Technical Analysis and Common Sense

Discussion in 'Technical Analysis' started by rs7, Jul 26, 2002.

  1. DblArrow

    DblArrow

    Try that again.
     
    #51     Jul 27, 2002
  2. rs7

    rs7

     
    #52     Jul 27, 2002
  3. Dblarrow,

    I looked at that picture and I just didn't see a good enough correllation to make me want to bet money. For me, it is just too noisy. But that is just my perspective, I'm not presenting it as a fact.
     
    #53     Jul 27, 2002

  4. I have to agree with DblArrow, Dotslash...

    Here's a couple of examples to clarify my opinion. The first
    chart is a daily of the S&P with a stochastic slow D (14)
    layed over.

    One of my favorite signals is a Convergence/Divergence
    of stochastic for buy and sells.


    For those of you not familiar with this:

    1. A divergence is when price makes a higher high and
    stochastic makes a lower high.

    2. A convergence is when price makes a lower low and
    stochastic makes a higher low.


    The second chart is a 100 tick chart of the ES emini with
    a stochastic slow D (14) layed over, also. As you can see,
    the signals a very similiar.
     
    #54     Jul 27, 2002
  5. A 100 T ick Chart
     
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    #55     Jul 27, 2002
  6. ok, the first chart was a daily chart, and it looked great to me, that is the kind of thing I am using now.

    Tick charts are not something I have ever used before. In your experience what is the main difference between using a tick chart and say a 1 minute bar chart ?
     
    #56     Jul 27, 2002


  7. The reason I like to use a 100 tick chart instead of 1 minute
    or 3 minute is this:


    Say the market gets real active and I get 5 or 6
    hundred ticks in a minutes time.

    On a 1 minute chart, I get a very "long" bar that is
    difficult to trade. It makes choosing my stop a little
    harder, and it distorts my indicators, somewhat.



    With a 100 tick chart, I get 5 or 6 "Bars" which makes
    it easier for me to place a close stop in a logical place, and
    my chart is "smoother" so to speak. So, my indicators don't
    jump around as much.


    It's kind of hard to explain in words...lol

    Hope this helps.
     
    #57     Jul 27, 2002
  8. hey, that's cool, that makes sense. It seems to take some of the noise out of the stochastic as well, at least in that example. Thanks. Unfortunately my software doesn't provide tick charts, I'm using an inexpensive retail oriented program. What software do you use ?
     
    #58     Jul 27, 2002
  9. I have only been trading for 4 years yet for a good part of the first 3 years or so, I did a lot of work with indicators. I got so good at knowing their behavior characteristics that I could take a chart and hand draw on a piece of paper how the MACD looked, Stochastics and ADX. I could also do it backwards, draw a general chart by using the indicators. I even went so far in Real Tick as to use a table format with their charts rather than the actually chart.

    My point is none of these indicators really work unless you have hard and fast rules for using them. They all will behave generally the same because they all act on the same input, which of course is price.

    Having said that, the one tool that I have found beneifical in daytrading is the Relative Strength Index. Generally speaking, you can buy pivot lows when the RSI 14 > 50 and sell them when they are less than 50. I also use volume which is just as important.

    Getting into any trade, no matter what the criteria for entry is, is the easy part. Hard part is getting out. That is where the rule setting comes in to play. I suggest anyone interested in setting rules for profit objectives and initial stops using any indicator look to the ATR (average true range) for clues.

    John
     
    #59     Jul 27, 2002
  10. Average True Range

    Does your software give you average true range ? Is that what it sounds like, basically the typical trading range in a day ?
     
    #60     Jul 27, 2002