Price Patterns.

[chump]

Many moons ago I was sat next to a pro (and I hope you are keeping well) and i member eagerly saying "should we sell now ..should we move the stop up"..and he just sat there saying "we're just managing the trade"..I'm sure one or two here recognise those priceless words.
Crowding before you need to crowd is 'weak' ..it takes 'strength' for want of a better word to be willing to sit back until you see a real need to do more than that... I've come to decide that once you've cleared your hurdle on directional bias "managing the trade" is really what it's all about and where you need to show 'strength' when you know what your probs and expectancy are...give them the respect they deserve.

 

[Paul71]

This question now is pointed toward newbies in the main, and it's about how they go about looking at the markets at the start of thier trading life.

If there should be such a thing as multiple trends (trends within trends)

Which trend is the weakest?

Which trend 'holds' or 'hosts' the most 'shenanigans'?

Which trend is the easiest to manipulate?

Which trend is the hardest to learn?

Is it wise to take on the above trends at the beginning?

 

[andycan]

questions asked should pertain to your particular requirement
a scalpers view though he may take the more established trend as a guide will still trade the in between, whilst a swing trader will consider the in between as noise, and allow the so called trend to mature, big money moves slower and gradual like a tank cutting a path, everyone else weaves in and out within the path. you have strategies and trickery but all within the road that has been made, your choice is whether to follow the tank or to figure out the strategies or the tricksters.

 

[Splitlink]

Short term shenanigans aside, doesn't it rely on money flow at the end of the day?

More money coming in, prices will rise and vice versa. When the big boys playing with their own money start taking money out then watch out. Course, they are different from the big boys playing with retail money - if the public keep giving it to them then they've got to put it somewhere.

good thread 😀

jon

Smart money, perhaps, uses fundamental analysis, buys when stock is cheap whereas traders use chart analysis and follow trends . In that way, traders will use patterns but smart money, i.e. investing money, is only picking up value or growth and, perhaps, hedging by shorting overbought positions or writing options., instead of selling outright.

TA is, always, going to be a hit or miss affair, used by the mass traders. Capital makes fortunes and the owners of capital risk it as little as possible by investing it in what is cheap, not by reading a chart.

Over the years, I have spent less time and made better returns on a portfolio of shares, than I have trading shares by TA.. That is not to say that there are not great traders making fortunes but they are, relatively, few. if I can get a set of results and look at the growth of a company over the years, I will tell whether it is cheap, or not. Let the traders push the price up when they catch on.

Split

 

[chump]

Terminology is sometimes the problem....'weak' to me means two things..one is any player in any timeframe who crowds his trade before he has to and in other words does not let his trade run to expectancy..and two , in terms of supporting a trend any trend strength that approaches parabolic because then 'weak' becomes the sum toal of the shorter timeframes who will be progressively closer and closer to the price action with little ,or no longer timeframe support close by. In a case like that to fulfill two sides to a market pros in the shorter timeframes will start taking the opposite side , or will at least have stepped aside and distributed.

As a context aid for the chart I posted earlier here are two charts showing the bigger picture and the more immediate action.


Headlines today wail about mining weakness holding back the FT...from the two comparative charts it should be immediately obvious why that is happening.

 

[barjon]

.....Over the years, I have spent less time and made better returns on a portfolio of shares, than I have trading shares by TA.. That is not to say that there are not great traders making fortunes but they are, relatively, few. if I can get a set of results and look at the growth of a company over the years, I will tell whether it is cheap, or not. Let the traders push the price up when they catch on.........

Split

split

Too true! My wife, an "active investor", has outperformed me, a "TA trader", more than six years out of ten over the last thirty years 😢 But that's just because I'm still getting to grips with TA 😉

Now about that trend..........easy to see in hindsight, damn nigh impossible (for me anyway) to see at its outset. And the longer you wait the nearer it is to finishing. That's why I concentrate on potential trend continuation after retracement with some simple mechanical rules which "assume" continuation until the price action says otherwise. If I had the skill to read what the pros are up to then I'd do something different, but their book remains obscure to me (which is what they intend I suppose) despite all the efforts of several on these boards to teach me the language.

good trading

jon

 

[new_trader]

split

Too true! My wife, an "active investor", has outperformed me, a "TA trader", more than six years out of ten over the last thirty years 😢 But that's just because I'm still getting to grips with TA 😉

