Tell me what you think of my method

Discussion in 'Technical Analysis' started by cashmoney69, May 17, 2006.

  1. Because Scottrade does not allow me to use ANY indicators other

    than volume. No MA's, no BB's..nothing, I developed my own

    system for finding S/R, and its great because it will work for just

    about any time frame.


    here are the steps:

    1. Have no more more than 2 time frames (mine is 3 days to a week) to concentrate on for a single chart. Seems to work well on 3 day and 4 week charts for me.

    2. Say your smallest time frame is 3 days. Get the most recent historical data for the high price of each of those past 3 days. Add the prices, and divide by 3. That number is your resistance for your 3 day holding period

    3. Do the same for #2 except add the low's of the past 3 days and divide by 3, thats your support.

    4. Add another time frame if you want to, and repeat steps 2-3 .


    intel historical data


    16-May-06 19.35
    15-May-06 19.35
    12-May-06 19.52
    11-May-06 19.60
    10-May-06 19.98

    97.80 / 5 = 19.56


    16-May-06 18.93
    15-May-06 19.00
    12-May-06 19.03
    11-May-06 19.21
    10-May-06 19.50

    95.67 / 5 = 19.13

    Here is Intel with s/r drawn for a 5 day holding period.

    red line - resistance at 19.56

    light blue - support at 19.13

    yellow line - the average close price for those 3 days (19.27)


    The problem with this is that

    1. you will probably have to wait longer for s/r to be hit, but you might be safer knowing how high or low a stock will go on average within your holding period

    2. This method seems to work best when a stock is trading in a range.. somewhat like intel. Stocks in a strong up/down trend wont really work with this method

    3. You might leave more money on the table than you have planned.


    if you have any questions/ comments/ constructive criticism, please let me know :)

    - nathan
  2. forgot :mad:
  3. piece of didn't load my file......i'm gonna try this one last time.
  4. OK, I understood how you calculate support and resistance lines for each time frame. But I can't see how this is a complete method yet. You seem to imply that after calculating those lines, one should enter long at the lower one and exit long (or reverse to short) at the upper one and vice cersa. But how about stops? They are at least as important as price targets imo!

    Right now I don't see how your "method" is better than throwing darts or rolling the dice. You need to add rules for stops, then you should backtest your method on your charts and write down the results. Don't forget to subtract commissions and slippage! Maybe you want to add a kind of directional filter.

    By the way, I like the concept of trading with horizontal lines only instead of using traditional indicators!
  5. Stops should be tailored to each trader's risk tolerance. Size, holding time, and % gain the trader is looking for is not something TA can help with really. I think its just personal preference.

    - nathan
  6. Well, I think TA can help for stops, too. What about this:

    input: stopfactor (0.5);
    var: stopsize (0), linerange (0);
    stopsize=stopfactor * linerange;
    if marketposition=1 then exitlong entryprice - stoprange stop;
    if marketposition=-1 then exitshort entryprice + stoprange stop;

    {this way you can optimize the stopfactor, while stopsize still adapts to market conditions}
  7. 4re


    I am a breakout traders using mainly S/R for my trading. I do use bollinger bands and moving averages to insure that my analysis is correct also. You can check out my journal and compare your charts to mine if you like. It is the S/R emini journal. I like to use a 60 minute or daily chart to determine S/R but I trade with a 3 minute chart. I have used this method for options, stocks, and emini. works fine with a little tweaking.

  8. vjay


    Out of curiosity- in scottrade have you
    gone to the Quotes and Research section:
    Charts:interactive charts. There's a few technical studies there you can use?
  9. yes but thats not streaming, so its pretty much useless to a trader.