When people buy/sell, they leave a visual footprint, so to speak, on the charts. Some footprints are meaningless, some are useful. When you begin to recognize this, you begin to see within the charts where the buying/selling is. And when you become more adept, you begin to see when these footprints are emerging and developing prior to big moves.
TA provides a framework from within to view a chaotic system. nothing more, nothing less. best, surfer
Oldtrader... you post one of the rare "Wow!"s in ET... Regardless of my insomnia, it made my insomnia worthwhile...
Historically, the efforts of Dow laid the foundations for the subsequent work in evolving the P, V relationship. All of TA follows this. I guess this is why prediciting is not necessary. If you want to chack yourself out a little, tke the time to find all the examples of formations and see how they flawlessly follow the P, V relation. Other really important things to get in synch with are how various people came up with the variety of indicators that they did. I spent my time personalizing things so I knew where the cycle was; what was coming next in the cycle and how fast it was changing. My reward seems to be that i have short lists of stocks for each part of the cycle. The most helpful ones turn out to be the one's related to upcoming break outs. Before you use TA for making money,you need to select a universe to apply it to. That involves culling. To cull it is more a matter of a form of TA that puts all the stocks out there in slots. After that you just use TA to appraise their potential for making money.
That was a classic!!! It is very simple for me, if T/A did not work I would not be here. I would not be taking nice profits each week from trading the ES, and I would have quit this trading lifestyle a long time ago. T/A and my evolving studies of it have allowed me to turn the corner and become consistent in my trading over the past year. I see T/A as a set of tools to visually interpret the behaviors of price action during periods of time. I use T/A as many do, to enter and exit trades with the awareness of significant price action levels and the behavior of price between these levels.
Obviously, you are a paper trader... but it's good you're a good analyst... Hey, on the bright side... I work at 2 McDonalds because they don't like to pay overtime... LOL...
then you would not have to work at McDonalds! BTW, could you please keep the damn onions of my burger from now on! I would not be leaving my job at Southwest Airlines if I was only paper trading! :eek: January 22, 2004 "Independence Day" I am building a house here in Austin, Texas (I also have a house in "The Lakes" development in Las Vegas if you ever want to meet up for some blackjack fun), and after I close on the house I am done working at SWA. SWA is a great company to work for, but changing a CFM 56-7 engine at 01:00 am for a 06:30 gate time on a 737-700 is getting old! When you sweat your ass off for 18 years in the middle of the night as an Aircraft Maintenance Technician, you become highly motivated on how to trade profitably. When I sign "my name" to the aircraft records for maintenance tasks completed (about 10 to 20 a night), and "my name" is flying around day after day on all those aircraft logbooks, it tends to make a person think that there is a better way to make a living. Leave your family home alone every night year after year while at work and see if you can find the motivation to figure out profitable trading. For me, this decision was simple, learn to trade or work for someone else building up their dreams with my life until I am 60. NO PROBLEM...I will take the trading route! BTW, hurry up on that #3 and I want that with a coke! :eek:
Now I can tell you something about insomnia! It was only my day off last night and I was up all night...just the usual for me...damn what great motivation!
I've seen the same question asked about why fundamental analysis "works". The key, IMO, to this question is: How do you find the "true" value a stock? For example, if a stock earns around a $1.00 per share what is it worth? Looking through the quotes, the P/Es for similar stocks varies widely. For example, looking at stocks with an EPS of between $1.00 and $1.25 we find P/E ratios that vary from 1.5 all the way up to 57. Doesn't seem to be any useful information there. Now I know there are other factors such as growth rates that influence the P/E. Screening for stocks that have positive earnings shows, well nothing. The P/E's are all over the place. Some stocks with -25% or worse growth rates have some of the highest P/Es. While some of the stocks with the highest growth rates have the lowest PE's. Adding the projected growth rates doesn't help either. Dividends don't seem to mean much either as many REITs have great dividends but very low P/Es. IMO, among them are some of the best stocks to own long term. My point is how do you place a value on the fundamental parameters. I don't know how, and I'm not sure anyone else does. That is why we have a stock market. A stocks price is determined by the market. How do we see what the market is doing-well I think that is what we call technical analyses. Some of the highest paid people equipped with the most sophisticated computer programs in the investment business, mutual fund managers, are paid (Well, I think that is why they pull the big bucks) to do this, find stocks that are undervalued. However, as a group they do not do as well as an unmanaged index fund. And, in addition to their overall underperformance, they charge you pretty big fees to underperform. Kinda sounds like the Mets baseball team. DS