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Is chart trading dead? (At least when it comes to ES)

  1. I've had a lousy year trading ES. The lack-of-volatility, overlayed with six months of chemotherapy, just about prompted me to throw in the towel.

    First lesson: Don't trade while undergoing chemo.

    Second lesson: Well, that's the point of this post. Bear with me....

    I just finished watching one of John Grady's excellent webinar videos on order flow. He appears to be a proponent of trading without charts, using just order flow info (in this case as presented on the Jigsaw platform). He asserts that prop firms don't allow newbie traders to use charts at all. Moreover, in this algo-driven enviroment, where the bots are scalping for two-to-four ticks, he says it makes sense to do what the bots do. He advocates trading extremes of the buzz-n-fuzz range for ticks.

    Ok, a couple of questions:

    1) Why would I want to compete head on with bots at their own game? Doesn't any advantage of discretionary trading stem from the fact that skilled discretionary traders are able to transcend the noise and capitalize on imbalances that lead to price dislocation?

    2) Doesn't such an approach leave one vulnerable to account-decimating overtrading?

    3) Am I a Luddite, seeking to justify the old ways of doing things when those old ways just don't work anymore? Maybe "chemo brain" is not too blame for the cascade of poor entries and worse exists. Maybe charts really are yesterday's tech, and ES traders need to be order flow scalpers in order to survive.

    Thoughts, anyone?
     
  2. Yes
     
  3. I had a feeling this thread would be a mistake.
     
  4. 1) Bots are as smart as their programmers. Studying orderflow can be very illuminating. Noise in the financial markets is more a reflection of one’s level of discernment. This discernment comes from deconstructing market structure and P/V action into their respective basic grandularity.

    2) Yes. It frequently does. Applying multiple timeframes can help limit one’s over trading. It’s important to understand the factors and variables that change a retrace into a reversal from one’s initial position. The opposite is also true, the pace of compounding profits accelerates by frequently being on the ‘right side of the market’ and not exposing oneself to unnecessary drawdowns.
    The lure of easy money and get rich quick is very costly to the unprepared, the lazy, the greedy and the undercapitalized.

    3) Success and failure can be discovered in any method. It really comes down to the level of differentiation one has built in their mind and how one goes about increasing the emotion of confidence in the approach that most resonants within their personality.
     
  5. You can't scalp ticks if you don't get 'wash'.
    Put up a 1min candle graph of ATR with a 6min SMA.
    Put a horizontal line at 0.50: if the 1min ATR is not averaging above half-a-point for the past 6 minutes, DO NOT TRADE.
    For me, the sweet spot was ~0.75.
    Above 1.0, and you're now a B.S.D. (and, I wouldn't do it.)
    Also, see if you can put on a trades/minute statistic somewhere: if you open an order with 1000 contracts sitting at that strike, and the trades/minute are 1250, you've to sit there for 48 seconds with the market chewing through the book, til *your* order gets hit. Knowing where you are (which is to say, "how *deep* you are...") is a very handy skill....

    10 years ago, it was pretty easy to scalp ticks -- I called it, "milling money."
    As the ATR has come down, so has the advisability of trading for ticks. :wtf::confused::vomit::(
    I *don't* scalp now. (Though it continues to inform my thinking/trading very much.)
     
  6. Not really, there is plenty of money chart trading this year, just that times vary as you need to adapt.

    The first half of 2014 when I started trading ES was brutal, paint drying volume in the extreme and requiring beyond patience during the World Cup etc.

    By the time the Greek debt crisis kicked in I was mentally attuned to a narrow range and happy with 1-4 points a day. Since then when it returned to relative normal, nearly every day has been great.

    Whether you start in a time of feast or famine might affect outlook.

    Trading when feeling low is a problem.

    I have been on heavy antibiotics for the past 10 days. My beard has grown at maybe half rate, a side effect is these tablets is they reduce testosterone by 50-80%. My trading is lousy as my mind is very flat.

    I know however that this will pass and I will have more pep in my step so I don't worry. Sometimes it is you and there is nothing to be done but get better.
     
  7. The charts have given clear signals on ES not just this year but always. Every sell off found quick support at a previous area of resistance and continued up. Continuous buying opportunities, if you will.
     
  8. I honestly think you should just change your timeframe. I don't know if you're trading intraday but if you are and you're also undergoing chemo I would stop trading on anything lower than the daily. IMO the other things going on outside of trading probably have a far stronger effect then the charts or price action themselves.
     
  9. Yes, I’ve stopped until i’m out-of-the-woods. Timeframe is intraday.
     
  10. Nothing is dead; Things become a reborn variation of a variation.

    Trading is all about how you interpret the dynamic future. and how you apply it. Sounds simple enough,
    But most people are simply just spinning their wheels getting nowhere.
    99% of people here are full of stuff, and/or failures. -- as with any given sample anywhere.

