Improving Chart Analysis

[Sean K]

Magdoran, why is 24 Sep and 31 Oct marked on the chart? I can't see your explanation for this.

I would mark this because it looks like a support level hit in the past at $60. That's why it's going to bounce from these levels, not because of any vibrations.....

 

[Magdoran]

Magdoran, why is 24 Sep and 31 Oct marked on the chart? I can't see your explanation for this.

I would mark this because it looks like a support level hit in the past at $60. That's why it's going to bounce from these levels, not because of any vibrations.....

Hello Kennas,


Sure, you might think that - only price is in play here, right?

But I had these time points projected before the 11th of August based on the vibration pattern. I even posted the Brent version of this chart on this thread. Does that count for anything?

Coincidence? Sure it is, (but one I find that keeps recurring for the top end practitioners who use this style – but that’s just my opinion and experience. Of course it is entirely possible that we are all deluded. Frank no doubt will accuse me of “curve fitting” what ever that means. I really can’t see how he isn’t curve fitting too with projections if this is the case. This is a forward projection; I’m not going back in time and re-jigging this chart. I even posted the Brent version of this on this thread… lucky guess huh?).

The dates are based on locating the vibration in context of the pattern, and the time points are generated based on calibrating the square in line with the pattern according to a set criteria (a bit like the way EW practitioners have criteria for specific wave patterns).

Anyway, thanks for pointing out that support levels work. Fully agree here, price levels are important and can be projected as possible areas of support and resistance. Imagine what you can do though if you can do this with time. Imagine having both time and price line up. Would that be useful?

Regards


Magdoran

P.S. Don’t forget, Crude may fly through projected resistance with a vengeance if the pitch down is too strong.

 

[Magdoran]

tech/a



With true statistical data, outliers, are formed in the bell curve distribution, and measured via standard deviations, thus, the large outliers tend to be rather infrequent.

However, the market, is not statistical.
The market is deterministic.
Thus, outliers exist in the fat tails and are much more frequent.

Analysis, correctly performed, will identify the outliers that generate the outsized returns, and far exceed the 50/50 proposition.
Hence, the %winners will be high, and the %return will be high.
Thus your expectancy, will be high.

TT is not an analysis based model...........it is a money management model Fundamental valuation models are analysis models, with a discretionary money management element.

jog on
d998

You know Duc,


You never cease to amaze me in terms of your capacity for pulling far reaching concepts out of your hat.

This is one of them. I actually have a pet theory I’m working on that most conventional market approaches don’t factor in the fat tails, and the +/- 4+ standard deviation “black swans”.

Interestingly, that’s something I aim to capture if possible. Those big blow off moves in a short space of time… trick is to recognise them and time it right…

Nice idea about T/A really being a money management approach. Have to think about that one, but it looks right to me at first glance.


Magdoran

 

[Magdoran]

Actually you maybe interested to know that they have proven mathamatically that it doesnt matter how many monkeys you place at any number of type writers,you'll NEVER get the complete works of Shakespear typed out.

So while you may get a word or so or even a sentance typed out,so the Dart board/Gann practitioner may have a profitable trade or a string of profitable trades.Over time----never the complete works of Shakespear.

I'm sure you get my drift.

By the way lookforward to seeing the Crows knock off Sydney next week.
If we are not good enough then Westcoast will do the job.
2 best sides in the comp playing in a few hrs.

And of course our tech is the modern day “paywrite”. Put him in front of a keyboard and look what you get!

 

[Magdoran]

Magdoran,

Thanks for the update and the clarification. I thought that may have been the case with respect to the box, Just wanted to make sure.

There were elements of the chart that were easy to work out. It was just a question of clarifying which parts were actually being done via Gannalyst settings.

Cheers.

Hello Les,


Hope it all makes sense...


Mag

 

[Sean K]

Hello Kennas,

Sure, you might think that - only price is in play here, right?

Coincidence? Sure it is, (but one I find that keeps recurring for the top end practitioners who use this style – but that’s just my opinion and experience. Of course it is entirely possible that we are all deluded. Frank no doubt will accuse me of “curve fitting” what ever that means. I really can’t see how he isn’t curve fitting too with projections if this is the case. This is a forward projection; I’m not going back in time and re-jigging this chart. I even posted the Brent version of this on this thread… lucky guess huh?).

The dates are based on locating the vibration in context of the pattern, and the time points are generated based on calibrating the square in line with the pattern according to a set criteria (a bit like the way EW practitioners have criteria for specific wave patterns).

Anyway, thanks for pointing out that support levels work. Fully agree here, price levels are important and can be projected as possible areas of support and resistance. Imagine what you can do though if you can do this with time. Imagine having both time and price line up. Would that be useful?

Regards

Magdoran

P.S. Don’t forget, Crude may fly through projected resistance with a vengeance if the pitch down is too strong.

Mag, I still don't quite get the reference to:

"dates are based on locating the vibration in context of the pattern, and the time points are generated based on calibrating the square in line with the pattern according to a set criteria".

Have I missed something you posted previously in regard to vibrating?

