It's simple... A trend can change only after a greater retracement. In the attachment: the last ret. in the up leg was .64, so on the way down past .64 is short country. In the down leg, .29 is the first ret. and .21 is the second...obviously the down trend will continue. 1.09 is a caution, but back to short after breaking the 3.15 swing. In the larger degree(orange), 3.67 is less than 4.02...still looking for shorts. Price action rules. See: www.janarps.com The UST(Universal Swing Tool) is FREE...
As a trader you have to respect the current market trend and I attempt to trade in that direction myself. But having read Nassim Taleb's book "Fooled by Randomness" I have to agree with above statement as well (the quote above sounds like something he would say) . It is best to follow the trend but beware the black swan. If someone figures out how to do that . . .
If that's the old MB from the Omega List you can bet he has everything figured out. Slumming here Mark?
About the Black Swan: If you have a good system you should never encounter the Black Swan. If you are afraid of the Black Swan you better never start trading, but that means that you will never be able to make money either. No pain, no gain. Never put all your money in trading, so that you can start over again if ever you should encouter the Black Swan. If my account is wiped out i loose less than 1 month profits. So after 1 year my account can be wiped out by the Black Swan 12 times in a row and i will still have my starting capital. The disadvantage of this way of trading is that you cannot reinvest endless all your profits. But i'm not that greedy and i will always stay alive financially.
No idea who MB is or what the Omega List might be or who Mark is. Pretty much a newb just making an observation.
See: www.janarps.com The UST(Universal Swing Tool) is FREE... [/B][/QUOTE] Thanks for the hint Dave I'm curious to see whether UST is more than the ZIGZAG indicator - which is useless imho. And the ADAM PRICE REFLECTION (sold at $ 495) is easily matched by the Heikin Ashi candlestick indicator - for free! ( www.educofin.com ) Moreover those indicators developed by TRO ( www.kreslik.com ) will never get an award from TradeStation since he gives it away for no charge - in Easy Language.
Charly, You have to play with the swing sensitivity. Notice on my chart there are gray & orange boxes that represent ranges of 5m & 30m bars. I try to get the UST swings to go from reversal to reversal in each time-frame. Note, you can go down to tenths to fine tune it. In this manner it is better than most zig-zag's. But occasionally it does not peg every swing exactly...but what do you expect, it's free
The concept of "Zig Zags" are ok but they never finish the concept. Here is a chart showing Extreme oscillations which designate trend on the bottom and Trading oscillations designated by the price labels on the top.