Keeping it simple

[jfink]

I've been trading in my spare time for several years and so far without consistent results. Over time I've tried many differnt methods from moving averages to many of the popular indicators (i.e. stochastics, RSI, momentum, etc.).

I can't help but think it really just boils to identifying support and resistence and placing your trades and stops off of these levels.

Could it really be as simple as nothing more than a chart of the price action and volume, no more no less? I think I've been making this more difficult than it needs to be.

Any thoughts?

 

[Lord Flasheart]

I've been trading in my spare time for several years and so far without consistent results. Over time I've tried many differnt methods from moving averages to many of the popular indicators (i.e. stochastics, RSI, momentum, etc.).

I can't help but think it really just boils to identifying support and resistence and placing your trades and stops off of these levels.

Could it really be as simple as nothing more than a chart of the price action and volume, no more no less? I think I've been making this more difficult than it needs to be.

Any thoughts?

Absolutely. I spent years looking for the holy grail by way of indicators etc.I use SR area and trendlines. The only hard part is the money management and discipline.Welcome to the site

 

[neil]

I've been trading in my spare time for several years and so far without consistent results. Over time I've tried many differnt methods from moving averages to many of the popular indicators (i.e. stochastics, RSI, momentum, etc.).

I can't help but think it really just boils to identifying support and resistence and placing your trades and stops off of these levels.

Could it really be as simple as nothing more than a chart of the price action and volume, no more no less? I think I've been making this more difficult than it needs to be.

Any thoughts?

Many of us who started out, in the dim and distant past,used all sorts of methods, apart from Rune stones, to find the "Holy Grail." Eventually, many of us found that "simple" works and that a lot of the battle for profitability is fought inside your head. Have a look at James16 over at ForexFactory -http://www.forexfactory.com/showthread.php?t=2331
and read the likes of Flasheart above who post live trades (join in too if you like, I'm sure you would be welcome.

 

[scose-no-doubt]

I've been trading in my spare time for several years and so far without consistent results. Over time I've tried many differnt methods from moving averages to many of the popular indicators (i.e. stochastics, RSI, momentum, etc.)

σ

I can't help but think it really just boils to identifying support and resistence and placing your trades and stops off of these levels.

Could it really be as simple as nothing more than a chart of the price action and volume, no more no less? I think I've been making this more difficult than it needs to be.

Any thoughts?

While I (in my possible naivety) think this could be the foundation of an approach and I wish it were the case, I like to think that businesses employ bright people to trade for a reason; and that the reason is trading isn't really that simple. Obviously that's not the stance that spread betting firms like to put out there but look at the evidence. You only have to pick up a few pricing books to realise that financial markets are no walk in the park.

Suppose it's all dependant on your approach and more importantly, the length of time you wish to hold your trades/manage your positions. Horses for courses and all that.

 

[The Leopard]

I think simple but not too simple.

I too started out with a few indicators, looking for price to cross the "overbought line" etc. This ballooned to a ton of indicators.

Then I started looking at price action (the conventional type that you see discussed on forums). So, certain bars and bar formations at certain areas etc. This was OK as far as it went.

Since then I suppose I've evolved. In my opinion (just my opinion) that is not enough. It's OK as a foundation to get you to start thinking about the market in the right way, but I don't think it will get you terribly far (I could be wrong, of course).

Now I guess I'd say that I've spent a long time in front of the charts and have just (slowly and painfully) developed my own way of reading them, and making decisions based on that. I think considering the overall context is very important, something I used to overlook when using "forum" price action. It's still just price action really, but it involves a bit more thought and rather less reliance on some of the more obvious things you see spoken about.

So I think a simple and uncluttered approach is best, but be wary of trying to make it too simple.

Indicators I view as useless. I do keep the ladder open on my platform, but I don't actually use it to make any decisions. I find it a distraction more than anything, although I'd love that not to be the case.

 

[Lickyluciano]

Yes it's us simple but it's not easy, or else no one would blow up or lose their money.
I strongly recommend you read market wizards 1, over and over and over. Never stop reading it.
There is a lot of high level knowledge in there and it's not from someone selling a system. There are many styles and systems I'm there.
Ultimately, it's about making a large profit. I keep it as simple stealing 2 percentage points or slightly more per swing trade. At two trades per month you have a 4% return. I buy a strong blue chip stocks with great fundamentals, (no dogs such as RIM) which are in an upward trend. I buy into market weakness on a pullback and sell into strength for 2% swings or better. Do this 2 times per month if possible. Rinse and repeat. Look at YUM for example. I bought at $69.20 when jobs report came out and it closed at $72.80 (5%) Mcdonalds, at $96.00 sold at $98.30 (2%).
Use simple indicators as tools only, not to make decisions. Watch and get to know price on 1-2 medium only. Be patient.

