I agree. 100% success probably could be found if you were aiming for 1 point on the rebound or the continuation as both are likely to happen.....how do we measure success? 50% of the time was my rather weak attempt to say nothing is certain
Let's keep this at least in the realm of reality. You are saying here that you could probably get 100% success rate. This is nonsense. If you could do 100% success rate with 1 point per trade, you would be a wealthy man indeed.
I'm not for one second knocking TA etc. as I know a number of traders who are very successful using TA although I have a sneaking suspicion that they may not be successful for the reasons they think they are but I am way too new at this to be making rash statements like that so take that with a pinch of salt!
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The part highlighted above is an extremely astute statement. It applies not only to trading but to all endeavours in life. Many people write books on the secrets of their success but they always put it down to the conscious efforts they made and not any sub-conscious factors or even luck.
Can DT not mine the necessary data and backtest this methodology ?
Nope - because the very nature of what we are discussing is not mechanical. It is grasping the fuzziness of tape reading where every scenario is slightly different.
So there you have it.....all those consistently profitable traders using charts, perhaps with an indicator or two......they just dont work as DT has proclaimed (on any number of threads on T2W)....may as well get a few bunny rabbits, get them to run around a bit and base your entries and exits on the resulting bunny formation.....
These people you discuss are a myth. How many succesful traders to most board members know ? I know 3 succesful traders besides Mr Charts.
1 - Day trader running a hedge fund with $30M plus who trades off news/earnings, he uses his experience in how these stocks move, his ability to put himself in the shoes of a market maker and his research assistants. A typical trade would be an earnings stock with a gap up, he'll have a target price below the gap at which he'll enter the market - he sets those targets based on his experience and good memory. He is somewhat of an engima. He regularly has 30-40 trades on at a time.
2 - Day trader who trades 40 stocks and perhaps 1 or 2 news stocks. He'll review his 40 stocks decides which he'll trade for the day based on prior days action. He has years of experience and so can predict roughly where the stocks will top out. He'll use the charts for signs of topping out and he'll take a reversal trade, totally against the trend of the day. His experience is what sets him apart. He'll put on 1 or 2 trades a day and sometimes he'll not trade at all.
3 - Futures trader who uses T&S/DOM, and looks for reversals, mostly at prior highs/lows. The T&S/DOM tells him if this is going to punch through or reverse. Note that at least 50% of the time, these reversals are not at prior support/resistance, rather, these are places where TA traders will be suckered in to trades. It's normal for him to take 2 or 3 trades a day and he spends most of his time sitting on his hands.
None of these guys would qualify as TA traders in the traditional sense. I have never seen TA being used to predict where a stock should be brought if it goes down after a gap up. I have never seen TA accurately tell you where the market will reverse.
Now - roll on all these 'chart traders' - I have never met one. They only exist on internet forums.
because without those levels if you just execute a trade based on a buy\sell signal you basically flipping a coin. the reason for this is simple. where are the buyers and sellers? do you really think they are at any old place. do you think the entire market is seeing what your seeing?
They are visible on the DOM/T&S and NOT on the chart.
Price just seems to be attracted to and do alot of work around certain ref points, whether they be old highs/lows, range breakout points, pivots, etc etc. maybe price will bust straight through a level one time for one reason or another, then do alot of work on a retracement, or do the work initially before pushing through, or bounce straight off it - whatever. the point is that they are levels that attract activity and a decision of some sort by various market participants, therefore they are relevant and important.
But whether you spot these levels and the associated activity by looking at charts and candles, or whether you spot them by noticing the increased activity levels in the order flow and the level of competition at certain price points - i reckon 9 times out of ten, we'll all be looking at the same ref point because if your involved in the market you can't help but notice them.
You are correct that there are areas of interest. As in the article poste by barjon - the author had that much correct. Tape reading is exhausting and cannot be done all the time. The areas you discuss are well known by large traders and they use the fact that inexperienced traders get in at these places to fool them into taking a bad trade. You can see this play out day in/day out on the DOM/T&S.
There is a big difference between what the chart shows you and this lower level information. This is why textbook TA won't make you money in the short term. Experience and study of the behaviours of the market will.
To think you can learn your TA and then just switch on any market at any time in any timeframe and trade it is ludicrous.
