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Hi Jim,
A fair question. In essense quite simple but life never really is :-) So for
example before price can go up it must make higher highs and before it can
do that it should stop making lower lows. Now that much is obvious I guess
but this is likely to happen before any indicator kicks in. I find S/R
levels can be important too but of course the problem is support is support
untill it breaks and becomes resistance (or a pivot). Carefuly watching
price at these levels can give clues as to wether they will break or hold. I
tend to look at 1-2-3 highs and lows (using the Joe Ross 'law of charts'
type definition). These are good bottoming/topping patterns. I find some of
the traditional ledge/flag/pennant type patterns useful too. I dont trade
them as mechanical patterns but for example a ledge in trend provides a low
risk entry/pyramid point. If watching the price and volume suggests that
this is just a 'breather' I'm confident taking the trade. The price action
rather than the pattern itself (or an indicator) dictates the entry and
stop. As for a target again rather than just say a price of X I'd rather
wait for price to tell me that it dosent want to go in that direction
anymore. Perhaps a key thing is how price behaved at that level before.
These patterns ocur because there where buyer/sellers at that level before.
(This may well be because it is a retracement or a fib level or floor
level). When they are overpowered by the other side of the crowd price will
move to a new level.
I'm not completely against indicators as Bob appears to be however my view
is that these simply provide reference points. They can help to see how
price is behaving in relationship to that level. I think as you get more in
tune with price behaviour you need them less than less. I guess its the
discipline of chart reading. It holds much more in common with the tape
reading of old than TA.
Oops open time better stop there.
Cheers,
Nick.
----- Original Message -----
From: "Jim Johnson" <jejohn@xxxxxxxxxxx>
To: <omega-list@xxxxxxxxxx>; "Nick Ali" <nick.ali@xxxxxxxxxxxxx>
Sent: Monday, July 15, 2002 1:24 PM
Subject: Re[2]: Work 50-70 hours a week
Hello Nick,
I agree in general but I am curious what you mean by "price action".
S/R levels, Fibs, depth of retracements/lenghth of moves, etc. Just
curious.
Best regards,
Jim Johnson mailto:jejohn@xxxxxxxxxxx
--
Monday, July 15, 2002, 7:52:21 AM, you wrote:
NA> Exactly! imvho if you do not have an intimate grasp of price action you
NA> will never make it to major league let alone 'star performer' (talking
about
NA> discretionary trading here). Once you have a really deep understanding
of
NA> price movement you find that most of the squiggly lines obscure what
price
NA> is trying to tell you.
NA> As for markets changing I'd say no, however I'd agree they exhibit
somewhat
NA> different characters. Things like program trading must have some effect.
But
NA> if a price is going from a point A to a point B there are only so many
ways
NA> it can do that. Some times it moves 'better' than others. If you take
charts
NA> from the early part of this century price was moving in those self same
ways
NA> then.
NA> Each to there own of course.
NA> Cheers,
NA> Nick.
NA> ____Snip____
NA> However, I can tell you that I still use the same entries, the same
NA> timeframes, the same methods to determine the market's S/R levels, and
the
NA> same techniques to manage a trade - which are all based on PRICE action
(and
NA> I still despise any and all indicators/oscillators). The underlying
NA> foundation has not changed at all, and that is really the point I was
trying
NA> to make in my earlier post because there is a huge difference between
NA> adapting to subtle changes in the market (consciously or subconsciously)
NA> versus constantly being on a quest for New methodologies. If that's the
NA> road someone is traveling down then they will never become proficient at
any
NA> of them.
NA> Bob
NA> ----- Original Message -----
NA> From: "Gary Fritz" <fritz@xxxxxxxx>
NA> To: "Omega List" <omega-list@xxxxxxxxxx>
NA> Sent: Saturday, July 13, 2002 8:55 PM
NA> Subject: Re: Work 50-70 hours a week
>> > I disagree completely on having to be on a constant quest for new
>> > methods. The markets may change in terms of bear/bull and other
>> > things like volatility but the Price action doesn't. I've been
>> > trading the same methods for years and while I have added a wrinkle
>> > here and there as I become more experienced, the underlying
>> > methodology has remained and will remain constant.
>>
>> I suspect you have changed more than you realize. The markets DO
>> change and they DO act in different ways, and a successful trader
>> must adapt to those changes to continue to succeed. I'd guarantee
>> your trading methods are not identical to those you used in early
>> 2000. The broad-brush approach may be the same, but I'd bet a lot
>> that your fine-detail implementation of those techniques has changed.
>>
>> A good discretionary trader is so "in tune" with the market that he
>> may not even notice its character changing, and may not think about
>> the changes he makes to his approach. It all happens subconsciously
>> as the trader flows with the market. I doubt ANY successful trader,
>> discretionary or no, can succeed for long without rolling with the
>> market's punches.
>>
>> A mechanical trader's system is cast in stone, so he can't "fudge"
>> his approach without being aware of it. A mechanical trader may be
>> more susceptable to market changes, especially if his system does not
>> adapt. I'd believe that mechanical traders have to spend more time
>> refining and adjusting their approaches, especially since they then
>> cast those approaches in stone and expect them to work without ANY
>> changes.
>>
>> On the other hand, a mechanical trader doesn't have to spend his time
>> staring at screens during the trading day, because the system does
>> that for him. A mechanical trader doesn't have to spend time
>> watching the pre-open, or trying to decipher news events, or doing
>> many of the other activities that occupy a discretionary trader's
>> time. Different approaches pay their dues in different ways, but
>> they all pay their dues.
>>
>> Gary
>>
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