    I assume we're all trying to predict/trade/manage the daily SPY/DOW/ES chart.
    The Big, and only, game in town...as far as I'm concerned. The so-called Holy Grail skill in trading.
    We're not investors (or swing traders)....we're impatient -- We want more revolutions, for that compoundability.

    I envision most traders blindly staring at square chart boxes...hoping and praying to glean some magical automatic formula.
    Try to look at the collective picture of things, and all its potentially triggering variables. Not just the surface level of things.

    If you can read Miss Bitchy Market's mood with patience and adaptability...you will become rich.
    Go fishing for the shark -- don't nibble and attract and bait and pull in a regular fish. Have greater, deeper horizons and understanding and wisdom of the market,
    Don't look to quickie fuck Miss Bitchy Market...slowly open up to her, be patient...observe her, talk and dance with her. When you ride and time that wave...that's where the magical love/profit zone will be.

    Be malleable Play-Doh and honey. not a solid brick or rock, or watery...water.
    Trading is an organic, real Pet to manage and oversee. not a Chia pet. -- good luck with reading square charts trying to establish an automatic gold mine, money printing system.
     
  11. Charts show basically the same patterns as years ago. If anything the HFT's and algos have made them more precise because they are removing the emotional element.

    70% or so of the trades in ES are computers. 25% are your traditional institutions and lastly 5% retail traders.

    Look at any chart today. It matters not that computers created the patterns or manual traders did. The same basic patterns are there. They were there 50 years ago. They are there today. They will most certainly be there thru our lifetime.

    Many HFT's are operating at a sub second level so if you are trading 5 or 15 min charts these basically won't effect you at all, at worst, little effect. Stoplosses may have to be put a little further out of reach as sometimes algo's will push price up or down and knocking out traditional stops then price immediately reverses.
     
  12. Trading is nothing like it used to be.

    like the man sez
    soes was better
     
  13. Not sure burnouts pining for the good ol' days adds much value to the site.
     
  14. You mean hoes was better. Right?

     
  15. I wish you luck on your chemo! Hopefully this year will.be better
     
  16. I been ill past 9.5 years, first 2.5 years were manual trading and so hard, bathroom was my office. I traded less short term and more long, hired to get automated and all systems automated now. 2 of 14 are based on math and rest are chart/indicators based. Some monthly down to 2 tick charts, 8 scalp/daytrading, 2 HFTs, 4 swing to very long term. 40 years of staring at charts, am most comfortable there and keeping open mind. I just dont notice anything not seen before at some point. Trading and ET often been outlets to stay almost sane. LOL
     
  17. Seriously though OP. If you mean charts in terms of representing quantifiable data, that’s all fine and dandy. But if you mean V, W, triangular, square, and circular price patterns, then we’re talking voodoo.
     
  18. I made lots of money this year from charts.
     
  19. 1. ES charts were fine this year, as always. Yes, volatility was low much of the time. That only means you should expect to make your gains in smaller chunks.

    2. Spend time on becoming a better chart player. When you get a handle on that, you won't be listening to anybody for market advice.

    3. K.I.S.S., as always.
     
  20. This is backed by research fwiw. Andrew Lo from MIT did a massive study on technical analysis patterns if you want to check it out.
     
  21. Thanks. I needed to hear that.
     
  22. DJ Funk used to play this in his sets. Brings back memories.
     
  23. ROFL...ANYTHING CAN BE MEASURED. Even circles and squares.........
     
  24. Of course it is. Everyone wants to take the easy road. If there was any convincing evidence, there wouldn't be a need to slave away in front of historical price data.
     
  25. Then show us how to measure them in a non-static state :)
     
  26. Nor do miscreants, but don't let that stop you.
     
  27.  
  28. I don't want to start a war over TA. Lo did attempt to quantify patterns like head and shoulders.
     
  29. I recall an Andrew Lo lecture I found very useful in understanding efficient markets and such.

     
  30. Rather than abandon charts, try trading something else. I chose the NQ over the ES years ago and have never had reason to regret it. The NQ is volatile, it's directional, it's predictable, and it moves.
     
  31. Trading intra-day takes a toll on a healthy body. It is ok if you are profitable and still healthy but certainly not ok if you are on chemotherapy.
     
  32. When times of just plain trading badly, I get gorilla conservative and use very rigid entries like H&S, Triples two minute bars, waiting for double Bullish divergence like on two minute ES, then wait for the "thrust bar" John Hill speaks of which is a bar that closes strong up above congestion, and soon after a retracement to get into to go long. Risk few ticks and go for 6-8 ticks.
     
  33. Is chart trading dead?

    If chart trading were dead, I'd be dead too!! And I ain't dead!!
     
  34. Thanks! I'll have to watch this. Lots of great stuff on youtube.
     

  35. I haven't been trading anything like as long as you guys, but both the observations above describe my position perfectly. But I've never tried to trade ES and wouldn't fancy it: to me, it looks a little like watching paint dry (I do about 75% NQ and 25% CL).
     
  36. ES and NQ not so different.

    Point value of NQ is 40% of the point value of the ES, but NQ is about 2.5x more volatile.
     
