.............dealing with a stock open position.............(I'll wait for any comments to this point cause I'm probably boring everyone! PS For a short sell most of the above would obviously be the opposite attack)
> 
> PPS. Re ROC, (I agree with Coyotte after looking at the chart tonight) If the price of oil goes up overnight my short sell on ROC looks very shakey!  ...fingers crossed,......... although the short term oil price looks/looked? like it could drop some more, any comments appreciated,   Barney.




Barney, firstly READ Tech/A's reply to Duckman!

I don' look at fundamentals. I feel they are not a true repesentation, but I may be wrong.

The stochastic and MACD are too different indicators for different purposes of analysis - fancy lines with colours.

ROC is tanking man! Yesterday it rejected $3.50 (resistance) on higher volume and today closed on the low - not able to push above $3.50. 

Finally, why trade stocks that are too correlated to other price action - oil? Why not just trade commodities?

Mere opinion from Snake


----------



## lesm

Hi Magdoran,

Been busy myself a pile of work to do.



			
				Magdoran said:
			
		

> Absolutely, were you expecting some mystical incantations in Gannese? Hahahaha!



Hahahah!...no it's interesting to look at the pros and cons, as well as the similarities and differences between different approaches. Having three charts for the same code lets you see the forward progression at different points in time and gain a better understanding of the approach.

Did a bit of quick research to obtain a quick overview of some aspects of Gann over the last couple of days.



			
				Magdoran said:
			
		

> To utilise this approach you need to accept that markets have discernable cycles and subscribe to vibration theories.  If you don’t, then a logical position would be to say that the apparent correlation is purely coincidental, and that the whole process is a self fulfilling prophecy.  I accept that this may be true, hence I’m researching it.



You could also argue that in the context of the equity markets that there are also cycles within cycles, including the potential for contra-cycles.



			
				Magdoran said:
			
		

> Currently, my best shot guess is that it is not coincidence that drives this.  Having seen some masters at work, and having hit returns I would never have believed possible, I tend to be persuaded to continue in this direction while it works, and continue to push the boundaries refining the approach.



Each individual's potential is realised or limited by their inherent beliefs, views or experience. This also applies to trading.  Pushing boundaries and refining approaches helps us to improve our methods and understanding of what works or does not work in different or changing conditions. Sometimes we may find an interesting approach purely by accident.

Good luck with your efforts.



			
				Magodran said:
			
		

> The projection can be time or price based, or both, and in part are dictated by the pattern of trend.  The parallel line was just something I manually marked the chart with based on price projections on another chart to highlight the time and price target for the people I sent the chart around to.



Thanks for the clarification, always good to ask questions. Have seen parallel lines or channels used before in approaches related to forecasting potential movements.



			
				Magdoran said:
			
		

> Sure.  This isn’t rocket science.  The basic building blocks of T/A usually are similar.



Hahaha...certainly isn't rocket science. Agree, there is a common basis for a lot of T/A and then the different approaches start diverging off into their own little niches.



			
				Magdoran said:
			
		

> Sorry, that’s me trying to put concepts into English, and failing.



The joy of written language.....white boards are better.   



			
				Magdoran}... partly outsmarting the opposition....[/QUOTE said:
			
		

> Trying to develop and edge?
> 
> 
> 
> 
> Magdoran said:
> 
> 
> 
> 
> Oh dear, does that mean we have to invite “Brother Duck” for dinner?
> 
> 
> 
> 
> Canard l'Orange anyone?
> 
> 
> 
> 
> Magdoran said:
> 
> 
> 
> 
> By the way Les, what was your user name on RC?
> 
> Click to expand...
> 
> 
> lesm. I was on RC in the late 90's from memory, as well as SC. Only a couple of posts on RC at that time, re-registered late last year. A few on SC, then didn't have much to do with forums for a few years. Too busy work wise and doing my own thing. Don't really post a lot, but have become a bit more frequent of late.
> 
> I need to spend some more time reading and doing my own research, but it's good to exchange ideas or views at times.
> 
> 
> 
> 
> Magdoran said:
> 
> 
> 
> 
> P.S. Still mulling your epiphany. M
> 
> Click to expand...
> 
> 
> Have fun. It's a little disjointed and off the top of the head. I tend to think faster than I can write or type. Sometimes I need to slow down and review before I press the submit button.
> 
> Cheers,
> Les.
Click to expand...


----------



## barney

Snake Pliskin said:
			
		

> Barney, firstly READ Tech/A's reply to Duckman!
> 
> I don' look at fundamentals. I feel they are not a true repesentation, but I may be wrong.
> 
> The stochastic and MACD are too different indicators for different purposes of analysis - fancy lines with colours.
> 
> ROC is tanking man! Yesterday it rejected $3.50 (resistance) on higher volume and today closed on the low - not able to push above $3.50.
> 
> Finally, why trade stocks that are too correlated to other price action - oil? Why not just trade commodities?
> 
> Mere opinion from Snake





Thanks Snake, Did read Tech's response......appreciate what you are saying (PS I just read it twice more   

Hi Duckman, I know what you mean about the more you "learn" the harder it seems  to get it right..............I'm kinda hoping that eventually the "light bulb" will switch on and the mass of information will start to mesh together, rather than be isolated "pockets" of learning. 


Hints.

(1) Look for stocks which are over $ and under $5 for best opportunity at doubling in price.(Good start for a universe to trade).

Tech/Snake,  Re: 1) above, In simple terms, what initialy "draws" you to a stock...ie what "tells" you that this is the "right" stock to invest in??  

I assume that using charts as "indicators" is a good thing??, but from what you guys have been telling me (correct me if I'm wrong) its more about "seeing" what the market/stock is doing mainly through price action. Is this more obvious through "course of sales" data ie size of buys and sells or is even this unreliable?  

I notice Mag on another thread talks about how the "big players" (my words not his)  will "short" a stock down, then buy it up at the lower prices..........This obviously goes on a lot, so, is that what we are looking for when trading a stock (shorter term) ? ie A stock that is being "worked over" by smart money, and are there any obvious tell tale signs to go by other than the previous day/days price action.  

And I guess even if we do pick up on the right stock, chances are the smart money has moved on to the next stock??  So for a shorter term trader are there any specific intraday "signals" that you guys find reliable??

PS I'm not really asking about "day trading"........cause I reckon that is better left to the experts (and I dont have enough money to risk)..........more in relation to shorter term trading in "proven/quality" stocks. Any advice appreciated. Barney

PPS I've never traded commodoties......don't think I'd have enough capital to "buy in" hence looking for the "poor mans" way to trade the oil price.


----------



## Magdoran

barney said:
			
		

> Thanks Snake, Did read Tech's response......appreciate what you are saying (PS I just read it twice more
> 
> Hi Duckman, I know what you mean about the more you "learn" the harder it seems  to get it right..............I'm kinda hoping that eventually the "light bulb" will switch on and the mass of information will start to mesh together, rather than be isolated "pockets" of learning.
> 
> 
> Hints.
> 
> (1) Look for stocks which are over $ and under $5 for best opportunity at doubling in price.(Good start for a universe to trade).
> 
> Tech/Snake,  Re: 1) above, In simple terms, what initialy "draws" you to a stock...ie what "tells" you that this is the "right" stock to invest in??
> 
> I assume that using charts as "indicators" is a good thing??, but from what you guys have been telling me (correct me if I'm wrong) its more about "seeing" what the market/stock is doing mainly through price action. Is this more obvious through "course of sales" data ie size of buys and sells or is even this unreliable?
> 
> I notice Mag on another thread talks about how the "big players" (my words not his)  will "short" a stock down, then buy it up at the lower prices..........This obviously goes on a lot, so, is that what we are looking for when trading a stock (shorter term) ? ie A stock that is being "worked over" by smart money, and are there any obvious tell tale signs to go by other than the previous day/days price action.
> 
> And I guess even if we do pick up on the right stock, chances are the smart money has moved on to the next stock??  So for a shorter term trader are there any specific intraday "signals" that you guys find reliable??
> 
> PS I'm not really asking about "day trading"........cause I reckon that is better left to the experts (and I dont have enough money to risk)..........more in relation to shorter term trading in "proven/quality" stocks. Any advice appreciated. Barney
> 
> PPS I've never traded commodoties......don't think I'd have enough capital to "buy in" hence looking for the "poor mans" way to trade the oil price.



Hello barney,


How’s the strumming going? I presume you had a gig on Saturday?

barney, something has been puzzling me recently.  When I’ve read your trading based comments recently, there is an ambiguity that confuses me.  On one level you come across like you’re fairly new to T/A, and on another level you come across as if you have quite a lot of sophistication in the market.

For instance short selling stocks is quite unusual, many straight stock traders don’t have the ability to short stocks, and many just don’t understand it.  Yet here you are with a short position in ROC, yet you indicate you have limited resources.  Things must have greatly changed from the time I sought out retail brokers who will allow you to short stocks (the brokerage rates were highway robbery!).  Which broker are you with out of interest (if you don’t mind me asking)?  Ok, just thought I’d ask… (Suspect you have come from a more F/A oriented past, am I right?).

Now, a few comments about “broker recommendations”:  just think about who is putting this out, and what their bias might be.  If the broker is holding a stock that they want to get rid of, do you think it is likely they will issue a “sell” recommendation to the public?  Also, if they have a relationship with a firm, how likely is it that the broker will issue an adverse report?

When I look at broker reports, if I ever do now, it is either for amusement value and a good laugh, or to look for contrarian opportunities by looking at the prospect of doing the opposite to the “consensus”.  Of course this depends on a range of factors.

As for using stochastics and the MACD, just think about what these are reading, and their limitations.  In this kind of consolidating/range trading market with no real trend in the daily chart, the problem is for medium term traders, you can only really pick the swings in most stocks, unless you find the few that are trending – and there are some if you look for them.

The lagging nature of these indicators if they are set with too low an average is that you will get whipsawed in and out of positions if you are only using them to trade.  These work better in trending markets, and in the longer term.  The time frame you are trading/investing is highly relevant to the indicators and settings you select.  

Personally, I threw out things like stochastics and the MACD a long time ago, but that is my preference.  Sure they have their place, but I believe they can actually obscure the price action if you don’t use them the right way.  I do know of some cycle based traders that reset the displacement to use them in a kind of forecasting style, but you really need to know your stuff to do this.

Try looking at some charts with just the bars and volume.  Try to work out how the underlying is trending in both the daily and weekly charts (even go to the monthly occasionally to get a macro picture of what’s been going on).  Too many T/A people I know get wrapped up in the gizmos, and miss the bigger picture, and chop in and out of positions getting stopped out in the chop and die slowly by the death of 1000 cuts.

Also, if you just look at the chart, you can see some stocks base first, and then can have a strong move up, which then weakens, or even consolidates for another drive up.  The initial almost vertical intensity just can’t be sustained by most markets.   Most stocks don’t trend in a straight line, they pull back in bull markets, then continue for instance.  

This is what the concept of counter trends is all about.  Determine what the trend is, and then try to imagine what a counter trend would look like.  This is where you want to get in.  Like bunyip says, buy the dips in an up trending market, and sell the rallies in a down trending market.  Sounds easy, doesn’t it?  Like in your ROC example, you need a plan, and a reasonably wide enough stop to stay in a position long enough to profit.


Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> Hello barney,
> 
> 
> How’s the strumming going? I presume you had a gig on Saturday?
> 
> barney, something has been puzzling me recently.  When I’ve read your trading based comments recently, there is an ambiguity that confuses me.  On one level you come across like you’re fairly new to T/A, and on another level you come across as if you have quite a lot of sophistication in the market.
> 
> For instance short selling stocks is quite unusual, many straight stock traders don’t have the ability to short stocks, and many just don’t understand it.  Yet here you are with a short position in ROC, yet you indicate you have limited resources.  Things must have greatly changed from the time I sought out retail brokers who will allow you to short stocks (the brokerage rates were highway robbery!).  Which broker are you with out of interest (if you don’t mind me asking)?  Ok, just thought I’d ask… (Suspect you have come from a more F/A oriented past, am I right?).
> 
> Now, a few comments about “broker recommendations”:  just think about who is putting this out, and what their bias might be.  If the broker is holding a stock that they want to get rid of, do you think it is likely they will issue a “sell” recommendation to the public?  Also, if they have a relationship with a firm, how likely is it that the broker will issue an adverse report?
> 
> When I look at broker reports, if I ever do now, it is either for amusement value and a good laugh, or to look for contrarian opportunities by looking at the prospect of doing the opposite to the “consensus”.  Of course this depends on a range of factors.
> 
> As for using stochastics and the MACD, just think about what these are reading, and their limitations.  In this kind of consolidating/range trading market with no real trend in the daily chart, the problem is for medium term traders, you can only really pick the swings in most stocks, unless you find the few that are trending – and there are some if you look for them.
> 
> The lagging nature of these indicators if they are set with too low an average is that you will get whipsawed in and out of positions if you are only using them to trade.  These work better in trending markets, and in the longer term.  The time frame you are trading/investing is highly relevant to the indicators and settings you select.
> 
> Personally, I threw out things like stochastics and the MACD a long time ago, but that is my preference.  Sure they have their place, but I believe they can actually obscure the price action if you don’t use them the right way.  I do know of some cycle based traders that reset the displacement to use them in a kind of forecasting style, but you really need to know your stuff to do this.
> 
> Try looking at some charts with just the bars and volume.  Try to work out how the underlying is trending in both the daily and weekly charts (even go to the monthly occasionally to get a macro picture of what’s been going on).  Too many T/A people I know get wrapped up in the gizmos, and miss the bigger picture, and chop in and out of positions getting stopped out in the chop and die slowly by the death of 1000 cuts.
> 
> Also, if you just look at the chart, you can see some stocks base first, and then can have a strong move up, which then weakens, or even consolidates for another drive up.  The initial almost vertical intensity just can’t be sustained by most markets.   Most stocks don’t trend in a straight line, they pull back in bull markets, then continue for instance.
> 
> This is what the concept of counter trends is all about.  Determine what the trend is, and then try to imagine what a counter trend would look like.  This is where you want to get in.  Like bunyip says, buy the dips in an up trending market, and sell the rallies in a down trending market.  Sounds easy, doesn’t it?  Like in your ROC example, you need a plan, and a reasonably wide enough stop to stay in a position long enough to profit.
> 
> 
> Regards
> 
> 
> Magdoran





Hey Mag, I really appreciate your comments (and I MEAN that!)  I'm not sure whether you were complimenting me or telling me I am totally confused with the "sophistication" thing   Seriously, I am one month into chart analysis, but have been "dabbling" with trading for about a year and a half (I was going ok till I started "mixing" it with the "big boys" at the height of CDU's dramatic rise (Lost a small fortune......literally!!!)  

Funny thing, I reckon I am better at picking "shorts" because everything I pick goes down !!!  

The only stocks I can short sell are those through a CFD provider (mine is "Green")  The reason I have to use CFD's is because I lost so much money, that  I can only"afford" to trade on "margin" (where you only need a % of the "real cost" of the stock.........Hope this clears up any unsuredness, cause I am as "straight" as a gun barrel!!................I have no ego problems....and I respect all people's "position" in life.........My main aim with "trading" at this point in time is to show/prove to my family that I am not an "idiot"  for losing 25% of our life savings, and WHEN I "win" back what I lost, I will be telling the  world that I fixed my "stuffup"..............and by that time , I may be able to give others some good advice!!..........as you do!!!...........You are a smart man MAG...........and I have a great deal of respect for your depth of analysis (and I'm not just talking share trading) Cheers , Barney.


----------



## tech/a

Barny

You are taking a huge risk trading CFD's with limited funds.
If it goes against you you could be cleaned out!!!


----------



## barney

tech/a said:
			
		

> Barny
> 
> You are taking a huge risk trading CFD's with limited funds.
> If it goes against you you could be cleaned out!!!




Hi Tech, (the same respect goes to you as well!!)   Don't be concerned, I am only "investing" in CFD's with very small portions ..............I simply don't have enough capital to buy/sell  stocks outright  atm.  This is part of my learning curve.  If I can "get it right" (with small profits from small investments), then I will build confidence in my "blueprint/plan", and can then increase my  "investments" in the future when capital permits. I appreciate and respect your  advice/concerns, Barney.


----------



## tech/a

Barney

I only trade long.
If Im trading short term in a discretionary manner I look for the following when "Eyeballing" a chart.

(1) It must either be obviously in an uptrend OR
(2) It must be obviously breaking out of a downtrend AFTER a period of consolidation.A single spike out of a downtrend is not sufficient for me to consider.
(3) The trend must (if it continues) Have no resistance on the chart OR a great deal of movement before it reaches old resistance (Up to a year ago). 
(4) I prefer obvious mounting volume.
(5) There is a place where I can place a stop CLOSE to my entry < 5% price movement.

NXS is an example of (1) and if SEN trades on volume above 50C then that would be an example of (2,3,4,) with 5 yet to be determined If I saw it and price had raced to 60c then I would not take it as the risk would be to much,in my view.Will watch how it developes and perhaps look at how it could be traded Resistance certainly held at 49c today.

Pretty simple

I only use oscillators and indicators in formulas.


----------



## Porper

tech/a said:
			
		

> Barny
> 
> You are taking a huge risk trading CFD's with limited funds.
> If it goes against you you could be cleaned out!!!




I'll second that, through experience !!

It is totally different, maybe the psychological aspect, not sure really but trading CFD'S is different to trading a normal account.

It seems the same, entry, exit, stock selection, money management etc, etc.

When you get into a bad trade, maybe a gap down below your stop, it can really put a big dent in your account which can take a long time to get back.Which in turn will make you more likely to deviate from your plan.

Nick Radge recently pointed out why we have guaranteed stop losses using CFD'S after HDR shot up.That would've hurt to say the least.


----------



## RichKid

barney said:
			
		

> Hi Tech, (the same respect goes to you as well!!)   Don't be concerned, I am only "investing" in CFD's with very small portions ..............I simply don't have enough capital to buy/sell  stocks outright  atm.  This is part of my learning curve.  If I can "get it right" (with small profits from small investments), then I will build confidence in my "blueprint/plan", and can then increase my  "investments" in the future when capital permits. I appreciate and respect your  advice/concerns, Barney.




Barney, If you are going to play with fire I'd at least be using a guaranteed stop loss, just my opinion (I like MacquarieCFD's atm). Can't see why you shouldn't be patient and just paper trade stocks for a bit.

Also, if we could transfer any resulting discussion on the merits of using CFD's for a beginner to an appropriate thread (there are many on CFD's and risks and stocks etc) that would be great as I'd like to keep this thread restricted to a comparison of charting methods and accompanying trading tactics (if discrete issues have been discussed before in detail in other threads, then that's where the issue should be investigated in depth).


----------



## barney

Porper said:
			
		

> I'll second that, through experience !!
> 
> It is totally different, maybe the psychological aspect, not sure really but trading CFD'S is different to trading a normal account.
> 
> It seems the same, entry, exit, stock selection, money management etc, etc.
> 
> When you get into a bad trade, maybe a gap down below your stop, it can really put a big dent in your account which can take a long time to get back.Which in turn will make you more likely to deviate from your plan.
> 
> Nick Radge recently pointed out why we have guaranteed stop losses using CFD'S after HDR shot up.That would've hurt to say the least.




I Hear and appreciate what you guys are telling me, but if I can try and put it in perspective...............say for arguments sake I liked stock "X", and bought 1000 at $4 ($4000 investment) ....Next day the sp dropped 15%  My stop loss was triggered at say $3.40 ...I sell and lose $600.........The same buy /sell scenario on CFD is .....buy 1000 at $4  ...(10% outlay = $400)......my stop loss is triggered at $3.40.... I lose ....$600....same loss, but I only needed $400 to be "in the market"..............I think most people use CFD's to increase their "exposure" to the market, ( and thats where the danger lies), but if you treat it the same as if you have to "pay" the "full" amount for the stock, I can't really see much difference , apart from  the fact that you do not need as much "capital"..........Does  that make sense, or am I missing something??    Cheers, Barney


----------



## tech/a

Very good carry on.


----------



## It's Snake Pliskin

> Tech/Snake, Re: 1) above, In simple terms, what initialy "draws" you to a stock...ie what "tells" you that this is the "right" stock to invest in??




Barney,

"Opportunity"

I must say, I had the same thoughts as Magdoran regarding your comments. 
 :kebab Snake


----------



## pacer

Still long on mbl...damn.... sold BHP yesterday....time will telll...hmmmm!
I like Barney......due for a big rise...held since last weeekk.....MBL


----------



## barney

Magdoran said:
			
		

> When I look at broker reports, if I ever do now, it is either for amusement value and a good laugh, or to look for contrarian opportunities by looking at the prospect of doing the opposite to the “consensus”. Of course this depends on a range of factors.




Hi Mag,
I noticed that this happened on AWE the other day....most analysts had a "strong Buy" just before it nosedived.



			
				Magdoran said:
			
		

> The lagging nature of these indicators if they are set with too low an average is that you will get whipsawed in and out of positions if you are only using them to trade




Exactly what was happening!!  I thought I was picking up the chart stuff OK, so would take a position (with my new found "knowledge"), then the sp would go against me, only to reverse back again (but after my stop had been hit). 



			
				Magdoran said:
			
		

> Try looking at some charts with just the bars and volume. Try to work out how the underlying is trending in both the daily and weekly charts (even go to the monthly occasionally to get a macro picture of what’s been going on). Too many T/A people I know get wrapped up in the gizmos, and miss the bigger picture, and chop in and out of positions getting stopped out in the chop and die slowly by the death of 1000 cuts.




I'm only up to 500 cuts   .........I am concentrating on watching the Price bars/Volume  movements atm.............Lots of people have pointed this out to me on the forum, and its FINALLY starting to sink in!! :homer:   (Doh)



			
				Magdoran said:
			
		

> This is what the concept of counter trends is all about. Determine what the trend is, and then try to imagine what a counter trend would look like. This is where you want to get in. Like bunyip says, buy the dips in an up trending market, and sell the rallies in a down trending market. Sounds easy, doesn’t it? Like in your ROC example, you need a plan, and a reasonably wide enough stop to stay in a position long enough to profit.




It definitely 'aint easy!!........ learned that for sure.......but I am improving ....Re the stops.........I have been setting them too close (whipsawed out several times.......losing; when a little wider stop would have meant winning;often with a good profit.............Like the quote goes...."Scared money never wins"  This is where the T/A of recognising "support and resistance" is obviously very important ...........I understand the concepts of it , but still at "entry level" with that.................thanks again for your advice.



			
				RichKid said:
			
		

> Barney, If you are going to play with fire I'd at least be using a guaranteed stop loss, just my opinion (I like MacquarieCFD's atm). Can't see why you shouldn't be patient and just paper trade stocks for a bit.




Hi Rich, Probably am impatient......but find I learn more by physically having to push the "buy" button.....that way your decisions are for real so to speak. I realise the CFD thing is off topic; sorry about that;just replying to Mag's question re short selling....( I am using "Green CFD"..............the name is quite apt I reckon!!).



			
				tech/a said:
			
		

> NXS is an example of (1) and if SEN trades on volume above 50C then that would be an example of (2,3,4,) with 5 yet to be determined If I saw it and price had raced to 60c then I would not take it as the risk would be to much,in my view.Will watch how it developes and perhaps look at how it could be traded Resistance certainly held at 49c today.
> 
> Pretty simple
> 
> I only use oscillators and indicators in formulas.




Thanks for the 5 tips Tech..............the part about not taking the stock if it raced to 60c is the clincher for me.........Apart from my loss on CDU, where I started getting into most trouble was "chasing" a stock AFTER it had taken its run.........It seems so obvious now how DUMB that was, but at least I know now..............I originally thought that yourself and most other experienced traders probably ONLY used "charts/indicators" etc for your trading.........That misconception is now sorted as well!....................Pretty much think you guys have given me what I need to know/learn now, so I wont keep asking so many dumb questions! 
Here goes........Learn to follow Price patterns ......price is of utmost importance (tells us the who the when and the why of a stock)...........Add Volume to the equation, which is probably our best "indicator" as to where Price will be in the future.................Learn points of support and resistance so that sound money management can be applied (ie Stop losses, Entry and Exit levels)................Once you learn it....get good at it...then just do it! (and PS.... Show Patience and Discipline!!!)

Please tell me this is the right track to follow, cause otherwise I'm gona be real confused?



			
				It's Snake Pliskin said:
			
		

> Barney,
> 
> "Opportunity"




Snake, you are a man of few words!! 

PS Sorry this post is so long...I kinda think out aloud as I go.......I hope it hasn't been too boring     and really hope that other "new chums" to the stock market might learn something from my mistakes.    Cheers to all, Barney


----------



## tech/a

Pretty well on the Track Barney.

Why not post up a few as "Paper trades" as you find them for comment on the trade/s.


----------



## tech/a

Moggie.

24/9/06 seems to have passed for Brent Crude as a non event.
Cant see how it had any significance?


----------



## nizar

tech/a said:
			
		

> I find the best technical analysis to be the simplest.
> You couldnt call my system formulas anything but BASIC.
> 
> My short trem discretionary "Fun" trading is pretty well bar chart analysis.
> I do however have some nifty tools which find me "trending" breakouts 10 mins into trading each day.Some are outstanding,some I get on and others I miss.
> 
> But in these 2 areas I'm as proficient as I need be,I'm returning waht I would expect and at times better than expected.Always looking for improvement but no longer searching for "How is it done".
> 
> *Hints.*
> 
> (1) Look for stocks which are over $ and under $5 for best opportunity at doubling in price.(Good start for a universe to trade).
> (2) Dont trade without a stop and if short term make it tight as you'll get it wrong more often than right and for gods sake when its triggered *SELLLLLLL.*
> (3) Record EVERY TRADE so you can build up an expectancy to how your trading. Risk/reward (How much is your average loss IE stopped out V your average win--exit?) What are your strings of losses? 5 1% losses and 1 10% win is fine!
> (4) Be *RUTHLESSLY DECISIVE*,make that decision NOW,right OR wrong,buy or sell.
> (5) Short/term trading---if its not* OBVIOUS * and screaming *BUY BUY BUY*,then its not for you.
> (6) If you think buying enthusiasms starting to fail---YOUR NOT ALONE!
> Take your profit and RUN.
> (7) HOPE is not a stratagy its a liability!
> (8) If you miss it there will ALWAYS be another trade. If you dont trade tommorow or next week,there will be another opportunity--dont chase it!
> 
> Finally--Its not the analysis or winning trades that will make you wealthy *its the way you use your and other peoples money!*Etch this into your grey matter and UNDERSTAND it.Research how others do it,it is THE factor in wealth creation.
> 
> See anything about indicators/oscillators or analysis of any kind above???
> Ponder then on WHY!




AND



			
				tech/a said:
			
		

> If Im trading short term in a discretionary manner I look for the following when "Eyeballing" a chart.
> 
> (1) It must either be obviously in an uptrend OR
> (2) It must be obviously breaking out of a downtrend AFTER a period of consolidation.A single spike out of a downtrend is not sufficient for me to consider.
> (3) The trend must (if it continues) Have no resistance on the chart OR a great deal of movement before it reaches old resistance (Up to a year ago).
> (4) I prefer obvious mounting volume.
> (5) There is a place where I can place a stop CLOSE to my entry < 5% price movement.




Excellent stuff tech, probably the best advice i have read on this forum


----------



## tech/a

Nizar.

Thanks.
But really its only my own personal preferences,in answer to the question "What do you guys look for".

Frankly I find short term discretionary trading the hardest of all to make a consistant profit.

I only do it with a small account and leave the bulk of funds in longer term.

Why--trade discretionary short term at all?
As you well know the challenge and the lure of a quick dollar,gets us all in.

But keep it in perspective.


----------



## professor_frink

tech/a said:
			
		

> Nizar.
> 
> Thanks.
> But really its only my own personal preferences,in answer to the question "What do you guys look for".
> 
> Frankly I find short term discretionary trading the hardest of all to make a consistant profit.
> 
> I only do it with a small account and leave the bulk of funds in longer term.
> 
> Why--trade discretionary short term at all?
> As you well know the challenge and the lure of a quick dollar,gets us all in.
> 
> But keep it in perspective.





Tech,

Not all short term traders are sucked in by the lure of a quick dollar. Not sure if you meant it to come out that way, but that's how it seems sometimes.


----------



## Magdoran

tech/a said:
			
		

> Moggie.
> 
> 24/9/06 seems to have passed for Brent Crude as a non event.
> Cant see how it had any significance?



Daffy,

Hahahaha... You are a funny Duck!  Jeez tech, I pick the low well in advance, put the charts up to illustrate it, and you say it’s a non event!  Hahahaha, those blinkers welded to your head must be so heavy you need a crane to lift your head up in the morning!

True to form, either you’re tugging my chain, or you’re just not seeing it.

Are you really telling me you can’t see the support coming in using the time approach I’ve just demonstrated in this instance?

Perhaps from your perspective pinpointing a low in the recent drive is not significant, especially if you’re investing for 20 years and holding...  Either that or you’re just not looking. 

I held off posting till my futures EOD came through so I could post the charts up with this comment.  Just look in the charts and tell me what you see...

Now lets’ look at how this time factor works:  The 24th is a Sunday, which means that we have to use our imagination Daffy.

Now let’s stretch our imagination a little bit here to absorb the concept of time in the markets... 

So, we have a Sunday come in on the chart.  Try this concept.  Which trading days are closest to that?  Remember the concept is that it is usually +/- 1 trading day tolerance, and up to 2 potentially for the end of a cycle.  Weekends get a bit messy because you have 2 non trading days.

Given that our cycle day/time point (whatever you want to call it) was the 24th on a Sunday, which days could it be?  Hmmmm, let’s see... It could be Friday 22nd.  It could be Tuesday 26th, but is less likely. It could be Thursday 21st at a stretch, because it is a complete cycle time point, hence less likely.  Special note:  For a complete cycle low it can actually be out by as much as 2 trading days.  

So, given the cycle day is a Sunday, which other trading day have we missed, that is actually the closest trading day to the Sunday?

Ok, the closest trading day to the projected cycle day would be... (Big drum roll) *Monday 25th*, wouldn’t it? 

Have a look at the attached charts for Brent and Light Crude, and try to get your head around the way both have counter trended from this point.

Surely you’d agree that the 25th in each case is a reversal day, and the low in the current daily bearish drive, or do you dispute this?

We were looking for an exit for our short.  We identified a point where the bearish drive in the daily could be at risk, and did so based on time.  The closest date to the 24th was Monday 25th.  Exiting on the gap down or around this date was the strategy chosen in this example because this could be where a resumption of the bullish trend in the weekly occurs.  

An aggressive contrarian could be long here.  A conservative player looking for confirmation would be looking for a Bullish counter trend here and a higher low to go long.  Shorts are at risk now... but there is a short entry for an aggressive bear play tomorrow.  Personally, I’d want to see a false break here to consider going short with a resumption of the bearish drive in the daily.

Remember Tech, this is position trading which I do as my core approach, with long term investing as my second bow, the opposite to you.  Your emphasis is in the long term, and only trade small amounts in the shorter time frame.  Perhaps you call this swing trading, something that the style of analysis I’m using is suited to.

Please tell me that you can see the reversal and counter trend at this level, and that you were just tugging my chain for fun.  If you really can’t see this, and dispute that this is what happened, then our way of perceiving bar charts is so far apart there’s no point in discussing this further, and we’ll just have to agree to disagree, and leave it at that.


Regards


Magdoran (AKA "H.G. Wells")

P.S. The next thing will be Frank telling me I “curve fitted” my forecast by going back in time and telling myself the result in my time machine.  So, just call me H.G. Wells!


----------



## RichKid

Tech,

Great posts there about your method (in the preceding two pages, as referred to by Nizar). 

I recall there was an attempt made at developing a short term system or a speccy system for short term trading. Have you given up on that in favour of this discretionary approach to short term trading? I think you had trouble coming up with something workable and you tested a few things.

Here are some related threads for those who would like some background info, please continue the discussion in these threads guys if they are of interest (or if you have a postscript or an update tech): https://www.aussiestockforums.com/forums/showthread.php?t=572 (stocks under 20c) and
https://www.aussiestockforums.com/forums/showthread.php?t=1710 (short term system)


----------



## tech/a

Moggie.

I couldnt find the chart on Futures Scource or Big Charts.
Knew that post would get a quick response---sorry my sense of humour.

I'll reply a little later.When more time.Looks good though Moggie.


----------



## Magdoran

tech/a said:
			
		

> Duckman
> 
> 
> 
> You'll be happy to know Ive been there. Most of us have or are there. Some never have the guts to try!
> 
> Try to become an expert in one form of trading at a time.As your super is in longterm I would suggest longterm. It is by far the easiest to master. (well thats what I found).
> I know I go on a lot about having a "Blueprint" but for newbies I feel its a must .Without one you'll zig in and zag out without EVER knowing if the way you trade is longterm profitable regardless of timeframe traded.
> 
> If its any help most at one time or another suffer from analysis paralysis.
> Getting it wrong turns us into a manic analyst analysing WHY.
> 
> I find the best technical analysis to be the simplest.
> You couldnt call my system formulas anything but BASIC.
> 
> My short trem discretionary "Fun" trading is pretty well bar chart analysis.
> I do however have some nifty tools which find me "trending" breakouts 10 mins into trading each day.Some are outstanding,some I get on and others I miss.
> 
> But in these 2 areas I'm as proficient as I need be,I'm returning waht I would expect and at times better than expected.Always looking for improvement but no longer searching for "How is it done".
> 
> *Hints.*
> 
> (1) Look for stocks which are over $ and under $5 for best opportunity at doubling in price.(Good start for a universe to trade).
> (2) Dont trade without a stop and if short term make it tight as you'll get it wrong more often than right and for gods sake when its triggered *SELLLLLLL.*
> (3) Record EVERY TRADE so you can build up an expectancy to how your trading. Risk/reward (How much is your average loss IE stopped out V your average win--exit?) What are your strings of losses? 5 1% losses and 1 10% win is fine!
> (4) Be *RUTHLESSLY DECISIVE*,make that decision NOW,right OR wrong,buy or sell.
> (5) Short/term trading---if its not* OBVIOUS * and screaming *BUY BUY BUY*,then its not for you.
> (6) If you think buying enthusiasms starting to fail---YOUR NOT ALONE!
> Take your profit and RUN.
> (7) HOPE is not a stratagy its a liability!
> (8) If you miss it there will ALWAYS be another trade. If you dont trade tommorow or next week,there will be another opportunity--dont chase it!
> 
> Finally--Its not the analysis or winning trades that will make you wealthy *its the way you use your and other peoples money!*Etch this into your grey matter and UNDERSTAND it.Research how others do it,it is THE factor in wealth creation.
> 
> See anything about indicators/oscillators or analysis of any kind above???
> Ponder then on WHY!



All good points Tech,


Newer players, do please take note that this is an important aspect of trading/investing successfully. I fully agree with tech that setting up your system is a critical cornerstone to success.

Don’t forget that psychology is the other cornerstone to trading/investing too.

Just as an aside, my focus on this thread has been on the chart analysis, much like my focus on derivatives is in the derivative area.  I tend to try to stay within the core subject, and make references to related subjects, hence I’m not going to comment on my system or psychology approaches on this thread, except perhaps in passing as I have done here.

But do keep in mind that these aspects need to be considered in line with charting analysis.  Charting is only one aspect of trading/investing, and the trading rules you build based on this knowledge are just as important.


Regards,


Magdoran (“HG”)


----------



## Magdoran

tech/a said:
			
		

> Moggie.
> 
> I couldnt find the chart on Futures Scource or Big Charts.
> Knew that post would get a quick response---sorry my sense of humour.
> 
> I'll reply a little later.When more time.Looks good though Moggie.



I wondered who’d stolen my wooden spoon this morning.  It was YOU, you naughty Duck!

Hey, you’re not allowed to stir me with my own spoon!  Give it back!


Hahahahahaha!


Moggie


----------



## tech/a

professor_frink said:
			
		

> Tech,
> 
> Not all short term traders are sucked in by the lure of a quick dollar. Not sure if you meant it to come out that way, but that's how it seems sometimes.




No thats true.

*But I am!!!!*


----------



## professor_frink

tech/a said:
			
		

> No thats true.
> 
> *But I am!!!!*




fair enough mate


----------



## tech/a

> NXS is an example of (1) and if SEN trades on volume above 50C then that would be an example of (2,3,4,) with 5 yet to be determined If I saw it and price had raced to 60c then I would not take it as the risk would be to much,in my view.Will watch how it developes and perhaps look at how it could be traded Resistance certainly held at 49c today.




NXS has bolted.
SEN has not gone on with it and was right in giving it conditions before a buy.

Just mentioned so you can get a feel for "eyeballing" and why and perhaps some thinking that goes with it.


----------



## tech/a

Wanted to post this up as an example of how trending stocks move.
The chart is the last 2 days NXS.This is a realtime tick chart and you can see where decisions can be made both on entry and when exit comes.

Clearly it moves from consolidation to consolidation.
Support then resistance broken.
Trailing stops can be placed as trading progresses.
Note the big moves in the early morning sessions.Same will occure when the market or stock is bearish so something to watch.

The second is AUZ both Im currently trading.


----------



## tech/a

Thought Id follow up NXS trade.
This chart just a few mins old shows support at .955 breached.
Old resistance from the morning is holding current trading at .95
And acting as support at .94  old resistance it at both thease levels.
Plan for today is sell if trading at .935.
Expect break above .95 but likely to go only to .96---.97 max.
Then hold O/N.


----------



## tech/a

Out NXS shows no buying support.


----------



## Magdoran

lesm said:
			
		

> A question here is, do we see what we want to see or can we discern repeatable patterns in a deterministic manner that is consistently repeatable?
> 
> The computer between our ears is very powerful and by learning and understanding market behaviour and the ability to identify patterns that are immediately discernable is within its capabilities. We have natural inbuilt neural network, we just need to learn to use it effectively. The more we look at something the more likely we are to run the risk of seeing what we want to see. What we see in the first couple of seconds (or less) of looking at a chart is most likely the correct interpretation.
> 
> The more we study patterns enables us to determine their reliability as a method for determining, which way the market or an individual stock might move. We can gather information, which we can use to develop a probalilistic mathematical model to reduce the guess work. Afterall, probability is a mathematical approach to dealing with  uncertainty. We can refine and monitor the model through time, as there are no gurantees that a particular pattern will not fail through time or at particular times due to changes in market behaviour/dynamics.



Hello Les,


This is my first cut at responding to your “epiphany” in post 155 on this thread (155!!! Wow, we must have been busy posters.  Barney will be pleased he kicked off a monster!).

*Psychology:*

To what extent do we “colour” what we see in a chart?

Douglas goes into the psychology underlying the way people impose a view on a chart.  He gives the example of two different hypothetical situations where a child for the first time meets with a dog, child “A” meets a friendly dog, while child “B” meets with a vicious dog.  

A’s first experience is pleasant, and the child associates the nice feeling of the dogs coat, and the joy of patting it, instilling a positive emotional memory.

B on the other hand is bitten and attacked by the dog, and associates dogs with an unpleasant experience and danger.

In both cases any future dogs each child meets is perceived in the emotional framework established from the first experience.  Of course Douglas goes into much greater detail, but this line of thinking I think has a lot of merit, and that the experiences that we as traders/investors have will unconsciously affect the way we view the whole process let alone our view of a chart.

Gann made some interesting observations here too.  He writes about each individual having an innate bias when looking at charts, either bullish or bearish.  The idea is that we all have a bias, and tend to read our bias (bullish or bearish) into a chart.

McLaren talks about different trading dispositions too.  Some people are greedy, counting how much profit they have made while the trade is still active, hoping for that extra few point to bring in enough profits to buy that new car… so they tend to overstay positions.  The fearful trader tends to get “nicked” out of positions, often setting stops too close, or not being confident enough either to pull the trigger, or to stay long enough in a winning position.

So, I suppose you can have a greedy bull, a fearful bear, a greedy bear, or a fearful bull, if you mix the various psychologies together…

So I agree, the aim is to precisely set up a “probabilistic mindset” ala Douglas, which equates with your comment on a mathematical model.  The key process though is to try to compensate as much as possible for innate psychological influences from colouring our view in the chart.  

*The Psychology of Chart Analysis:*

Now, I do agree that in the first few seconds when looking at a chart, a portion of the mind intuitively takes stock of the situation and makes an immediate judgement.  Sometimes this can be spot on, but sometimes it can be heavily influenced by the propensity to impose a view on the market. 

In my experience, you also need to study both markets in general, and the actual underlying you are looking at to determine its nature.

Based on this bedrock of experience, by going through a series of technical analysis steps and really examining the chart in detail, all sorts of clues can present themselves, but you have to know what to look for.  

When it comes to time cycles, the more you do it, the quicker you get at seeing the “3D” like picture behind the obvious bars.  But I find this takes a little longer to get your eye in, and I’m still really an intermediate player doing this.  The best practitioners I know have been doing it for well over a decade ranging up to decades.

*Assessing Probabilities:*

To really come up with a consistent approach to assessing probabilities in the market, I’d tend to argue that it is through the process that Douglas ventures in “Trading in the Zone” that this can be achieved, either through a mathematical algorithm, or through a combination of well developed charting with the Douglas axioms and checklist in place (and maybe add some custom criteria – especially a set of requirements if using options).

While I agree that mathematics can aid in estimating risk, and ascribing probability, I would argue that while there are some aspects of the market that can be quantified, that there are some elements where all any of us have is a guess, some more educated than others.

It’s kind of like an actuary in an insurance firm trying to assess the probability of a hurricane hitting a part of Florida, and trying to work out what premium to charge to cover the potential losses in the context of the chances of a hurricane hitting.

You can’t really predict this with an iron clad algorithm.  There is a degree of pure speculation and “guesstimation” involved.  Executives fudge all the time, and try to hide it behind techno-jargon and gobbledegook.  Same is true for risk management in quoting on an IT implementation when a whole range of unknowns will only be unearthed once the project is underway.  Half the game in any kind of implementation I’d suggest, whether it’s in the building game, IT, or other commercial activities, is being able to guesstimate well.



How about you Les, what is your perspective on this?


Regards


Magdoran


----------



## Magdoran

lesm said:
			
		

> A question here is that in performing analysis and developing methods aren't  we attempting to move from the purely subjective approach to being more objective or if possible more quantitative, within reasonable bounds?
> 
> The more highly subjective the analysis is the more likely we have increased the risk of failed trades. Our testing should remove an element of the subjectiveness. Monitoring going forward should enable us to better quantify and confirm whether we have positive approach or not.
> 
> But in real terms, the analysis is only the starting point, as it is how we conduct and manage the trade once we are committed that is important.
> 
> I recall a comment from a well-known and respected trader on another forum along the following lines. For a system he developed he stated that he couold train a group of traders how to use is system and expected the following outcome:
> 1. One subgroup would trade the system better than he could
> 2. One subgroup would trade the sytem at the same level as he could
> 3. One subgroup would trade the system worse than he could or make a loss.
> 
> A lot of time is spent on the initial analysis and time needs to be spent in looking at the overall approach, as analysis is not necessarily the point where we may lose the game. We can have a winning system, but still lose money.



Hello Les,


This is my second cut at responding to your “epiphany” in post 155 on this thread.

I agree that by constructing a trading/investing regimen that we are trying to compensate for our subjective nature, and striving to be as objective as possible.  What I’m saying though at the philosophical end of the equation that we are necessarily limited (by time, resources, upbringing, innate capacity, emotional disposition etc), and that once we have developed approaches to minimise our own bias, that often it become increasingly difficult to make more than marginal improvements.  Not always though, and this is where the idea of a paradigm shift can revolutionise an approach, and allow all sorts of benefits to become possible which were previously unlikely with the former paradigm.  

On the flip side, Ducatti has argued on other threads in the derivative area, that emotions are integral to making financial decisions, and in fact are a key element in the mix of success, but configuring a holistic approach is necessary to achieve this.  I tend to agree with this notion.  The devil in the detail is that we are dealing with highly complex individuals with a plethora of talents, preferences and dispositions.  So, the solution for one person may be totally inappropriate for another.

While I agree that having a positive expectancy system is a cornerstone to success, that there are a myriad of ways of achieving this if you look beyond the nuts and bolts.  Being a believer that the sum of the whole is often greater than the parts (you’ve got to wonder about some people though!), a harmonious blend of techniques and approaches may require different configurations within established systems, and this is more relevant with custom approaches.

So I’m saying, all the components, not only the system need to be working in a constructive fusion if you will.  Having the system alone is not a guarantee of success.  Sure, it constitutes an edge of sorts, but even the best system in the world will not ensure a successful result as your comment about the respected trader indicates.  Hence we agree here.  So my conclusion is that to give yourself the edge requires both a strategic outlook, effective reappraisal, and an ongoing education process.


Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> Hello Les,
> 
> 
> This is my first cut at responding to your “epiphany” in post 155 on this thread (155!!! Wow, we must have been busy posters.  Barney will be pleased he kicked off a monster!).




Now if only I could pick stocks with the same "volume"  ..........Thanks for all your help again guys........kinda feel like the light bulbs are starting to come on :screwy:


----------



## wayneL

H.G. Wells said:
			
		

> An aggressive contrarian could be long here.




So, being an aggresive S.O.B., you're long? (me too  )

Cheers
The Count

PS Nice to have a window into what this Gann stuff is all about...TKX


----------



## tech/a

> kinda feel like the light bulbs are starting to come on




Invest in utilities.


----------



## MichaelD

Barney,

There's lots posted here, both beginner advice and advanced advice, but I'll add a few more points for you to ponder on, much of which seems to have been glossed over.

1. You've indicated that you do not have a written down, backtested, robust trading plan AND that you've blown 25% of your life savings to date trading AND that you are using CFDs because you don't have sufficient capital to take non margin positions. This is a guaranteed recipe for the rapid destruction of your remaining capital - not enough capital, unknown expectancy, and the destructive psychology of revenge trading. You may wish to give serious consideration to ceasing trading and re-evaluating.

2. Don't waste your energy on the perfect entry. Entries don't make you money. The exits + money and risk management make you money and that is where you should be concentrating your efforts.


----------



## tech/a

*



			2. Don't waste your energy on the perfect entry. Entries don't make you money. The exits + money and risk management make you money and that is where you should be concentrating your efforts.
		
Click to expand...


*
Worth repeating.


*



			2. Don't waste your energy on the perfect entry. Entries don't make you money. The exits + money and risk management make you money and that is where you should be concentrating your efforts.
		
Click to expand...


*


----------



## barney

tech/a said:
			
		

> Invest in utilities.





Very Funny!! :  


PS Michael, re above advice,  I will take that on board and consider, Thanks.


----------



## Magdoran

At the risk of inciting a riot amongst EW practitioners by my approximate Elliott Wave labelling (wavepicker is much more advanced in this respect), here’s my current thinking on Crude Oil as the continuing example.

This is where the fusion of the two schools can be very helpful (wave structure is an element in McLaren’s approach).

Also just straight candlestick signals can be really revealing too.  Just look at last nights bar, and it is a classic false break bar.  You see these a lot around counter trend points or key reversals.  Of course crude can fly up past this tonight, which could happen, hence I’d tend to wait to see it confirmed by a bearish bar.

There is a chance that some kind of consolidation will happen around this level.  Don’t forget, the weekly chart is still quite bullish despite the strong bearish drive recently.

While the daily chart is bearish it is around this level that bullish price action may develop.  If the 25th low is the end of a wave 3, then a wave 4 would probably be a complex wave, and consolidate at this level, and I’ve placed some unconfirmed number 4 labels at various areas you’d expect resistance (would you agree wavepicker??).

So, while last nights bar looks like it could be a false break, and even if the next day is bearish or a minor day (which I’d expect – a small inside day to the 27th), there is a possibility that the 25th low will hold.  In which case you’d expect some kind of bullish impulse, or at least a sideways move. 

A close below the low, depending on the bar may indicate at least an attempt at a marginal low (which would signal a low coming in potentially with a false break low), or a fast move down of similar magnitude to the existing drive down.  This is where I’d look to go short again (rather than the aggressive short last night), but cautiously with a tight exit half.  This is because there is a real prospect of a marginal low coming in (say around 25% extension of the bearish drive – maybe 33%) and the trend reversing.

An aggressive short from last nights bar (you would have entered at close this morning), would be vulnerable to the 25th low holding, or to a marginal break down and a reversal, so this is quite dangerous. There is an outside chance of a strong continuation, but the pattern looks to me like the fast move down has halted, and either a consolidation needs to happen, or a counter trend up around where I’ve marked the potential “4”s for the bearish drive to continue.  There is also a good chance of a sideways pattern for a while now.  A lot will depend on the next couple of days.

What we do have is a time cycle date of some significance coming up (Oct 30th), but until this little pattern plays out it is unclear how to use this for a trade.  Once we have a direction, we then have the intermediate time point (but it is minor), and the major time point to aim for.


----------



## tech/a

Moggie.

Like your analysis looks good to me.

