Improving Chart Analysis

[Magdoran]

Wayne I want to hold hands again someday.

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

Pete Garret at his best. :dance:

Now that was a band to see LIVE!

 

[It's Snake Pliskin]

Snake!


You know, Reeling in a big fish...

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

Ah, I see. Thanks for the interpretation.

Magdoran,

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

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

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

Tech and Mag thanks for the entertainment.

Midnight Oil is great!

Snake

 

[barney]

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

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

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

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

 

[It's Snake Pliskin]

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

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

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

Barney,

This is a post you should read many times.

 

[It's Snake Pliskin]

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

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

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

 

[barney]

Barney,

This is a post you should read many times.

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

 

[lesm]

Hello Magdoran,

Thanks for your respone.

Hello Les,

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

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

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

He'll probably be too busy with his girlfriends.

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

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

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

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

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

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

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

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

Hope this makes sense.

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

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

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

By suitable instrument I take that to mean an ETO.

Cheers,
Les.

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

 

[Magdoran]

Ah, I see. Thanks for the interpretation.

Magdoran,

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

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

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

Tech and Mag thanks for the entertainment.

Midnight Oil is great!

Snake

Hi Snake,

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

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

Glad you enjoyed the show!

And yes, Midnight Oil was a premium Aussie band!


Regards


Magdoran

 

[Magdoran]

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

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

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

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

Hi barney,


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

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

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

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

Regards


Magdoran

 

[Magdoran]

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

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

Snake,


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

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

Regards


Magdoran

 

[lesm]

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

Snake,

So true..oh so true.

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

The wrong mindset is detrimental to anyone in the market.

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

Cheers.

 

[Magdoran]

Hello Magdoran,

Thanks for your respone.



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



He'll probably be too busy with his girlfriends.



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



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



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



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



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

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

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

By suitable instrument I take that to mean an ETO.

Cheers,
Les.

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

Hello Les,


Quick answers:

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

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

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

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

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

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

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

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

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


Great to hear from you les.


Best Regards


Magdoran

 

[coyotte]

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

Cheers

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


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




Magdoran :

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

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

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

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

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



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

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

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



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

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



Sorry
End of Subject

 

[barney]

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


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




Magdoran :

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

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

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

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

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



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

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

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



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

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



Sorry
End of Subject

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

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

 

[It's Snake Pliskin]

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

Magdoran,

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

What other influences are there for you?

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

Lesm,

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

Snake

 

[ducati916]

Gannies

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

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

jog on
d998

 

[It's Snake Pliskin]

Gannies

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

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

jog on
d998

Duc are you a closet Gann man?

 

[ducati916]

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

Here's an interesting little snippet;

Hedge fund Amaranth Advisors sent a letter to investors warning that an energy bet gone wrong will result in massive losses for the fund, CNBC's David Faber reported this morning.

Amaranth, an $8 billion asset management behemoth started in 2000, was up 22% going into September. But in the letter, it warned that it would be down in excess of 35% year-to-date as it unwinds a disastrous natural gas trade.

Natural gas prices sank 10% to a two-year low last Thursday, based on another bigger-than-expected rise in inventories that one analysts described as a natural-gas glut.

The letter assured investors the funds has met every margin call to date, but one has to wonder how investors will react, Faber reported.

 

[Frank D]

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

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

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

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

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

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

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

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

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


www.datafeeds.com.au/AMT15sept.pdf

www.datafeeds.com.au/AMT18sept.pdf

This mornings report

www.datafeeds.com.au/AMT19sept.pdf


Frank Dilernia


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



© AMT Market Dynmaic model Frank Dilernia

© OTD OPEN Trading Dynamics Frank Dilernia

 

[It's Snake Pliskin]

Frank D,

Thanks for your posting.

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

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

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

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

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

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

If you don’t know the concept or theory behind my work it’s not easy to follow, but you should still see the patterns in the market and range movement within day sessions if you have been following the reports.
© AMT Market Dynmaic model Frank Dilernia
© OTD OPEN Trading Dynamics Frank Dilernia

What is the concept and theory behind your work?

Thanks
Snake