Chart confirmation before trade entry

[edho11]

What do you think about waiting for confirmations of bars/candles before putting the actual trade on?
Is it a waste of time and wasting ticks that could have been made?
Or would you just put the trade on based on the trade idea/pattern that you think may be forming?

 

[Trembling Hand]

No such thing as confirmation.

 

[sammy84]

No such thing as confirmation.

What about confirmation of your own analysis and the expected move necessary for the trade fit your criteria necessary for an edge?

In relation to trading before confirmation, IMO without confirmation of your analysis you have no edge, therefore no trade.

 

[brty]

Once you have confirmation, you have used up part of the profit by waiting, and you have widened your stoploss, basically a different system to what you started with.

The 'confirmation' of any trade being a winner is at the completion of it. Up to that point it could go back to the stop point.

What are you really thinking is 'confirmation'?

brty

 

[Trembling Hand]

What about confirmation of your own analysis and the expected move necessary for the trade fit your criteria necessary for an edge?

Such as what? A break out? A pause and reversal of trend to indicate a new trend has stated? Or any other TA 101 gumph?

Nothing in price action will Confirm what the next move will be or how long it will be.

Many seek confirmation, many seek it in TA. What they find is nothing more that missed moves, wider stops & an eternal search to be right.

 

[Trembling Hand]

http://wordnetweb.princeton.edu/perl/webwn?s=confirmation

•S: (n) confirmation, verification, check, substantiation (additional proof that something that was believed (some fact or hypothesis or theory) is correct) "fossils provided further confirmation of the evolutionary theory"

You can wait and confirm what has already happened. You cannot confirm what will happen.

 

[quinn123]

I thought confirmation conditions are used in a basic trend following systems to attempt to reduce the number of false signals (J., Schwager, 1999).

For a basic breakout system a confirmation condition might be the number of thrust days or the number of days (Time delay) required before you enter a position.

E.g. If you had a basic breakout system where you trade every breakout of 56 days you may have a confirmation condition where you require three up-thrust days to enter the trade.

This might achieve:
- Less whipsaws
- less profit on the trade

The term "confirmation condition" can be a bit misleading I rkn because it isn't really confirming anything, but it might decrease the number of false signals. Have some affect on your success rate I suppose.

If you can prove that breakouts have a higher probability of continuing the trend after some sort of confirmed condition then it would have merit.

 

[tech/a]

No such thing as confirmation.

There is validation of anticipation.

Shwagger lost money trading futures incidently.

 

[IFocus]

I thought confirmation conditions are used in a basic trend following systems to attempt to reduce the number of false signals (J., Schwager, 1999).

For a basic breakout system a confirmation condition might be the number of thrust days or the number of days (Time delay) required before you enter a position.

E.g. If you had a basic breakout system where you trade every breakout of 56 days you may have a confirmation condition where you require three up-thrust days to enter the trade.

This might achieve:
- Less whipsaws
- less profit on the trade

The term "confirmation condition" can be a bit misleading I rkn because it isn't really confirming anything, but it might decrease the number of false signals. Have some affect on your success rate I suppose.

If you can prove that breakouts have a higher probability of continuing the trend after some sort of confirmed condition then it would have merit.

Confirmation sounds like need to be right fatal thinking in trading.

IMHO for get confirmation and think probability

 

[tech/a]

IMHO for get confirmation and think probability

Please explain!!
Interested in how you can rate a prospective trade-- probability---unless youve tested every known variant.

 

[sammy84]

Such as what? A break out? A pause and reversal of trend to indicate a new trend has stated? Or any other TA 101 gumph?

Well yes. That is what confirmation is for me. A breakout trader for e.g. they will enter a trade when price breaks through their perceived confirmation point. If the breakout of holds for the day this is their confirmation that the pattern they want to trade, which is the pattern that provides their edge, is currently in existence. Doesn't mean the trade trade is going to make money, only that you are in a trade that gives you the greatest chance of survival per the rules of your system.

 

[CanOz]

Well yes. That is what confirmation is for me. A breakout trader for e.g. they will enter a trade when price breaks through their perceived confirmation point. If the breakout of holds for the day this is their confirmation that the pattern they want to trade, which is the pattern that provides their edge, is currently in existence. Doesn't mean the trade trade is going to make money, only that you are in a trade that gives you the greatest chance of survival per the rules of your system.

Hmm, Sammy this sounds like missing the boat? I admit i used to think i had to wait for confirmation, but then i realized...confirmation of what?

Cheers,


CanOz

 

[nunthewiser]

What about confirmation of your own analysis and the expected move necessary for the trade fit your criteria necessary for an edge?

In relation to trading before confirmation, IMO without confirmation of your analysis you have no edge, therefore no trade.

Im still trying to work out what an edge means if you have a secondhand plan that 500,000 other ppl have read also and sounds great on paper but usually means shiite in realtime trading ............


no offense intended just wondering what the "edge" is in maximising profits and minmizing losses when one waits till the partys in full swing and could shut down at any time it sees fit..........


anyhoo what would i know i get it wrong on a daily basis

 

[nunthewiser]

Well yes. That is what confirmation is for me. A breakout trader for e.g. they will enter a trade when price breaks through their perceived confirmation point. If the breakout of holds for the day this is their confirmation that the pattern they want to trade .

And i suggest a scan through 5000 breakout charts and then add up how many retest original resistance OR dip below it , stopping them same traders out because they expected an immediate continuation after holding that point briefly..........

anyways dont matter ..your cash ....your choice how to spend it

 

[skyQuake]

sammy that just seems more like additional trade parameters/filters rather than confirmation.

imo there should be no confirmation. You either include the 'confirmation' into your original trade plan or you dont. Then backtest the efficacy of it.
Usually waiting for confirmation its just as bad as a late entry.

 

[Ghetto23]

It depends what you want confirmation of doesn't it?

If you have a trading plan in place, then you should wait for the price action to confirm that it conforms with your trading plan before you trade it.

That doesn't mean the trade is ensured of going the way that you want, but at least you are being true to your trading plan - and that's all we can really control at the end of the day...

 

[BBand]

Hi edh011,
"Confirmation" to me is price moving in the direction you expected from your "analysis" (what ever that might be)

For example: I never enter a trade unless price trades above the high of my signal bar (for long trade), and this must happen on the next bar - if not - no trade - move on - plenty more trading candidates.
My stop is the low of the signal bar.
Works great for me

However, you may not feel comfortable trading this way - so it becomes meaningless !

You have to find a method you have faith in, so that you will have no doubts in taking a trade which meets YOUR entry requirements

It can be as simple or as complicated as you want - its your choice

Hope this helps
Peter

PS It would probably be in your own best interest to spend more time studying your charts, than asking others for advice

 

[WaveSurfer]

....If you have a trading plan in place, then you should wait for the price action to confirm that it conforms with your trading plan before you trade it.....

I think that's what Ed means.

TH has nailed it "You cannot confirm what will happen". Until of course, it actually happens. By then it's too late.

I would refer to your methodology question Ed as aggressive or conservative.

 

[IFocus]

Please explain!!
Interested in how you can rate a prospective trade-- probability---unless youve tested every known variant.

Couldn't image why anyone other than punters would take a trade without testing!

 

[tech/a]

Couldn't image why anyone other than punters would take a trade without testing!

I dont classify myself as a punter!

Ive often seen confirmation its that trade you see and think
Bugga should have taken that!