ETF (Sectors) swing trading

slightly off topic but, do you think wedge patterns (or any similar "patterns") have any validity? They are subjective to even identify.

If you put a dozen traders in a room all looking at the same charts they will come up with different wedge formations on the same charts.

I'm not saying they are useless, just that one should really test the validity of a pattern and not accept conventional wisdom from the trading community.
 
Quote from fkeane:

slightly off topic but, do you think wedge patterns (or any similar "patterns") have any validity? They are subjective to even identify.

If you put a dozen traders in a room all looking at the same charts they will come up with different wedge formations on the same charts.

I'm not saying they are useless, just that one should really test the validity of a pattern and not accept conventional wisdom from the trading community.
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There is a thread that discusses this in the Strategy Trading or Technical Analysis forum I think. It's called So These Pattrns Really Work. You might search for it or browse the contents pages.

Anyway, I think the fairest thing to say is that wedges, flags, etc., are merely periods of consolidation. And breaks from consolidation provide decent trading opportunities. Studies have been done on predictiveness with some fairly remarkable results. I like them. Others don't. But if you remember that their real value is defining periods of consolidation, that is truly all you need to know.
 
Quote from inandlong:

There is a thread that discusses this in the Strategy Trading or Technical Analysis forum I think. It's called So These Pattrns Really Work. You might search for it or browse the contents pages.

Anyway, I think the fairest thing to say is that wedges, flags, etc., are merely periods of consolidation. And breaks from consolidation provide decent trading opportunities. Studies have been done on predictiveness with some fairly remarkable results. I like them. Others don't. But if you remember that their real value is defining periods of consolidation, that is truly all you need to know.
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Absolutely agree. fyi: Active Trader's most recent mag had an article by a lady who apparently trades flags/pennants successfully, but it gave no details.
 
problem ive seen with these are teh spreads, not as big of deal if you are planning on a swing, but still ive seen spreads as high as 1/2 point, and they can really eat into profit even on a swing where your profit objecticve is 1-3 points or so... you need patience and skill ot get a good fill... i liek the idea of arbing htem, i.e i was considering long banks short SPY, b/c of of factors such as steepening yield curve and a spread on the yield btw. sectors...
anyone else arbing indexes
 
Yes, last week I was watching them and very often observed spreads, even on high volume etfs of .3-.4%. It's not always all day, but even if it's for an hour or two it's a killer imo.
 
Quote from ShoeshineBoy:

I was afraid someone might ask. This is an example of a trade where I don't agree with my setup and I didn't follow my plan afterwards! I'm usually more disciplined than that.

Anyway, my current thinking is that most of the indexes are in a "stage III" (with most of them at the top of the Boll Band or the top of a descending wedge/triangle) that will look something like June/July/Aug in 2001. So I'll stay in until 17.8, but see if it goes down to 17. If it turns up much, I'll just get out so I can put those dollars to better use!
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Yes, I think 17.8 is good stop if you entered about 17.2. Good luck
 
XLK is probably out , but look to (pharma) PPH weakness in this rally !! . Had nice short setup but PPH fell down (I expected pullback today to short it). :(

Anybody else interested in discussing swing ETF trades ? :confused:
Countdown to open of special discussion already started ... :)
 
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