Hi, I'm interested in starting discretionary trading, and learning how to read the market depth information in order to make profitable trades. Would anyone be able to recommend something to read to help me get started? Thanks, Chris
I use T/A indicators (fast macd and stochastic settings) to generate my entry signals, but I am using a market breadth filter for one of the products I trade that has had excellent results eliminating entries into losing signals. The breadth indicator I use as a entry filter has been the nyse TICK.
Chris, From what I have learned in this world I would completely disregard what the person after you said. If you are a discretionary trader, there is no way IMO that you would be able to come up with something profitable using technical analysis. NO WAY!!! you are on the right if you are going into discretionary trading, the only thing you should concentrate on is MARKET DEPTH INFO
The tape. Imo, if you are going the discretionary route, general tape reading of multiple markets is far more reliable than market depth at any given moment.
No one told Chris to START by using T/A (btw, what is so scary about T/A...no big deal?), but he was told by me how I use market breadth..very simple.
Illiquid, Thank you for your reply. Are there any good books about learning to read the tape? Could you explain exactly what the tape is? I'm very new. Thanks Chris
All "the tape" actually means is price, size, and pace. The best way to learn is just to sit in front of your screen and watch the market you're trading day in, day out. Learn to watch for when the best moves occur in your time frame and what kind of action took place beforehand. There is nothing in a book that can teach you what a real-time quote provider will, you just need to watch and be aware of patterns of supply and demand.
I am new as well, and this is exactly what I have been doing for the past month. I sit in front of my computer from 8:30 to 3:00 (central time) and watch the DOW price move. I tell people that ask me about trading that it is like developing a relationship. It is like knowing what your child is going to do before they do it because you have put the time into the relationship. To begin to get a sense of how I will act with real money on the line, I have been trading ETFs for the past two weeks. They move slower and with less leverage than the eminis which is what I am in preparing for (YM). I primarily use EWZ for up positions and DXD for down positions.
Chris, I'm on the other side of the ball, I develope automated trading systems based on specific rules. Even though I have never traded discretionary, I would agree 100% with illiquid's statements. IMHO, there's many things that a computer can do better than just the lone person, but what he's talking about describes the "the human edge" of which is the edge that the person has vs the computer Good luck