barney said:
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