And:

"Imagine what you can do though if you can do this with time. Imagine having both time and price line up. Would that be useful?"

Yes, this is my aim with TA. This is what Gann combined with Elliot and standard TA principles should provide. If it all comes together at a point, then I think you'd have a pretty good trade position.....Or, is this the Holy Grail, unachievable? Should we just stick to darts?

kennas

 

[Magdoran]

Mag, I still don't quite get the reference to:

"dates are based on locating the vibration in context of the pattern, and the time points are generated based on calibrating the square in line with the pattern according to a set criteria".

Have I missed something you posted previously in regard to vibrating?

And:

"Imagine what you can do though if you can do this with time. Imagine having both time and price line up. Would that be useful?"

Yes, this is my aim with TA. This is what Gann combined with Elliot and standard TA principles should provide. If it all comes together at a point, then I think you'd have a pretty good trade position.....Or, is this the Holy Grail, unachievable? Should we just stick to darts?

kennas

Hello kennas,


Ok, did you miss something? - Only a few years of studying this stuff. Sorry, I ran out of time, so unfortunately I gobbledegooked it with jargon… It’s pretty hard to condense the whole thing into 2 sentences…

This is it in a nutshell: first you need to be able to grasp how markets trend, develop an understanding of patterns of trend, understand how counter trends work – especially in different time frames, grasp time cycles/vibration theory, study lots of charts in lots of markets from early records to current charts.

Then you need to learn about time and price squares and how they can be used. The time and price increments are configurable; hence they are both selected with a specified time cycle, and calibrated in terms of price units to time units (a ratio). This also determines the various angles available. It is also possible to select which angles are drawn in the square. There is a whole raft of different approaches possible in terms of how these are implemented depending on your personal preference.

The pattern in the chart is the starting point. How it has been trending is important, where and when highs and low have come in is taken into account in relevant time frames (daily/weekly etc). Depending on the individual price divisions can be examined (“division of the range” – retracements and extensions).

But the key is to recognise the cycle running beneath the obvious bars in the chart. You sort of have to look beyond the chart – kind of like those weird 3D pictures that were around. You sort of stare at them till you get you eye in, then suddenly the 3D picture leaps out at you – it’s kind of similar.

In dealing with time, each cycle theoretically has unique harmonics that run through the underlying. There is usually a dominant cycle, but there can be minor cycles that are evident too. Sometimes key increments in the cycle tend to be more prevalent, but each cycle has its own characteristics. In a way a lot of Elliott theory parallels the logic behind this approach.

Sometimes there just isn’t a clear cycle, sometimes time is totally irrelevant. Sometimes there is no pattern, or there is ambiguity, or if there are patterns there you may not have the right mindset to see them – all possible.

I only trade what I can see. Sometimes time is irrelevant in some trends and patterns so you just ignore it. Some wave structures are so clear that you can trade them alone (not saying it will do what you think it will, but you can certainly get an edge if you know what you’re doing– wavepicker does this very well with pure Elliott Waves combined with some straight McLaren charting concepts – non Gann). Some patterns are sufficient to trade from. But this all comes with experience. Also, there’s no guarantee that even when things line up, that the market will trade the way you think it will. Often it won't, and that’s where having clear cut failure criteria and contingency planning comes in.


Hope that made better sense.


Regards,


Magdoran

 

[Magdoran]

A question here is, do we see what we want to see or can we discern repeatable patterns in a deterministic manner that is consistently repeatable?

The computer between our ears is very powerful and by learning and understanding market behaviour and the ability to identify patterns that are immediately discernable is within its capabilities. We have natural inbuilt neural network, we just need to learn to use it effectively. The more we look at something the more likely we are to run the risk of seeing what we want to see. What we see in the first couple of seconds (or less) of looking at a chart is most likely the correct interpretation.

The more we study patterns enables us to determine their reliability as a method for determining, which way the market or an individual stock might move. We can gather information, which we can use to develop a probalilistic mathematical model to reduce the guess work. Afterall, probability is a mathematical approach to dealing with uncertainty. We can refine and monitor the model through time, as there are no gurantees that a particular pattern will not fail through time or at particular times due to changes in market behaviour/dynamics.



Magodran - I accidentally changed some of the words in the above quote.

A question here is that in performing analysis and developing methods aren't we attempting to move from the purely subjective approach to being more objective or if possible more quantitative, within reasonable bounds?

The more highly subjective the analysis is the more likely we have increased the risk of failed trades. Our testing should remove an element of the subjectiveness. Monitoring going forward should enable us to better quantify and confirm whether we have positive approach or not.

But in real terms, the analysis is only the starting point, as it is how we conduct and manage the trade once we are committed that is important.

I recall a comment from a well-known and respected trader on another forum along the following lines. For a system he developed he stated that he couold train a group of traders how to use is system and expected the following outcome:
1. One subgroup would trade the system better than he could
2. One subgroup would trade the sytem at the same level as he could
3. One subgroup would trade the system worse than he could or make a loss.

A lot of time is spent on the initial analysis and time needs to be spent in looking at the overall approach, as analysis is not necessarily the point where we may lose the game. We can have a winning system, but still lose money.



