I agree with most all of what oldrader is saying. I went from being an intuitive trader with good feel and no discipline, to an indicator laden, confused zombie, with no feel and still no discipline. The obvious problem with stoh's and RSI is that the more over bought/sold the market becomes. the more your "system" has you committed to the wrong side of what can be the biggest moves ever, Any idea how oversold SP was the Friday before the 1987 crash. If I could only use a single technical study it would be MA's. Yeah choppy markets suck, but I fade movement as a habit, so for my personality, having something that counters my personal trading biases is appropriate. But oldtrader IMO makes a great point that trading indices is more about identifying what the componants are trying to do. ES is'nt a single entity. but a sea of issues, some leading. some following, some lagging, but in the end painting a mosaic of overall market structure and direction. remember the old saying, it's not a stock market, but a market of stocks.
Seems he beat me to it. http://www.elitetrader.com/vb/showthread.php?s=&postid=118746#post118746 Would still love to hear more.
I suspect there are as many ways to trade as there are people. I just have my own preferences. If I were forced to pick an indicator to use I would probably pick a moving average. With some judicious use it should keep you on the right side of the market. And if you can get through the choppy periods without losing all your money, or giving up just before the big move, then they might just work out. One of the things I don't like about moving averages is the line on the chart. This gives me a preconceived notion right out of the chute. Maybe it's just me. I don't want to have a preconceived notion. Take the morning of September 11. We gapped up....and as it would happen, we gapped over the 20 day average...and were well above both the 10 and 50 day averages. (I keep track of all these....but I don't have them on my charts). So since you guys are all daytraders, I presume that meant that you should all be bullish on the opening....and as it turned out....at the high for the move....and right near a big resistance area. We didn't break down through the 10 and 50 day averages until very late in the move down that day. Kind of a confusing day for a guy using moving averages. Now maybe you mean to use averages on intraday charts. They had the same kind of problem...just to a different degree. Then there's the problem of the length of the average. Today the 5 minute chart whipped around the 20 bar average any of a number of times. As you lengthen out the average, it increases the play in your trade obviously. For me I'd rather look at the charts and the other things I monitor...and wait until something becomes clear to me. I don't want to be driven by an average. But there may be those who use them successfully. I don't have the "holy grail"...it doesn't exist. OldTrader
Long - Inside bar followed by a high, higher than the bar of two bars ago. Short - Inside bar followed by a low, lower than the bar of two bars ago. Anytime frame Runningbear
RunningBear, So true. You are the man -- but I'm curious about something. With a name like "RunningBear," do you have a natural bias for being short or from chasing bears and being LONG?
RB, Could you (or anyone) please elaborate and define "inside bar" for us? Yeah, I know, us dumb rookies... Thanks, Paul
Markets always go down faster than up. I love the short side. During the 98 Asian currency crisis I made 30% on an overnight short trade. I've been in love with the short side ever since. 70% of companies that float eventually fold, or are taken over at prices lower than their float price. Statistics favor the short side. Optimists play the long side. Realists play the short side. Im always happy to go long after a big sell off, but like Jesse Livermore, the short side just feels so much better. Selling chronic stocks that show weakness to a sector is the easiest money in the market. Runningbear
Slap. Its been out there for a while, so I'll answer it for you. Inside bar--any bar (be it 5 min, 1 hour, 1 day etc) which stays completely inside the range of the previous bar - ie the high is lower than the previous high and the low is higher than the previous low. On the same basis, an outside bar is one that totally encapsulates the previous bar.....ie the high is higher and the low is lower.