Discussion in 'Strategy Building' started by inandlong, Feb 14, 2003.
Thank you OldTrader for your wisdom. Your post is very meaningful. Thanks for your time and consideration.
I particularly appreciate your reference to chart patterns, a la Edwards and Magee and your insistence on understanding chart patterns in their context versus simple recognition.
damn good post... thanks
I too was taught to draw charts by hand.
Your explanation of the interpretive nuances of analysis is right on.
Was going to post a long reply... but you covered it well. So as a discretionary trader wlll simply add that to me (also) trading is an art form wherein one must not only know and understand (and appreciate) the primary colors... but how they mix into secondary and intermediate ones, and then... how all of this can merge on canvas to produce a "work of art"!
I use a lot of things for trade entry, but for trade exit the only thing that matters is price. I like to use trailing stops. This takes away about half of the angst involved in stock trading and frees up a lot of time, I am not glued to the screen just because i have a trade on.
I do not intend to hold myself out as an "expert" in any particular indicator, to include stochastics. I've already stated that I don't use stochastics. So if I explained something about stochastics incorrectly, it should be clear why that is....I don't use it.
I freely admit that I must be missing something about stochastics that you evidently see and understand. For instance, I see stochastics get "overbought". Sometimes the market turns down from this position, sometimes it keeps going and stochastics stays overbought. In other words, there is nothing particularly consistent about what the market does when stochastics gets to a particular position.
Now YOU evidently know what YOU are supposed to do when stochastics does certain things. You evidently have several different settings for stochastics which you use in some manner. In other words, you have evidently learned how to use stochastics to your benefit.
But here's what I know. I know without a trace of doubt that there is no holy grail. You could use various settings on stochastics, and act in certain ways depending on what those settings are telling you to do. But a day will eventually come when the market will do things that stochastics did not predict. At that particular point you will have to decide a simple question....was it the stochastics you did not understand or interpret correctly, or was it the market you didn't understand?
Perhaps it's a fine distinction, but one that I feel is worth making. You can choose to understand the market. Or, you can choose to understand stochastics as an aid to understanding the market. I taken the first road, you evidently have taken the second.
The interesting part of this is that I believe I can tell when a market is overbought without the aid of an indicator. I don't need a formula or a set of squiggly lines set to a particular setting to tell me this.
Either way, I am well aware that there are different methods for trading the market. I'd say that most people use indicators of one type or another....so whether you have one more adherent or not should not affect you one way or the other.
Jack stoc, FYI
Thanks for the chart including indicators. I was unable to read the settings on the stochastics or the MACD. If this isn't something proprietary would you post the settings involved?
With the settings I can take a look at some charts to observe what happens with them. I guess the principle is that if one is good, then 3 must be 3X as good huh?
Or there's another theory out there that a guy should watch several different time periods in terms of charts...perhaps 1 min, 5 min, 30 min.
I suppose the point is that the stochastics are derived by formula from the price action. So different settings on the stochastics just puts a different type of spin on the price action...just like different time periods in charts put a different look to the chart.
OldTrader it is GREAT to see your posts again
I wanted to state publicly that you have helped me a great deal to expand my time horizons (I weaned off just trading on 1 and 3 minute charts and start looking more at 15, 30, 60 min) and to learn more about what is actually moving the market and ways to read it. My trading has improved considerably from your ideas.
I notice a lot of indicator supporters tend to blast your assertions but I feel they only do this because they don't want to lose confidence in what they are trading with, regardless of the solid truth of your postings. So don't take it personally.
I have found a combination of charts that works well for me to read "the big picture". Some of them are pure candles only and a few have indicators, mostly just MACD because it is when price action DIVERGES from what the lagging indicators are telling you that good opportunites arise - at least for me.
IMO, the understated value of indicators is to tell a person when NOT to trade - such as when an MA cross shows nothing more than chop. I use indicators more as a filter when not to trade than when to trade.
Please keep sharing your experience with us.
Yeah, OT, good to see you back.
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