You have posed an interesting question to which there are potentially a myriad of answers or views.

If we consider the market to be a dynamic system (breaking this down we could consider whether it is a linear or non-linear system) with a range of variables that affect its dynamics, can we then develop a model that would enable us to predict its behaviour with an acceptable level of confidence?

An interesting problem and due to there being a range of variables not a simple one. What is required is a simpler model that can use key variables, as well as the ability to self-learn.

Even if a 'fuzzy-logic' based approach is used, to maintain its effectiveness a capabilty would be required to add or remove facts through time. An interesting area of AI research.

Of course we know that chartists simplify the approach on the basis that all information currently known to buyers and sellers is reflected in the price and ignore any/all other information.

In simple terms, the futures markets are probably an easier environment to model as opposed to the stock markets.

In terms of comparing systems, without being able to identify a control to use as a reference point it will not necessarily be able to objectivley compare systems and consideration would need to be given to determining the time frame that the comparison would conducted over. As performance charateristics may change through time and be affected by market conditions and changes.

One would expect that any reasonably effective system should perform better than random to be claimed to have an edge.


The trick here is can you identify the elements where the methods complement each other and bring those elements together in a workable manner.

Reliable or effective testing will always be an issue, as well as the ability, knowledge and experience of individual testers.



There are an untold number of ways to trade the market and do it successfully. The danger with sweeping certainties is that it leaves the author open to challenge and the question of, can the method survive the long term or does it only work in a particular type of market environment or conditions. Only time will tell.



Agree. No one appears to have collared the market yet, but some do better than others.

Not sure if I waffled a littel bit, but think I caught most of the main.

I actually prefer whiteboards for discussing these type of topics.

Cheers
lesm

Hello Les,


I have been mulling over your post whenever I have had a chance. There is a lot of ground to be covered here, and will take some time to address.

You have raised some interesting perspectives, and rather than deal with them in an off the cuff fashion, I’d prefer to consider then for a while and perhaps deal with your points in separate posts…

YAWN! Time for bed now!

Regards


Magdoran

 

[lesm]

I have been mulling over your post whenever I have had a chance. There is a lot of ground to be covered here, and will take some time to address.

You have raised some interesting perspectives, and rather than deal with them in an off the cuff fashion, I’d prefer to consider then for a while and perhaps deal with your points in separate posts…

YAWN! Time for bed now!

Magdoran,

I came to a similar conclusion after responding to your post that it may be more beneficial to break out the various points and address them more fully.

Short quick answers at times can tend to oversimplify or confuse. Sometimes the devil is in the detail or we don't provide enough information and raise more questions.

Will be interested in your response(s).

Cheers
Les.

PS: Have you had the opportunity to start reading the Phantom of the Pits (POP)?

 

[tech/a]

Analysis, correctly performed, will identify the outliers that generate the outsized returns, and far exceed the 50/50 proposition.
Hence, the %winners will be high, and the %return will be high.
Thus your expectancy, will be high.

Ducster youve used the words WILL IDENTIFY,simply it WON'T
All analysis can do is place you in a percievedposition to take advantage of a possibleoutlier move.You and I have proven this with our own methods.There is a vast difference to my "Blueprints" and yours and Moggie's but I'll approach this later.

Discussing this kind of subject can get very messy very quickly because there are problems with semantics, building blocks of concepts, levels of knowledge and understanding, and a broad range of different interpretations of the various “churches” of technical analysis (examples – Elliott, Gann, Darvas, Guppy/Wilson, Williams, and a whole host of different classifications too long to list – chose the ones most people are familiar with from recent discussions).

Technical Analysis is as much an art as it is a science, since it is not scientifically robust in the conventional sense, and relies on the capacity of the individual to interpret the available information. Different methods have been devised out of using discrete combinations of techniques which are welded into schools of thinking.

So, I would argue that to really appraise any approach is problematic because there are so many variables to contend with. Individual capacity, a plethora of interpretations, competing criteria etc. I think at the core, if you believe that markets trend (the antithesis of random walk), and that trends can be detected and observed, then technical analysis could conceivably be viable. The next step though is to devise methods to determine the trend and devise strategies to take advantage of trends. This is where it gets tricky because over time different technical analysis “schools”/”churches” have developed.

All of this is interpretation and application of analysis in a discretionary manner,and if trading in that way all of the above comes very much into play.

A question here is, do we see what we want to see or can we discern repeatable patterns in a deterministic manner that is consistently repeatable?

And herein lies the dilema of any discretionary trading.

I recall a comment from a well-known and respected trader on another forum along the following lines. For a system he developed he stated that he couold train a group of traders how to use is system and expected the following outcome:
1. One subgroup would trade the system better than he could
2. One subgroup would trade the sytem at the same level as he could
3. One subgroup would trade the system worse than he could or make a loss.

