This is a mobile optimized page that loads fast, if you want to load the real page, click this text.

My Brush with Technical Analysis

Jump to new

These are technical setups just like many other setups.
They aren't predicting anything they are anticipating
a reaction to the volume.

So in your opinion what has been shown is B/S or is all T/A--- B/S?

I agree that hopping on momentum is the best way to minimize risk It can eliminate it.
Nothing wrong with having a stable of prospects where momentum is anticipated
then hopping on once confirmed with a breakout.
 
rb250660 said:
Listen to skc.
Predicting the move with technical analysis is just bs and will end in tears with trades like these.
Click to expand...

I didn't mean technical analysis is bs. I was just saying that, looking at a chart that's broken out and calling it obvious doesn't actually prove anything.


Interesting. I didn't know Nick Radge has a book / strategy like this.

rb250660 said:
Trade the break confirmed by the good (or bad) news.
Click to expand...

+1. This will dramatically increase your win%. Couple with watching the depth and you will have some truely low risk trades.
 
skc said:
I didn't mean technical analysis is bs. I was just saying that, looking at a chart that's broken out and calling it obvious doesn't actually prove anything.
Click to expand...

The main bs about T/A is the misguided expectation that T/A can make a "prediction" about the future. Whenever there is a discussion about relative merits of Tech vs Fundas, it's long odds that a denier will argue "Try as you may, you can't predict the future." Or they challenge you to "predict where XYZ's share price will be 6 months from now. Anyone expecting that kind of prediction should visit Athena Starwoman of Madam Tarot.
What Technical Analysis can provide, however, is a set of relative probabilities of the way a given setup will be likely to play out, like those Volume-Price sequences, or the Momentum turning before a price breakout. If I see a pattern that has - in the past - had, say, an 80% chance of an impulsive rally, I do call it an obvious signal to enter. Should this particular case follow the less likely 20% and not get on with it, I'll have a Plan B, cutting the loss short without emotional attachment and moving to the next obvious setup. No individual trade need to follow "a prediction", but over time, I'll be way ahead purely by statistical law of numbers.

Check out this chart of your example: The combination of volume and momentum that I routinely use gave me one signal in late April, which followed a path with a lower probability and was therefore overturned very early. The next cluster in early June was successful; with the entry at 9c, I had the choice of swing-trading up to 11c, or staying Long, topping up in early July and doubling, even tripling my money.



And this is how the chart looked BEFORE the breakout. The arrows in early June were picking up the increased volume and turning momentum - quite obvious, really. Tradeable between 9 and 11, re-entry in July at 10.5 to 11.5c; or staying on...



Mind you, other methods may have fired differently; my point is: if you have a proven analysis and the skill to use it, ignore calls of bs and just go on earning a living.

Couple with watching the depth and you will have some truely low risk trades.
Click to expand...

About depth, I beg to differ. Market Depth is of limited use because it is, and has been for decades, used for all kinds of deception. Be it U/ entries (now rarely used), queue jumping (frowned upon by ASIC), level stacking, or adding bogus entries being pulled before the Market gets to them,... the main use I get out of a depth screen is a vague notion of which way the deceivers may intend to trade. The rest is bs as most orders come off screen, so you can never be sure of the real intention of the powers behind an order.
 

Well that's my point exactly. What is the probability of the identified set up resulting in an impulsive rally? I'd like someone to be able to quantify that with some real time calls, as opposed to using some broken out charts to call out repeatable patterns.


It is of very limited use unless one knows how to use it! Market depth in combination with course of sale can give you heaps of information and often before it is shown on a chart. All the prop guys use it. Perhaps there are some trading strategies that can still be profitable without using market depth. But, here's a passage by Mike Bellafiore from the book One Good Trade



When trading penny stocks (like SBM), watching the depth can also be used to save yourself a tick or two on entry and exits. When you consider each tick on a 10c stock is 5%, these add up considerably. Say your entry was 12c and your automatic stop order was 10c, you will be stopped out if the bid/ask was 10/10.5, and someone just sell 1 share into the 10 bid. By watching the depth and you see still plenty of bids at 10 and not much ask at 10.5, you can choose to wait or put your sell order in at 10.5 and get a better price.
 
skc said:
... as opposed to using some broken out charts to call out repeatable patterns.
Click to expand...

Three breakout charts were offered by tech/a,
to be illustrative.
His point is simple.

The information is there.
If one fails to see it, one misses out.

Take the horse manure (or bullsh!t) to the garden.
Put it on the strawberries.
Watch them grow and ripen!

The same lesson would be harder,
if the breakouts had not yet happened!
 
skc said:
Interesting. I didn't know Nick Radge has a book / strategy like this.
Click to expand...
I coded it and it's pretty good if long term trend trading is you thing.

tech/a said:
So in your opinion what has been shown is B/S or is all T/A--- B/S?
Click to expand...

pixel said:
The main bs about T/A is the misguided expectation that T/A can make a "prediction" about the future.
Click to expand...

What pixel said tech. Using t/a to predict high probability moves in things like MEP PSY TOE (i currently do not hold any of these) et. al. is impossible. The break on news is how it's done in my opinion. How to get in and out is the hard part to work out for most people.

With that said my primary strategy is a purely technical swing trading method and looks for high probability setups. This year its been right 92% of the time with higher than usual trade frequency and profit. Breakouts in the small cap arena have been easy money too for the last 6 months or so. This year has been great year so far for many traders.
 

I'm afraid you misunderstood what I said, rb...

I don't "predict" anything for any stock. But I believe my MEP example is evidence that T/A does indeed work on penny stocks. It may not tell at the outset how far a rise is about to go; that depends indeed on news or events "out of left field". However, given sufficiently strong signals underpinned by volume, momentum, and trading activity, high-probability signals like the ones in my MEP example have proven highly profitable over time. For all types of stocks and over all time frames.
 