Ive always respected Elliot as an analysis tool,and use it in the limited understanding capacity from an eyebell perspective when taking short term trades---if its clear to me.

I wait with anticipation with regard to any further time calls.
Wether they pan out spot on or miles out they are an interesting tool.


----------



## Magdoran

wayneL said:
			
		

> So, being an aggresive S.O.B., you're long? (me too  )
> 
> Cheers
> The Count
> 
> PS Nice to have a window into what this Gann stuff is all about...TKX



Hello Dracula,


“Count” me out (hahahahaha!).  No, I’m not long, I’m a “fearful bear” in my psychological disposition.  I tend to wait for confirmation and forgo the extra crumbs at entry.  Especially at tipping points like the one Oil is currently at. If I had gone long at the opening on the 25th, I’d be out as of last night’s bar, looking for a re-entry. 

While I’m aggressive in options, I’m really cautious in T/A (I’ve found you have to be selective since the magnification of losses is definitely a factor – especially getting the timing right…).

Glad my little introductory to a particular style of Gann is of interest.  Note though that there are many different “schools” depending on the interpretation, and which part of the knowledge you are looking at.

Glad to see that you rise from the crypt one in a while!

Regards,


Magdoran


----------



## Magdoran

tech/a said:
			
		

> Moggie.
> 
> Like your analysis looks good to me.
> 
> Ive always respected Elliot as an analysis tool,and use it in the limited understanding capacity from an eyebell perspective when taking short term trades---if its clear to me.
> 
> I wait with anticipation with regard to any further time calls.
> Wether they pan out spot on or miles out they are an interesting tool.



Thanks Daffy,


It’s been fun, hasn’t it?  Brent and Light Crude make good examples since the markets are bigger and harder to manipulate, unlike stocks which can do funny things due to specific events only related to them (and tricky things like dividends to contend with).

The other good thing is that since I’m not trading oil directly due to not liking the financial instruments currently available to me (working on this), I’m not vulnerable to a hostile move on an actual trade (look at what happened to that Hunter guy over at Amaranth). 

I will forward my next instalment once I’ve sauntered into my “Dilernia” patented time machine so I can “curve fit” my next projection.


Regards


Magdoran  (H.G. Wells)


----------



## wayneL

H.G. Wells said:
			
		

> “Count” me out (hahahahaha!).



  



			
				H.G. Wells said:
			
		

> No, I’m not long, I’m a “fearful bear” in my psychological disposition.  I tend to wait for confirmation and forgo the extra crumbs at entry.  Especially at tipping points like the one Oil is currently at. If I had gone long at the opening on the 25th, *I’d be out as of last night’s bar, looking for a re-entry*.




Yes agree, I was disappointed that the mo petered out, and exited. Could be a more complicated bottom setting up here. I feel a good shot at the jugular could appear out of this though. Mwahahahhaha!

Cheers


----------



## Magdoran

wayneL said:
			
		

> Yes agree, I was disappointed that the mo petered out, and exited. Could be a more complicated bottom setting up here. I feel a good shot at the jugular could appear out of this though. Mwahahahhaha!
> 
> Cheers



Hello Count Dooku,


I did say that last night might present a quick short opportunity if you were an aggressive bear, but I did say this was a high risk activity, and not something I’d do or recommend.  The time for a long is yet to present itself in my view, otherwise you’re scalping and playing against the odds.

My best shot guess out of all the possibilities is that the 25th low will hold, and we’ll get a higher low, and see a wave 4 move bullish drive before seeing a retest of the low (which may result in a new low).  We could also see a failed 5th wave from a wave 4 (assuming a wave 4 eventuates), and that may be a springboard for a retest of the major high.

Ha! So you are really a “Morlock” in disguise huh?  I suppose that makes the rest of us “Eloi” doesn’t it?




> <sound of “TARDIS” like noise as Magdoran prepares to “curve fit” his next forecast stopping briefly to view the Morlock like “Dilernia” cave to “borrow” one of Frank's patented curve fitting tools>





Regards


H.G. Wells (aka Magdoran)


----------



## wayneL

H.G. Wells said:
			
		

> Hello Count Dooku,




Well through a curious intersection of time precipited by "The Doctor" flipping about in time and space indiscriminately, I have managed to procur a parallel incidence of Tardis.

This means I can appear as any number of Christopher Lee characters:



















Of course, Drac is my favourite....The women seem to like me in that form... even if they can be a tad violent.

But I've been meaning to put my Tardis in for service. The future I went to had a V-bottom in oil, a convenient terrorist attack in the US ( a respectable amount of time before the mid-term elections) and a nuke attack on Iran, just as I pressed the buy button. That bloody tardis took me to the wrong dimension!!!!!

I know one thing, I don't really want to be short oil from now on.


----------



## lesm

Magodran said:
			
		

> On the flip side, Ducatti has argued on other threads in the derivative area, that emotions are integral to making financial decisions, and in fact are a key element in the mix of success, but configuring a holistic approach is necessary to achieve this.  I tend to agree with this notion.  The devil in the detail is that we are dealing with highly complex individuals with a plethora of talents, preferences and dispositions.  So, the solution for one person may be totally inappropriate for another.



Agree with Duc's overall notion, but there is a need to control the emotions. Being overly emotional can cloud our judgement and reduce objectivity. There is a need to be decisive regardless o fwhthere we are initiating or closing out a trade. A little too much emotion can reduce the reuired decisiveness.

A holistic approach is key so being successful in the markets, similar to what Brent Penfold describes as the 'Holy Trinity' in "Trading the SPI'.

Due to the differences and complexities associated with each individual only reinforces the necessity for each individual to develop a trading or even investment style that suits there individual psyche. One size certainly doesn't fit all.



> While I agree that having a positive expectancy system is a cornerstone to success, that there are a myriad of ways of achieving this if you look beyond the nuts and bolts.  Being a believer that the sum of the whole is often greater than the parts (you’ve got to wonder about some people though!), a harmonious blend of techniques and approaches may require different configurations within established systems, and this is more relevant with custom approaches.



Agree, but some people take longer to learn this than others and some will never learn it. The trouble is a lot of money will be lost and heartache experienced along the way by many. A large number will fall by the wayside having never really understood the basic building blocks, of what it means or is required to become a successful trader.

A well-rounded trader needs to understand a number of techniques and how to effectively apply them. Understanding the techniques in isolation is insufficient. It really doesn't matter if they are a mechanical, systems or startegy trader, especially if they wish to continually and effectively trade through different types/ranges of market conditions.



			
				Magdoran said:
			
		

> So I’m saying, all the components, not only the system need to be working in a constructive fusion if you will.  Having the system alone is not a guarantee of success.  Sure, it constitutes an edge of sorts, but even the best system in the world will not ensure a successful result as your comment about the respected trader indicates.  Hence we agree here.  So my conclusion is that to give yourself the edge requires both a strategic outlook, effective reappraisal, and an ongoing education process.




Agree. Ongoing reappraisal and education or research is necessary to stay in the game. The dynamic nature of the market and the factors that affect it 'stays the same', yet 'changes through time'. The number of automated systems, as well as technical systems of varying forms also influence or impact on market behaviour. A range of events are triggered in some manner or form by the signals that are being generated by systems. Others are being triggered by events that influence the markets or other market participants. There are a whole range of events that are outside of our control, hence whatever approach we use needs to realise this. We need to be able to repond or manage these as they arise. This requires and objective mindset and the need to keep our emotions under control, so that we can be as objective as reasonably possibele

Cheers,
Les.


----------



## Magdoran

Ongoing Oil Example:


This is getting interesting.  Friday night’s bar looks like it could be a false break, and a rejection of a bearish attempt, and could set up to be a higher low.

I have a suspicion now that a bullish impulse will eventuate, and be sustained till October 30th, if Friday’s low can hold.  But this is with some reservation.  You’d expect a retest of the 25th low to be a little longer than a one day false break, so, we really want to see a strong bullish bar on Monday night with some volume to confirm a potential long entry.  

An aggressive bull may have gone long on this bar, but I’d tend to wait to see the 28th false break high taken out and closed above with some volume.  If so the option target price would be $66.33 and the target time 30th October.  

The price is a balance between 3 different chart price increments, taking the more conservative level looking for the second half to finish in the money if going long a call. Exit half at $68.45.  Depending on volatility maybe a bull put might be a better strategy (or bull call), but then the profits would be capped…

The danger of going long here is that there may be limited upside, and that the move may be too small.  This is not as good a prospect as the fast move down, and there is a chance the bearish drive may continue.  Exiting with discipline is a must for this kind of position.  The higher low in this case is not a good indication of a sustained key reversal, and only suggests a short term play.  We need a better higher low to come in to suggest a retest of the major high at this point (although that of course may come to pass).

There is also an increment on Thursday 12th October to consider, but this is a minor date, and may be a minor counter trend point.

Let’s see how it pans out.


Magdoran


----------



## Magdoran

wayneL said:
			
		

> Well through a curious intersection of time precipited by "The Doctor" flipping about in time and space indiscriminately, I have managed to procur a parallel incidence of Tardis.
> 
> This means I can appear as any number of Christopher Lee characters:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Of course, Drac is my favourite....The women seem to like me in that form... even if they can be a tad violent.
> 
> But I've been meaning to put my Tardis in for service. The future I went to had a V-bottom in oil, a convenient terrorist attack in the US ( a respectable amount of time before the mid-term elections) and a nuke attack on Iran, just as I pressed the buy button. That bloody tardis took me to the wrong dimension!!!!!
> 
> I know one thing, I don't really want to be short oil from now on.



Love it Wayne!

I actually think you look the most handsome in the 3rd photo.

Your last fancy dress party no?


Magdoran


----------



## lesm

Hi Magdoran,

Some interesting points in your post.

The first thing I thought of, after reading the above, was with regard to a number of aspects of eastern philosophy as they relate to psychology.

One that readily comes to mind is 'to see things as they really are'. Another, which I will paraphrase is learning to step back from our emotions and focus on what we are doing and doing it well rather than on thinking about whether we may win or lose. Uncontrolled emotions cloud our thinking.

Western philosophy, beliefs and approaches to living whether everyday, sport or business really don't prepare people well for dealing in the market, as not all people are adept at stepping back from their emotions and remaining objective. A lot of people don't cope well with losing, but is something that they need to learn to deal with in the market.

Most successful traders have lost money in the markets, some more than once, but they have learnt from their mistakes and have gone on to be the success that they are. In real terms, how many traders are born and how many have learnt their craft?

The market is a mindless, emotionless and conscienceless beast that gives no regard as to how we may or may not feel. We need to be mindful of these characteristics and prepare ourselves to participate in this unfeeling environment. For a whole range of participants this will require a level of behavior modification. To cope or survive we need to learn the necessary survival skills and think about an approach that enables us to achieve this. We need to refocus the mind to consider performing the act of trading, without worrying about whether we will win or lose, but to do the best we can or to do the right thing, based on the information or knowledge we have. There is a need to bring our fears under control, otherwise we create our own errors or make our own mistakes, as the emotions are in control. Too much subjectiveness is detrimental to developing a consistent trading approach.

*Imposing a view on the market.* The market really doesn't really care what view we impose on it, it's an abstraction created by humans. As participants we hold one of many views and unless we can control the market, which we can't, it's an exercise in futility. We may hold a view, as yet unproven, but only time will tell if we have the right view, at any given point in time. It is how we determine a view as to the potential direction of the market or the stocks that make up the various universes, realising that we may not always be right, that makes the difference. Including the further realisation that we are one of many participants and that there is an opposing view to whichever view we have.

*Colouring the charts.* We need to learn to see charts as they really are, no more no less. This takes practice and experience to develop an objective and unemotional interpretation of charts. This needs to become part of the subconscious, as more often than not the more people study a chart the more likely they are to see what they want to see. Yes, further study may reveal nuances or intricacies in the chart, but the basis for looking at the chart in the first place needs to have some foundation. If you have the capability, try doing and auto-display of the ASX 100 on a five (5) second display and only select the charts that are of interest to you for a more in-depth analysis. Of course there may be some that don't select that may do well, but who has time to examine and analyse each individual chart representing all the stocks on the ASX, or anything from the ASX 500 down to the ASX 50.

*Bullish vs bearish.* The predominant trait of most people is bullish, as it is easier for people to understand making a profit from rising prices. Some of the trading clichÃ©s, such as buy low sell high contribute to this. ClichÃ©s may sound good, but without understanding what they mean or how to apply them counts for nothing. It is a foreign concept for most people to be comfortable with making money from losing money. For those people, it is a skill or approach that they will need to learn. They also need to learn that simply converting a number of trading systems from trading the long side to trading the short side will not always work.

*Knowing what to look for.* In all probability is a learned skill and requires practice. Trend following is the easiest, but to trade in all sorts of market conditions people need to learn an effective approach to trading in different styles of markets or using different styles/approaches in a single set of market conditions, if they wish to fully exploit the market. In any given market only a particular percentage of stocks are trending. To simplify this the remainder of stocks will be ranging or in some form of consolidation pattern or moving sideways. To exploit opportunities requires the ability to use different trading styles in any given market, as well as knowing what to look for and how to apply it. It also about understanding the strengths and weaknesses of different approaches. For example, a number of trend following systems will start to fail and/or experience high drawdowns, as market volatility increases.

*Prediction.* Probability gives us an approach to dealing with uncertainty, but no guarantees, otherwise we might as well just use darts to select stocks. The quality and reliability of application has a dependency on the user of the method and how much work they are prepared to do to prove/disprove and refine their methods. Of course there will be an element of quesstimation, but whoever said trading was an exact science. There is a need to learn multiple skills, as well as to manage our own psyches, as well as to understand market behavior and how to apply those skills.

Some additional thoughts for you above.

Cheers,
Les.


----------



## Magdoran

Hello Les,


As you can see, I’ve attempted to continue our dialogue as best I can…



			
				lesm said:
			
		

> Agree with Duc's overall notion, but there is a need to control the emotions. Being overly emotional can cloud our judgement and reduce objectivity. There is a need to be decisive regardless o fwhthere we are initiating or closing out a trade. A little too much emotion can reduce the reuired decisiveness.
> 
> A holistic approach is key so being successful in the markets, similar to what Brent Penfold describes as the 'Holy Trinity' in "Trading the SPI'.
> 
> Due to the differences and complexities associated with each individual only reinforces the necessity for each individual to develop a trading or even investment style that suits there individual psyche. One size certainly doesn't fit all.




Actually, this is precisely the point Ducati was making, to utilise the right emotions and filter out the disruptive ones… easier said than done.  So I think there is overall agreement here.

Interestingly I flicked though Penfold’s book on the SPI this weekend, but only in a very cursory fashion.  It was interesting to see his T/A experience using Elliott Wave, then the move to multiple higher lows/lower highs – almost paralleling some of McLaren’s work.  I must get around to reading the other parts of the book more deeply though (I gather you think it is worthwhile?).



			
				lesm said:
			
		

> Agree, but some people take longer to learn this than others and some will never learn it. The trouble is a lot of money will be lost and heartache experienced along the way by many. A large number will fall by the wayside having never really understood the basic building blocks, of what it means or is required to become a successful trader.
> 
> A well-rounded trader needs to understand a number of techniques and how to effectively apply them. Understanding the techniques in isolation is insufficient. It really doesn't matter if they are a mechanical, systems or startegy trader, especially if they wish to continually and effectively trade through different types/ranges of market conditions.




Yes, very true.  I suppose time is of the essence, and that is why I think it is wise for many to paper trade or trade small positions for as long as it takes.  I think we are in agreement here, this is the essence of good trading.


Regards,


Magdoran


----------



## lesm

Hi Magodran,



> Interestingly I flicked though Penfold’s book on the SPI this weekend, but only in a very cursory fashion. It was interesting to see his T/A experience using Elliott Wave, then the move to multiple higher lows/lower highs – almost paralleling some of McLaren’s work. I must get around to reading the other parts of the book more deeply though (I gather you think it is worthwhile?).




I found elements of Penfold's book useful, it also helped some other thoughts I was having fall into place or clarify them.

You can usually find something useful in a range of books, sometimes I am just looking for an alternative view or approach or a clue to help resolve or refocus an issue.

Good to see that you are still posting the chart and following up on it.

Will give Daffy some reading when he gets back, must be busy this weekend, as he has been very quiet.

Cheers,
Les.


----------



## Magdoran

Hello Les,


Applause.  An excellent post.  I found myself nodding in agreement as I read it.




			
				lesm said:
			
		

> Hi Magdoran,
> 
> Some interesting points in your post.
> 
> The first thing I thought of, after reading the above, was with regard to a number of aspects of eastern philosophy as they relate to psychology.
> 
> One that readily comes to mind is 'to see things as they really are'. Another, which I will paraphrase is learning to step back from our emotions and focus on what we are doing and doing it well rather than on thinking about whether we may win or lose. Uncontrolled emotions cloud our thinking.
> 
> Western philosophy, beliefs and approaches to living whether everyday, sport or business really don't prepare people well for dealing in the market, as not all people are adept at stepping back from their emotions and remaining objective. A lot of people don't cope well with losing, but is something that they need to learn to deal with in the market.
> 
> Most successful traders have lost money in the markets, some more than once, but they have learnt from their mistakes and have gone on to be the success that they are. In real terms, how many traders are born and how many have learnt their craft?
> 
> The market is a mindless, emotionless and conscienceless beast that gives no regard as to how we may or may not feel. We need to be mindful of these characteristics and prepare ourselves to participate in this unfeeling environment. For a whole range of participants this will require a level of behavior modification. To cope or survive we need to learn the necessary survival skills and think about an approach that enables us to achieve this. We need to refocus the mind to consider performing the act of trading, without worrying about whether we will win or lose, but to do the best we can or to do the right thing, based on the information or knowledge we have. There is a need to bring our fears under control, otherwise we create our own errors or make our own mistakes, as the emotions are in control. Too much subjectiveness is detrimental to developing a consistent trading approach.




Fully agree with you.  Well said. I do think that there is a lot of wisdom in the eastern philosophy which is very useful for trading.



			
				lesm said:
			
		

> *Imposing a view on the market.* The market really doesn't really care what view we impose on it, it's an abstraction created by humans. As participants we hold one of many views and unless we can control the market, which we can't, it's an exercise in futility. We may hold a view, as yet unproven, but only time will tell if we have the right view, at any given point in time. It is how we determine a view as to the potential direction of the market or the stocks that make up the various universes, realising that we may not always be right, that makes the difference. Including the further realisation that we are one of many participants and that there is an opposing view to whichever view we have.




I believe Ducati actually said “the market is a peanut” meaning it is really stupid - Hahahaha.  I agree with you here, spot on.



			
				lesm said:
			
		

> *Colouring the charts.* We need to learn to see charts as they really are, no more no less. This takes practice and experience to develop an objective and unemotional interpretation of charts. This needs to become part of the subconscious, as more often than not the more people study a chart the more likely they are to see what they want to see. Yes, further study may reveal nuances or intricacies in the chart, but the basis for looking at the chart in the first place needs to have some foundation. If you have the capability, try doing and auto-display of the ASX 100 on a five (5) second display and only select the charts that are of interest to you for a more in-depth analysis. Of course there may be some that don't select that may do well, but who has time to examine and analyse each individual chart representing all the stocks on the ASX, or anything from the ASX 500 down to the ASX 50.




Agree.  Indeed, aligning the subconscious so as not to impose a view is a challenge, and one I struggle with daily.  I think that it is a positive step however just to recognise this dimension exits.  To truly understand and master this approach is a major undertaking, but I would argue a necessary one.



			
				lesm said:
			
		

> *Bullish vs bearish.* The predominant trait of most people is bullish, as it is easier for people to understand making a profit from rising prices. Some of the trading clichÃ©s, such as buy low sell high contribute to this. ClichÃ©s may sound good, but without understanding what they mean or how to apply them counts for nothing. It is a foreign concept for most people to be comfortable with making money from losing money. For those people, it is a skill or approach that they will need to learn. They also need to learn that simply converting a number of trading systems from trading the long side to trading the short side will not always work.




Interestingly, my chart bias is bearish, which actually helps to see counter trends in bull markets, but means missing some strong bull moves sometimes when I’m not compensating.  It also helps in playing the short side of the market, a very important side to neglect!



			
				lesm said:
			
		

> *Knowing what to look for.* In all probability is a learned skill and requires practice. Trend following is the easiest, but to trade in all sorts of market conditions people need to learn an effective approach to trading in different styles of markets or using different styles/approaches in a single set of market conditions, if they wish to fully exploit the market. In any given market only a particular percentage of stocks are trending. To simplify this the remainder of stocks will be ranging or in some form of consolidation pattern or moving sideways. To exploit opportunities requires the ability to use different trading styles in any given market, as well as knowing what to look for and how to apply it. It also about understanding the strengths and weaknesses of different approaches. For example, a number of trend following systems will start to fail and/or experience high drawdowns, as market volatility increases.




I think this comes with experience. Sometimes the market is a brutal teacher.  The more stupidity in managing a position, often (but not always) the tougher the punishment.  Agree, trend following looks easy (certainly in a raging bull or bear market), but recognising consolidations is certainly a useful element in the mix.  When using time based derivatives, time becomes a significant element too.



			
				lesm said:
			
		

> *Prediction.* Probability gives us an approach to dealing with uncertainty, but no guarantees, otherwise we might as well just use darts to select stocks. The quality and reliability of application has a dependency on the user of the method and how much work they are prepared to do to prove/disprove and refine their methods. Of course there will be an element of quesstimation, but whoever said trading was an exact science. There is a need to learn multiple skills, as well as to manage our own psyches, as well as to understand market behavior and how to apply those skills.




I think this boils down to the individuals capacity to imagine the future, and do so with a degree of inspiration (although mechanical traders, and some fundamental players may want to modify this statement).  It is about looking at potential future events, and being able to effectively assess probabilities enough to consistently deliver a positive expectancy.  This is actually more complex than it sounds since it is multidimensional, and I would argue that the majority of the commentators on this site fall into a couple of major paradigms, and miss a whole raft of issues (too many to cover here, and something I’m still in the process of grasping).

Your concept of “Quesstimation” sits well with my view of trading, I see it as primarily an art and not a science, even though there are considerable dimensions of mathematical theories involved.



Thanks again Les for your perspicacious perspectives!


Regards,


Magdoran


----------



## Magdoran

lesm said:
			
		

> Hi Magodran,
> 
> 
> 
> I found elements of Penfold's book useful, it also helped some other thoughts I was having fall into place or clarify them.
> 
> You can usually find something useful in a range of books, sometimes I am just looking for an alternative view or approach or a clue to help resolve or refocus an issue.
> 
> Good to see that you are still posting the chart and following up on it.
> 
> Will give Daffy some reading when he gets back, must be busy this weekend, as he has been very quiet.
> 
> Cheers,
> Les.



Thanks Les,


I know what you mean, I’m constantly on the prowl for new ideas…  I liked the way Penfold opened in the text.  He was quite candid about viewing his comments as opinion, and to be suspicious of all ideas ventured in the financial fraternity.  I like that.

Re posting the ongoing Oil charts, I sometimes wonder if this is such a good idea.  I have no way of knowing if anyone thinks this is of interest.  

I’ve been working on this stuff for so long now that it’s easy to lose perspective since it’s second nature to me, and sometimes consider that it must come over as jargon and gobbledegook.  I’d hate to be boring the pants off everyone with it.

Of course it’s fun with Wayne, wavepicker, RichKid, ducati, swingstar, daffy (tech/a), barney, kennas, professor Frink, snake, coyote, michaelD, duckman#72, to name a few as travelling companions (yourself included of course Les).  At least everyone here has had a great sense of humour, and that makes it all worthwhile, doesn’t it?


Regards,


Magdoran


----------



## It's Snake Pliskin

Magdoran and Les where did you guys get "Phantom of the Pits"?


----------



## lesm

It's Snake Pliskin said:
			
		

> Magdoran and Les where did you guys get "Phantom of the Pits"?




Snake,

I have included a link to the softcopy below:

http://www.trading-naked.com/library/Phantom_of_the _Pits.pdf

Cheers.


----------



## Duckman#72

Magdoran said:
			
		

> I’ve been working on this stuff for so long now that it’s easy to lose perspective since it’s second nature to me, and sometimes consider that it must come over as jargon and gobbledegook.  I’d hate to be boring the pants off everyone with it.





Ah Magdoran......"since it's second nature"........that's just where I want to be!!!   

As for "boring the pants off everyone"......rest assured I love this thread, your shared knowledge and your fencing with Tech. 

Duckman


----------



## lesm

Duckman#72 said:
			
		

> Ah Magdoran......"since it's second nature"........that's just where I want to be!!!
> 
> As for "boring the pants off everyone"......rest assured I love this thread, your shared knowledge and your fencing with Tech.
> 
> Duckman




Magodoran,

There has been well over 5,000 views of this thread, so it is certainly getting some attention, even if there have not been a lot of comments.

The good thing is the thread has not been hijacked, as some others have, and let's hope it stays that way.

A few questions from some of the readers could help to target or highlight particular aspects, if they stay on topic, and we can expand on some areas as required.

Cheers,
Les.


----------



## It's Snake Pliskin

lesm said:
			
		

> Snake,
> 
> I have included a link to the softcopy below:
> 
> http://www.trading-naked.com/library/Phantom_of_the _Pits.pdf
> 
> Cheers.




Thanks Les.


----------



## wayneL

Magdoran said:
			
		

> Love it Wayne!
> 
> I actually think you look the most handsome in the 3rd photo.
> 
> Your last fancy dress party no?
> 
> 
> Magdoran




Thats just me before a shower LOL

However, this could have been me with my oil position; had I not learned long ago to be a professional coward


----------



## Magdoran

Ok, at the expense of being accused of hindsight trading, I had intended to put this comment out yesterday, but ran out of time to do so – very exciting period in the markets – hence very busy…

The purpose of these comments is to illustrate a style, not to be a hero.  The only place I want to be a hero in is in my bank account, hence trading takes priority over posts.

So, my TARDIS got stuck yesterday…  Anyway, it was time to go short at the close in crude oil yesterday, so you can just assume a short entry as of today if you prefer as a worst case scenario, or accept that the trade was on then, up to you.  The idea here is to get into the “swing of things”.

Let me outline what I saw:

The false break on the 28th September was validated by the bearish bar on the 2nd of October, invalidating the potential bullish attempt on the 29th September.

This left us with a 4 day bullish counter trend against the bear drive in the daily chart – very bearish probabilities.  Have a look at the high of the 29th September and notice how little the attempt made an impact into the bearish drive.

On the attached chart I’ve set some price targets.  There are too many price ranges to go into them all, and none really stand out to me currently, but here are the ones that seem more relevant.  Sorry, can’t really give a good projection on this currently:  If crude capitulates we may see $45.36 or if less aggressive, $50.08 around 30th October.  $47.84 is a very important price point and may present strong resistance, and $55.50 is also an important price level.

I’ll post a new comment up when my EOD futures data comes in.  As you can see, my orientation is very bearish now, but there is a danger for short positions that a marginal low will come in, and the trend may reverse suddenly.  The main drive down in my view was a less risky trade.  There is a lot more risk in my view trading this part of the leg.


Regards


Magdoran


----------



## tech/a

Excellent Moggie


----------



## Magdoran

The 3rd October bar could be exhaustive and see one or two range trading days.  If the 4th opens up at or above the opening on the 3rd, this would not look good for shorts, especially if it closed up – the further up the worse it would look for bears.

If entering short after last nights price action, I suspect that an entry in a day or two is realistic, expecting an inside day around the middle of last nights bar.  There may also be a counter trend at some point for 2-4 trading days – watch for a similar pattern to the last false break.

I suspect we now have our direction for the 30th October target which is bearish.

We’re getting a slight “zig zag” pattern here (kind of a creeping congestion down) hence we may see a strong break away to terminate the bear drive in a spike/capitulation move down.  It could also signal some support coming in.  That could mean a fast almost vertical drop to wash out the sellers.  This is in effect a panic move down.  If we get a higher low though, this would suggest a bullish attempt, and put the short at risk.

It is possible the previous cycle has ended, so I have added an alternative cycle which may now become dominant.  Price action at these time points will give some clues as to whether this is the case.

As for the Elliott labelling, this still could be the wave 3, hence some caution here, hence the exit half (preferably just above) the one quarter extension.

The price action on Monday 2nd October was an entry signal since it confirmed the false break on the 28th September, a confirmed lower high.  This was the signal we were looking for to go short.  If the time cycle holds, there is a good probability of a sustained bearish drive in a “blow off” / capitulation move down into the 30th October target.  Price action will give clues if this is a correct interpretation of what I’m seeing in the charts.


Regards,


Magdoran


----------



## Magdoran

Duckman#72 said:
			
		

> Ah Magdoran......"since it's second nature"........that's just where I want to be!!!
> 
> As for "boring the pants off everyone"......rest assured I love this thread, your shared knowledge and your fencing with Tech.
> 
> Duckman



Hey Duckman#72,


Great to hear from you.  So you like the jousting do you?  Daffy and I put on a good show, don’t we?  Hahahaha.  

Wayne just cracks me up sometimes.  Up pops an email, and I click onto the site, and kill myself laughing with his latest antics.  I laughed so hard one day reading his naughtiness that I actually spilt my cup of tea all over the place.  My wife must think I’m mad!

Hope the running commentary is food for thought (I’m glad someone is reading it – still think it must be hard to understand at times…).


Warm Regards


Magdoran


----------



## barney

Hi guys, Two reasons for this post; Firstly to see if I can get the chart on the screen, and secondly it is a good example of a downward breakout (short term ) (thats how I would describe it anyway) , and a good opportunity to get feedback from the experienced members on the forum on the opinions of a "novice"  in "training" 

What I see/know about the stock, and why I would/will be "watching" it over the next few days/ weeks; 

1) Just had a downgrade of resource at current mining op. (1 third)New mine has been commissioned to produce starting this month I believe. Fundamentals of the Co. basically unchanged apart from that.

2)Large SP drop on big volume (initial spike has eased, volume decreasing slightly, and the spread of the SP has lessened) ........... Indicates to me further drop is likely, but looks to be slowing.

3) Old support area of around $1.35 will now become the point of resistance against the Sp rebounding, but imo this will be a "weak" POR due to the small amount of time/ volume the SP traded in this area. 2nd and third POR's also very weak, which indicates to me, that if/when the SP does reverse, it should have little trouble rebounding strongly. 

I would be looking to "possibly" trade this stock in the future if I get confirmation of a positive reversal after the current downtrend has proven to be over. Imo this will most likely happen because the size of the downtrend seems to be an "over reaction" to the news recieved. 

Gold prices, (according to those that know more than myself) are tipped to be  
a good "long term" investment, so, if this Co. has a resource upgrade (which the management indicates is likely in the future), I could imagine the SP returning to much higher prices.

Of course, if the SP does not reverse. or simply "stagnates" at its new lower level, then no trade would be considered. 

Hope the charts "post up" ............... Any opinions and constructive comments/criticisms appreciated ............... Thanks, Barney

( PS The second POR was off the left of screen at about $1.45 ; also short time span.)


----------



## It's Snake Pliskin

barney said:
			
		

> Hi guys, Two reasons for this post; Firstly to see if I can get the chart on the screen, and secondly it is a good example of a downward breakout (short term ) (thats how I would describe it anyway) , and a good opportunity to get feedback from the experienced members on the forum on the opinions of a "novice"  in "training"
> 
> What I see/know about the stock, and why I would/will be "watching" it over the next few days/ weeks;
> 
> 1) Just had a downgrade of resource at current mining op. (1 third)New mine has been commissioned to produce starting this month I believe. Fundamentals of the Co. basically unchanged apart from that.
> 
> 2)Large SP drop on big volume (initial spike has eased, volume decreasing slightly, and the spread of the SP has lessened) ........... Indicates to me further drop is likely, but looks to be slowing.
> 
> 3) Old support area of around $1.35 will now become the point of resistance against the Sp rebounding, but imo this will be a "weak" POR due to the small amount of time/ volume the SP traded in this area. 2nd and third POR's also very weak, which indicates to me, that if/when the SP does reverse, it should have little trouble rebounding strongly.
> 
> I would be looking to "possibly" trade this stock in the future if I get confirmation of a positive reversal after the current downtrend has proven to be over. Imo this will most likely happen because the size of the downtrend seems to be an "over reaction" to the news recieved.
> 
> Gold prices, (according to those that know more than myself) are tipped to be
> a good "long term" investment, so, if this Co. has a resource upgrade (which the management indicates is likely in the future), I could imagine the SP returning to much higher prices.
> 
> Of course, if the SP does not reverse. or simply "stagnates" at its new lower level, then no trade would be considered.
> 
> Hope the charts "post up" ............... Any opinions and constructive comments/criticisms appreciated ............... Thanks, Barney
> 
> ( PS The second POR was off the left of screen at about $1.45 ; also short time span.)




Good Morning Barney.

Too much analysis in the charts! Line chart? 

Distribution - there is plenty of supply there.


----------



## barney

It's Snake Pliskin said:
			
		

> Good Morning Barney.
> 
> Too much analysis in the charts! Line chart?
> 
> Distribution - there is plenty of supply there.




Hi Snake,   Youre up late (or early) as well..... I havn't been to bed yet   ............ Could you elaborate for me on your comments ............ ie Are you saying I'm reading to much into the chart? .............. I assume the Distribution indicates plenty of scope for more "downturn" ......... thats what I was thinking ......... Really what I was trying to get at was this stock would warrant being on a watchlist over the next period of time .... the high volume steep price drop could either indicate a possible downside breakout, or, if it did recover on good news, it could bounce back strongly considering the lack of upward resistance points ........ so not looking to trade it atm, just worth keeping an eye on  Cheers Barney.


----------



## MichaelD

Barney,

My   about BDG.

Why would you be considering BUYING a stock that is going DOWN?

Profitable traders:
Stock price going down = SELL
Stock price going up = BUY

Unprofitable masses:
Stock price going down = BARGAIN


I tend to agree with Snake in that there is a bit too much analysis on your chart. My analysis of BDG follows;

1. Price going down.
2. Breakdown 9-10 with volume spike
3. Materials sector is weak

This signals a short sell on 10-10.

Disclaimer: I hold a paper short in BDG as above (I'm currently paper trading my shorting system until I can prove that it has a positive expectancy).


The FAR more important questions for you to answer are;
1. Can I apply a positive expectancy system to this observed pattern?
2. Can I handle the fact that there is approximately a 50 - 60% chance that I will NOT profit from this trade?
3. Can I handle the fact that in fact the vast majority of my analysis can be shown to be no better than a coin toss?

The entry is merely the starting point, the least important part of your trade.


----------



## Magdoran

barney said:
			
		

> Hi guys, Two reasons for this post; Firstly to see if I can get the chart on the screen, and secondly it is a good example of a downward breakout (short term ) (thats how I would describe it anyway) , and a good opportunity to get feedback from the experienced members on the forum on the opinions of a "novice"  in "training"
> 
> What I see/know about the stock, and why I would/will be "watching" it over the next few days/ weeks;
> 
> 1) Just had a downgrade of resource at current mining op. (1 third)New mine has been commissioned to produce starting this month I believe. Fundamentals of the Co. basically unchanged apart from that.
> 
> 2)Large SP drop on big volume (initial spike has eased, volume decreasing slightly, and the spread of the SP has lessened) ........... Indicates to me further drop is likely, but looks to be slowing.
> 
> 3) Old support area of around $1.35 will now become the point of resistance against the Sp rebounding, but imo this will be a "weak" POR due to the small amount of time/ volume the SP traded in this area. 2nd and third POR's also very weak, which indicates to me, that if/when the SP does reverse, it should have little trouble rebounding strongly.
> 
> I would be looking to "possibly" trade this stock in the future if I get confirmation of a positive reversal after the current downtrend has proven to be over. Imo this will most likely happen because the size of the downtrend seems to be an "over reaction" to the news recieved.
> 
> Gold prices, (according to those that know more than myself) are tipped to be
> a good "long term" investment, so, if this Co. has a resource upgrade (which the management indicates is likely in the future), I could imagine the SP returning to much higher prices.
> 
> Of course, if the SP does not reverse. or simply "stagnates" at its new lower level, then no trade would be considered.
> 
> Hope the charts "post up" ............... Any opinions and constructive comments/criticisms appreciated ............... Thanks, Barney
> 
> ( PS The second POR was off the left of screen at about $1.45 ; also short time span.)



Hi barney,


You late night bandit you!

Looking at your chart gives me a headache.  It looks like spaghetti.  How you can see anything beats me.  Agree with Snake and Michael here, there’s way too much going on. 

Remember what I said about gizmo’s obscuring the chart?  Well this one is so busy with lines everywhere even I had to struggle to mentally filter them out when I was looking at your chart.  I can’t help but feel it has to be even more distracting for you since you’re new to this.

Ok, in my view, most people don’t know how to use moving averages effectively at the best of times (of course there are some people on this forum who do).  They are a lagging indicator, and in many cases in my view tell you what is happening well after the event has happened, and what the chart was telling you was a probability if you cared to look at it and not the indicator at the time.

In strongly trending markets, this is not so much of a problem, the main trend is easy to see, and if you take longer term trades, you can do quite nicely without much angst, even using moving averages.  

In consolidating and creeping markets this all changes, and moving average/oscillator based traders who don’t understand how to use these indicators get whipsawed in and out of trades – the death of 1000 cuts.  

Moving averages used the wavepicker uses them in my view is an effective use – he displaces them and ties them into cycle analysis (very important in resource stocks).


Distribution:
Ok, the concept about distribution is that the smart money is exiting in an orderly fashion, and don’t want to upset the price too much as they exit taking profits or reducing exposure, or transferring capital to a different prospect, prior to a sell off of the underlying.

Snake is talking about pattern analysis, and he’s seeing a pattern that he’s interpreting as distribution – the smart money selling off in an orderly fashion before a sell off.  When you get a consolidation pattern this often precedes a decline, often a fast and sharp one, hence if this is your view, these present great shorting opportunities.

Broad Market Influences:
Now, there is some danger in looking at the materials index at the moment in isolation.  Resources are driven by commodities.  If you’re going to trade resource stocks, you have to be aware of the markets that affect them.  So, you need to be aware of which metal futures or oil, or gold, are relevant.  Then you need to be aware of currency movements.

I remember a trading colleague and I went long LHG a few years ago purely from a bullish gold chart, only to see LHG move down.  We couldn’t figure this out at first, but then I realised I hadn’t done my due diligence, and forgot to include currency movements.  The US dollar was falling faster than gold was going up, so in net terms, the value to LHG was going DOWN, not up!  Just think about these kinds of things when you’re doing your analysis.

If you look at JBM recently, why do you think this has been so bullish?  Look at the nickel futures and compare it with other metals (particularly copper).  Nickel has been very bullish of late, and the USD has been strengthening.  What do you think this might do to the market perception?  Of course you could just trade the JBM chart, but watching the relevant commodities and currencies may give you an early warning of opportunities and threats.

I think it is great what you are doing by the way.  Saying what you see, then thinking about other perspectives.  A great way to learn.  But be patient, and filter the many views, and take what you can see.  It takes time to learn how to read charts believe me.  You never really stop learning.


Regards


Magdoran

P.S.  How’s the guitar!


----------



## barney

MichaelD said:
			
		

> Barney,
> 
> My   about BDG.
> 
> Why would you be considering BUYING a stock that is going DOWN?
> 
> Profitable traders:
> Stock price going down = SELL
> Stock price going up = BUY
> 
> Unprofitable masses:
> Stock price going down = BARGAIN
> 
> 
> I tend to agree with Snake in that there is a bit too much analysis on your chart. My analysis of BDG follows;
> 
> 1. Price going down.
> 2. Breakdown 9-10 with volume spike
> 3. Materials sector is weak
> 
> This signals a short sell on 10-10.
> 
> Disclaimer: I hold a paper short in BDG as above (I'm currently paper trading my shorting system until I can prove that it has a positive expectancy).
> 
> 
> The FAR more important questions for you to answer are;
> 1. Can I apply a positive expectancy system to this observed pattern?
> 2. Can I handle the fact that there is approximately a 50 - 60% chance that I will NOT profit from this trade?
> 3. Can I handle the fact that in fact the vast majority of my analysis can be shown to be no better than a coin toss?
> 
> The entry is merely the starting point, the least important part of your trade.






Thankyou Michael, Your comments always are respected,  Can I stress here guys, that I am NOT looking to buy this stock at present unless there is/was a positive reversal, otherwise I agree that it looks better "short" ...... What actually got me interested in the stock was I initially saw it as a "short sell", but then asked myself, is the short sell position a "safe bet" due to the exteme spike ....(from what I've seen of many stocks that spike down like this,  seem to "die out" quickly and often reverse strongly)    Its kind of the Renee Rivkin theory of get them while they are down, but only on positive sentiment!! ......... 

If the stock was to reverse in a week/month/6 months, is it fair to say that a) Due to the fact that the SP is currently at a very low point in its recent history, and b) The potential upward resistance to me seems very minimal (if the stock does rebound) , that the stock "bares attention"  ....Thats all I'm really getting at ............ I put the chart in simply to visualise the spike down, and to try and give an example of my reasoning behind the "weak" upward resistance in case of an upturn .......

Thankyou for any further comments, Barney. (Still learning......)


----------



## barney

Magdoran said:
			
		

> Hi barney,
> 
> 
> You late night bandit you!
> 
> Looking at your chart gives me a headache.  It looks like spaghetti.  How you can see anything beats me.  Agree with Snake and Michael here, there’s way too much going on.
> 
> Remember what I said about gizmo’s obscuring the chart?  Well this one is so busy with lines everywhere even I had to struggle to mentally filter them out when I was looking at your chart.  I can’t help but feel it has to be even more distracting for you since you’re new to this.
> 
> Ok, in my view, most people don’t know how to use moving averages effectively at the best of times (of course there are some people on this forum who do).  They are a lagging indicator, and in many cases in my view tell you what is happening well after the event has happened, and what the chart was telling you was a probability if you cared to look at it and not the indicator at the time.
> 
> In strongly trending markets, this is not so much of a problem, the main trend is easy to see, and if you take longer term trades, you can do quite nicely without much angst, even using moving averages.
> 
> In consolidating and creeping markets this all changes, and moving average/oscillator based traders who don’t understand how to use these indicators get whipsawed in and out of trades – the death of 1000 cuts.
> 
> Moving averages used the wavepicker uses them in my view is an effective use – he displaces them and ties them into cycle analysis (very important in resource stocks).
> 
> 
> Distribution:
> Ok, the concept about distribution is that the smart money is exiting in an orderly fashion, and don’t want to upset the price too much as they exit taking profits or reducing exposure, or transferring capital to a different prospect, prior to a sell off of the underlying.
> 
> Snake is talking about pattern analysis, and he’s seeing a pattern that he’s interpreting as distribution – the smart money selling off in an orderly fashion before a sell off.  When you get a consolidation pattern this often precedes a decline, often a fast and sharp one, hence if this is your view, these present great shorting opportunities.
> 
> Broad Market Influences:
> Now, there is some danger in looking at the materials index at the moment in isolation.  Resources are driven by commodities.  If you’re going to trade resource stocks, you have to be aware of the markets that affect them.  So, you need to be aware of which metal futures or oil, or gold, are relevant.  Then you need to be aware of currency movements.
> 
> I remember a trading colleague and I went long LHG a few years ago purely from a bullish gold chart, only to see LHG move down.  We couldn’t figure this out at first, but then I realised I hadn’t done my due diligence, and forgot to include currency movements.  The US dollar was falling faster than gold was going up, so in net terms, the value to LHG was going DOWN, not up!  Just think about these kinds of things when you’re doing your analysis.
> 
> If you look at JBM recently, why do you think this has been so bullish?  Look at the nickel futures and compare it with other metals (particularly copper).  Nickel has been very bullish of late, and the USD has been strengthening.  What do you think this might do to the market perception?  Of course you could just trade the JBM chart, but watching the relevant commodities and currencies may give you an early warning of opportunities and threats.
> 
> I think it is great what you are doing by the way.  Saying what you see, then thinking about other perspectives.  A great way to learn.  But be patient, and filter the many views, and take what you can see.  It takes time to learn how to read charts believe me.  You never really stop learning.
> 
> 
> Regards
> 
> 
> Magdoran
> 
> P.S.  How’s the guitar!





Hi Mag, Ditto to my appreciation of your comments, always enlightening ........... I haven't had time to digest it yet ..............Unfortunately have to do a real job as well atm (thats what happens when you lose a lot of money   

Anyway, I'll take all on board and reply later today with any questions etc Thanks.

PS The chart is not nearly so messy looking before it was compressed ....... Imagine how it looked to me at 4 o clock this morning   

PPS The old Les Paul is fine, but we havn't been working a lot lately .... actually good to have some weekends at home for a change ........... getting too old for it I think ................... The current "day job" keeps me ticking over ................. Anyway thanks again , Barney.

PPPS Re my chart looking like spaghetti (lol) ....Do you not like spaghetti? ......It tastes good on toast!!


----------



## yogi-in-oz

Hi folks,

BDG ..... fwiw, it should finish 2006 on a very strong note !~!

 ..... and BDG is a typical example of the dilemma that faces 
all traders, when a stock falls off its perch ..... that is, at 
which point do we re-enter this market???

If we consider the price axis alone, then our TA will be
focused on a PRICE level that may have been historical 
support ..... ..... at the lower edge of a trading channel, 
for example.

Tools for analyzing the price axis seem to be endless, but 
even if the price level from our TA proves to be correct, how
long will BDG bounce along on its lows, before lifting into
the next upswing ..... ???

Maybe, if we do some analysis of the TIME axis and marry
it to our analysis of the PRICE axis, we may be able to
come up with a better entry, BEFORE the next rally comes
along.

As time moves on, confirm your regular BDG analysis with
the following time cycles:

       25102006 ..... minor and positive (intraday move only)

  30-31102006 ..... 2 minor cycles here .....

  03-06112006 ..... minor

      21112006 ..... minor (intraday)

      23112006 ..... significant and positive - finances???

      30112006 ..... positive spotlight on BDG ..... 

      13122006 ..... significant and positive news here???

 15-19122006 ..... 1 major, positive cycle and 2 minor cycles 


 27-29122006 ..... 2 cycles and a strong rally here                                                        ... ???

In January 2007, BDG still should stiil be well supported,
but February 2007 will likely bring the next slide in price.

happy days

 yogi



=====


----------



## barney

Hi guys,  It was my first Chart post so it was messy ......... what can I say??

Can I start this again (now that is not 4 am in the morning!!)

Thanks for the feedback so far ........... It is fairly difficult for me trying to get my points across ..........

1) Without sounding like I'm pretending I know what I'm talking about!! , and,  

2) Actually conveying clearly what I'm thinking with regard to charts etc. ...so here is kinda what I was thinking with regard to BDG ...........

Firstly I noticed BDG as a heavily falling stock yesterday on a generally up day for the Oz S. Market .....created interest for possible "short sell" 

I looked at the chart, but considered the heavy down spike to be "well under way" , and therefore a short sell on this stock maybe in fact now risky (considering the stock was at lowest point for a year. 

My opinion was that I would NOT short sell this stock!! (Not enough downside to justify it)

Baring in mind that it is a "quality" stock with great potential, I then thought, if it is at a "low point" (mainly due to Gold price dropping and news of resource downgrade), then, assuming that the resource (according to the Company) would/could be increased substantially at some point in the future, then it may be more beneficial to wait for an "upturn" in the stock price from its present low, hence .................  

The way I would consider this stock from a trading point of view, would be to wait for "confirmation" of a reversal (and I do believe it will reverse .... maybe in a week, maybe in a month maybe 6 months!!) 

It looks to me as though the potential upside is far greater than the downside for this stock (even if  not in the immediate short term ) ............

So that was my "analysis" of what I "saw" ............ not that technical, but I believe the chart will give a clearer picture of when the stock is ready to reverse .............

In saying that, the volume has lowered in unison with the price spread again today, indicating ..........well indicating nothing!!, other than it bares further investigation over the next period of time to see whether the sp might reverse, and IMO, if it does reverse, particularly on good news such as a resource upgrade etc, then the upside for this stock looks potentially promising ................. Hope that is clearer regarding what I was "seeing" ............ I will post a clearer chart (hopefully) showing nothing more than the Volume on SP decrease, and the  possible support/resistance levels, which, when considered with "Time", hopefully "backup" my assumptions (OK I know assumptions don't count in the stock market ............. unless they are correct??!!)  Cheers All .............. This may seem very "novice" orientated, but I assure you that I "consider" my opinions carefully, I appreciate that I don't understand the "true" concepts of  technical analysis (YET), but I like to think   I am "intelligent" enough to have "sensible" concepts ........... Again further comments and criticisms are most welcome .......... All the best, Barney.

PS If the SP dropped as low as $0.80 (previous support level) , but then reversed substantially, this would indicate a strong possible "upside" ?? .... Yes/No ??  Thanks .............


