First trading system

[Mr J]

A somewhat smaller supposition that I know nothing of price action. And yes all derivations of price computated constitute the basis of an oscilating indicator.

A true expert will know why. The various tools will be used when and where required. Watching bar by bar only, has its limitations.

Your final sentence highlights the ignorance of and disregard to various strategies and tactics that price action (bar by bar watching) alone will not assist you with at times.

I am not an expert, let alone a true expert, so perhaps I'm not able to think of the reasons myself. I see indicators as no more than a visual aid for representing what can already be found on a chart. Since you know what a true expert would know, would you care to step off your high horse and at least provide some reasoning?

 

[MRC & Co]

Snake,

I am interested in hearing the general methods you use as I have never seen your ideas..........

I know you don't want to share details, this is why I have stated, general methods.

 

[It's Snake Pliskin]

Snake,

I am interested in hearing the general methods you use as I have never seen your ideas..........

I know you don't want to share details, this is why I have stated, general methods.

Hi MRC,

I'll disclaim away that I am no expert.
Generally divergence set ups, exhaustion, patterns, trendlines. Very simple stuff. Though there is more to use and consider, it depends. End of day trading is not too exciting.
My call on LEI that you queried me on before was based off a very simple strategy. Price action confirmed the buy signal.
Cheers..

 

[Mr J]

Generally divergence set ups, exhaustion, patterns, trendlines

I'm still waiting to hear what indicators show that the chart (i.e. price action) does not.

 

[nomore4s]

I'm still waiting to hear what indicators show that the chart (i.e. price action) does not.

Divergence, for starters.

And what about FrankD and his levels? Very powerful indicators.

Alot of good traders use indicators at some point or for certain setups.

 

[mazzatelli1000]

I'm still waiting to hear what indicators show that the chart (i.e. price action) does not.

Statistical volatility
Pivot Points

 

[Mr J]

I didn't say indicators weren't useful - they are, but as visual aids. Divergence is shown on a chart. It may not be immediately obvious, but it is there. It's the same information, just shown a different way. Anything shown on an indicator is also shown on the chart, it's just a matter of whether the trader can spot it on the chart or with the indicator.

 

[havaiana]

Just a quick update, made 6 trades tonight, 5 were losses! At least i'm consistent. Working really late at the moment due to end financial year, so will go into a bit more detail in a couple of days so the other newbies can learn from my mistakes.

Tomorrow night i'm going to do the exact opposite of what i did tonight. How can i go wrong??

 

[nomore4s]

Looks like you forgot that indicators are based off of price action :. The true expect will only use what he needs and no more. If the indicators are based on price action and one can read price action well, then there's no need for indicators.

A true expert will understand what works and what doesn't and why it works or why it doesnt before discounting methods. Also 1 expert might find indicators useless for his/her timeframe, method & instrument but another could find certain indicators extremely useful. I wouldn't be disgarding a tool without understanding it first, considering the level the OP is at.

I didn't say indicators weren't useful - they are, but as visual aids. Divergence is shown on a chart. It may not be immediately obvious, but it is there. It's the same information, just shown a different way. Anything shown on an indicator is also shown on the chart, it's just a matter of whether the trader can spot it on the chart or with the indicator.

So you admit that indicators are useful but shouldn't be used even if they help the trader read the price action with more ease? Which is the idea behind an indicator, isn't it?

The OP has stated he is a beginner, so wouldn't he be better served by learning about indicators - how they are constructed, what they are telling the trader and whether they can then be useful to the timeframe and method of trading he wants to use? Instead of just disregarding them all together because "it's all in the price action". Doing this may also help the OP understand what the price action is actually saying and how best to take advantage of it.

 

[Mr J]

A true expert will understand

A number of you have been stating this rubbish. It has nothing to do with it.

before discounting methods

I don't. Indicators aren't a method, they're a tool that some use to carry out that method.

So you admit that indicators are useful but shouldn't be used even if they help the trader read the price action with more ease? Which is the idea behind an indicator, isn't it?

They're useful if you can't readily see that info on a chart, but that doesn't mean you shouldn't try to see it on the chart. The more you focus on a chart, the more information jumps out at you. I realise I'm stepping on toes, as a lot of traders like their indicators.

An indicator is a crutch. It's helpful when we're just starting to walk again, but if we don't get rid of it we will probably start to depend on it, and it will probably limit performance. Maybe some need their crutch, but others may benefit from walking without it. Doesn't hurt to try.