I would argue here that the "System" is a method of discretionary application to a chart or charts.If a single loss could be recorded by following a methodolgy then it is not a mechanical method. The only caveat (Not knowing the method) would be that I presume he is speaking about trading the method by various people over the same timeframe.
Taking T/T as an example and other tested systems like the other 2 I trade and the 4 different methods disclosed to my by others,not one of them traded over the 3-4 yrs I have had the opportunity to trade and observe have ever been in the position to ne a nett loser.

Why because there is no discretion.

Ok, let’s deal with the semantics and possible meanings when using the term “accuracy”.

For example, let’s look at the concept of the “accuracy” of price projections. This is based on the technique of using price range projections to estimate possible (probable) support/resistance in price for extensions and retracements.

For example Nick Radge was recently using this technique of projecting a range upwards to estimate probable areas of resistance in price for the XAO. He was using Fibonacci increments and used a method to establish exact price levels where he thought resistance might be met. Interestingly, Yogi did the same thing, but using Gann based increments. Both of them were not far off the mark in their estimations.

The question of accuracy is only of minor importance when a tested plan has the final blueprint.It is NOT totally foolproof as there can and will be times as history goes on that due to the rule of large numbers the system/s will eventually trade both above and below their blueprint.Sure this would represent system failure but even now system failure would still see all systems I am aware of walk away with tremendous profit. New data causing failure would simply then be added to the developement of a more robust method which would then do the cycle again.Mind you if it failed to the upside I would still continue to trade.

Just think about it this way, if it doesn’t trend the right way, time to get out. If it does, like a tech blueprint, you have a battle plan for your trading of where to take profits. As you can see from the previous charts, it hit near my mark, then kept on going. I don’t have a crystal ball, but like in a battle, it’s about playing an educated hunch about the enemy’s strength and movements.

There is a VAST difference in the two "Blueprints".
Mine is a blueprint of the application of the identical analysis over 1000s of trades over a given period. The result is "The BLUEPRINT".I monitor future perfomance of my trades (accumulative) against it. Individual trades are of little consequence.
Had you applied your "Blueprint" to 1000s of trades and had those results tabulated to form a record of what could be expected applying this "Discretionary" approach on those trades then we would both have a similar print.

My interest in the discussion is the PRACTICAL application of your methodologies---both Moggies and Duc's in bettering the overall results of trading in general.

To date and it is still a work in progress from Duc's part Ive not seen any tangible results that would suggest improvement over that which I have adopted.Duc's aim is to return better than 30% a year over 3 yrs.Which is approx T/Ts average un leveraged performance.
Its not a competition,and my running of the method was/is for debate just as we have here today.Win lose or draw,I/You We all can benifit from these discussions while it does its thing in the background.
Same with Duc's.
Moggie can you show a practical demo of your use of your analysis using an option trade (Your prefered instrument)?

No need to go to the whys and wherefores a simple "Analysis tells me price will go to here over this time period so Im taking this trade"---,or a few trades.Would be interesting.


As an aside Yogi has had some great success with his method,Ive seen it.
However I wonder what his "Blueprint" would look like over 1000 trades.
How consistent are methods?

 

[Sean K]

Hello kennas,

Ok, did you miss something? - Only a few years of studying this stuff. Sorry, I ran out of time, so unfortunately I gobbledegooked it with jargon… It’s pretty hard to condense the whole thing into 2 sentences…

This is it in a nutshell: first you need to be able to grasp how markets trend, develop an understanding of patterns of trend, understand how counter trends work – especially in different time frames, grasp time cycles/vibration theory, study lots of charts in lots of markets from early records to current charts.

Then you need to learn about time and price squares and how they can be used. The time and price increments are configurable; hence they are both selected with a specified time cycle, and calibrated in terms of price units to time units (a ratio). This also determines the various angles available. It is also possible to select which angles are drawn in the square. There is a whole raft of different approaches possible in terms of how these are implemented depending on your personal preference.

The pattern in the chart is the starting point. How it has been trending is important, where and when highs and low have come in is taken into account in relevant time frames (daily/weekly etc). Depending on the individual price divisions can be examined (“division of the range” – retracements and extensions).

But the key is to recognise the cycle running beneath the obvious bars in the chart. You sort of have to look beyond the chart – kind of like those weird 3D pictures that were around. You sort of stare at them till you get you eye in, then suddenly the 3D picture leaps out at you – it’s kind of similar.

In dealing with time, each cycle theoretically has unique harmonics that run through the underlying. There is usually a dominant cycle, but there can be minor cycles that are evident too. Sometimes key increments in the cycle tend to be more prevalent, but each cycle has its own characteristics. In a way a lot of Elliott theory parallels the logic behind this approach.

Sometimes there just isn’t a clear cycle, sometimes time is totally irrelevant. Sometimes there is no pattern, or there is ambiguity, or if there are patterns there you may not have the right mindset to see them – all possible.

I only trade what I can see. Sometimes time is irrelevant in some trends and patterns so you just ignore it. Some wave structures are so clear that you can trade them alone (not saying it will do what you think it will, but you can certainly get an edge if you know what you’re doing– wavepicker does this very well with pure Elliott Waves combined with some straight McLaren charting concepts – non Gann). Some patterns are sufficient to trade from. But this all comes with experience. Also, there’s no guarantee that even when things line up, that the market will trade the way you think it will. Often it won't, and that’s where having clear cut failure criteria and contingency planning comes in.