----------



## MichaelD

barney said:
			
		

> If the stock was to reverse in a week/month/6 months, is it fair to say that a) Due to the fact that the SP is currently at a very low point in its recent history, and b) The potential upward resistance to me seems very minimal (if the stock does rebound) , that the stock "bares attention"  ....Thats all I'm really getting at ............ I put the chart in simply to visualise the spike down, and to try and give an example of my reasoning behind the "weak" upward resistance in case of an upturn .......



I have to say I pretty much completely disagree with this. I'd argue that unless something very exciting happens to the price of gold or to this company, it's going to wallow for a long long time.

Why?

Your assessment: Stock price is LOW. BARGAIN ALERT.

My assessment: The chart is merely a reflection of people and their actions. Every single person who bought this stock in the last 10-11 months and who is still holding it is now sitting on a LOSS. Everyone is in PAIN. The universal emotion is FEAR. There will be people that bought this stock at $2.50 who still hold it at $1. Ditto for all the prices in between.

What do you think the vast majority of these people will do as soon as the share price shows the slightest hint of getting close to their buy price? Answer: Sell and pat themselves on the back for getting out even. What will happen to the price if there is a deluge of sellers every time the price rallies? Answer: Down she goes, swamping the people attempting to bottom pick. Dead cat bounce heaven.

I could well be totally wrong - if I am, I'll lose a small amount of capital and move on - but if I'm right, I will do well. That's what a trailing stop is for. I expect to be right 40-50% of the time.

Take a look at BCL for an almost identical scenario being played out on a heavy downwards price/volume spike but a little further advanced down the line.


Bottom picking is a very, very dangerous strategy to your capital. It is much, much safer to find a nice trend already in progress and hop on. Yes, you'll sometimes pick the very top of the trend, but the upside of getting onto a trend that runs for months/years will far outweigh the occasional buys at the top.

Think about it - if a stock makes a new all-time high, that means EVERY SINGLE PERSON who has gone long on a stock is in PROFIT and patting themselves on the back for their cleverness. They are less likely to sell than owners who are panicking.


----------



## barney

Think about it - if a stock makes a new all-time high, that means EVERY SINGLE PERSON who has gone long on a stock is in PROFIT and patting themselves on the back for their cleverness. They are less likely to sell than owners who are panicking.[/QUOTE]


Thank again Michael, Point well made, and well taken. 

My impession of BDG may have been a bit tainted with what I saw on BOL .......... about 25th September looked to be on a continous downturn ..........Looked like a good "short" opportunity ............ The share reversed north again fairly strongly last two weeks. I'd be interested in anyones perception of this  stock? Does it look like the trend has finally turned or will the longer term down trend re establish itself? Cheers, Barney.


----------



## It's Snake Pliskin

Hello Barney,

I have to agree with Michael.

Re: your chart; higher highs and higher lows tell when it has turned - generally. Potential upside is generally hindered by those holders who sell out to recoup losses which takes time. When there is lighter supply it MAY trend up.

Regarding the first chart Magdoran got it right: I like spaghetti  but can`t read it  

Snake


----------



## MichaelD

barney said:
			
		

> My impession of BDG may have been a bit tainted with what I saw on BOL .......... about 25th September looked to be on a continous downturn ..........Looked like a good "short" opportunity ............ The share reversed north again fairly strongly last two weeks. I'd be interested in anyones perception of this  stock? Does it look like the trend has finally turned or will the longer term down trend re establish itself?



Barney,

You will NEVER learn to trade profitably until you realize that the answer to this question is;

1. Unknowable except in retrospect, and
2. Makes no difference to your profitability.

You MUST stop wasting your time on the ENTRY and instead focus on what you do AFTER the entry, namely how to EXIT profitably.

If I were to assign profit %s to the components of a trading system, I'd suggest;

Entry - Less than 5%
Exit - 75%
Money Management - 20% of extra cream on top

...and then you need the psychological fortitude to cope with this.

What % of your research time do you spend on working out your exit strategy vs your entry strategy?


----------



## Magdoran

Crude is struggling to go down.  But the trend in the daily is still bearish.

It is still possible for a capitulation move down to occur to wash out the sellers, but there is also a possibility now of this being the marginal low, and a bullish drive coming from here.

But I’m sticking to my guns till I see something to invalidate the bearish drive currently in the chart, and I’m not seeing this.

This has not been an orderly sell off.  A lot of players were hurt, and some are still hurting, so I would not be surprised to see some more downside.

The trend is not as strong as it was in August and September, but it is still down.

There could be a small 5 wave structure in place now starting in late September.  I’m going to watch this closely to see how it resolves.


Regards


Magdoran


----------



## Magdoran

barney said:
			
		

> Hi guys,  It was my first Chart post so it was messy ......... what can I say??
> 
> Can I start this again (now that is not 4 am in the morning!!)
> 
> Thanks for the feedback so far ........... It is fairly difficult for me trying to get my points across ..........
> 
> 1) Without sounding like I'm pretending I know what I'm talking about!! , and,
> 
> 2) Actually conveying clearly what I'm thinking with regard to charts etc. ...so here is kinda what I was thinking with regard to BDG ...........
> 
> Firstly I noticed BDG as a heavily falling stock yesterday on a generally up day for the Oz S. Market .....created interest for possible "short sell"
> 
> I looked at the chart, but considered the heavy down spike to be "well under way" , and therefore a short sell on this stock maybe in fact now risky (considering the stock was at lowest point for a year.
> 
> My opinion was that I would NOT short sell this stock!! (Not enough downside to justify it)
> 
> Baring in mind that it is a "quality" stock with great potential, I then thought, if it is at a "low point" (mainly due to Gold price dropping and news of resource downgrade), then, assuming that the resource (according to the Company) would/could be increased substantially at some point in the future, then it may be more beneficial to wait for an "upturn" in the stock price from its present low, hence .................
> 
> The way I would consider this stock from a trading point of view, would be to wait for "confirmation" of a reversal (and I do believe it will reverse .... maybe in a week, maybe in a month maybe 6 months!!)
> 
> It looks to me as though the potential upside is far greater than the downside for this stock (even if  not in the immediate short term ) ............
> 
> So that was my "analysis" of what I "saw" ............ not that technical, but I believe the chart will give a clearer picture of when the stock is ready to reverse .............
> 
> In saying that, the volume has lowered in unison with the price spread again today, indicating ..........well indicating nothing!!, other than it bares further investigation over the next period of time to see whether the sp might reverse, and IMO, if it does reverse, particularly on good news such as a resource upgrade etc, then the upside for this stock looks potentially promising ................. Hope that is clearer regarding what I was "seeing" ............ I will post a clearer chart (hopefully) showing nothing more than the Volume on SP decrease, and the  possible support/resistance levels, which, when considered with "Time", hopefully "backup" my assumptions (OK I know assumptions don't count in the stock market ............. unless they are correct??!!)  Cheers All .............. This may seem very "novice" orientated, but I assure you that I "consider" my opinions carefully, I appreciate that I don't understand the "true" concepts of  technical analysis (YET), but I like to think   I am "intelligent" enough to have "sensible" concepts ........... Again further comments and criticisms are most welcome .......... All the best, Barney.
> 
> PS If the SP dropped as low as $0.80 (previous support level) , but then reversed substantially, this would indicate a strong possible "upside" ?? .... Yes/No ??  Thanks .............



Hello barney,

So, the veritable Les Paul is getting dusty is it?  Sounds like my guitars.  The strings probably need to be changed and the cases dusted I haven’t picked them up for so long…

Ok, re your chart... Thought I’d make a quick comment (quick for me that is).  I’ve looked at BDG and made up a couple of charts for you to look at and consider.  One is pure charting, and some observations that may be of interest.

After such a strong drive down, it is not unusual for a kind of consolidation to occur after the panic and activity.  The move often uses up many of the available sellers and buyers, hence these “spike moves” down with “spike volume” tends to “stop the move” (a “McLaren-ism”).

We may see a marginal low come in now, or a false break to end the bear campaign.  I agree, there may not be much downside, hence there is some risk here.  Just my opinion though.

Sure, historical major lows can be important price levels.  This is after all an interpretive game.  It’s a good idea to look at the longer term charts too sometimes, depending on the time frame you want to trade in.

Frankly though, there are much better shorts around (if you think shorting is a good move in a currently bullish market).  I tend to think Weinstein is on to something good – essentially short the weakest stock in the weakest sector in a bear market, and go long the strongest stock in the strongest sector in a bull market.  Simple really (bunyip would agree with this I’m sure).

Even better then, if you think the market is bullish, look, as Michael quite rightly suggests, for an up trending stock… higher lows, confirming volume, bullish pattern… etc.

Regarding your example, it is likely that for this kind of pattern to become a bullish, the prospect usually needs to base for a long time (sometimes longer than it took to go down, maybe twice or three times as much time), so just be careful.  You want higher lows, and bullish patterns, don’t you.

Every chart tells a story, you just need the right “babel fish” to understand what it is telling you.  This is the challenge – how to read the charts and comprehend the clues and patterns embedded in them.  This is where experience comes in.

Keep up the good work barney, I can see your mind fired with inspiration pushing the boundaries every day.  It’s a “rush”, isn’t it?

Regards


Magdoran

P.S.  For those that don’t know, the “babel fish” was a fictional fish you put in your ear in Douglas Adams' “Hitchhiker’s Guide to the Galaxyâ which acted as a universal translator so you could understand other languages.  Mag.


----------



## barney

Thanks Gentlemen, A few little "pearls of wisdom" amongst those replies.

Snake, as always, good advice with minimal words .....That is a rare art form!

Michael, Just wanted to clarify that I am very conscious of the importance of exits now (wasn't previously)  For example,I had to work (real job!!) yesterday, and have a couple of trades in place, but everyone is covered by a tight stop loss setup ............. My point is that I was able to "leave the house" relaxed    knowing that I shouldn't come home to any ugly surprises ............. This has been one of the most important things I have learned and I thank all those that have continued to remind me of this ....... So I do appreciate the entry is far less important than the exit, but from my "novice" level, I need to understand/comprehend how to "read" charts better to give me more confidence overall ........... Thanks again for your comments.

Mag, As always your explanations and advice are top shelf .......... Thanks for posting that chart; your additional comments cleared the smoke a bit for me.  I'll take it all on board and hopefully climb another notch up the ladder ........ and yes it is addictive this stuff ................. Its kinda like Mathematics crossed with Phsycology (both of which I enjoy) .................. what a crazy mixture!! 

PS The Les Paul is outa the box tonight ........... gig at a local RSL. Actually got a bit more work coming up towards the end of the year .......... Its the "Marrying" season!!  ................... Cheers to all, Barney.


----------



## barney

Hi Guys, Have to go out shortly, but just a quick one regarding PMN below. Curious as to anyones opinion on a likely scenario for this stock. They are going to be bought out by Suncorp I believe hence the SP spike, but then a massive SP down turn on another up day  for the Oz Stock Market. Interesting ........... Could have been seen as a long position 2 days ago ........... Now maybe a short?  I don't know; just curious for more experienced opinions, Cheers Barney.


----------



## MichaelD

barney said:
			
		

> Could have been seen as a long position 2 days ago ........... Now maybe a short?



Barney.

Profitable strategy:
Stock going up: BUY
Stock going down: SELL
Not sure whether it's going up or down: Don't touch.

Want a simple, highly profitable strategy for stocks?
1. Buy a stock which hits an all time high
2. Sell it when it breaches a long term stop, such as a wide ATR stop or a long term moving average.
3. Repeat 1 and 2 ad nauseum.

You will make far more money than the majority of traders will ever do. Making money on the stock market is the SIMPLEST thing you can possibly imagine. Actually consistently executing this laughably simple thing, however, is the HARDEST thing you will ever do because your own psychology will refuse to believe just how laughably simple it is.

Charts won't help you.
Fundamental analysis won't help you.


----------



## tech/a

Michael.

100% golden.

Most fail because they want to turn $5k into $500k this year.


----------



## rex

Michael D

Very good post.

Except for the bit about charts not helping you. Your simple strategy involves buying new highs with a stop below support or an ATR. How are you meant to see the support without a chart?

Rex


----------



## swingstar

I think Michael's point was that the _type_ of analysis used doesn't matter (even so a chart isn't necessary in that example--you could do it in Excel). 

Although analysis is very important, and there should be certain probabilities given the condition, as in any risk taking venture. What separates the net winners from the losers is having an edge, planning (unless it's a mechanical system that tells you when to act), and following the plan.


----------



## Porper

tech/a said:
			
		

> Michael.
> 
> 100% golden.
> 
> Most fail because they want to turn $5k into $500k this year.




I think all beginners are guilty of trying for huge gains, I certainly did (and sometimes still do).In a raging bull market you will survive but when there is even a relatively small correction you get nailed.

It's a misconception that the "blue chips" can't make big gains.They won't double overnight, but they also won't lose anywhere near that amount either.

MichaelD is pretty onto it also.Simple is good.

Learning too many indicators, taking Elliot Wave to it's extremes, does this make you more profitable ? . Does having 30 projection lines on a chart give a better probability of likely price action than just taking the trend, price  and associated volume,  using support / resistance levels with good money management rules.Probably not.In fact it can make you confused, too many conflicting signals can freeze you out, stop you being able to place a trade.

Nothing wrong with learning, especially if it is enjoyable, but as everybody keeps saying, the tools don't make the money.


----------



## machi

> Making money on the stock market is the SIMPLEST thing you can possibly imagine.




True, in a strongly trending market as we have had for the last 3 years. In fact you don't need such a strategy as 90% of the stocks are rising.
However how would such a strategy perform under other conditions? 
ie a choppy, volatile market or even in a bear market? 

There is nothing simple about making $$$ in the market. This is the hardest game in town.  After all, bull markets don't last forever. The only way to become consistant is to learn to trade markets in all 3 directions. For most folks that takes years of learning and practice.


----------



## nizar

MichaelD said:
			
		

> Barney.
> 
> Profitable strategy:
> Stock going up: BUY
> Stock going down: SELL
> Not sure whether it's going up or down: Don't touch.
> 
> Want a simple, highly profitable strategy for stocks?
> 1. Buy a stock which hits an all time high
> 2. Sell it when it breaches a long term stop, such as a wide ATR stop or a long term moving average.
> 3. Repeat 1 and 2 ad nauseum.
> 
> You will make far more money than the majority of traders will ever do. Making money on the stock market is the SIMPLEST thing you can possibly imagine. Actually consistently executing this laughably simple thing, however, is the HARDEST thing you will ever do because your own psychology will refuse to believe just how laughably simple it is.
> 
> Charts won't help you.
> Fundamental analysis won't help you.




Great post.
On the ball, Michael.


----------



## machi

> Learning too many indicators, taking Elliot Wave to it's extremes, does this make you more profitable ? . Does having 30 projection lines on a chart give a better probability of likely price action than just taking the trend, price  and associated volume,  using support / resistance levels with good money management rules.Probably not.In fact it can make you confused, too many conflicting signals can freeze you out, stop you being able to place a trade.




What actually is taking Elliott to extremes? Didn't know such a thing was possible. You just follow the rules. Simple. A move will either work out or becomes invalid.

Does it make someone more profitable? Who knows?. But it might give you a hell of an edge if used in the right hands. If you really would like to have your question answered Porper, then perhaps you should pit your skills against someone who uses one of these systems. Then you would find out huh?


----------



## tech/a

machi said:
			
		

> True, in a strongly trending market as we have had for the last 3 years. In fact you don't need such a strategy as 90% of the stocks are rising.




Well its far less than 90%



> However how would such a strategy perform under other conditions?
> ie a choppy, volatile market or even in a bear market?




There are times to be in the market and times to stand aside.Attempting to trade *stocks* in ALL market conditions will see periods of drawdown.



> There is nothing simple about making $$$ in the market. This is the hardest game in town.  After all, bull markets don't last forever.




It doesnt have to be it truely is very simple. Bullmarket or not. If you take a look at the all Ords,I could argue strongly that its been bullish since 1987.



> The only way to become consistant is to learn to trade markets in all 3 directions. For most folks that takes years of learning and practice.




No I dont agree that its the *ONLY * way.Maximum consistant return I agree could come with trading Indexes or Futures when bullishness in the stock market turns to bear. If you dont think you can be net profitable over long periods trading in a bullish manner only then I would say think again.

*Humans have this ability of turning the most simple into the most complex.*
This is seen on a daily basis on stock market forums.


----------



## machi

> It doesnt have to be it truely is very simple. Bullmarket or not. If you take a look at the all Ords,I could argue strongly that its been bullish since 1987.




That's true, but that is history. Past perfomance is no guarantee of future perfomance. Trends can change at any time from going up for years to going sideways for years or even down for years just like in the 1970's. Anything is possible in the market.


----------



## swingstar

This whole thing about finding a 'simple' approach is silly. Some of Mag's charts contain quite specialised knowledge or at least knowledge you won't find in any help file. Is it complex to him? Probably not. In fact it's probably very simple, and I think he's said that in the past. 

Look at some of the options strategies Wayne posts... they look like they're in another language.

Some of the economic/fundie posts are complex to me. I don't know what the hell people are talking about some of the time. 

The code of a mechanical system will look complex to anyone who hasn't programmed... and in fact could be the most complex path for many people interested in trading. Michael's 'simple' system isn't simple--because to quantify it you'd need to know how to code. 

What's simple to someone may be complex to many, and vice versa. As long as you have an edge (positive expectancy), a plan, and can follow it, you'll have an uptrending equity curve.


----------



## tech/a

> As long as you have an edge (positive expectancy), a plan, and can follow it, you'll have an uptrending equity curve.




Which in itself is simple.


----------



## swingstar

tech/a said:
			
		

> Which in itself is simple.




Agreed, but to get there isn't. Whatever path one takes will take time, and will probably be hard.


----------



## wavepicker

swingstar said:
			
		

> This whole thing about finding a 'simple' approach is silly. Some of Mag's charts contain quite specialised knowledge or at least knowledge you won't find in any help file. Is it complex to him? Probably not. In fact it's probably very simple, and I think he's said that in the past.
> 
> Look at some of the options strategies Wayne posts... they look like they're in another language.
> 
> Some of the economic/fundie posts are complex to me. I don't know what the hell people are talking about some of the time.
> 
> The code of a mechanical system will look complex to anyone who hasn't programmed... and in fact could be the most complex path for many people interested in trading. Michael's 'simple' system isn't simple--because to quantify it you'd need to know how to code.
> 
> What's simple to someone may be complex to many, and vice versa. As long as you have an edge (positive expectancy), a plan, and can follow it, you'll have an uptrending equity curve.





Hi swingstar,

Well said. I think you are very spot on with your comments there. What appears complex to one trader may in fact be quite simple for another. It just depends on how you look at things.

I'll give you an analogy. I like to fly. when I take up a passenger one of the first comments I get is "how on earth do you sacn all the gauges? Isn't it confusing?" I find it easy because I am used to it. But it wasn't always that way. It took me ages to develop that skill. However other people picked it up quite easily.

The same maybe said with trading for some people. Mag's knowledge is very specialized. I am sure he would agree with me in saying that it didn't come easy and took hrs of dedicated study and effort. But now it has probably become second nature. The skills people like him have are needed for the type of trades they take and the instruments they use. 

Thanks Mag all the others for posting those charts and comments in this thread. More people should post their knowledge. Sure at times they may conflict with the approach of others, but any material regarding markets is invaluable in my opnion
So why don't all of us put our ego's aside and see what we can learn off each other, instead of getting the knives out everytime someone posts an interesting chart saying it's too complex or some other ridiculous comment.

It seems to me that there of us here that have made a few bucks here and there and we become instant experts. 

Machi I disagree with you, making $$$ is easier than keeping it!! Knowing when to fold em is the key!! 

Cheers


----------



## swingstar

wavepicker said:
			
		

> So why don't all of us put our ego's aside and see what we can learn off each other, instead of getting the knives out everytime someone posts an interesting chart saying it's too complex or some other ridiculous comment.




Hi wavepicker, I agree. I've been posting some wave counts around in the hopes of other EW traders commenting, but besides you, Nick and Mag, there doesn't seem to be many. But nevertheless, I'd certainly welcome comments, as I feel myself being more suited to EW/Gann/Fib/etc analysis, and I still have a lot to learn. 

Maybe when I have another count soon, I'll make a new thread for EW in this section.


----------



## MichaelD

barney said:
			
		

> I had to work (real job!!) yesterday, and have a couple of trades in place, but everyone is covered by a tight stop loss setup



Barney,

Congratulations.

You don't quite realize this yet, but by doing this one seemingly small thing, you have finally separated yourself from the losing masses.

Well done!

Salute!

Keep it up.

 :drink: 

You will now see your trading change pattern. From henceforth, you will have lots of little losses, lots of little wins and the occasional huge win to make it all worthwhile. You will be able to survive long enough to get to the huge wins and to learn how the markets work.



			
				wavepicker said:
			
		

> Knowing when to fold em is the key!!



YES!


			
				rex said:
			
		

> How are you meant to see the support without a chart?



Hehe - ya got me! I should have said "Technical Analysis won't help you".


			
				machi said:
			
		

> The only way to become consistant is to learn to trade markets in all 3 directions.



Possibly true, but long term trend following done well will allow survival even in the leanest of times whilst developing other strategies, and makes plenty of money when there's even a whiff of a bull market.


			
				swingstar said:
			
		

> Agreed, but to get there isn't.



Yes, the journey is complex, but survival allows the journey to be taken.


----------



## wavepicker

> I'll make a new thread for EW in this section.





Hi Swingstar,

There maybe a thread already in this section you may want to use:-

https://www.aussiestockforums.com/forums/showthread.php?t=3570


----------



## nizar

Michael D,
Do u trade full time and how long have u been trading for?

tech/a,
I recall u said that as a new trader dont expect to be profitable until year 3. Does that include even if u have trialed and tested a system through backtesting and paper trading? Do u mean the moment u start trading for $$ in realtime is year1 and then 2 years on from that can expect to turn a profit?

must be to do with psychology then...


----------



## swingstar

nizar said:
			
		

> I recall u said that as a new trader dont expect to be profitable until year 3. Does that include even if u have trialed and tested a system through backtesting and paper trading? Do u mean the moment u start trading for $$ in realtime is year1 and then 2 years on from that can expect to turn a profit?
> 
> must be to do with psychology then...




I'd say expect longevity when you have...
* put in all the hard yards
* have a plan
* have a positive expectancy
* have capital, and
* have experience

How long till then will vary greatly amongst everybody. Could take months, years, or even decades.


----------



## nizar

swingstar said:
			
		

> I'd say expect longevity when you have...
> * put in all the hard yards
> * have a plan
> * have a positive expectancy
> * have capital, and
> * have experience
> 
> How long till then will vary greatly amongst everybody. Could take months, years, or even decades.




yeh capital is the main issue for me. i'll just read and learn and paper test until then i guess. the market will still be around in 1 year, or 5 years. or of course i can try and be a hero and blow my account in a few strokes trying to get rich overnite


----------



## swingstar

nizar said:
			
		

> yeh capital is the main issue for me. i'll just read and learn and paper test until then i guess. the market will still be around in 1 year, or 5 years. or of course i can try and be a hero and blow my account in a few strokes trying to get rich overnite




The most valuable lesson I've learned is to have patience. I think tech/a said it: Patience can be very profitable. 

Edit: BTW, money should be the least of your concerns. Getting money to start is the easy part, whether from family, banks, whatever. Generation and keeping it is the hard part.


----------



## nizar

swingstar said:
			
		

> The most valuable lesson I've learned is to have patience. I think tech/a said it: Patience can be very profitable.
> 
> Edit: BTW, money should be the least of your concerns. Getting money to start is the easy part, whether from family, banks, whatever. Generation and keeping it is the hard part.




when i start working fulltime in a few years after i graduate and i start earning real money then i will have something to play with. I dont need a loan or wateva. 

the plan is from until then i can learn a few things.

thanks for the advice.


----------



## barney

MichaelD said:
			
		

> Barney,
> 
> Congratulations.
> 
> You don't quite realize this yet, but by doing this one seemingly small thing, you have finally separated yourself from the losing masses.
> 
> Well done!
> 
> Salute!
> 
> Keep it up.
> 
> :drink:
> 
> You will now see your trading change pattern. From henceforth, you will have lots of little losses, lots of little wins and the occasional huge win to make it all worthwhile. You will be able to survive long enough to get to the huge wins and to learn how the markets work.






			
				MichaelD said:
			
		

> Thanks Michael (Cheers back to you)  :bier: ,  It was only two weeks ago that I entered a trade and did not set a stop loss (That will be my LAST trade ever that I do that in .... I promise) Guess what happened? Yeah, I'm still paying the bill for that one ....Lucky for me I've done the right thing since, and my "correct" trades are covering that "incorrect" one ............. You, and all the others who continually tell us "L' platers that money management/setting stop losses/ learning when to exit etc is the most critical aspect of trading are so RIGHT, yet, even after being told many many times previously, I still got it wrong the other week and payed dearly for it (NEVER AGAIN) ................... the "penny" has finally dropped .......... I'm a new man ......... all I need is my capital back
> 
> Also I appreciate what Tech and others have told me that all you really need is Price and Volume to get a handle on most stocks .... Thats true I believe.  I personally get a kick out of trying to decifer charts etc, (even though it isn't important to many trades/traders)  Its good that there are so many different opinions/styles etc. of trading to be found on this Forum cause it makes it all the more interesting................. Cheers to all, Barney.


----------



## MichaelD

nizar said:
			
		

> Michael D,
> Do u trade full time and how long have u been trading for?



No, I don't trade full time. I have a day job to pay the day-to-day bills until such time as I am able to trade full time, which is my goal. I expect to reach this goal within the next 3 or 4 years, and possibly sooner.

However, I currently spend 40+ hours per week on trading, trading education and trading research. I have a very rigid routine which I go through at the end of every trading day and some things which I do every weekend.

I am trading one positive expectancy system and trialling another at the moment.

I have dabbled for years in the markets but only started trading properly (i.e. with a plan) in about October of last year. The journey has been long and remarkable and I have a long way still to go.


----------



## barney

nizar said:
			
		

> when i start working fulltime in a few years after i graduate and i start earning real money then i will have something to play with. I dont need a loan or wateva.
> 
> the plan is from until then i can learn a few things.
> 
> thanks for the advice.




Hi Nizar,  My daughter is in her first year of Uni at Q/Land. She doing a double degree of Arts/Law .....    (She'll hopefull be able to keep me out of jail if I stray off the straight and narrow   )  What are you studying?


----------



## nizar

barney said:
			
		

> Hi Nizar,  My daughter is in her first year of Uni at Q/Land. She doing a double degree of Arts/Law .....    (She'll hopefull be able to keep me out of jail if I stray off the straight and narrow   )  What are you studying?




Oh nice one...
Im studying Pharmacy



			
				Michael D said:
			
		

> However, I currently spend 40+ hours per week on trading, trading education and trading research




Michael D - Can u please elaborate in what exactly the above entails ie. trading education and research? Thats a lot of hours a week, hopefully at the end u will find what you are looking for.


----------



## Porper

machi said:
			
		

> What actually is taking Elliott to extremes? Didn't know such a thing was possible. You just follow the rules. Simple. A move will either work out or becomes invalid.
> 
> Does it make someone more profitable? Who knows?. But it might give you a hell of an edge if used in the right hands. If you really would like to have your question answered Porper, then perhaps you should pit your skills against someone who uses one of these systems. Then you would find out huh?




Machi,

A lot of people, myself included use Elliot wave to distinguish the trend or wave.There are many different levels & teachings.To become a "Elliotician" is a lot different to what many people practice.

As for your second comment, I do not wish to pit my skills as you put it against anybody thanks, this isn't why I trade.As long as I have a reason to enter a trade, whether that be using an Elliot wave count or whatever and a valid reason to exit I am happy with my process thanks.

There are 5 or 6 very clever posters on ASF from which I still learn, I will probably never gain the knowledge and skill they possess, but it doesn't matter, anybody can be successful if they listen and learn.

Trading is not a competition.


----------



## tech/a

Nizar.
 3 yrs is a rule of thumb and I have found it reasonably accurate in many things.
Trading proficiency,Business proficiency,Job or work proficiency.
But as Wave or Swing said it can vary from person to person. Think I was one of the dumbest.

*Elliot* is one of the very few analysis techniques I have any time for,as it has proven to be consistant in structure and form.While no expert its a discussion I would welcome here.For me I simply use it to identify roughly where the trade is.Wave1,3.5. Or if looking for a continuation in a move A,B,C or 2,4 waves. People like Radge have developed their own method around Elliot Wave analysis.
While it is handy its not necessary to have as a trading tool as in isolation everything else is not an absolute requirement.Yet in conjunction can be excellent tools.

Its the formulation of analysis,Position sizing,Stop placement and execution,Risk management plan,and adherence to the final "Blueprint" which takes the years.

*Trading for a living*
Why does everyone see this as a sign of experience. I for one couldnt think of anything more boring.I can do it from my desk now with no need to sell a Company returning me a more than adequate renumeration.


----------



## bingk6

MichaelD said:
			
		

> Barney.
> 
> Want a simple, highly profitable strategy for stocks?
> 1. Buy a stock which hits an all time high
> 2. Sell it when it breaches a long term stop, such as a wide ATR stop or a long term moving average.
> 3. Repeat 1 and 2 ad nauseum.




Hi Michael,

That is certainly a most interesting method of trading. What ever happened to the buy low and sell high philosophy ?? I suspect that Kerry Packer will be turning in his grave if James was using this investment technique.

BTW, I will be curious whether anybody has done extensive backtesting on this trading method to see what sort of results one would get.

Ultimately, you are correct in stating that the exit is much more important than entrance. With solid position sizing, money management, Stop Loss settings etc etc, one really could come up with a very solid strategy irrespective of where the entry is.


----------



## MichaelD

bingk6 said:
			
		

> That is certainly a most interesting method of trading. What ever happened to the buy low and sell high philosophy ??



It doesn't work. You keep buying lower, and lower, and lower...and then the company's suddenly gone. At the very best, the company wallows in the doldrums for months/years before finally rallying. Buy high and sell higher works much better.


			
				bingk6 said:
			
		

> BTW, I will be curious whether anybody has done extensive backtesting on this trading method to see what sort of results one would get.



Yes, I have as have numerous others. Somewhere on the 'net a boutique US fund posted a detailed report on exactly this method of entry coupled with a 10.5 ATR exit - it's what they use to consistently outperform.

In fact, I've just quickly done a backtest on the strategy up to close of trade Friday. Backtesting does have many caveats which are beyond the scope of this post, but the results are;

Universe: Current ASX300
Trading: From 1-Jan-1996
Starting Capital: $100,000
Reinvest All Profits
No pyramiding of trades
Entry: Close at all-time high
Exit: 6.5 ATR

Finishing Profit: $2,638,159.39
Win %: 53.86%
Drawdown %: 10.96%


----------



## MichaelD

Addendum to last post:
Position sizing: 2% of total capital risked per trade

It's a remarkably effective trading technique, but the vast majority of the unprofitable masses will reject it for purely psychological reasons. Their loss.


----------



## tech/a

bingk6 said:
			
		

> Hi Michael,
> 
> That is certainly a most interesting method of trading. What ever happened to the buy low and sell high philosophy ?? I suspect that Kerry Packer will be turning in his grave if James was using this investment technique.




I doubt it.(Packer).
*Buy high sell higher.*
Todays high will be tommorows low (wish Id bought it then,that stock,that house,that business,that land---you get the drift).



> BTW, I will be curious whether anybody has done extensive backtesting on this trading method to see what sort of results one would get.




I've done much and in the end settled for a 180day EMA of the low exit.(which I trade---the method has been traded live for 4 yrs on Reefcap---techtrader). ATR works fine and I know many who use it. Happy to run as many tests as you want at whatever * ATR you want, Michael is right its very profitable for long term methodologies,not an exit for short term systems.
I now of one method trading weekly and doing very well---he will pipe up (make comment) if he wishes!



> Ultimately, you are correct in stating that the exit is much more important than entrance. With solid position sizing, money management, Stop Loss settings etc etc, one really could come up with a very solid strategy irrespective of where the entry is.





Pretty well---you can use random. However there are more aspects to a system or trading methodology than purely profit.
Smooth equity curves are something I like,the consistency and confidence goes a long way. Minimising strings of losses and sensible leverage with profit re investment are also musts in my veiw.
Positioning of entry opportunity (by that I mean taking the highest high means your trading with the trend rateher than taking the lowest low in a bullish trading method) has a role to play rather than the specific entry trigger.


----------



## nizar

tech/a - u say that 180ema is one of your exits. If u take a look at KZL, for example, its trading at about $6 on a massive uptrend but its way above its 180ema which is sitting at around $4. What would be your exit in this case? Obviously u wouldnt want to lose 66% before you were "stopped" out. 

michael - what do u mean by "no pyramiding of trades" and "% drawdown"

BTW thats fairly impressive stats you have there. 2% of initial capital works if you are starting with 50,60k+. Anything less and your stop will be too narrow, though as tech/a has pointed out, such a technique can still work. A bullmarket would have helped as well. So there may be less opportunities in a bearmarket but i think there will still be opportunities. They'll just pop up less so u just trade less, yeh? Probably go on a holiday or something when that happens...


----------



## barney

nizar said:
			
		

> Oh nice one...
> Im studying Pharmacy
> 
> 
> Good onya Nizar, I knew you sounded switched on for a "young fella" .
> 
> ps You shouldn't be staying up so late .... bad for your study    Cheers, Barney.


----------



## nizar

barney said:
			
		

> Good onya Nizar, I knew you sounded switched on for a "young fella" .
> 
> ps You shouldn't be staying up so late .... bad for your study    Cheers, Barney.




Thanks barney.
Yeh i was "studying" last nite, got exams soon.


----------



## bingk6

MichaelD said:
			
		

> In fact, I've just quickly done a backtest on the strategy up to close of trade Friday. Backtesting does have many caveats which are beyond the scope of this post, but the results are;
> 
> Universe: Current ASX300
> Trading: From 1-Jan-1996
> Starting Capital: $100,000
> Reinvest All Profits
> No pyramiding of trades
> Entry: Close at all-time high
> Exit: 6.5 ATR
> 
> Finishing Profit: $2,638,159.39
> Win %: 53.86%
> Drawdown %: 10.96%




Hi Michael,

Amazing stats to say the least. Can you tell me whether these trades include both long and short positions ? Just curious to see how effective this technique is when applied to a stock or index (if any) that are on its way down. 

Secondly, would also like to see how pyramiding of trades affect the results.


----------



## MichaelD

nizar said:
			
		

> Michael D - Can u please elaborate in what exactly the above entails ie. trading education and research? Thats a lot of hours a week, hopefully at the end u will find what you are looking for.



I spend 1-2 hours per weeknight risk managing my open positions. It's a precise, written down routine that I go through every weeknight, over and over again.

If a stop loss has been hit, I'll arrange for the position to be closed the next day and for new position(s) to be opened - almost invariably these are pyramids of existing profitable positions.

Most days this system does not trade.

I'm also trial trading three systems at present; one is a short term breakout system with 4 positions, one is an experimental CFD system which has 1 position which I'm using to learn how to safely trade with leverage, and one is a shorting system being paper traded.

These systems take a little more time as I'm also collating additional information about these systems as they go - learning the lessons the positions are teaching me.

I have a daily worksheet which I complete for all of these systems every day and which I can refer back to if necessary.

After I've completed my risk management I'll then report to my wife on the day's trading. This acts as my trading diary where I have to 'fess up to my weaknesses.

I'll then cruise several of the stock forums if I have time left.

Fridays (or one weekend day) I do additional work, calculating portfolio HEAT and doing data maintenance.

I read books in bursts - I travel a lot for my real job and will often use this time to read. I'd probably read on average 4 hours a week.

Some weekends I will spend a fair bit of time backtesting any concepts which I've picked up which sound promising. Most of the time this is a complete waste of time and I don't find anything more profitable than what I already do, but occasionally I'll find something useful for trading. I have come to accept that finding something useful is rare in this game.

Will I find what I'm looking for?

Yes I will. I am already trading a positive expectancy system which has taught me a lot about the markets and about myself. I have a very specific goal in mind - that of living off the proceeds of trading, which is slightly different to the concept embodied in the "trading for a living" mantra - and I am in a position where I can work at my real job as much or as little as I need to so that I don't need to put pressure on my trading to produce results too soon. I do not want to sit in front of a screen all day trading. My systems are all based around this core concept - they fit what I want to achieve.

Is it a lot of hours a week?

How many years of study are you putting in to get your degree so that you can earn a living as a pharmacist? Why should trading be any less rigorous?

Will I succeed?

Yes I will. I am 100% convinced that I will succeed. The basics of profitable trading are now completely ingrained in me (stop losses, letting winners run, positive expectancy, money management). I know with 100% certainty that the key to successful trading lies within myself. I find trading intrinsically fascinating, and the fact that it makes money is a secondary bonus.


----------



## machi

> It doesn't work. You keep buying lower, and lower, and lower...and then the company's suddenly gone. At the very best, the company wallows in the doldrums for months/years before finally rallying. Buy high and sell higher works much better.




In my opinion totally incorrect. Some of the best investors in the world i.e. Buffet, Templeton to name a few have made it big time, buying low and selling high.

Obviously you have no other mechanism for buying a stock other than the fact that it is making new highs. How do you know it's not just a rally in a bear market? Simple you don't. Buying on breakouts to new highs is a poor strategy in my opinion. A breakout to new highs can lead to a false move. False moves can lead to fast moves in the opposite direction


----------



## tech/a

nizar said:
			
		

> tech/a - u say that 180ema is one of your exits. If u take a look at KZL, for example, its trading at about $6 on a massive uptrend but its way above its 180ema which is sitting at around $4. What would be your exit in this case? Obviously u wouldnt want to lose 66% before you were "stopped" out.




No thats the Risk if you want to call it that that you take. Stock rarely drops 50% of its value if its a blue chip,does happen but to spike off 50% then in KLZ's case Zinc would have to become as common as dirt!
remember that the method has been tested over 20000 portfolio's and cases in isolation can and do happen but overall the ruturn is consistant.For my portfolio to be the one in 10000 that has a disaster or 2 would be pretty unlikely (I havent won the lottery yet!!). Most stocks have a distribution phase at which time the EMA catches up. I can show you many charts which i have held for years and would never have done so with a closer exit.
Having said that I also trade a small amount in a discretionary manner in search of the odd HDR. etc.



> michael - what do u mean by "no pyramiding of trades" and "% drawdown"




Adding to trades which trigger again whilst your trading it.
% drawdown can be either the initial loss of capital before a portfolio reaches a profitable point----very common when starting a new portfolio or way of trading.
OR Peak to Valley drawdown where your open profit will fluctuate from its high to a pullback low. This varies throughout the life of a portfolio and is reported in testing as the Maximum found during a test period.



> BTW thats fairly impressive stats you have there. 2% of initial capital works if you are starting with 50,60k+. Anything less and your stop will be too narrow, though as tech/a has pointed out, such a technique can still work. A bullmarket would have helped as well. So there may be less opportunities in a bearmarket but i think there will still be opportunities. They'll just pop up less so u just trade less, yeh? Probably go on a holiday or something when that happens...




Quite true. Infact I'm looking at swithes for turning on and off portfolio's. Unfortunately the Tax issue makes it very difficult as soon as you sell you have a 50% tax slug. Hold for 12 mths and its 25%. Still working at it!


----------



## tech/a

machi said:
			
		

> In my opinion totally incorrect. Some of the best investors in the world i.e. Buffet, Templeton to name a few have made it big time, buying low and selling high.
> 
> Obviously you have no other mechanism for buying a stock other than the fact that it is making new highs. How do you know it's not just a rally in a bear market? Simple you don't. Buying on breakouts to new highs is a poor strategy in my opinion. A breakout to new highs can lead to a false move. False moves can lead to fast moves in the opposite direction




I wouldnt say totally incorrect.

Its as valid a stratagy as buying a pullback.
Simply when you buy a pullback even if you use fib or Elliot or Gann or whatever as analysis you wont know before time if the pullback will hold or keep going---just as you wont know for a high to continue higher.

By the way Buffet made his money buying a run down company at a bargain and turning it into a winner. *He owned the company*---big difference!!!

As for saying its a poor strategy,I would love to see evidence to support a comparison of the 2. hypothesis and rhetoric dont qualify in my veiw as supporting evidence.


----------



## nizar

Thanks tech/a and Michael D
Much appreciated


----------



## machi

> As for saying its a poor strategy,I would love to see evidence to support a comparison of the 2. hypothesis and rhetoric dont qualify in my veiw as supporting evidence.




Open up your charts and have look. 

I would rather be buying a stock on a pullback after initial move up from lows anytime. What your eye has to catch is the fact that you have a higher low. That higher low( or successive higher lows) is what is needed. It can be the start of a multi month or year move. It can also be a dud. But if it's not a dud it may lead to a huge % move from those lows. Unlike a tired stock that has been already rising for x amount of years, and maybe coming to the end of a run and have the potential of small % move.  

Take an example, look a stock that once for example traded at $100. It then falls to $1.  From 1$ to $3 is a huge gain. Even though it nothing compared to $100.  But $100-103. Well....

As for a pullback. There are specific aspects to look out for in a pullback, especially where to place stops. Positioning of stops is the hardest thing you can do in trading. Also what sort of move was the move down? You aint gonna buy at a specific level simply because it is a fib level. You have to examine the price and evaluate how it has trended down. Ie it may have trended in a struggling manner and taking the same time or even longer than the move up. i.e the market has found it easier to go up than down. It may have exhibited specific patterns

Buying breakouts is an old Wall street axiom. There are better strategies in my opinion. If it works for you guys then fine


----------



## swingstar

I think you guys are comparing different systems. One (machi) sounds like swing / short-term, and the other (tech/a, Michael) position / trend following. 

machi, your system puts a lot of emphasis on entry, which the other guys have little interest in. They have certain conditions that when met they enter, then as they're met again they pile in the profits. The pyramiding makes the bulk of the profits, not win/loss or scalping swings.


----------



## Porper

machi said:
			
		

> Take an example, look a stock that once for example traded at $100. It then falls to $1.  From 1$ to $3 is a huge gain. Even though it nothing compared to $100.  But $100-103. Well....




A bit of an extreme case don't you think machi.Who said they thought a stock going from $100 to $103 is a good trade ?



			
				machi said:
			
		

> Positioning of stops is the hardest thing you can do in trading.




Why is it ?

It is very simple.Place an initial stop at entry.Then a breakeven stop (if this is how you trade) anyway there are several types of stops, too many to go into, you get the drift.But all have very exact specific rules.There is nothing difficult about it at all Machi.I am a beginner and if I can do it so can anybody.


----------



## MichaelD

tech/a said:
			
		

> As for saying its a poor strategy,I would love to see evidence to support a comparison of the 2. hypothesis and rhetoric dont qualify in my veiw as supporting evidence.



Totally agree with Tech/A here and disagree with you, machi. Buying on pullbacks may be profitable, but is it MORE profitable than buying at random or buying on breakout or buying on highest close ever?

Well chosen examples are great for writing and illustrating books, but that doesn't mean the strategy is any better or worse than any other at selecting for the outlier big winners when it is actually properly tested.

If the exit is the same, there is virtually no difference in overall outcome. It is the exit which selects for the outlier winners, not the entry.

Humans, however, have an inherent need to DO something which they perceive will make a difference on trade entry.


----------



## MichaelD

nizar said:
			
		

> michael - what do u mean by "no pyramiding of trades" and "% drawdown



No pyramiding = not adding to winning positions.

% drawdown = drawdown is the % your equity will go down from its peak before making another peak.

Example - say you are trading a system with a 50% win/loss ratio and you take 10 positions. How does this trade in real life? What follows is an oversimplification, but makes the point.

Trend following cuts losses short and lets winners run.

You start with $100,000 and 10 trades, each risking $2,000 of your capital (2%).
5 trades will lose money and will be stopped out, so you're down $10,000 in closed trades from your starting point. However, the 5 winners are powering ahead so overall you've still got about $100,000 worth of stock.
You replace the 5 losers with another 5 stocks.
2 or 3 of these will be stopped out, so you lose another $6,000, but now 7 are powering ahead.
You replace these, and 1 more gets stopped out, so you lose another $2,000 while 9 are powering ahead.
Eventually, you're left with only winners which keep on trending.

So, even though you started with $100,000 and lost $18,000 (18% drawdown) to begin with, you come out way ahead in the long run.

However, very few people can handle "losing" $18,000 (9 times in a row) before starting to win.



			
				bingk6 said:
			
		

> Can you tell me whether these trades include both long and short positions ?
> 
> Secondly, would also like to see how pyramiding of trades affect the results.



Long only. Long term shorting is not a profitable strategy.

Pyramiding:
Position size 0.5%, pyramid up to 2.5% (which is my personal preferred pyramiding strategy)
Profit $2,483,835.53
Drawdown 6.94%

Important: What's significant about this is the much lesser drawdown, NOT the profit figure. The profit figure also doesn't take into account the necessity of taking out tax and money to live on if that is what you are trying to achieve. It's much more important to focus on the drawdown than it is to focus on the profit.

Pyramiding smooths an equity curve, which then opens the possibility of safely using greater leverage. Tech/A has posted much on this, but it really boils down to the concept that the amount of drawdown you are able to tolerate defines the amount of profit you will take home.


----------



## wavepicker

Porper said:
			
		

> A bit of an extreme case don't you think machi.Who said they thought a stock going from $100 to $103 is a good trade ?
> 
> 
> 
> Why is it ?
> 
> It is very simple.Place an initial stop at entry.Then a breakeven stop (if this is how you trade) anyway there are several types of stops, too many to go into, you get the drift.But all have very exact specific rules.There is nothing difficult about it at all Machi.I am a beginner and if I can do it so can anybody.




hi,

I think the point he is trying to make is that you have to place a stop in a strategic position.  I mean I know traders that place an arbitrary stop and then they get stopped out. Repeatedly. A stop must not be placed in an obvious position. Most likely if you have placed your stop in an obvious position, then so has everyone else. All you end up with in the end is a string of stopouts.

Personally I don't like placing stops. I don't like to let the market know my intentions. I either use a mental stop or close out the trade based on market movement and behavoiur, ie the patern of the trend. Unless of course I will be away or I have a position running in a market when I am asleep.

Cheers


----------



## It's Snake Pliskin

_MichaelD,_


> Addendum to last post:
> Position sizing: 2% of total capital risked per trade
> 
> It's a remarkably effective trading technique, but the vast majority of the unprofitable masses will reject it for purely psychological reasons. Their loss.




So at $100,000 total capital 2% is $2000.
10 losses at 2% = $20,000.  You can see why I don`t like the arbitrary percentage determining how much I will risk.

I prefer something more like 0.5% or less = I don`t know but it is way less than 2%. 


_Nizar_


			
				nizar said:
			
		

> michael - what do u mean by "no pyramiding of trades" and "% drawdown"
> 
> BTW thats fairly impressive stats you have there. 2% of initial capital works if you are starting with 50,60k+. Anything less and your stop will be too narrow, though as tech/a has pointed out, such a technique can still work. A bullmarket would have helped as well. So there may be less opportunities in a bearmarket but i think there will still be opportunities. They'll just pop up less so u just trade less, yeh? Probably go on a holiday or something when that happens...




Your stop determines your tradable risk, so the above is fallacious unless employing a percentage stop of say 2% as your tradable risk. (look above) 

I want at least 3 to 1 reward to risk with not more than $300 loss per trade (yes this is arbitrary) sometimes $500. At, say $100,000 that is 0.3%; 10 losses = $3000, I still have plenty to recoup the losses with and *IF* getting some wins at, at least 3x, maintaining or improving the expectancy curve - the goal!

The only offset with this is sometimes my initial purchase is small until breakeven and then pyramided with more funds as it goes higher increasing brokerage. But you can`t have your cake and eat it too, as the saying goes.


----------



## nizar

It's Snake Pliskin said:
			
		

> _MichaelD,_
> 
> 
> So at $100,000 total capital 2% is $2000.
> 10 losses at 2% = $20,000.  You can see why I don`t like the arbitrary percentage determining how much I will risk.
> 
> I prefer something more like 0.5% or less = I don`t know but it is way less than 2%.
> 
> 
> _Nizar_
> 
> Your stop determines your tradable risk, so the above is fallacious unless employing a percentage stop of say 2% as your tradable risk. (look above)
> 
> I want at least 3 to 1 reward to risk with not more than $300 loss per trade (yes this is arbitrary) sometimes $500. At, say $100,000 that is 0.3%; 10 losses = $3000, I still have plenty to recoup the losses with and *IF* getting some wins at, at least 3x, maintaining or improving the expectancy curve - the goal!
> 
> The only offset with this is sometimes my initial purchase is small until breakeven and then pyramided with more funds as it goes higher increasing brokerage. But you can`t have your cake and eat it too, as the saying goes.





Yeh snake i understand your point but when placing a stop, dont u have to take into account the behaviour of the particular stock (?), and thats the reason why people use ATRs.

