Advice

[K-Pia]

Btw KP. if you don't want me posting charts here, just say so, and I will post elsewhere, as I know you don't like charts

J_S

No that's fine. Post whatever you want to post. It's thoughts - Always worth considering. If this thread can be constructive and / or valuable for someone then go ahead. I'll check them out.

 

[K-Pia]

You're right I don't like chart. But once you know what to look for then it's not disturbing anymore I guess. It's just that I never found what to look for =P And don't bother anymore with them. But I can still watch them. Without reading =P Cause for me it's meaningless. But Yeah. I'll give it a try.

 

[J_Smith]

Well KP, if you look up charting, you will come across many ways, one of which is called measured moves, or MM for short.

Let's hide all the TA and take a look at the current swing in the SPX and go back the same distance and see where we land.

Keep in mind, that if you draw enough lines on a chart, price WILL pass thru them at one stage, or another!

Are we at the top, or will we get another push up - will it test one, two, or three times, will it keep going up, and if so, how much more before it makes a nice move back down, and, what is the first major support line on way back down?

J_S

 

[J_Smith]

And if we look at the hourly, which white line do we use for target up - the lower or higher one, and who said that price is going to hit these, and how long it is going to take - should we draw slanty lines instead, or, is it all a load of bollox and no one really knows what is going to happen, only that, over time, price will revert to the mean, as, things change in our daily lives, and these changes affect the way we think and operate, thus resulting in ever changing actions by people!!!!

What would Mr Bean say - "oh, isn't that a lovey picture of Whistler's Mother, with her big nose drawn in black marker"

"whistler's mother mr bean" filetypeng

Why do we need to worry about where price will go, for, surely all we need to do is monitor the deviation from the mean, and trade accordingly, as, statistically, price will revert back to the mean, we might just have to wait a little longer than we thought - but, is the mean changing as well, cause if it is, surely that will fuk us up, and, next week, or next month, might then become next 6 months, or next year

J_S

 

[eganon69]

Maybe I am just feeling a bit sour after a bad day at work ( good day in the market for me,...so no that's not it) but I think you guys that don't use TA and charts trying to prove or disprove that TA and charting doesn't work reminds me of a saying I learned long ago, and to me it's been words to live by.

"The eyes cannot see what the mind does not know"

So you shouldn't really speak of something you know little about. If you've tried it and it's not useful for you,...Fine. Move on. For those that are willing to put in the time and effort it can be useful. There are enough people out there using TA and many using Fundamentals or Price action or any combination of them all. If there was no validity to it then you self proclaimed experts out there should be ENCOURAGING people to do something that is a losing method,...after all you are the "shark", right? That means their stupid TA would make you money. And as they say in poker,.."don't tap the glass."..you sharks will scare away the fish.

Let it go already. I use TA almost exclusively and many others here do too. I don't watch the news and I don't look at fundamentals. It works for me. You do what works for you. Many ways to make money. Do more of what works and less of what does not. THAT'S the best advice I ever got!

 

[AbbotAle]

If you want any long time success in this business you have to solve one critical problem - your collective profits must be much larger than your collective losses.

That question relates to the size of the stop you use.

This is why some of the best profiteers in the trading business use the tightest stop possible. If they were to double the size of their stop they would probably breakeven at best. Do the maths yourself and you'll see what I call the nastiest stat/equation in trading and that is THE SOLE REASON why so many don't make it.

Warren Buffet by the way has solved this problem. That's why he's one of the richest people on the planet.

 

[J_Smith]

Ok, a few points to clarify things.

Yes, the market can be traded many ways, but, SOME ways are MUCH BETTER than others, when it comes to risk versus reward.

No one is saying TA does not work, OVER TIME, same as any otther method, as, over time price WILL move up and down, that is a certainty.

It is all about YOUR TIME, and how much you are going to make or lose.

There is absolutely nothing wrong with KP not using any charts, once he " stay's on the bus".

Warren Buffet is irrelevant, as, he is not going to help you or me make money.

