Technical Analysis - Futures / Commodities

[Dibbs]

Hi,

I’m new on the forum – so please pardon my noob questions!

I’ve started to read a few beginner threads which discuss basic trading methodologies (currently reading: http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html).

In the thread reference above, a lot of examples are related to foreign exchange. I’ve been trying to apply some of these methodologies on my own to test out setups on paper. While the FX market is interesting, I’d like to transpose some of these methods to the commodities markets.

Now I obviously run into a data problem with futures because of roll.

The question I have is the following: When charting out patterns, S/R lines, etc., how do you account for that in your charts? Is spot commodity prices used? Or does price series have to be adjusted/spliced (panama method, proportional etc.)?

My first reflex would be to think that price series have to be adjusted, because some speculators may induce S/R at certain given profit targets. (for example, I buy $100 worth of future, then lose $5 because of rolling, I may want to get out when I am back at break even which doesn't translate into the initial price of the futures I bought)

 

[dbphoenix]

If you're daytrading, RO will be of no concern. If you're trading a longer timeframe, RO won't be a concern then, either. If the prospect of a loss due to RO keeps you up at night, buy after RO and re-evaluate in three months before the next RO (odds are you will have re-evaluated long before that).

Support and resistance are determined by what traders are willing to pay, not by software. If you confuse yourself with lots of patterns and S/R lines and so forth, it is likely you will be so tangled in second-guessing that you'll either (a) enter at exactly the wrong price or (b) not enter a trade at all, joining so many traders who are in a perpetual state of couldawouldashoulda.

Db

 

[Dibbs]

Thanks for the quick response. I don't think I'm concerned by RO. I'm just asking myself whether or not I'm using the right chart as a starting point (unadjusted futures, adjusted futures or spot).

 

[dbphoenix]

Whoever is providing your charts should be adjusting them automatically.

What commodity are you trading?

What instrument are you using to trade it?

What is your timeframe?

What bar interval are you using?

 

[Dibbs]

I have no charts provider yet. I currently look at spot prices on stockcharts.com

I'm not trading yet, but looking at grains as a starting point for my analyses.

Expected timeframe would be few days and would be mostly relying on daily bars.

 

[dbphoenix]

If your timeframe is only a few days, a daily bar interval won't give you any signals. You'd want no more than hourly.

Take a look at this. There are questions at the beginning that you need to think about.

Db

 

[Dibbs]

Cool, I really appreciate the input.