Now about that trend..........easy to see in hindsight, damn nigh impossible (for me anyway) to see at its outset. And the longer you wait the nearer it is to finishing. That's why I concentrate on potential trend continuation after retracement with some simple mechanical rules which "assume" continuation until the price action says otherwise. If I had the skill to read what the pros are up to then I'd do something different, but their book remains obscure to me (which is what they intend I suppose) despite all the efforts of several on these boards to teach me the language.

good trading

jon

I agree Jon. If I have understood correctly, it appears that having the ability to judge "intent" of the Market Manipulators is the key to trading successfully. The secrets of intent can be unravelled in the price action to volume relationship. I think I have just restated the obvious.. 😕

 

[andycan]

I agree Jon. If I have understood correctly, it appears that having the ability to judge "intent" of the Market Manipulators is the key to trading successfully. The secrets of intent can be unravelled in the price action to volume relationship. I think I have just restated the obvious.. 😕

price actions and volume do not always work together, that would be too too easy

 

[andycan]

...price and volume dont tell everything ....there meaning is limited without an understanding of the psychology which went into there creation.

of course but looking at the bars i can see what they are doing i know what the players want to do in different time frames
structure tells me where funds are going to buy and sell, waves tells me what everyone sees and allows me to see the psychology of buying and selling pressure, OI and volume tells me if the moves are short lived or its genuine interest in that direction and then i have geometry that puts it all together and confirms what is not visible and tells me what the players will and sometimes what they are going to do before they do it
all a series of events that speak the unspoken word,

 

[chump]

Interesting update from the earlier charts...can't really say there was not every warning in these charts ! Forget hindsight...the range was there to aim for wasn't it.

 

[Charlton]

Uncomfortable facts

Hello DB.

We have buying and we have selling this gives us a price.

What is the formulae/equation that binds this proccess to make it real, to give it structure, to take it away from the supernatural and myth.

This is the very source of what the world financial markets are based on.

If you have explained this, or showed this equation somewhere else on these boards i appologise. Could you please show it one more time, i beg you.

Thankyou in advance.

Linesniffer

I suspect that your questioning is not that of a beginner, but more provocative
There is no formulae/equation.

If there were then the weaker hands, no matter how weaker they are, would discover it and it would become useless to the stronger hands. A market by definition needs weaker and stronger players to exist.

The most important thing is to determine intent. This is a nebulous concept that requires interaction with the markets and their intraday movements to develop a full understanding.

It's difficult to explain. It needs to be experienced.

Textbooks, standard patterns, trends and so forth are the mechanical means of approaching this realisation, but goes further than that. They propel one along this path, but evenutally have to be supeseded by more personal qualities.

These things cannot be taught. They can be illustrated by contact wth professionals or contact with the market by oneself, accompanied by appropriate thought processes.

This is an annoying, uncomfortable and unsatisfactory fact for newbies.

Charlton

 

[Paul71]

Linesniffer

I suspect that your questioning is not that of a beginner, but more evocative.

There is no formulae/equation.

If there were then the weaker hands, no matter how weaker they are, would discover it and it would become useless to the stronger hands. A market by definition needs weaker and stronger players to exist.

The most important thing is to determine intent. This is a nebulous concept that requires interaction with the markets and their intraday movements to develop a full understanding.

It's difficult to explain. It needs to be experienced.

Textbooks, standard patterns, trends and so forth are the mechanical means of approaching this realisation, but goes further than that. They propel one along this path, but evenutally have to be supeseded by more personal qualities.

These things cannot be taught. They can be illustrated by contact wth professionals or contact with the market by oneself, accompanied by appropriate thought processes.

This is an annoying, unconfortable and disastifactory fact for newbies.

Charlton

Hi Charlton.

Thanks for the reply.

Think of what mathematics can explain, it can explain alot.

Why not the markets?

Why can buying and selling pressure not be formulated?

Someone buys, someone sells, time is in the mix and everything else you can think of.

It's got to be possible.

Thanks.

 

[Paul71]

Price doesn't just act willy nilly, it is regulated and formed precisely.

Does the execution of a trade show the intent/psychology?

Or...

The price?