Hope that made better sense.

Regards,

Magdoran

Thanks for the time you've put into these posts Mag.

I've been studying this stuff for a little while too, but I still can't define what you mean by vibrations. Are you just saying it's the underlying trend in price? I can see the trends when they are there, am I seeing the vibrations even though it's not in 3D? Yet. Perhaps a bit of LSD would help me there.

 

[Morgan]

I would be interested to hear people's thoughts on how company fundamentals overlay into chart analysis.
I feel technical chart analysis tends to 'disregard' that we are actually trading a real-life physical company (selling services or products) and not just a line on a chart.
From a technical standpoint, do we just assume that everyone in the market knows everything about a company all of the time? I find this hard to grasp, as (without wanting to allude to insider trading) in that case everyone would be a buyer, or everyone would be a seller.
This brings me to my personal conspiracy theory- 'does the market know who I am?'. In theory, the market should be broad enough and deep enough to not even notice my measly buying and selling. Yet how often do others notice, that just after you buy into a long and strong uptrend, the company calls in the administrators the next day after you take up your position?
Or after you cannot take the pain any longer and offload your stock in an unloved downtrending biotech, only to have them shortly after announce (insert major medical breakthrough of your choosing)?

 

[Magdoran]

Magdoran,

I came to a similar conclusion after responding to your post that it may be more beneficial to break out the various points and address them more fully.

Short quick answers at times can tend to oversimplify or confuse. Sometimes the devil is in the detail or we don't provide enough information and raise more questions.

Will be interested in your response(s).

Cheers
Les.

PS: Have you had the opportunity to start reading the Phantom of the Pits (POP)?

Hello Les,


Yes I have been reading the Phantom of the Pits, thank-you. I liked the reference to Sun Tsu, I read the Art of War many years ago in my teens, and this kind of “wisdom” has served very well.

I’m a great believer in using these kinds of tactics in the field – the idea of the “Chen” obvious move, and using the “che” (I call it sneaky move). I think a lot of competitive areas are like this, you try to keep your competitor focused on your obvious Chen moves while the real thrust comes from the “che” move.

“POP’s” tactics on the trading room floor reminded me of people like Krieger in the late 80s and early 90s using hedging tactics to disguise his real intentions to outmanoeuvre his opponents.

As for dealing with posts, I think we’re on the same page here.

Have a lot on today, so we’ll see how we go…


Best Regards


Magdoran

 

[barney]

I would be interested to hear people's thoughts on how company fundamentals overlay into chart analysis.
I feel technical chart analysis tends to 'disregard' that we are actually trading a real-life physical company (selling services or products) and not just a line on a chart.
From a technical standpoint, do we just assume that everyone in the market knows everything about a company all of the time? I find this hard to grasp, as (without wanting to allude to insider trading) in that case everyone would be a buyer, or everyone would be a seller.
This brings me to my personal conspiracy theory- 'does the market know who I am?'. In theory, the market should be broad enough and deep enough to not even notice my measly buying and selling. Yet how often do others notice, that just after you buy into a long and strong uptrend, the company calls in the administrators the next day after you take up your position?
Or after you cannot take the pain any longer and offload your stock in an unloved downtrending biotech, only to have them shortly after announce (insert major medical breakthrough of your choosing)?

I may be a little out of my depth on this thread, but firstly, everything you said (MAG) a couple of posts back actually made "perfect" sense (except for a little unsuredness on the "vibrations" as well)...........The more I study what you guys say/talk about, the "simpler" the "complexities" become if that makes sense, so thanks for the "enlightenment" I am receiving.

Morgan, I am also curious re the "guys" (plural) response, on how the "real life" part of trading is/can be formulated into the equation(s). I respect that the charts etc give a great depth of statistical "behaviour" to base our trading plans/judgements on etc., but it seems to me that, no matter how good our analysis is of past events, the "uncertainties" of the world in general will always make it difficult to "trade into the future" Now don't you guys get stuck into me just cause I'm new..........I am still agreeing that analysis is a brilliant concept, and I am becoming "obsessed" with looking at charts etc......(thats all your fault(s) (plural again) ............but I do think that Morgan's point on "real life" is of great importance For eg. The sp on might be sailing along nicely on an oil producer (not atm when...bang .......hurricane from nowhere wipes them off the planet.........sp drops 20-30-40% .....the point is we cannot formulate that into a chart!........I wont ramble on any more cause there is far better knowledge to be gained by me reading,not writing ! :bowdown: ...........But in essence, I guess my question is..........would it be any more or less successful by simply "trading after the event" so to speak (which may require a lot of patience/sitting around...........rather than trying "see into the future" from past events/analysis.........Personally I like to trade, so I would not want to "sit around" waiting for the next "tidal wave"..........but any opinions regarding this would be interesting...... :dunno: Cheers, Barney.

 

[tech/a]

Barney.

