counter_violent
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Whilst a lot of traders use candlestick charts, there does seem to be quite a lot of backlash lately towards time-based charts. This is of course quite logical, at first, because , really, why should a daily chart have any more significance than a 23H chart? a H1 chart over a 55M chart?
When using candlesticks, there is no doubt about it, you are slicing time into neat little intervals, say the naysayers, whilst volume-based or trend based bars 'smooth out noise'.
I can see the logic in this argument. The problem is, literally every single broker or charting software starts off with W1 D1 H4 H1 30M 15M 5M, like every time. I get the feeling that there are a hell of a lot more traders looking at where a daily or weekly candlestick closes than a 23hr chart close. In my opinion, then, candlesticks and time-based charts are from quite a basic view, irrelevant, but on the other hand, so many traders use them, and the vast majority of traders using candlesticks seem to focus on a few timeframes.
Not to say that volume or tick bars have no relevance, I think they are brilliant too.
What do you guys think?
I find them useful but the appropriate home work needs to be done.
Personally I will determine strength, then I will wait for the suckers to get in, with candle stick patterns ( they also help me if the market is stalling or not) I am able to see where the traders failed, smart traders get in and failed traders join in by covering with a loss.
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counter_violent
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Gonna move my limits up again. Lets try 18,150/60 level.
The only time large participants place themselves before a release is when they have enough evidence to know that the news will merely confirm the sentiment. This is a risky practice because a number thats a surprise on the opposite end can often result in a session divergence of the fundamentals and they will need to ride it out or take a loss and get back in at a better price.
In terms of the chart showing what is going to happen i can only say this is somewhat true in scenarios where you getting a series of good or better than expected data which is backed by an overall fundamental bias. More often than not, especially since 2008, this isn't the case and you tend to have a mixed bag which leans in one direction giving moderate outlook.
Ultimately its the fundamentals that drive markets, not charts. It's a leading indicator whereas charts are lagging. For a chartist to determine a trend for example they could use trend lines or moving averages. Trend lines require at least 2 touches with space and moving averages require time and only confirm on crosses. Fundamentals however would be painting the picture long before and a single news release of the right kind could present an entry opportunity or an opportunity to add to a position. The difference is the sentiment would come before the trend line or the moving average cross.
Your example of the bear market with positive news is a good one in that it shows how session sentiment pivots around a longer term fundamental picture. Where you will be fading that move I would likely be buying the news for a session gain and then adding to a longer term trade going south. The critical difference with your strategy to mine is that I would have more evidence that things are turning negative on a persistent basis.
You can easily get false readings in charts where it looks like bearish trend is forming but what's ultimately happening is anticipation of an upcoming event, let's say the market is expecting interest rates to fall. Over the course of the month the data points might send mixed signals with a bearish bias. This leads to price forming a bearish trend and the trigger to continue an established trend is a drop in rates. Well if the central bank comes out leaving them unchanged for the time being then you will likely get a failed trend formation (at least for the time being). You might also get a rally because leaving rates unchanged is positive for a currency at least but this plays out differently in other markets of course
Fa is also not a science, is an art form, it is more subjective than TA.
Many times in my experience if a technical set up occurs before the release in the direction of the least resistance the better, if it does not occur in that direction it can still move in the DOLR, beside as I mentioned before market movers have too many informations we (retailers) cannot compete with but gaining the ability to read every bar as an indication can give us an edge to follow them before is too late.
Just look at what happened on the kiwi lately before the good number on employment come out, kiwi turned from the bottom, and making HL's and HH's made a double bottom bull flag around 7110 and moved up
FA was saying another leg down was expected to 6950 (us strong, rate up and all that bit...)
Still Kiwi was moving up, would I short it? No way, despite the FA, market movers were buying....
just before the release in technical terms prices made a BOPB with a strong bull bar, marker movers were buying and so should have the retailers, the time the release come out it was too late ...
Only me...
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dbphoenix
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Whenever you study the tape or a chart, consider what you see there as an expression of the forces that lift and depress prices. Study your charts not with an eye to comparing the shapes of the formations, but from the viewpoint of the behavior of the stock; the motives of those who are dominant in it; and the successes and failures of the buyers and sellers as they struggle for mastery on every move.
The struggle is continuous. The tape shows all this in detail. The charts enable you to pick the market apart and study whatever portion or phase of it you choose.
Supply and demand may be studied on the tape of the stock ticker, and to even better advantage from charts.
The tape is like a moving picture film. Every minute of the day it is demonstrating whether supply or demand is the greater. Prices are constantly showing strength or weakness: strength when buyers predominate and weakness when the offerings overpower the buyers. All the various phases from dullness to activity; from strength to weakness; from depression to boom, and from the top of the market down to the bottom – all these are faithfully recorded on the tape. All these movements, small or great, demonstrate the workings of the Law of Supply and Demand. By transferring to the charts portions of what appears on the tape, for study and forecasting purposes, one is more readily enabled to make deductions with accuracy.