 

[Charlton]

Pscyhology, intent, tactics and mathematics

Hi Charlton.

Thanks for the reply.

Think of what mathematics can explain, it can explain alot.

Why not the markets?

Why can buying and selling pressure not be formulated?

Someone buys, someone sells, time is in the mix and everything else you can think of.

It's got to be possible.

Thanks.

Linesniffer

I understand where you are coming from. Of course there is tremendous complexity. I am sure that your reply would be that no matter what level of complexity, it can still be mathematically coded. That may well be true, but can it be achieved in the short-term i.e the next 1000 years ?

The market is comprised of humans and also machines, programmed to react to certain events prescribed by humans.

The problem is that humans do not necessarily follow rules of logic, which would be neeed to formulate exact rules of buying and selling pressure. Also they can react quickly to changing circumstances.

It is, for example, perfectly possible for one individual to affect share price. You don't have to be a big player to do it. Find a rather stagnant stock - create a transaction of 100 shares buy or sell - wait for a minute or two and watch the change on level II. Even the small player can influence things to a certain extent. Formulation requires participants to behave logically. Humans do not always behave in this fashion, even if it is detrimental to their "material" wealth.

I concede that mathematics can play an important role and provide a useful tool, but as a discretionary trader I do not believe that it can be the be-all and end all. One needs to understand the psychology, intent and tactics behind the markets.

Charlton

 

[Paul71]

...yes there is a formulae....just because others dont believe in it doesn't mean it doesn't exist...for example mysteriously i the cookies and milk were still gone Christmas morning for mr chirmbo......then again i i do have a history of sleep walking and a love of food.

😆 Santa does exist,...doesn't he?

 

[trendie]

aaaahhhhhhhh, Charlton!

are you saying that if we simplified the market and treated it as if it were a low volume stock, and thought through the idea of pump-and-dump merchants, it can give an insight into the mechanics of how markets can be manipulated ?
in that, it can explain in a microcosm the of how the pros can accumulate stock quietly at first to build up "energy", and then to deliberately buy in volume to attract attention, triggering a stampede to buy, and then selling off their accumulated stock to the new buyers, thus off-loading their inventory at a profit?

or have I got it wrong again.

 

[Paul71]

Linesniffer

I understand where you are coming from. Of course there is tremendous complexity. I am sure that your reply would be that no matter what level of complexity, it can still be mathematically coded. That may well be true, but can it be achieved in the short-term i.e the next 1000 years ?

The market is comprised of humans and also machines, programmed to react to certain events prescribed by humans.

The problem is that humans do not necessarily follow rules of logic, which would be neeed to formulate exact rules of buying and selling pressure. Also they can react quickly to changing circumstances.

It is, for example, perfectly possible for one individual to affect share price. You don't have to be a big player to do it. Find a rather stagnant stock - create a transaction of 100 shares buy or sell - wait for a minute or two and watch the change on level II. Even the small player can influence things to a certain extent. Formulation requires participants to behave logically. Humans do not always behave in this fashion, even if it is detrimental to their "material" wealth.

I concede that mathematics can play an important role and provide a useful tool, but as a discretionary trader I do not believe that it can be the be-all and end all. One needs to understand the psychology, intent and tactics behind the markets.

Charlton

I'm not on about formulating behaviour.

Is price delayed to buying and selling?

 

[Paul71]

How is a stock price formulated for a company that is going to be floated?

Going by what your saying charlton, they do it like this...

The chairman of the company likes the colour red.

The word red has three letters in it.

His grandmother died at the age 87, he still loves her though.

87pence x 3pence, there, you've got the price of the stock.

Silly, innit?

Prices are not just cooked up out of nothing, they are created through a process, a logical process. I'm not talking about the psychology of traders here, or there intent.

 

[Charlton]

How is a stock price formulated for a company that is going to be floated?

Going by what your saying charlton, they do it like this...

The chairman of the company likes the colour red.

The word red has three letters in it.

His grandmother died at the age 87, he still loves her though.

87pence x 3pence, there, you've got the price of the stock.

Silly, innit?

Prices are not just cooked up out of nothing, they are created through a process, a logical process. I'm not talking about the psychology of traders here, or there intent.

As you wish !

Charlton

 

[Paul71]

How are stock prices formulated for companies that are going to be floated?