Good to see your well on your journey.

but it seems to me that, no matter how good our analysis is of past events, the "uncertainties" of the world in general will always make it difficult to "trade into the future"

Absolutely correct.The trick here is to trade in such a way that even these uncertainties (Which are rare events) have minimal effect on your bottom line over the long run.You cant filter them out or pre empt them.However you can minimise impact even like that of an 87 crash.

But in essence, I guess my question is..........would it be any more or less successful by simply "trading after the event" so to speak (which may require a lot of patience/sitting around...........rather than trying "see into the future" from past events/analysis

This is just as risky as any other "analysis" take the 87 crash,it wasnt until 1994 that price returned to pre crash levels.
Some analysts would have avoided the crash,both technical and fundamental by simply not being in the market.
Others would have minimised impact by diversification (Not having ALL investments in stock) or by having minimised holdings.
Many of course would have been caught. ( I took a hit in 97 before I knew what I knew now!).We must make sure that in an event such as 87/97 that we will not be wiped out. Survival is of utmost importance.

 

[barney]

Barney.

Good to see your well on your journey.



Absolutely correct.The trick here is to trade in such a way that even these uncertainties (Which are rare events) have minimal effect on your bottom line over the long run.You cant filter them out or pre empt them.However you can minimise impact even like that of an 87 crash.



This is just as risky as any other "analysis" take the 87 crash,it wasnt until 1994 that price returned to pre crash levels.
Some analysts would have avoided the crash,both technical and fundamental by simply not being in the market.
Others would have minimised impact by diversification (Not having ALL investments in stock) or by having minimised holdings.
Many of course would have been caught. ( I took a hit in 97 before I knew what I knew now!).We must make sure that in an event such as 87/97 that we will not be wiped out. Survival is of utmost importance.

Thanks Tech, Good advice as always............Just out of curiousity.........say I had $100,000 to invest (which I don't, but thats another story)........How much of that capital would be considered "sensible" to have "tied" up at any one point in time? ie. Is there a ballpark ratio of shares to cash on hand that is recommended, or do you just "play" the current market of the time, how you see it? ....I'm guessing you'll say its relative to the "strength" of the market at the given moment in time? For eg. Now would probably not be a great time to have all your money tied up because a) There is uncertainty with no firm direction and b) Due to this uncertainty, there may be some "bargains" to be had by remaining "liquid/flexible"?? Is that on the right track?? Cheers, Barney ("L" plater in action......keep well clear :1zhelp:

 

[tech/a]

Its a question that everyone should ask themselves.
Everyone will be different.
Those who are starting out on the journey of accumulating wealth for the future are at more risk than others due to smaller capital bases.

The following is my personal view and not meant to be advice to you or anyone.

In the beginning its best in my veiw to establish a base.
Most wont do this as the desire to accumulate wealth is stronger than the understanding that they dont have to do this in a year or 5 even 10 yrs.

Personally again my first aim would be to have a base established in either Property or longterm growth type stocks.
Wealth unfortunatley grows slowley and the old adage "Money makes Money" is so so true.Once you get going the growth is exponential (Or can be if applied wisely).

To the $100K.
If I didnt have a home then I would be slow in my investment into growth stocks taking say 1/3rd and waiting for that to grow to 1.5 times or so the initial capital base of $33K until I invested more even in the same successful stocks.
Eventually the aim would be to hold all growth stocks over a long period with enough capital growth in my investments to weather most storms.

If I had a home then I would put it there and re draw the 1/3rd and do the same.
Never putting myself at risk of ruin ( well to the best of my ablility).

As your capital base becomes larger than you can split off capital to diversify OR more importantly maximise capital in one area where obvious opportunity exists.
Even so I would not place ALL capital in one opportunity.

I have been to 80% geared in property and it wasnt very comfortable.
However it has paid off and I realise as everyone does when they find an opportunity,that it wont go on forever.There comes a time with all investments that we should crystalise the profit and get ready for the next opportunity.
This will vary from person to person,and timing will always be an issue.
Getting it mostly right is far better than getting it horribly wrong.
A balance of a little fear and a little greed generally means we can grab that in the middle---worthwhile profit.

 

[barney]

Its a question that everyone should ask themselves.
Everyone will be different.
Those who are starting out on the journey of accumulating wealth for the future are at more risk than others due to smaller capital bases.

The following is my personal view and not meant to be advice to you or anyone.

In the beginning its best in my veiw to establish a base.
Most wont do this as the desire to accumulate wealth is stronger than the understanding that they dont have to do this in a year or 5 even 10 yrs.

Personally again my first aim would be to have a base established in either Property or longterm growth type stocks.
Wealth unfortunatley grows slowley and the old adage "Money makes Money" is so so true.Once you get going the growth is exponential (Or can be if applied wisely).

To the $100K.
If I didnt have a home then I would be slow in my investment into growth stocks taking say 1/3rd and waiting for that to grow to 1.5 times or so the initial capital base of $33K until I invested more even in the same successful stocks.
Eventually the aim would be to hold all growth stocks over a long period with enough capital growth in my investments to weather most storms.

If I had a home then I would put it there and re draw the 1/3rd and do the same.
Never putting myself at risk of ruin ( well to the best of my ablility).

