Truth be told, I've never really understood this point. Win rates aside, because they can be all over the board from one day to the next, calculating the potential for a trade has always eluded me. It smacks of ~predicting, and I've always stayed away from those black arts ever since I've proven to myself time and again that I don't have such powers. Do you base your view of potential on where S/R might be, or perhaps measured moves? (Personally I think measured moves are illusory.) In my case, even if there is S or R nearby, if I have a clean setup on which I can risk only a small amount of money, I would still take it. If the trade begins to act wrong, at S/R or anywhere else, I would look to exit. But the exit would be based on what is happening at the time, and I never know that until it happens.
@Frederick Foresight I can't see your post of where you explained the tightening of stops etc. You did a way better job than me in explaining what I wanted to. Appreciate it.
It always depends. Sometimes it may be the above two, sometimes it's the relative strengths and magnets, sometimes it's TLs, but most times it is a combo of some of these and pure PA. The above makes my trading very discretionary, in which case, making an algo based on it is a lost cause. Also my trading is very sensitive in nature, so it takes me a while to get back to scratch if I take more than 2 weeks off. Basically, I'm married to this until I find other options ops: I completely relate to what you have mentioned and it fits in with my style for the most part.
Unfortunately, when TA is coded objectively it fails miserably--- sorry but dats the fact jack-- see Aronson Evidence based TA for the proof--among others-- surf
My argument is against objective TA that can be coded and executed--- not the intuitive , subjective art of TA--although I have never seen this actually work for a longer period of time, it is possible some very adept folks can make it work ---- it is possible, but unlikely so I am open to it. surf
yes they must trade differently, when they trade they are large enough individually or collectively to move price so they need to trade in a different way. I don't agree with this. The average retail trader has no clue where the larger traders are entering. The larger more informed traders know where the retail traders enter though. think. TLs, MAs, classical support and resistance. It depends on what function they are performing at the time and what is in their inventory. Sometimes they are just looking to flatten inventory. There is of course a speculative element to institutional trading. They build their inventory when lesser informed traders enter. How do you know buying is strong or weak though? For every buyer there is a counterparty. FX is very opaque unless you are inside the dealing room of a large bank. If you are not a profitable trader then I would trade a physical commodity and avoid FX. or perhaps fixed income.
When what TA is coded objectively? The standard fare found in any number of books that serve only as benchmarks upon which to design your own approach which you then must subject to rigorous testing? Jack? I'm sure that uninspired trading methods based entirely on pure stats can also fail miserably. Even if they're programmed into a computer, if you can imagine!
Surf, This is not something I read on the web...that's a hint. Nothing needs to be proven to you. I like the fact you're stuck inside the box. Last 10 years of summary from you in chronological order (oldest to most recent): 1) TA doesn't work for anybody 2) I don't use TA 3) I admit those charts and TA analysis at that website (blog) are mine 4) Ok...I admit I use TA but only for illustrative purposes only as a journalist 5) My friend Sykes is a profitable trader and here are his statements for proof (verification) 6) There's no proof by any trader that he/she can use TA profitably...subjective or science 7) I forgot to mention that Sykes uses TA with other things (contradicts #6) 8) TA could work for some that uses it with other things but I don't know anybody that uses it as such (contradicts #6 or intentionally argumentative) 9) Hedge funds and Institutions do not use TA 10) Hedge funds and Institutions uses TA but only for illustration to their clients 11) TA analysts at institutions are generally part of the marketing departments Surf, you can't be serious. You use to go around here and state as if its a fact, these firms didn't use TA no matter what evidence was posted to you. Yet, today, you seem to acknowledge that firms have TA analysts but you're trying to down play it via saying its generally for their marketing departments. Seriously, why would an institutional firm hire TA analysts...some of which have won awards for their analysis...all while as part of a marketing and promotion of the firm. Nothing needs to be proven to you. I like where you're stuck at and its taken you more than 10 years to realize that these folks exist at some firms. Then again, you are surf and probably knew that 10 years ago but decided to keep that persona (that facade), until now, that pros that use TA do not exist. P.S. Most hedge funds do not have TA analysts...just some have them. Most institutions do not have TA analysis...just some have them. Yet, we both know that profitable traders that uses TA...it ain't the only thing they're using regardless if they are retail or professional. P.S.S. I don't believe TA can be used profitably all by itself (nothing else). A person using TA should already know the markets and understand the direction prior to any appearances of a trade signal via TA. Simply, if someone doesn't know what's going on...don't use TA to tell them what's going on. Marketing Departments...that's a laugh. Doesn't matter if its art or science, keep using it if you're profitable.
Yes, I agree that the average retail trader has no clue. And for the most part, I can't say which trades are those of an institution or not either. But when I see certain levels defended, when I see price take off, 30 seconds later get pushed down, but not below the previous low, when I see a quick thrust down reverse very quickly which shows that there were enough limit orders down there to go long, I have to assume that the big boys are loading up and protecting their levels. Yes, but for me, whatever the reason for their decisions shouldn't matter to me. Seeing the way price is moving should at least tip me off about what they are doing, and that should be enough. Agreed... but if price is dropping, I would say the demand is weak. For sure somebody wants to buy, but if the next transaction is at an even lower level, then clearly not enough people want to buy. Most of this of course only really matters at key levels, and when you zoom out a bit and not go tick by tick.