Consider that this all stemmed from me stating that the information shown by indicators is already shown in a chart, and at least one - possibly more - seemingly denying this.

The OP has stated he is a beginner, so wouldn't he be better served by learning about indicators

Maybe, maybe not. I'm not going to say that dumping indicators is certainly better for him, just that it could be. The only absolute I'm bringing to this thread is that the information shown by indicators is already in the chart.

Doing this may also help the OP understand what the price action is actually saying and how best to take advantage of it.

Like almost everyone on any topic, I probably have a bias here. I found dumping indicators to be quite useful and allow me to read a chart better. I focused on the price action rather than the indicators. I do believe that indicators can be misleading and that it is better to go straight to the source (which isn't actually a chart, but anyway....).

 

[Trembling Hand]

Tomorrow night i'm going to do the exact opposite of what i did tonight. How can i go wrong??

To be doing the exact opposite of what you did last night would be to,

Find out some truths about how your market moves and then exploit that.

But I'm guessing you will be doing exactly the same as last night. Trading without an understanding.

 

[--B--]

hi TH, i like what you say about an understanding the markets being central to designing a system and im interested in your suggestions as to how one furthers their knowledge and learns more about this?

is it reading? is it practical experience? how does someone with a thirst for this knowledge begin on the long road to acquiring it?

 

[Trembling Hand]

hi TH, i like what you say about an understanding the markets being central to designing a system and im interested in your suggestions as to how one furthers their knowledge and learns more about this?

is it reading? is it practical experience? how does someone with a thirst for this knowledge begin on the long road to acquiring it?

Its a pretty big question and I haven't much time at the moment but,

You have to know what to expect from the market you trade. you have to know what sort of ranges are likely and what sort of day you have ahead of you. So if you are an index futs trader you need to know things like avg daily and avg 15 min ranges. Its no good trading for 100 ticks on a slow range bound day, especially after for example 3 large range days in the same direction.

Its no good having 30 tick profit target if your holding trades for 15 minutes and the ATR(15) is 12 ticks.

Its no good looking at the double bottom and support on the SPI and going long if the HSI opens down 3% and currency are getting smashed against the USD.

Its silly to go long on the open when the SPI gaps up to R2 on the open because its got a 60% chance of hitting R1 before R3.

Its a bit hard to cover everything but the problem I see people making is they think TA "works" and want to apply it. What works is looking and expecting the right things at the right time and knowing when the market/s are & aren't acting as expected.

Use TA to trade what you expect not to tell you what to think. (that's my approach anyway )

 

[--B--]

Its a pretty big question and I haven't much time at the moment but,

You have to know what to expect from the market you trade. you have to know what sort of ranges are likely and what sort of day you have ahead of you. So if you are an index futs trader you need to know things like avg daily and avg 15 min ranges. Its no good trading for 100 ticks on a slow range bound day, especially after for example 3 large range days in the same direction.

Its no good having 30 tick profit target if your holding trades for 15 minutes and the ATR(15) is 12 ticks.

Its no good looking at the double bottom and support on the SPI and going long if the HSI opens down 3% and currency are getting smashed against the USD.

Its silly to go long on the open when the SPI gaps up to R2 on the open because its got a 60% chance of hitting R1 before R3.

Its a bit hard to cover everything but the problem I see people making is they think TA "works" and want to apply it. What works is looking and expecting the right things at the right time and knowing when the market/s are & aren't acting as expected.

Use TA to trade what you expect not to tell you what to think. (that's my approach anyway )

many thanks TH. i understand the point youre making and appreciate you taking the time to elaborate for me.

i think certainly experince plays a major part however this and general research and study must be coupled with an eyes wide open approach to ensure the greater picture is understood.

 

[Mr J]

Like always, I have an opinion, but wanted TH to reply first.

i like what you say about an understanding the markets being central to designing a system

The strategy has to fit the game. Ranges, timeframe, stop and targets etc. They all have to be fit with each other, which goes with what TH said about ranges.

how one furthers their knowledge and learns more about this?

Again my opinion, but my answer would be experience (screentime), and I believe TH will say something similar. Pretend the market is an animal and study it's habits. When does it sleep, eat, drink, mate? What is its mood? What is its nature? How should I approach it? When is it safe? Etc.

