I don't see why everyone is so confused about what John is saying. He's simply a value trader. He knows which prices he's going to trade in advance after all the uninformed participants demand for liquidity pushes price away from it's fundamental value. Traders like John get into the market at the bottom of the pin bar, before all the price action traders know whats going on. Thats why he says PA/charts are lagging. If you know when and at what price the market is away from it's true value, you can jump right in before the herd. Having this simple ability makes trading a very viable business and takes 98% of the stress out of trading. If you can remove your brain from the chart, and 'get behind the chart,' you'll be golden. Buy when prices have fallen below fundamental value, and sell then they've been artificially pushed above value. This is what professionals do. Profesionals are the ones making price move on our charts in the first place. Think like them and after some significant studying, pain, sweat, ect, you might just trade like them too. It's one hell of a hard road, but it can be done. Learning to think for yourself is the hardest part of learning to trade successfully.
I am a growth , not a value investor. There is a point that I would like to put to you about value investing. Shares can be undervalued for an indeterminate length of time, often months or years and the investor is happy because he has done his sums and knows that he has value. A trader, certainly this one, is not prepared to trade such shares on that basis. Would you not agree that, most of the time, the FT100 shares are traded on what is thought future earnings are likely to be and what the index, in general, is likely to do?
Most of my spare cash is in shares because I don't think much of current bank interest rates. I would not like to be trading these shares on a short term basis, though, because time is on the side of long term investment, not short term trading.
For trading I can't use anything other than TA, it's like a road map that is in front of me.
If one uses systems such as MP they are, IMO, using charting to come to their conclusions.
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Hey Splitlink,
You and I are operating on the same wave length, but I am speaking of much smaller time frame trading. Value traders in the sense in which I'm using the term, are the ones who supply dealers with liquidity after they've taken on unwanted inventory positions. It's like buying your shares @ wholesale before the rest of the market knows what is going on. It is ussually after the uninformed among us trade that we take the other side of their trades and run over them. So to trade logically and objectively as John talks about, it's imperitive that one knows the story behind price at the moment. Is the current price reflecting value, or is current price the byproduct of unimformed traders? Thats what you need to be concerned with. I'm not at all worried about sharing too much because it's very hard to get to the point where you can 'see' whats going on in the market. It's all about understanding implications as John also said. This involves learning all the boring basics of trading and market mechanics that nobody really wants to spend a lot of time on. Charts are quick, easy, and addicting in many cases. They simply get you in too late and set you up to take on unnessisary risks. Get yourself outside of the mainstream drivle and market 'knowledge' and find out what's making things tick. Pardon the pun.
You and I are operating on the same wave length, but I am speaking of much smaller time frame trading. Value traders in the sense in which I'm using the term, are the ones who supply dealers with liquidity after they've taken on unwanted inventory positions. It's like buying your shares @ wholesale before the rest of the market knows what is going on. It is ussually after the uninformed among us trade that we take the other side of their trades and run over them. So to trade logically and objectively as John talks about, it's imperitive that one knows the story behind price at the moment. Is the current price reflecting value, or is current price the byproduct of unimformed traders? Thats what you need to be concerned with. I'm not at all worried about sharing too much because it's very hard to get to the point where you can 'see' whats going on in the market. It's all about understanding implications as John also said. This involves learning all the boring basics of trading and market mechanics that nobody really wants to spend a lot of time on. Charts are quick, easy, and addicting in many cases. They simply get you in too late and set you up to take on unnessisary risks. Get yourself outside of the mainstream drivle and market 'knowledge' and find out what's making things tick. Pardon the pun.
Horses for courses! Think Derivatives!
I don't recall suggesting Market Profile as a viable approach.
Good Trading
John1
I hadn't bothered continuing because it appeared that I was simply howling at the moon! Perhaps you might like to continue running with the baton.
Good Trading
John1
There is nothing so blind as a no-eyed deer! By all means stick to what you do, this is simply an open minded discussion, there can be no harm and therefore no foul!
Good Trading
John1
temporarilylight
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Harvaster. I think John said that he doesn't use Fundamental analysis. He doesn't use TA(charts, level2, mathematical models etc) or Fundamental Analysys. It's pointless trying to guess, and Will only frustrate you.
I couldn't find your post among all the pages but MP just crossed my mind, with no suggestion about what you use, in particular. I guess that you are a trader with access to information that I don't have. I don't have sophisticated software but I doubt whether I would be able to, or even want to, trade much faster than I do, which is fairly leisurely.
That said, I accept the fact that you are in the trade before the price move gets my attention. I suggest, though, that it should not matter all that much as long as one gets the middle bit of any trend. As you say, horses for courses and this nag is getting on a bit to be watching the turns.
A lot of us chartwatchers do manage to get some good moves, though, now and again.
It's a business, all you have to do is develop a solid business like way of thinking. It's that simple and that complex. The issues that you mention don't even come into the equasion.
Anyway, it's time to step back so good luck in the search!
Good Trading
John1
I couldn't find your post among all the pages but MP just crossed my mind, with no suggestion about what you use, in particular. I guess that you are a trader with access to information that I don't have. I don't have sophisticated software but I doubt whether I would be able to, or even want to, trade much faster than I do, which is fairly leisurely.
