Trading Levels

Discussion in 'Technical Analysis' started by Frank Furter, May 1, 2012.

  1. This thread will be about what I refer to as trading levels. Trading levels have been around as long as there have been markets. Nobody invented them and nobody has a patent on the right values.

    These are not the holy grail and like any other method or tool, sometimes you get the bull, sometimes you get the horns.

    This thread is not about ACD. There is a very extensive thread already devoted to ACD with plenty of useful information. Please post any ACD questions or comments there. Thanks.

    About me ... I have been a software developer for 20+ years (longer but saying only 20 makes me sound younger). I have written hundreds if not thousands of useless indicators, backtesting apps, and custom charting apps before stepping back and realizing a simple approach is the most powerful approach. Einstein had it right when he said "Everything should be made as simple as possible, but not one bit simpler."

    So I will periodically post charts and comments on a levels I am watching on some of what I trade. Down the road I may spin off another thread in the Automation forom on the automation project I am working on utilizing levels as that gets closer to completion.

  2. What is a level to me? I use levels to mean decision points.

    Expanding on what I had originally posted in the ACD thread earlier today, you can see this chart of NatGas has hit a pre-determined level, or decision point if you will. In this 60 minute chart it has stayed at or near this level for the past 10 hours.

    But looking at this chart by itself without context doesnt really tell you anything other than we have confirmed that this is indeed a decision point and one side will eventually say uncle (accounting for the usual headfakes).
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  3. Mr_You


    Are you referring to Support and Resistance when you say levels or decision points?
  4. Definitely not in the traditional since meaning using a previous day or previous weeks high or low, area of consolidation, etc.

    The projected NatGas decision point held its ground, price paused and kicked around at that level and is now retreating off of that level.

    So how to use this information ... put it in its proper context. I will post on that as soon as I get a chance.
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  5. I want to expand on the context issue, but one quick sidetrack if I may.

    This was posted on Tuesday around noon when I posted on a different thread that Nat Gas and Oil were rising into decision points.

    "Dude, your levels are off. I got confirmed weeklies in NG and USO"

    Since that time Nat Gas and Oil have pulled backed significantly off of the decision points that were posted as shown in the attached chart. Holding longs at those levels proved to be quite painful.

    That is not to say the bias on either is short, I am not saying that, and I do want to get back to context which gives us the best chance of being on the right side of the market in all timeframes. It is also not to say I am right and someone else is wrong. I have been wrong more times than I would care to admit.

    So my point, 2 fold ... First, have an open mind. Your method and mine can always be improved, tweaked (if the statistics prove you out). You or I haven't cornered the market on perfection.

    Second ... call bullshit when you see it. This is a forum, not a worship center to a trader or a methodology.
  6. Crude ....

    Liking a long in the area of 102.5 if we get there and the reaction to that level is good.
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  7. Maverick74


    Frank, your "levels" or my "levels" are meaningless. What does hold meaning is how YOU trade your own levels. You have no idea how long someone's time frame is on a trade, whether it be minutes, days, weeks or months. This idea that some trader is taking pain because they did not get out at some "decision" point is ludicrous. This is analogous to someone who has been long AAPL since 100 and is sitting in a pullback from 640 to 580 and saying they are taking pain. I would hardly call that pain. To someone who bought long at 640 as a daytrade and they are now sitting on a long term trade 60 pts in the hole, that is pain.

    Not trying to hijack this thread, just trying to offer context. I felt obligated to post since you were referencing the ACD thread. Nobody over there is worshiping anything, we are just trading.
  8. Good thread so far, keep it coming. Would like to hear more about how the decision points are created.
  9. I've been wondering the same thing.
    How does he identify the decision points?
  10. Mav, since we are on my thread I will speak my mind a little more than I would on your thread.

    If we are talking ludicrous, I would say the notion that your levels, my levels, the next guys levels dont matter, as long as we are all consistent is hogwash, which is what has been mentioned numerous times there.

    So if that is true, lets make up some levels, say 1 pt +/- some arbitray value. How do you think that would backtest out if I followed it to a T? It would be ugly, but I would have been very consistent.

    And to my original post in your thread, I DID NOT say go short. I said I would have been long looking for a reason to exit. That level and the reaction to it gave me the reason. I can have a long bias on something for the next 5 years, that doesnt mean i buy and hold it for 5 years. I am looking for proven stats that say this is the most likely event to occur when we hit this level, and if that means a pullback, i exit and wait for it to tell me its safe to enter the water again.

    Enough of this ... we disagree on numerous topics. I have stopped posting there because a new view on using levels was obviously not accepted very well there because it didn't fit the mold as some saw it. I will not disrupt that thread and agree to disagree with you and leave it at that. I ask you to do the same here.

    Thanks and good luck to you.
    #10     May 3, 2012