Trader Talk

The conversation continues…..keep in mind that this is just my look at things.  There is no “right” way.

Wise words, “Distinct would be in the eye of the beholder”. I agree with you once again on “price is traveling sideways”, but I guess here is where we our agreement ends, as I see the price expanding while traveling sideways … 🙂 … This might be more obvious in a 4 hour chart … But tell me, what is “price acceptance”?

What I meant about price travelling sideways is I don’t consider those areas where prices pivoted, swings.  Here is a great example of this price pattern where you can see, un-mistakenly, distinct swings in price.  On the four hour chart on the pair you are trading, why was the high on the 16th discounted considering it was the last directional move in price? In the end though, I don’t generally use lower time frame charts as a setup chart.  Peter Brandt, the trader this chart is from, won’t consider any pattern less then 13 weeks old.  Different strokes.

Price acceptance.  If price reaches a level and is rejected, the new price level was not accepted.  Price closing at or above the level, price acceptance which, for me, carries much more weight.

I searched for … Rule of “Thumb Acceptance” … I found nothing … 🙁 … What is “Thumb Acceptance”?

You know, “as a rule of thumb, use a 50 SMA because big institutions use them”.  I ignore rules of thumb until it’s proven.  On that note, how do we know?  We don’t.  It’s just what people say.

I agree, “expanding upper and lower swings, is it’s a market without clear direction. “ … But guess what? According to Richard Schabacker, it’s about to get it … The market without clear direction is about to get directional … Thank you for introducing me to the work of Richard Schabacker … It supplemented the knowledge I had of Megaphones.

Exactly.  Why do I want to trade a market without clear direction? It becomes no better than random.  About to get direction and having direction are two vastly different things for me. I won’t put risk on a directionless market.  Also note the Schabacker, Ewards and Magee gang are long before we have the quantitative abilities we have now.  Even Peter Brandt, a long time respected classical chart pattern trader, has found, after decades of statistics, his results on any pattern outside of horizontal patterns were not very good.  Now, strictly horizontal patterns for him.

I wanted to post a pic of my entry point in a chart, and in a copy of the trade info in the Trade tab in the Terminal

You can’t.  Jing is a free tool where you can screen capture (even record video) for free and they host the upload giving you a link.  Allowing uploads opens my server to hacks.

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OMG … Are you looking over my shoulder? … Have you hacked my laptop? … You hit the nail right on the head … That’s my sin … 🙁 … My analysis is complex and labor intensive … Sometimes it takes me 4 to 6 hours to thoroughly analyze a pair … 🙁

Whoa.  If I have to search, it isn’t there.  A few minutes a pair, tops.  Our brains love patterns and the longer I stare, the more chance I could come up with something.  Much like seeing an animal in the clouds.

You’re right. I wouldn’t know. But the question is ‘why would I want to know’? … If something is producing good results with true data, why would I care if the same something is producing good or bad results with random data?  If something is producing profits with true data trade it … if it doesn’t, then don’t … I’m sorry, I fail to see the relevance of random data … Why even consider random data, if I’ll never trade random data?

If it produces similar results with random data, there is no driver behind price (the random data) therefore behind what how someone approaches the market  It’s no better than chance.

A good test…..turn off all your price bars, insert a bunch of horizontal lines, turn price back on.  You will see bounces, retests and a bunch of price activity around your random lines.

Here is a great story about random data and a chart where someone thinks its true data.  I think you will understand why I believe random data certainly has a place in any back test.

The bark of the naysayers is a sign you’re doing something great … 🙂

Thank you.  I find those that are succeeding, don’t feel the need to waste their time going negative.

You’re right. I’m sorry, I was dragging you to my 4H charts … 🙁

Don’t get me wrong, I will use a four hour for a closer look at something that catches my eye.  I will also use the 4 hour for an entry into a daily setup.  Just in this case, there was nothing I wanted to put risk on.  Remember though….as mentioned on the chart, there was an opportunity as a support holding/failing trade, that’s why I posted it.

What is the purpose of keeping it simple? After all, the more indicators, studies, strategies telling you what the market is supposed to do, the higher the level of confidence to take the trade. Am I right?

Going back to the chart, it was a support holding or failing setup.  I didn’t need a bunch of other things showing me that.  I see the logic in what you are saying however how robust can something be that needs far too many variables to make a decision.  A few minutes a chart as opposed to a few hours and we came to the same conclusion – there was a trading opportunity.

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Not saying this applies to you but people will look for everything to line up so they can avoid a loss.

Wins/losses come in a random distribution so no matter how many things lines up, does not increase the chance the next trade is a winner. Then..how do I test everything on its own and then combine everything to see if there is an edge?

When the expectancy of the system plays out over a large basket of trades and the results are not what they “should” have been, how do I know where the issue is with the strategy?

Thank you for sharing your insights. At the end, I think we all process the same information differently. The sharing of ideas enriches us both … 

Absolutely!

“Inflection point”? … I’m sorry. I lost you … I first came to the knowledge of this concept in Calculus … According to Merriam-Webster-Treviño an inflection point is  a point on a curve that separates an arc concave upward from one concave downward and vice versa.

(in business) a time of significant change in a situation; a turning point.

(with a greater imbalance of one or the other, I would like to see something happen that shows it.) “See something happen” … like what?

Taking a support trade for example, seeing a Wykoff spring makes me happy.  Price will spike down and then regain back up to support.  This takes into account price rejection and acceptance that I wrote about earlier.  This shows a true imbalance.  There is no guesswork…..no subjectivity.  Here is a primer on springs and upthrusts.  You can also see my USDCAD entry here as an example

Here is the four hour chart of NZDCHF.  The first circle shows my kind of support test.

Remember, I posted this chart because there was a setup for a trade.  A trade that many would consider.  What I do is post up charts that show potential.  I certainly don’t trade all of them from a risk perspective and some just evolve in a manner more suitable to my approach.  I can see where many may enter a trade and go a little more conservative when doing the results.  For example…on that chart….the retest of support is one entry.  A break of a short term trend line and retest is another.

Mean reversion and momentum.  That’s how I approach the market and requires very little in terms of analysis.  Inside of those two things, are simple patterns and qualifying information for those patterns.  I hope some of that comes across every week when I post a chart.

 

2 Responses

  1. Rolando Treviño