As your capital base becomes larger than you can split off capital to diversify OR more importantly maximise capital in one area where obvious opportunity exists.
Even so I would not place ALL capital in one opportunity.

I have been to 80% geared in property and it wasnt very comfortable.
However it has paid off and I realise as everyone does when they find an opportunity,that it wont go on forever.There comes a time with all investments that we should crystalise the profit and get ready for the next opportunity.
This will vary from person to person,and timing will always be an issue.
Getting it mostly right is far better than getting it horribly wrong.
A balance of a little fear and a little greed generally means we can grab that in the middle---worthwhile profit.

Thanks again Tech, just put that all in the personal computer (the one between my ears!) I lost quite a bit not long back through lack of education, and thinking this was an "easy game to play!" ...or probably more to the point, just "not thinking!" My longer term plan is to "earn" back what I lost so I can post on this forum with some hopefully "useful" advice to help the unwary (like I was). I expect it to take a while, but with a little luck and a lot of planning etc who knows??.......................one of the main things this forum has helped me with particularly, is making more DISCIPLINED decisions. Many times over the last few weeks instead of "jumping in" on a trade like I would have done previously, I've learned to sit back and ask myself WHY am I going into this trade?, and if I can't prove to myself why it is a good trade, then I have "walked away" .........still dont get 'em all right, (and I trade a lot less) but even if I get it wrong, I am happy that I had sound reasons for entering in the first place. Anyway I've taken up enough space here.....I'm going to do some "real" work :run: Cheers, Barney.

 

[Magdoran]

I may be a little out of my depth on this thread, but firstly, everything you said (MAG) a couple of posts back actually made "perfect" sense (except for a little unsuredness on the "vibrations" as well)...........The more I study what you guys say/talk about, the "simpler" the "complexities" become if that makes sense, so thanks for the "enlightenment" I am receiving.

Morgan, I am also curious re the "guys" (plural) response, on how the "real life" part of trading is/can be formulated into the equation(s). I respect that the charts etc give a great depth of statistical "behaviour" to base our trading plans/judgements on etc., but it seems to me that, no matter how good our analysis is of past events, the "uncertainties" of the world in general will always make it difficult to "trade into the future" Now don't you guys get stuck into me just cause I'm new..........I am still agreeing that analysis is a brilliant concept, and I am becoming "obsessed" with looking at charts etc......(thats all your fault(s) (plural again) ............but I do think that Morgan's point on "real life" is of great importance For eg. The sp on might be sailing along nicely on an oil producer (not atm when...bang .......hurricane from nowhere wipes them off the planet.........sp drops 20-30-40% .....the point is we cannot formulate that into a chart!........I wont ramble on any more cause there is far better knowledge to be gained by me reading,not writing ! :bowdown: ...........But in essence, I guess my question is..........would it be any more or less successful by simply "trading after the event" so to speak (which may require a lot of patience/sitting around...........rather than trying "see into the future" from past events/analysis.........Personally I like to trade, so I would not want to "sit around" waiting for the next "tidal wave"..........but any opinions regarding this would be interesting...... :dunno: Cheers, Barney.

Hello barney,


It suddenly occurred to me that this is in the beginner area… woops, and here we are really getting into the deep end. Easy to do when you have some capable people around.

Have a look at the threads I posted up where there are some discussions.

The consensus view came up with a range of texts to consider – focus on Technical analysis here (money management which is important others can recommend, although Van Tharp’s “Trade your way to Financial Freedom” is commonly used).

One that was generally agreed on was Stan Weinstein’s “Secrets for profiting in Bull and Bear markets” (a really good general primer that spells out the building blocks, and it reads well).

Other Authors generally mentioned by the different posters for technical analysis were alphabetically:

Bigalow,
Bedford,
Darvas,
Edwards,
Guppy,
Prechter and Frost,
Radge,
Schwager,
Watkins,
Wilson,

Have a read through the various threads I mentioned in my first post on this thread, and consider which approaches you feel more comfortable with, and have a look at each area you want to in turn. I suggest you take you time, and try not to overdo it and get swamped with too much information.

Try to give yourself enough time to absorb the ideas you are accessing, and recognise that it is a long journey in this field. Recognise too that it is highly competitive in the market, so please consider paper trading a lot at first, and if you do want to trade, do so with very small positions at first.

If you have capital you want to invest wisely, consider locating an expert financial advisor that you can trust (beware of advisors who gain from steering you into an approach with a trailing commission – they must disclose this by law).

Vibration Theory:
Concepts like vibration theory is way too advanced for a beginner. It is also very unorthodox, and a very small percentage of the market use or understand this perspective. In fact it is little known even in T/A circles. While this is something that will only confuse you now, and probably for at least a couple of years, I’ll give a brief comment on it for future reference and for those who are curious reading this:

Vibration theory operates on two distinct levels. Firstly the cycles that run through all markets at all times (like the seasons, commodity cycles, economic cycles, etc…). Secondly, localised cycles that have a limited time horizon.

