Discussion in 'Educational Resources' started by traderkay, Sep 12, 2002.
has anyone ever fought their way all the way through this book?
uh, what is this, or that book?
Kymar has it memorized and programmed on TS...are you kidding me.
That is the classic, if you will; and since all patterns are nothing more than a graphic or quantified representation of human behavior and human behavior repeats, the methods outlined are valid for daytrading.
You will read that price patterns become less significant as the time frame decreases. While I have not read an explanation for this empiric observation, my theory is that as the time frame decreases, so do the number of people monitoring that time frame. In other words, many more market participants respond to the daily charts than do the 1 minute chart.
As in any statistical evaluation, the power of a pattern is increased by the size of the sample.
So Kymar would you share with us what concepts from the book you use in daytrading?
Probably one of the first books I read way back in 1980! That and the weekly Daily Graphs chart book, and I was off. Now with the `puter, it is so much easier.
There are many concepts developed in E&M's TA OF STOCK TRENDS that I find useful for daytrading - the most important being the way of thinking about the markets and about the typical patterns that develop over the course of trading.
Direct translation of TAST's methods to daytrading isn't always a good idea at all, I don't think, but, in my experience, there's still much even on a very specific level that can be carried over fairly successfully. Though the search for good pattern-based set-ups in the intraday time frame can introduce a danger of what Alan Farley calls "trend relativity error" - the attempt to trade a set-up that is unlikely to resolve within the appropriate time frame - many patterns occur at virtually all tradable "resolutions." You can find tradable flags, pennants, triangles, wedges, head and shoulders patterns, snapbacks, pullbacks, and so on, within day-tradable time frames, often down to the tick chart level.
The E&M playbook can also help you to situate a given day's trading within the longer-term frameworks upon which the authors exclusively concentrate. Multi-day and longer support/resistance levels of the type E&M examine in detail, in conjunction with other critical levels and what others sometimes call "micro-support" or "micro-resistance," normally appear to play significant roles in intraday price movement.
Of course, as with any trading methodologies or insights, E&M probably won't take you very far, in my opinion, if not joined to hard-won experience and understanding of the markets - unless you begin with a great deal of luck, "natural" market-affinity, or conceivably other advantages that might even make books like E&M's more a hindrance than a help.
A chart is a chart - no matter the time frame. But what kymar said about the "hard earned experience" is even more true. Developing a feel for the market is essential, and only comes with time, and only if you work hard at acquiring it.
Is E&M useful in daytrading? Yes, and no. However any knowledge of how markets really work is invaluable. The book is not an easy read, but it is worth the effort. It is but one piece of the puzzle, but an important one.
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