do you typically wait for a "confirmation candle" before going short?

[padutrader]

I don't believe in trying to get short when a chart has printed a strong uptrend. Its a game which a small number of skilled old hands can win at but which almost all new traders believe is the road to success. You might disagree but if there was a way to gather the data, I think we'd find that 90% of the 90% who are wiped out in 90 days have been doing this.

At least you're not day-trading.

well said....

 

[padutrader]

I don't believe in trying to get short when a chart has printed a strong uptrend. Its a game which a small number of skilled old hands can win at but which almost all new traders believe is the road to success. You might disagree but if there was a way to gather the data, I think we'd find that 90% of the 90% who are wiped out in 90 days have been doing this.

At least you're not day-trading.

i think new traders focus on the reward of catching a long term top.

what they do not realise is that the probability of doing this successfully is so low.

Invariably where the perceived reward is high the probaility of success is low

if you have deep pockets you can keep on doing this because eventually all trends end

 

[padutrader]

I don't believe in trying to get short when a chart has printed a strong uptrend. Its a game which a small number of skilled old hands can win at but which almost all new traders believe is the road to success. You might disagree but if there was a way to gather the data, I think we'd find that 90% of the 90% who are wiped out in 90 days have been doing this.

At least you're not day-trading.

day trading is alright and very neccessary so confine your day trading to the supermarket

 

[padutrader]

Confirmation for this amateur was always a delay or lag to enter. Not saying its bad but maybe its another system or method and should be treated as such.
Moving averages are excellent for confirmation.

confirmation by moving average is excellent but only if it is a trend.....if in a range.. moving averages do not confirm anything except that price is not going anywhere and that you can see you do not need the moving average.

 

[padutrader]

Hello,

Suppose a stock runs up a *lot* (too much too soon), and you are confident it will retrace. Do you typically wait for meaningful down day before buying puts?

I saw a nice top, but waited. I even had the luxury of being able to make a decision immediately after an earnings report, thus minimizing news risk to the trade. The retrace started (stock price down 5% in one day), and the options price went up from .25 to .35. So I missed a huge relative gain (40% appreciation in one day). Sure, the down day gave me reassurance that I found the top, but I missed out on a lot of gain.

Even if the stock ran up a bit more, I believe the put would have declined only to .20, because it was a far out of the money put several months into the future.

I was wondering if there is some sort of mathematics, axioms, or best practices regarding this.?

My instinct was telling me to buy at the .25 price on a green candle, but I though maybe the professional approach is wait for a down day before buying the short put.

if you are trading by instinct, my instinct says learn either fundamental or technical analysis or say bye bye to yr money

 

[Money Trust]

The notion of "confirmation" is a myth.... there is no such thing.

Of course you'd like to get some kind of "reinforcement" that you're SURE you're doing the right thing with risking your money.... as would we all. Unfortunately, there is nothing like that.

I remember asking you about a similar thing a while ago. lol
Fortunately, our conversation combined with further personal experience showed that horizontal S&R areas are the best way to do it. I used to wait for confirmation bars and whatnot until I found that I was missing the move in many cases. I admit, it did help to put the odds in my favor but I found myself chasing the market by waiting on some confirmation signal, thereby needlessly making the trade more expensive.

 

[Scataphagos]

I used to wait for confirmation bars and whatnot until I found that I was missing the move in many cases. I admit, it did help to put the odds in my favor but I found myself chasing the market by waiting on some confirmation signal, thereby needlessly making the trade more expensive.

Yes. And even when you got the confirmation bar... it sometimes failed shortly thereafter, invalidating the "confirmation", did it not?

 

[SunTrader]

Moving averages "confirm" ... what has already happened.

PA confirmation is what gets you in right and I use it every time.

 

[Money Trust]

Yes. And even when you got the confirmation bar... it sometimes failed shortly thereafter, invalidating the "confirmation", did it not?

Correct. It's a very expensive way to lose money, too.

 

[murray t turtle]

Hello,

Suppose a stock runs up a *lot* (too much too soon), and you are confident it will retrace. Do you typically wait for meaningful down day before buying puts?

I saw a nice top, but waited. I even had the luxury of being able to make a decision immediately after an earnings report, thus minimizing news risk to the trade. The retrace started (stock price down 5% in one day), and the options price went up from .25 to .35. So I missed a huge relative gain (40% appreciation in one day). Sure, the down day gave me reassurance that I found the top, but I missed out on a lot of gain.

Even if the stock ran up a bit more, I believe the put would have declined only to .20, because it was a far out of the money put several months into the future.

I was wondering if there is some sort of mathematics, axioms, or best practices regarding this.?

My instinct was telling me to buy at the .25 price on a green candle, but I though maybe the professional approach is wait for a down day before buying the short put.

%%
Something like that; except i seldom pick up quarters ,mainly because not many people throw/lose quarters. Strange; i foud more dollars than quarters. You have to really do some sort of trend confirmation; other wise you short /lose your shirt stuff like all time big tech trend shorts in 1999.Makes no difference if you use candles or bars. You could find a use for put call ratio; but i would use a NYSE short ratio[line chart LOL-LOL/true] before the the other.Wisdom is profitable to direct. One of them on a big trading ..... said dont run around around in shorts in a bull market; GE is still in a bear market, below 200 dma.,