  37. I see differently pretty much every day.

    This morning is no different.

    As of right now, ES range per contract ~$150 today.

    YM ~$250.

    NQ ~$400.

    NQ is superior when it comes to the number of entry opportunities on any given day, so it is really good for retail scalpers/intra-day traders.
     
  38. Not really. Both tend to make their reversals at the same time.

    With higher NQ volatility and more violent reversals, more difficult to catch it close to the best trade point.... IOW, "more left on the table"... not to mention the more common "air pockets" in the NQ

    "net" = "not that different", from where I sit.

    NQ seems like it could be much more profitable for those who "consistently nail it", but not so much for us mortal traders.

    Money to be made from either if traded well.
     
  39. chart trading will never die - it's just a tool...

    but one should never confuse the tool with the method , which uses the tool

    and Grady (whoever he is) is not an idiot - he popularizes right ideas (for brokers and props): churning the trader's account (via trading a-la bots) is the best way for brokers and props to get the most commissions off the trader's account before the bozo will lose everything to market anyway :)
     
  40. Good post.

    I was going to chime in with "Grady is full of crap", but held my tongue (not sure why... that's not like me.) :) When you explain it from the broker's "account churning, generating commissions" perspective, makes perfect sense.
     
  41. I suspect a large part of the difference may have to do with whether one trades price or indicators. The NQ doesn't wait around. One has to make a decision and act on it. There's no time to wait for crossovers of some sort. Then of course there's volume . . . :)
     
  42. Ditto. To be a really good trader you need to (1) have clearly defined what you should do and why... that's where K.I.S.S. comes in, (2) be paying close attention so that you see what you're supposed to and "on time" (easy to mess this one up), and (3) be able to size-up the situation and pull the trigger within 1 minute... even better, within 15 seconds!*

    Every INCH of deviation from this "formula" hurts performance!

    Yeah, as if that mattered... :)

    *"15 seconds"... really? If you have the "trade concept in your mind", 15 seconds is plenty of time!
     
  43. Nothing has changed in the markets except for the logistics of trading ie computer order entry etc.---The same chart reading skills that were used when the ES and indeed the Big SP were started are applicable now.
     
  44. Ditto!
     
  45. Bingo...bingo...BINGO
     
  46. ROFLMAO! Trading "a la grady" is certainly a way to scalp but it is surely not for everyone. You have gotta to have a quick eye...quick instincts..quick wits...quick decision making skill...total concentration...detachment from wins and losses...count profit or loss at the end of day...i am sure brokers REALLY like such a trader.....
     
  47. A lot of what OP said that "Grady said".. sounds like BS to me. The notion of trying to scalp the stock indices for "2-4 tics" is ridiculous.... waaayyy too much noise for that.
     
  48. It can be done but not everyone is suited for it. It takes a different set of skills. You look at no charts..no indicators..just a Dom with eyeball eyelids pinned back with bobby pins or toothpick so to speaks....lol

    Years ago i used scalp the spread back when quotes where in fractions 1/16, 1/8, 1/4, 1/2. etc. Over and over hours per day. No Dom just looking at level2. Then they went to decimals. That destroyed the game. I could wish for those days again. It was lucrative ..it was fun..mm's and specialists hated traders that could play the game. Back then the spread was their bread and butter.

    Nowdays, IMO what grady does is just a kind of manual HFT trading.

    Google ...Paul Rotter ...he made millions....used to do this sort of scalping howbeit with a bit different methodology.
     
  49. I recall Rotter's name. I don't know, but perhaps Rotter was a "front-runner" ala SAC Capital. (??) If that's the case, can't logically compare him to anything.

    But just because "one guy" made it big with that/any kind of thing doesn't mean it's the "norm" and that ET traders should be able to accomplish the same.

    "Anything" for lots/the majority of people to be successful at... needs to be simple and easy. Trading is NOT that at all. (If it were, all traders would be rich... and we all know the status of that!)
     
  50. It depends on the person. People with good physical tactility do this easily with practice it seems to me. I know a small few traders like myself who knock off 3-10 contract scalps all day for 1-5 ticks. We will take more if we can get it.

    Dom or chart does not matter in my experience, it is the bounce of price on the right one tunes into along with obvious levels to the left.

    Personalities vary wildly however being drawn to dangerous sports, climbing, racing and whatnot is 100% in the small sample I know. There is a subconscious skillset built from such, you always have a way to step back from the heat in mind (or you would be dead already).

    The snag is there are low(ish) revenue ceilings with scalping? You should make money every day, only a few losing days a year (sick days) however averaging much past 8-9k a day is damned difficult (tough on the heart) and 3-5 is common as I understand from discussions with my friends.

    Then once you are doing well for a couple of years, you have more capital than you can deploy efficiently scalping so swing trading becomes necessary to push through the scalping ceiling.