And now that you are undertaking to learn this Method, it is best that you prepare your mind for it by discarding most of the factors that you have heretofore employed in forming your judgment and making your decisions, such as: tips, rumors, news items, newspaper and magazine articles, analyses, reports, dividend rates, politics and fundamental statistics; and especially the half-baked trading theories which are expounded in boardrooms and popular books on the stock market.
It is not necessary for you to consider any of these factors because the effect of all of them is boiled down for you on the tape. Thus the tape does for you what you are unable to do for yourself; it concentrates all these elements (that other people use as a basis for their stock market actions) into the combined effect of their buying and selling.
You draw from the tape or from your charts the comparatively few facts which you require for your purpose. These facts are: (1) price movement, (2) volume, or the intensity of the trading, (3) the relationships between price movement and volume and (4) the time required for all the movements to run their respective courses.
You are thus far better equipped than the man who is supplied all the financial news, statistics, etc., from the whole world. (Richard Wyckoff)
The struggle is continuous. The tape shows all this in detail. The charts enable you to pick the market apart and study whatever portion or phase of it you choose.
Supply and demand may be studied on the tape of the stock ticker, and to even better advantage from charts.
The tape is like a moving picture film. Every minute of the day it is demonstrating whether supply or demand is the greater. Prices are constantly showing strength or weakness: strength when buyers predominate and weakness when the offerings overpower the buyers. All the various phases from dullness to activity; from strength to weakness; from depression to boom, and from the top of the market down to the bottom – all these are faithfully recorded on the tape. All these movements, small or great, demonstrate the workings of the Law of Supply and Demand. By transferring to the charts portions of what appears on the tape, for study and forecasting purposes, one is more readily enabled to make deductions with accuracy.
And now that you are undertaking to learn this Method, it is best that you prepare your mind for it by discarding most of the factors that you have heretofore employed in forming your judgment and making your decisions, such as: tips, rumors, news items, newspaper and magazine articles, analyses, reports, dividend rates, politics and fundamental statistics; and especially the half-baked trading theories which are expounded in boardrooms and popular books on the stock market.
It is not necessary for you to consider any of these factors because the effect of all of them is boiled down for you on the tape. Thus the tape does for you what you are unable to do for yourself; it concentrates all these elements (that other people use as a basis for their stock market actions) into the combined effect of their buying and selling.
You draw from the tape or from your charts the comparatively few facts which you require for your purpose. These facts are: (1) price movement, (2) volume, or the intensity of the trading, (3) the relationships between price movement and volume and (4) the time required for all the movements to run their respective courses.
You are thus far better equipped than the man who is supplied all the financial news, statistics, etc., from the whole world. (Richard Wyckoff)
this is what happened to the swiss:
on the way up prices broke a major TL, went to revisit the new extreme but reversal was weak, who wants to get in there? Patience is a must here and everywhere (show me the money!!!!!!!!!!!, Gerry McGuire).
After a poor PB formed a DT, big reversal (money!!!!!!!), she stalled at the next TL, broke stongly and a flag, look at the 4h shaved bear bar for a possible continuation (money!!!!).
After that the news were coming out: trumps in front of the polls and everyone is buying swiss and gold.....too late.....the wolf already eat the tender lamb....
Here I did not need to know what was going on, the chart was telling me, beside Us dollar was weakened all around and swiss was gaining strength......
on the way up prices broke a major TL, went to revisit the new extreme but reversal was weak, who wants to get in there? Patience is a must here and everywhere (show me the money!!!!!!!!!!!, Gerry McGuire).
After a poor PB formed a DT, big reversal (money!!!!!!!), she stalled at the next TL, broke stongly and a flag, look at the 4h shaved bear bar for a possible continuation (money!!!!).
After that the news were coming out: trumps in front of the polls and everyone is buying swiss and gold.....too late.....the wolf already eat the tender lamb....
Here I did not need to know what was going on, the chart was telling me, beside Us dollar was weakened all around and swiss was gaining strength......
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the swiss and the kiwi are trades I took and profited from. I did not mentioned it because it was irrelevant.
I am only showing my perception and I feel I made a constructive criticism.... nothing more.....
You are losing it Tar......
I am only showing my perception and I feel I made a constructive criticism.... nothing more.....
You are losing it Tar......
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You are trying to convince someone that spent a decade trying to get the most out of technical analysis. I'm not saying it doesn't work although it's not nearly as profitable as a fundamental approach, which is why I don't even bother these days. Not sure what Tar has to do with it.
I am not trying to convince you, I was only trying to share my perception and experience....and if someone could find it useful the better....if they do not....well....I least I tried.