You can trade with, or without, stops - but if without then make sure you have plenty of cash and are not worried about sizeable drawdowns.

Placing stops at the wrong levels will kill your account.

You never go broke taking profits.

100 pennies make a pound.

J_S

 

[AbbotAle]

Warren Buffet is very relevant for traders to take note of because he solved the problem even though his holding period if often many years. Buffet takes losses, no doubt about that but when he makes he makes huge. That is the problem most traders battle with, their profits are never far larger than their losses. You have to solve this problem and without using a tight stop in relation to your profits it's going to be very very hard to do so because for every tick you increase your stop the potential profit you have to make increases dramatically. And if you don't use a stop then you haven't done much thinking about risk which means over a multi-year period the risk will probably get you either from a monetary level or worse a psychological one.

Risk 5 make 15 = 3:1
Risk 10 and to make 3:1 and you have to make 30 ticks
Risk 50 and to make 3:1 you have to make 150 ticks
Risk 100 and to make 3:1 you have to make 300 ticks and even a busy market will sometimes struggle to move 300+ ticks over a month.

See how the profit potential starts to increase dramatically as the stop is raised by just a few ticks, that is what gets most people in this game. No surprise that many on the old floor got very rich and some very quickly because they knew that the secret was to use a very tight stop because then major major R:R could be earned. Those upstairs using 20-50+ tick stops hardly ever put themselves in a position to earn 4:1, 5:1 or even higher. Floor traders put themselves in such positions many times per hour.

Now, if you don't think you can use tight stops you're very wrong. Yes, a tight stop will get you into a lot of problems if you don't use them correctly but if you study your charts there's always a time when 'everyone wants it' (or doesn't want it for shorts) in every timeframe, and I'm not talking about over big figures. In those situations a very tight stop can be used with the knowledge that none of the boys or robots can really hurt you because if everyone wants it any attempt to smash it will result in those offers being gobbled up. In effect you nullify the perversity they bring to the game.

 

[J_Smith]

Au contraire - currently working on software to facilitate very tight stops, but that is for what I call bread and butter trading - the bigger money is made with the wider stop trades - anyone who has traded for some time knows this!

Tight stops CAN ruin you if you can not read charts correctly, as, I have found the best way to have a good guess on what might happen next, is to see what has just happened - ignoring the past is silly, as you have to know where you have been, before you take a gamble on where you might be going.

At the end of the day, what you say, or Warren Buffet, or me, or anyone else, matters Jack Shit to another person -the only thing that really matters is what they actually do, and, in this game, very few can do, as the psychological issues are far too great - get the head right and you can do anything!

I think as much about Warren Buffet as I do about Jach Hershey

J_S

 

[eganon69]

Ok, a few points to clarify things.

Yes, the market can be traded many ways, but, SOME ways are MUCH BETTER than others, when it comes to risk versus reward....

...Warren Buffet is irrelevant, as, he is not going to help you or me make money....

...You never go broke taking profits.


J_S

...said the blind man.

Again, it's like me telling a carpenter his bunch of tools are worthless simply because I cannot build the same piece of beautiful custom furniture that he can using those same tools. There are much better ways out there to build furniture than by hand using those tools, right?

All these methods are tools in your craft. Do whatever works. PERIOD. No need to try to discredit other methods.

I personally think Elliot Wave is a stupid way to trade but other than this post you don't here me talking about how useless it is. Many people use it successfully. I never have. So I don't use it. But I don't discredit those that make it work for them. More power to them.

By the way Warren Buffet uses fundamental analysis and cash flow projections of companies and it clearly works for MANY people.... Probably more than any other method out there. It too worked for me and many very wealthy people I know. It was a decent way to trade,...FOR ME. But not as good as TA,...FOR ME. So I don't use it.

And Lastly, you can go broke taking profits if you are not letting your winners maximize profit to make up for losses.

AbbotAle is absolutely correct about stops in my opinion. Risk management techniques are crucial in this business no matter the method for getting long or short.