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DbPhoenix
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Everything posted by DbPhoenix
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Picks and shovels . . . . . . .
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Picks and shovels. . . . . .
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Is Ben Bernanke an Idiot, Dumb, & Ignorant?
DbPhoenix replied to MadMarketScientist's topic in Market News & Analysis
Sound advice as far as it goes, but of little benefit if one is looking at the wrong thing. -
You're on the right track, Gekko. Congratulations for knowing yourself.
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- Keeping an eye on Apple. And preliminary support:
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After a lengthy discussion of retracements and reversals, an exercise such as this serves to focus the attention on just what retracements and reversals are and what the difference is between them. But the answer isn't as important as the process one goes through in order to arrive at it. Some will immediately look at trend, support and resistance, waves, volume, compression and expansion, almost as a reflex action, the sort of thing a professional will do automatically. This likely will have much to do with the amount of time and effort the individual has devoted to the course. Others, not knowing what to look for, will decide instead that there's nothing to see. There may also be an observable difference between those who do this every day in real time and those who don't, but there are people who learn how to do excellent hindsight analyses without ever having traded -- successfully -- in real time at all. Think, therefore, about your process. What did you look for, if anything? Did you know what to look for? Where to start? Did you slip into a well-practiced routine? Did you recognize that everything you need to know is given to you? Did you find that you may have been following the wrong map?
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So how much of a big bite did you take?
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Depends on your objective. What is it that you're trying to accomplish?
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You're probably looking for the $TICK (or, for the Nasdaq, the $TICKQ). Vols of advancers and decliners aren't going to do you much good if you're daytrading. The following explains how to use the $TICKQ, but it all applies to the $TICK as well. Click here.
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Then expand the scale so that the movements fill the vertical space and watch it as it scrolls in front of you.
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The task is not to practice at looking at something but to look at it. If you want more information on the left, expand your view. There is an infinite left. But that's not going to help you to determine whether or not the wave that's forming in front of you is stronger or weaker than the wave immediately preceding it. Nor will it help you to evaluate the wave that hasn't formed yet.
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A. There's some problem with this display. The ticks should fill the space from top to bottom, not trail along in a narrow line. B. What happened before is irrelevant unless you're looking to place a trade. The point of this is to understand the shifts between buying pressure and selling pressure. Worry about placing trades later. Much later.
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- In reference to this post, here's a little exercise from way back when (forgive the candles and the MA; they aren't pertinent). Is this a retracement in an uptrend or a lower high in a downtrend?
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The purpose of studying price movement via a tick chart or T&S display is to develop a fundamental understanding of the continuous nature of price movement. This is why I say over and over again that one shouldn't be trading while he's going through this. If he does, it all just takes that much longer, sometimes years, if ever. But once one does understand this, the bar interval is irrelevant. He can use 5m or 15m or 60m bars if he likes. But he won't be coloring them and candling them and obsessing over where they "close". They will be markers along price's journey and nothing more. He will also be in a position to surf his way back and forth through many intervals in order to find the best entry once price is in a position, e.g., heavy-duty support, to provide him with one that has a higher-than-average probability of success. I'm sure you've noticed by now that the longer the interval, the fewer the opportunities. Plus, the longer the interval, the more traders you have who are looking over your shoulder. Retracements which occur on the 1m or 3m or even 5m chart will be invisible to most everyone else. This is an edge, or at least an important element of one, particularly when one considers the traders who view anything below the 5m chart as "noise". If you're still having trouble opening things up, provide yourself with several simultaneous intervals, e.g., a tick (or close to it), a 1m, and a 5m. Include a 15m if you like. Watch how they relate. This will free you to at least some extent.
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I don't know what the extent and duration of each move will be until I open the chart. There may be fits and starts or there may be well-defined waves or there may be parabolic moves. If you want specifics, you'll have to read or re-read what I listed above and watch price move in a great many charts. This may take days or weeks or months. If you're trying to trade, it will take even longer.
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If you're working, a tick chart isn't appropriate. You shouldn't be using anything less than a 60m bar. If you do, you should have no trouble determining the difference between an upwave and a downwave. If you have not yet read the first part of the course and either the second part of the course or the Daytrader's Bible, doing so will help make this clear.
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An understanding of waves is basic to this approach: Buying and Selling Waves. The Wyckoff approach is a three-legged stool: demand/supply, support/resistance, price/volume. Two out of three aren't enough.
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- Technically this is not trading in foresight since one can't foresee what these waves will look like. One can, of course, anticipate where one might make the most out of tracking these waves by determining where S and R will most likely lie and paying special attention to the waves at those levels. However, price doesn't always turn at anticipated S&R. Therefore, I'm posting these here (a) to show how one might trade using these waves exclusive of S/R and (b) because this is where the rest of these charts wound up. Note here that there was a possible entry pre-market, but it would have been SO quickly. Thereafter it formed a hinge. Price fell out of this hinge right before the open, dangerous territory. After the open, however, the waves provided a clear signal, which may not have been taken if one were trading only off S/R. Note: tracking these waves can also help one avoid chop.
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Just watch out for those virgins
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I understand. However, the turn and downmove may have had less to do with R than with other considerations. R here is a pretty wide zone, so finding some level to provide a potential explanation for the reversal amounts to throwing virgins into the volcano. This is an example of the point I've been trying to make over the past couple of weeks: it's not lines or zones or patterns; it's trader behavior. Price can turn like a school of fish, even though neither support nor resistance are anywhere on the horizon. This is primarily why I've brought waves back into the picture. They are a direct measure of buying pressure vs selling pressure, unlike anything else one might plot (other than the TICKQ).
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I suspect it had less to do with any kind of R and more to do with AAPL, just as the pop out had mostly to do with GOOG. Keyholes.
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There isn't much time in chat for elaboration. In fact, uv prb ntcd tht I uz a lt of abbrv n my psts thr. But the issue here is not so much the distance to R. As you point out, one cannot know in advance whether R will hold or not. The more important issue is that the entry is at 14, and if you wait, then your price risk increases substantially. If you enter at 15 rather than 14, your profit potential is less, your chance of being faded is greater, your chance of being trapped inside a hinge is greater, etc. This is not to say that you shouldn't take it, but to remind that there are risks involved in not taking the proper entry that should be considered before taking action. And even if the trade works out, one should not feel too satisfied as the market has just taught you a bad habit, and it will make you pay at some other point in the future. Db