$100k at say 20k position size, $300 is not that much. It wouldn'ty allow for the average movement of the stock. A stock may move this much and STILL be in an uptrend. The whole point of a stop is to get you out of there when the trend changes, isnt it? For example if you bought PDN at $5, thats 4,000shares.  $300 stop would be set at $4.925. or 1.5%. This would almost definately get hit. But i guess 2% is a bit loose.

Point taken.

Snake do u use trailing stop losses and when?


----------



## Magdoran

barney said:
			
		

> Hi Guys, Have to go out shortly, but just a quick one regarding PMN below. Curious as to anyones opinion on a likely scenario for this stock. They are going to be bought out by Suncorp I believe hence the SP spike, but then a massive SP down turn on another up day  for the Oz Stock Market. Interesting ........... Could have been seen as a long position 2 days ago ........... Now maybe a short?  I don't know; just curious for more experienced opinions, Cheers Barney.



Hello barney,


Re Post 290:

In periods of high volatility when events like takeovers or significant bad news are in play, there is considerably more uncertainty involved (although smart people like Soros and Buffet can sometimes take advantage of this of course n their respective ways – but this is another discussion outside of chart analysis entirely – look at Soros’ theory of “Reflexivity” for instance).

In essence with moves like PMN currently (this is not financial advice for this particular stock, but a general observation about the pattern and takeover events generally) I perceive as highly dangerous to trade once a situation like this is known in the public.  Unless you have specific information that is not widely known (and even if you possess this, markets can still do erratic things contrary to what you’d expect), it is really a coin toss as to what may transpire from the chart image you have posted.

Where do you think the price might go?  In high momentum vertical moves, going long or short in the middle of such spikes could see great gains or losses.  There are some traders who specialise in this.  If you were long in this case, you could have taken profits on the gap up day (I certainly would have – I may even have exited the whole position).

The problem is that if you can’t assess the situation and have exit rules in place, these moves are very hard to trade effectively consistently.  If you have traded these for years and know what you are doing, fine.  But for newbies, this kind of move can be a real trap.

What would I do here?  I fully agree with Michael here. Personally I’d stay well clear of it.  I need a reason to enter, and I have a process for constructing a trade.

The question you need to ask yourself barney is wether you feel technically proficient enough to construct a consistently successful approach to this kind of volatile move or not.  If not, you need to study these moves more if you want to trade them.  You may also later come to the same conclusion that Michael and I have – these moves once in play are high risk trades, and hence should be avoided (That doesn’t mean you can’t enter earlier and be in them when they happen – preferably on the right side of the market).

Of course you may have a gift for reading these situations and become a master trader in playing the odds here.  Fine if you can do figure out a way to do this consistently.  There are traders out there that play these moves, and you may be one of them.  Me, I have tried and won and lost heavily trying to do this in the past.  

Now, I look for specific situations to trade, and more importantly, recognise specific situations NOT to trade.  This is one of them.

Food for thought.


Regards


Magdoran


----------



## barney

It's Snake Pliskin said:
			
		

> _MichaelD,_
> 
> 
> So at $100,000 total capital 2% is $2000.
> 10 losses at 2% = $20,000.  You can see why I don`t like the arbitrary percentage determining how much I will risk.
> 
> I prefer something more like 0.5% or less = I don`t know but it is way less than 2%.
> 
> 
> _Nizar_
> 
> Your stop determines your tradable risk, so the above is fallacious unless employing a percentage stop of say 2% as your tradable risk. (look above)
> 
> I want at least 3 to 1 reward to risk with not more than $300 loss per trade (yes this is arbitrary) sometimes $500. At, say $100,000 that is 0.3%; 10 losses = $3000, I still have plenty to recoup the losses with and *IF* getting some wins at, at least 3x, maintaining or improving the expectancy curve - the goal!
> 
> The only offset with this is sometimes my initial purchase is small until breakeven and then pyramided with more funds as it goes higher increasing brokerage. But you can`t have your cake and eat it too, as the saying goes.





Hi Snake, was wondering when you'd "bounce" back in.  Thats the most I think you've ever written in one post (JK) .... Interesting comments as always.

Can I as a newbie make this comment/observation with regard to stops (in my position) ............. a) I have limited capital atm, so my primary concern due to that restriction, is, when I enter a trade, I always consider the "daily trend" for that stock ...... ie. If the general trend/say weekly or monthly, is up, then I wait for a day when the daily trend fits my "assumptions" (or whatever I should call it), After I place my trade, I place a very (very) tight stop/loss, because I believe the stock should continue to do what it "seems" to be doing....... If I get it right and the stock goes my way, then I can almost immediately move the stop loss to break even position (which for me is like utopia!!    If I get it wrong and the stock goes against me, I am now, (after much tutoring from those wiser than me on this Forum.... thank you all) Happy to be stopped out at a minimal loss of way less than 2% (Usually only a couple of cents on an average stock price of say $3-4) ........... As I say, my position is probably a little different to most ( I have to be extremely careful with the capital I have left ............. I simply cannot afford to "stuff up" any more) ................ but my point is .....that this "careful" approach seems to be working for me at this point, so I'm gona stick with it ............ Any opinions welcome .................... Barney.


----------



## It's Snake Pliskin

nizar said:
			
		

> $100k at say 20k position size, $300 is not that much. It wouldn'ty allow for the average movement of the stock. A stock may move this much and STILL be in an uptrend. The whole point of a stop is to get you out of there when the trend changes, isnt it? For example if you bought PDN at $5, thats 4,000shares.  $300 stop would be set at $4.925. or 1.5%. This would almost definately get hit. But i guess 2% is a bit loose.
> 
> Point taken.
> 
> Snake do u use trailing stop losses and when?




Nizar you are missing the point. 
Initial stops and trade entry: most of the time I don`t directly know my position size in $$$. Only the size of the position. I do know my tradable risk though which is $300 - $500 usually.

As I generally have the luxury to sit at a computer (though I have a life and don`t just stare at the screen in anticipation) I tend to use discretionary stops when I feel it has been exhausted. I can always get back in if it proves me wrong - using MA's lose too much money and tend to push one into a right and wrong mentality which I don't care for. 

Snake


----------



## barney

Magdoran said:
			
		

> Hello barney,
> 
> 
> Re Post 290:
> 
> In periods of high volatility when events like takeovers or significant bad news are in play, there is considerably more uncertainty involved (although smart people like Soros and Buffet can sometimes take advantage of this of course n their respective ways – but this is another discussion outside of chart analysis entirely – look at Soros’ theory of “Reflexivity” for instance).
> 
> In essence with moves like PMN currently (this is not financial advice for this particular stock, but a general observation about the pattern and takeover events generally) I perceive as highly dangerous to trade once a situation like this is known in the public.  Unless you have specific information that is not widely known (and even if you possess this, markets can still do erratic things contrary to what you’d expect), it is really a coin toss as to what may transpire from the chart image you have posted.
> 
> Where do you think the price might go?  In high momentum vertical moves, going long or short in the middle of such spikes could see great gains or losses.  There are some traders who specialise in this.  If you were long in this case, you could have taken profits on the gap up day (I certainly would have – I may even have exited the whole position).
> 
> The problem is that if you can’t assess the situation and have exit rules in place, these moves are very hard to trade effectively consistently.  If you have traded these for years and know what you are doing, fine.  But for newbies, this kind of move can be a real trap.
> 
> What would I do here?  I fully agree with Michael here. Personally I’d stay well clear of it.  I need a reason to enter, and I have a process for constructing a trade.
> 
> The question you need to ask yourself barney is wether you feel technically proficient enough to construct a consistently successful approach to this kind of volatile move or not.  If not, you need to study these moves more if you want to trade them.  You may also later come to the same conclusion that Michael and I have – these moves once in play are high risk trades, and hence should be avoided (That doesn’t mean you can’t enter earlier and be in them when they happen – preferably on the right side of the market).
> 
> Of course you may have a gift for reading these situations and become a master trader in playing the odds here.  Fine if you can do figure out a way to do this consistently.  There are traders out there that play these moves, and you may be one of them.  Me, I have tried and won and lost heavily trying to do this in the past.
> 
> Now, I look for specific situations to trade, and more importantly, recognise specific situations NOT to trade.  This is one of them.
> 
> Food for thought.
> 
> 
> Regards
> 
> 
> Magdoran





Hi Mag, Thanks for your analysis.  I agree with your comments (as always).   I must confess here, that I shorted this stock midway through Friday (PS I would not short it now because the initial drop may be over)......... Now my reasoning was this ........ There appeared an apparent rejection (or maybe just profit taking) of the initial spike on SP. (And this was on an up day for the ASX, which kind of "sold" it to me)  I have seen  so many stocks do this "big" spike only to fall dramatically over the next 24-48 hours ............. And I speak from "financial" experience because I have in the past bought many of these  kind of stock positions on the up, only to be crucified on the almost immediate plunge back down, so I " short sold" the stock, but as I stated in my previous post re stop losses, I took a very tight stop/loss position just in case it went sour ............... Now in this case I got lucky (for want of a better word), and the SP dropped a lot before close............. My position now is ; I have reset my stop/loss to a "profitable" position, so in this instance all is well (praise the Lord!!) I expect this stock to probably rise again (maybe subtantially), but my position is "safe" ............. I would not consider "shorting" this stock at this point in time (which is what you are saying) due to the "unknowns", but I considered "shorting" it when I did to be an educated risk at that point in time ............ Maybe I'm playing outside my league, but I seem to be better at this kind of position than some of the more "obvious" positions (Probably because I've been on the losing side of so many of these kinds of trades)  Thanks, Barney.


----------



## wavepicker

"Before You Recoil In Horror" (Some Practical Advice From Bob Prechter) 
By Anna Troupe 

An analyst in a recent news story says using stops is the "most basic tactic" for managing risk in a volatile market. The advantages (according to this analyst) are that they define losses in advance, they give you an objective reason to sell (exit) your position, and get you out before getting emotionally involved. So by using stops, investors will "spare themselves the kinds of losses that are difficult to recover from."
Sounds logical, right? As it turns out, Bob Prechter has a very different take on risk management and on using stops. For anyone who trades or is considering doing so, here's a "second opinion" -- an insight crafted from years of experience that can improve your understanding of trading in general.
Number one on his list of six requirements for successful trading (page 99 of Prechter's Perspective, c.1996) is "A method: Any time you enter or exit a market, it must be for a predetermined reason that will also apply in the future." Number five says, "Accommodation of losses: The perfect trading system does not exist, so your method must deal with taking losses."
The first step to "dealing" with losses is to manage risk in advance. As Bob warns in Prechter's Perspective, "If you take a position large enough to inflict serious financial damage upon yourself, you are a loser going out of the gate."
Back to requirement number one -- a method for entering and exiting the market: In the March Elliott Wave Theorist, Bob comments that every (trading) book says to use stops. Yet he states unequivocally his belief that "people lose more money on stops than anything else."
"Before you recoil in horror, consider that I know a futures trader who steadily makes $200,000 - $400,000 every year, and he never uses stops.
So what should a trader use in place of stops? He should use real-time analysis. The question isn't so much whether a level is broken but what the analysis indicates as it breaks. A stop only takes one aspect of analysis into account: price. There is much more to analysis than price.
A stop also makes you lazy. If the market and your analysis turn against you, you are prone to think, 'well, if the market takes my stop, then I'm out.' But if you have already decided that your position is wrong, you should already be out! On the flip side, when you already have a stop in and decide it's in the wrong place, there is a psychological impediment to widening it. If you don't act, the stop is typically taken out, and then the market turns your way without you.
To those who insist that without stops they'd get killed, I say, you are trading with too much leverage. Leverage forces you out so often that all you will have after years of trading is a long string of losses from stop-outs. Trade well within your capital so that you can allow the market time to respond to the forces that you detect developing in your analysis. If you cannot watch the market closely or do not have time to do the analysis (or don't have someone doing it for you), you shouldn't be trading in the first place. Aside from all that, there may in fact be occasional times for close stops. But treat them as exceptions that analysis demands."


----------



## Magdoran

machi said:
			
		

> Learning too many indicators, taking Elliot Wave to it's extremes, does this make you more profitable ? . Does having 30 projection lines on a chart give a better probability of likely price action than just taking the trend, price and associated volume, using support / resistance levels with good money management rules.Probably not.In fact it can make you confused, too many conflicting signals can freeze you out, stop you being able to place a trade.
> 
> 
> 
> 
> 
> What actually is taking Elliott to extremes? Didn't know such a thing was possible. You just follow the rules. Simple. A move will either work out or becomes invalid.
> 
> Does it make someone more profitable? Who knows?. But it might give you a hell of an edge if used in the right hands. If you really would like to have your question answered Porper, then perhaps you should pit your skills against someone who uses one of these systems. Then you would find out huh?What actually is taking Elliott to extremes? Didn't know such a thing was possible. You just follow the rules. Simple. A move will either work out or becomes invalid.
> 
> Does it make someone more profitable? Who knows?. But it might give you a hell of an edge if used in the right hands. If you really would like to have your question answered Porper, then perhaps you should pit your skills against someone who uses one of these systems. Then you would find out huh?
Click to expand...



I tend to agree with machi, this is the hardest game in town.  I agree with the notion that the right approach in the right hands can certainly improve a trader’s edge, especially when the focus of this thread is on pure chart analysis.

While I agree with Porper’s notion that too many indicators, or too much complexity which is not aiding the trader to be consistently profitable, is to be avoided; I would make a distinction that there are other variables to consider such as the technical analysis proficiency, experience, and approach (style, time frame etc).

Different styles of analysis require disproportionate levels of effort.  For example, it is fairly easy to set up a simple moving average cross over, and enter and exit based on generated moving average cross over signals. To add complexity to this, add in a basic back testing system.  Then add in an oscillator.  Already the effort required increases.

Let’s consider various levels of Elliott Wave analysis in comparison.  I know people like wavepicker for example have spent over a decade working on this approach.  Also, consider that every person who reads this thread has a unique make up – both mentally and psychologically.  So another variable is the person involved, and their make up – strengths and weaknesses.  Add to this their determination and ability to learn and adapt, and their will power to do this.

So the question is, will one approach or another make you profitable?  This really depends on a range of variables, doesn’t it?  The person, the approach, and most importantly - the market.  

This is where I again agree with machi’s points about the prevailing market conditions, and that there is a choice for example to trade the short side if the individual chooses to do so, and if they do, that there are issues to consider to trade profitably consistently if doing so.  Alternatively as Daffy (tech) points out, you may opt not to trade short.  In my view, horses for courses.  So, counter trend trading is one valid way to make good returns even in a raging bull market if you are proficient at doing it.

I agree with swingstar’s points in post 301:

As for the argument of “complexity vs simplicity”, ironically I think this is a gross over simplification of what is actually a very involved subject.  I kind of object to people glossing over the labyrinth of theories and practice in the market with this throw away line about “simplicity”.  Let’s tease this out, and start being specific, rather than chant this sloppy mantra about lionising the “simplicity” (misnomer) over equally incorrect labelling of “complexity”.

Hard Facts:

There is a diversity of approaches, and every person reading this thread is unique.  Some people are just not cut out to use many of the methods outlined on this thread.  Many will fail and give up.  Some will have middling results as they develop.  Some will do really well out of the market, and make consistent returns.

Yes we want to be profitable.  Yes we want to develop an overall strategy (which may involve one or more approaches) which consistently returns a profit.  

The challenge is to be able to narrow down the information deluge we are confronted with into a format we can use to make market decisions.  This can be based on a vast array of methods (too many to go into here).  

The point I would like to make is that the strategy needs to suit the individual involved, and that the level of research and development is in part a function of the capacity of the individual, and in part the level of commitment of the individual in terms of time and effort, and the ability to be effective.

Yes we want to boil down the complexity into components that we can deal with, but this might actually be an involved process.  There is a chasm of difference in effort and knowledge required if your objective is to build a passenger jet as opposed to flying a kite.  They both fly, but the dynamics are vastly different.

So, just as wavepicker said in post 304, learning to read the instrument panel was necessary to fly the plane.  If you want to fly a plane, you need to learn how to do this.  If you only want to fly a kite then you don’t.  What I’m trying to do is to talk about some specific areas of the instrument panel.  I hope that this is of some interest to some of the readers who want to know more about the finer points.

Above all this, I think nizar is onto something by recognising the importance of psychology.  It is over 50% of the game in my view.  But this is not the psychology thread; it is the “improving chart analysis” thread, which is what I’ve focussed on.  Full commendation to barney for keeping the thread on the subject which is to discuss different ways of interpreting charts.


Regards


Magdoran


----------



## wavepicker

Magdoran said:
			
		

> Hello barney,
> 
> 
> Re Post 290:
> 
> In periods of high volatility when events like takeovers or significant bad news are in play, there is considerably more uncertainty involved (although smart people like Soros and Buffet can sometimes take advantage of this of course n their respective ways – but this is another discussion outside of chart analysis entirely – look at Soros’ theory of “Reflexivity” for instance).
> 
> In essence with moves like PMN currently (this is not financial advice for this particular stock, but a general observation about the pattern and takeover events generally) I perceive as highly dangerous to trade once a situation like this is known in the public.  Unless you have specific information that is not widely known (and even if you possess this, markets can still do erratic things contrary to what you’d expect), it is really a coin toss as to what may transpire from the chart image you have posted.
> 
> Where do you think the price might go?  In high momentum vertical moves, going long or short in the middle of such spikes could see great gains or losses.  There are some traders who specialise in this.  If you were long in this case, you could have taken profits on the gap up day (I certainly would have – I may even have exited the whole position).
> 
> The problem is that if you can’t assess the situation and have exit rules in place, these moves are very hard to trade effectively consistently.  If you have traded these for years and know what you are doing, fine.  But for newbies, this kind of move can be a real trap.
> 
> What would I do here?  I fully agree with Michael here. Personally I’d stay well clear of it.  I need a reason to enter, and I have a process for constructing a trade.
> 
> The question you need to ask yourself barney is wether you feel technically proficient enough to construct a consistently successful approach to this kind of volatile move or not.  If not, you need to study these moves more if you want to trade them.  You may also later come to the same conclusion that Michael and I have – these moves once in play are high risk trades, and hence should be avoided (That doesn’t mean you can’t enter earlier and be in them when they happen – preferably on the right side of the market).
> 
> Of course you may have a gift for reading these situations and become a master trader in playing the odds here.  Fine if you can do figure out a way to do this consistently.  There are traders out there that play these moves, and you may be one of them.  Me, I have tried and won and lost heavily trying to do this in the past.
> 
> Now, I look for specific situations to trade, and more importantly, recognise specific situations NOT to trade.  This is one of them.
> 
> Food for thought.
> 
> 
> Regards
> 
> 
> Magdoran





Hi Mag, with regard to the Mclaren faker move. He calls it 'trading against the spike'. Usually the day following the spike is an inside day. The direction of the day following the inside day is the one that is usually bogus, and the market may do the opposite of that day, if it is a down day then prices will usually go back up and re test the old highs, so he says. 

Cheers


----------



## Porper

wavepicker said:
			
		

> hi,
> 
> I think the point he is trying to make is that you have to place a stop in a strategic position.  I mean I know traders that place an arbitrary stop and then they get stopped out. Repeatedly. A stop must not be placed in an obvious position. Most likely if you have placed your stop in an obvious position, then so has everyone else. All you end up with in the end is a string of stopouts.




I totally agree, a stop cannot be placed in an obvious place, and this is how the text books would have us do it, ie. 1 tick under a support line.

This of course effects our risk/reward as we tend to place a stop further away trying to avoid being "played" by the big boys.It's amazing how many times prices will just go under a support line then bounce back on heavy volume.

If this scenario does happen, which of course it doesn't because it is illegal ....................... so wont go there.


----------



## It's Snake Pliskin

> A stop also makes you lazy. If the market and your analysis turn against you, you are prone to think, 'well, if the market takes my stop, then I'm out.'




No the lazy are lazy.  It is insurance only not a *SPOON*! Open wide, that's a good boy.


----------



## Magdoran

wavepicker said:
			
		

> Hi Mag, with regard to the Mclaren faker move. He calls it 'trading against the spike'. Usually the day following the spike is an inside day. The direction of the day following the inside day is the one that is usually bogus, and the market may do the opposite of that day, if it is a down day then prices will usually go back up and re test the old highs, so he says.
> 
> Cheers



Hi Wavepicker,

Absolutely.  The idea is that the faker move is indicating the wrong direction.  Yes, it is usually an inside day.  Which is why I read this chart as being ambiguous.

Thanks for clarifying this, my comments could have been clearer.


Regards



Magdoran


----------



## Magdoran

Porper said:
			
		

> Positioning of stops is the hardest thing you can do in trading.
> 
> 
> 
> 
> 
> Why is it ?
> 
> It is very simple.Place an initial stop at entry.Then a breakeven stop (if this is how you trade) anyway there are several types of stops, too many to go into, you get the drift.But all have very exact specific rules.There is nothing difficult about it at all Machi.I am a beginner and if I can do it so can anybody.
Click to expand...


Actually I think that there is a real art to placing your stop, and it is deceptively simple.

It is easy to mark any old price or time on a chart, but to integrate setting stop losses into a trade to maximise profitability I would argue takes a lot of experience.

It is in effect much more involved than many people think.  I have built a series of exit criteria into my stops for instance, such as time as a factor, technical, discretionary failure and other reasons.

This is a real trap for beginners if they think this is easy full stop.  The basic concept is easy; the application in the real market to make real time market decisions is quite another story.


Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> Hi Wavepicker,
> 
> Absolutely.  The idea is that the faker move is indicating the wrong direction.  Yes, it is usually an inside day.  Which is why I read this chart as being ambiguous.
> 
> Thanks for clarifying this, my comments could have been clearer.
> 
> 
> Regards
> 
> 
> 
> Magdoran





Thanks  Wave and Mag,  Even though I didn't know what to call what I was seeing (Inside day) ............. Would it be fair to say that this "common" feature of price spikes (reversing substantially during 24-48 hours) in a sense
is a "trading" opportunity ( be it very SHORT TERM!!  of course, which is how I was looking at PMN )? Thanks guys, enjoying the education .......... Barney.


----------



## Magdoran

tech/a said:
			
		

> *Originally Posted by machi*
> In my opinion totally incorrect. Some of the best investors in the world i.e. Buffet, Templeton to name a few have made it big time, buying low and selling high.
> 
> Obviously you have no other mechanism for buying a stock other than the fact that it is making new highs. How do you know it's not just a rally in a bear market? Simple you don't. Buying on breakouts to new highs is a poor strategy in my opinion. A breakout to new highs can lead to a false move. False moves can lead to fast moves in the opposite direction
> 
> 
> 
> 
> 
> I wouldnt say totally incorrect.
> 
> Its as valid a stratagy as buying a pullback.
> Simply when you buy a pullback even if you use fib or Elliot or Gann or whatever as analysis you wont know before time if the pullback will hold or keep going---just as you wont know for a high to continue higher.
> 
> By the way Buffet made his money buying a run down company at a bargain and turning it into a winner. *He owned the company*---big difference!!!
> 
> As for saying its a poor strategy,I would love to see evidence to support a comparison of the 2. hypothesis and rhetoric dont qualify in my veiw as supporting evidence.
Click to expand...


I tend to think that there are a range of times you can enter a position ranging from guessing where a pull back might end before you have confirmation, on a confirmation criteria is met with a pull back, anywhere along this trend including just at or above the high.

Any of these points can be traded successfully based on the individuals market view.  I have some specific patterns I look for in the chart.

I would agree though that entering around a previous high (or low if looking to go short) has some risk because the underlying is nearing previous resistance (or support).

If Michael finds he is effective doing it this way fine.  Me, I do trade near new highs sometimes based on the pattern (have done recently), but fully aware that there is quite some risk of a marginal high occurring, and being prepared to exit or even reverse the position.


Regards


Magdoran


----------



## It's Snake Pliskin

barney said:
			
		

> Hi Snake, was wondering when you'd "bounce" back in.  Thats the most I think you've ever written in one post (JK) .... Interesting comments as always.
> 
> Can I as a newbie make this comment/observation with regard to stops (in my position) ............. a) I have limited capital atm, so my primary concern due to that restriction, is, when I enter a trade, I always consider the "daily trend" for that stock ...... ie. If the general trend/say weekly or monthly, is up, then I wait for a day when the daily trend fits my "assumptions" (or whatever I should call it), After I place my trade, I place a very (very) tight stop/loss, because I believe the stock should continue to do what it "seems" to be doing....... If I get it right and the stock goes my way, then I can almost immediately move the stop loss to break even position (which for me is like utopia!!    If I get it wrong and the stock goes against me, I am now, (after much tutoring from those wiser than me on this Forum.... thank you all) Happy to be stopped out at a minimal loss of way less than 2% (Usually only a couple of cents on an average stock price of say $3-4) ........... As I say, my position is probably a little different to most ( I have to be extremely careful with the capital I have left ............. I simply cannot afford to "stuff up" any more) ................ but my point is .....that this "careful" approach seems to be working for me at this point, so I'm gona stick with it ............ Any opinions welcome .................... Barney.




Barney I can't give advice.

Consider this:

Momentum trading strategy 
Range trading strategy
Countertrend trading strategy
What strategy are you using? Shouldn't you determine this first?

Determine what is acceptable for a loss. 

Protect capital.

Continue to protect capital.

Let winners run and protect your increased capital.

A tight stop is not always the way to have a small loss - please think about it.

Snake


----------



## Magdoran

barney said:
			
		

> Thanks  Wave and Mag,  Even though I didn't know what to call what I was seeing (Inside day) ............. Would it be fair to say that this "common" feature of price spikes (reversing substantially during 24-48 hours) in a sense
> is a "trading" opportunity ( be it very SHORT TERM!!  of course, which is how I was looking at PMN )? Thanks guys, enjoying the education .......... Barney.



Every move in the market is a potential opportunity to do something.

The question is can you consistently make profits with this kind of move?

Me, I tend to think these are too hard.  I don’t like the risk to reward parameters, and I can’t formulate an effective strategy or assess the probabilities well enough.  Too much to work out in too little time with too much emotion and pressure.

I tend to like to make decisions coolly; hence I shy away from these kinds of moves once they’ve started.  If I’m in something when it happens, I quickly appraise the situation and make a call if I have to.  Otherwise I leave it well alone.  I aim to trade what I understand.

But that’s my personal preference.  You on the other hand may have a gift for trading these.  It is possible.  In most cases though most people don’t make good calls under pressure.  Trading these for real and not paper trading them is different too.

I don’t really know anyone that specialises in this style in my circles, but I have heard of some people being masters at this kind of event, but I believe they were highly experienced players.

Of course there are institutional players that do this stuff all the time, and certainly the market makers have a heavy selection on people who can make major decisions quickly.

Maybe you are one of these rare people.  If you think so, why not try out with a market maker with their test and see?  If you are offered a role at a place like that, then maybe you have what it takes.


Regards


Magdoran


----------



## wavepicker

Porper said:
			
		

> I totally agree, a stop cannot be placed in an obvious place, and this is how the text books would have us do it, ie. 1 tick under a support line.
> 
> This of course effects our risk/reward as we tend to place a stop further away trying to avoid being "played" by the big boys.It's amazing how many times prices will just go under a support line then bounce back on heavy volume.
> 
> If this scenario does happen, which of course it doesn't because it is illegal ....................... so wont go there.




Porper, 

You wouldn't beleive how many times I have had to let good trades go because I have been stopped out. This was especially the case when I first started to trade.

I mean you do all the hard work planning your trade, expected entries, exits, and other contingencies etc. What does the market do? It does some fancy footwork first, takes out out all the obvious stops, only to move in your desired direction of speculation shortly after!! Now that can really piss you off!! I am sure that has happened to most of us here at some stage or another. 
There has to be careful consideration to where stops are placed. Sometimes I get the impression, dealers love us to place stops and even push and advertise it. It's in their interests, the more trades they can get people to do the better.

Cheers


----------



## barney

It's Snake Pliskin said:
			
		

> Barney I can't give advice.
> 
> Consider this:
> 
> Momentum trading strategy
> Range trading strategy
> Countertrend trading strategy
> What strategy are you using? Shouldn't you determine this first?
> 
> Determine what is acceptable for a loss.
> 
> Protect capital.
> 
> Continue to protect capital.
> 
> Let winners run and protect your increased capital.
> 
> A tight stop is not always the way to have a small loss - please think about it.
> 
> Snake





Hi Snake, You've done it to me again!!! I've read through what you've written at least 6-8 times ................ And my conclusion is ........... (wait for it .......)  I thought that what I had described as my current "attack" to entering (and hopefully continuing) on trades (mainly short term trades atm) was kind of on the same wavelength as what you have told me to consider ...... Re  A tight stop is not always the way to have a small loss - please think about it.  please fill me in a bit, cause I really thought I was on the right track    PS I really enjoy decifering your comments cause there are many "pearls of wisdom" amongst so few words, but I might need a little help on that last part    Thanks, Barney.


----------



## tech/a

Hopefully this will illustrate the entry question well.

This is a trade which is one which is public here on tech trader.

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000029;p=3


----------



## It's Snake Pliskin

barney said:
			
		

> Hi Snake, You've done it to me again!!! I've read through what you've written at least 6-8 times ................ And my conclusion is ........... (wait for it .......)  I thought that what I had described as my current "attack" to entering (and hopefully continuing) on trades (mainly short term trades atm) was kind of on the same wavelength as what you have told me to consider ...... Re  A tight stop is not always the way to have a small loss - please think about it.  please fill me in a bit, cause I really thought I was on the right track    PS I really enjoy decifering your comments cause there are many "pearls of wisdom" amongst so few words, but I might need a little help on that last part    Thanks, Barney.




Barney you are not lazy which is good.

The nature of the stock you intend to trade: daily ranges, noise, volume etc. They are all different and avoiding the manipulators taking your stops is important. 
A small position with a wide stop can achieve a small loss if gone wrong. It doesn't have to be big positions, or small, with tight stops.

This part I liked:



> If I get it right and the stock goes my way, then I can almost immediately move the stop loss to break even position (which for me is like utopia!!  If I get it wrong and the stock goes against me, I am now, (after much tutoring from those wiser than me on this Forum.... thank you all) Happy to be stopped out at a minimal loss of way less than 2%




Snake


----------



## It's Snake Pliskin

tech/a said:
			
		

> Hopefully this will illustrate the entry question well.
> 
> This is a trade which is one which is public here on tech trader.
> 
> http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000029;p=3




Nice charts Tech!

They fail to acknowledge what trading strategies we are all using though. For trending - momentum - YES the exit as shown.


----------



## barney

Magdoran said:
			
		

> Every move in the market is a potential opportunity to do something.
> 
> The question is can you consistently make profits with this kind of move?
> 
> Me, I tend to think these are too hard.  I don’t like the risk to reward parameters, and I can’t formulate an effective strategy or assess the probabilities well enough.  Too much to work out in too little time with too much emotion and pressure.
> 
> I tend to like to make decisions coolly; hence I shy away from these kinds of moves once they’ve started.  If I’m in something when it happens, I quickly appraise the situation and make a call if I have to.  Otherwise I leave it well alone.  I aim to trade what I understand.
> 
> But that’s my personal preference.  You on the other hand may have a gift for trading these.  It is possible.  In most cases though most people don’t make good calls under pressure.  Trading these for real and not paper trading them is different too.
> 
> I don’t really know anyone that specialises in this style in my circles, but I have heard of some people being masters at this kind of event, but I believe they were highly experienced players.
> 
> Of course there are institutional players that do this stuff all the time, and certainly the market makers have a heavy selection on people who can make major decisions quickly.
> 
> Maybe you are one of these rare people.  If you think so, why not try out with a market maker with their test and see?  If you are offered a role at a place like that, then maybe you have what it takes.
> 
> 
> Regards
> 
> 
> Magdoran





Hey Mag, I appreciate I probably just "got lucky" with PMN dropping further on the day, but my main "learning" point was that I had my stop loss in place (and tight) so that my judgement, if incorrect, was covered.   I don't know who "Market Maker" are, but I'd be pretty sure that my "personality" would not fit the "pressure" scenario.  I like to make "valued" decisions as well ..... I think the fact that  I had made so many wrong decisions in this familiar situation previously, perhaps gave me more confidence to "back" what I saw, if that makes sense.  

You are again quite right to ask .... can you consistently make profits with this kind of move? ................ And that is why you and other "well educated" traders do well LONG TERM ............. and these are the things I need to keep "drumming" into my head .............. Anyone can have a short term "win", but to do it consistently over time requires a lot of dedication .............. Thank you again for the "subtle" wake up call,  Barney.


----------



## barney

It's Snake Pliskin said:
			
		

> Barney you are not lazy which is good.
> 
> The nature of the stock you intend to trade: daily ranges, noise, volume etc. They are all different and avoiding the manipulators taking your stops is important.
> A small position with a wide stop can achieve a small loss if gone wrong. It doesn't have to be big positions, or small, with tight stops.
> 
> This part I liked:
> 
> 
> 
> Snake




I understand now thank you Snake ! ................... I suspect you may be/have been  a "teacher" of some kind ........... to enable thought processes to develop, questions/puzzles are much more productive "food for thought" ................ Of course you may also be a truck driver from Dapto    Thanks Barney.


----------



## It's Snake Pliskin

Barney,

Certainly not Dapto and not taking speed etc to drive long distances. Yes I  teach conversational English as a part-time thing to maintain human contact and pay for bills etc. 

Take note of Tech's charts he has posted - they say a lot.


----------



## barney

It's Snake Pliskin said:
			
		

> Barney,
> 
> Take note of Tech's charts he has has posted.




Yeah You are quite right. I meant to make comment on my last post ............. Tech, that is a lesson in "chart analysis" on its own! ............ Can I ask Tech; After the position was taken, what stop/loss position did you take? And when it first reversed against your initial analysis, how did you react Phsycologically to the position?   Thanks, Barney.


----------



## Magdoran

wavepicker said:
			
		

> Porper,
> 
> You wouldn't beleive how many times I have had to let good trades go because I have been stopped out. This was especially the case when I first started to trade.
> 
> I mean you do all the hard work planning your trade, expected entries, exits, and other contingencies etc. What does the market do? It does some fancy footwork first, takes out out all the obvious stops, only to move in your desired direction of speculation shortly after!! Now that can really piss you off!! I am sure that has happened to most of us here at some stage or another.
> There has to be careful consideration to where stops are placed. Sometimes I get the impression, dealers love us to place stops and even push and advertise it. It's in their interests, the more trades they can get people to do the better.
> 
> Cheers



Well said wavepicker, nicely illustrated to demonstrate the point.


Magdoran


----------



## barney

It's Snake Pliskin said:
			
		

> Barney,
> 
> Certainly not Dapto and not taking speed etc to drive long distances. Yes I  teach conversational English as a part-time thing to maintain human contact and pay for bills etc.
> 
> Take note of Tech's charts he has posted - they say a lot.




I thought so. As  I said earlier ........... to make informative/constructive/(not to mention thought provoking!!)  comments with minimal use of words is an art form .............. Hopefully others around here appreciate that !!  A couple of my best friends are teachers (tafe and school system) ............ I am also curious about Mag's past employment.............. I also suspect a Uni degree in Law/Politics/Economics , but I may be totally off the track??  Cheers Guys. Barney ............ PS No degree for me, but my daughter!! .......... she is another story ...............Very proud of her ............ (make that VERY VERY proud!!


----------



## nizar

tech/a said:
			
		

> Hopefully this will illustrate the entry question well.
> 
> This is a trade which is one which is public here on tech trader.
> 
> http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000029;p=3





tech/a, 

great charts.

just a couple of questions:
1/ where was ur initial stop upon entry?
2/ where is your stop loss now (i suspect around the $22 mark?)


----------



## MichaelD

Magdoran said:
			
		

> I would agree though that entering around a previous high (or low if looking to go short) has some risk because the underlying is nearing previous resistance (or support).
> 
> If Michael finds he is effective doing it this way fine.  Me, I do trade near new highs sometimes based on the pattern (have done recently), but fully aware that there is quite some risk of a marginal high occurring, and being prepared to exit or even reverse the position.



Mag,

I don't trade with an all time highest close entry. I was merely using it as an example of how simple a robust, profitable system can be and how unimportant the entry is in the overall outcome of a system.

The aim of all my systems is to smooth out the equity curve and minimize drawdown as much as possible to make them pleasant (relatively speaking) to trade. An all time highest close entry is quite a choppy system to trade, so not quite to my tastes.

My major trend following system tends to pick up either trends in progress or stocks about to breakout to a Weinstein Stage 2.


			
				It's Snake Plisken said:
			
		

> 10 losses at 2% = $20,000



Beginners say 2% risk - so little?

Pros say 2% risk - so much?

I used 2% for the example since it's a commonly used risk %. I personally like to trade 0.5% and pyramid winners. It keeps the losses to a size where I can easily shrug them off.


			
				It's Snake Plisken said:
			
		

> A tight stop is not always the way to have a small loss - please think about it.



Barney,

There's a lot contained within these few words.

1. A tight stop can easily be whipsawed out by random market action.

2. A tight stop may be suitable for trading a wild ride down like PMN. Whether you can consistently take this sort of wild countertrend ride is another matter. Who knows - maybe it's your niche. Not for me at the moment, thanks - too much excitement. After a spike up you see several possible different behaviours;

 a. Another spike up - everyone's seen the spike and greed is dominant. Gimme gimme gimme at any price.
 b. A day which opens and closes at about the same spot with a fairly wide range between the high and the low. Here many of the holders of the stock from way back have noticed the spike and have headed for the exit, locking in profits, but buyers are equally keen to get hold of the stock.
 c. A modest pullback on low volume. Very common for this to occur and a few days later the stock breaks out again.
 d. A big bearish day where old holders swamp the buyers to get out after the price spike.

Working out how to consistently profit from these behaviours is the hard part. For me, this is my current work-in-progress. Tech/A has started a thread on trading this sort of behaviour which promises to be extremely interesting.

3. You can also lose a little by trading a small parcel size with a wide stop. If a trade size is so small that you're thinking "why am I wasting my time even putting on this trade" then it's about right.

4. Based on my backtesting, an intraday stop leads to more drawdown than an end of day stop - the ride is wilder. There's a pattern of potential interest which I believe is called a Kangaroo Tail which seems to reflect all the intraday stops which have been placed at the same or similar price being hit and causing a deluge of sellers getting out at market - the price drops down quickly and then when the sellers are all out, the price rebounds, so you get this long tail on your chart.

I prefer to keep my stops on my charts and not in the market for my style of trading for this reason.


Having said all of this, all of this discussion should not lose sight of the fact that;

*Barney is now trading with a stop.*

Barney has now given himself a shot at surviving. All the rest is finesse.


----------



## nizar

Magdoran said:
			
		

> Well said wavepicker, nicely illustrated to demonstrate the point.
> 
> 
> Magdoran




Mag,

when does an initial stop loss become a trailing one for you? as in, when do u start moving up your stop to protect increasing levels of profit?
are most of your exits from the stock hitting your stop or from some other exit criteria?

i used to think that the only reason traders would sell is if a stock hit their stop. ie. they wanna keep hold of a winning position as long as the trend allows, and consequently the stop should be placed in a position which would indicate that


----------



## tech/a

> After the position was taken, what stop/loss position did you take? And when it first reversed against your initial analysis, how did you react Phsycologically to the position?




The system has a 10% of purchase price stop which when you hold 10 positions and you have equal $$ value of stock held equates to 1% of total equity.In this case it was 79c off the purchase price.

How did I feel.---I had no attachment to it,it would do one of 3 things like ALL my trades. Be a winner,be a loser or bugger about in no mans land.
A 1% loss doesnt concern me. 

However during discretionary trading a 10-20% drawdown does concern me.
This has happened more than once and when it does I STOP trading completely and re visit *WHY*.

*WITHOUT exception * its been letting my losses run longer than I should *AND in doing so * causing my profit on exit to be less than the loss would bear--IE the Reward Risk ratio was out of skew.

Last time that happened was 4 yrs ago.
Ive become an expert in selling stops.

My R/R aim is 7:1 or more in realisty that gives me 3+---as I cant test how I trade in a discretionary manner I guard this R/R  like Fort Knox.
Its the outlier wins that make the $$s thats for sure.Ive had more than a few that return 200:1 R/R.
As Ive said before my stop is 2-3 ticks on momentum discretionary trades.
A vast difference to the 10% longterm stop placement.

Ive been waiting for someone to pull me up on *TIMEFRAME*---there you go did it myself!!

Moggie.
You open up topics that will have us involved for hrs!!---*Bugger I have other things to do!!*

*Nizar* the stop is still in its original spot---quite useless now!! the exit is the 180 day EMA of the low ---the red line! as you can see its chased it all the way up.What seemed like a crazy wide stop aint that crazy now!!


----------



## barney

MichaelD said:
			
		

> Mag,
> 
> I don't trade with an all time highest close entry. I was merely using it as an example of how simple a robust, profitable system can be and how unimportant the entry is in the overall outcome of a system.
> 
> The aim of all my systems is to smooth out the equity curve and minimize drawdown as much as possible to make them pleasant (relatively speaking) to trade. An all time highest close entry is quite a choppy system to trade, so not quite to my tastes.
> 
> My major trend following system tends to pick up either trends in progress or stocks about to breakout to a Weinstein Stage 2.
> Beginners say 2% risk - so little?
> 
> Pros say 2% risk - so much?
> 
> I used 2% for the example since it's a commonly used risk %. I personally like to trade 0.5% and pyramid winners. It keeps the losses to a size where I can easily shrug them off.
> Barney,
> 
> There's a lot contained within these few words.
> 
> 1. A tight stop can easily be whipsawed out by random market action.
> 
> 2. A tight stop may be suitable for trading a wild ride down like PMN. Whether you can consistently take this sort of wild countertrend ride is another matter. Who knows - maybe it's your niche. Not for me at the moment, thanks - too much excitement. After a spike up you see several possible different behaviours;
> 
> a. Another spike up - everyone's seen the spike and greed is dominant. Gimme gimme gimme at any price.
> b. A day which opens and closes at about the same spot with a fairly wide range between the high and the low. Here many of the holders of the stock from way back have noticed the spike and have headed for the exit, locking in profits, but buyers are equally keen to get hold of the stock.
> c. A modest pullback on low volume. Very common for this to occur and a few days later the stock breaks out again.
> d. A big bearish day where old holders swamp the buyers to get out after the price spike.
> 
> Working out how to consistently profit from these behaviours is the hard part. For me, this is my current work-in-progress. Tech/A has started a thread on trading this sort of behaviour which promises to be extremely interesting.
> 
> 3. You can also lose a little by trading a small parcel size with a wide stop. If a trade size is so small that you're thinking "why am I wasting my time even putting on this trade" then it's about right.
> 
> 4. Based on my backtesting, an intraday stop leads to more drawdown than an end of day stop - the ride is wilder. There's a pattern of potential interest which I believe is called a Kangaroo Tail which seems to reflect all the intraday stops which have been placed at the same or similar price being hit and causing a deluge of sellers getting out at market - the price drops down quickly and then when the sellers are all out, the price rebounds, so you get this long tail on your chart.
> 
> I prefer to keep my stops on my charts and not in the market for my style of trading for this reason.
> 
> 
> Having said all of this, all of this discussion should not lose sight of the fact that;
> 
> *Barney is now trading with a stop.*
> 
> Barney has now given himself a shot at surviving. All the rest is finesse.





Thank you Michael, So much good advice around here its almost scarey!!   Can I say, that on this Forum, most of the "Good Advice" is found "Between the Lines" ................ In the words of Billy Connelly .... (Brilliant!) Cheers, Barney.


----------



## It's Snake Pliskin

nizar said:
			
		

> i used to think that the only reason traders would sell is if a stock hit their stop. ie. they wanna keep hold of a winning position as long as the trend allows, and consequently the stop should be placed in a position which would indicate that




Setting stops is guesswork at best.


----------



## tech/a

> Tech/A has started a thread on trading this sort of behaviour which promises to be extremely interesting.




These can be traded very well and you guys just get me involved in other threads which take so long to answer I havent devoted the time to such a great topic.
Actually I'm looking forward to the flack from the "Experts" from the Fundamental lounge,who have been trading outliers like they are a longterm trend.MOX and PHM threads make a good read.


I will get to it I'll have to do it in small chunks.
My apologies.


----------



## barney

tech/a said:
			
		

> The system has a 10% of purchase price stop which when you hold 10 positions and you have equal $$ value of stock held equates to 1% of total equity.In this case it was 79c off the purchase price.
> 
> How did I feel.---I had no attachment to it,it would do one of 3 things like ALL my trades. Be a winner,be a loser or bugger about in no mans land.
> A 1% loss doesnt concern me.
> 
> However during discretionary trading a 10-20% drawdown does concern me.
> This has happened more than once and when it does I STOP trading completely and re visit *WHY*.
> 
> *WITHOUT exception * its been letting my losses run longer than I should *AND in doing so * causing my profit on exit to be less than the loss would bear--IE the Reward Risk ratio was out of skew.
> 
> Last time that happened was 4 yrs ago.
> Ive become an expert in selling stops.
> 
> My R/R aim is 7:1 or more in realisty that gives me 3+---as I cant test how I trade in a discretionary manner I guard this R/R  like Fort Knox.
> Its the outlier wins that make the $$s thats for sure.Ive had more than a few that return 200:1 R/R.
> As Ive said before my stop is 2-3 ticks on momentum discretionary trades.
> A vast difference to the 10% longterm stop placement.
> 
> Ive been waiting for someone to pull me up on *TIMEFRAME*---there you go did it myself!!
> 
> Moggie.
> You open up topics that will have us involved for hrs!!---*Bugger I have other things to do!!*
> 
> *Nizar* the stop is still in its original spot---quite useless now!! the exit is the 180 day EMA of the low ---the red line! as you can see its chased it all the way up.What seemed like a crazy wide stop aint that crazy now!!





Thanks Tech, I'll let others more experienced take these points up, and thank you for your input ........... I feel like the "kid at the side show" .......... just enjoying the atmosphere .............. Barney

And PS ...I agree .... Its Mag's fault ............. Thats what you guys get for being clever ...........serve you all right     Been a great discussion on this thread ............ hopefully others have gotten a lot of "insight" out of it as I have ,   Barney.


----------



## tech/a

It's Snake Pliskin said:
			
		

> Setting stops is guesswork at best.




No its part of risk management if you trade that way.
IE you trade the numbers.
I gave you the test results for various width stops.
All they do is preserve capital so that when you do get a runner YOU HAVE THE CAPITAL ON IT!

Barny its *NO PROBLEM*
Thats my humour


----------



## lesm

tech/a said:
			
		

> These can be traded very well and you guys just get me involved in other threads which take so long to answer I havent devoted the time to such a great topic.
> Actually I'm looking forward to the flack from the "Experts" from the Fundamental lounge,who have been trading outliers like they are a longterm trend.MOX and PHM threads make a good read.
> 
> I will get to it I'll have to do it in small chunks.
> My apologies.



No need to apologise. When you get the time.

Those guys are good for a bit of light humour and when a light distraction from more important matters is required. Unless you are going to use a baseball bat with spikes, why waste the time on them. They don't want to hear or try to understand the message, even if it may actually be in their interests.

Some good comments on this thread so far and looks like Barney is moving in a positive direction.

Cheers.


----------



## nizar

tech/a said:
			
		

> The system has a 10% of purchase price stop which when you hold 10 positions and you have equal $$ value of stock held equates to 1% of total equity.In this case it was 79c off the purchase price.
> 
> How did I feel.---I had no attachment to it,it would do one of 3 things like ALL my trades. Be a winner,be a loser or bugger about in no mans land.
> A 1% loss doesnt concern me.
> 
> However during discretionary trading a 10-20% drawdown does concern me.
> This has happened more than once and when it does I STOP trading completely and re visit *WHY*.
> 
> *WITHOUT exception * its been letting my losses run longer than I should *AND in doing so * causing my profit on exit to be less than the loss would bear--IE the Reward Risk ratio was out of skew.
> 
> Last time that happened was 4 yrs ago.
> Ive become an expert in selling stops.
> 
> My R/R aim is 7:1 or more in realisty that gives me 3+---as I cant test how I trade in a discretionary manner I guard this R/R  like Fort Knox.
> Its the outlier wins that make the $$s thats for sure.Ive had more than a few that return 200:1 R/R.
> As Ive said before my stop is 2-3 ticks on momentum discretionary trades.
> A vast difference to the 10% longterm stop placement.
> 
> Ive been waiting for someone to pull me up on *TIMEFRAME*---there you go did it myself!!
> 
> Moggie.
> You open up topics that will have us involved for hrs!!---*Bugger I have other things to do!!*
> 
> *Nizar* the stop is still in its original spot---quite useless now!! the exit is the 180 day EMA of the low ---the red line! as you can see its chased it all the way up.What seemed like a crazy wide stop aint that crazy now!!





tech/a,

how long do u keep a stock thats in "no mans land" before u chop it?


