RE: Gambling Indicators: They work!

["Neil Harrington" <njhprovo@xxxxxxxxxx>]

Bill,


|  -----Original Message-----
|  From: T-BONDTRADER [mailto:T-BONDTRADER@xxxxxxx]
|  Sent: Thursday, October 08, 1998 11:25 AM
|  To: Gabe Hanover; Pierre Orphelin
|  Cc: Omega-list
|  Subject: Re: Gambling Indicators: They work!
|
|
|  Hi Gabe and anyone else who is into indicators...
|
|  Before you get too excited about 'understanding' indicators,
|  let us be quite
|  clear that all indicators lag price.   All indicators lag
|  price.  Write that
|  on your wall!
|
|  If you day trade, you don't need indicators because the
|  price action tells
|  you precisely what is going on. There are various tools (not
|  indicators)
|  which can help you establish the position of the market at a
|  precise moment
|  that the price action is telling you what it is doing.  It
|  is the various
|  factors of support and resistance that you assess in
|  relation to price
|  action, which tells you what to do.  In short, it is called
|  reading the
|  tape.

Could you give a more detailed definition of "reading the tape"? From what
you have said, it sounds like you are using "technical indicators" of
support and resistance lines and breakouts or rebounds from those lines to
decide what direction to trade. If so, we seem to be arguing over semantics
of what a technical indicator is, as opposed to "tape reading" being
something separate and apart from technical analysis.

I sense a great learning opportunity for me and hopefully many others on
this list, so I hope you can respond in good detail to my question and
comments.

Thanks for any insights,

Neil



|
|  If you position trade and use indicators, then you are using
|  a tool that
|  lags the market, therefore, you have to have a bank account that will
|  accommodate the draw downs you have to suffer.   This is not
|  to say the
|  indicators don't give you the indication you are seeking,
|  but it is going to
|  cost you dearly on many occasions.  It will give you super
|  returns, by the
|  same token.  The BUT, is that you have to have a bank
|  account of decent, if
|  not obscene, amount to withstand the drawdowns.
|
|  For example, the day trader in the Bonds over the last
|  several days has seen
|  excellent buying days on the way up and excellent selling
|  days on the way
|  down.  He or she had a good night's sleep prior to the
|  opening for another
|  good day, each day.  The position trader who started long,
|  may have lost at
|  least half the money on the way down, while the indicator started to
|  indicate a change in trend, if indeed, it did that.  If the
|  indicator is
|  saying 'hold on' this is just a retracement, then he needs a
|  goodly amount
|  of loot - and belief!
|
|  Personally, I'd rather rely on reading the tape in the short
|  term than rely
|  on the lagging indicators for a position in the long term.
|  Today, like most
|  days, was predictable on the bonds, because all the factors
|  were there to
|  read the tape.  But tomorrow?   I gotta wait for tomorrow to
|  become Today,
|  then I'll know...
|
|
|
|  Best of luck
|
|  Bill Eykyn
|
|
|
|