Of course it matters. Why do you think traders/shops pay so much money for news services? You mean to say your trading is completely unaffected by the 2nd largest stock in the world cutting guidance and citing China as the main culprit?
Exactly...the why is part of the market context or part of that puzzle. Too many people believe that markets do what they do via technical reasons alone when in fact breaking news, schedule news events, geopolitical events etc do in fact impact the price action that we're trading...its part of the big picture. Its important to have the big picture especially when something unexpectedly happens so that the next trades are not occurring with a blindfold. I use to ignore the why until 911 happen. In fact, I do remember many traders wondering why the markets was acting crazy and then shut down when 911 was occurring...gotta know the why to prevent the next trades from occurring with a blindfold. Anyways, the big boys that moves the markets care about the why...we retailers should too. wrbtrader
I am 99% pattern recognition automation, if I can't back test it, it is of no use to me. The 1% is manually trading/testing new models. I am educated in accounting and economics, but that doesn't mean crap when other people's are doing briefs of their takes on what is going on, I learned long ago the numbers are bullshit, and all that counts is which way is price going to go. Many of the Hedge funds not doing well, they picked wrong directions or commitments of symbols to go up instead of simply using charts and let others guide your positions. If that works for you, I applaud you, but I use what works as far as how I understand. I do buy One service on weather for commodities, but no other services nor listen to radio or CNBC, I don't care what the news is or the whys. And yes I trade stocks, but strictly on degrees of patterns, relationships and science. I do trade new reports 24/5.5-but don't care of what news is given, just need when time of when they come out. I learned long ago I have strengths and weaknesses in life, weaknesses such as believing in the numbers, I learned how to hedge well. Better to know what price patterns to stop trading than fishing around to discover the whys. It is better to get risk as far down to zero as one can do not only for today but tomorrows than rely on the whys. You bet your money on what works for you.
Just to clarify, you are NOT talking about well recognized TA patters (like H&S), but rather your proprietary patterns you've uncovered, right? Back-testing TA patterns (on daily and higher time frame) outside of the context (bull/bear mkt, trend/sideways, volatility, etc) is something I can't wrap my ahead around.
I am taking about even TA patterns as well, I have well defined pattern structure rules. As an example, I learned 40 years ago how to draw trendlines, and I have kept same rules all this time, but how many times do you see other posters charts and they draw through bars? I never draw thru middle of bars and I program trendlines a variance, like quarter of a tick it can overlap the bottom or top of a bar is all(fat pencil). Same thing like a H&S, like the left shoulder, how many bars to the left is too much, or how low can it be, different rules for right shoulder, I have found for myself through back testing massive amounts of data, plus 100k sample size, it matters for what I am trying to achieve. Many traders don't require as tight of rules, but for automation, you have to be more defined. And I am in my 60s, can't manually trade as well as when I was younger, get bored of this, hands shake, where automation can track thousands of symbols. I am sure we would agree that having consistent rules to be effective for trading, all I am doing is programming well defined patterns of whatever I find for entries and exits as well between using one minute bars for scalping/runners all the way to monthly bars for credit spreads.
So do you have filters/adjustments for trend and volatility? Trading simple pull back in a bull market is very different than trading it in a sideways or bear market ... same pattern.
In my mind, fundamentals guide the market, and technicals try to fill in the blanks. How many technical patterns have you seen break down when you thought they would work? Many I am sure. To be fair, on the other side of the coin, I have seen fundamentals break down, where for example CL SHOULD go up on fundamental news such as a supply drop, but reverses instead. I cannot see how that counter-intuitive move would "back the technical". Today's AAPL earnings call is a good example. Their numbers were terrible, so one would think the stock was doomed, but the thing id up from market close by something silly, like 5%? Was that a technical move, a fundamental move? What was it? @vanzandt Yer the stock guy I know. What is your take on AAPL movement after earnings? Technical, fundamental, or were they both fubar tonight? Hell, the NQ is showing some serious long love currently.
Typical technical move, honestly. I was expecting AAPL to at least hit ~160-161 during this earnings, based on my TA from a few days ago. I don't even trade stocks, but I was asked about AAPL last week and that's the only reason I looked at it for this release. Buy signal generated 3 weeks ago on weekly chart, long term (daily) trend is up, short term trends (1hr/4hr) going up, thus it had to go up this week. All the signs are always there from my experience, it's just up to us to keep our eyes open and recognize them. Also it's funny you mention CL, the CL reports are one of my favorites. They are so perfectly disciplined, I always watch those even though I'm not trading oil these days.
Does anyone here trade NQ with any regularity? It used to be my market of choice a number of years ago, but it has since become the equivalent of a crazy video game. Too wild for me.