In brief with TA personally I am more able to weight the tugs of was between the parts and jump on the wagon as soon as it leaves, without it I lose my timing, I am also aware of FA by filtering it by making my own sentiment and often I combine the two, but TA is my weapon, why? Because I chose to, to me is the most objective tools and make sense to me, most of the time I am in and out in a couple of days......
Do I get it right all the time? No, but I am narrowing the gap. TA is a never ending learning curve.... markets are like water......but with time it gives you the confidence to score consistently.
The facets of TA are numerous in relation to the many facets of market conditions, with greater understanding of it a trader makes the decision to specialize only in the one which have the most probability to succeed based on his personality and waits most of the time a bit like an hawk......Will TA be enough? No it will not. Most traders fail not because of TA or FA or anything else, they fail because they have not invested in themselves to build and create that trader they aim to be.
I hope this post helps a bit.
Do not worry about Tar, you know the way he is....He is an old goat.
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dbphoenix
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There is an unfortunate tendency among both inexperienced and experienced traders to believe that if they can't do something, it can't be done. That if they haven't found value in X (charts, indicators, earnings reports, economic forecasts et al), there is none. That if they see nothing, there is nothing to be seen. That if price movement makes no sense to them, then price movement is therefore random. That if their losses are habitual and more or less continual, someone or something is plotting against them.
All of this is a function of the ego -- if I'm losing, it can't possibly be my fault because I'm so smart and so talented and so special. And unless and until the ego is squelched and decisions are made rationally and objectively, the trader will continue to operate according to a series of assumptions that have no more basis in reality than the tooth fairy.
What matters is not what one believes but what is real, what is true. The more one trades according to what he has gleaned second or third or tenth-hand rather than what he has determined for himself through objective methods, the more likely he is to continue to struggle and eventually fail.
All of this is a function of the ego -- if I'm losing, it can't possibly be my fault because I'm so smart and so talented and so special. And unless and until the ego is squelched and decisions are made rationally and objectively, the trader will continue to operate according to a series of assumptions that have no more basis in reality than the tooth fairy.
What matters is not what one believes but what is real, what is true. The more one trades according to what he has gleaned second or third or tenth-hand rather than what he has determined for himself through objective methods, the more likely he is to continue to struggle and eventually fail.
My reasoning behind the points I have made is clear, ego has nothing to do with it. Neither was it failure to make technical analysis work, it merely isn't as profitable in my experience of it. However I do see your point
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dbphoenix
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My remarks were not directed toward you personally. Rather I was thinking about certain journalists, as well as certain helicopter posters who are exceptionally free with their advice. You appear to have reached an accommodation between fundamental and technical analysis that is beyond the reach of most. Whether or not you are satisfied with it has absolutely nothing to do with its applicability -- or lack of it -- to any other trader.
Are you referring to yourself?
Mine was not an advice nor I was not try to convince anyone how to trade, as I mentioned before I am only sharing my perception.
Did I do something wrong in doing that?
dbphoenix
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My remarks were not addressed to you personally either. It should not be difficult to come up with a list of members who habitually insist that X doesn't work or Y is a waste of time or that if one doesn't do Z he may as well quit. This is an open thread with many readers.
I'll reiterate my point, in the event that it was missed:
What matters is not what one believes but what is real, what is true. The more one trades according to what he has gleaned second or third or tenth-hand rather than what he has determined for himself through objective methods, the more likely he is to continue to struggle and eventually fail.
Yes, all well said.
any technicality together with candle patterns are useless if not taken in the proper market conditions, also in forex is a must to weight the relative strength with one another (not sure what needs to be done with indices, stocks or other, I am sure others know better then myself in regard): long the strong against the weak, short the weak against the strong. Here technicality are most of the time very effective.
There are some relative strength or cluster indicator around but I find them useless and only confusing but you can create your own with classic indicators which make sense most to you (rsi, macd and so on)
Myself before my trading day I weight 28 pairs, take notes in my excel sheet and trade only strength against weakness hoping they will continue......(with trend)
I also trade reversals (against the trend) at the previous extreme, here the previous analysis mentioned on pairs is not considered but I make sure before a test of the previous extreme (being a test, an undershoot or an overshoot) the counter traders market movers have already showed strong interest: an healthy pull back at least 2-3 times the average and a previous break of a major trend line.
Hope this helps a bit
There are some relative strength or cluster indicator around but I find them useless and only confusing but you can create your own with classic indicators which make sense most to you (rsi, macd and so on)
Myself before my trading day I weight 28 pairs, take notes in my excel sheet and trade only strength against weakness hoping they will continue......(with trend)
I also trade reversals (against the trend) at the previous extreme, here the previous analysis mentioned on pairs is not considered but I make sure before a test of the previous extreme (being a test, an undershoot or an overshoot) the counter traders market movers have already showed strong interest: an healthy pull back at least 2-3 times the average and a previous break of a major trend line.
Hope this helps a bit
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