Improving Chart Analysis

[Duckman#72]

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]

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]

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?

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...

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.

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.

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]

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...

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.

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.

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.

(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.

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.

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.

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.

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]

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]

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.

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.

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.

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.

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.

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.

Sorry, that’s me trying to put concepts into English, and failing.

The joy of written language.....white boards are better.

Trying to develop and edge?

Oh dear, does that mean we have to invite “Brother Duck” for dinner?

Canard l'Orange anyone?

By the way Les, what was your user name on RC?

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.

P.S. Still mulling your epiphany. M

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.

 

[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

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]

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]

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]

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]

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]

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]

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