    That might seem like good remuneration, who is complaining right? but compared to a CEO job these days? decent but not not spectacular for the effort and few if any cocktail parties. It is a lonely job. Being in the market in swings over weekends / holidays etc. is stressful to the subconscious for me anyway, I rarely relax properly. And you have to be the kind of sharp person who could be a CEO or director anyway to scalp like this as a solo retail trader. It is only one way of many to make money for the quick.

    Two cents anyway. I love scalping though. I run back to momma whenever I feel lost. Once you are past building capital, its like dealing a game of patience or a 'meditation' as Sting said :)

     
  51. BINGO..you gotta love it. I did it way back before the days of the Dom and have never been able to get it out of my blood...a scalper may meander over to other methologies as the markets change but way down..deep inside...scalping rules. And it is never forgotton.
     
  52. I agree, in theory, with one exception. Regardless of methodology most traders will not be successful. Simple..complicated...it doesn't matter. Usually what does most traders in are the psychological issues. I suppose that is where automation can help.
     
  53. Back in my professional bowling days, one old-timer used to quip, "the mind is the Devil's weapon". True in trading as well.
     
  54. That made me think of the comedy bowling movie Kingpin 1996,
    [​IMG] [​IMG]
    Woody Harrelson lost to his nemesis because he was basically weak mentally. -- But he still ended up with the girl. and a condom endorsement.
     
  55. I don't know if you follow women's golf... but at the year-ending CME Globe championship this year, Lexi Thompson had perhaps the most pressure-packed short putt in history. If she makes it, she wins (1) Player of the year, the CME championship, $500k prize money, and 2 Hall of Fame points... and she gagged that 2-foot put like a choking dog.

    Like Lee Trevino said, "Pressure makes us all leak a little oil. Some more than others."

    There is a lot of pressure in trading the markets... desire to win, fear of being wrong, fear of losing money and having to deal with the consequences, etc.
     
  56. Regardless of the consolation prize, you always remember that you choked when having the chance to grab the brass ring. In trading, it seems the opportunity for that is a routine experience.
     
  57. Manual scalping like bringing a knife to a gunfight in this day and age.
     
  58. Personally I prefer to bring my knife-gun. :)

    upload_2017-12-27_13-11-46.jpeg

    There are tools, will they make you more profitable?
     
  59. You must not have seen the western The Big Gundown with "cuchillo" .......
     
  60. @tortoise
    Sorry to hear about your poor health of late. I hope you move beyond this and get back to full strength soon.
    Your performance could be mostly due to your condition/treatment, it is hard to tell.

    What
    drives order flow and price?
    What drives volatility?
     
  61. Thank you for this excellent post and link to Andrew Lo presentation. I have studied what Dr. Lo has published for years and used his findings in my trading. It is brilliant, as would be expected from MIT and in keeping with another paper by Dr.Lo on Random Walk versus Predictable patterns in the markets. This really deserves the attention of any serious trader. Thanks.
     
  62. Thanks for the excellent post! Well presented and inciteful. (Now it looks like ET has returned to more useful information -- and retreated from the contests with sponsors of recent days.) Thanks also to the OP for starting this thread.
     
  63. An additional point or suggestion on this video: @Startibartfast, I suggest that this video and the discussion of it would be an extremely valuable thread. Perhaps you would initiate a thread illustrating how to apply the knowledge gained from watching the video and use thereof to profitably trade today's markets. Any takers? Or encouragement from ET members to proceed?
     
  64. First, what style of trading are you doing? Meaning, what trading setups are you looking for? Double tops, 123's, flags, support & resistance etc?

    If you are just trading price action, then bots don't matter at all.. They actually help especially when they short/long squeeze the market.. Just ride the wave..

    I made the mistake last year sticking to one market just because I was used to trading that particular market.. But it is complete suicide.. Just look for a market that has volatility and trade it..

    The NQ is way better than the ES IMO..
     
    • All of the above. There’s no reason for me not to include NQ in the day. I follow it anyway.
     
  65. charts are not dead, but they need to show order flow...
     
  66. My 2 cents:

    Cancer treatment can be stressful.
    Day-trading can be stressful.
    Cut back on your stress. Do stuff that you enjoy.

    IMHO don't compete with the HFT bots trading the noise.

    If you must trade, slow the game down. Trade a longer timeframe/interval. Only take your very best trade set-ups. Having alerts and reminders wouldn't hurt either.

    Think Positive, Stay Hydrated, Eat right, Exercise, Be well. :strong:
     
  67. Assuming that 'chart trading' worked in the first place - why would it be any different this year than prior years?

    Contraction of volatility is just part of the market cycle. Higher volatility might be easier for some since you might have a few stop outs and still be able to get a piece of the action eventually.

    In a low volatility environment offering less movement, your margin of error is lower since there's less to catch, so to speak. On some days, there might even be only one good trade. A lot of people seem to get continuous stopouts in such an environment since they're trying to trade a different market than the one that's currently in effect.

    Looking at the last months of 2017, there's certainly been good opportunities in the ES, although there have been some dull days for sure.
     