----------



## wayneL

tech/a said:
			
		

> Actually I'm looking forward to the flack from the "Experts" from the Fundamental lounge,who have been trading outliers like they are a longterm trend.MOX and PHM threads make a good read.
> 
> 
> I will get to it I'll have to do it in small chunks.
> My apologies.




Tech,

It's a bit like the Catholics and the Protestants in Nth Ireland, innit.

In reality we know *they're* the apostates. We should just treat them with ignore and get on with our own ideas.... instead of fighting.

Hmmmmmmmmmm. Maybe I should follow my own advise  

Cheers


----------



## lesm

wayneL said:
			
		

> Tech,
> It's a bit like the Catholics and the Protestants in Nth Ireland, innit.
> 
> In reality we know *they're* the apostates. We should just treat them with ignore and get on with our own ideas.... instead of fighting.
> 
> Hmmmmmmmmmm. Maybe I should follow my own advise
> Cheers



Agree with ignoring them.

You wouldn't happen to be referring to the SPI thread with your last sentence?    

Have they been making too much noise and awakening you from the crypt?


----------



## It's Snake Pliskin

> Its the outlier wins that make the $$s thats for sure.Ive had more than a few that return 200:1 R/R.




Tech,

An outlier is something far from normal. Taking that meaning and relying on outliers for CONSISTENT profits seems a little challenging. Do you rely only on outliers, and are they included in your stats for expectancy etc?

What timeframe allows the consistent outliers to eventuate in your case? Much like the charts posted before I would imagine. 

You may see the paradox: consistent outliers are not outliers, merely consistent returns.


----------



## It's Snake Pliskin

tech/a said:
			
		

> No its part of risk management if you trade that way.
> IE you trade the numbers.
> I gave you the test results for various width stops.
> All they do is preserve capital so that when you do get a runner YOU HAVE THE CAPITAL ON IT!
> 
> Barny its *NO PROBLEM*
> Thats my humour




Yes tech you may see that I used the word "SETTING" and not "USING". I fully agree with using stops.


----------



## barney

Some good comments on this thread so far and looks like Barney is moving in a positive direction.

Cheers.[/QUOTE]

Thanks Les, I hope you're right ............. I think I need continual "wake up calls" from the many experienced folks here (I read between the lines Mag, thank you) ...........This trading is an interesting exercise in personal phsycological analysis of "yourself"................ I admit to being a bit "impulsive/impatient" etc. , but think that, long term, I (might) go OK??? Many have said that it is easy ............... It probably is (in a Bull Market!!) When the  market is contrary and hard to "read" ............ That is when the ones who "understand" what is "going on" will benefit .................. and then I ask myself .............. What importance does this have in the overall scheme of things ............... ie Life/ Family/Happiness etc............. OK Its Saturday night and I'm getting Philosophical, but in the final wash up, Its all a game (I love the game!!)  but the important facets of life should never be overlooked ................ I'm starting to ramble on (couple of beers) , so I'll sign off......... Cheers, Barney.


----------



## wavepicker

tech/a said:
			
		

> Hopefully this will illustrate the entry question well.
> 
> This is a trade which is one which is public here on tech trader.
> 
> http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000029;p=3




Hi Tech, Thanks for the charts, and congrats on a fine trade.

May I offer some suggestions however based on my own experience. In the chart you posted the 180EMA (which is actually one of the lowest lag filters togtehr with a WMA) is always well below the price action. Obviously this is a very strong trend, which typifies the runup a lot of stocks have had since march 2003. If your methodology scans stocks and looks for these sorts of stocks then fine.

I also used similar lagging indicators at one stage only to get whipsawed everytime price broke under the MA, and then continue it's uptrend. 
Something that was very simple and that helped me a lot was rather than using an MA, I used fib price levels. Just 1 of them!! 

I'll demontrate. In the first chart of the 2 you posted, you had an initial upswing starting from the left of the chart. It was a thrust that took 8 days. The subsequent countertrend also 8 days duration, it was struggle down in comparision. It retraced 50% of the initial leg up. The market is finding it easier to go up than go down. If the retracement had put in a close under the 75% fibo mark ( I stress close) I probably would have been bearish. Following the retracement you had another small thrust up and a retest of that thrust up (a double bottom). Double bottoms in uptrends are bullish. 

Moving along the mext swing up, it was also followed by a retracement, that could not close below 75% of the swing up. Hence you stay in the market. If you looking like closing at a level below the 75% level you exit. It does not mean it's the end of the trend, but acts as warning, and the market will probably sink to a lower level.

This chart you posted does not do the method much justice because it was such a strong trend. But you get my drift.

If you were forced to exit because of a close beneath the 75%, use the same strategy but in reverse, ie on the downward swings to renter a continuous bull.

Now this does not always work, but can be very useful, especially when used with ATR, and RSI. Will leave that for another time though. I use it at varying degress of trend especially in the FX markets. 

Just something to think about regarding both entries and exits. Especially when making entries after breaking to new highs. Something as simple as this and you maybe able to finetune those entries a little more and make a few extra buckaroos!

Cheers


----------



## tech/a

Wave.

Thanks,what a great and simple Idea.

Ill have to code it up and have a test on it.
Even so I do like the idea.
Ill read over your post again when I have more time---just about to nip out for dinner.

Thanks again.
Even OLD DUCKS can be taught new tricks.


----------



## Porper

barney said:
			
		

> Some good comments on this thread so far and looks like Barney is moving in a positive direction.




Totally agree Barney, excellent thread, not too advanced that us "beginners" can't get a grasp of things.It takes a while for it to sink in for all of us but the fact is you can be the best at analysing a chart, but if you let your losers run and take profits too quickly you will be one of the statistics in the 90 odd % that fail.


----------



## barney

Porper said:
			
		

> Totally agree Barney, excellent thread, not too advanced that us "beginners" can't get a grasp of things.It takes a while for it to sink in for all of us but the fact is you can be the best at analysing a chart, but if you let your losers run and take profits too quickly you will be one of the statistics in the 90 odd % that fail.




Amen Porper, I think Trading is a cross between Knowledge and Discipline .............. and from my point of view, you need a lot of both,  .............................and if you have  lots of either, without the other, you are bound to have problems at some stage ............ (That is a "novice" point of view, but even "novices" can be correct sometimes   ) ............. PS I'm tired of being a novice, but I can live with it ............PPS  How do I know when I get past the novice stage??


----------



## Porper

barney said:
			
		

> How do I know when I get past the novice stage??




How many people do you think there are on other forums who think what we discuss here is absolute rubbish ?

I was one of those people just over 2 years ago.I soon realised that trading on tips, gossip and lack of knowledge was going to make me broke.So like you I changed and listened.

So, as far as I am concerned you are past "novice" Barney.

The beginners cycle takes a long time especially when we all need a "life" outside trading, then there is work, family etc.

I sometimes think I am getting past beginner, then there are posts where I have no idea what is going on.I suspect we will never stop learning, but that is good if you enjoy it.


----------



## MichaelD

barney said:
			
		

> PPS  How do I know when I get past the novice stage??



You are past the novice stage already, Barney.

When you start to trade with a stop your trading paradigm changes irrevocably - you change focus from entry to exit. That is the end of the beginning and the beginning of the next part of your journey. The light bulb has suddenly turned on.

90% of traders never get this far.
90% of traders lose.

Porper put it very well - "How many people do you think there are on other forums who think what we discuss here is absolute rubbish ?" - lots, in a raging bull market. It's one of the ways of very quickly telling who actually knows what they are talking about.

Winning traders may disagree on many points as can be seen in this thread, but the central tenets of winning trading behaviour remain constant.


----------



## barney

MichaelD said:
			
		

> You are past the novice stage already, Barney.
> 
> When you start to trade with a stop your trading paradigm changes irrevocably - you change focus from entry to exit. That is the end of the beginning and the beginning of the next part of your journey. The light bulb has suddenly turned on.
> 
> 90% of traders never get this far.
> 90% of traders lose.
> 
> Porper put it very well - "How many people do you think there are on other forums who think what we discuss here is absolute rubbish ?" - lots, in a raging bull market. It's one of the ways of very quickly telling who actually knows what they are talking about.
> 
> Winning traders may disagree on many points as can be seen in this thread, but the central tenets of winning trading behaviour remain constant.




Thank you Michael and Porper for the "moral" support, Bottom line is, I feel like a novice (compared to many here), and will no doubt do many things wrong in the future, yet, at the same time, feel strangely "more in control" than before, due to education I am aquiring ............. Funny, Up until a couple of weeks or so ago I thought to be a good trader you had to be a chart guru/mathematical wizard etc. and be able to "spout" off about the whys and wherefors of all things technical,  but now I realise that the technical aspects are only part of the battle. 

Hindsight is a "cheap" commodity, but if I had taken the time to learn to the basic level I am at now, I would be a much wealthier person atm .............. Not by what I would have aquired, but by what I wouldn't have lost !!! , and that is by far the most valuable lesson I've had so far. My "schooling" was expensive, but hopefully I live long enough to turn that around. For me, it is less about money now and more about personal achievement ............ Hopefully my mistakes will save others making the same mistakes ........  that would be a good thing ............ Barney.  (PS I'd like to make some money as well


----------



## Magdoran

*Ongoing Light Crude Example.*


Crude found support on the 12th which tends to confirm the cycle we have been using may well remain valid.

From the price action we could expect 2-4 days counter trend to the bearish drive in the daily chart.

Last night’s price bar could be a small false break of sorts, and could see a continuation from here.  I suspect this is what will happen, but a counter trend is possible too.

There is an outside chance the low on the 12th was a false break low, and could see a bullish counter trend to the bearish drive in the daily chart, which is also supported by a “mini” 5 wave structure down, so could be a completion of sorts.

Also, the 12th was also a potential end of the weaker cycle shown in the third chart below.  The second chart is a similar alternative cycle, but is not currently dominant like the first chart.

But overall this still looks bearish to me, but we have to be aware of the possibility of being wrong, and pre think what a bullish reversal might look like, so we can recognise it early so we can take action as the trade unfolds.

The downward momentum for crude has slowed currently, but this may be temporary, or maybe this is the rate it will continue at, until support comes in.

Currently we still have the October 30th time point as the as the exit objective, and the half exit point still stands.


Regards


Magdoran

P.S. For those who haven’t been following this on this thread, please refer to the previous posts on Crude and Brent oil futures.  Mag.


----------



## tech/a

> "How many people do you think there are on other forums who think what we discuss here is absolute rubbish ?"




*Hell there are many right here on ASF.*

I was involved in discussion on PMH last week pointed it out as a blowoff top in the Outlier thread.
Went to the trouble of posting charts and started discussion from my experience in trading these. Everytime it fell from highs there was interest even questions. Everytime it tested the high,I was and still am apparently showing people exactly how "They shouldn't be trading".

I've really come to the decision *why bother*,most arent interested in learning,*success,to them should be treated with contempt*. Frankly one of the reasons why I havent continued the Outlier thread---I now realise they would have no interest and wouldnt understand it anyway.

If you'd like an education in the pull and push of Fear and greed then read that and MOX thread.
https://www.aussiestockforums.com/forums/showthread.php?p=80784#post80784

Its a pleasure to be involved in a thread where all seem to be genuine in passing on knowledge and respectful of varying veiws and methods.
Ive picked up some hints--thanks
.


----------



## MichaelD

tech/a said:
			
		

> Frankly one of the reasons why I havent continued the Outlier thread---I now realise they would have no interest and wouldnt understand it anyway.



  
I'm interested (VERY interested) and I'd understand.



			
				tech/a said:
			
		

> Its a pleasure to be involved in a thread where all seem to be genuine in passing on knowledge and respectful of varying veiws and methods.
> Ive picked up some hints--thanks.



100% agree. It's these outlier   threads that make it all worthwhile.


----------



## nizar

MichaelD said:
			
		

> I'm interested (VERY interested) and I'd understand.




so am i tech/a
please continue


----------



## barney

MichaelD said:
			
		

> I'm interested (VERY interested) and I'd understand.
> 
> 100% agree. It's these outlier   threads that make it all worthwhile.





Even if I don't understand ........ I'm still very interested


----------



## It's Snake Pliskin

It's Snake Pliskin said:
			
		

> Tech,
> An outlier is something far from normal. Taking that meaning and relying on outliers for CONSISTENT profits seems a little challenging. Do you rely only on outliers, and are they included in your stats for expectancy etc?
> 
> What timeframe allows the consistent outliers to eventuate in your case? Much like the charts posted before I would imagine.
> 
> You may see the paradox: consistent outliers are not outliers, merely consistent returns.




From my experience you ask questions that don't look like a newbie in awe and nothing.



> Hell there are many right here on ASF.
> 
> I was involved in discussion on PMH last week pointed it out as a blowoff top in the Outlier thread.
> Went to the trouble of posting charts and started discussion from my experience in trading these. Everytime it fell from highs there was interest even questions. Everytime it tested the high,I was and still am apparently showing people exactly how "They shouldn't be trading".
> 
> I've really come to the decision why bother,most arent interested in learning,success,to them should be treated with contempt. Frankly one of the reasons why I havent continued the Outlier thread---I now realise they would have no interest and wouldnt understand it anyway.
> 
> If you'd like an education in the pull and push of Fear and greed then read that and MOX thread.
> https://www.aussiestockforums.com/fo...80784#post80784
> 
> Its a pleasure to be involved in a thread where all seem to be genuine in passing on knowledge and respectful of varying veiws and methods.
> Ive picked up some hints--thanks




I am interested in the inclusion/exclusion of outliers in collecting and calculating trading results.


----------



## tech/a

Snake as you know normally the few highest winners and largest losers are excluded from results.
Personally I look for those on the winning side to see if they skew the return.

More common in longer term trading methods.


----------



## It's Snake Pliskin

tech/a said:
			
		

> Snake as you know normally the few highest winners and largest losers are excluded from results.
> Personally I look for those on the winning side to see if they skew the return.
> 
> More common in longer term trading methods.




Yes naturally Tech. Thanks for the answer.


----------



## Magdoran

nizar said:
			
		

> Mag,
> 
> when does an initial stop loss become a trailing one for you? as in, when do u start moving up your stop to protect increasing levels of profit?
> are most of your exits from the stock hitting your stop or from some other exit criteria?
> 
> i used to think that the only reason traders would sell is if a stock hit their stop. ie. they wanna keep hold of a winning position as long as the trend allows, and consequently the stop should be placed in a position which would indicate that



Hello Nizar,


Your question is deceptively simple, but the answer is very involved.

Ok, simple answers:  I tend to aim to trade the main trend, and exit where I think an impulse is at risk (this is usually a half exit, but sometimes a full exit).  Once the trend resumes or near where I think it will resume I look to re-enter the position.  

I also sometimes play the counter trends looking for sharp gains with puts (I did this a lot with BHP and RIO as they pulled back during this last bull run from 2003 – very dangerous though, you really need to know what you are doing here and be very nimble.  Need to know your option theory too if using them.).  If trading long options (puts or calls), you need to sell on strength (“McLaren-ism”).

Now, let’s examine this in more detail since this is not as straight forward as it looks.  As for stop losses, these are usually driven by failure criteria, time and often by discretionary exits if it looks wrong to me oddly enough.  I do often have a technical stop too, but this is carefully placed – I try to imagine what I would do if I was on the opposite side trying to take stops out, and place my stop accordingly – in a not very obvious place.

But behind this, we’re really talking about money management issues and developing a trading plan to suit your approach/system, so this is very much horses for courses.  As you can imagine there are quite a few variables involved, based on what market you trade, what instrument you use (shares, options, CFDs, futures, warrants, bonds, and other derivatives such as structured financial notes etc), your risk profile, and your timeframe, not to mention your trading style.

If we’re talking Stop losses specifically, my approach varies depending on a range of these variables.  Don’t forget that timeframe and instrument should play a big part in how you structure your trading plan and money management approach.  But the core inputs are:

•	Technical Exit – profit, loss, and partial exit (to lock in profit).
•	Time:  set a time target for exit - especially if using options.
•	Discretionary: pattern invalidation/failure or some kind of reason that puts the trade at risk.
•	Position size
•	Instrument
•	Market


*“Cut the losers” – how tight should your stop really be?*

Think about situations like the one Daffy (tech) describes in post 357.  After you’ve entered long on a pull back (expecting a resumption of a bull trend), the stock goes flying down hard – in these situations many people jump out while the professional players shove the price down to shake out longs with stops set too tightly.  

Then once enough stops are taken out, the strong buying continues all the way up, then they sell it down again to take their profits.  Look at the bar on Daffy’s “Ouch” day.  This is pretty much the way I read that bar.  Gapped down at open, moved back up strongly, then was sold off towards the close.  Classic bar.

Snake was spot on in drawing attention to this.  If you had set a stop loss too tightly, you would have been taken out, only to see the underlying rally all the way back in the direction you thought it would go.  There are times to use tight stops, and times not to.  Time frame is a critical element as is the position size involved.  Sometimes it makes sense to trade for longer periods, and reduce position size to allow a wider stop.  Fully agree with Snake’s observations here.


*Money Management:*

This in my view revolves around two key concepts – 1) Risk and Reward, and 2) Probabilities.  In my view, you need to be aware of how much you are actually risking, and what the likely rewards are.  Then I also believe that you need to assess the probability of a range of possible outcomes to the best of your ability, and what the net effect would be to your position.  But this is just my view, some choose to ignore one or both or these concerns (at their peril).

A key element in money management is position size.  I keep reading these ridiculous comments about only risking 1% of capital because someone has set a stop loss at a specific price.  Hogwash.  If you put up $10,000 into a share purchase, you are actually risking $10,000.  If for some reason a trading halt is called, and the stock goes into liquidation, it is possible for you to lose the entire capital staked.  This can happen.  Sure, it is not probable, but it is possible.  Think about this.

Also, it is highly possible for a stock to gap down way below a “stop loss” and keep going.  In a panic move, it may not be possible to exit until the stock has hit a price way over the fabled 1% stop loss.  In my view this is really a misnomer about stop losses. Of course I’m assuming a long share type position here, the reverse of course applies to short positions (if short and the underlying gaps up), and leveraged instruments also can behave differently depending on the instrument used.

This is where probability estimation comes in.  It’s a bit like an insurance actuary assigning risk and examining the reward for doing so.  This is essential in my view to determine which trades to avoid, as much as identifying the ones to take. 


*“Let the winners Run” – the important half of the story!*

Another sloppy mantra that is chanted ad nauseum is the concept of “letting the winners run” – what a dangerous notion this is if it is not combined with Mark Douglas’ gem:  “I pay myself as the market makes money available to me”.  What he’s saying lines up with McLaren’s wonderful story of learning “how to take a profit”.  I’m sick to death of people putting this kind of “truism” up without explaining the important half - Knowing when to get out and not overstay the position.

I remember being really bullish on a banking stock a few years ago, got the entry spot on and saw my options double overnight, and continue for 2 more trading days, didn’t take my profits, then saw the stock plummet and take over a month to get back to the same level, resulting in a loss because I didn’t believe it was going down.  Hence I learned my lesson, and now set technical partial profit exits (ala McLaren), or if unsure of the technical exit identify doubling my position as an exit half target.  Then I also set failure criteria and profit stops for the remaining half.


*Playing the Market:*

People seem to forget that this is a highly competitive arena where the big guys have huge $$$ targets to achieve, and are out to take your money.  They have deployed considerable resources to the sole pursuit of taking money from any source they can find – this includes YOU!

There are also professional traders who depend on winning at this game to make a living.  They treat this pursuit as a serious business and have to be 100% committed to making consistent profits.  Then there are the amateurs and mums and dads.

If you don’t understand that there are all sorts of manipulative tricks that some of these guys play to make a quick buck out of the majority, then you are naive, and probably will be their next meal.  

There are as snake points out different trading objectives, such as long term trend following, counter trend trading (usually quite short since it is against the main trend), day trading etc.  All very relevant considerations into the mix.

The way I trade, I assess the probabilities, and interpret the chart and define exit criteria of taking profits when the trade is at risk, or where there is a good chance that an impulse may end and retrace against the main trend.  You have to know how to take a profit, as much as know how to take a loss.  Two sides of the coin, and half the equation that is often missed if you are position/swing trading (I tend to see these terms as pretty much interchangeable depending on the definition).

As you can imagine, we’re skirting a lot of involved issues here, and there are subtleties and tactics, and methods that we could talk about for hours on this subject, but I hope this helps to illuminate some of the issues in this first cut at the subject.


Regards


Magdoran


----------



## Magdoran

tech/a said:
			
		

> Moggie.
> You open up topics that will have us involved for hrs!!---*Bugger I have other things to do!!*



Geez Daffy,


Am I making you work am I?  Sounds like you have a war going with the “fundies” and “shark bar” amateurs at the moment without me adding to your inbox!

You poor old duck.  No sleep for you this weekend.  No play.  No tennis Mr McEnroe!

Sorry, can’t help myself either, topics get put up, I think about them and comment… 

It is fun though, isn’t it?  This is a really good thread, lots of interesting ideas here…

As for barney, what do you mean it’s my fault?!  You’re the one who started this crazy thread, and keep adding fuel to the fire!

Hahahahaha!


âœMoggie”


----------



## Magdoran

wavepicker said:
			
		

> "Before You Recoil In Horror" (Some Practical Advice From Bob Prechter)
> By Anna Troupe
> 
> An analyst in a recent news story says using stops is the "most basic tactic" for managing risk in a volatile market. The advantages (according to this analyst) are that they define losses in advance, they give you an objective reason to sell (exit) your position, and get you out before getting emotionally involved. So by using stops, investors will "spare themselves the kinds of losses that are difficult to recover from."
> Sounds logical, right? As it turns out, Bob Prechter has a very different take on risk management and on using stops. For anyone who trades or is considering doing so, here's a "second opinion" -- an insight crafted from years of experience that can improve your understanding of trading in general.
> Number one on his list of six requirements for successful trading (page 99 of Prechter's Perspective, c.1996) is "A method: Any time you enter or exit a market, it must be for a predetermined reason that will also apply in the future." Number five says, "Accommodation of losses: The perfect trading system does not exist, so your method must deal with taking losses."
> The first step to "dealing" with losses is to manage risk in advance. As Bob warns in Prechter's Perspective, "If you take a position large enough to inflict serious financial damage upon yourself, you are a loser going out of the gate."
> Back to requirement number one -- a method for entering and exiting the market: In the March Elliott Wave Theorist, Bob comments that every (trading) book says to use stops. Yet he states unequivocally his belief that "people lose more money on stops than anything else."
> "Before you recoil in horror, consider that I know a futures trader who steadily makes $200,000 - $400,000 every year, and he never uses stops.
> So what should a trader use in place of stops? He should use real-time analysis. The question isn't so much whether a level is broken but what the analysis indicates as it breaks. A stop only takes one aspect of analysis into account: price. There is much more to analysis than price.
> A stop also makes you lazy. If the market and your analysis turn against you, you are prone to think, 'well, if the market takes my stop, then I'm out.' But if you have already decided that your position is wrong, you should already be out! On the flip side, when you already have a stop in and decide it's in the wrong place, there is a psychological impediment to widening it. If you don't act, the stop is typically taken out, and then the market turns your way without you.
> To those who insist that without stops they'd get killed, I say, you are trading with too much leverage. Leverage forces you out so often that all you will have after years of trading is a long string of losses from stop-outs. Trade well within your capital so that you can allow the market time to respond to the forces that you detect developing in your analysis. If you cannot watch the market closely or do not have time to do the analysis (or don't have someone doing it for you), you shouldn't be trading in the first place. Aside from all that, there may in fact be occasional times for close stops. But treat them as exceptions that analysis demands."




*Applause.*


Really, really good points.

I agree with this appraisal.


Magdoran


----------



## Magdoran

It's Snake Pliskin said:
			
		

> Barney I can't give advice.
> 
> Consider this:
> 
> Momentum trading strategy
> Range trading strategy
> Countertrend trading strategy
> What strategy are you using? Shouldn't you determine this first?
> 
> Determine what is acceptable for a loss.
> 
> Protect capital.
> 
> Continue to protect capital.
> 
> Let winners run and protect your increased capital.
> 
> A tight stop is not always the way to have a small loss - please think about it.
> 
> Snake



Excellent points Snake, well said.

Protecting your capital is paramount.  

These points are worth highlighting.

Magdoran


----------



## tech/a

Magdoran said:
			
		

> Hello Nizar,
> 
> 
> Now, let’s examine this in more detail since this is not as straight forward as it looks.  As for stop losses, these are usually driven by failure criteria, time and often by discretionary exits if it looks wrong to me oddly enough.  I do often have a technical stop too, but this is carefully placed – I try to imagine what I would do if I was on the opposite side trying to take stops out, and place my stop accordingly – in a not very obvious place.




Moggie do you seriously think institutions short sell stock to trigger stops?
Futures I agree stock--now thats a stretch.




> *“Cut the losers” – how tight should your stop really be?*
> 
> Think about situations like the one Daffy (tech) describes in post 357.  After you’ve entered long on a pull back (expecting a resumption of a bull trend), the stock goes flying down hard – in these situations many people jump out while the professional players shove the price down to shake out longs with stops set too tightly.




Moggie just how do they do that? Ive watched even penny stocks take a beating and it would take many millions to take out a falling stocks sellers.
*Just doesnt make sense.* Professional traders you are saying just keep selling stock to force price lower so they can buy it back up again.---Really--what then was the price they bought this stock at so they could sell it down again???



> Then once enough stops are taken out, the strong buying continues all the way up, then they sell it down again to take their profits.  Look at the bar on Daffy’s “Ouch” day.  This is pretty much the way I read that bar.  Gapped down at open, moved back up strongly, then was sold off towards the close.  Classic bar.




Pros arent going to be stupid enough to keep selling a stock lower,with their own stock! A pro will only sell if he thinks he is at risk or taking a profit.
This manipulation theory IN STOCKS is more myth than fact.



> Snake was spot on in drawing attention to this.  If you had set a stop loss too tightly, you would have been taken out, only to see the underlying rally all the way back in the direction you thought it would go.




At the time of setting a stop you have no idea how loose or tight is the optimum.
We make an educated decision---I go tight as the trade Im taking in a momentum move I expect to continue NOW. If its taken out then its not doing as I want. If its a longterm position trade then its wider..



> There are times to use tight stops, and times not to.  Time frame is a critical element as is the position size involved.  Sometimes it makes sense to trade for longer periods, and reduce position size to allow a wider stop.  Fully agree with Snake’s observations here.




So Iguess I agree to.


*Money Management:*



> This in my view revolves around two key concepts – 1) Risk and Reward, and 2) Probabilities.  In my view, you need to be aware of how much you are actually risking, and what the likely rewards are.  Then I also believe that you need to assess the probability of a range of possible outcomes to the best of your ability, and what the net effect would be to your position.  But this is just my view, some choose to ignore one or both or these concerns (at their peril).




Dont know how you can do this without rigorous testing of stratagies. Without it its a guess,educated at best.



> A key element in money management is position size.  I keep reading these ridiculous comments about only risking 1% of capital because someone has set a stop loss at a specific price.  Hogwash.  If you put up $10,000 into a share purchase, you are actually risking $10,000.  If for some reason a trading halt is called, and the stock goes into liquidation, it is possible for you to lose the entire capital staked.  This can happen.  Sure, it is not probable, but it is possible.  Think about this.




Sure Moggie it can happen but how on earth do you propose to do part one of your Moneymanagement analysis without setting a stop level which will be a % of initial capital.



> Also, it is highly possible for a stock to gap down way below a “stop loss” and keep going.  In a panic move, it may not be possible to exit until the stock has hit a price way over the fabled 1% stop loss.  In my view this is really a misnomer about stop losses. Of course I’m assuming a long share type position here, the reverse of course applies to short positions (if short and the underlying gaps up), and leveraged instruments also can behave differently depending on the instrument used.




Hmm your alternative?



> This is where probability estimation comes in.  It’s a bit like an insurance actuary assigning risk and examining the reward for doing so.  This is essential in my view to determine which trades to avoid, as much as identifying the ones to take.




Terrific great idea so how do you assign risk?? Youve just stated that any amount is likely to be invalid.I'm interesred in how you do this.




> *“Let the winners Run” – the important half of the story!*
> 
> Another sloppy mantra that is chanted ad nauseum is the concept of “letting the winners run” – what a dangerous notion this is if it is not combined with Mark Douglas’ gem:  “I pay myself as the market makes money available to me”.  What he’s saying lines up with McLaren’s wonderful story of learning “how to take a profit”.  I’m sick to death of people putting this kind of “truism” up without explaining the important half - Knowing when to get out and not overstay the position.




Moggie really--- I remember Darryl the guy who makes the tables up for the results of Techtrader writing up one night that he "Thought" CTX one of our stocks could not possibly go any higher---It was at $5.91 and we had had it since the High $3s from memory.
I replied saying that an exit had not been triggered so keep it.It was eventually stopped out at $8.80.
Wait but there is MORE. Darryl was away when the stop was hit so he didnt sell it in his portfolio---when he got back it was as you have said back over the sell trigger. He kept it and *STILL* has it in his portfolio.

There are all sorts of arguements around taking profit---one thing is for sure taking small profits would give you the chance to grab a huge profit.
The only way you'll know is to test exits--you'll never get them 100% right but if you can profit from the *MEAT of the MOVE * in the TIMEFRAME your trading in then thats the best you can ask for.

Letting your profits run may mean this particular move---or this particular bull run.Like trends there are immediate intermediatory and primary.

*Let your profits run and run and run if you can*



> I remember being really bullish on a banking stock a few years ago, got the entry spot on and saw my options double overnight, and continue for 2 more trading days, didn’t take my profits, then saw the stock plummet and take over a month to get back to the same level, resulting in a loss because I didn’t believe it was going down.  Hence I learned my lesson, and now set technical partial profit exits (ala McLaren), or if unsure of the technical exit identify doubling my position as an exit half target.  Then I also set failure criteria and profit stops for the remaining half.




Yep timeframe.


*Playing the Market:*



> People seem to forget that this is a highly competitive arena where the big guys have huge $$$ targets to achieve, and are out to take your money.  They have deployed considerable resources to the sole pursuit of taking money from any source they can find – this includes YOU!
> 
> There are also professional traders who depend on winning at this game to make a living.  They treat this pursuit as a serious business and have to be 100% committed to making consistent profits.  Then there are the amateurs and mums and dads.
> 
> If you don’t understand that there are all sorts of manipulative tricks that some of these guys play to make a quick buck out of the majority, then you are naive, and probably will be their next meal.




Ok I'm nieve.Think its all hog wash in stocks.Futures different story. 




> The way I trade, I assess the probabilities, and interpret the chart and define exit criteria of taking profits when the trade is at risk, or where there is a good chance that an impulse may end and retrace against the main trend.




So simply you will only gain the immediate move/rarely the intermediate move as a correction would normally see you "at risk" particularly if it gave back a fair % of open profit. I doubt youll ever get that $3-$23 move---but hey it could spike that in a day!



> You have to know how to take a profit, as much as know how to take a loss.  Two sides of the coin, and half the equation that is often missed if you are position/swing trading (I tend to see these terms as pretty much interchangeable depending on the definition).




Depends on win ratios and expectancy.
When discretionary trading I would argue that win ratios are formost and expectancy over a100 trades pretty well unknown. Having an expectancy for each trade is not only misleading but down right dangerous.There just isnt enough information for 99.9% of discretionary traders to make informed M/M decisions.

*Bloody hell moggie havent you heard of brevity?*


----------



## RichKid

Tech, in the previous post you said you didn't believe that instos would sell at a lower level to the current price action in order to trigger stops- surely being a TA man yourself you've read the respected texts and traders on the subject? 

It's called a 'shakeout', the weaker hands are shaken out of the stock, often a low volume spike down (so the cost is minimal to the instos as they distribute tiny parcels at lower prices) or a short move where 'weaker hands' are cleared and then prices are free to move higher, sometimes larger parcels change hands as people panic, this has been tracked in stock charts for over 50years- see Edwards and Magee, Wyckoff, Schabacker etc etc...often happens at obvious stop placement levels where most TA people are supposed to put their stops....sometimes the buying is so strong that the instos fail but it is a known technique imo- not sure if absolute proof is available unless you trace every order's origin, but that's TA. 

Happens the other way around as well when you see false, quick breaks to the upside.  It's hard to say that every situation like this is an insto shakeout play. I can't see the difference bw instos doing it in the futures markets and in stocks.


----------



## Magdoran

Hello Daffy,


Where do you get the time to do all this?  You must be on steroids!




			
				tech/a said:
			
		

> Moggie do you seriously think institutions short sell stock to trigger stops?
> Futures I agree stock--now thats a stretch.




I agree, it’s more common in futures, but it’s a big world, and there is a lot of powerful players in the market.

Try reading Frank Partnoy’s book “Infectious Greed” for an idea of some of the tricks of the trade...  this may help to illustrate the game in a way you may not have considered.

Admittedly I am pretty cynical, but then I was around some “interesting” circles for a long time, and some of my contemporaries have ended up in some very interesting places.  Can’t say too much here...  

It is hard to know all the strategies that are in play at any one time, but based on a range of people’s observations I think this kind of activity definitely goes on.  It is often not talked about for obvious reasons (partly why I’m not going to say too much here either).  Even McLaren who traded on the floor in the US has a lot to say about this, especially if you’re lucky enough for him to speak candidly.

But we all have to make out best shot judgment on the issue.  I’ve made mine, and respect yours.




			
				tech/a said:
			
		

> Moggie just how do they do that? Ive watched even penny stocks take a beating and it would take many millions to take out a falling stocks sellers.
> *Just doesnt make sense.* Professional traders you are saying just keep selling stock to force price lower so they can buy it back up again.---Really--what then was the price they bought this stock at so they could sell it down again???




It is not like they are in a smoke filled room and all conspire.  There are market forces in action, but the smarter players I would argue take advantage of a play, sometimes backing a major player, sometimes playing against them.  Think about the salient examples like Nick Leeson for example, and the way he manipulated the market for a long time.  Think about the way Hunter was taken to the cleaners with Gas futures...

The bar we looked at gapped down, then moved up with force.  I suspect that many stops fired off while savvy players bought like mad, then sold off a lot forcing the bar back down when they reduced their positions.  I suppose your view is coloured by who you talk to in the financial markets.  Probably said too much now...




			
				tech/a said:
			
		

> Pros arent going to be stupid enough to keep selling a stock lower,with their own stock! A pro will only sell if he thinks he is at risk or taking a profit.
> This manipulation theory IN STOCKS is more myth than fact.




True, they might not do it with their own stock, but look at the short selling registers some time, or try to estimate who is selling and buying back at the bottom.  You need to understand the short side of the equation.



			
				tech/a said:
			
		

> At the time of setting a stop you have no idea how loose or tight is the optimum.
> We make an educated decision---I go tight as the trade Im taking in a momentum move I expect to continue NOW. If its taken out then its not doing as I want. If its a longterm position trade then its wider..




Agree.  So you have to exercise judgment based on a range of criteria.  My point is that there is a lot to this, and many dimensions that beginners don’t think of immediately until they consider what is going on.  Put 50 traders in a room and you’ll get 50 different mixes of approaches, won’t you?

End of part 1


----------



## Magdoran

Part 2



			
				tech/a said:
			
		

> Dont know how you can do this without rigorous testing of stratagies. Without it its a guess,educated at best.




Good question and one I’m still working on. Hence yes, use an “educated guess”.



			
				tech/a said:
			
		

> Sure Moggie it can happen but how on earth do you propose to do part one of your Moneymanagement analysis without setting a stop level which will be a % of initial capital.




That is a huge topic in itself, and one you could devote a whole thread to.  My point is that many don’t realise the real risk involved.  The method of determining how much to put on is an art in itself, and my concern is that many do not realise the real risks involved, or think about probabilities enough.



			
				tech/a said:
			
		

> Hmm your alternative?




Determine an approach that allows you to limit your risks.  Me, I use option strategies... but there are many ways to achieve this.




			
				tech/a said:
			
		

> Terrific great idea so how do you assign risk?? Youve just stated that any amount is likely to be invalid.I'm interesred in how you do this.




As above, determine the maximum risk using an instrument that conforms to my criteria.




			
				tech/a said:
			
		

> Moggie really--- I remember Darryl the guy who makes the tables up for the results of Techtrader writing up one night that he "Thought" CTX one of our stocks could not possibly go any higher---It was at $5.91 and we had had it since the High $3s from memory.
> I replied saying that an exit had not been triggered so keep it.It was eventually stopped out at $8.80.
> Wait but there is MORE. Darryl was away when the stop was hit so he didnt sell it in his portfolio---when he got back it was as you have said back over the sell trigger. He kept it and *STILL* has it in his portfolio.
> 
> There are all sorts of arguements around taking profit---one thing is for sure taking small profits would give you the chance to grab a huge profit.
> The only way you'll know is to test exits--you'll never get them 100% right but if you can profit from the *MEAT of the MOVE * in the TIMEFRAME your trading in then thats the best you can ask for.
> 
> Letting your profits run may mean this particular move---or this particular bull run.Like trends there are immediate intermediatory and primary.
> 
> *Let your profits run and run and run if you can*




The way I trade is to exit partial positions, exit outright under specific conditions, and look to re-enter using a counter trend based approach.  Sure, I might miss 10-20% (or more) of the move, but the corollary of this is that losses should be more limited by not over staying positions.  This is a trade off, and there are many different ways to construct trading plans successfully. I just don’t like to top or bottom pick, and have learnt to take profits when the trend is at risk.  Give me the middle 50-60% any day.   Also, using options means you must exit on strength, hence volatility is a factor for me for example, as is theta decay... 




			
				tech/a said:
			
		

> Ok I'm nieve.Think its all hog wash in stocks.Futures different story.




Agree, it is more evident in the futures market.  Read the book above, and it may open your eyes...




			
				tech/a said:
			
		

> So simply you will only gain the immediate move/rarely the intermediate move as a correction would normally see you "at risk" particularly if it gave back a fair % of open profit. I doubt youll ever get that $3-$23 move---but hey it could spike that in a day!




Not sure what you mean here.  You can always re-enter on a counter trend.  If you understand McLaren’s approach, then maybe this would make more sense.  I suppose it’s a style thing...



			
				tech/a said:
			
		

> Depends on win ratios and expectancy.
> When discretionary trading I would argue that win ratios are formost and expectancy over a100 trades pretty well unknown. Having an expectancy for each trade is not only misleading but down right dangerous.There just isnt enough information for 99.9% of discretionary traders to make informed M/M decisions.




Maybe, again something I’m working on.  I suspect though that there are no objective views because there are so many variables involved, so I kind of agree with you.  But I still think you can be the casino re Douglas if you have an edge.

Hence the approach I’ve in part outlined does deliver a kind of expectancy, but I’d argue that your theoretical expectancy, although more stable in one respect because it is over a longer time frame, will still statistically bounce around a lot, but each style will do so uniquely.




			
				tech/a said:
			
		

> *Bloody hell moggie havent you heard of brevity?*





Nup, what’s that? (Amusingly I earned this as a nickname with some friends once – especially after consuming a couple of bottles of wine together!).

Thanks tech, some good questions and observations there.


Regards


Magdoran


----------



## tech/a

> You must be on steroids!




Yup isthnt evry dwuck??


----------



## barney

Posts 397 (...Mag), and 401 (....Tech) , Meaty stuff you guys ............ This is what we've all paid our "entry fee" for ............. Heavy reading ..... but funny how it gets "lighter" (understand)  the more I read it! ............. I'm sure everyone (not just us newbies) are getting some good insight here.  Well done gentlemen (Gentlemen being the operative word ............ differing opinions yet stated with mutual respect ........... as life in general should be!!   , Barney.


----------



## It's Snake Pliskin

Tech,



> Moggie just how do they do that? Ive watched even penny stocks take a beating and it would take many millions to take out a falling stocks sellers.
> Just doesnt make sense. Professional traders you are saying just keep selling stock to force price lower so they can buy it back up again.---Really--what then was the price they bought this stock at so they could sell it down again???
> 
> 
> Quote:
> Then once enough stops are taken out, the strong buying continues all the way up, then they sell it down again to take their profits. Look at the bar on Daffy’s “Ouch” day. This is pretty much the way I read that bar. Gapped down at open, moved back up strongly, then was sold off towards the close. Classic bar.
> 
> Pros arent going to be stupid enough to keep selling a stock lower,with their own stock! A pro will only sell if he thinks he is at risk or taking a profit.
> This manipulation theory IN STOCKS is more myth than fact.




See Richkid's post. There are many large TRADING SYNDICATES that you should talk to and explain the myth to.


----------



## barney

It's Snake Pliskin said:
			
		

> Tech,
> 
> 
> 
> See Richkid's post. There are many large TRADING SYNDICATES that you should talk to and explain the myth to.




Hi Snake, Re The large Syndicates that "short sell" these stocks down before re buying at a discount ............... Do they pay the same % brokerage fees as us "little guys", ........ I'm assuming they get volume discounts?? ..... Also what fees would an actual Broker pay on his trades since it is his profession??  Just curious, cause if they get "hefty" discounts, it kinda gives them a double advantage when "pushing" the SP around. Cheers, Barney.


----------



## barney

Hi Guys, Nothing real tricky with  this chart on AWB ............ Obviously a lot of bad press etc and in an obvious downtrend ................ Just curious with the heavy volume, two days in a row SP gap down, whether we might see one of those "inside days" (today,monday) as talked about earlier (only this time from the "bottom up" instead of the other way round).............. It would probably be fair to say if the SP dropped anything above an average amount again today, that AWB would be looking very poor . Will be interesting to see what sort of support, if any, the SP gets over the next few days.  Cheers, Barney.


----------



## swingstar

Hi barney

Here's where I'd put my lines. With the heavy volume on the recent down days, I suspect it'll just continue, possibly finding support at $2.40 or lower on the bottom of the channel. That horizontal line I put in was the lowest point AWB had ever reached (notice the consolidation around there), so there's no history/support ahead. 

Cheers


----------



## swingstar

Here's AMP in 2002. Very similar trend. What the chart doesn't show is AMP hovered around the previous all-time low for a few months, then proceeded to fall about 70%.

Also have a look at Telstra. It broke through new lows late last year and has been hovering around since.


----------



## barney

swingstar said:
			
		

> Hi barney
> 
> Here's where I'd put my lines. With the heavy volume on the recent down days, I suspect it'll just continue, possibly finding support at $2.40 or lower on the bottom of the channel. That horizontal line I put in was the lowest point AWB had ever reached (notice the consolidation around there), so there's no history/support ahead.
> 
> Cheers




Hi Swingstar, Thanks for your description. I like your lines better than mine    It does look a bit "sad" for AWB, and I can't see how it could turn around with any momentum in the short term with all the bad press atm. Any one game to hazard a guess as to how low it could go if they lose their monopoly status??  Its not the type of Company that could "go under" is it? I assume the Gov. has too much to lose to let that happen??  Cheers, Barney.


----------



## tech/a

Hmm Barney your invested in the company and "Cant,--Dont want too--Cant bring yourself" to take a loss on it?


----------



## barney

tech/a said:
			
		

> Hmm Barney your invested in the company and "Cant,--Dont want too--Cant bring yourself" to take a loss on it?




No Tech, Fortunately I'm not on AWB, If I were I would be pretty sure my stops would have been hit by now. Just a passing interest as to how a stock in this kind of trouble will pan out. If AWB resurged this week, I would start to question everything I've learned (although a small short term reversal would not surprise from what I've seen other stocks do), cause it would not make any sense to me, but then again, if it did, there would have to be a logical reason (?) , so I would simply learn something I didn't know about.  The trend of this seems so obvious that even I should be able to get it right!?  (Barney says hopefully    Cheers.


----------



## Magdoran

barney said:
			
		

> Hi Guys, Nothing real tricky with  this chart on AWB ............ Obviously a lot of bad press etc and in an obvious downtrend ................ Just curious with the heavy volume, two days in a row SP gap down, whether we might see one of those "inside days" (today,monday) as talked about earlier (only this time from the "bottom up" instead of the other way round).............. It would probably be fair to say if the SP dropped anything above an average amount again today, that AWB would be looking very poor . Will be interesting to see what sort of support, if any, the SP gets over the next few days.  Cheers, Barney.



Hello barney,


An inside day is NOT an “insider” day! Hahahahahaha!  ROTFLMAO!


It is where you have a day that has its open high low close range within the trading range of the previous day.  See the attached chart for an example.

The significance of the faker move is when you have a “spike” high/low with spike volume and the day directly afterwards is an inside day (within the range of the previous day).  The concept is that whichever way this following day moves is the wrong direction.  It is a “faker move”, and the real trend direction is likely to be in the opposite direction to this day for the short term.

In the example you’re giving here, this is not quite a spike move - there is spike volume, but the length of the bars aren’t really long enough in my opinion to be classified as a “spike day” – you’re looking for really pronounced ranges many times greater than the average bars. 

Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> Hello barney,
> 
> 
> An inside day is NOT an “insider” day! Hahahahahaha!  ROTFLMAO!
> 
> 
> It is where you have a day that has its open high low close range within the trading range of the previous day.  See the attached chart for an example.
> 
> The significance of the faker move is when you have a “spike” high/low with spike volume and the day directly afterwards is an inside day (within the range of the previous day).  The concept is that whichever way this following day moves is the wrong direction.  It is a “faker move”, and the real trend direction is likely to be in the opposite direction to this day for the short term.
> 
> In the example you’re giving here, this is not quite a spike move - there is spike volume, but the length of the bars aren’t really long enough in my opinion to be classified as a “spike day” – you’re looking for really pronounced ranges many times greater than the average bars.
> 
> Regards
> 
> 
> Magdoran





Let me see ...........  if Mag is rolling around on the floor hurting himself with humorous gyrations ........... Barney has probably said something dumb (again   :homer: ............... PS You wouldn't laugh at me if you heard me cut a riff on  the "Les"   ............. Anyway, I can take it .....someone around here has to make everyone else seem intelligent   

Just as a follow up to that chart I posted on AWB It is basically 3 gap down days in a row Todays volume was higher again today .......Will that signal a slow down, or is it likely to keep bombing???  Interesting scenario.  Yours in total humility, Barney.


----------



## swingstar

Even more volume today. 

What's that song?

Yeah it's free, free fallin'... 

Only support I can gauge is the bottom of the channel, otherwise it's in no man's land. Will see what Mag thinks on a more micro scale (I just ordered the McLaren DVD BTW--going to Tassie for a few weeks in a couple of days, so no doubt that will fill in the boredom ).


----------



## barney

swingstar said:
			
		

> Even more volume today.
> 
> What's that song?
> 
> Yeah it's free, free fallin'...
> 
> Only support I can gauge is the bottom of the channel, otherwise it's in no man's land. Will see what Mag thinks on a more micro scale (I just ordered the McLaren DVD BTW--going to Tassie for a few weeks in a couple of days, so no doubt that will fill in the boredom ).




Why are you bored Swingstar?? If money is of no consequence anymore, I could use a loan     Cheers Barney.   I'd like to take my wife to Tasmania one day. Whats the best time to go?


----------



## swingstar

barney said:
			
		

> Why are you bored Swingstar?? If money is of no consequence anymore, I could use a loan     Cheers Barney.   I'd like to take my wife to Tasmania one day. Whats the best time to go?




LOL, I meant Tassie is boring. I once lived there, and family stayed behind, so now unfortunately if I want to see them, I have to visit there. Nah, I'm sure it's nice for the naturists. 

Best time to go... probably when global warming has well and truly kicked into gear and Tassie is the new Hawaii (so probably not in our lifetimes).


----------



## barney

swingstar said:
			
		

> LOL, I meant Tassie is boring. I once lived there, and family stayed behind, so now unfortunately if I want to see them, I have to visit there. Nah, I'm sure it's nice for the naturists.
> 
> Best time to go... probably when global warming has well and truly kicked into gear and Tassie is the new Hawaii (so probably not in our lifetimes).




Haha very funny.     Don't like the cold eh?? ........ Funny how when you've lived somewhere you can't think of anything good about it ......the old "familiarity" concept ...............  My wife likes the idea of cold nights/snuggle up and all that stuff ...... I like the Casino idea, but I need money   .............. actually Casino's don't really interest me anymore since I've started "studying" the share market! Why leave it to chance when you can use your brains?? Cheers.


----------



## It's Snake Pliskin

barney said:
			
		

> Hi Snake, Re The large Syndicates that "short sell" these stocks down before re buying at a discount ............... Do they pay the same % brokerage fees as us "little guys", ........ I'm assuming they get volume discounts?? ..... Also what fees would an actual Broker pay on his trades since it is his profession??  Just curious, cause if they get "hefty" discounts, it kinda gives them a double advantage when "pushing" the SP around. Cheers, Barney.




Barney,

How about cutting a riff on the LES and videoing it and posting it for us.  

I don't know anything about BIG guys and what brokerage they use or pay. Some pay more than $30,000 per month. Read Everyday Traders by Nick Radge where he interviews some interesting traders.

