Edwards 'n' Magee = useless for daytrading?
- Thread starter traderkay
- Start date
Well, at the risk of actually engaging in a discussion on ET, I'd be happy to debate the "worth" vs. the "worthlessness" of TAST with you, and, I'll even set aside the failsafe case for the former viewpoint - that observation of its worthlessness might be of some value - unless you're determined to defend the position even to this totalistic extreme.
Resolved: There are insights and methodologies of potential usefulness to daytraders presented in THE TECHNICAL ANALYSIS OF STOCK TRENDS by Edwards and Magee.
I do recognize some danger that such a debate might quickly devolve into an argument over definitions of "usefulness" and even of "proof" within the context of trading methodologies. On the other hand, even if you yourself in theory rely on some statistically verified systematic approach that has nothing to do with pattern, s/r, and Dow Theory(ish) set-ups, I know from our frequent exchanges in the E.T. chatroom that you frequently discuss "support" and "resistance," and that you have at least in the past seemed to take special notice of, say, a "head and shoulders" pattern in development. I think that to whatever extent you utilize such notions, you're already putting yourself effectively in the E&M camp.
So, do you really believe what you appeared to be saying in the prior post?
Kymar, if this was anybody but you, I wouldn't go into this - but you have been very helpful to me, so...
IMHO, support and resistance levels are absolutely critical, specially in spoos trading. However, the S/R that I use are NOT anywhere to be seen in TAST or anywhere else that I am aware of for that matter. In the chatroom, I do take special notice of H/S, but I will almost always add [I get tired of repeating it] of how more often than not this H/S is gonna be worthless - and about 85% of the time, it is worthless.
Because I am primarily a listed stock trader, my most important "Indicators" are the spoos tick and 1 minute with:
1) Specialized dynamic S/R level
2) What you may have seen me call MONSTER, which is not an "Indicator" per se, more like an "inside day" is an indicator [There are currently only two times that I take a spoos trade - when I get a MONSTER, or there is a panic selloff...Sometimes I will use the SPY instead of the ES for the trade.]
Alongside the spoos,
3) The NQ's - I will watch the NQ's to see who is "boss" today - ES or NQ.
4) MSFT, IBM, INTC [mostly to use in conjunction with NQ] and WMT, and GE [They give me a feel for how the overall market "feels" today.
5) The TICK, TIKI, PREM and VIX as well as the DOW and the NASDAQ. I have TRIN up as well, but I do not "get it."
1 - 5 are ALWAYS visible no matter what else I may be looking at - Unfortunately, I have to duplicate this on every workspace in TS6, as there is no way that I know to ask TS to display a set of windows in all workspaces.
6) Tons of Stocks and Sectors of Stocks with their High and Low for the day, their corresponding Index, and specialized "Indicators" that help me gauge the [mis]pricing of a pair.
That is it - the rest is trash, I wouldn't be caught dead with MACD or any of that other crap on one of my spoos chart or stock charts [with the exception of the mentioned custom S/R's and "MONSTER"]
The spoos are a STORY constantly being told - they are in a constant dance with with the NQ's, as well as "news." I don't want "lines" on my screen polluting or "forcing my eye" into some prejudice.
I am not saying that _ALL_ indicators are worthless, just all the ones I have seen in books, with the exception of TIKI, TICK and PREM.
nitro
Knowing the "classic" technical patterns is a definite advantage, even if the action taken is not exactly what the authors had in mind.
Looking for a good place to dump that small cap you're up 20% on? Wait til that ascending triangle gets broken to the upside and then dump into the rush of TA traders. Can't wait to get long your favorite semiconductor name? Watch that H&S pattern forming on the 15-min, whose downside target (head minus neckline) will just nick a new 52-week low -- then start buying with both fists.
The biggest weakness about pure technical trading is that the entry points -- and hence the failure points -- are quit obvious for all to see. The TA patterns in E&G very often succeed -- right to the point past your supposed entry. However, whether that trade goes on to fulfill its objective is a completely different story.
Think about it, if you were a big institution who needed to get a large order done, wouldn't you be licking your chops at all the volume a collapsed neckline will produce? And also knowing that a simple nudge of the stock back above that neckline will cause all those who shorted to cover automatically?
Looking for a good place to dump that small cap you're up 20% on? Wait til that ascending triangle gets broken to the upside and then dump into the rush of TA traders. Can't wait to get long your favorite semiconductor name? Watch that H&S pattern forming on the 15-min, whose downside target (head minus neckline) will just nick a new 52-week low -- then start buying with both fists.
The biggest weakness about pure technical trading is that the entry points -- and hence the failure points -- are quit obvious for all to see. The TA patterns in E&G very often succeed -- right to the point past your supposed entry. However, whether that trade goes on to fulfill its objective is a completely different story.
Think about it, if you were a big institution who needed to get a large order done, wouldn't you be licking your chops at all the volume a collapsed neckline will produce? And also knowing that a simple nudge of the stock back above that neckline will cause all those who shorted to cover automatically?
Oh well, so I guess I'll have to do something else this weekend than debate TAST with you... darn. Still, thanks for you reply. Not to make you self-conscious, but it's interesting to picture what you're doing.
As you know, I trade individual stocks pretty much exclusively. I do so based on a very narrow set of pattern-based set-ups, with filters based primarily on market internals - which I in turn find more easily readable in relationship to structural S/R as well as classical price patterns in the major indices. On occasion, the situation of one of my main trading patterns within some classical (E&M) pattern in a larger time frame may make me a bit more aggressive on entry and willing to press before exit.
In the case of the much-discussed H&S pattern - I find it, if properly filtered and understood, to be more useful and tradable than many other traders and analysts seem to. Also, regardless of how the lower-level H&S's trade, when I see a nice one forming in the longer-term time frames, I'll usually put whatever stock or index on close watch: Whether or not things go the distance in the classic H&S breakdown mode, I expect increased likelihood of some form of day-tradable activity. If we had decided to take this to the level of a debate, I would also have produced examples of intraday wedges and flags, which I seem to observe more frequently, and which can often be traded in the intraday time frame in a manner quite similar to the E&M daily/weekly methods.
