Stacking Edges

[SpideySense 10]

If it's based on what price has done it's technical analysis; and although I believe that there are many paths to success my own approach has evolved towards simplicity.

 

I'd prefer the thread stay away from market internals, bid and ask volume, and anything that isn't generally available across most of the world's markets. Also, from me at least there'll be a lack of indicators and an attempt to focus on robustness. I'll put up a series of ideas for discussion that I think can contribute to profitable trading either as exit, entry or both.

 

So the first straw man is this:

Longer time frames give more reliable signals, be they highs and lows or patterns of price action.

[SIUYA 11]

So the first straw man is this:

Longer time frames give more reliable signals, be they highs and lows or patterns of price action.

 

.....for longer term trading.

 

For shorter term trading how relevant are the longer term levels (clearly relevant as to what the market might do when reaching these levels, but if you are trading short term swings, then maybe the longer term is less relevant. That is not to say reliable.....as we all know nothing in trading is that reliable

 

I think matching the correct tool for the job, the correct time frame for what you are trying to do and the style/strategy you are trying to implement successfully is whereby you need to match items such as long term signals/price action with the short term movements you might be trying to capture.

The long term might give the context in which to best implement the short term strategy.

eg; it might not make a lot of sense to take even short term longs on a breakout strategy, when after a bullish run of a few days is at or near old highs. It might be best to wait for a pullback or consolidation of some kind first, and the strategy maybe best changed to looking to buy support - or shorting false/failed long breakouts

 

[Interceptor 10]

Kinda keeps coming back to capitalisation.

The contents of your wallet dictates your possible options re timeframes and 'style'.

[Colonel B 10]

Lets build a car.

First thing is you cant use a steering wheel.

You can only build it with 3 wheels.

It has to have the body of a 97 Ford Tarus.

We are going to sell this to the public world wide and compete with the other major car manufactures and make money

All of the parts must be available world wide.

The frame of the car must be made completely of "robustness"

Don't tell me how to build it because I want to develop my own strategy.

I believe that there are many ways to make a good solid car because of all the different companies, models, and brands so my business needs to reflect my beliefs.

Building a business and a car can be accomplished by any creative means and requires no structure or standard.

 

If this is how you build cars or a businesses then good luck to you. Good luck competing against others in the industry. The fact is that if you want to use what is available to everyone world wide as the standard then you will lose. The reason is that the game isn't that way. Internet alone will provide an advantage over others. The speed of computers will provide another advantage over others. There are folks that are using fiber optic and I7 or better comps for platforms and executions. If you want to use a mid range comp that lags with internet that is falls off every once and a while then good luck. Having a seat is another advantage. A cheaper broker is another. Some guy trading in India with one monitor with a pig slow PC with slower then averaged internet with a broker that is charging him an international rate can't compete with me even if we are doing the same thing.

 

Hard to say if longer time frames give better signals. If you are using something solid that works no matter the time frame then longer time frames wont give better results and they should give the same results. If you are using something that is more time frame specific then yes you could get better results (if you adjusted for larger time frames) and no you could get worst results(if its adjusted for smaller time frames). If you are using something that doesn't use time as a major part then yes you could get better results and no you might not because time would have less meaning.

 

You are going to get folks that consider themselves swing traders and will swear that they get better results then their counter parts and you are going to have folks that use a 1 sec chart and swear that their system is superior.

 

I guess I need a bit more context. Does getting long a daily low work better or worst then getting long a weekly or monthly low? Depends on the context. Some times a daily low works for 3-5 days and the then it fails. And so if the monthly low fails on the same day as the daily low fails does that mean that daily lows work better then monthly?

 

There really is and ever has been one "edge" that traders had and will ever continue to have. It was the "edge" that traders had in the pit and what traders have today. I bet it was the same "edge" they had in Japan when futures where invented. The "edge" traders in the pit had wasn't the 50 MA or even the 200 MA.

 

Hope that helps and adds to the convo

[castlemaine 10]

In the 24/5 markets the lack of synchronisation between time interval boundaries and market events means that intraday time period bars/candles cannot be relied upon to portray a price action event the same way every time.

 

This means that any short time frame based strategy which is looking for particular candle forms or patterns is on shaky ground. VSA, for example, relies on a bar/candle closing in a particular area for some of its analysis of bar/candle meaning. Intraday, this can't be an entirely valid approach.

 

The daily cycle of activity in the market allows for some degree of synchronisation on the D1 time frame and the weekend break allows the same for the W1 time frame.

[zdo 20]

So the first straw man is this:

Longer time frames give more reliable signals, be they highs and lows or patterns of price action.

 

or maybe they just give us better opportunity (via more time) to see them setting up...

or maybe longer time frames just result in less 'decision fatigue'

[zdo 20]

So the first straw man is this:

Longer time frames give more reliable signals, be they highs and lows or patterns of price action.

 

I typically prefer to stay away from biophysical parallels but -

If you ever walked railroad tracks as a kid, you’ll remember that visually orienting to just the right range and peripheral scope down the track really helps you stay balanced. 'Focusing' too close or too far out increases your odds of losing balance and falling off the track.

[BlueHorseshoe 10]

I think this depends on whether we're talking purely about the reliability of the signal, or whether we're talking about the capacity of a strategy based on that signal to make money in the real world.

 

It wouldn't be hard to give you examples of signals from very short term charts which are highly reliable, but then once you've paid the spread and the commission you're left with (less than) nothing. Assuming that the size of the move you wish to exploit, the trading frequency, and the time frame are all directly proportional, and that we only consider performance metrics before deduction of costs, then the shorter term signal will tend to be more reliable.

 

Factor in costs, and you're probably more likely to end up with a profit trading higher timeframes.

 

BlueHorseshoe