Snake


----------



## nizar

Brokers dont pay brokerage. Or perhaps they do, but its very little.
Thats why they can afford to have "bots" buying the same parcel of shares (eg.7821 shares at like every 15-20mins) at the same price to make sure the sp does not close below a certain point. I see this everyday.


----------



## RichKid

ok guys, this thread is beginning to collect a lot of extraneous topics, I will have to start moderating it strictly. There are other threads on odd lots and on depth of market orders etc etc, there is no point in having separate threads on a forum if everything gets banded together. Sometimes it's good to just close a thread so everyone can sit back and go over it all from where we started and look more closely at what's been said so far- time for a recap and breather maybe....please try to stick to the core of analysing and comparing methods of chart analysis in order to improve it.


----------



## Magdoran

barney said:
			
		

> Let me see ...........  if Mag is rolling around on the floor hurting himself with humorous gyrations ........... Barney has probably said something dumb (again   :homer: ............... PS You wouldn't laugh at me if you heard me cut a riff on  the "Les"   ............. Anyway, I can take it .....someone around here has to make everyone else seem intelligent
> 
> Just as a follow up to that chart I posted on AWB It is basically 3 gap down days in a row Todays volume was higher again today .......Will that signal a slow down, or is it likely to keep bombing???  Interesting scenario.  Yours in total humility, Barney.



Awwww, C’mon barney,


Don’t go all “thensitive” on us.  It was just my warped sense of humour about the concept of “insider trading” following the comments about stop running tactics, and spike days…

Nothing regarding your intelligence, I assure you.  

You are doing a sterling job asking interesting questions about a very involved subject.  The last thing I’d want to do would be to discourage you from your journey.

Just look at the view counter, you’re not the only one wanting to know more, and to your credit you have the courage to ask questions about what you don’t know.  I bet there are a host of people who are thankful for that.

I second Snake's request for a sound bite of your “Les”.

Now that would be cool!


Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> Awwww, C’mon barney,
> 
> 
> Don’t go all “thensitive” on us.  It was just my warped sense of humour about the concept of “insider trading” following the comments about stop running tactics, and spike days…
> 
> Nothing regarding your intelligence, I assure you.
> 
> You are doing a sterling job asking interesting questions about a very involved subject.  The last thing I’d want to do would be to discourage you from your journey.
> 
> Just look at the view counter, you’re not the only one wanting to know more, and to your credit you have the courage to ask questions about what you don’t know.  I bet there are a host of people who are thankful for that.
> 
> I second Snake's request for a sound bite of your “Les”.
> 
> Now that would be cool!
> 
> 
> Regards
> 
> 
> Magdoran





No worries Mag ............ I wasn't getting sensitive   ............. Just a bit PARANOID  ............... If people can find humour in anything I say (direct or indirect I think thats brilliant ......... I love good humour, so you keep rolling around the floor Mag (its probably the best place for you ........ see, now thats my kind of humour!! ......... Cheers, Your comments as always, first class ............. Re the les ...... I've never uploaded wav.'s to the net  ....that would be an interesting exercise ...I'll look into it .....Ps I promise I won't put my "head" in the shot .....Don't want to scare the forum members!!!

Re the 3 day gap down on AWB ............ Will it keep bombing do you think??


----------



## MichaelD

barney said:
			
		

> Just as a follow up to that chart I posted on AWB It is basically 3 gap down days in a row Todays volume was higher again today .......Will that signal a slow down, or is it likely to keep bombing???



Who knows what it will do? The best anyone can do is to take a viewpoint on what they think it will do and position themselves so they can profit from what it might do whilst minimizing the damage done if it doesn't behave according to your wishes.

Personally, AWB appeared in my scan for shorts on 13-Oct and looked to my eye to have no real solid support below its close. That's a short entry signal for the system I'm testing at present, so I (paper) shorted it on the open on 16-Oct with a stop at the 2.95 high of the trigger day. So far it's co-operating with my view. Whether the trade ends in a profit or a loss is unknown at this point in time.


----------



## Magdoran

barney said:
			
		

> No worries Mag ............ I wasn't getting sensitive   ............. Just a bit PARANOID  ............... If people can find humour in anything I say (direct or indirect I think thats brilliant ......... I love good humour, so you keep rolling around the floor Mag (its probably the best place for you ........ see, now thats my kind of humour!! ......... Cheers, Your comments as always, first class ............. Re the les ...... I've never uploaded wav.'s to the net  ....that would be an interesting exercise ...I'll look into it .....Ps I promise I won't put my "head" in the shot .....Don't want to scare the forum members!!!
> 
> Re the 3 day gap down on AWB ............ Will it keep bombing do you think??



Hello barney,


As snake said earlier, we can't give financial advice.  Please understand that we have to be very careful here, and can only express a viewpoint to illustrate general ideas.  Once we start to become specific, it is a very grey line where the giving of advice starts in line with the new regime presided over in part by ASIC.

I introduced the oil concept as an illustration of a charting approach and ways it could be used in constructing trades for educational purposes.  I was not offering financial advice in doing so.

So I’m reluctant to comment much on AWB in response to the way your last question was framed.  You may not be aware of the way the rules work here, but snake was trying to alert you to this earlier.

We could talk about it in a wider generic context; I just want to avoid any possibility of making any posts that could be construed as giving financial advice.


Regards


Magdoran


----------



## barney

MichaelD said:
			
		

> Who knows what it will do? The best anyone can do is to take a viewpoint on what they think it will do and position themselves so they can profit from what it might do whilst minimizing the damage done if it doesn't behave according to your wishes.
> 
> Personally, AWB appeared in my scan for shorts on 13-Oct and looked to my eye to have no real solid support below its close. That's a short entry signal for the system I'm testing at present, so I (paper) shorted it on the open on 16-Oct with a stop at the 2.95 high of the trigger day. So far it's co-operating with my view. Whether the trade ends in a profit or a loss is unknown at this point in time.




Hi Michael, AWB certainly would have been a "short" players dream to this point. The chart is/ will make an interesting topic of study as the "news" continues to unfold in the future .... Cheers Barney


----------



## barney

Magdoran said:
			
		

> Hello barney,
> 
> 
> As snake said earlier, we can't give advice.  Please understand that we have to be very careful here, and can only express a viewpoint to illustrate general ideas.  Once we start to become specific, it is a very grey line where the giving of advice starts in line with the new regime presided over in part by ASIC.
> 
> I introduced the oil concept as an illustration of a charting approach and ways it could be used in constructing trades for educational purposes.  I was not offering financial advice in doing so.
> 
> So I’m reluctant to comment much on AWB in response to the way your last question was framed.  You may not be aware of the way the rules work here, but snake was trying to alert you to this earlier.
> 
> We could talk about it in a wider generic context; I just want to avoid any possibility of making any posts that could be construed as giving financial advice.
> 
> 
> Regards
> 
> 
> Magdoran





I'm with ya' Mag.  Sorry about that. Did not realise there were "legal" parameters involved.  I know everyone is supposed to use IMO etc.  (Good to see you are finally "off the floor") Barney.


----------



## Magdoran

Here’s a current illustration of spike bars, although these are usually found towards the end of an impulse, so the nature of the bars in this chart may be more unorthodox, but in my view the principles of the idea are similar.

The McLaren “trading against the spike” concept is quite involved, and this is my extension and interpretation of a part of that concept.

The time frame though is an issue, and it is possible for the underlying to pull back into the range.  These moves are exhaustive, and can result in a sideways move for a period of time.

I've used candlesticks in this example for clarity.  I think these really illustrate the minutia of each bar more graphically, but often use standard bars in other areas.  I hope this doesn't put orthodox chartists off.


Food for thought.


Magdoran


----------



## barney

Magdoran said:
			
		

> Here’s a current illustration of spike bars, although these are usually found towards the end of an impulse, so the nature of the bars in this chart may be more unorthodox, but in my view the principles of the idea are similar.
> 
> The McLaren “trading against the spike” concept is quite involved, and this is my extension and interpretation of a part of that concept.
> 
> The time frame though is an issue, and it is possible for the underlying to pull back into the range.  These moves are exhaustive, and can result in a sideways move for a period of time.
> 
> I've used candlesticks in this example for clarity.  I think these really illustrate the minutia of each bar more graphically, but often use standard bars in other areas.  I hope this doesn't put orthodox chartists off.
> 
> 
> Food for thought.
> 
> 
> Magdoran





Hi Mag, I'll jump in cause no one else has .............. Your analysis seems to have been spot on (don't you get sick of that    ................  even though a "down" day today, ........ the sp final price was "above" the "spike day" EOD price  3 days ago .......... well done! ............... Being a stock which is "connected" to the price of gold, how should we approach this "chart" from a relative point of view, so to speak ............ In other words, even if our analysis/assumptions are correct, how much credence (good name for a band) should we give to the "commodity" price (gold in this case) of the stock involved ??  ...Hope that question makes sense . Barney

PS If the question makes no sense, I accept no responsibility on behalf of anyone living or deceased, regardless of their social standing/and or political beliefs (That should cover any litigation problems


----------



## Magdoran

barney said:
			
		

> Hi Mag, I'll jump in cause no one else has .............. Your analysis seems to have been spot on (don't you get sick of that    ................  even though a "down" day today, ........ the sp final price was "above" the "spike day" EOD price  3 days ago .......... well done! ............... Being a stock which is "connected" to the price of gold, how should we approach this "chart" from a relative point of view, so to speak ............ In other words, even if our analysis/assumptions are correct, how much credence (good name for a band) should we give to the "commodity" price (gold in this case) of the stock involved ??  ...Hope that question makes sense . Barney
> 
> PS If the question makes no sense, I accept no responsibility on behalf of anyone living or deceased, regardless of their social standing/and or political beliefs (That should cover any litigation problems



Hello barney,

When dealing with resource stocks, in addition to doing the usual research using technical analysis/charting, it is certainly worthwhile tracking relevant commodities and currencies.

Using the gold stocks as an example, tracking gold futures can be very helpful.  Remember though that if you’re dealing with spot gold on the NYMEX (New York Mercantile exchange), then you should look at the Australian dollar against the US dollar.

If the US dollar is weakening while gold futures are rising, this can negate the benefit for local outfits when gold prices are rising since the exchange is valued in US dollars. Also, how well hedged a gold producer is may be a factor depending on the way gold and the US dollar are trading. 

I follow Gold like I do crude oil on a daily basis, as well as the AUD/USD.  If I’m going to trade resource stocks, then I do a full analysis on all relevant commodities and currencies, and sometimes sectoral indexes too.  But this is up to the individual.  There are some players that just trade the chart and nothing else – personal choice.

Links to NYMEX and LME:

http://www.nymex.com/index.aspx

http://www.lme.co.uk/


Re my analysis, beware of the potential pull back when these strong bullish moves happen.  Sometimes these stocks are sold down and people get shaken out.  If the sell down is too strong, it can actually push the stock down hard for a retest of the low, so just be careful.  Don’t forget that the strong volume can suck up a lot of demand (or supply), so the effects can be unpredictable.  Also be aware of potential take overs in this climate too.


Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> Hello barney,
> 
> When dealing with resource stocks, in addition to doing the usual research using technical analysis/charting, it is certainly worthwhile tracking relevant commodities and currencies.
> 
> Using the gold stocks as an example, tracking gold futures can be very helpful.  Remember though that if you’re dealing with spot gold on the NYMEX (New York Mercantile exchange), then you should look at the Australian dollar against the US dollar.
> 
> If the US dollar is weakening while gold futures are rising, this can negate the benefit for local outfits when gold prices are rising since the exchange is valued in US dollars. Also, how well hedged a gold producer is may be a factor depending on the way gold and the US dollar are trading.
> 
> I follow Gold like I do crude oil on a daily basis, as well as the AUD/USD.  If I’m going to trade resource stocks, then I do a full analysis on all relevant commodities and currencies, and sometimes sectoral indexes too.  But this is up to the individual.  There are some players that just trade the chart and nothing else – personal choice.
> 
> Links to NYMEX and LME:
> 
> http://www.nymex.com/index.aspx
> 
> http://www.lme.co.uk/
> 
> 
> Re my analysis, beware of the potential pull back when these strong bullish moves happen.  Sometimes these stocks are sold down and people get shaken out.  If the sell down is too strong, it can actually push the stock down hard for a retest of the low, so just be careful.  Don’t forget that the strong volume can suck up a lot of demand (or supply), so the effects can be unpredictable.  Also be aware of potential take overs in this climate too.
> 
> 
> Regards
> 
> 
> Magdoran





Thanks Mag,  So as a general rule of thumb, it would be sensible to sit on the fence so to speak till we see a positive movement after the spike day (one way or another), before jumping in??  Getting in early may work at times ,but would be more subject to being whipsawed as you mentioned in an earlier post ?  Cheers Barney.  

PS Re the hedging; Excuse my lack of knowledge, but how do we know to what extent a company is hedged? Thanks.


----------



## nizar

MichaelD said:
			
		

> In fact, I've just quickly done a backtest on the strategy up to close of trade Friday. Backtesting does have many caveats which are beyond the scope of this post, but the results are;
> 
> Universe: Current ASX300
> Trading: From 1-Jan-1996
> Starting Capital: $100,000
> Reinvest All Profits
> No pyramiding of trades
> Entry: Close at all-time high
> Exit: 6.5 ATR
> 
> Finishing Profit: $2,638,159.39
> Win %: 53.86%
> Drawdown %: 10.96%




Michael D
What was the parcel size for the above backtest? 10Gs? And how about like initial stop? 2%

Can someone please explain to me what 6.5ATR actually means? I knew a mate who would exit if a stock fell 2ATRs. I understood ATR to mean average true range as in how much a stock fluctuates in a day on average. Is this right?

Can someone give me an example?

Thanks

Btw this is a great thread, it should be kept on the main page!


----------



## tech/a

*Nizar* as requested.

JAK question addressed on my thread on outliers.
Out to dinner.


----------



## MichaelD

nizar said:
			
		

> What was the parcel size for the above backtest? 10Gs? And how about like initial stop? 2%
> 
> Can someone please explain to me what 6.5ATR actually means? I knew a mate who would exit if a stock fell 2ATRs. I understood ATR to mean average true range as in how much a stock fluctuates in a day on average. Is this right?



Position sizing for the backtest was 2% of capital risked per position - there are numerous other posts on the details of this type of position sizing, but the guts of its mechanics are;
1. The initial stop is at 6.5 ATR
2. Since ATR is a variable amount, the position size is adjusted to compensate for the volatility of the ATR. The nett effect is that you are risking the same amount of money regardless of where the stop is placed. The wider the stop, the smaller the position size.

As many of you here know, I LOVE ATR based stops. I find them more responsive to long term trends than a long term moving average, whilst being reasonably forgiving of increased volatility. Also, the indicator makes it bleedingly obvious when the stop has been hit since there's this HUGE downwards line on the offending bar.

Tech/A - you cheeky boy - of course they ride the whole trend - they're a long term stop. And really, comparing them to buy and hold. Hmph. Try telling that to my portfolio. 6 months ago it had 32 positions open and now it has 14 nicely pyramided ones, the rest jettisoned after hitting the 6.5 ATR stop.

Nizar, a couple of other points about % and ATR stops;

A 2% initial stop is way too close - this will lead to a tonne of whipsawing. Tech/A has numbers on % initial stop and from memory the optimal is around 7% or so (but ATR for an initial stop is even better...but cannot be backtested with TradeSim unfortunately).

A 2 ATR stop is too close. Even 2.5 ATR is too close. Using an ATR stop with these values does not guarantee your system a positive expectancy because of the whipsawing in a non-trending or downwards trending market.

I personally have found 6.5 - 7.5 ATR to be optimum for long term trend following, which is WAY more than you'll see in most books - the reason the smaller ATRs tend to appear in books is because a wide ATR stop is actually quite hard to trade psychologically (lots of profit giveback) and because it needs a decent amount of capital to make the position sizes worth trading, both factors which are usually in short supply in newer traders.


----------



## nizar

MichaelD said:
			
		

> Position sizing for the backtest was 2% of capital risked per position - there are numerous other posts on the details of this type of position sizing, but the guts of its mechanics are;
> 1. The initial stop is at 6.5 ATR
> 2. Since ATR is a variable amount, the position size is adjusted to compensate for the volatility of the ATR. The nett effect is that you are risking the same amount of money regardless of where the stop is placed. The wider the stop, the smaller the position size.
> 
> As many of you here know, I LOVE ATR based stops. I find them more responsive to long term trends than a long term moving average, whilst being reasonably forgiving of increased volatility. Also, the indicator makes it bleedingly obvious when the stop has been hit since there's this HUGE downwards line on the offending bar.
> 
> Tech/A - you cheeky boy - of course they ride the whole trend - they're a long term stop. And really, comparing them to buy and hold. Hmph. Try telling that to my portfolio. 6 months ago it had 32 positions open and now it has 14 nicely pyramided ones, the rest jettisoned after hitting the 6.5 ATR stop.
> 
> Nizar, a couple of other points about % and ATR stops;
> 
> A 2% initial stop is way too close - this will lead to a tonne of whipsawing. Tech/A has numbers on % initial stop and from memory the optimal is around 7% or so (but ATR for an initial stop is even better...but cannot be backtested with TradeSim unfortunately).
> 
> A 2 ATR stop is too close. Even 2.5 ATR is too close. Using an ATR stop with these values does not guarantee your system a positive expectancy because of the whipsawing in a non-trending or downwards trending market.
> 
> I personally have found 6.5 - 7.5 ATR to be optimum for long term trend following, which is WAY more than you'll see in most books - the reason the smaller ATRs tend to appear in books is because a wide ATR stop is actually quite hard to trade psychologically (lots of profit giveback) and because it needs a decent amount of capital to make the position sizes worth trading, both factors which are usually in short supply in newer traders.




Michael D,

If initial stop is 7% doesnt that mean 10 losses in a row will wipe out 70% of your account. I thought for pros 2% is too much, so even go for 0.5-1%?? Am i misunderstanding something here??

Also - re: having such a wide ATR stop. What happens when you first buy into a stock. Say you bought KZL yesterday not an all time high close but pretty close (just say that it was for purposes of this example) at $6.15. Where would your initial stop be?
What is the point where u say, ok, my stop didnt get hit straight away, im now in profit, lets look for an exit. Coz say if it went to $6.50, a 6.5ATR exit is probably even below your entry. So do u keep the initial stop there for a while longer??

I guess 6.5ATR is a decent exit (i know i know for you its been trialed and tested and positive expectancy) but maybe only once ur in decent profit??


----------



## wayneL

MichaelD said:
			
		

> As many of you here know, I LOVE ATR based stops. I find them more responsive to long term trends than a long term moving average, whilst being reasonably forgiving of increased volatility. Also, the indicator makes it bleedingly obvious when the stop has been hit since there's this HUGE downwards line on the offending bar.
> 
> 
> *I personally have found 6.5 - 7.5 ATR to be optimum for long term trend following,* which is WAY more than you'll see in most books - the reason the smaller ATRs tend to appear in books is because a wide ATR stop is actually quite hard to trade psychologically (lots of profit giveback) and because it needs a decent amount of capital to make the position sizes worth trading, both factors which are usually in short supply in newer traders.




I've done some work with ATR stops on US stocks and came to the exact same conclusion... 4.5 absolute bare minimum with optimum  in the  same ~6.5 value.

Most books/articles I've read say 2.5 - 3.... way too tight.


----------



## tech/a

nizar said:
			
		

> Michael D,
> 
> If initial stop is 7% doesnt that mean 10 losses in a row will wipe out 70% of your account. I thought for pros 2% is too much, so even go for 0.5-1%?? Am i misunderstanding something here??




Nizar----the ambiguity of numbers.
The stop is set from the buy price so lets say we have a buy and a 10% stop for this exercise so at $1  the stop is $.90c.

If we have $100,000 account and we buy 100,000 of our $stop we have a 10% possible capital drawdown.---10 losses we are Cactus (actually less than that but thats a whole new mathamatical problem of deminishing returns).

So the solution is that we split our $100k into parcel sizes so that we are not fully at risk but still being able to have a 10% from initial buy stop.

So if we are to risk only 2% on our capital at one time then we have 5 positions at 10% stop. we are risking $2000 on any one trade or 2%

So 7% on the same portfolio would be 1.4%.
*There was the parcel size component missing in Michael's post.*



> Also - re: having such a wide ATR stop. What happens when you first buy into a stock. Say you bought KZL yesterday not an all time high close but pretty close (just say that it was for purposes of this example) at $6.15. Where would your initial stop be?
> What is the point where u say, ok, my stop didnt get hit straight away, im now in profit, lets look for an exit. Coz say if it went to $6.50, a 6.5ATR exit is probably even below your entry. So do u keep the initial stop there for a while longer??
> 
> I guess 6.5ATR is a decent exit (i know i know for you its been trialed and tested and positive expectancy) but maybe only once ur in decent profit??





Ill leave this to Michael.


----------



## MichaelD

nizar said:
			
		

> If initial stop is 7% doesnt that mean 10 losses in a row will wipe out 70% of your account. I thought for pros 2% is too much, so even go for 0.5-1%?? Am i misunderstanding something here??



You're confusing RISK management ('where do I put my stop') with MONEY management ('now that I've worked out where I'll put my stop, HOW MANY shares do I buy').



			
				nizar said:
			
		

> What happens when you first buy into a stock. Say you bought KZL yesterday not an all time high close but pretty close (just say that it was for purposes of this example) at $6.15. Where would your initial stop be?
> What is the point where u say, ok, my stop didnt get hit straight away, im now in profit, lets look for an exit. Coz say if it went to $6.50, a 6.5ATR exit is probably even below your entry. So do u keep the initial stop there for a while longer??



Worked example for KZL.

Trading capital $100,000
Position Sizing 2% of capital put at risk
Exit 6.5ATR

Close on 18-Oct-2006 for KZL is $6.16
ATR on 18-Oct-2006 for KZL is $0.19238
Thus, a 6.5 ATR stop would be at 6.5 x $0.19238 ($1.25), which is at $4.91.

You are risking 2% of your capital per trade, which is $2,000.
Your stop is $1.25 away from the CLOSE.
Thus, you are able to purchase $2000/$1.25 shares (1600) or $9,856 worth.

The whole point of position sizing like this is that you can put your stop wherever you decide is a good point, not just a fixed % away, and buy the appropriate number of shares so that you'll lose approximately the same amount of money per trade despite the wide range in where the stop is placed. It better controls your losses.

At 2% position sizing like this, 10 losses in a row will lose 20% of your capital.

A chart showing you a 6.5 ATR exit on KZL is below.


----------



## tech/a

*Nizar.*

If interested you could look up Fixed Fractional Position Sizing.


----------



## MichaelD

One other point to clarify - my Initial Stop (aka Money Management) stop IS my trailing 6.5 ATR stop. There is evidence that a tighter initial stop is better until the trade reaches break-even, but it is not possible to backtest this with the tools I have at present.

Rule #1 of my trend following system is if I can't backtest it to prove it works better, I don't use it.


----------



## nizar

MichaelD said:
			
		

> One other point to clarify - my Initial Stop (aka Money Management) stop IS my trailing 6.5 ATR stop. There is evidence that a tighter initial stop is better until the trade reaches break-even, but it is not possible to backtest this with the tools I have at present.
> 
> Rule #1 of my trend following system is if I can't backtest it to prove it works better, I don't use it.




Thanks MichaelD
Interesting what you say in the above, brings a new light on things. So getting stopped out would mean u lose like 20% on THAT trade (2000/9856). I guess the upside is you wouldnt get stopped out that much, and give the stock time to ride the trend...

tech/a - what has your research showed on this?
ie. where to put initial stop?
and how long do u decide that yes uv got it right its going up, and then switch to a trailing stop or an exit.


----------



## swingstar

barney said:
			
		

> Let me see ...........  if Mag is rolling around on the floor hurting himself with humorous gyrations ........... Barney has probably said something dumb (again   :homer: ............... PS You wouldn't laugh at me if you heard me cut a riff on  the "Les"   ............. Anyway, I can take it .....someone around here has to make everyone else seem intelligent
> 
> Just as a follow up to that chart I posted on AWB It is basically 3 gap down days in a row Todays volume was higher again today .......Will that signal a slow down, or is it likely to keep bombing???  Interesting scenario.  Yours in total humility, Barney.




Bang on the bottom of the channel at 2.40. Will it hold?


----------



## MichaelD

nizar said:
			
		

> So getting stopped out would mean u lose like 20% on THAT trade (2000/9856). I guess the upside is you wouldnt get stopped out that much, and give the stock time to ride the trend...



Yes that is correct, but it is only 2% of your overall capital, which is the important point. Individual trades mean nothing in the overall picture so long as on average your winners win more than your losers lose.


----------



## barney

swingstar said:
			
		

> Bang on the bottom of the channel at 2.40. Will it hold?




You were spot on with the channel bottom prediction SS ................. Today saw AWB gap open and rise again on V good volume ................. Looks like the buyers are back ............ Its interesting how this all works .......... Essentially nothing has changed fundamentally during the past few days, yet we have seen a roller coaster ................ I think this example of AWB as it unfolds might provide some very interesting insights into how the market works in general .............. Could be more an example of how sometimes "Chart Analysis" can't identify what is actually "driving" the SP ................. As Mag elluded to in an earlier post; These situations may be best "left alone"  due to the "inconsistencies/"too much excitement" encountered (I hope I'm "analysing/comprehending" your words correctly Mag??)    ........... Cheers Barney.

PS The earlier referral from Mag was related to a stock at the opposite end of the spectrum .......... ie SP spike on high volume .......... this one of AWB, is kind of a "mirror image"  so to speak??!!  If I have misinterpreted that analogy, please let there be retribution ......... I can take the heat!!


----------



## tech/a

Looks pretty clear to me Barney---its tanking.


----------



## MichaelD

AWB - some pretty good volume on the last 2 up days. A short on the breakdown in my paper system, but has it reached support or is it a dead cat bounce? Who knows? Me, I'm closing the (paper) short today.


----------



## RichKid

AWB- looks like capitulation judbing by the price/volume story on your chart Barney and Swingstar's, but this doesn't mean it'll necessarily bounce straight back up. I'll post more in the AWB thread.


----------



## Magdoran

barney said:
			
		

> You were spot on with the channel bottom prediction SS ................. Today saw AWB gap open and rise again on V good volume ................. Looks like the buyers are back ............ Its interesting how this all works .......... Essentially nothing has changed fundamentally during the past few days, yet we have seen a roller coaster ................ I think this example of AWB as it unfolds might provide some very interesting insights into how the market works in general .............. Could be more an example of how sometimes "Chart Analysis" can't identify what is actually "driving" the SP ................. As Mag elluded to in an earlier post; These situations may be best "left alone"  due to the "inconsistencies/"too much excitement" encountered (I hope I'm "analysing/comprehending" your words correctly Mag??)    ........... Cheers Barney.
> 
> PS The earlier referral from Mag was related to a stock at the opposite end of the spectrum .......... ie SP spike on high volume .......... this one of AWB, is kind of a "mirror image"  so to speak??!!  If I have misinterpreted that analogy, please let there be retribution ......... I can take the heat!!



Hello barney,


My comments were about trying to play stocks that had already moved significantly, especially under takeover scenarios where it is difficult to know when to enter and exit either long or short.

If you’ve been watching Daffy’s (tech’s) thread on ‘Discretionary Trading Method-----Trading Outliers', this is an example of an approach to this situation.

I my view, it is better to recognise the potential for this kind of situation when it is forming, and look to exit on these strong moves up or down by being positioned the right way.  

This includes downward capitulations as much as bullish spikes.  They are similar in that they are high momentum moves, but panic moves down can behave differently.  It’s kind of a bear/bull thing – one is motivated by greed and fear of not getting in, the other is motivated by fear of losing and panic.

So, once the move has happened, trying to enter at these times in my view is very risky.  There are a range of styles that attempt to profit from these situations like the one outlined by tech.

My point earlier was if you think you’re able to consistently trade these situations profitably, by all means be my guest.  There are a minority who seem to have a gift for this kind of trade.  The majority (including myself) tend to have mixed results in my experience.

In capitulation moves either up or down, it is hard to know where the top/bottom is, hence my approach is to take profits (especially when they reach the 1000% range for me in options).  But that is a style of dealing with this kind of uncertainty.  What we do know is that there is high volatility.  The problem is working out where in price (and in my case, time) to exit.

Some of these fast moves can reverse and move all the way back, so they can be dangerous.  A lot depends on the unique circumstances that surround these moves, but there are some common chart elements which can help to make an interpretation of events, and styles/systems can be developed to deal with situations like this.

 As I said, once you’ve had a substantial move, and you have a spike with an inside day, trying to second guess the market at this point in time is highly risky, but as I said, if you can work out an approach that returns consistent profits, by all means be my guest.

My personal choice is to trade what I can assess, and attribute probabilities and determine the risk to reward parameters.  Once this kind of move has “matured”, there comes a point I decide to ignore the situation because it becomes impossible to assess.

There are top and bottom picking styles where the focus is to try to find the bottom or the top of a move.  The approach I subscribe to is the opposite.  I’m happy to exit before the bottom/top, and wait for signals to go long/short after it.

In a downward capitulation there are T/A approaches to forecast where this might be, but it is very involved, and requires a layer of different T/A knowledge.  Key things I use other than straight charting (looking at the bars and volume, patterns, trend), is looking at price increments (retracements, ranges) and extending these to determine probable areas of support (resistance) in both time and price.  Once the trend is at risk I look to lock in at least partial profits.

Food for thought…


Regards


Magdoran


----------



## tech/a

> As I said, once you’ve had a substantial move, and you have a spike with an inside day, *trying to second guess the market at this point in time is highly risky, * but as I said, if you can work out an approach that returns consistent profits, by all means be my guest.
> 
> *My personal choice is to trade what I can assess, and attribute probabilities and determine the risk to reward parameters. Once this kind of move has “matured”, there comes a point I decide to ignore the situation because it becomes impossible to assess.*
> 
> There are top and bottom picking styles where the focus is to try to find the bottom or the top of a move. *The approach I subscribe to is the opposite. I’m happy to exit before the bottom/top, and wait for signals to go long/short after it*.




Food for thought moggie!!!--- *its a smorgasboard!!!*

Bon apetite'
Just add dressing!


----------



## Magdoran

tech/a said:
			
		

> Food for thought moggie!!!--- *its a smorgasboard!!!*
> 
> Bon apetite'
> Just add dressing!



Hi Daffy!


By the way, that’s a really interesting thread you’re running on outliers.  I’ve been reading it daily.  You make some really insightful observations in it.

Do you find you can trade these kinds of moves profitably with any consistency?

Regards


Magdoran


----------



## tech/a

Yes Moggie.

As you know its a case of win some lose some then every now and then win a biggie.
Since 18/9 when I arrived back from the UK Ive done more discretionary trading with good success.
I really dont like it (discretionary trading) Im very much like Michael if I cant measure it and have a blueprint Im not that happy.

But having a ticker on my desk time and again (and it happens almost daily even now) I see many great opportunities pass by.

So I made the decision to get on a few. Trading in 15K parcels makes it worth while both for small wins and ofcourse those outliers I get every so often.
Now 45% on initial capital from 18/9 so happy with that.

Distracting though but cant be ignored---and being the boss I can shut the door and play if I have to.

Much prefer the portfolio trading though and as you know thats where the majority of my trading funds lie.
Most like to do the short term style hence the thread.

Think the important thing is and I hope this is coming across is the minimisation of loss/Risk. 1/2 positions tight stops and trailings.
Havent had one yet where we can investigate letting stops trail a little looser and let profits run.

WSA and NWR working nicely at the mo.

Gotta go.


----------



## tech/a

Moggie.

I see your "McClaren" inside day principal worked really well on NLX.

Damned well missed it. Said it was likely to go to 10C---think there will be another pullback first so not over yet.


----------



## Magdoran

tech/a said:
			
		

> Moggie.
> 
> I see your "McClaren" inside day principal worked really well on NLX.
> 
> Damned well missed it. Said it was likely to go to 10C---think there will be another pullback first so not over yet.



Hello Daffy,


The concept is McLaren inspired, but the patterns are not quite what he calls “trading against the spike”, this is kind of a hybrid interpretation of that principle, and there are some caveats to consider…

Agree, a pull back would be good for a long entry if your view is bullish.  I’d be watching the resistance at the 16/03/06 low at 0.095, may test into here and come back.  It’s also one eighth the range down at 0.09.

If it can break through this level and find support above it, that would tend to indicate to me a good probability of a bullish drive, but dependent on the pattern.

It could of course just be a bullish counter trend to the bearish campaign.  Bet it finds resistance around 0.25 if it gets there.


Magdoran


----------



## barney

Hi Lads, Re the chart on AWB ..........

Thanks Mag, some good insightful info there ............ still digesting .........

Rich I'll have a look on the AWB thread .........

Tech, Re;
Looks pretty clear to me Barney---its tanking.

Could you perhaps give us some more detailed info re the chart as it finished today Gapped open but finished on its lows, yet still higher than yeterdays close ........ Volume still reasonable .......Thats 3 days in a row up from the all time low .......... Does today clarify or cloud our judgement re tanking or was today simply inconclusive either way (considering it was an up day for the market in general)  
Just wondering what we can make of this at this point in time, if anything? ...........  I still think this will be a good learning exercise though for us newer chums as it unfolds, Cheers Barney


----------



## It's Snake Pliskin

barney said:
			
		

> Hi Lads, Re the chart on AWB ..........
> 
> Thanks Mag, some good insightful info there ............ still digesting .........
> 
> Rich I'll have a look on the AWB thread .........
> 
> Tech, Re;
> Looks pretty clear to me Barney---its tanking.
> 
> Could you perhaps give us some more detailed info re the chart as it finished today Gapped open but finished on its lows, yet still higher than yeterdays close ........ Volume still reasonable .......Thats 3 days in a row up from the all time low .......... Does today clarify or cloud our judgement re tanking or was today simply inconclusive either way (considering it was an up day for the market in general)
> Just wondering what we can make of this at this point in time, if anything? ...........  I still think this will be a good learning exercise though for us newer chums as it unfolds, Cheers Barney




Good evening Barney,

You sure do pick the difficult ones. 
A stock plummets with EMOTION, GROUP BEHAVIOUR, and BAD NEWS GALORE.

...and some will think it is CHEAP  (I don't care for that way of thinking)

Who knows what it will do! 

Wednesday's action is important, and what happens at that low, if it goes there again.

I have a LES too. Good things aren't they.
Regards
Snake


----------



## barney

It's Snake Pliskin said:
			
		

> Good evening Barney,
> 
> You sure do pick the difficult ones.
> A stock plummets with EMOTION, GROUP BEHAVIOUR, and BAD NEWS GALORE.
> 
> ...and some will think it is CHEAP  (I don't care for that way of thinking)
> 
> Who knows what it will do!
> 
> Wednesday's action is important, and what happens at that low, if it goes there again.
> 
> I have a LES too. Good things aren't they.
> Regards
> Snake





Hi Snake, I guess I just find this one interesting cause there is so much going on with it .......... Wednesday .... the initial reversal day Big volume ........ Is there any way of knowing who the big "buyers" were on that day?? I imagine not? .. Frightening for the share holders if it gets below that low again.

You have a Les eh...............Often wondered why you role in late of an evening .......... out gigging?? I've had mine for about 25 years or so...... Better not get off topic here, Cheers, Barney.


----------



## It's Snake Pliskin

barney said:
			
		

> Wednesday .... the initial reversal day Big volume ........ Is there any way of knowing who the big "buyers" were on that day?? I imagine not? .. Frightening for the share holders if it gets below that low again.




Barney,

You don't need to know who was buying. The point is there is a lot of supply there without a spiking rejection. Then there is that GAP.....

No gigs yet, in the new year though.


----------



## barney

It's Snake Pliskin said:
			
		

> Barney,
> 
> You don't need to know who was buying. The point is there is a lot of supply there without a spiking rejection. Then there is that GAP.....
> 
> No gigs yet, in the new year though.




(Cool about the gigs Snake Rehearsals are why you get in late?)

There is obviously so much stuff I don't understand about these situations.  I was thinking that the reversal on wednesday followed by the gap up on thursday, and again today to a lesser degree was indicating a reasonable short term stabilisation of the big downtrend, but are you saying that because of the gaps, there will be little resistance if the sp takes another dive?? Cheers Barney


----------



## CanOz

Hi Barney. I really enjoy your posts and too be honest you ask allot of very good questions that allot of us newbies are probably to timid to ask, well done. 

If i may add my immature and humble opinion here, i think if you look at the weekly chart you will see some stopping volume. The trend however has not broken out of its downward channel indicating to me at least, that its not finished until it does so. AWB being a big company, in a very supply / demand agri business would be set to benefit from higher wheat prices...maybe the smart money had seen this and considers it either valuable for that reason, or others. 

Either way, in my opinion it would be best to be sure of the price action before entering a trade on it. Great stock to analyse though.

Cheers,


----------



## It's Snake Pliskin

barney said:
			
		

> (Cool about the gigs Snake Rehearsals are why you get in late?)
> 
> There is obviously so much stuff I don't understand about these situations.  I was thinking that the reversal on wednesday followed by the gap up on thursday, and again today to a lesser degree was indicating a reasonable short term stabilisation of the big downtrend, but are you saying that because of the gaps, there will be little resistance if the sp takes another dive?? Cheers Barney




(Yes and No, I teach until late and then there is the time difference - I'm in Japan :samurai: )

Some people believe gaps fill, so in this case without a spike it may well happen - the momentum is south remember. This is not a stock I would trade. Give me something without headlines. Something I can sneak my way into and out of  

Cheers
Snake


----------



## barney

CanOz said:
			
		

> Hi Barney. I really enjoy your posts and too be honest you ask allot of very good questions that allot of us newbies are probably to timid to ask, well done.
> 
> If i may add my immature and humble opinion here, i think if you look at the weekly chart you will see some stopping volume. The trend however has not broken out of its downward channel indicating to me at least, that its not finished until it does so. AWB being a big company, in a very supply / demand agri business would be set to benefit from higher wheat prices...maybe the smart money had seen this and considers it either valuable for that reason, or others.
> 
> Either way, in my opinion it would be best to be sure of the price action before entering a trade on it. Great stock to analyse though.
> 
> Cheers,




Hi Can (abbreviated your name hope you don't mind .... couldn't spell it  ), Thanks about the support re the questions, and I agree AWB makes an interesting case study (both chart wise and fundamentally) I think the way it pans out could be very interesting in hindsight a few months from now  .............. 

Actually the answers we get from the "Lads" around here are first rate and thanks must go to them for taking the time to give us "lesser" mortals their valuable time/information ......... So well done to you guys (you know who you are)    Cheers, Barney.


----------



## barney

It's Snake Pliskin said:
			
		

> (Yes and No, I teach until late and then there is the time difference - I'm in Japan :samurai: )
> 
> Some people believe gaps fill, so in this case without a spike it may well happen - the momentum is south remember. This is not a stock I would trade. Give me something without headlines. Something I can sneak my way into and out of
> 
> Cheers
> Snake




Thanks for that Snake,  I guess volatility is good to a point, but it can really burn you (even if you are careful ........... I certainly know that feeling!) 
Re "Sneaking in and out of a stock"  .................. Can you recommend any "conservative" chart(s) to "study"  that give a less volatile yet still useful example re analysis?  I tend to be drawn to the "headlines" all the time, which is probably not a good thing at my level.   Cheers, Barney.

Japan eh! .............. Man, and I thought you were a truck driver from Dapto   Did you move there from Oz?  

Arigatou./
Doumo.


----------



## tech/a

*AWB---I smell Bottom Picking---nasty habit!*


----------



## barney

tech/a said:
			
		

> *AWB---I smell Bottom Picking---nasty habit!*




Not if you use a surgical glove Tech    

Seriously though, I reckon this stock will give valuable lessons longer term Cheers Barney


----------



## tech/a

> I reckon this stock will give valuable lessons longer term




Ah the surgical glove and reckon indicator, valuable tools.

If long then a valuable lesson may well be learnt.


----------



## It's Snake Pliskin

barney said:
			
		

> Thanks for that Snake,  I guess volatility is good to a point, but it can really burn you (even if you are careful ........... I certainly know that feeling!)
> Re "Sneaking in and out of a stock"  .................. Can you recommend any "conservative" chart(s) to "study"  that give a less volatile yet still useful example re analysis?  I tend to be drawn to the "headlines" all the time, which is probably not a good thing at my level.   Cheers, Barney.
> 
> Japan eh! .............. Man, and I thought you were a truck driver from Dapto   Did you move there from Oz?
> 
> Arigatou./
> Doumo.




Barney,

Have a look at PSA.

I have called rejections at $2.45, then $2.60 and it has broken both on increased volume. 
I am not good with posting charts and the like but will try later as I have to go out today.

Snake


----------



## barney

tech/a said:
			
		

> Ah the surgical glove and reckon indicator, valuable tools.
> 
> If long then a valuable lesson may well be learnt.




Point taken Tech,   My reckon indicator is my best performed one   ......... If I reckon a stock will go up I "short" it ..........and if I reckon it will go down, I go long ............... I'm going to start a new theory on technical analysis ...........might call it the Bl**dy Barney theory ............. I "Reckon" its a winner!!  (which of course means its doomed to failure    What do you reckon??

PS I agree AWB is not looking very handsome atm ............ still interesting to watch from a learners point of view just the same ......... Cheers Barney.

PPS Thanks Snake I'll check PSA out.


----------



## It's Snake Pliskin

How does one post a CHART? It's easier to design a rocket!!!!!!!!!!!!!!


----------



## sails

Hi Snake,

Once you are into the "reply to thread" window (where you normally type your replies), scroll further down the page until you see a button that says "manage attachments".  You will also see the available attachment types that you can load at ASF.

Click on that "manage attachments" button and then click on "browse" to find the image on your PC (or wherever you have it stored).  

Once you have found your file, double click on it which will put it into the text box next to the "browse" button.  

Then click on "upload".

The only difficulty now is if the image size is too large - but try the above and see if that works.  If not, then the image needs to be made smaller!

Hope this helps!

Margaret.


----------



## barney

It's Snake Pliskin said:
			
		

> How does one post a CHART? It's easier to design a rocket!!!!!!!!!!!!!!





Hi Snake .............. Gee it would be nice if I might be able to help you for a change !!  .................. Re what Sails said above .........That is exactly correct,  but going back one step further before that, you have to first Save the chart/file as an "Image" file (ie a .PNG file)  I use incredible charts ......... when you have the chart displayed as you want it, go to "File", then click on "Save file as Image" .......... (you can set the destination folder to wherever you like) Then you follow "Sails" advice re uploading .......... hope that helps, Barney.

PS  How many "Rockets" have you designed


----------



## It's Snake Pliskin

sails said:
			
		

> Hi Snake,
> 
> Once you are into the "reply to thread" window (where you normally type your replies), scroll further down the page until you see a button that says "manage attachments".  You will also see the available attachment types that you can load at ASF.
> 
> Click on that "manage attachments" button and then click on "browse" to find the image on your PC (or wherever you have it stored).
> 
> Once you have found your file, double click on it which will put it into the text box next to the "browse" button.
> 
> Then click on "upload".
> 
> The only difficulty now is if the image size is too large - but try the above and see if that works.  If not, then the image needs to be made smaller!
> 
> Hope this helps!
> 
> Margaret.




Thanks Margaret, that was very well documented and easy to follow. Barney thank you too.
Here goes:


----------



## barney

Hi Snake, Re the PSA chart,  The OHLC charts show "green" when the candles don't .... I assume this is because, even though the close was lower than the high for the day (red candle), the close of the day was still higher than the close of the previous day.  Is that correct?  So working on that, the fact that the sp close was lower than the open on friday is inconsequential in relation to the fact that it still closed higher than the day before on increased volume, so the overall trend is still very Bullish (yes?)    It is interesting that 6 of the last 7  days have produced red candles, yet the sp has increased/trend is up.  Is this why the OHLC is a more "respected/pure" form of analysis so to speak .......... 
I remember Mag making a comment on a previous chart sort of indicating that was the case 

I'll make a commentary here Snake re what I'm seeing ......my comments are not meant to be statements, rather questions put in statement form so that I can be judged on what I see, if that makes sense .............  

Curious at to what stage we would have looked to take a long position on this stock .......... 12th and 13th September were big down days ........... SP recovered quickly over next few days, but the overall trend was still very down, so I imagine to enter here would have been  seen as very risky/speculative ?? Even entering in the week leading up to the 9th October, due to the fact that the trend (even though levelling out) had still not clearly reversed would still have been "an educated guess??"    

The 11th October is kind of the obvious move in price with good volume, but is this an entry point?? and the 12th october is an "inside????" day (I think) .......... so at this point we still dont have confirmation?  

Not sure what to make of the next 2 days Very little price movement and lower volumes ............ The gap open on the 17th october looks like the move is proven to me .............. this is where I would see a less volatile position to open, BUT, have I missed the boat by being too conservative??

The 9th October (if I were being a bit more carefree) would have been my entry point, due to the moving averages "getting together" ................ I actually like using M/A's (3) combined with Volume to indicate good entry points.............. might seem too simple for many, but I see a lot of merit in them ...............  

PS The fact that PSA is also bouncing up against the trend in Oil price has to be very positive also.

How did I do??  All comments and criticisms appreciated, Cheers, Barney.


----------



## It's Snake Pliskin

Hi Barney,



> The OHLC charts show "green" when the candles don't .... I assume this is because, even though the close was lower than the high for the day (red candle), the close of the day was still higher than the close of the previous day.  Is that correct?




They show the higher close, than the day before, as an up day where candles don't. Using candles you could see a big gap down day and then it finishes higher than the open and it is an up day - an up day but bearish in nature.  



> So working on that, the fact that the sp close was lower than the open on friday is inconsequential in relation to the fact that it still closed higher than the day before on increased volume, so the overall trend is still very Bullish (yes?)    It is interesting that 6 of the last 7  days have produced red candles, yet the sp has increased/trend is up.




I wouldn't say it is very bullish.



> Is this why the OHLC is a more "respected/pure" form of analysis so to speak ..........




I find it easier to read, but others like candles.  



> Curious at to what stage we would have looked to take a long position on this stock




I am waiting to see what happens with the test of $2.85ish.




> .......... 12th and 13th September were big down days ........... SP recovered quickly over next few days, but the overall trend was still very down, so I imagine to enter here would have been  seen as very risky/speculative ?? Even entering in the week leading up to the 9th October, due to the fact that the trend (even though levelling out) had still not clearly reversed would still have been "an educated guess??"
> 
> The 11th October is kind of the obvious move in price with good volume, but is this an entry point?? and the 12th october is an "inside????" day (I think) .......... so at this point we still dont have confirmation?
> 
> Not sure what to make of the next 2 days Very little price movement and lower volumes ............ The gap open on the 17th october looks like the move is proven to me .............. this is where I would see a less volatile position to open, BUT, have I missed the boat by being too conservative??
> 
> The 9th October (if I were being a bit more carefree) would have been my entry point, due to the moving averages "getting together" ................ I actually like using M/A's (3) combined with Volume to indicate good entry points.............. might seem too simple for many, but I see a lot of merit in them ...............




I'll address the dates you mentioned:

12th, 13th September: the 12th rejected the low but the 13th didn't -   

17th October: a small gap and small range - uncommitted maybe. It filled the next day.

9th October:  actually the 9th provided me with a signal on a new tactic I am trialing - no moving average crossover though.

Watch the next few days Barney and how the price also reacts if it goes to $2.85. Ultimately I don't know where it is going but time will tell.


----------



## It's Snake Pliskin

Barney here is another chart on PSA. All yellow lines underscore buy opportunities: the x to the right that breaks out higher.


----------



## barney

It's Snake Pliskin said:
			
		

> Hi Barney,
> 
> 
> 
> They show the higher close, than the day before, as an up day where candles don't. Using candles you could see a big gap down day and then it finishes higher than the open and it is an up day - an up day but bearish in nature.
> 
> 
> 
> I wouldn't say it is very bullish.
> 
> 
> 
> I find it easier to read, but others like candles.
> 
> 
> 
> I am waiting to see what happens with the test of $2.85ish.
> 
> 
> 
> 
> I'll address the dates you mentioned:
> 
> 12th, 13th September: the 12th rejected the low but the 13th didn't -
> 
> 17th October: a small gap and small range - uncommitted maybe. It filled the next day.
> 
> 9th October:  actually the 9th provided me with a signal on a new tactic I am trialing - no moving average crossover though.
> 
> Watch the next few days Barney and how the price also reacts if it goes to $2.85. Ultimately I don't know where it is going but time will tell.