  68. Agreed. I’ve been cognitively compromised and this has affected my performance, not surprisingly.
     
  69. Good point! One that many traders do not even consider. I, of course, am a chart reader. Patterns work a percentage of time. Other times they fail. Correctly interpreting the context within which a price pattern occurs is an important factor in deciding if the pattern will likely succeed or likely fail IMO. As needful as it is to "see" chart patterns (assuming one is a chart reader) it is also needful to determine the probability of that pattern doing what is anticipated of that pattern. In addition, it is just as important to know "what" to do when a patterns fails.
     
  70. %%
    I like charts also,:caution::cool:; but my records confirm i do better with things besides ES, like stocks for example.........................................................................................Don Bright Daytrading Co,warned behind every shipwreck there is a chart @ the bottom of the sea LOL
     
  71. LOL same thing for indicators..stats...automation...except for indicators, stats, automation it is a slew of indicators....stats..algo's and computer programs..or price drivers..basically anything else one chooses to use in trading. ALL at the bottom of the sea...ROFLMAO.

    MOST SHIPWRECKS are not methodological problems but caused by psychological issues.

    Just think about Victor Niederhoffer account blowups. Why? Was it methodological? Psychological? Combination of both? Or none of the above?

    His were big shipwrecks.
     
  72. Then what about Marketsurfers Price drivers and Beat the Machines with the 1000 point guaranteed price drop in the YM? When you marry a positon and the market does the opposite it can be difficult to just go with what the market is doing. It is best not to marry a position in the markets.
     
  73. %%
    I buy @ XOM ,volpro; but we can NOT really blame XOM Valdez shipwreck on charts, or ES LOL Shipwreck analysis shows 7-9 things that caused it including'' hurry up, '' just like the Titanic...... Market makers+ specialists do good work in a hurry, but driving the Valdez or Titanic, not so much.:caution::cool:
     
  74. Understandable.

    When I hear 'chart reading', I'm immediately thinking subjective, open to interpretation, making decisions on the fly, discretion, etc.

    I think charts are very valuable, but it might make sense to incorporate some hard rules, statistics and plan the trading in advance if one isn't already doing that.

    Best of luck. :)
     
  75. Is chart trading dead?

    It will never die because there will always be trends in the markets as long as there are
    people (and algos) that can't read them!!
     
  76. Yes, 'chart reading' may sound lightweight compared to other expressions that define the same approach. Just as the well known Head & Shoulders may sound sort of Mickey Mouse to some. Perhaps if it had been named a 'rectangle with a false breakout' it would be taken more seriously.
     
  77. Yes, it is all of that and more. A trader just gotta get good in all those areas and flexible to bend in all those areas. Markets do not "live" by our rules. There are only moments when probable success in a trade is high like 90%. Most of the time if a trader can "see" 60% or 65% probabilty of success he best make haste and place his bets.

    Many times probability is only 50% or even less. A trader can still trade the lower probability but will PROBALLY get stopped out more often. However, the times he does get the direction correct ..well..it can make up for all the stop outs.

    There is no high level of certainty in the markets, and cannot be, or all who found it would ...well be extremely rich. There are only pressures bull or bearish..up or down..and determining which has the upper hand at the moment is a traders primary task before placing a high probabilty trade. A low probabilty trade can be placed if a trader can read the larger context and interpret it correctly.

    Markets have been known to twist interpretations..decisions....stats...into a convoluted mess that has no redemption. That is what stoplosses are for. ROFL
     
  78. What you're really saying is that you haven't found a high level of certainty and that you aren't extremely rich.

    There are certainly others who've become 'extremely rich' from trading, so I would reconsider what's actually possible and not in trading.

    How can there be any progress in trading if one never do any better than a mere coin flip? :)
     
  79. Your logic is good. However your particular beliefs around the relevancy of volume determining price is not so good.

    If you are perceiving the markets as each bar a coin flip, then one's progress is
    dependent on when you are taking the coin flip in the series and when you are not and how much of your stake you wager on any particular flip.

    A coin flip near the highs or lows of the previous bar on increasing volume creates a different context than the coin flip taken when there is decreasing volume.

    For most, the market is ruled by the paradigm of game theory. If you subscribe to this belief, then understand your probabilities, place your bets and take your chances.


    The wisdom of the crowd

     
  80. Great Post -- thanks
     
  81. Sprout, I now have a new appreciation for your posts. (I previously had the impression, that you were intelligent, as well as anxious to move through threads with an attitude of some superiority or hierarchal grading approach to posts -- particularly ones that did not fit with your philosophical bias This contribution of the "wisdom of the crowd" is Brilliant. Thanks.
     
  82. LOL ..NO that is not what I said or mean't...what I am saying is that there is no high level of certainty to be found, at all times, in the market. There are moments of high probability. NO need to find a high level of certainty to become rich from the markets. And one can become extremely rich even in a high level of uncertainty. But not all will, because they haven't learned to trade in uncertainty. If the markets were 100% certain and that could be discovered then all COULD be rich..LOL. It just doesn't exist. If you think it does then you are mistaken.