Read market wizards twice a year.

 

[toposwope]

I've been trading in my spare time for several years and so far without consistent results. Over time I've tried many differnt methods from moving averages to many of the popular indicators (i.e. stochastics, RSI, momentum, etc.).

I can't help but think it really just boils to identifying support and resistence and placing your trades and stops off of these levels.

Could it really be as simple as nothing more than a chart of the price action and volume, no more no less? I think I've been making this more difficult than it needs to be.

Any thoughts?

1. You need an edge. Quite possibly that edge is realising the support is actually support and resistance is actually resistance. It doesnt matter what your edge is, you just need one.

2. You must be disciplined and this can only come through...

3. Experience. You have to put in the time. 'On and off' or 'in my spare time' wont cut it.

4. Money management. (2% rule is a good start)

Tick all these boxes and you CAN be profitable.

 

[Enzzo]

I also think S/R's are very valuable in these markets...
Most people over look it but the most important thing is to get a good understanding of how price moves into these areas, and how it is likely to react of them

 

[jfink]

Absolutely. I spent years looking for the holy grail by way of indicators etc.I use SR area and trendlines. The only hard part is the money management and discipline.Welcome to the site

Thanks for the welcome. I agree the hard part is money management, but I think it is as important if not more than picking the right investment. I've found that I can have more losing trades (not that this is my objective) and still come out profitable.

 

[jfink]

I think simple but not too simple.

I too started out with a few indicators, looking for price to cross the "overbought line" etc. This ballooned to a ton of indicators.

Then I started looking at price action (the conventional type that you see discussed on forums). So, certain bars and bar formations at certain areas etc. This was OK as far as it went.

Since then I suppose I've evolved. In my opinion (just my opinion) that is not enough. It's OK as a foundation to get you to start thinking about the market in the right way, but I don't think it will get you terribly far (I could be wrong, of course).

Now I guess I'd say that I've spent a long time in front of the charts and have just (slowly and painfully) developed my own way of reading them, and making decisions based on that. I think considering the overall context is very important, something I used to overlook when using "forum" price action. It's still just price action really, but it involves a bit more thought and rather less reliance on some of the more obvious things you see spoken about.

So I think a simple and uncluttered approach is best, but be wary of trying to make it too simple.

Indicators I view as useless. I do keep the ladder open on my platform, but I don't actually use it to make any decisions. I find it a distraction more than anything, although I'd love that not to be the case.

I think using different timeframes is also a big help keeping things in perspective (i.e. weekly view before zeroing in on a daily chart).

 

[NVP]

I've been trading in my spare time for several years and so far without consistent results. Over time I've tried many differnt methods from moving averages to many of the popular indicators (i.e. stochastics, RSI, momentum, etc.).

I can't help but think it really just boils to identifying support and resistence and placing your trades and stops off of these levels.

Could it really be as simple as nothing more than a chart of the price action and volume, no more no less? I think I've been making this more difficult than it needs to be.

Any thoughts?

Now your rolling fella..........


THE TRADING TRINITY

1) The market
2) The system
3) The Trader


the market is never wrong so that 1) sorted....

The system ........yep as simple as possible but you may need to add a few bells and whistles as time progresses .....you need something that works for you and you are confident with .......Trial and error and years of research and practice needed

The Trader ....this is the meat........it encompasses everything in how you manage the system and yourself........Trial and error and years of research and practice needed.....and gaining experience


2 and 3 are very interlinked (naturally) - and bringing them gradually up to high levels of performance and consistency is the true Holy grail.....

good luck :smart:
N

 

[jfink]

Now your rolling fella..........


THE TRADING TRINITY

1) The market
2) The system
3) The Trader


the market is never wrong so that 1) sorted....