Thanks for that Snake,  I actually noticed I got my moving crossovers mixed up so the 9th was only a cross of the short term MA over the medium term MA.  The long term MA was actually just about crossed today by the medium, which from the little I know,seems to be a good indicator (when the short term is above both)........... Almost confused myself with all that   

Re the Point and Figure chart ........... I haven't quite been able to get my head around working them out yet, but will do a bit more reading on that ....... Again, considering energy stocks took a bit of a beating today, this stock looks strong ............. next few days will be interesting, Cheers, Barney


----------



## Magdoran

*Ongoing Light Crude Example * - Time to exit...


I don’t like the way HU (Unleaded futures) has been trading recently.  I have a theory that fuel drives the oil, and not the other way.  Given the strong bullish move in unleaded futures overnight, I think it’s time to wind out the Crude oil short.

Interestingly when trading futures markets, the way the spot markets are figured out can mess up the charts, especially when a series of contracts expires, and a new front month takes over.  The interesting thing about crude oil, is that as you move out further in time, the price seems to be ascending.  The market seems to be expecting oil to rise in price again.

So, looking at the revised pattern with the December contract becoming the front month, we now have a higher low.  Have a look at the December contract pattern for interest.

If we see a rally here, it may be a wave 4, find a high, and test down again, so any longs initiated here will be risky, and suggest a half exit approach at obvious resistance points would be a sensible approach.

The higher low could be taken to be a signal for a short term long.  The October 12th increment seems to have had a greater significance, and the October 30th date will be interesting to see what transpires, depending on the way Crude oil trades into it.


Regards


Magdoran


----------



## wayneL

Mag

Being the total cynic, I am expecting a post election oil bull :batman:

There has been a lot of talk of pre election manipulation on oil, gold, eco #'s & equities; which I am quite prepared to go along with.

The SP is the most suspicious looking chart I've seen for some time.

FWIW


----------



## Magdoran

wayneL said:
			
		

> Mag
> 
> Being the total cynic, I am expecting a post election oil bull :batman:
> 
> There has been a lot of talk of pre election manipulation on oil, gold, eco #'s & equities; which I am quite prepared to go along with.
> 
> The SP is the most suspicious looking chart I've seen for some time.
> 
> FWIW




Hi Wayne,

Should have known you'd be out of the "Crypt"!

Very tired here - it's a trading bonanza at the moment, and I have too many opportunities to follow up on, so was doing my due diligence, and then thought I'd wrap up the oil trade example too...

Just don't like the way oil’s trading for the short side.  I've also have a sneaking suspicion that copper and gold may shoot up from here.

That S&P 500 will be interesting to watch if oil makes a run up.  But sometimes equity runs can foster economic prosperity since sufficient confidence is maintained to keep the wheels turning...

Maybe oil causes a pull back in the S&P 500???  Hard to know...  But it’s been very bullish hasn’t it?

How do you like the charts by the way?



Regards


Magdoran


----------



## pacer

OIL sux....give me solid gains.....not the flavour of the month....I look elsewhere!......:


----------



## wayneL

Magdoran said:
			
		

> Hi Wayne,
> 
> Should have known you'd be out of the "Crypt"!
> 
> Very tired here - it's a trading bonanza at the moment, and I have too many opportunities to follow up on, so was doing my due diligence, and then thought I'd wrap up the oil trade example too...
> 
> Just don't like the way oil’s trading for the short side.  I've also have a sneaking suspicion that copper and gold may shoot up from here.
> 
> That S&P 500 will be interesting to watch if oil makes a run up.  But sometimes equity runs can foster economic prosperity since sufficient confidence is maintained to keep the wheels turning...
> 
> Maybe oil causes a pull back in the S&P 500???  Hard to know...  But it’s been very bullish hasn’t it?




A definate Goldilocks thing going on in equities. I have several theories as to the eventual outcome, which cover every possible scenario... so I can't be wrong can I? LOL

But it is unnatural IMO. The PPT rocks... if you're a bull.



> How do you like the charts by the way?
> 
> 
> 
> Regards
> 
> 
> Magdoran



Well, if I knew what I was looking at......lol

But I know geometric approaches work well for those so inclined. So looks good  

Cheers


----------



## wayneL

pacer said:
			
		

> OIL sux....give me solid gains.....not the flavour of the month....I look elsewhere!......:




Oil neither sux or blows when you trade futures. I'm sure the shorters are ecstatic.


----------



## Sean K

wayneL said:
			
		

> Mag
> 
> Being the total cynic, I am expecting a post election oil bull :batman:
> 
> There has been a lot of talk of pre election manipulation on oil, gold, eco #'s & equities; which I am quite prepared to go along with.
> 
> The SP is the most suspicious looking chart I've seen for some time.
> 
> FWIW




I'm with you Wayne. But not necessary because the POI, POG, $US HAS  been manipulated, but because there's a lot of talk that is has. That perception will be enough for $US sell off, and POG and POI increase. 

To link this to the thread topic, I am also a big believer that charts are a somewhat self fulfilling prophecy. Becasue chart analysis has become something of a legitimate trading method, and the theories widely accepted, then people will natuarally use this understanding to trade this market psychology.


----------



## barney

Magdoran said:
			
		

> *Ongoing Light Crude Example * - Time to exit...
> 
> 
> I don’t like the way HU (Unleaded futures) has been trading recently.  I have a theory that fuel drives the oil, and not the other way.  Given the strong bullish move in unleaded futures overnight, I think it’s time to wind out the Crude oil short.
> 
> Interestingly when trading futures markets, the way the spot markets are figured out can mess up the charts, especially when a series of contracts expires, and a new front month takes over.  The interesting thing about crude oil, is that as you move out further in time, the price seems to be ascending.  The market seems to be expecting oil to rise in price again.
> 
> So, looking at the revised pattern with the December contract becoming the front month, we now have a higher low.  Have a look at the December contract pattern for interest.
> 
> If we see a rally here, it may be a wave 4, find a high, and test down again, so any longs initiated here will be risky, and suggest a half exit approach at obvious resistance points would be a sensible approach.
> 
> The higher low could be taken to be a signal for a short term long.  The October 12th increment seems to have had a greater significance, and the October 30th date will be interesting to see what transpires, depending on the way Crude oil trades into it.
> 
> 
> Regards
> 
> 
> Magdoran





Hi Mag, Can I say from a "novice" point of view that your explanations/charts etc. on oil make a lot of sense ........... Not that my opinion carries much weight !!, but I agree that the price of oil looks like it maybe bottoming (is that a real word??)  Perhaps from a laymans point of view, I could make the comment that, the average man in the street, believes that it is only a matter of time before oil/price of fuel rises again (and probably substantially) so to be bearish on oil would be risky at the best of times in this modern age (??), so your analysis which shows us that it is becoming a risky proposition now (even after a sustained downturn), seems like good "advice" to me .......... I for one would not be game to back against oil rising over the short/medium term ............. 

Now, to a different slant ......... In keeping with my "lay my cards on the table" style of investing ........... I have short sold  Amcor AMC atm (OK I know it was an up day and the market is trending upwards ............ call me stupid, I probably deserve it) but I still think this company has short term problems which can be seen in the charts as well .... four down days in succession (not today though) The moving averages are  turning against the general market trend.  ROC longer trend is diverging from price as is Momentum (not that I place a lot of importance on that, its just that it confirms my "wider" conception of what is happening ............ So I put myself up for judgement yet again in the hope I might learn something (Please be gentle on me cause I'm getting bruised     Cheers Barney.


----------



## Sean K

AMC is in an interesting position. It's in a downward trend, but is hitting a key resistance and support area. I see it pausing around this area. Not ideal to go short IMO. It could be on it's way back to $6.50, but there's a chance that $6.75 could be a support area and possible rebound. 

My    in regard to very simple chart analysis.

I have no idea why it's dropped recently. I actually used to own this but sold out a year or so ago, because it was so boring.


----------



## barney

kennas said:
			
		

> AMC is in an interesting position. It's in a downward trend, but is hitting a key resistance and support area. I see it pausing around this area. Not ideal to go short IMO. It could be on it's way back to $6.50, but there's a chance that $6.75 could be a support area and possible rebound.
> 
> My    in regard to very simple chart analysis.
> 
> I have no idea why it's dropped recently. I actually used to own this but sold out a year or so ago, because it was so boring.





Thank for that Kennas,  I confess I did not look at the previous resistance/support levels that closely (I was paying more attention to their apparent short term difficulties in reaching profit targets/competition etc. (I need to write a list of things to check!!!!)  I notice back in July there was a resistance (perhaps now support) level of around $6.90 If it gets past that it may drop to $6.75 ish as you say ??    I'd be happy with that from a short point of view; anything under $6.90 from my point of view puts me in positive  territory ........... my investment is only minimal, but it is all a learning experience,  Cheers Barney


----------



## swingstar

AMC is my favourite stock. I'm currently short also (check out the AMC thread for my analysis). Right now it is in the middle of a large trading range where it has rebounded from in the past, so it's probably not an ideal entry point.


----------



## barney

swingstar said:
			
		

> AMC is my favourite stock. I'm currently short also (check out the AMC thread for my analysis). Right now it is in the middle of a large trading range where it has rebounded from in the past, so it's probably not an ideal entry point.




Thanks Swingstar, I checked out the AMC thread and your charts explain your position well ........... I know I may have missed the thrust of the downtrend, but just happy that I got the gist of the stock direction, even though it could bounce from here. Next day or two should tell a better story ..... Still looks a little room for downward movement considering the news reports and the fact it has been going against the market trend . Cheers Barney.


----------



## Magdoran

*“Ignorance is Strength”* 


I’m not sure what is in the mind of some people who make bizarre comments on this thread, but let me reiterate what I’m doing here for those may not have followed the way this thread developed.

The Light Crude / Brent example was primarily a real time illustration of a type of technical analysis approach in action, as requested by Tech/A (Daffy) and Les. The idea was to contribute an alternative approach based on using a time factor in technical analysis combined with patterns.  This thread is after all about chart analysis is it not? 

Also, considering the far reaching impact that the price of oil/fuel has on the world economy, and the consequent impact this has on inflationary measures, I would have thought that tracking oil futures would be an integral factor in many markets, wouldn’t it?

If trading anything related to oil, if not trading the commodity itself, and utilising the marked decline in crude oil prices I would have thought yielded many significant trading opportunities, and will I would argue do the same again in the future.

Specifically, try correlating the decline in light crude with the way the DOW and other US stock markets have performed, not to mention various European indexes such as the FTSE and the DAX.

However, the primary purpose of posting the charts was not to examine oil, but to demonstrate a time based approach to technical analysis.


Regards


Magdoran

P.S. If the title seems odd, please refer to "1984" - George Orwell. Mag.


----------



## Magdoran

*Ongoing Crude Oil Example*


Light Crude moved strongly down on the 30th in the US, in what appears to be an exhaustive bar.

If the time cycle is correct, this may become a low (or the next day). This was the significant day previously posted.

Obviously the pattern is either going to resolve down for another leg down, or resolve up for a drive up from this point.  The trick is to recognise as early as possible which way.  It is of course possible that crude will trade sideways for a while too and either accumulate or distribute…

The congestion indicates to me some kind indecision.  This is probably partly due to the oncoming winter in the northern hemisphere, and the consequent increase in energy needs.  The ongoing higher inventory levels in fuel and oil and the recent media hype over OPEC’s comments to cut production appear to me to be a lot of theatre.

I suspect we may see a strong move come from this soon.  If this low can hold, this could be bullish depending how crude trades over the next few days.  A close below the existing major low may signal bearish probabilities.


Regards


Magdoran


----------



## CanOz

Anyone care to analyse these from a technical point of view?

BPT
MLS
SDL
CBH


----------



## tech/a

Well ill be a Daffy Duck.

Truely fascinating!!


----------



## Magdoran

barney said:
			
		

> Hi Mag, Can I say from a "novice" point of view that your explanations/charts etc. on oil make a lot of sense ........... Not that my opinion carries much weight !!, but I agree that the price of oil looks like it maybe bottoming (is that a real word??)  Perhaps from a laymans point of view, I could make the comment that, the average man in the street, believes that it is only a matter of time before oil/price of fuel rises again (and probably substantially) so to be bearish on oil would be risky at the best of times in this modern age (??), so your analysis which shows us that it is becoming a risky proposition now (even after a sustained downturn), seems like good "advice" to me .......... I for one would not be game to back against oil rising over the short/medium term .............
> 
> Now, to a different slant ......... In keeping with my "lay my cards on the table" style of investing ........... I have short sold  Amcor AMC atm (OK I know it was an up day and the market is trending upwards ............ call me stupid, I probably deserve it) but I still think this company has short term problems which can be seen in the charts as well .... four down days in succession (not today though) The moving averages are  turning against the general market trend.  ROC longer trend is diverging from price as is Momentum (not that I place a lot of importance on that, its just that it confirms my "wider" conception of what is happening ............ So I put myself up for judgement yet again in the hope I might learn something (Please be gentle on me cause I'm getting bruised     Cheers Barney.



Hello barney,


How is the music business treating you?

I didn’t really want to respond to an actual trade you are in since this could affect your trade.  Also, I really don’t want to be in any kind of position where I may be misconstrued as giving financial advice.

Firstly, I am not a fan of moving averages having discarded these a long time ago (although I do know of some cycle based displaced approaches which use measures of standard deviation which can be used effectively with EW styles).  Try switching these off and just look at the bar chart and volume.

It's great that you're in a position, and that you pulled the trigger based on your analysis.  I really don't want to colour your view, but will tell you a few things I notice, and make some suggestions that you may ponder if you like...

My eye is drawn immediately to the lower high a few days ago 4 days after the high.  Also, my eye is drawn to the August low ranging to the October high.  Also look at the minor high in August too.  Consider where support may come from in the range.  This will give you potential price objectives to consider.

When trading short, I’ve found that you really need to be nimble if you think these are short term counter trends and consider taking profits and re-entering on the way down, depending on how fast the move is, and what the price action is telling you.

In this case, the time to short was actually at close the day after the lower high.

There is some risk around 6.85 where the previous high was.  This might be tested, but you’d expect some support to be evident around this area.  

Also, if you consider patterns, you may find that you get “two thrusts” down to wash out the sellers, and then a resumption if this is actually a counter trend to the bullish drive.  If it is a bearish drive, you can expect 5, 7, 9, or even 11 waves down…  (or ask an EW specialist like wavepicker to correctly label the waves).

The question is barney, have you got a time frame in mind for this trade?  What are the conditions under which you will take profits/losses?  Do you have a profit target?  Do you have a failure criteria?  Do you have a criteria for taking partial profits, or adding to the position?  This is of course based on a style, and maybe you have a moving average cross over to buy the short back?…



Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> Hello barney,
> 
> 
> How is the music business treating you?
> 
> I didn’t really want to respond to an actual trade you are in since this could affect your trade.  Also, I really don’t want to be in any kind of position where I may be misconstrued as giving financial advice.
> 
> Firstly, I am not a fan of moving averages having discarded these a long time ago (although I do know of some cycle based displaced approaches which use measures of standard deviation which can be used effectively with EW styles).  Try switching these off and just look at the bar chart and volume.
> 
> It's great that you're in a position, and that you pulled the trigger based on your analysis.  I really don't want to colour your view, but will tell you a few things I notice, and make some suggestions that you may ponder if you like...
> 
> My eye is drawn immediately to the lower high a few days ago 4 days after the high.  Also, my eye is drawn to the August low ranging to the October high.  Also look at the minor high in August too.  Consider where support may come from in the range.  This will give you potential price objectives to consider.
> 
> When trading short, I’ve found that you really need to be nimble if you think these are short term counter trends and consider taking profits and re-entering on the way down, depending on how fast the move is, and what the price action is telling you.
> 
> In this case, the time to short was actually at close the day after the lower high.
> 
> There is some risk around 6.85 where the previous high was.  This might be tested, but you’d expect some support to be evident around this area.
> 
> Also, if you consider patterns, you may find that you get “two thrusts” down to wash out the sellers, and then a resumption if this is actually a counter trend to the bullish drive.  If it is a bearish drive, you can expect 5, 7, 9, or even 11 waves down…  (or ask an EW specialist like wavepicker to correctly label the waves).
> 
> The question is barney, have you got a time frame in mind for this trade?  What are the conditions under which you will take profits/losses?  Do you have a profit target?  Do you have a failure criteria?  Do you have a criteria for taking partial profits, or adding to the position?  This is of course based on a style, and maybe you have a moving average cross over to buy the short back?…
> 
> 
> 
> Regards
> 
> 
> Magdoran





Hi Mag, Music is going OK. Few weddings atm, Keeping the wolf from the door. 

PS I am no longer holding this position.  Not that I didn't like it, but I needed the money for other things (Its a bugga being poor)

Thanks for your input. I appreciate your position of not wishing to appear to be giving specific advice. No problems there. I've posted the chart below illustrating the "questions" you put to me, and hopefully I've gotten the positions correct.  Let me know where I can improve.

Re the short sell point ..... Is this a general signal for a possible short position?  The lower highs and lower lows with volume sell off etc. I assume all stocks will trend differently. This one seems to follow a "predictable" pattern if there is such a thing. 

PPS I took the MA's etc off the chart. It does clear the picture up a bit, but I think I still need the visual confirmation that they give at this stage cause its not that obvious to me yet ........... Give me another 5 years    Cheers Barney.

PPPS I am curious about the 5 7 9 or 11 waves theory. Are you saying that if the downturn turns out to be a "fair dinkum" bearish reversal,that it is possible to "predict" how far it may go? Is this based on mathematics, or human phsychology?  Thanks.

PPPPS (More peas than you can poke a farmer at!)  How do I stop my charts from being so messy looking when I upload them. I cant seem to reposition my captions anywhere other than the top of the page which gets really congested


----------



## It's Snake Pliskin

barney said:
			
		

> Re the short sell point ..... Is this a general signal for a possible short position?  The lower highs and lower lows with volume sell off etc. I assume all stocks will trend differently. This one seems to follow a "predictable" pattern if there is such a thing.
> 
> PPPPS (More peas than you can poke a farmer at!)  How do I stop my charts from being so messy looking when I upload them. I cant seem to reposition my captions anywhere other than the top of the page which gets really congested




Firstly Barney, Incredible charts don't have a good caption or comment facility. As I have trialled them I won't be paying and will just keep using the free version for backup etc.

I've posted a short sell *hindsight* analysis for you. Just to cover my **** for the vulchers willing to attack. :sheep: Predictable patterns are the stuff of Star Trek and Religious fanatics  .

Actually I haven't because I can't remember how to compress it. Computers the stuff of miracles  Life sure is harder with them.

Just did it but it looks **** so won't bother with it anymore. They look far better as a full screen. I'll post smilies instead Barney.


----------



## barney

CanOz said:
			
		

> Anyone care to analyse these from a technical point of view?
> 
> BPT
> MLS
> SDL
> CBH





Hi there Can,

This wont be real technical, but if I start it off, someone else can fix it up then we all learn something

Re the SDL chart ..... Trend seems to be Long term up Medium term down Short term spike but direction uncertain ......
Broke through a resistance point of .095 on 26th October but did not sustain the break. The daily trend now seems downward considering increase in volume over last 2 days.  Looks like the sp might continue to range between .095 and .085 in the short term depending on any news of course. 

Thats my simple chart analysis. Hopefully someone will elaborate with more details ........... Cheers, Barney.


----------



## barney

It's Snake Pliskin said:
			
		

> Firstly Barney, Incredible charts don't have a good caption or comment facility. As I have trialled them I won't be paying and will just keep using the free version for backup etc.
> 
> I've posted a short sell *hindsight* analysis for you. Just to cover my **** for the vulchers willing to attack. :sheep: Predictable patterns are the stuff of Star Trek and Religious fanatics  .
> 
> Actually I haven't because I can't remember how to compress it. Computers the stuff of miracles  Life sure is harder with them.





I like the dancing sheep anyway thanks Snake     Barney.


----------



## wayneL

Magdoran said:
			
		

> *Ongoing Crude Oil Example*
> 
> 
> Light Crude moved strongly down on the 30th in the US, in what appears to be an exhaustive bar.
> 
> If the time cycle is correct, this may become a low (or the next day). This was the significant day previously posted.
> 
> Obviously the pattern is either going to resolve down for another leg down, or resolve up for a drive up from this point.  The trick is to recognise as early as possible which way.  It is of course possible that crude will trade sideways for a while too and either accumulate or distribute…
> 
> The congestion indicates to me some kind indecision.  This is probably partly due to the oncoming winter in the northern hemisphere, and the consequent increase in energy needs.  The ongoing higher inventory levels in fuel and oil and the recent media hype over OPEC’s comments to cut production appear to me to be a lot of theatre.
> 
> I suspect we may see a strong move come from this soon.  If this low can hold, this could be bullish depending how crude trades over the next few days.  A close below the existing major low may signal bearish probabilities.
> 
> 
> Regards
> 
> 
> Magdoran




Mag,

What contract are you using there. My spot contract (z) looks quite different to yours.


----------



## wayneL

Oops....chart\/


----------



## tech/a

Well done Barney. Good effort.

*SDL*

Here I get out the magnifying glass for some
short term analysis.
A fall below .091 to .090 and its snaffoood.
Potential targets 11.5 and or 13c

*Technical opinion only not advice to trade*


----------



## Knobby22

And good stuff Tech (nothing worse than a new convert).


----------



## Magdoran

wayneL said:
			
		

> Mag,
> 
> What contract are you using there. My spot contract (z) looks quite different to yours.




Hello Wayne,


Are you using the 2006 Z (December) contract?  This is now the front month.  The SpotV chart is an ongoing composite of the front month, and has some rules a bit like an index on how it is weighted.  They will appear to be different, quite so.

If you look at my previous posts on this, I did post the 2006 Z contract to compare with the SpotV chart.  If you look at the different contracts you will find that the further out in time you go, the prices are generally staggered upwards currently (the market is expecting demand to rise during winter in the northern hemisphere).  

When we moved to the 2006 December contract, this price was higher than the now expired November contract, hence the higher low in the SpotV chart as opposed to the low in the December contract.

This can get confusing in futures markets if you don’t take into account how the spot markets are calculated.

Let me know if that is correct.


Regards


Magdoran


----------



## Magdoran

wayneL said:
			
		

> Mag,
> 
> What contract are you using there. My spot contract (z) looks quite different to yours.



Hello Wayne,


Correction, the October 2006 V contract is the one that just expired (inadvertently put this in as November).  

The SpotV market is a composite of the front months, and there is a changeover point when the front month nears expiry.  2006 V was the October contract which just expired.  It is different to the Spot V, which is now using the December 2006 Z contract.


Regards,


Magdoran


----------



## tech/a

tech/a said:
			
		

> Well done Barney. Good effort.
> 
> *SDL*
> 
> Here I get out the magnifying glass for some
> short term analysis.
> A fall below .091 to .090 and its snaffoood.
> Potential targets 11.5 and or 13c
> 
> *Technical opinion only not advice to trade*




So strong support has been broken small loss taken on to the next trade.

If .96 was taken out it would be worth another look.


----------



## CanOz

tech/a said:
			
		

> So strong support has been broken small loss taken on to the next trade.
> 
> If .96 was taken out it would be worth another look.




I actually have my stop at .088, and today i watched it close without hitting it. If it goes tomorrow ok, but if it gaps i'll dump it anyway....too many more opportunities at the moment.

I'm having trouble posting at the moment but i'll try to put up some interesting charts that i was looking at today. AVX has a great textbook (at east it looks 'textbook') triple bottom that its breaking through. Thought maybe everyone might like to put thier 2 bob into it.

Later,


----------



## barney

tech/a said:
			
		

> Well done Barney. Good effort.
> 
> *SDL*
> 
> Here I get out the magnifying glass for some
> short term analysis.
> A fall below .091 to .090 and its snaffoood.
> Potential targets 11.5 and or 13c
> 
> *Technical opinion only not advice to trade*




Like I said, My analysis was very basic   .............. and doesn't Tech's show that !!! I learned at least 3-4 new things in your analysis Tech .... Thanks for that ....hopefully others have benefited as well 

One thing Tech ... can you explain the "Break away gap not filled in 3 days, a strong sign"  comment in a little more detail for me, cause I'm not quite understanding that  :homer: 
PS Why does this analysis stuff have to be so difficult?? ..... Shouldn't it be simple like ........... That stock looks good; I'll buy it; It goes up heaps; I sell and make lots of money; ......... (Repeat process) .......... My wife then thinks I'm clever cause she can buy stuff she likes!! ..... and I'm a genius    If only!!!!           Cheers Barney.


----------



## CanOz

barney said:
			
		

> Like I said, My analysis was very basic   .............. and doesn't Tech's show that !!! I learned at least 3-4 new things in your analysis Tech .... Thanks for that ....hopefully others have benefited as well
> 
> One thing Tech ... can you explain the "Break away gap not filled in 3 days, a strong sign"  comment in a little more detail for me, cause I'm not quite understanding that  :homer:
> PS Why does this analysis stuff have to be so difficult?? ..... Shouldn't it be simple like ........... That stock looks good; I'll buy it; It goes up heaps; I sell and make lots of money; ......... (Repeat process) .......... My wife then thinks I'm clever cause she can buy stuff she likes!! ..... and I'm a genius    If only!!!!           Cheers Barney.




Have a go at AVX Barney....its an interesting chart. I don't currently hold but i have a price alert on it.

Cheers;


----------



## tech/a

SDL's not done yet only on my very short term trading analysis.
I expect the gap to hold and would be suprised if its even breached.
If I had lost on this short term move I would still have it in my watchlist.

There are many ways to trade it.The fall on low volume shows that Sellers have won the day and new buyers are not attracted at the old prices.It is possible some of those expecting a breakout have been spooked into selling out as it dropped. 8.6c/ish would be where I expect new buying to move in/become intersted.


----------



## CanOz

Thanks Tech! Have you read Master the Markets? I'm still getting through it, but some of your analysis some familar, esp the price action comments.


----------



## Magdoran

*Continuing Crude Oil Example*


This is really in the balance now.  The next few days are critical.

I have a suspicion tonight’s price action in HU (Unleaded futures) may give a clue as to which way the crude market is going to go.  

If HU continues down, I think this will probably drive Light Crude prices down too.  I think it is fuel consumption not lubrication/pharmaceuticals/other oil products that drives the price of oil.

I have to say that the front month HU contract may have broken down, and this could drive price down if it can hold below the recent lows.

Have a look at the attached charts…


Regards


Magdoran


----------



## wayneL

Magdoran said:
			
		

> Hello Wayne,
> 
> 
> Correction, the October 2006 V contract is the one that just expired (inadvertently put this in as November).
> 
> The SpotV market is a composite of the front months, and there is a changeover point when the front month nears expiry.  2006 V was the October contract which just expired.  It is different to the Spot V, which is now using the December 2006 Z contract.
> 
> 
> Regards,
> 
> 
> Magdoran



This all makes things a bit dodgy as far as t.a./Gann/EW are concerned.

What is the appropriate chart to perform analysis on? Each has their problems, particularly with physical commodities.

Continuous charts have gaps on contract rollover because of cost of carry considerations. You can back-adjust of course, but this creates other problems.

Then there are the conditions of contango and/or backwardation (and the factors which cause them)

It is a minefield.

For analysis spanning not longer than 6 months, I use singular contracts (the one being traded). Cost of carry will affect the values as time goes by, but not greatly.

$0.015


----------



## Magdoran

wayneL said:
			
		

> This all makes things a bit dodgy as far as t.a./Gann/EW are concerned.
> 
> What is the appropriate chart to perform analysis on? Each has their problems, particularly with physical commodities.
> 
> Continuous charts have gaps on contract rollover because of cost of carry considerations. You can back-adjust of course, but this creates other problems.
> 
> Then there are the conditions of contango and/or backwardation (and the factors which cause them)
> 
> It is a minefield.
> 
> For analysis spanning not longer than 6 months, I use singular contracts (the one being traded). Cost of carry will affect the values as time goes by, but not greatly.
> 
> $0.015



Hello Wayne,


Thanks, you raised some really good points about futures.

Quite true, it is a minefield, and the effects of “contango” (where longer dated futures are priced higher than nearer dated futures) and “backwardation” (where longer dated futures are priced lower than nearer dated futures) certainly add an element of complexity to the analysis process.

As you can imagine there are a range of ways of approaching various aspects peculiar to futures, and I don’t intend to expand on all the facets here since the focus here is on chart analysis.

The way I approach this is to either analyse a specific contract (which is why I posted up the December 2006 chart as an example), or accept the composite nature of the spot chart (much like the way stock indexes are weighted).  

I would argue that the nature of market cycles underlying spot markets are evident, and that the analysis I am using aims to fathom these cycles irrespective of the quirks of futures markets.  

By being aware of aspects such as “backwardation” and “contango”, it is possible to take these factors into account and adjust accordingly, which is why if you are trading spot markets with CFDs you really need to understand the mechanics.

If you ask me, I’d say analyse both the spot and the various contracts you think are relevant to get the best picture possible.  Take away wisdom:  research the $#@% out of everything!


Regards


Magdoran

P.S. I wasn’t going to raise terms like “backwardation” and “contango”, but what the hell, this is after all a teaching thread!  Mag


----------



## dj_420

Hey guys, im very new to tech analysis and thought i would post one chart up. my view is that following the recent up trend we will see a slight pullback or consolidation around the 80 cents mark before resuming uptrend. 

IMO market fundamentals for zinc will give this stock support for current levels it has run to. volume for this stock is still relatively high, so i dont think we will see to much of a pullback. 

pls correct me if im wrong, any other opinions on this chart? also im finding it hard to locate specific resistance points due to chart been a bit all over, if someone could point them out that would be great thanks.


----------



## barney

dj_420 said:
			
		

> Hey guys, im very new to tech analysis and thought i would post one chart up. my view is that following the recent up trend we will see a slight pullback or consolidation around the 80 cents mark before resuming uptrend.
> 
> IMO market fundamentals for zinc will give this stock support for current levels it has run to. volume for this stock is still relatively high, so i dont think we will see to much of a pullback.
> 
> pls correct me if im wrong, any other opinions on this chart? also im finding it hard to locate specific resistance points due to chart been a bit all over, if someone could point them out that would be great thanks.





Hi DJ 420, (Are you a DJ?), In my humble opinion, this stock looks strong to me also. I agree with the strength related to Zinc atm, and they are also ready to start mining in 2007 I believe. It looks like .84 will be the new support level, and I'd be surprised if this ever gets broken the way zinc is firing. If it hasn't already, this stock should have been listed on the Outstanding breakout alerts ..... Cheers, Barney.


----------



## tech/a

https://www.aussiestockforums.com/forums/showthread.php?t=3119

Been discussing JML here.


----------



## Magdoran

barney said:
			
		

> Hi Mag, Music is going OK. Few weddings atm, Keeping the wolf from the door.
> 
> PS I am no longer holding this position.  Not that I didn't like it, but I needed the money for other things (Its a bugga being poor)
> 
> Thanks for your input. I appreciate your position of not wishing to appear to be giving specific advice. No problems there. I've posted the chart below illustrating the "questions" you put to me, and hopefully I've gotten the positions correct.  Let me know where I can improve.
> 
> Re the short sell point ..... Is this a general signal for a possible short position?  The lower highs and lower lows with volume sell off etc. I assume all stocks will trend differently. This one seems to follow a "predictable" pattern if there is such a thing.
> 
> PPS I took the MA's etc off the chart. It does clear the picture up a bit, but I think I still need the visual confirmation that they give at this stage cause its not that obvious to me yet ........... Give me another 5 years    Cheers Barney.
> 
> PPPS I am curious about the 5 7 9 or 11 waves theory. Are you saying that if the downturn turns out to be a "fair dinkum" bearish reversal,that it is possible to "predict" how far it may go? Is this based on mathematics, or human phsychology?  Thanks.
> 
> PPPPS (More peas than you can poke a farmer at!)  How do I stop my charts from being so messy looking when I upload them. I cant seem to reposition my captions anywhere other than the top of the page which gets really congested



Hi barney,


Quick off the cuff answers – I’ve been meaning to get around to this…

Signals to go long and short are really a personal choice about what you think constitutes a trigger to enter a position.  

For me certain patterns give a probability of what might happen…  A confirmed lower high in certain technical patterns (meaning the next day closes below the lower high in a way that you believe validates that it may be a lower high), may constitute for me a short opportunity, but where I set my exits and criteria depend on a range of variables.

The wave structure theory is in part based on McLaren’s interpretation of Prechter and Frost’s revision of Elliott Wave theory.  The core idea is that waves may subdivide on the way down and different wave structure schools may well argue over the labelling, but you can sometimes count up to 11 waves down in some bear campaigns, although some would argue that the 5th or 3rd waves have subdivided… but this is quite a specialised area for those who subscribe to Wave theories.

As for the prediction on how far a bear campaign may last, this is very subjective, and there are many different schools of thought on this subject, even in the EW and Gann “schools” and I suppose even “intra-school” debates...  

Essentially price ranges can be projected based on a range of criteria, as well as an interpretation of the straight bar chart and volume, and an analysis of wave structure.  A lot is to do with counter trend theory which can give hints as to what might transpire, but it is all about estimating probabilities.  Add to this the cycle approach, and it can get quite involved till you understand all the building blocks involved.


Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> Hi barney,
> 
> 
> Quick off the cuff answers – I’ve been meaning to get around to this…
> 
> Signals to go long and short are really a personal choice about what you think constitutes a trigger to enter a position.
> 
> For me certain patterns give a probability of what might happen…  A confirmed lower high in certain technical patterns (meaning the next day closes below the lower high in a way that you believe validates that it may be a lower high), may constitute for me a short opportunity, but where I set my exits and criteria depend on a range of variables.
> 
> The wave structure theory is in part based on McLaren’s interpretation of Prechter and Frost’s revision of Elliott Wave theory.  The core idea is that waves may subdivide on the way down and different wave structure schools may well argue over the labelling, but you can sometimes count up to 11 waves down in some bear campaigns, although some would argue that the 5th or 3rd waves have subdivided… but this is quite a specialised area for those who subscribe to Wave theories.
> 
> As for the prediction on how far a bear campaign may last, this is very subjective, and there are many different schools of thought on this subject, even in the EW and Gann “schools” and I suppose even “intra-school” debates...
> 
> Essentially price ranges can be projected based on a range of criteria, as well as an interpretation of the straight bar chart and volume, and an analysis of wave structure.  A lot is to do with counter trend theory which can give hints as to what might transpire, but it is all about estimating probabilities.  Add to this the cycle approach, and it can get quite involved till you understand all the building blocks involved.
> 
> 
> Regards
> 
> 
> Magdoran





Thanks Mag,  I am appreciating the many variables more all the time.  I guess it is all fairly subjective to the trader involved and the time frame each of us likes to trade in, relative to the theories/signals etc. that seem the most reliable.  The very short term can be "nervy", and the long term can require a lot of patience.  At this point in time I am trying to develop a "simple" trading plan, with Chart analysis as the backbone of entry/exit decisions .......... Still struggling to get it right, but like you say, the more "building blocks" that are added to the structure, the stronger the foundation is becoming.

PS Read some of the stuff you guys are talking about on the Derivatives thread ............ Is that in english?     Cheers, barney.


----------



## It's Snake Pliskin

barney said:
			
		

> The very short term can be "nervy", and the long term can require a lot of patience.  At this point in time I am trying to develop a "simple" trading plan, with Chart analysis as the backbone of entry/exit decisions ..........




Barney may I suggest you dispense with the fundamental element of your analysis. A chart will tell you more than you could imagine. Remember though, analysis is only a small part of it. 

The short term is exciting and the long term is smoke blowing in the wind - hence your use of "patience".


----------



## Bobby

It's Snake Pliskin said:
			
		

> Barney may I suggest you dispense with the fundamental element of your analysis. A chart will tell you more than you could imagine. Remember though, analysis is only a small part of it.
> 
> The short term is exciting and the long term is smoke blowing in the wind - hence your use of "patience".



Well said Snake, those that are not in sink with the evolution of resent manifestations will lose.


----------



## barney

It's Snake Pliskin said:
			
		

> Barney may I suggest you dispense with the fundamental element of your analysis. A chart will tell you more than you could imagine. Remember though, analysis is only a small part of it.
> 
> The short term is exciting and the long term is smoke blowing in the wind - hence your use of "patience".




Cheers Snake, I understand what you're saying re the "fundamentals".  They are simply represented in the price/volume action on the chart. 
The short term is where I prefer to tread also, but due to so many poor past decisions,the short term "excitement" is now often replaced with "nervousness". Now I understand "scared money never wins" (one of my favorite quotes), but I am still coming to terms with my past losses ........... phsycological I know, but I still reckon physycology is at least half of what this "game" is all about ..... I'm pretty sure Mag would agree with that?? Thanks, Barney.


----------



## It's Snake Pliskin

barney said:
			
		

> Cheers Snake, I understand what you're saying re the "fundamentals".  They are simply represented in the price/volume action on the chart.
> The short term is where I prefer to tread also, but due to so many poor past decisions,the short term "excitement" is now often replaced with "nervousness". Now I understand "scared money never wins" (one of my favorite quotes), but I am still coming to terms with my past losses ........... phsycological I know, but I still reckon physycology is at least half of what this "game" is all about ..... I'm pretty sure Mag would agree with that?? Thanks, Barney.




No worries Barney. Forget you lost the money and start small until you are proficient. 
Snake


----------



## It's Snake Pliskin

Bobby said:
			
		

> Well said Snake, those that are not in sink with the evolution of resent manifestations will lose.




Actually Bob, that is well said! I like the word "evolution".


----------



## barney

It's Snake Pliskin said:
			
		

> No worries Barney. Forget you lost the money and start small until you are proficient.
> Snake




Patience (ie trading small) has unfortunately not been one of my better attributes ..... gets me into tight situations, but I'm working on that!




			
				Bobby said:
			
		

> Well said Snake, those that are not in sink with the evolution of resent manifestations will lose.




I agree Bob, The market is in constant change/movement, and often mutating into different formations.    (Mutant! ..... sorry its late.)

PS Re the PSA chart earlier in the thread Snake; What is your take on its current position. I realise you probably don't use B/Bands etc, but is the fact that they are tightening noticeably, plus 50 day MA is well under the mid B/band any indication that the next move will be up?? The sp has been bouncing around $2.60-$2.70 on fluctuating volume for a while, so my guess is that until we see some volume action, the stock is in limbo (ranging).  Cheers, Barney. 

PPS Can we learn anything from the Accum Distribution chart relative to price from the last few months?


----------



## It's Snake Pliskin

barney said:
			
		

> I agree Bob, The market is in constant change/movement, and often mutating into different formations. (Mutant! ..... sorry its late.)
> 
> PS Re the PSA chart earlier in the thread Snake; What is your take on its current position. I realise you probably don't use B/Bands etc, but is the fact that they are tightening noticeably, plus 50 day MA is well under the mid B/band any indication that the next move will be up?? The sp has been bouncing around $2.60-$2.70 on fluctuating volume for a while, so my guess is that until we see some volume action, the stock is in limbo (ranging). Cheers, Barney.
> 
> PPS Can we learn anything from the Accum Distribution chart relative to price from the last few months?




Barney,
It is doing nothing at the moment. My P/F chart is a sell at $2.58 if it breaks down that far; the bar chart confirms the uncommitted.

B bands don't use them or read them, and the averaged Accum/Distribu is unexciting, just like the share price. 

Regards
Snake


----------



## barney

It's Snake Pliskin said:
			
		

> Barney,
> It is doing nothing at the moment. My P/F chart is a sell at $2.58 if it breaks down that far; the bar chart confirms the uncommitted.
> 
> B bands don't use them or read them, and the averaged Accum/Distribu is unexciting, just like the share price.
> 
> Regards
> Snake




I'm pleased thats how you described it ("confirms the uncommitted") cause thats kind of how it looked to me as well (confirmation is good) .... my "technical" term was "limbo"   
 Mata ai masho, Barney.


----------



## It's Snake Pliskin

barney said:
			
		

> I'm pleased thats how you described it ("confirms the uncommitted") cause thats kind of how it looked to me as well (confirmation is good) .... my "technical" term was "limbo"
> Mata ai masho, Barney.




Barney san wa jouzu ni natta. jaa, mata yoroshiku onegaishimasu.


----------



## tech/a

> Barney,
> It is doing nothing at the moment. My P/F chart is a sell at $2.58 if it breaks down that far; the bar chart confirms the uncommitted.




Thought this example of a chart that interests me may help.

Ive traded this was in at .037 and out yesterday at .040.
Its currently back on the watch list.


----------



## Magdoran

barney said:
			
		

> Cheers Snake, I understand what you're saying re the "fundamentals".  They are simply represented in the price/volume action on the chart.
> The short term is where I prefer to tread also, but due to so many poor past decisions,the short term "excitement" is now often replaced with "nervousness". Now I understand "scared money never wins" (one of my favorite quotes), but I am still coming to terms with my past losses ........... phsycological I know, but I still reckon physycology is at least half of what this "game" is all about ..... I'm pretty sure Mag would agree with that?? Thanks, Barney.



Hello barney,


For a long time I’ve stated in various forums that in my view psychology is the cornerstone to successful trading, and it really does separate the pack.

So, yes, in my view Psychology rates as number 1 over analysis, system and strategy.

If you have the wrong mindset your chances of success are poor.

Many people invest the majority of their time into analysis or system building.  These are key factors in the process, but far too often many neglect psychology.  Some are lucky and develop a successful mindset by trial and error, but works like “Trading in the Zone” by Mark Douglas, and “The Phantom of the Pits” are the best works I’ve come across so far.

Combine this with good T/A, an effective system, and a sound strategy, then you stand some chance of succeeding…

It sounds like you would really benefit from reading these psychology books to me.  It may help to address some of the psychological damage done by your recent heavy losses.  

(By the way, I note some posters who dismissed psychology have never read Douglas.  I’m quite happy to debate the different techniques on their merits, but I’d suggest barney that anyone who discounts these works who has never read it should be ignored – they don’t know what they’re talking about.  It makes no sense to me to listen to the ignorant who haven’t even bothered to read the material before dismissing it.)

I know this is digressing from pure chart analysis methods, but in my view it is integral to effectively using analysis.


Regards


Magdoran


----------



## barney

tech/a said:
			
		

> Thought this example of a chart that interests me may help.
> 
> Ive traded this was in at .037 and out yesterday at .040.
> Its currently back on the watch list.




Thanks Tech, I've been watching a few of your charts on the other threads. Would Nov 6 have been a valid entry point as well, (price gapped open and continued to rise on the day), or is it better to wait for double confirmation (gap open 7th and 8th). 

Just for the point of the exercise, what are the final "indicators" for  you to pull the trigger ie Did you simply "feed" off the Depth on the 8th after open to confirm your entry, and did you exit the position on the way up to, or the way back down from the high of the day?  ie what was the entry and exit strategies? These questions probably seem a bit "obvious" to experienced traders, but these are the kind of things that would give someone like me more confidence in this type of trade.  I assume with that kind of volume it was a day traders paradise, (which can be a "novices" nightmare!) thats why I am still a bit hesitant to have a go at these.  
Thanks, Barney.


----------



## barney

Magdoran said:
			
		

> Hello barney,
> 
> 
> For a long time I’ve stated in various forums that in my view psychology is the cornerstone to successful trading, and it really does separate the pack.
> 
> So, yes, in my view Psychology rates as number 1 over analysis, system and strategy.
> 
> If you have the wrong mindset your chances of success are poor.
> 
> Many people invest the majority of their time into analysis or system building.  These are key factors in the process, but far too often many neglect psychology.  Some are lucky and develop a successful mindset by trial and error, but works like “Trading in the Zone” by Mark Douglas, and “The Phantom of the Pits” are the best works I’ve come across so far.
> 
> Combine this with good T/A, an effective system, and a sound strategy, then you stand some chance of succeeding…
> 
> It sounds like you would really benefit from reading these psychology books to me.  It may help to address some of the psychological damage done by your recent heavy losses.
> 
> (By the way, I note some posters who dismissed psychology have never read Douglas.  I’m quite happy to debate the different techniques on their merits, but I’d suggest barney that anyone who discounts these works who has never read it should be ignored – they don’t know what they’re talking about.  It makes no sense to me to listen to the ignorant who haven’t even bothered to read the material before dismissing it.)
> 
> I know this is digressing from pure chart analysis methods, but in my view it is integral to effectively using analysis.
> 
> 
> Regards
> 
> 
> Magdoran




Good advice as always Mag. I haven't got onto any of the phsyc books as yet, but certainly will, as I agree that it is important.  I still remember that sick feeling of staring down the barrell of a multi (actually more like Mega) thousands of $ loss on one trade, and pressing the sell button. Initially it was a relief to "get out", but the remorse sets in quickly when you realise you just wasted about 10 years of your life savings virtually overnight. Thats when you realise what the phsycology of trading pressure can do to you. I admit to stupidity for getting in the position in the first place, but it is important for new players to learn how to cope with a pressure/losing situation before actually getting into the situation in the first place (and have steps in place to minimise that loss.) Thats why education, including chart analysis is important ............. building confidence in the way we trade. On basic knowledge of trading I reckon I'm about 20% of the way there, but from a phsyc point of view (being in control of my trading strategies and sticking to them no matter what) I reckon I'm about 2%    Its interesting that even through the pages of a forum you can tell how much more "relaxed" lads like youself and Tech are in your trading approach, whereas someone like me who is really not confident in my approach just yet, still has to battle with every decision ..... (but improving!!) All the best, Barney

PS Hey Snake thanks for the Japanese! Took me a while to decifer it cause I don't actually speak J. My daughter speaks a little.  Its an interesting language/culture.    Suki desu


----------



## tech/a

> I reckon I'm about 2%  Its interesting that even through the pages of a forum you can tell how much more "relaxed" lads like youself and Tech are in your trading approach,




Barney 

An interesting observation. Ive been following a few stocks in the fundamental forum and constantly see from most of the contributors the whole range of emotions talked about.The roller coaster ride that occurs when your on a stock it rises 100% or more in a few days then crashes back to the initial buy area it started from.

Have a look at GDN as a good example.

This is one of the problems with fundamental analysis.Its really for the longer term and when used for short term trading the majority of the time it leaves the exponent with little skill to read the SHORT  term price action.
Often when a 100% plus rise comes along its years before you see that high takn out.

With tech analysis as a tool in your trading tool box you have the ability to make a decision about NOW or about the FUTURE.
*Stage one * to relaxed trading.

*Stage 2*Trading is a business.All decisions are for the benifit of the business--there is no place for emotion.

*Stage 3* 
Trade within your comfort zone.Manage risk FIRST then position size.
Profit comes to those who understand the value of small fish to nibble on while the big fisk get hooked a few times a year.
Just like in business youll have 30 average sales and then in will walk a Kerry Packer and buy half the store. Doesnt happen often but if you stay in business long enough it will happen.


----------



## ducati916

*tech/a* 



> This is one of the problems with fundamental analysis.Its really for the longer term and when used for short term trading the majority of the time it leaves the exponent with little skill to read the SHORT term price action.
> Often when a 100% plus rise comes along its years before you see that high takn out.




Fundamental analysis, an interesting, yet flawed evaluation.
It would illustrate the common perception, or definition of Fundamental analysis being simply the identification of an undervalued, or overvalued security, and taking a directional trade, [long or short]

A more perceptive definition of a Fundamental analysis, which would negate your time based definition, would be an arbitrage, calculated on, *price*, or *return.*. This definition of a Fundamental analysis would include all timeframes inclusive of daytrade scalping.

jog on
d998


----------



## tech/a

Duc accepted.

However scoot over to the GDN thraed and you'll see what I mean.
The Fundamental skills employed GENERALLY within this forum are limited to "Valuation".The psycological skills are limited to (Generally) emotive reaction.
The resultant Trading skill is less than evident.


----------



## ducati916

tech/a said:
			
		

> Duc accepted.
> 
> However scoot over to the GDN thraed and you'll see what I mean.
> The Fundamental skills employed GENERALLY within this forum are limited to "Valuation".The psycological skills are limited to (Generally) emotive reaction.
> The resultant Trading skill is less than evident.




I have had a brief read through the GDN thread.
There are no Fundamental valuations that immediately make themselves apparent on the thread. From the brief look, it would seem that GDN has zero revenues currently, which simply means that it is a pure speculation, and has no intrinsic value.

Therefore by definition it becomes sentiment driven, which is the model that technical analysis is based upon. A sentiment based model not infrequently overwhelms the user, with, sentiment.

jog on
d998


----------



## tech/a

*Exactly.*

Technical trading of these instruments (speculative) will out perform.
The fundamental analysis seen on the thread is purley speculative and as such has no basis for a valuation as each "reading" will imply a different "Percieved" value to each reader often goverened by the position the reader is at the time of reading.

IE in the trade,waiting to buy,or having taken a profit or loss.