    What will be the open, high, low, close, and of course the volume (Rofl) in say the Nq tomm? Exact figures ok!

    Yes, there are many that have become extremely rich from the markets. Others (way more) have become extremely broke. Those that became rich didn't do it by finding 100% certainty in the markets. They don't need that. They just need an edge and psychological preparation to trade the markets.

    As far as coin flips one can do worse and still get rich. Coin flips have nothing to do with the markets.
     
  83. No, unless you're lucky.

    The market is closed tomorrow. I can tell you that with 100% certainty. :)
     
  84. ROFLMAO ...you market wizard...you too sharp...have a great weekend.

    Me thinks Bama will beat Clemson and Oklahoma might beat Ga but so much uncertainty....but probable.
     
  85. What you say is true!
    Does it have to be though? I mean does one have to look at a chart subjectively?
    There is a direct link between profitability and being objective.
    The issue is is that subjectivity comes naturally and it's easy. Objectivity isn't.

    Here are some questions that are driven by subjective thinking:
    Q1. What is the best setting on MACD for scalping 5 min charts?
    Q2. What is the best chart time frame to use for trading macro trends?
    Q3. Would I get better results using Gann or Fibonacci for entries?
    Q4. Is a weighted moving average better or a simple moving average?
    Q5. I'm day trading. What chart is likely to give me a more reliable signal, a range chart or a tick chart?

    Here are some questions that are driven by objective thinking:
    Q1. If I determine that 'X' is relevant, is the market also concerned with 'X'?
    (What evidence do I have of this?)
    Q2. I have a system to trade and on a back test over 10 years it is profitable. What market conditions would cause it to fail?
    (If back testing a system cannot guarantee future performance, what is the point of back testing it in the first place? If I cannot know under what conditions the system will break down, then should I really be trading the system? I will make money because my system takes advantage of what?).
    Q3. Would it be wise to change markets after a poor stretch in performance?
    (Would it be okay to switch to crude oil after a rough patch in soya bean futures? Why would it be okay? When would it be okay?)
    Q4. Does a simple moving average indicate trend better than price itself?
    (If it does, what setting is the best? Why is that setting the best? Will it change in the future and under what conditions? A moving average smooths price, but what if by 'smoothing' I have eliminating even more crucial trend evidence?)
    Q5. Could I assess trend change more effectively without a chart?
    (If a chart displays a trend, then what is the driving force behind the graphic? Is it just one force or various forces? Cyclical? Seasonal?)

    Subjectivity is tainted. Down the rabbit hole you go! You are not the captain, you are the deck hand.

    Objectivity means questioning everything!
    You throw away what you think you know and what you've been told.
     
  86. If you want to change your experience of the markets from fearful to confident, if you want to change your results from an erratic equity curve to a steadily rising one, the first step is to embrace the responsibility and stop expecting the market to give you anything or do anything for you. If you resolve from this point forward to do it all yourself, the market can no longer be your opponent. If you stop fighting the market, which in effect means you stop fighting yourself, you'll be amazed at how quickly you will recognize exactly what you need to learn, and how quickly you will learn it. Taking responsibility is the cornerstone of a winning attitude.

    –Mark Douglas
     
  87. Douglas never made a dime trading :)
     
  88. I think a laissez faire approach to the market is probally best. Just let it runs its course (of course it is going to whether you let it or not) and dance with it. You don't know what moves (patterns) it will make as it goes up or down. But one thing is CERTAIN it will go up or down or stay the same. We cannot create the dance floor (context) nor can we create the dance steps. But we can follow them and anticipate them. The dances are subjective. No two are exactly alike.

    Yep laissez faire is the best approach IMO. The autocratic approach trys to make the market do what it wants it to do. To be what it wants it to be. To dance the way it wants it to dance. However, it is too much of a rebel to be hemmed in by rules. However, we CAN hem ourselves in with rules. For some I suppose that that makes the uncertain more palatable.

    I have two rules.

    1) above all just try to do what the market is doing regardless of what I think it should do.

    2) have a stoploss or other mechanism in place for when my interpretation of the dance is wrong

    Hence i can and will change my mind in a second if i am dancing the wrong dance. I feel no need to let my trade "play out" if I discern I am dancing the wrong dance. I will shuffle my feet (get out even before SL is hit) and try to enter lockstep into the markets dance.

    And of course the passion (vol) of a dance move can be useful in interpretating, especially for anticipation of the next move.......
     
  89. What? he didn't? Are you sure?
     
  90. The dance metaphor is interesting, this is how I would interpret it.

    Broadly, there are two main types of dances - the choreographed and the improvised.

    One thing common for a majority of dance forms is music. Contact or botoh are examples of dance forms without music.

    Setting aside the choreographed and the music-less, leaves the improvised.

    The improvised would either be in sync with the music or not.

    Music in this metaphor would be the signal that the dancers movements would be influenced by - either in time with, contra to or syncopated with the dominant beat.