The system ........yep as simple as possible but you may need to add a few bells and whistles as time progresses .....you need something that works for you and you are confident with .......Trial and error and years of research and practice needed

The Trader ....this is the meat........it encompasses everything in how you manage the system and yourself........Trial and error and years of research and practice needed.....and gaining experience


2 and 3 are very interlinked (naturally) - and bringing them gradually up to high levels of performance and consistency is the true Holy grail.....

good luck :smart:
N

Great points. I spent so much time in the past focused on trying to pick the right stock and less time on money/risk management. I've found recently that doing the opposite is not only profitable, but less stressful and much more enjoyable...

 

[rathcoole_exile]

it doesnt matter how you "calculate" it, but draw a horizontal line on your chart that is away from current price area.
It could be a Pivot point, a 00/50/25 number, yesterdays hi/lo, ANYTHING !
Then decide in advance what you'll do if price reaches your level
Decide in advance what your targets/risk parameters will be,
and voila....

 

[The Leopard]

I think using different timeframes is also a big help keeping things in perspective (i.e. weekly view before zeroing in on a daily chart).

I'm sure it can be, although it's not something I do. I think the value of doing so depends to a large extent upon your trade management approach.

 

[pisces4200]

In my experience risk management is more important than picking trades, early on I would have stretches of profitable trades and wipe all my gains with one bad trade, now I can have a stretch of poor trades and wipe out my losses with one good one.

I also picked a few trade setups that I like and stick with those.

I get to know a handful of stocks and how they trade and continually trade in and out of the same
ones until their behavior changes. I did this for months recently with KOG and WFC for example.

 

[rathcoole_exile]

the Thai stock market (SET 50 Futures) rose abruptly on today's Open, then crashed mid-morning back to the opening level.
I just showed the chart to my 3 year old daughter and asked her if it will go up or down.
She said down, so that's good enough for me to take a Short...I'll report later

 

[cristiano]

the Thai stock market (SET 50 Futures) rose abruptly on today's Open, then crashed mid-morning back to the opening level.
I just showed the chart to my 3 year old daughter and asked her if it will go up or down.
She said down, so that's good enough for me to take a Short...I'll report later

How did she do calling the direction?
I have a 1 year old but it's a struggle making sense of whether she's saying up or down for now.

 

[hgh]

risk management is more important than picking trades,when the storm comes, early on I would have stretches of profitable trades and wipe all my gains with one bad trade.

 

[sweatyslouch]

I've been trading in my spare time for several years and so far without consistent results. Over time I've tried many differnt methods from moving averages to many of the popular indicators (i.e. stochastics, RSI, momentum, etc.).

I can't help but think it really just boils to identifying support and resistence and placing your trades and stops off of these levels.

Could it really be as simple as nothing more than a chart of the price action and volume, no more no less? I think I've been making this more difficult than it needs to be.

Any thoughts?

Hi. Jfink. I have spent 5 years working at a prop trading firm and can categorically tell you that none of our trades are based on systems that incorporate conventional technical indicators. S/R is all that needed to be able trade and beat the markets consistently. It is not simple though.
The following difficulties are forever present; Firstly, not all S/R levels are created equally. The key to drawing effective S/R levels is in being able identify price levels that have the most psychological impact on market participants.
Being able to identify where a large number of market participants who are long/short will want to take profits, losses or close at break even, being able to identify where a large number or market participants who are not currently in the market are likely to want to get into the market and being able to identify where market participants who are already long/short would likely add to positions are a few of the aspects that critical in calculating the S/R levels that are actually worth trading off. Having a good understanding of where the most stop and limit orders are is also critical to trading S/R effectively.
The following points are all learnable through experience but are not really something that can be incorporated into a rigid system because they are forever changing with the flow of the market.
Furthermore, once you understand how to identify the S/R levels that are worth trading off you still need to overcome the common pitfalls of losing traders; poor money management, a lack of confidence, too much confidence, not trading off a plan, not keeping records, not having patience, having unrealistic expectations of how much money you could make, having a false belief that you can predict market direction, constantly changing your approach because you do not understand the expectancy of an edge. Etc. these are just some of the many things that mean no trading methodology is ever simple or easy. I trade exclusively from S/R levels and have a video blog that I make every day that highlights my trading plans for the day and the levels that I consider important.. It is completely free and invite you to send me a private message if you would like a link to it. Best of luck with your trading.

 

[PATrader]

risk management is more important than picking trades,when the storm comes, early on I would have stretches of profitable trades and wipe all my gains with one bad trade.

Both are important. In trading, every small little things that are part of a bigger profit making plan are important. They all work together.