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TheNegotiator

Market Wizard
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Everything posted by TheNegotiator

  1. TheNegotiator
    Absolutely, every case must be unique. But we all should have similarities as we are after all part of the same species and we all trade the markets.
  2. TheNegotiator
    Haha minoo! Price is indeed a tricky thing and the idea should be to try to look at what it is trying to do overall. I have had some decent success in the past with Fibonacci confluence levels when markets are moving considerably. But do you think they work as well on mechanical changes in a market such as margin hikes? I'm not saying they shouldn't but am merely interested on your view.
  3. TheNegotiator
    Yeah I think that the recent heavy push higher has been more about speculation than anything seeing that the margin hike has moved silver down so hard. My idea is that it is still going to rocker at some point and this maybe was just a bit of a false start. I wouldn't be surprised if many of the guys involved in oil's move higher are the same big players in silver now.
  4. TheNegotiator
    To me, this is a simple question to answer. Technical analysis does work it's traders that don't. They want a nice simple thing to tell them to do a certain thing which will make them money. When it doesn't work, it's not their fault but the indicator or whatever that isn't reliable.
  5. TheNegotiator
    Volume of course can 'complete' the story somewhat. For example, what would be your view on a break of the neckline if you then saw that there was no follow through selling appearing in the volume? Would you still be wanting to sell hard into the break or would it be more prudent to wait for an attempted retest and fail of the neckline? Coupling it with delta is another way to go. Stochastics is another possibility I guess but you should already be seeing price divergence on the right shoulder, no? Would you use stochastics in another way Tams?
  6. TheNegotiator
    Possibly one of the most underrated trading books of all time. This book is packed with statistical data of every type of technical chart pattern in both bear and bull markets. Bulkowski explains how to trade these patterns with precise measuring rules for exit points. If you are a technical trader this book is a must read. Bulkowski includes a section called "Focus on Failures" for each pattern. From pure technical information, Bulkowski explains how to anticipate such pattern failures. He also points out several patterns that will help traders identify a pattern failure in place. If you are a technical trader based on price patterns this is a true gem to your trading library. This is a great reference book for traders of all levels.
  7. TheNegotiator
    So what are the implications of the supply and demand in this pattern? Well, the trend starts and continues with the left shoulder, pullback and then head. The buyers in the above image of gold try to push the price higher but either are met with stronger selling (new or old business) or lack of continued strength. This is clearly demonstrated by the lack of a continuing trend which would have been indicated by a higher high. The last piece is the neckline break. The pullback trend is broken indicating a capitulation of longs. Generally I would look for this pattern on a 30 min timeframe or more as I see it as having momentum implications.
  8. TheNegotiator
    So a head and shoulders pattern, or inverse of the same pattern, is simply put a trend followed by a pullback, then a further push and another pullback and finally a last attempt to continue the trend which lacks in strength. So basically the last push higher(or lower) makes a lower high(or higher low) than the second swing and indicates exhaustion in the trend. A 'trend' or 'neckline' is drawn between the pullback lows(or highs) to indicate a potential entry once the pattern completes.
  9. TheNegotiator
    So how useful is the head and shoulders pattern today? I think most people would say that it's pretty useful. But why? How many of us stop to question the nature of this old chart pattern? Let's take a look at the nature of it and discuss the reasons for it's efficacy.
  10. TheNegotiator
    Well I'd definitely say good luck to you then! But the one thing that you must always bear in mind is that even with the most highly effective strategy, if it isn't implemented with strong money management methods, the account will have a margin call before you even see it coming.
  11. TheNegotiator
    Hi jlove, Welcome to TL! I don't want to dampen your expectations but generally you shouldn't expect to get such great results when you test the system in a live market. Backtesting and optimisation of systems is a skill that people take years to master.
  12. TheNegotiator
    My advice to any new trader on news is listen to what the news is and ignore the rest of the report. Form your own opinions on the effects of the news and reasons for them, based on your understanding and observation of the market itself.
  13. TheNegotiator
    I definitely agree with you guys here. The fact is any indicator is always subjective if only just because the one thing you generally can't see on a chart is the guys who are waiting on the sidelines preparing to make their move. Everything has to be viewed in context and assessed as a continuum of probabilities. Trading is about thinking. Methods may help traders think more incisively but most just want them to tell them what to do and when. To me, this is the holy grail that doesn't exist.
