Improving Chart Analysis

[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]

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.

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).

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)

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.

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!!).

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?

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]

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

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]

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]

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]

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]

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]

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]

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.