Think about the string on your guitar when you strike it. It vibrates as certain intervals (look at music theory and the relationships of harmonics – vibration theory is very much like this). When you hit all 6 strings, depending on how they are tuned and which notes are playing, you will get a range of notes that interact with each other. If you have a dominant note, the harmonics related to that note have a bearing on the tonal quality.

Also, think of a pond with a range of ripples. If you drop a large rock with force, it will make large concentric ripples, while a smaller stone thrown closer to the observer may make smaller ripples in the scheme of the pond, but appear larger from the observer’s perspective.

Consider that the two ripples merge at a given point. The “high” wave hitting a trough from the other ripple, may cancel each other out, or significantly reduce the effect of the other. But when two “highs” or “lows” coincide, the resultant peak or trough may be exaggerated.

I think markets work a bit like this, but the ripples are numerous (interest rate moves, weather effects – cold winters = higher energy consumptions, supply and demand for numerous commodities, collective wage rates, tax rates, capital injections, government regulations, mergers and acquisitions, - the list goes on – essentially everything that effects all markets).

Another view of the market could be conceived along the lines of how gravity and motion work. Imagine a group of asteroids each with their own trajectory, and the way different levels of gravity from a range of bodies might modify their movement, and how collisions may affect them to.

So, vibration/cycle theories recognise markets generally don’t trend in a straight line, but vibrate, and they do this through time. Part of the concept is to locate and use the harmonics if you can identify a potential cycle. Note though that this is open to interpretation, hence it is not an easy subject to deal with. Also, a lot of the process has to do with pattern recognition, but pattern recognition in a macro context – actually looking for smaller basic patterns in particular combinations (again a bit like chess combinations) making up larger patterns.

Using the guitar analogy, if you have a chord, the harmonics all work out nicely. Add in some discord, and it can wash over the dominant note, and obscure it’s harmonics. This is kind of the “white noise” of the market. The idea is to try to locate patterns with tradable market harmonics, and compensate for random noise and filter it out. Easier said than done.

This is where the “3D picture” trick comes in - to use your imagination somewhat like seeing many moves deep in chess, and intuitively screening out the flawed combinations of moves. Like in chess where you use your intuition to narrow down the options, and focus on the really elegant combinations, the idea is to screen out the noise. Maybe it’s like innovating/jamming live with others, you hear the melody before you play it, it’s kind of like that if that makes any sense. (Doing my best here to explain it with words – a white board in person would be a different story).


Ok, forget all that, and focus on the simple basic concepts, and find approaches you feel comfortable with. Read what you can, and explore each step when you’re ready. Be careful not to rush things - learning this art takes time, and you have smorgasbord of choice.

Good luck with your journey, there are many wise voices here. If you get your head around a lot of it, it will give you a solid grounding to move forward!



Regards


Magdoran

 

[Magdoran]

There is a VAST difference in the two "Blueprints".
Mine is a blueprint of the application of the identical analysis over 1000s of trades over a given period. The result is "The BLUEPRINT".I monitor future perfomance of my trades (accumulative) against it. Individual trades are of little consequence.
Had you applied your "Blueprint" to 1000s of trades and had those results tabulated to form a record of what could be expected applying this "Discretionary" approach on those trades then we would both have a similar print.

Hello tech,


You raised some interesting perspectives here.

Agreed this isn’t a competition, it’s a comparison, and an examination of the smorgasbord of choice available in the market. So to add to your comments:

Yes there is a vast difference between the two “blue prints”, certainly due to the points you raised, and to some extent because some of our primary structural approaches are based on polar opposite end of the spectrum. (Kind of like the difference between your approach and the Duc’s).

Key input variables that are different are: Time frame, financial instruments, method of determining probabilities, Technical Analysis approach, method of delivering positive expectancy, time allocated to the process.

T/T is a long term approach using margin lending unhedged (unless you have changed this), based on probability determined by a custom calibrated back testing regimen and a trading system utilising a version of a positive expectancy approach utilising an orthodox technical analysis methods. Is that a fair encapsulation?

Points of difference then is shorter time frame, using options and other derivatives, probability manually determined, unorthodox hybrid technical analysis, manually calculated (floating) positive expectancy…

Because of the time frame difference, the shorter term “blueprints” are designed to be more immediate and flexible to deal with fluid market conditions. Rather than focus on screening out the swings in the market for the long term, the idea is to take full advantage of these and trade both the trend, and the counter trend if an opportunity which fits a criteria is identified. Also, all of this is done within an overriding strategic plan, but it has points of flexibility imbedded in it along the lines of the way RUP (Rational Unified Process) is configured.

What I’m saying is that a lot of the larger profits came from trading counter trend moves (bearish positions) in a raging bull market. Why? Because entering a put with low volatility at a key point can make significant returns in a very short space of time, and gets an added bonus from an increase in volatility.

So my trading approach aims to benefit from direction, magnitude of the move, and from the double benefits of the “slingshot” effect when the underlying moves very quickly augmenting the returns from volatility and delta. But this approach is very intensive, and not a put the trade on and walk away variety. It is also highly technical and not suitable at all for beginners.


Regards


Magdoran