 

[It's Snake Pliskin]

I didn't say indicators weren't useful - they are, but as visual aids. Divergence is shown on a chart. It may not be immediately obvious, but it is there. It's the same information, just shown a different way. Anything shown on an indicator is also shown on the chart, it's just a matter of whether the trader can spot it on the chart or with the indicator.

But you said this:

If the indicators are based on price action and one can read price action well, then there's no need for indicators.

And you said this:

They're useful if you can't readily see that info on a chart, but that doesn't mean you shouldn't try to see it on the chart.

And this:

I focused on the price action rather than the indicators. I do believe that indicators can be misleading and that it is better to go straight to the source

Finally:

The only absolute I'm bringing to this thread is that the information shown by indicators is already in the chart.

So naturally any indicator derived from price is going to be of some help if not just a little. All the information is in the chart right?

I'm not interested in an argument and just highlighting what seems to be contradictory. And I would love to see how a divergence can be seen without an oscillator and just price bars or candlesticks. I am genuinely interested in this.

 

[johenmo]

Haviana... TH sums it up well - know your enemy - even if it leans towards currency trading. It took me some months to realise that I didn't really understand the market I am in. Even tried ATR but didn't work with it correctly.

If the market is in a strong trend eitherway then an MA will be more likely to assist. I feel not all indicators work in all markets - just as one system doesn't work in all markets. I devised one which will return $ in a bull market but will drive me to bankruptcy in this!!

If you can get your head around price and volume movement/relationship I feel you have made a fundamental step in yr learning. And look at charts - lots of them.

Stock selection/filtering is important. Tech/a gave good advice to a thread I started like yours. Made me go away and think about it for months.

Trawl this forum. Good stuff here but it's often hidden. Good luck.

 

[Mr J]

Snake, you're overlooking the fact that just because something isn't necessary, doesn't mean it's not useful. Of course, that doesn't mean that indicators aren't necessary to some people.

I'm not interested in an argument and just highlighting what seems to be contradictory

It's not contradictory, as those quotes do not address the same thing.

And I would love to see how a divergence can be seen without an oscillator and just price bars or candlesticks

Divergence is simply situation where a move is running out of puff, and this is quite visible in real-time. It's obviously not as clear as identifying where stochs would be 'oversold' or 'overbought', but it's there.

A more concise description of my view on indicators, so there's no confusion:
1. They can be useful, but they are not necessary.
2. They show the same info a chart shows. It may or may not be hard to see this info on the chart.
3. Many people rely too heavily on indicators, particularly when they start trading.
4. Focus on indicators can take focus away from studying movement itself.
5. Dumping indicators altogether may be a very useful exercise.

just as one system doesn't work in all markets

A system can work on all markets, at least from what I have seen.

If the market is in a strong trend eitherway then an MA will be more likely to assist.

So will any other indicator you use.

 

[Trembling Hand]

And I would love to see how a divergence can be seen without an oscillator and just price bars or candlesticks. I am genuinely interested in this.

Snake its pretty easy to see what would be divergence on an chart without an indicator. In fact it is not divergence. Its just running out of steam with each cycle higher or lower. Divergence is the representation in the indicator. loss or reduction of momentum on each trust is the actual cause you are plotting.

So you would get prices cycles like up 100, down 20, up 70, down 25, up 40, down 18, up 25.

 

[It's Snake Pliskin]

Mr J

Divergence is simply situation where a move is running out of puff, and this is quite visible in real-time. It's obviously not as clear as identifying where stochs would be 'oversold' or 'overbought', but it's there.

Oh, I see you are talking about exhaustion and not divergence. If only using price bars then there can be no divergence. I see now.

A more concise description of my view on indicators, so there's no confusion:
1. They can be useful, but they are not necessary.
2. They show the same info a chart shows. It may or may not be hard to see this info on the chart.
3. Many people rely too heavily on indicators, particularly when they start trading.
4. Focus on indicators can take focus away from studying movement itself.
5. Dumping indicators altogether may be a very useful exercise.

Thanks for the clarification. It is much easier to see that in one post.

Snake its pretty easy to see what would be divergence on an chart without an indicator. In fact it is not divergence. Its just running out of steam with each cycle higher or lower. Divergence is the representation in the indicator. loss or reduction of momentum on each trust is the actual cause you are plotting.

So you would get prices cycles like up 100, down 20, up 70, down 25, up 40, down 18, up 25.

Thanks for your input here TH. As I have said above and you have said it is not divergence if there is nothing diverging. I call it exhaustion if not referring to a divergence.

Cheers...