  14. TheNegotiator
    Here's that video for anyone who hasn't already seen it:- YouTube - malekanoms's Channel
  15. TheNegotiator
    Well I think that QE2 should work but unfortunately that chart to me just shows that the money that is being ploughed into the economy isn't actually reaching businesses in general. There was a funny video that some guy did a while ago on it.
  16. TheNegotiator
    Finally, you might ask what I was talking about in the example in the previous post when I mentioned that the break of the consolidation needs to hold. Well duh! Of course it needs to hold! The reason this is of particular interest is again one of inventory. Failed flags can and do happen. I would personally would not jump straight back in on a stop out to reverse into a failed formation, but you certainly could look at doing that I'm sure. The failed flag is in a bull flag example, initial strong buying followed by weaker selling and consolidation. The break then occurs on more buyers and capitulation of sellers. However, then stronger selling does enter the market and reverse the initial strong buying. I personally have had most success with flags on a 3-10min chart as I think that the inventory on these timeframes work well with this formation intraday. Not to say it wouldn't work elsewhere. The last thing I forgot to mention is about entry. I enter on a break with increasing activity and expect to have the continuation progress within a few bars. Just one more thing (in a non-columbo kinda way), if there is a clear flag consolidation pattern and it goes on for a good while without showing signs of breaking, my expectation is of a complete reversal. I hope you enjoyed this cursory look at flag patterns and feel free to discuss or correct me!!
  17. TheNegotiator
    So the basic premise of a flag formation is that there is a fairly clear directional move(flagpole), then consolidation(flag) and finally a break which is in the order of magnitude as the flagpole. A flag is a continuation pattern which can be either up or down(inverse flag if you like). The thing that you really need to be looking for is a less volatile consolidation phase(flag) on lower volume than the original move(flagpole). The reason for this is that say there is a good deal of buying on the move up for example. The conditions for continuation are going to be shorting in the consolidation against the stronger buyer, hence the lower or weaker activity. On a break of the consolidation, the sellers will generally liquidate, adding to the secondary push higher. If this selling is stronger then you'll likely not see a consolidation at all, but an immediate reversal. See the attached image for an example in the NQ.
  18. TheNegotiator
    For all the different methods of technical analysis employed to place a trade and all the different forces within markets nowadays, do simple patterns still have a place in your repertoire of trades? Well, I would personally say that the answer to this question is a categorical yes with the one qualifier that the pattern must be a strong indication of the underlying auction and the inventories being added to or squared up. One such formation that I really like(given that I have done well from it in the past) but probably under utilise is the Flag Formation and in my next post, I'll discuss the ins and out of trading it.
  19. TheNegotiator
    Yes, I understand it's used in various different ways. Option delta is the obvious one. However, generally in trading it is used it terms of difference in market executions at bid and ask. Order book delta is an interesting thought though, but I am sure there are many of different considerations using this method. Like for example whether it is open to manipulation. If you don't have to even place a trade, manipulating become much more viable if it works...
  20. TheNegotiator
    Order book delta? Are you using the difference between bid and ask limit orders here? If so, how far are you going depth-wise? Delta as it's known in the traditional sense is the difference in actual trade at the bid and ask. If you have an interesting idea on this, please share it.
  21. TheNegotiator
    Erm, I'm pretty sure it did break davie.d
  22. TheNegotiator
    Another really important reason that the rich get richer is timing. First off they don't have any imperative to trade or invest or start a business or whatever. So they sit and they observe and they wait and if needs be they wait some more. Then when everything is looking like it is in their favour, then they make the trade. Secondly, if their timing is off slightly but the idea is right, they have the proverbial 'deep pockets' to stay in the trade longer than most. Usually, I'd say people have the right idea but timing especially in trading, means they have to exit before money can be made. Rich people don't tend to have the same issue.
  23. TheNegotiator
    I don't know but I'm pretty sure you would end up losing on price and transaction costs if you look into it properly.
  24. TheNegotiator
    So does NLP really work and can it help traders? As far as I'm aware, it's a pretty broad subject so not all of it would be applicable to trading I'm sure. But could you literally talk yourself into trading well or is this just ridiculous? Does everything still come down to your strategy and work ethic?
  25. TheNegotiator
    BlowFish I agree. Like I mentioned earlier in the thread though, I also watch the quality and flow of the CD to monitor for algo/otf activity. I find it is a good tell and a useful visual tool in addition to specific value or value comparison techniques.
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