I've found that the market for crude oil cares very, very much about the trend lines on my chart. It's downright eerie how predictably it cares.
Have you used dbphoenix's teachings to become a successful trader?
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I've found that the market for crude oil cares very, very much about the trend lines on my chart. It's downright eerie how predictably it cares.
I'm much too ill prepared to go down this road with what I'm about to say, but I can certainly see that there is an issue of causality here.
The fact that the market respects these trendlines that you draw doesn't mean that traders for the most part are buying because price hits a support line... correct? I'm reminded of Db's story about throwing virgins into a volcano.
So if price goes up because it hits a line, does this mean people are buying because the line is hit, or are they buying for some other reason, and it just so happens that this line is there making it appear as if it had an influence? When it comes to trading of course, it doesn't much matter why it happens, as long as it happens enough that you can make a trade based on this occurrence, regardless of the cause.
If this was a medical study, we would for sure want to know if the placebo effect is causing positive outcomes, or if it is actually the medication. But if we can see that this magic pill makes more people feel better who take it than those who don't, it probably doesn't much matter why if we are just looking to profit from it.
So I guess what I'm saying is that I absolutely understand how Db says so often that trendlines and channel lines aren't in the market, but if they should happen to help someone devise a statistically positive outcome, then why the hell not, right?
Contrast this of course with price levels that are actually in the market since the failure to go above or below a certain price is a phenomenon of market activity. Now since this is a line too, and yet its also in the market, it makes this line much better in my eyes. So this is the line I wanna use!
(this of course corroborates well with what 40D says about how half of his trades are at previous day highs or lows, or overnight highs and low.... and this isn't the first time I've read this as well)
Price stops rising when buyers are no longer willing to pay the ask. It stops falling when sellers are no longer willing to lower it. Even those who trade the ladder understand this. Even those who trade randomly understand this. If they don't understand it, whatever success they may enjoy will be purely accidental.
When buyers stop taking the ask at the same price level, one has a double top.
When sellers stop lowering the ask at the same price level, one has a double bottom.
It is for these reasons at least that DTs and DBs convey a certain message. Those like Donna who understand what that message is will profit from it by design. Those who don't understand what that message is will profit from it, if they profit from it at all, purely by accident.
As for lines, trades will often print with some regularity that is not lateral, forming a diagonal line. Why this occurs is a subject for discussion, or, on some trading forums, argument. But it is not the line that is in control, it is the price points themselves. Donna understands this. Why else would she choose her particular avatar?
Those who go on -- and on -- about the triviality and irrelevance of trend lines, much less the existence of ranges, reveal their ignorance of the Law of Supply and Demand and auction markets and probably their general incompetence as traders.
When buyers stop taking the ask at the same price level, one has a double top.
When sellers stop lowering the ask at the same price level, one has a double bottom.
It is for these reasons at least that DTs and DBs convey a certain message. Those like Donna who understand what that message is will profit from it by design. Those who don't understand what that message is will profit from it, if they profit from it at all, purely by accident.
As for lines, trades will often print with some regularity that is not lateral, forming a diagonal line. Why this occurs is a subject for discussion, or, on some trading forums, argument. But it is not the line that is in control, it is the price points themselves. Donna understands this. Why else would she choose her particular avatar?
Those who go on -- and on -- about the triviality and irrelevance of trend lines, much less the existence of ranges, reveal their ignorance of the Law of Supply and Demand and auction markets and probably their general incompetence as traders.
It is remarkable indeed, that when we discover a slope (or "frequency" as some would call it), it often will be tested again, to the tick. Often we can also see the same slope being repeated in different timeframes for a while, which is quite interesting, albeit less useful.
While an explanation is completely unnecessary, for fun I venture guesses for such observations and the best model I could come up with is the prevalence of buying or selling programs by institutional participants. For example in TWS, one can program automated scaling in and out of large positions at fixed price intervals; the scaling feature even does some selling in an overall buying program, and vice versa, according to price movement rules. I'm sure some programs also incorporate time because I've heard anecdotes of "600 shares every 15 minutes" for hours, for example. On longer timeframes, I can see for example a car manufacturer updating its currency hedges at fixed intervals (and a somewhat constant order size given the steady flow of sales).
everybody, just find repetetive patterns on the contract which you want to trade with positive expectancy, preferably with pf greater then 1.5, with reasonably long enough history of existqnce. thats it, thats the super secret formula that profitable trader use.
the simpler the pattern, the better.
the simpler the pattern, the better.
http://www.elitetrader.com/et/index...w-a-straight-line.276076/page-78#post-3866046
That link, assuming it works, is to a post I made just short of three months after starting DbPhoenix's SLA to develop a plan to trade the NQ. If the link doesn't work, here is what I believe is most relevant to this discussion:
"Here is my trading plan as it has developed, at least that part of the plan that most would be interested in, and in a nutshell to boot:
1) identify during premarket trading those levels of S/R that are likely to come into play during the upcoming session.
