Does the chart have any value?

Discussion in 'Strategy Building' started by bat1, Sep 15, 2010.

  1. bat1


    When I look at a chart all I see is the History the past
    performance of the underlaying security not the future..

    So if a chart can't predict the future what real value
    does it have?
  2. A chart can tell you many things that are valuable without even touching the question of where we going.

    Characteristics of the instrument, perhaps seasonality, volume attributes, volatility in relation to indices, how it behaved during bear and bull cycles, and so forth.

  3. bat1


    I see what you are saying however to me it's history

    History does not always repeat it's self....
  4. oraclewizard77

    oraclewizard77 Moderator

    Certain Price action does in fact lead to a high probability pattern. When I say high probability, I am talking about 60% not 99%. So you can then forward test this in real time using a small bank roll to see if I am right or wrong.

    The next step is money management.

    For example, should I use a max daily loss. If I take a losing trade, how many more trades should I be willingly to take but not end up revenge or over trading.

    What should I set my target and stop at. For example, do you base your target and stop on the chart, for example, market yesterday never breached 1100, so let's assume for sake of argument you take a long position, do you use a standard stop, or set an emergency stop below what the market was never able to breach. If we assume the market is either in a range or trending up which would be 2 reasons you may want to go long, why would the market suddenly go down. Well, it might be do to a report, and in this case, you have to assume if the market breaches this level, you then know that the market has proven your long trade wrong. This type of stop prevents total account wipe out.

    Also, what time frame should we base our decisions on. The shorter the time frame, the more noise and random the market becomes vs a longer time frame which may be easier to recognize price movements.

    If you like post a chart during real time on the ES forum during afternoon hours. I will predict price action that will take place before the close. For example, you post the chart, as soon as I see it, I will reply with a trade either long or short plus stop and target. Chart can not be 1 min, it must be 3, 5, 10, or 15 min chart.

  5. toc



    try to watch the real time charts on the 1/5/10 min tick. see the patterns form, break out and reach or fail to reach their targets. you will learn to respect the charts if not revere them. it will take time like few months atleast. :D :cool:
  6. You're asking if it has any value. The better question is, what is the oppurtunity cost of watching charts. I would rather read the tape than the charts for certain markets. If u trade discretionary then a chart is useful for identifying stable character traits, and perhaps magnet areas etc. For some charts, I can tell by how they move, if I a chart has predictability in it. For those time, a chart can be a great tool. With all that being said, it doesn't take the place of scientific research and they are generally overused as a tool for trading. For most newbies it's a distraction and a crutch.
  7. On a interday chart if it shows rolling eps and volume by price it can tell
    you a lot about what will happen.
  8. No...for me it's purely to monitor my positions.......nothing else.
  9. ALL data used to make investment or trading decisions are based on history, whether the data is fundamental, technical, quantitative, or a chart. Some find predictive information of value in historical data.

  10. Wrong! History always repeats itself - but each time it does the players are different, the time is different, the circumstances are different, so this throws the astute observer off the scent.

    Haven't you heard or seen this being said or written? .... the same old patterns, over and over again, just repeating and repeating and repeating ...

    in fact the above para is an entire chapter titled pretty much the same way in TAST9, the TA bible.
    #10     Sep 18, 2010