Kastro, All you need is Support/Resistance and Trend Lines. All the other indicators, technicals, and numbers everything are derived from those basic concepts. If you get those down pact, you're as good as any.
Just my opinion: TA is for those who don't have the time/resources/inclination to bother learning about what makes the market move in the first place -- why that support or resistance was broken, etc. It's perfectly legit to trade on T/A alone, but know that you'll always be a few steps behind others who know that particular market along other dimensions as well -- the T/A part is usually the easiest to quickly assimilate and therefore your reward will be commensurate. The advantages of trading soley on technicals is the ease by which one can apply them over a large number of markets, and therefore expose the best opportunities from a large potential pool. Contrast that with someone who concentrates on knowing one or two markets inside and out, but who must spend most of his time sitting on his hands waiting for the right opportunity -- there's positives and negatives for both. But if you do plan on just trading one market like the spoos or bonds, I think you will be a good ways behind others who go beyond pure lines and chart patterns.
First of all, when asking questions about technical analysis (TA)... Its like asking questions about the word sports. Imagine going somewhere and you ask this question to a bunch of athletes... How did you all get good in sports ??? Your going to get so many different answers...your going to get confused. Therefore, define what area of TA your interested in and begin your learning process there. Simply...to one trader...TA means indicators. To another trader...TA means price patterns. To another trader...TA means supply/demand reflected in the charts and no indicators. To another trader...TA could be a combination of a lot of different things. Here's my suggestion... After you define what TA is to you...prior to going down that road... Learn about the contract specifications of your trading instrument, learn about the reasons why most parabolic price movements occur in your particular trading instrument (the catalyst), learn about what related instrument you can hedge in case of an emergency (like the one we saw today when traders were unable to trade ES), learn how volatility moves from one time zone in a trading day to the next and so on. Once you learn the above...you'll be better prepare to learn whatever your definition of TA is. My own definition of TA involves just price action only trading (no indicators, no moving averages) and some reliable chart patterns. Repeatable price action that occurs again and again and again... From one trading day to the next. However, being prepared to exploit those repeatable price actions is another story all by itself. NihabaAshi
So, if i wanted to master trend lines and S/R, what is the best course of action to take? Any good books out there? THank you guys
Books you may wish to consider: http://www.amazon.com/exec/obidos/t...103-8408407-5974261?v=glance&s=books&n=507846 http://www.amazon.com/exec/obidos/t...f=sr_1_2/103-8408407-5974261?v=glance&s=books http://www.amazon.com/exec/obidos/t...f=sr_1_3/103-8408407-5974261?v=glance&s=books http://www.amazon.com/exec/obidos/t...f=sr_1_1/103-8408407-5974261?v=glance&s=books These books should give you most, if not all, of what you need to know about technical analysis. In fact, there is a significant amount of overlap between and among them. But it is worthwhile getting a (slightly) different perspective so that you can eventually tweak out your own. The dozens of other trading books I have read are just variations on the theme. None of the books will teach you to trade. They will introduce you to T/A. In fact, I think there is a fair amount of overkill, because I personally believe some (most?) of the stuff that passes for T/A is absurd. I think that Pring's book is fairly comparable to Murphy's. But I would suggest skipping the section of Pring's book that describes his proprietary indicator, the "KST." Silly and convoluted stuff. As a rule of thumb, the more "out there" that some of the stuff seems, the more you should probably avoid and ignore it. The simpler the concept, the more robust you will probably find it to be. My opinion is that you should acquaint yourself with the stuff, test it, and whittle away most of the fat (of which there is plenty) down to a few basic principles. Beyond that, it is all you. I included Sperandeo's book because he describes perhaps the best way to draw an onjective trend line. I though you might be interested since you expressed an interest in trend lines. (I, personally, do not care for them.) I found Elder's book to be worthwhile overall, even though I do not use any so-called technical indicators, let alone several of them, as he does. Again, interesting perspective for someone getting acquainted with the subject of T/A.
imo. Elder's book is worth 10 times it's weight in gold, simply for the psychology. At the least, it helped me overcome some serious issues. They were not apparent to me because i was making good money in trading stocks, at the time, and could not foresee the looming disaster because of my ways. Simplify and allow others to fight the battles, as long as you win the war. You can extract a great deal of meaning from words in a written context to help in your journey. But, you need to have faith in yourself and what you do. Without it you will perish.(imo) alex
To understand and apply T/A read one theory of Price Movement: 'Elliott Wave Principle : Key to Market Behavior' by Frost and Prechter â check your library system (online) for this and other texts. I prefer fibonacci price levels over pivots and channels, both of which can be viewed within this thread if you haven't already read it: http://www.elitetrader.com/vb/showthread.php?threadid=47536&perpage=6&pagenumber=1
With due respect, I think that Elliot and Fibonacci are "out there," and anyone wishing to employ such methods would be well advised to test those waters very, very carefully before committing money to them. (Of course, the same precaution applies to anything, but I would be particularly careful here. Beware of the well-chosen example. Do your own testing and judge for yourself.)
For the novice I would recommend reading chapters 1 and 2. They lead to some good questions (not necessarily on EW) after watching the market for awhile. The concepts of 5-3, motive and corrective, and the triangle formations can be simplified for practical use. I use 3 as a building block for trend and the formations are just FTP and FBP. That sentence sums up what I know to be true and useful after spending countless hours studying Elliott Waves and amassing quite a collection of books on the subject.