SKC and rb250660

You make solid valid observations.

But like most discussions the actual APPLICATION of a strategy is where it all falls in a screaming heap.

So In cases like a consolidation where we CAN'T PREDICT but we can ANTICIPATE an increase in positive momentum---you would simply set a conditional buy stop order on how many ever prospects you have.
This order wouldn't be triggered unless the momentum went far enough to trigger the buy stop. Of course once away you set a stop at B/E---as you will see in the short exercise I did here with PAV---the link posted already the overall risk is cut dramatically when you can move to B/E. While the exercise wasn't this----it does show the value of movement to B/E in respect of time taken to recover losses and overall Risk to Reward.


See chart.



I have some old searches at home so happy to have a look for some and post up some prospects to see how they go. Had a look last night and there was 1--forget its code----
 
I guess if you believe in TA then by default you have to believe that patterns will recur in the graphs you plot and that its possible to gain an edge by looking for events (volume, price changes etc), that have led to outcomes in the past and betting that its more likely than not that they wll happen again.

I suspect that having confidence in whatever strategy you use, and the discipline to stick to it, is more important than all the discussion about whether the strategy is 'correct' or not.

We know the % of successful traders is minute, I suspect the % of successful longer term investors is not too good either.

My believe is that its human psychology that gets in the way of the implementation of successful strategies - regardless of whether they are TA, FA, short term, trading, investing, buy & hold, whatever.

I know in my early days I researched all sorts of approaches, I could never get past the logical and mathematical issues I had with TA, so I knew it wasnt for me - because I would never have developed any confidence in a strategy based on it.

That doesnt mean its not a perfect approach for tech/a, pixel or anyone else. I still follow a lot of what the TA guys post because it helps me think about what i do and why I do it.
 

Hi G
I've stated many times its not about being right---I'm wrong more often than not and this particular setup wont play out profitably on every occasion---its about being profitable.

I'm one of these guys that wants proof just like all of us.
Over 20 yrs I've seen and traded "Proof" all the time.

Being Systems based myself the "proof" that programmed re occurring patterns could be traded profitably on data sets was enough for me to trade and invest.
But some markets are to be traded and some are to be avoided---this also panned out in systems trading.
Stocks are generally limited to one direction and this along with programmed rules doesn't auger well when trading difficult markets---stocks flounder.

So off to Index Futures I went---trading discretionary patterns that I knew worked.
They still do to this day---are they right all the time---No
But to me the secret to ANY trading Discretionary Fundamental OR Technical is your application of analysis to trades to return a profit.


Here we are discussing just one technical setup and its application in real time trading----from tech/a's view point.(The practical application I've presented)
 

I'm just polishing a new technical strategy right now based on this exact entry type but it doesn't use building momentum to flag a potential initial (and what we hope to be an) upward move. I works by detecting a recent past move and gets set based off that.
 
Once upon a time:

I accompanied a truckie on a parcel run from Adelaide to Mildura and return.

Having done the shift, we went to a cafe for breakfast.
There were truckies everywhere.

They were discussing shares: Ventracor ASX: VCR, and Unilife

(NOTICE - company delisted
Company code "VCR" delisted as of 01/09/2009
following failure to pay annual listing fee for the period ending 30 June 2010.)

Unilife, a company which intended to sell retractable syringes.

Both companies were HOT at the time.
They had Momentum.

T'was like they were following the favourites at the dogs or horse racing.
 
rb250660 said:
Leave it alone, it was over two weeks ago.
Click to expand...

I had waited to get on at 15c.
It has taken a month.
There were a few tense moments!


Hopefully it has momentum!

Is it too oily to say something immature!!
Toot! Toot!

:
 
burglar said:
I had waited to get on at 15c.
It has taken a month.
There were a few tense moments!


Hopefully it has momentum!

Is it too oily to say something immature!!
Toot! Toot!

:
Click to expand...

Assuming you were talking about MEP: That has indeed come down to 15c and found support there.
Momentum is rising, which suggests the support theory; I also find that the (yellow) 1-year EMA line will often mark a support level. The only thing that's still lagging: Volume. But it could be worthwhile starting a small position and adding as buying volume comes in - if it does.

 

Yes. MEP Minotaur Expl.
They had announced a SPP.
The effect seems to have worn off now.

A good announcement, or two, should see them up and running.
Not very T/A, but I am not fussed.

Not in a position to add, unless the Falcon flies, or the Iron Ore spot price improves.
Wait and see!
 
Its not showing anything technically---just like a dead fish floating on the surface.
 
tech/a said:
Its not showing anything technically---just like a dead fish floating on the surface.
Click to expand...

I absolutely agree with you ... just like a dead fish!

So why did I buy it?
Because I don't mind being wrong with this one.
The management has proved it can handle a big discovery!
They don't come much bigger than Mt Woods / Prominent Hill.

The share price is acting as I would expect.
The reports are imminent.

My worst case scenario - it may loiter awhile.

My worst enemy might be greed.
I've not conquered my greed in 14 years of trading penny dreads!


So what have I learnt since I fell into ASF ... ?
I am certainly not practicing it on this trade!
 
You must log in or register to reply here.

Similar threads

S
  • Question
Recommended Software for Day Trading
Replies
0
Views
944
sazr
S
  • Sticky
March 2025 Stock Competition Entries!
Replies
9
Views
876
Knobby22
January 2025 Stock Competition Entries!
3 4 5
Replies
96
Views
7K
Joe Blow
February 2025 Stock Competition Entries!
5 6 7
Replies
131
Views
8K
Craton
R
My strategy/plan going forward
2
Replies
38
Views
2K
RbNEO
R
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more...