    Dancers have a finite vocabulary to express their interpretation of music. This kinesthetic and visual vocabulary is coupled to dance forms. These dance forms are supported by their respective cultures.

    Dancing salsa at a Milonga is appreciated differently than break dancers forming a circle at a hip hop club. Blues house parties go off differently than an ecstatic dance one. An outdoor festival promotes a different feeling than an underground warehouse one off.

    Each culture supports their particular view on beauty and how the witnessing or participation of that beauty makes them feel.

    There is simply the volume of music but music has many more qualities that can be discerned.
    Rthythm, melody, tempo, pitch, tuning, scale, etc. all are qualities that can be modeled to music. In this metaphor they can be coupled to transaction volume.

    Dancers dance to music. In a live setting, quality musicians respond to dancers. The feedback loop between musicians and dancers in live participatory events transcends anything that can be choreographed.

    The connection between music and dancers varies across the forms. Some forms promote a very intimate connection between dancers, the dancers to music and the music to dancers. Other forms are more loosely coupled.

    Price cases would be the dance moves specific to a form. The dancers themselves are the participants choosing how to move their body in relation to the music.

    All this talk about dancing makes me want to dance more!
     
  91. Kelly, Thanks for your brilliant and carefully presented post. Chartists will benefit in so far as they carefully read your post with "open-minds" -- but alas, "People Believe What They Want to Believe." It is only when one has found a way to trade successfully without charts, that charts have a place in an approach that will be consistently profitable.
     
  92. One can only assume. Not long before he passed, I seen him on a late night Wizetrade infomercial/interview.
     
  93. Karl Mattingly presentation on TedX on this subject is especially insightful.

    He’s an ex-banker and discusses using this concept in financial forecasting.

    When he discusses trust networks and trust proxies my ears perked up.

    edit:
    When searching for the above transcript, this is the close I got. The almanis website is still in infancy but I imagine it's a matter of time before it gains some traction. Cypto-markets and all the alt coins would be an interesting application.

    https://www.economist.com/news/busi...ess-wisdom-crowds-without-groupthink-new-type
     
  94. So, you think most his money was made from book sales? Didn't his wife continue his work? I have never bought a book of his but have read excerpts here and there. He (his books) seems to be recommended in the trading world.
     
  95. I think so. Psychology and motivational stuff pretty much. I don’t think he died with high net worth.
     
  96. Here are some observations that we can all agree on:

    1) Charts have some value insofar as these provide a pictorial display of historic market movement (price action over time).
    2) Charts are not necessary to trade profitably.
    3) Charts allow, for those who believe that the markets are made up of predictable patterns -- to identify areas of "better" trade entries and exits.
    4) Charts are held to be meaningless, if the Markets are a "Random Walk"
    5) Charts are showing market history and may mislead one to trade with "what they believe" rather than "what they see."
    6) Utilizing statistical information, such as the probability of price movements over a given time, may be obtained from options chains, and probability analysis utilizing what is predicted for future price extremes. (measured moves or market maker moves)
    7) Trade strategy will eliminate the need for charting when one utilizes hedging as opposed to stops. (Duration trumps direction.)

    Boils down to the age-old debate of Random Walk vs. Predictable Markets. This is also contingent on the trader's outlook based on Duration, or how long they hold the trade. Hence the need for Targets along with durational terms, which are required before entering or exiting trades. Charts may be of little help and may actually mislead -- the cliche, "past performance is ...."
     

  97. David McCandless has an interesting presentation on this regard. The charts he presents create relevancy in data formatting. The beginning charts deal with military spending when compared to other countries. It then shows an insightful dataviz when military spending is compared to GDP.

    At the 3:00ish mark, there's a dataviz on tracking fear in digital media.

    At the 6:00ish mark, is a pattern that is quite surprising as well as quite predicable.

    At the 9:30ish mark, there's a dataviz that compares our five senses to computer bandwidth,... there's a teensy weensy block in the lower right hand corner which represents our cognitive capacity to process the bandwidth.





    My favorite quotes from him:

    "Let the dataset change the mindset"

    "Data is the new (s)oil"


    So in regards you your posting MACD,

    YES,... AND,...
     
  98. @Sprout -- OMG! Combine your recommended:

    "The wisdom of the crowd" video and now the

    David McCandless -- "The Beauty of Data Visualization" video

    These two recommended Video Posts by you are Must Watch to "Fertilize" the Trader's
    Brain. YES, your points are well taken regarding the power to understand markets utilizing proper tools to do so. True, we are overloaded with way too much data input and therefore, your point is well taken -- Visuals Help. Markets are "Crowd" data sets and Visuals permit the quicker more efficient use of the Data obtained when making Trading Decisions. (One Picture is Worth a Thousand Words).

    So, we get a flood of data inputs from many sources, one of which may be charts, then more input from news feeds, add indicators, add etc. and this makes for TMI and often leads to analysis paralyzes. Lack of clarity and contra or co-linear data inputs leads to losses.

