Anyone follow technicals closely? I have just started to learn about technicals and im finding out they are much more important than news. It seems that if you read the technicals properly regardless of the news you will know the direction the price of the stock will take. does anyone agree with this? im a newbie when it comes to trading. Traded for almost a year but lost money. Following this website calls as they help me learn the technicals now. They are very good. would love to get some feedback from people. what is the major technical indicator most useful? thanx, -TT
A few technical indicators may be of some slight value in intraday trading (i don't know anything about the time frame you are wanting to trade in) and it is worthwhile to become familiar with a few, such as the stoichastic and MACD, but a little knowledge can be a dangerous thing. If you are a new trader, i would strongly recommend that you concentrate on learning how to intrepret and use the market internals, such as market breadth, and the advance/ decline, and possibly the so-called traders index or TRIN. Learn about support and resistance and Fibonacci levels and how to find points on charts called pivot points which are really just points that have some higher than ordinary probability of a price reversal. You also must become familiar with options and the VIX index even if you are not going to trade options, because options trading does affect equity price action especially near option expirations. Also you will find that depending on what you are trading there will likely be sectors of the market that act as bell-weathers for your instrument of choice, so naturally you will want to monitor a real-time chart of those bellweather sectors. For example many people who trade NASDAQ stocks like to monitor the Philadelphia semi-conductor index, etc. Personally i would not spend much time studying esoteric and little used technical indicators. One thing you should do is find out what most other traders are looking at and look at the same things. In trading, it does not pay to be an innovator. And one other thing, while i am in preaching mode, i would not bother with Level II information. It is largely worthless nowadays in spite of all the hoopla you will hear about it. But if you can access time and sales, that is indeed useful. So, i guess what i am saying is that there in nothing wrong with learning how to correctly intrepret a few of the mainstream technical indicators, but don't be fooled into believing that they constitute some kind of Holy Grail. They don't. In my opinion it would be better to spend time trying to learn something about market psychology and why price does what it does at times (eg., bull and bear traps) than it would be to spend time learning about "odd ball" technical indicators. Oh, and one more bit of advice, don't try to glean anything from real-time data on a time scale anything shorter than 3-min per point, it's "pointless" to do so, unless you are a computer.
There are many believers in tech analysis. They will chant and sing and praise them. But when you push them for proof, they will start talking about how you COMBINE indicators; yea that is it!! But, they are believers. Proof will evaporate under the sunlight. As an example, there was very good analysis on Fib retracements. The classic levels had no more value than any other. But the believers go on. Support and resistance seems to have some value, and trend. But tech analysis and Elliot and Gann and Fibonacci and astrology and cycles will mostly break your heart and your bankroll
i appreciate your insight. right now im using a service on inthemoneystocks.com i go by their swing trade alerts. they hit DNDN at 3.70, though i sold at 5.25....it went to 20...quite something. they used their technical analysis techniques (not sure which) to get the buy signal. i usually just swing trade though i have been thinking about getting into day trading. they offer a service on there as well for day traders to trade alongside a pro trader. i will prob give it a shot next month. i use the 10 min candles. i agree anything less than 3 minute candles are useless. too much static. ive been looking at the MACD and STOCHASTICS. I like them but am still having some problems knowing tops and bottoms. thanx again for your advice. always a pleasure to chat with traders. -TT
i guess what it all comes down to is using technicals but just like with anything, tight stops are required if it doesnt work. i have noticed its all a % of winning trades. technicals could yield 75% winners but if you let the 25% losers wipe out the winners or take you negative it all doesnt matter. still a losing trader.
Rcanfiel, i was interested in your comment re Fibonacci. I too was once a real skeptic re fibonacci and for years ignored this concept. Surprisingly, i now find that Fibonacci retracement levels are useful in conjunction with the strength of the market internals. I find for example that in the case of the ER2, which is what i trade intraday, that price very often pauses right on or very near these Fibo levels, when retracing, and quite often reverses at them. I wonder if this is the result of self-fulfilling prophecy simply because enough traders are using these retracement levels now to make them meaningful?
ive done some research into the Fib numbers. it seems to me a turn in the stock price comes at one of them its just a matter of which fib number. i think if you tie it in with the macd or sto it can be very accurate. also, as mentioned watching market internals is very important. ive been taking a few private lessons from one guys running inthemoneystocks.com. he used to be a major market maker and has been telling me alot of crazy things they used to do. if you all remember what cramer said, it seems he confirms alot of it. they are big on technicals there.
The average objective probability of any technical indicator is 50/50 because almost every indicator is a function of price... which has already happened. I'm not saying TA isn't useful for analyzing historical data, but you need something outside of the closed loop system to make real-time decisions.
You are doing the right thing. Learning directly from a successful trader is by far the best way to learn, so long as they are a reasonably good teacher as well.