----------



## Magdoran

barney said:
			
		

> Good advice as always Mag. I haven't got onto any of the phsyc books as yet, but certainly will, as I agree that it is important.  I still remember that sick feeling of staring down the barrell of a multi (actually more like Mega) thousands of $ loss on one trade, and pressing the sell button. Initially it was a relief to "get out", but the remorse sets in quickly when you realise you just wasted about 10 years of your life savings virtually overnight. Thats when you realise what the phsycology of trading pressure can do to you. I admit to stupidity for getting in the position in the first place, but it is important for new players to learn how to cope with a pressure/losing situation before actually getting into the situation in the first place (and have steps in place to minimise that loss.) Thats why education, including chart analysis is important ............. building confidence in the way we trade. On basic knowledge of trading I reckon I'm about 20% of the way there, but from a phsyc point of view (being in control of my trading strategies and sticking to them no matter what) I reckon I'm about 2%    Its interesting that even through the pages of a forum you can tell how much more "relaxed" lads like youself and Tech are in your trading approach, whereas someone like me who is really not confident in my approach just yet, still has to battle with every decision ..... (but improving!!) All the best, Barney
> 
> PS Hey Snake thanks for the Japanese! Took me a while to decifer it cause I don't actually speak J. My daughter speaks a little.  Its an interesting language/culture.    Suki desu



Hello barney,


Let me repeat again the most important lesson I have learned about trading.  Above all other aspects, your own psychology is paramount, even in my view above chart analysis and system approach.  

I’ll say that again just in case you missed it - YOUR OWN PSYCHOLOGY IS PARAMOUNT.

From what I see you are investing a disproportionate amount of time (reads unbalanced) into analysis and system approaches over psychology.  In my view this should be redressed if not reversed.  Les posted a link to “Phantom of the Pits” – this is a great read.  I have also suggested “Trading in the Zone” by Mark Douglas.  

I have read a lot of books on the subject, and Douglas stands out head and shoulders above the rest in my view.  It is the cornerstone of my success and ability to trade.  I believe without it I would not be able to trade.  Strong words, which I cannot overemphasise this point.  It is THE point.  In your case, bearing such deep mental scars, it is likely to be of even greater importance. Please read that line again.

barney,  why are you resisting what needs to be done?  You are, you know – resisting (on some deep dark subliminal level).  I believe that most traders fail because they subconsciously sabotage themselves. They set themselves up to fail without realising it.  Douglas addresses this.   Success requires that you do what needs to be done to achieve your objective.  Do you have the courage to really succeed or not?

You are frantically focussing on minor indicators, when I keep telling you to just learn to read the chart.  Forget the moving averages, RSI, stochastics, oscillators, Bollinger bands, etc, etc, until you can learn to read a chart.  The objective is to determine the trend, then what part of the trend the underlying is in (beginning, middle or terminal phase), then when to enter, and when to exit.  Easier said than done.  Once you realise that a significant element in this pursuit is about filtering your psychological bias, you will fare much better.

Just learn to read a chart without the gizmos first.  In my view, there are very few people who know how to really use these effectively (people like tech for instance have pioneered a system and refined it – reads input of effective effort), and they have spent years working out how to use them.  

In my view using indicators too early to the exclusion of learning how to read a chart obscures the process of perceiving the nature of trends. Look at tech’s recent charts, he’s essentially using straight bar chart and volume, and interpretation based on the bars and the volume.  It is great T/A in my view, you can learn a lot from this.  Try to understand what he is trying to tell you.

Why not try just looking at the chart without the indicators for a while and focus on the bars and volume.  If you want to learn more, just ask the right questions, and start looking in the right places.  Let your imagination do the work.  Think of it like learning how to play music by ear.   Really listen to the music, don’t just read it from the stave.  You can hear when a note is wrong.  You know how it feels when there is harmony.  When you play, remember the joy of each phrase in the piece… Trading should be like that -Inspirational music.  That can be your goal if you want it.  Think about it.


Regards


Magdoran


----------



## barney

tech/a said:
			
		

> Barney
> 
> An interesting observation. Ive been following a few stocks in the fundamental forum and constantly see from most of the contributors the whole range of emotions talked about.The roller coaster ride that occurs when your on a stock it rises 100% or more in a few days then crashes back to the initial buy area it started from.
> 
> Have a look at GDN as a good example.
> 
> This is one of the problems with fundamental analysis.Its really for the longer term and when used for short term trading the majority of the time it leaves the exponent with little skill to read the SHORT  term price action.
> Often when a 100% plus rise comes along its years before you see that high takn out.
> 
> With tech analysis as a tool in your trading tool box you have the ability to make a decision about NOW or about the FUTURE.
> *Stage one * to relaxed trading.
> 
> *Stage 2*Trading is a business.All decisions are for the benifit of the business--there is no place for emotion.
> 
> *Stage 3*
> Trade within your comfort zone.Manage risk FIRST then position size.
> Profit comes to those who understand the value of small fish to nibble on while the big fisk get hooked a few times a year.
> Just like in business youll have 30 average sales and then in will walk a Kerry Packer and buy half the store. Doesnt happen often but if you stay in business long enough it will happen.




Thanks Tech, Could I make the observation that Stage 3 above is probably the most important from a phsycological point of view. ie You can remain relaxed if your position sizes are comfortable ..... that in a nutshell is where I really went wrong ......... too much leverage on a stock that had more volatility than a "rabid dog" (just thought I'd throw in a little metaphor) ....


----------



## Magdoran

tech/a said:
			
		

> Barney
> 
> An interesting observation. Ive been following a few stocks in the fundamental forum and constantly see from most of the contributors the whole range of emotions talked about.The roller coaster ride that occurs when your on a stock it rises 100% or more in a few days then crashes back to the initial buy area it started from.
> 
> Have a look at GDN as a good example.
> 
> This is one of the problems with fundamental analysis.Its really for the longer term and when used for short term trading the majority of the time it leaves the exponent with little skill to read the SHORT  term price action.
> Often when a 100% plus rise comes along its years before you see that high takn out.
> 
> With tech analysis as a tool in your trading tool box you have the ability to make a decision about NOW or about the FUTURE.
> *Stage one * to relaxed trading.
> 
> *Stage 2*Trading is a business.All decisions are for the benifit of the business--there is no place for emotion.



I partly agree with this, but would like to offer a slightly different perspective – Ducati posted some comments in some other threads regarding emotions, suggesting that emotions are actually vital to making decisions, and that in dealing with the market the suggestion was to essentially filter the emotions to minimise negative ones.  Sure the idea is to think more objectively and take the negative emotions out of the equation.



			
				tech/a said:
			
		

> *Stage 3*
> Trade within your comfort zone.Manage risk FIRST then position size.
> Profit comes to those who understand the value of small fish to nibble on while the big fisk get hooked a few times a year.
> Just like in business youll have 30 average sales and then in will walk a Kerry Packer and buy half the store. Doesnt happen often but if you stay in business long enough it will happen.



Great analogy tech, 


It is those “black swans” (4+ standard deviations – i.e. a big shift in your favour), that can really make a difference.  It’s about opportunities.  Once half is having the ability to recognise them, the other is in having the capability to act on them (and taking the action).

Really good points on managing the risk and position size too.


Regards 


Magdoran


----------



## tech/a

> Thanks Tech, Could I make the observation that Stage 3 above is probably the most important from a phsycological point of view. ie You can remain relaxed if your position sizes are comfortable ..... that in a nutshell is where I really went wrong ......... too much leverage on a stock that had more volatility than a "rabid dog" (just thought I'd throw in a little metaphor) ....




*This is the analogy which helped me get this Idea in perspective.*

(1) If your nett worth is $50K and you have a position of $50K and even worse its leveraged Then you'll be a babbling mess.(Most would anyway).

(2) Now same $50k position but your nett worth is $500k and your stop is a $2/3000 stop
How do you think youd handle that position?

Differently emotionally than (1)

Now once you get good at it there are times when you CAN move "Comfortably outside your comfort zone" and ways to do it.

Now is not the time for you to think about this and I can explain how I do it later if anyone interested. I'm sure my way isnt the ONLY way. But I dont have problems sleeping.

*Moggie.*

I have two emotions.


Happy that I made a profit---this can slip into really really happy.
Happy that I minimised risk---this can also slip into really really happy.

Neither influence the decision making process.*They constantly confirm it.*


----------



## bingk6

Magdoran said:
			
		

> I’ll say that again just in case you missed it - YOUR OWN PSYCHOLOGY IS PARAMOUNT.




While we are on the topic of psychology, I am curious as to how a trader's trading plan is in any way affected by the fact that the ASX200 and DOW are now at or close to their historical highs. Do people continue to implement their trading plan without question (and therefore without emotion) or do they make adjustments to the manner that they trade given the historical highs  (tightening stops etc) ??


----------



## barney

Magdoran said:
			
		

> Hello barney,
> 
> 
> Let me repeat again the most important lesson I have learned about trading.  Above all other aspects, your own psychology is paramount, even in my view above chart analysis and system approach.
> 
> I’ll say that again just in case you missed it - YOUR OWN PSYCHOLOGY IS PARAMOUNT.
> 
> From what I see you are investing a disproportionate amount of time (reads unbalanced) into analysis and system approaches over psychology.  In my view this should be redressed if not reversed.  Les posted a link to “Phantom of the Pits” – this is a great read.  I have also suggested “Trading in the Zone” by Mark Douglas.
> 
> I have read a lot of books on the subject, and Douglas stands out head and shoulders above the rest in my view.  It is the cornerstone of my success and ability to trade.  I believe without it I would not be able to trade.  Strong words, which I cannot overemphasise this point.  It is THE point.  In your case, bearing such deep mental scars, it is likely to be of even greater importance. Please read that line again.
> 
> barney,  why are you resisting what needs to be done?  You are, you know – resisting (on some deep dark subliminal level).  I believe that most traders fail because they subconsciously sabotage themselves. They set themselves up to fail without realising it.  Douglas addresses this.   Success requires that you do what needs to be done to achieve your objective.  Do you have the courage to really succeed or not?
> 
> You are frantically focussing on minor indicators, when I keep telling you to just learn to read the chart.  Forget the moving averages, RSI, stochastics, oscillators, Bollinger bands, etc, etc, until you can learn to read a chart.  The objective is to determine the trend, then what part of the trend the underlying is in (beginning, middle or terminal phase), then when to enter, and when to exit.  Easier said than done.  Once you realise that a significant element in this pursuit is about filtering your psychological bias, you will fare much better.
> 
> Just learn to read a chart without the gizmos first.  In my view, there are very few people who know how to really use these effectively (people like tech for instance have pioneered a system and refined it – reads input of effective effort), and they have spent years working out how to use them.
> 
> In my view using indicators too early to the exclusion of learning how to read a chart obscures the process of perceiving the nature of trends. Look at tech’s recent charts, he’s essentially using straight bar chart and volume, and interpretation based on the bars and the volume.  It is great T/A in my view, you can learn a lot from this.  Try to understand what he is trying to tell you.
> 
> Why not try just looking at the chart without the indicators for a while and focus on the bars and volume.  If you want to learn more, just ask the right questions, and start looking in the right places.  Let your imagination do the work.  Think of it like learning how to play music by ear.   Really listen to the music, don’t just read it from the stave.  You can hear when a note is wrong.  You know how it feels when there is harmony.  When you play, remember the joy of each phrase in the piece… Trading should be like that -Inspirational music.  That can be your goal if you want it.  Think about it.
> 
> 
> Regards
> 
> 
> Magdoran




I think I'm pretty much with you on this Mag, and promise I will get onto the psych books pronto ......

1) I understand the significance of each persons "own psychology" .............. we are all different and react differently to stress/pressure ..... and need to be able to a) accept our weaknesses and b) take steps to eliminate them from our decision making ...........  I notice that Tech mentions emotions have no place in trading ......... I understand that, but would say that Tech can now say this because he has harnessed his (if any) psych. shortcomings ..... ie He feels no emotional attachment because he devised a trading system he is confident with, and feels totally in control   (well done)  
Could I ask Tech, was there ever a time early on when this wasn't the case, and assuming it wasn't    what was the catalyst/light bulb moment that changed you into a totally confident trader?    

2) I no longer look at fundamental analysis unless looking to hold a stock long term........... 

3) I am starting to look at charts with simply price and volume, but I still like the indicators for confirmation (give me time)

4) I like the music analogy ......... I am self taught/ play 3 instruments all by ear ...... so I'll put some thought into that last comment .......... How much of the "inspirational music" of trading should be classed as "gut feel" just out of curiousity? ...... I am guessing that experience improves the gut feel substantially (as with music)   

Appreciate your comments as always. Thanks, Barney.

PS Believe me Mag I have no deep seated desire to fail at this (already done that one ...... wasn't a lot of fun!!!)  Success is what we want!! Success to me now is very relative .... I will be happy in a few years to get back square ..... Anything better than that will be a bonus .... At this stage I feel hopeful but not yet confident .... Still time though.


----------



## tech/a

> Could I ask Tech, was there ever a time early on when this wasn't the case, and assuming it wasn't  what was the catalyst/light bulb moment that changed you into a totally confident trader?




Absolutley!!!




> catalyst/light bulb moment




Continued and sustained losses.

You know humans (I was one Im now robotic) are stupid creatures--they do the same thing day in and day out and *EXPECT A DIFFERENT RESULT*.

*Therein my friend lies the Blinding light of inspiration!!*


----------



## barney

tech/a said:
			
		

> Absolutley!!!
> 
> 
> 
> 
> Continued and sustained losses.
> 
> You know humans (I was one Im now robotic) are stupid creatures--they do the same thing day in and day out and *EXPECT A DIFFERENT RESULT*.
> 
> *Therein my friend lies the Blinding light of inspiration!!*





Good onya Tech! ...... Actually, working on that advice, I feel a bit better, cause I think I've halted the continued and sustained losses part (atm anyway) There may be hope yet.  Cheers, Barney

PS Now that you are a Robot I guess your favorite album would be "Spark Side of the Moon"  (Yeah not funny I know, but its not my joke....)


----------



## MichaelD

tech/a said:
			
		

> Continued and sustained losses.



Was there ever a defining loss for you, tech? There was a defining day for me about a year back which I talked about on another thread where I lost $2,500 in 10 minutes which made me wake up and take notice of risk management. I've never looked back again.

Barney, take heart on the psychology front - I've been trading a new short term system for a month or so now (after paper trading for long enough to get about 60 completed trades under my belt and proving the positive expectancy of the system). For the first two trades I broke my system rules and promptly lost 2.5R which I shouldn't have. 'Twas my psychology getting the better of me - I so much wanted to start the new system with wins that I ignored my stops/moved them down. Thinking about it, I just didn't have enough confidence in the system to trade it according to its rules because it hadn't proved itself to me with real money yet. Lesson on psychology duly learned and paid for.


----------



## tech/a

MichaelD said:
			
		

> Was there ever a defining loss for you, tech? There was a defining day for me about a year back which I talked about on another thread where I lost $2,500 in 10 minutes which made me wake up and take notice of risk management. I've never looked back again.
> .




Hahaha no not really.

But there was 28/10/97 when I was attending a private group tutorial with Nick Radge and I lost $7000 odd that day. I thought he could have warned me---only to find he to was caught.

I had continued and sustained losses for about 3 yrs.
About 99 things slowley changed.

Radge taught me (sort of directly but in directly). that its not the Analysis that makes the Profit---when that actually stuck things started to change.


----------



## MichaelD

tech/a said:
			
		

> I had continued and sustained losses for about 3 yrs.
> About 99 things slowley changed.



In hindsight - why did it take this length of time to change to being profitable? i.e. what stopped you from realizing or accepting what you needed to do to become profitable sooner?

I ask this in the context of the current market conditions - there seems to be a lot of amateur money around at the moment again along with a dramatic rise in bull market champions. (I reckon a great contrarian indicator of market peaks is the posting of "watch me turn $5,000 into $50,000 in 12 months" threads - it always seems to be the same amounts involved for some reason.) What will it take for these folks to realize the folly of their ways and become profitable?


----------



## tech/a

Michael.

I was stuck in the same rut everyone gets into.
I had a rudimentary understanding of risk management but no idea how to implement it PROFITABLY.I was doing what everyone does,trade without knowing what my "Plan" would return. Plus the plan was discretionary so it altered with the analysis.

There was no "Blueprint"----no basis for verification that how I was trading could have any chance of being profitable.

*I had---like the majority here 100s of theories and no idea if they could be profitable---but hey they had to be everyone else believed in the same theories!!
Worst of all I traded them!!!

Radges wisdom and ITS APPLICATION in Systems testing and design---debunked pretty well ALL my theories and most of everyone elses!!*

T/T turned the tables and was the first---slow but steady---now its like a hare with a duracel battery in it. (Over $10k a week from a starting capital of $30K---SWEET). The tortise is turbo charged!!

Discretionary trading can be mastered but is by far the hardest of disciplines.
More profitable in % terms over time in the market for smaller Capital bases.

But then you travelled the same road from what I have seen--thanks for asking.


----------



## Freeballinginawetsuit

MichaelD said:
			
		

> In hindsight - why did it take this length of time to change to being profitable? i.e. what stopped you from realizing or accepting what you needed to do to become profitable sooner?
> 
> I ask this in the context of the current market conditions - there seems to be a lot of amateur money  around at the moment again along with a dramatic rise in bull market champions. (I reckon a great contrarian indicator of market peaks is the posting of "watch me turn $5,000 into $50,000 in 12 months" threads - it always seems to be the same amounts involved for some reason.) What will it take for these folks to realize the folly of their ways and become profitable?






I have read a few of youre posts Michael and firstly I'd like to say that you seem to be pretty much on the ball as a trader, good on ya!, then again this is a forum I don't know you from a bar of salt and ........... . I agree with everything you say about risk measures, totally!. 

In regard to your'e comment from Amateurs/Bullmarket to Profesionals/tried and tested trading the market. You sound like a bank manager/school teacher or workerbee quoting the statistics pumped out by some university learnt 'stastic'. Are these the Kerry Packers etc or any big business starter of our world, are you trying to tell me these people didn't go outside the box and take risks to get wear they are. Get real!

If the poster of $5000 to $50000 bucks sounds outside your'e reality,no drama's. If he's on the ball, makes educated decisions, minimizes his risks and has a go, well good on him. He could lose his 5 grand or he could make whatever, or he could put it in the bank, keep saving his wages, pay off his Mortgage in 20 years and take no risks.  

As for trading a bullmarket, well how many times have the experts called this bull run of the last few years wrong. ****loads. How many times have the Insto's and experts got on stocks way after the ship has sailed the port, ****loads. Any market can be traded, a bull/bear or a sideways one, you just have to adjust your plan!.

How many times do you think Forrest was knocked back when he brought annaconda out of its debacle, formed MRE, built his heap leach plant and had a go!. The banks, Insto's and experts would have given him the same grief as you are giving " the amateurs". Imagine the grief he got when he first started FMG. The same goes for Borshoff with PDN, Robinson with KZL etc etc. This could apply to elite athletes achiving their goals, odds are against them too and pretty much any thing in the general economy that dosen't fit the 'Box' mentallity

These crew come to the market with their ideas, as a specky, raise their funds 'from like minded individuals' and achieve their goals. The so called experts miss the boat, then jump on the band wagon quoting their expertise after the fact. Who's laughing the, guys that believed in their goals, had faith became billionaires as opposed to the pleb experts who earn a salary for the company they are an a employee of. 

Without dreamers no Company would exist, because they all started somewhere to become a producer. Sure not all make it, but thats the job of the trader/investor to weed out the wannabes from the real ones. However you trade the market, fundamentally/TA, short term/ long term, market outlook etc etc, is how we make our educated punts. In the end fundamentals will catch up and if you trade on T/A alone on a donkey and hold youre cactus.

Hence Risk measures are an essential part of trading but not necessarily on long term fundamental holds (unless something comes out of left field), a stop would probably be fallen through anyway!. If that happens well your portfolio should be spread over a few stocks anyway.

All the best with youre system/trades and all else, I hope you keep coming out in front

PS, I agree with Noira's quote ADI could return him 50k, but then again it might take a couple of grand off his position too, thats the problem with not much capital!, not much room to move sounds like a first home buyer with interest rates rising


----------



## MichaelD

Freeballinginawetsuit said:
			
		

> If the poster of $5000 to $50000 bucks sounds outside your'e reality,no drama's. If he's on the ball, makes educated decisions, minimizes his risks and has a go, well good on him.



Why this outcome is extraordinarily unlikely;

1. One position at a time.
2. Insider stated in the "biggest investment blunder" thread that his biggest investment blunder was using a stop, so no stop will be employed.

Consider the risk mathematics of this trading style - this requires 4 100% returns in 12 months and the risk of 100% of trading capital on every trade.

Yes, we could see some lucky guesses for a trade or two, but sooner or later a trade will go the wrong way...and what's the exit plan to preserve both profits and capital? There isn't one.

It's like betting your whole stake on RED at roulette - there could be a few wins along the way, but sooner or later the bet will go wrong and wipe you out.


----------



## Freeballinginawetsuit

Michael,

Of course your'e right.

Insiders capital is against him, he has no risk measures, and has quoted he not the best at riding momentem and sold out in the initial profit takes on (DYL).

Certainly he could lose the lot. He has said he's paper traded for a year (thats good) and his capital is now 10k after his DYL trade. If he takes some time in evaluating his next trades (holds more than one) and margins, he could get their, who knows!.

Anyway I like the fact he's set some goals and is having a go. I certainly hope he keeps us posted on his progress and has success.


----------



## It's Snake Pliskin

And how many have traded it using Rabbit indicators...........



> As for trading a bullmarket, well how many times have the experts called this bull run of the last few years wrong. ****loads. How many times have the Insto's and experts got on stocks way after the ship has sailed the port, ****loads. Any market can be traded, a bull/bear or a sideways one, you just have to adjust your plan!.


----------



## It's Snake Pliskin

I bet he doesn't use rabbit indicators....


> If the poster of $5000 to $50000 bucks sounds outside your'e reality,no drama's. If he's on the ball, makes educated decisions, minimizes his risks and has a go, well good on him. He could lose his 5 grand or he could make whatever, or he could put it in the bank, keep saving his wages, pay off his Mortgage in 20 years and take no risks.


----------



## professor_frink

It's Snake Pliskin said:
			
		

> I bet he doesn't use rabbit indicators....



Snake,

What do you mean by "rabbit indicators"?


----------



## Freeballinginawetsuit

It's Snake Pliskin said:
			
		

> I bet he doesn't use rabbit indicators....





'Rabbit Indicators' WTF, are you having one of youre digs at me Snake?, another one of youre informative one liners!.

1) I believe the first time I came across you some months ago (when I first joined ASF), I was putting forward the view of the Zincers and Nicklers at that point in time being 'better than money being in the bank'. Reasoning was a belief in the commodities they trade and the fundamentals behind the Companies. The same goes for the U trades. Youre answer was risk, at which I stated my reasoning.

Well all these guys doubled in SP Snake, just like they did in the pre May run which I traded them.

2) In fact all my trades and my logic behind them I have been happy to post on the forum since I joined. It's all plain to see and all have them have presented opportunities to make significant gains. I

3) I would think on ASF its goals is to share advice/opinion and market outlook with fellow traders. With all due respect to you as a Veteren member I have found nothing in youre posts that offer any of the above.

4) I'm an honest guy, up front and am happy to meet fellow traders. I have in fact posted on the site that I would be happy to meet fellow Perth Traders and even proposed a bit of a get together at my joint. I'd be happy to show my trading setup etc to others, I could be living in a humpy and trading on a typewriter, hmmmm  

5) And finally I disagree with much that is said on ASF abot potential gains/trading methodology/unrealistic opportunities etc of posters, as per the topic of your'e quotes. The fact of the matter is I have outperformed the market for years. I believe that all that are trading and have been for the last few years the "Commodities Boom" are in a fortunate marketplace and would have to be dumb dumbs to lose money however those types will always lose money in whatever they do!.


So how about we just agree to disagree


----------



## CanOz

Freeballinginawetsuit said:
			
		

> 'Rabbit Indicators' WTF, are you having one of youre digs at me Snake?, another one of youre informative one liners!.
> 
> 1) I believe the first time I came across you some months ago (when I first joined ASF), I was putting forward the view of the Zincers and Nicklers at that point in time being 'better than money being in the bank'. Reasoning was a belief in the commodities they trade and the fundamentals behind the Companies. The same goes for the U trades. Youre answer was risk, at which I stated my reasoning.
> 
> Well all these guys doubled in SP Snake, just like they did in the pre May run which I traded them.
> 
> 2) In fact all my trades and my logic behind them I have been happy to post on the forum since I joined. It's all plain to see and all have them have presented opportunities to make significant gains. I
> 
> 3) I would think on ASF its goals is to share advice/opinion and market outlook with fellow traders. With all due respect to you as a Veteren member I have found nothing in youre posts that offer any of the above.
> 
> 4) I'm an honest guy, up front and am happy to meet fellow traders. I have in fact posted on the site that I would be happy to meet fellow Perth Traders and even proposed a bit of a get together at my joint. I'd be happy to show my trading setup etc to others, I could be living in a humpy and trading on a typewriter, hmmmm
> 
> 5) And finally I disagree with much that is said on ASF abot potential gains/trading methodology/unrealistic opportunities etc of posters, as per the topic of your'e quotes. The fact of the matter is I have outperformed the market for years. I believe that all that are trading and have been for the last few years the "Commodities Boom" are in a fortunate marketplace and would have to be dumb dumbs to lose money however those types will always lose money in whatever they do!.
> 
> 
> So how about we just agree to disagree




Well said FREE BALL.


----------



## tech/a

Barney!!! an update on WMT you been watching?


----------



## barney

tech/a said:
			
		

> Barney!!! an update on WMT you been watching?




Definitely watching thanks Tech, but no spare money to invest atm unfortunately (guess who was still holding Zinc today     ....... starting to wonder whether I'm not cut out for this ..... frustrating when you're losing money when everyone else seems to be doing OK ...... 

I've learned  a lot off your charts Tech ....... Price and Volume ... just about tells the whole story .......Will keep learning, but I think the cash might run out before the enthusiasm!!       Cheers, Barney.


----------



## It's Snake Pliskin

professor_frink said:
			
		

> Snake,
> 
> What do you mean by "rabbit indicators"?




Forget I said it Professor. I shall conform to the masses and speak appropriately.


----------



## It's Snake Pliskin

barney said:
			
		

> Definitely watching thanks Tech, but no spare money to invest atm unfortunately (guess who was still holding Zinc today     ....... starting to wonder whether I'm not cut out for this ..... frustrating when you're losing money when everyone else seems to be doing OK ......
> 
> I've learned  a lot off your charts Tech ....... Price and Volume ... just about tells the whole story .......Will keep learning, but I think the cash might run out before the enthusiasm!!       Cheers, Barney.




Barney, just to impart some wisdom that some have been disappointed about; trade small until proficient. Then the cash will outlast the enthusiasm. It will even be there for when you trade the BEAR - proficiently. I like the way you help yourself in your pursuit. It is admirable.


----------



## pacer

Too right snakey.....play with 5-10%  of your $$$$.....Maaaaaannnnn have I got nearly caned.....lucky I bailed when I did....but took some severe hits...ok..I admit I said to myself ...bail! on friday.ZFX/KZL.....DOH...still up a heap and must bail soon to keep capital and some profit.......wwwhhhhaaa....mummy!....lol.....

Then find the next play....don't get stuck...move on.....


----------



## barney

It's Snake Pliskin said:
			
		

> Barney, just to impart some wisdom that some have been disappointed about; trade small until proficient. Then the cash will outlast the enthusiasm. It will even be there for when you trade the BEAR - proficiently. I like the way you help yourself in your pursuit. It is admirable.




You are dead right Snake .... stepping outside the comfort zone re the amounts invested is/has been a big downfall for me ........ Down, but not out for the count yet ........ thanks for the encouragement ......... Barney. ............ (Now if you could organise ZFX to bounce back a bit tomorrow that would help !!)
PS Glad you got out in time Paceman.


----------



## vert

hi tech/a, ive been following your threads and have been picking up some great advice on short term trading. today i searched through all the stocks on my watchlist using tick charts and found gdn to be trading with good volume,  gap on open and some news. i watched it for a while then decided it was time to trade, i had set my stop tight as i was late getting into the trade and my profit take wasnt much either but still a profit. as it turned out i was spot on and the only thing i could have improved was the timing of getting in earlier to maximize my profits and lower the risk as the price dropped of at the end of the day as i feared it would after a pretty good run up day.

i also watched wmt at the end and noticed some decent buy volumes go through on the close @ 0.048, what do you think is install for tuesday?

cheers


----------



## tech/a

Vert

Have a go yourself and see how you go.


----------



## professor_frink

It's Snake Pliskin said:
			
		

> Forget I said it Professor. I shall conform to the masses and speak appropriately.



It's all good snake- you gave a description in another thread, so I basically got my answer anyway  
Don't conform too much though. Can't have everyone talking the same and agreeing on everything


----------



## MichaelD

barney said:
			
		

> frustrating when you're losing money when everyone else seems to be doing OK ......



Barney - people have a habit of boasting about their wins and conveniently forgetting about their losses. I'll guarantee you that the vast majority of traders are losing money but denying it to themselves by only focussing on and posting about their wins.

(and if it makes you feel any less frustrated, my systems have lost money in the last few trading days - it's all part of the ebb and flow of positive expectancy systems).


----------



## nizar

It's Snake Pliskin said:
			
		

> Barney, just to impart some wisdom that some have been disappointed about; trade small until proficient. Then the cash will outlast the enthusiasm. It will even be there for when you trade the BEAR - proficiently. I like the way you help yourself in your pursuit. It is admirable.




SNake
You seem to always say so little yet u say so much.
Thats class, its a pleasure to have u on this board


----------



## It's Snake Pliskin

Nizar, sorry I missed the comment. Thanks.

Barney what is happening with PSA?


----------



## barney

It's Snake Pliskin said:
			
		

> Nizar, sorry I missed the comment. Thanks.
> 
> Barney what is happening with PSA?




Howdy Snake, Been busy .. late reply .............. Re the PSA chart .......... here's some of my observations .............. Feel free to correct if neccessary

Run up from 10-20th Oct looked promising. particularly 19th where it gapped open and finished near its high

Writing was on the wall on the 20th SP gapped open tested $2.75 but closed near its low

23rd again tested around $2.74 ish and failed by finishing on low (Not looking good)

Final nail in the coffin ......... Gapped open lower on 24th Tested $2.72 but failed again; closed near low on HIGH Volume 

SP drifted around over next 2-3 weeks Dropped on rising volume (bad) Recovered slightly on decreasing volume (also not good)

Just curious on how to interpret the 10th and 13th November Very long tail on 10th and decreasing range on 13th which I though may be indicating a change/slowing of downward momentum, yet the 14th was a real killer blow ...... any hints on that from yourself or anyone else would be appreciated. I am guessing that because the trend was down, that the tail had less significance   ie if the trend had been up would that tail have been more of an indication of resistance to the low?????         Cheers, Barney.


----------



## It's Snake Pliskin

barney said:
			
		

> Howdy Snake, Been busy .. late reply .............. Re the PSA chart .......... here's some of my observations .............. Feel free to correct if neccessary
> 
> Run up from 10-20th Oct looked promising. particularly 19th where it gapped open and finished near its high
> 
> Writing was on the wall on the 20th SP gapped open tested $2.75 but closed near its low
> 
> 23rd again tested around $2.74 ish and failed by finishing on low (Not looking good)
> 
> Final nail in the coffin ......... Gapped open lower on 24th Tested $2.72 but failed again; closed near low on HIGH Volume
> 
> SP drifted around over next 2-3 weeks Dropped on rising volume (bad) Recovered slightly on decreasing volume (also not good)
> 
> Just curious on how to interpret the 10th and 13th November Very long tail on 10th and decreasing range on 13th which I though may be indicating a change/slowing of downward momentum, yet the 14th was a real killer blow ...... any hints on that from yourself or anyone else would be appreciated. I am guessing that because the trend was down, that the tail had less significance   ie if the trend had been up would that tail have been more of an indication of resistance to the low?????         Cheers, Barney.




Barney it's good to see you have eaten all of that spaghetti.

You seem to be understanding more now which is good for you. I'll PM you.


----------



## MichaelD

barney said:
			
		

> Just curious on how to interpret the 10th and 13th November Very long tail on 10th



My opinion of the long tail on the 10th is intraday stops being hit - if a significant number of traders had their stops set at $2.60 then they would have caused the long tail down as the sell orders all flooded the market. Once the stops were all sold off, then buyers returned and pushed the price back up.

This is a pattern which I am noticing quite often. I have no evidence to prove the cause of this, it's just a gut feeling, and I have no system to trade this pattern (yet), but it makes sense to me.


----------



## Magdoran

barney said:
			
		

> Howdy Snake, Been busy .. late reply .............. Re the PSA chart .......... here's some of my observations .............. Feel free to correct if neccessary
> 
> Run up from 10-20th Oct looked promising. particularly 19th where it gapped open and finished near its high
> 
> Writing was on the wall on the 20th SP gapped open tested $2.75 but closed near its low
> 
> 23rd again tested around $2.74 ish and failed by finishing on low (Not looking good)
> 
> Final nail in the coffin ......... Gapped open lower on 24th Tested $2.72 but failed again; closed near low on HIGH Volume
> 
> SP drifted around over next 2-3 weeks Dropped on rising volume (bad) Recovered slightly on decreasing volume (also not good)
> 
> Just curious on how to interpret the 10th and 13th November Very long tail on 10th and decreasing range on 13th which I though may be indicating a change/slowing of downward momentum, yet the 14th was a real killer blow ...... any hints on that from yourself or anyone else would be appreciated. I am guessing that because the trend was down, that the tail had less significance   ie if the trend had been up would that tail have been more of an indication of resistance to the low?????         Cheers, Barney.



Good work barney,


This is exactly what I hoped you would do.  Just looking at the bars and the patterns, and trying to interpret the price action.  This is an excellent start.  Keep doing this, and a lot of the botched trades from the past may start to make more sense.

I agree with snake's comment here too, glad the spaghetti has gone.  This really makes it a lot easier to just take in the patterns that are there rather than obscure them.

Here’s another tip.  Try looking in the weekly chart for this stock, and put the daily price action in context in the wider move.  Try to work out what the main trend is in the weekly, and consequently what the daily trends are in relation with the weekly trend, or if they are counter trends to the weekly trend.

The mission is to work out what the pattern of trend is, then work out if it is the beginning of a trend, the middle (continuation), or the ending of a trend (termination).  This should determine the way you position, and the expected duration of the trade.  Sounds simple, doesn’t it?  

This is an art, and doing what you’re doing is heading in the right direction from what I can see.  You’re asking the right questions, which ironically is probably more important in a way than answering them (sorry this may seem cryptic, but I hope you see the wisdom in this at some point).

Keep up the good work.


Regards


Magdoran


----------



## nizar

MichaelD said:
			
		

> My opinion of the long tail on the 10th is intraday stops being hit - if a significant number of traders had their stops set at $2.60 then they would have caused the long tail down as the sell orders all flooded the market. Once the stops were all sold off, then buyers returned and pushed the price back up.
> 
> This is a pattern which I am noticing quite often. I have no evidence to prove the cause of this, it's just a gut feeling, and I have no system to trade this pattern (yet), but it makes sense to me.




I agree with the above, makes perfect sense.

Does every1 (or anybody?) agree with the statement:

If a stock closes in the top the days trading range it has a 70-80% chance of gapping up on the next trading days open.

Conversely, if a stock closes in the bottom of the days trading range it has a 70-80% chance of gapping down on the next trading days open.


----------



## Magdoran

nizar said:
			
		

> I agree with the above, makes perfect sense.
> 
> Does every1 (or anybody?) agree with the statement:
> 
> If a stock closes in the top the days trading range it has a 70-80% chance of gapping up on the next trading days open.
> 
> Conversely, if a stock closes in the bottom of the days trading range it has a 70-80% chance of gapping down on the next trading days open.



This question is actually more involved than it appears, and while I don’t have time to go into detail, a lot depends on the situation. Let me give a couple of brief examples: 

You can get bars for one day that open high, and close low, sometimes way lower than the open, and yet open the next day above the previous days opening…. This is a classic exhaustion bar, and a reversal signal as an example.

In other situations you may have a bar that opens low, and closes way up.  The next day the opening is smack in the middle of the bar.  On the following day, the price action can move up or down, or make a doji, or test up and move down, or the reverse.  There are numerous patterns that can occur.

Trying to make a sweeping assumption about the close with just 1 day is problematic in my view.  Really, a lot depends on the wider context, and this is the art of good charting analysis.  There are numerous books that examine trend analysis and bar chart interpretation.

Regards


Magdoran


----------



## MichaelD

nizar said:
			
		

> Does every1 (or anybody?) agree with the statement:
> 
> If a stock closes in the top the days trading range it has a 70-80% chance of gapping up on the next trading days open.



I don't agree with this (at the moment), based on my short term trading dataset of about 80 trades. The commoner behaviour that I have seen in this dataset is for the stock to open at the previous close or a few ticks below.

One thing I have noticed is that there were many more opening gaps than I had seen previously 1-2 weeks ago when the market was very peaky - lots of exhaustion gaps and irrational exuberance on the opens. That seems to have settled down again this week, so perhaps this is why you are making this observation.


----------



## barney

Hi Lads, Thought this might be a better place for this than on the ZFX thread ......... Zinifex is looking like a good chart to learn off atm, so hoping for some of you experienced lads to give your input from a learning perspective.

Has formed a base at around $15.30.  Price action seems to be very choppy ........ breaks above the $16.50-60 area with short sharp rallies, but quickly retreats .......... Been forming lower highs since early January.  Don't know much about EW, but would this triangle that is forming after the sustained rally up (end of trend Jan.2nd) be indicating a drop at the end of the triangle (ie if it breaks through the $15.30 support it might keep dropping to at least $14.50 ??), or alternatively, is it possible that this might be the start of the next rally (wave one up??) 

My interpretation is that the last couple of days price action have been very indecisive .............. Wed 7th gapped open after the previous days solid rise(maybe just a kneejerk reaction after the big drop? Punters looking for bargains etc.), but failed to improve, then yesterday weakened to finish near its lows ... Although it did finish the day off much stronger than it was looking around lunchtime .........

Looks precariously positioned atm ........... Next few days should be a good "learning experience" ............... Look forward to some more "experienced" analysis ............Cheers.


----------



## MichaelD

Barney,

Looks pretty much spot on to me.

Overall trend is now down - progressively lower highs.
Price having difficulty getting below 15.00 - support.

Overall pattern is of a descending triangle, so a break either way would be significant.

Good to see you've gotten rid of all the unnecessary stuff from the chart and are concentrating on price.


----------



## barney

MichaelD said:
			
		

> Barney,
> 
> Looks pretty much spot on to me.
> 
> Overall trend is now down - progressively lower highs.
> Price having difficulty getting below 15.00 - support.
> 
> Overall pattern is of a descending triangle, so a break either way would be significant.
> 
> Good to see you've gotten rid of all the unnecessary stuff from the chart and are concentrating on price.




Howdy Michael,  

Pleased to get some confirmation of my chart analysis ........ will follow this over the next few days or so to see how it pans out ......... Todays action  was almost  a carbon copy of yesterday, so none the wiser, price action still looks to be searching for direction, Volume was average so overall the sellers won the day ........... general feel is down, but that can change quickly with ZFX .......... also I find you can't give too much creedence to Fiday arvo's price action at times ............ Anyone like to do some EW on the chart, or offer some added analysis?  I know Mag has done some on another thread, but might be interesting to follow here from a learning perspective .......... Cheers.


----------



## coyotte

ZFX :

Just as I see it, probably wrong.

Rising Trend Line: 17/11 -- 9/2 -- 6/3  are the main points  (price bounced off this line)

Declining Trend Line: 2/1 -- 24/1 -- 1/3 (2.5 months of resistance on this line).

Testing: The Move above this upper line was the result of Traders testing the market --- U can tell this by the low volume and the uncommited moves.

I would be waiting for a confirmed CLOSE above the CB Line @ 17.09 with a STOP @ the lower rising trend line.

If ZFX does breakout it's still got the 2/1 high to overcome and @ $17 is going to be harder to move % wise than say a $4 stock.

The Closing of that Gap could also lead to a rapid DOWN move.

Although ZFX still appears to be in a UP trend -- I would be taking that as a declining triangle --- A NO, NO with Guppy Traders.


Cheers


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## tech/a

Well I'm pretty sure this is the top of Wave "B". The highest we will see it for sometime.
Just over 61.8%  retracement of the fast corrective move.

Noticed last week that my longterm portfolios came off even more than in the week of the larger drop. To me this shows a lot of un loading of positions.
Pretty well all of those held in my long term portfolio are in the ASX 200.


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## barney

tech/a said:
			
		

> Well I'm pretty sure this is the top of Wave "B". The highest we will see it for sometime.
> Just over 61.8%  retracement of the fast corrective move.
> 
> Noticed last week that my longterm portfolios came off even more than in the week of the larger drop. To me this shows a lot of un loading of positions.
> Pretty well all of those held in my long term portfolio are in the ASX 200.




Any chance of a chart to describe the EW on that thanks Tech.

As Coyotte mentioned ......... "descending triangle" ....... lower highs equal lows ............ bearish signal .........

Buyers seem to jump in everytime ZFX gets around the $16.30 "bottom" over the past few days ............  Wonder if it will hold??


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## tech/a

My amateur E/W below.


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## IFocus

Should the down side come i like the AFI coil

Focus


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## coyotte

A Adv-GET's view of the XJO -- @ close 12/03/07


If "A" is correct then .618 is reached as "B" --- Mag says possible move upto .75

If "B" is correct @ .618 or 5895 -- then

Wave 1 from "C" = 5150-4760 =390

Thus 5895 less 390 = 5505 = end of Wave C.

If B is not correct and moves higher, then from that HIGH less 390 = end of Wave C.

If Wave C is truncated, then thats supposed to be a very bullish sign.

But from what I seem to follow though is first u must determine whether the stock or index is following EW rules, as apparently only around a third of the XJO do so.

Just my 2 bobs worth -- this stuff all looks great in hindsight.

Cheers


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## coyotte

FOOTNOTE:

But all this can be aload of rubbish -- AdvGET has the XJO in a Intermediate Wave 5 correction Within a Major Wave 3 correction -- which as I understand will not be anywhere severe as if it was a Major Wave 5 correction.

EW ?????  


Cheers


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## tech/a

Coyotte.

I do understand the frustration. But it isnt the sort of analysis you'll pick up in a week or so or off the first or even the 3rd book you'll read.

But it does come together.
AGET uses only 250 bars so you wont get a full count.
Yes it will re label wave counts as they become Disproven.

Everything you see from moggi's top to this corrective wave pattern is in the process of being proven OR disproven.

Simply trade the market the way its being PROVEN.
When its not then your saved by stops (Thats where you put them---where the analysis is proven wrong) and you trade either something else or to the analysis which is THEN in the process of --- prove disprove.

Take the time it will be worth it!


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## coyotte

Thanks Tech

But is my basic EW analysis in the ballpark?

Cheers


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## tech/a

Coyotte.

To be honest the exact measurements of corrective waves,Ive not bothered with,I dont trade them---They can be very complex--but so far from a basic view they are proving pretty right.

This is expected to be a more complex corrective pattern so the ABC is expected to form into a 5 wave move which will be either A or Wave 1 in a down trend---as I understand it.

So far its playing out as "expected" I would argue.
While we cant say with definity what the wave action will play out to---we can say that if this happens then it means this and if it doesnt then it means that.

Sounds like another language but its not really.
Sorry I cant be of more help.

I've not yet finished the 3 yr apprenticeship.


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## Bobby

tech/a said:
			
		

> .
> While we cant say with definity what the wave action will play out to---we can say that if this happens then it means this and if it doesnt then it means that.
> 
> Sounds like another language but its not really.
> Sorry I cant be of more help.
> 
> I've not yet finished the 3 yr apprenticeship.





Hello Tech, 

Got that, to reiterate the wave will do its thing, whilst followers will think it will do their thing.

Tried EW, not for me.

Bob.


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## It's Snake Pliskin

barney said:
			
		

> Any chance of a chart to describe the EW on that thanks Tech.
> 
> As Coyotte mentioned ......... "descending triangle" ....... lower highs equal lows ............ bearish signal .........
> 
> Buyers seem to jump in everytime ZFX gets around the $16.30 "bottom" over the past few days ............  Wonder if it will hold??




Hi Barney,

Good to see you all over these charts. I have attached a chart for you to look at. Sorry it is from my not trading computer so i had to roughly edit it from windows and looks rough. As you can see the indicators do nothing to inspire a long entry and price is confirming. Look at the lead up to the action as of now, some distribution maybe?

Take care
Snake


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## pacer

ZFX is impossibly graphable...there are bigger things going on in the world THAN  that we know of...all systems and programs will suck over the next 10 years...IMO we are in a new wave of speculation, especialy with CFD trading coming in ...it wil be a rocky road.

I went to a CFD seminar last weekend for a giggle....they try to sell you a program, that is CRACKED already AND DOWNLOADABLE, for $3000...downloaded it with the crack and did a comparison with cracked metastock........these guys are charletons....talked to a few people there at this so called seminar and gave them more info in 5 mins than they got all day out of these guys...

Me and my mate were sooo bored after 5 minutes...we sat outside and chatted to any smokers that came out and nearly had a bigger crowd...!!

Some had heard of hotcopper...blech.....and some that were keen I suggested ASF to....but most had no idea....

It's no wonder 90% of traders fail in the first year with idiot's trying to sell a program that'll take 2 years to master and books and .....stufff that'll cost youi$$ ....you could have made a $$$on....by just coming here and reading all posts by TECH-A or others.......

AND DYOR....bar the corrections..but I love corrections...I double up going south......how hard is that!....CFD's...gotta luvem'

Blah blah blAH......GOOD NIGHT AND GOOD TRADING GUYS.


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## It's Snake Pliskin

pacer said:
			
		

> ZFX is impossibly graphable...there are bigger things going on in the world THAN  that we know of...all systems and programs will suck over the next 10 years...IMO we are in a new wave of speculation, especialy with CFD trading coming in ...it wil be a rocky road.
> 
> I went to a CFD seminar last weekend for a giggle....they try to sell you a program, that is CRACKED already AND DOWNLOADABLE, for $3000...downloaded it with the crack and did a comparison with cracked metastock........these guys are charletons....talked to a few people there at this so called seminar and gave them more info in 5 mins than they got all day out of these guys...
> 
> Me and my mate were sooo bored after 5 minutes...we sat outside and chatted to any smokers that came out and nearly had a bigger crowd...!!
> 
> Some had heard of hotcopper...blech.....and some that were keen I suggested ASF to....but most had no idea....
> 
> It's no wonder 90% of traders fail in the first year with idiot's trying to sell a program that'll take 2 years to master and books and .....stufff that'll cost youi$$ ....you could have made a $$$on....by just coming here and reading all posts by TECH-A or others.......
> 
> AND DYOR....bar the corrections..but I love corrections...I double up going south......how hard is that!....CFD's...gotta luvem'
> 
> Blah blah blAH......GOOD NIGHT AND GOOD TRADING GUYS.




Pacer,
the lazy seek easy answers.
Your not lazy because you run all the time  
I agree CFD's are not bad.


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## barney

It's Snake Pliskin said:
			
		

> Hi Barney,
> 
> Good to see you all over these charts. I have attached a chart for you to look at. Sorry it is from my not trading computer so i had to roughly edit it from windows and looks rough. As you can see the indicators do nothing to inspire a long entry and price is confirming. Look at the lead up to the action as of now, some distribution maybe?
> 
> Take care
> Snake




Hi Snake,  Agree with the "distribution". I've been watching the price action on ZFX very closely over the past couple of days particularly (my eyes are now square    ............. Even to my untrained eyes, the selloff has been building ............ Still interesting that enough buyers jump in to halt the potential capitulation at the $16.30 's, to the point that the sp actually rallies end of day ........... Some large parcels go through at times, so I assume this is mainly "fundies" selling to other fundies (the ones distributing) .......... I guess it just proves the point that everyone can percieve the market differently at different points in time ............ certainly an interesting stock to "study" .......... often seems to do the exact opposite of "logic" (Is the market ever logical though      Cheers.


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## tech/a

> ZFX is impossibly graphable...there are bigger things going on in the world THAN that we know of...all systems and programs will suck over the next 10 years...IMO we are in a new wave of speculation, especialy with CFD trading coming in ...it wil be a rocky road.
> 
> I went to a CFD seminar last weekend for a giggle....they try to sell you a program, that is CRACKED already AND DOWNLOADABLE, for $3000...downloaded it with the crack and did a comparison with cracked metastock........these guys are charletons....talked to a few people there at this so called seminar and gave them more info in 5 mins than they got all day out of these guys...




*Pacer.*
While I have no idea about the software your talking about.

There is some brilliant software out there.
You and anyone else who wishes to succeed in this business will have to do the *HARD* yards. The *YEARS* of pouring over charts and *LEARNING* those analysis skills which will put you well ahead of the 90% who *DONT*.
I'm still learning 12 yrs in!

The next few years will be challenging.
Best be prepared or sitting on the sidelines getting prepared.


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