    Therefore, in that regard charts may help some traders in their decisions. For me, there are more concise and integrated visual tools. For Example:
    Risk graph 12-31-17 S.png

    This one graph which shows the trades I have open in the ThinkorSwim Live Trading account -- in one glance I can determine any management required and the present risks as well as P&L. This may be used to enter trades as well as being able to manage while open. No charts were necessary when placing the trade as the required data was simply based on the statistical probability of profit (POP). The learning curve to use this tool is less than using charts and perhaps many other data inputs. (This may require more detailed information on how to read it and if there is interest in that I will try and post a video.)
    [​IMG]
     
  99. Sorry for the large post above. I am totally lame at how to post pics etc. I wanted to use a video to explain better but I still have not figured out how to do that. If anyone can Please help me with posting instructions and sizing pics I would be grateful for the help.
     
  100. I suppose you could upload your video to youtube and then post the link to it here. On ET itself it appears 4 mb is the max size file that can posted.
     
  101. Thanks Volpri
     
  102. You make a very good point on how to use the visualization of data to simplify a decision.

    After viewing the following video, I’m convinced the data displays of market information is transforming into something beyond the existing tools developed thus far.
    The included dataviz’s in the video are some of the best examples I’ve witnessed thus far in using data to convey meaning.

    One of the ideas presented - “we evolved to see things and make snap decisions.”

    The insight on complexity of air travel as being beyond our comprehension is grounding - “at any given time there are over 1 million people in the air.” The scale by which this is all co-ordinated across international borders is astonishing.

    The YouTube credits have links to explore the visualizations in detail. One thing that is super cool with the D3 spec is the concept of data-driven ‘living’ documents that update in real-time.

     
  103. @Sprout you continue to amaze me with your cogent conclusions based on your ability to research and digest that as it applies to trading. Hopefully traders will see the benefits to trade more informed in far less time and confusion of TMI. Please keep up your excellent contributions to ET. I learn from you. If there is such a thing as "Edge" you have improved mine. Thanks
     
  104. I think it's kind of arrogant to say john grady is full of crap just because he advocates order flow trading. Not trying to defend the guy here but just be logical for a second, do people really think chart trading is the only way of trading the markets?

    Also I keep reading that scalping watching the DOM is the same as competing with HFT and that is all just noise... Why you guys treat all instruments as if they were one?

    It's not the same trying to scalp CL using DOM, a really thin market and easily manipulated by HFT, than trading, let's say, ZF which is a thick, liquid market and not that easily manipulated by HFT. There are also different market conditions and different types of day that come into play where you should play or stay away cuz of heavy HFT as well. Not everything is just black or white.

    You have to trade the right instrument and use the right method for that instrument, and also have the right personality for that type of trading. I think that's why trading is so hard.

    Happy new year
     
  105. I don't think so.

    You can't compete with the bots at their game, but bots and algos aren't smarter than those who design them (the analysts, not the programmers), so there's still is opportunity there.
     
  106. Matt at Optimus Futures (a sponsor here) has a basic intro to order flow. It is useful I think for a chart trader to at least understand how an order flow guy sees things using not very specialist tools.

    http://optimusfutures.com/tradeblog/archives/order-flow-fundamentals/

    Beginners would do well to run through his blog archive, it has a lot of knowledge in light bites. He is not my broker however a friend sent me this a while back. Respect to a broker who tries to help educate his customers.

    http://optimusfutures.com/tradeblog/
    60 pages but some really nice stuff in there.
     
  107. Yes, @Startibartfast, followed your links and the information is nicely presented, clear and certainly of value. Thanks
     
  108. Completely agree.

    wrbtrader
     
  109. No disrespect -- ( I guess this is what makes a 2 sided market -- that is difference of opinion) but, I "completely disagree :D
     
  110. It's ok to disagree. :)
     
  111. easy to prove how easy it is

    like i do, post realtime winners.

    else you're all just blowing smoke , busting the chops of newbs

    some of you have time to write 5 paragraphs, but cant muster a single entry and exit

    smells like something the dog left behind
     
  112. WORST advice I have ever read / heard. But hey, this is lawrence 'part art part science' lugar.
    Of course you should look for regular fish / money and not look for home runs.
    If you can get a big shot, that s fine, but first you need to be regular.
    Discipline, routine and process, days after days, weeks after weeks, months after months.
    Tortoise, recover, find good habits you lost, and you should trade great again.

    CM
     
  113. Bama suffocated Clemson. Georgia barely squeaked by Oklahoma. Great game.

    Prediction: Bama beats Georgia for the title on jan 8
     
  114. Oh yes!
     

  115. Sorry to hear what's happened to you tortoise but I see this message as having really positive potential.

    Its early in a new year, a perfect time to take a step back and re-examine what you've been doing and how it went last year but also what you want to do and how you will achieve it this year.

    From your posts on ES trading through 2017 there would be no revision of your trading style and strategies that would be too radical. So, have you formed any plans for 2018 yet?