That said, I accept the fact that you are in the trade before the price move gets my attention. I suggest, though, that it should not matter all that much as long as one gets the middle bit of any trend. As you say, horses for courses and this nag is getting on a bit to be watching the turns.
A lot of us chartwatchers do manage to get some good moves, though, now and again.
Just a footnote before I go.
The crux of the issue is risk management, at any given time as a percentage the amount of risk that you take on will dwarf my largest probable losses, as a consequence your RR will pale into insignificance as a rule when compared to what is available to me. Apart from the models that I have developed there is nothing that I use that is not readily available to anybody who chooses to look. It should be obvious from what I have said that due to the attractive RR more opportunities become available to be exploited.
Good Trading
John1
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I'm not sure if John is a speculator or not based on his last posts, he might not be a trader at all, but still works in the world of trading in some form or another. I have friends who work at the BATS exchange in Kansas City who make money by taking a tiny fee for every share traded on the exchange. These small fees that most traders aren't even aware of add up to massive amounts of cash. It wouldn't surprise me if John was doing something like that in the periphery of the market in which he's involved.
This would allow him to be more business minded and structured, but thats not trading. Also, the people who are fee based profiters don't get the privilege of compounding.
So I guess a good question for John would be..Are you a trader or are you profiting from a service of some sort?
I'm a FX guy, and I do actively take directional speculative trades. None of the handful of guys who do what I do will ever talk about it on a public forum because frankly it would be stupid to do so. Uninformed traders are my bread and butter.
I just posted here so I could throw in my 2 cents, and it looks like I was wrong.
temporarilylight
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you're about the only person to shed some possible light, because nobody (including me)even knows what we are discussing for the last 20 or so pages! lol
its quite funny really.
I know a way to get really well built and muscled without any excercise or drugs or surgery.....
another guess:
DionysusToast
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The Mushy Pea Ice cream company releases earnings. They are terrible. There had been a rush up in Mushy Pea Ice cream shares prior to earnings. Mushy Peas drops, Harvey Moon Ice Cream drops too -as do all the major Ice Cream players.
Harvey Moon Ice Cream shares are down 20% two weeks later, the day before they announce their earnings.
Now - no-one really knows if these earnings will be good or bad, give it 50/50.
At this point, is there reason to put on a position in Harvey Moon the day before their earnings ? Or rather - is there a reason to choose one side of the market in Harvey Moon over the other ?
Note - no charts were harmed in making up this fictional scenario.
Harvey Moon Ice Cream shares are down 20% two weeks later, the day before they announce their earnings.
Now - no-one really knows if these earnings will be good or bad, give it 50/50.
At this point, is there reason to put on a position in Harvey Moon the day before their earnings ? Or rather - is there a reason to choose one side of the market in Harvey Moon over the other ?
Note - no charts were harmed in making up this fictional scenario.
Speculator, but stupid I'm not! And yes I do realize that self praise is no recomendation!
Good Trading
John1
trader_dante
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Do markets have a true value?
trader_dante
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I'm not sure why so many people seem confused by what John1 is saying.
There are lots of successful traders that don't use charts.
However, I believe they all have one thing in common. They will all want to know the currrent price before they enter.
I am sure no one on here is going to try and argue thats not the case.
And that price immediately allows the participant to qualify their decision whether it be a fundamental one right down to an arbitrage opportunity or a simple hedge.
So what you have to remember is that just because someone doesn't have a chart infront of them, doesn't mean they haven't been mapping the market some other way - either mentally or with another means of data entry.
The only reason I use a chart is because it saves me having to fill my head with lots of figures but it is certainly not necessary to trade profitably.
There are lots of successful traders that don't use charts.
However, I believe they all have one thing in common. They will all want to know the currrent price before they enter.
I am sure no one on here is going to try and argue thats not the case.
And that price immediately allows the participant to qualify their decision whether it be a fundamental one right down to an arbitrage opportunity or a simple hedge.
So what you have to remember is that just because someone doesn't have a chart infront of them, doesn't mean they haven't been mapping the market some other way - either mentally or with another means of data entry.
The only reason I use a chart is because it saves me having to fill my head with lots of figures but it is certainly not necessary to trade profitably.
spreader_legger
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The way I see it - trading should make money on consistent bases. I mostly trade FX using only charts for my trading decisions. For this style of trading it is difficult for me to see how can anybody make money without charts.
On the other hand, if astrology or whatever consistently works for you - stick to it.
Trading should be effortless - keep it simple. To much philosophizing may adversely affect your results IMO.
On the other hand, if astrology or whatever consistently works for you - stick to it.
Trading should be effortless - keep it simple. To much philosophizing may adversely affect your results IMO.
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Market participants, namely dealers in my world of FX value prices or zones that make them money. Said another way, they value the cash flow that certain prices produce for them. Because they control the market and the prices at which I trade, I pay close attention to what they're doing. Dealers don't like quoting prices @ which they lose money, when they find these prices they move the market away from them back to the prices they value. These change all the time, you just have to follow along. Sometimes dealers are forced to quote the prices they dislike, and when they do I trade and exploit the inefficiency.
Like I said, anybody can figure this out, it just takes some sweat and thousands of hours of boring study time.
IMO, no. It is far too late to open a trade unless one has really good grounds for doing so. Normally, the market has a good idea of how results are going to be months before they are published. That is why I believe in TA for trading purposes.