2) Wait for price to reach one of those levels.
a: If price indicates buying is present at S or selling is present at R, then enter long on a HL or short on a LH.
b: If price breaks through an S or R, then wait for a retrace back to test the former R as S, or S as R. Trade accordingly.
3) If at anytime I find myself with two stop outs in the same direction, stop trading and observe price until I am seeing price again, and not what I want to see.
What I can't tell you is how to apply it for yourself. I think this is where so many miss what DbPhoenix has been saying to everyone of us, and it is what makes the criticisms of him laughable: This is a personal journey. No one can lead you to its end. Someone can point the way to the path, but once on the path, it is your own responsibility to navigate its hazards and unravel the secrets of its rewards."
I think I have posted that trading plan close to a dozen times in one form or the other, and yet I still get questions asking "what does your trading plan look like." That is it. It works. That is, it works for me. But it is what I came up with to tell myself how to trade. Others might need a picture, still others might need an excel spreadsheet.
Another thought is this: I found DbPhoenix in early August 2012. I had, at that point, read two books as I recall: Understanding Wall Street by Jeffrey Little and Wyckoff's Studies in Tape Reading. I was a true newbie when I stumbled across DbPhoenix. Those here wishing to warn "newbie's" away are doing the truly new a great disservice, imo.
Those who have difficulty with this are likely not truly new. Those who have difficulty with this seem already to "know" much more than a true beginner would know. They already have ideas about what technical analysis is and how the market works. And even if so much of what they know is just plain wrong, few are willing to examine their beliefs. I knew how very little I knew. That is why I included Understanding Wall Street in my very first Amazon.com order for trading books when I ordered Wyckoff's Studies. I know that DbPhoenix himself has said he didn't find The Day Trader's Bible, aka Studies in Tape Reading, to be all that useful to him. But I believe that that being my first introduction to technical analysis had a highly beneficial effect: It got me thinking in terms of supply and demand rather than chart patterns right from the start.
So, I think DbPhoenix's recommendation is very useful to the beginner so long as that beginner has the humility to admit to himself how very little he knows and how much he has to learn.
I have to wonder what beginners would think if they knew that the books and courses and whatnot they spend hundreds and often thousands of dollars on are nearly all derived from works that are available for free or a pittance: Hamilton, Rhea, Wyckoff, deVilliers, Schabacker. I also have to wonder how many beginners have even heard of these people.
Jinx! I was reading that this morning! Nice way to express the idea in just a few points. Thank you for that, by the way, and the rest of your journal in that thread circa August-September 2013, which I'm going through this week.
I agree that, for me, The Day Trader's Bible was more of an entertaining book than study material. Introduces the concept of the tape reflecting supply and demand directly, but that's about it. Again, for me. Way too many transactions per minute these days to stare at time&sales usefully. I look forward to reading Wyckoff's 1930's course in the coming weeks, to see what I can extract from it.
You really have to dig, because the most easily accessible recommendations are for those who market the most (I won't go as far as say Tim Sykes, but holy crap is he everywhere if you don't have a good pop-up blocker!)
I ended up wasting money on a modern-day "reformulator of ideas" in 2003, not having known EliteTrader at the time (who did warn that BestDayTrader a.k.a. Shogun-Trader wasn't that useful), only to (luckily!) realize on my own within months that indicators A) were lagging and B) for some reason didn't tell me anything I didn't see with naked price. (i.e. squint and you know what the EMA looks like, useful or not). I could guess fairly well where MACD crossings were without having it displayed. When I came back to trading years later, I somehow stumbled upon Alexander Elder in trying to "do things right, this time". But that wasn't satisfactory either because of the indicator clutter and indecision coming from conflicting multiple timeframe screens. That's also around the time when I realized that sellers of education were usually doing so having failed at trading per se. They could be good coaches though, or useless, but no real way to tell in advance. For a second time I took a step back.
It was only last year, on my own in this my 3rd venture into trading, that I eventually found median lines and from there, Wyckoff. For me personally, they go hand in hand - what you call a trend channel and its mean, I call a Modified-Schiff median line and its upper/lower parallels. Most fascinating is that we're talking about core concepts of free markets, which have been around for centuries and are thus not likely to change beyond recognition within our lifetime.
I really wish I would've heard about Wyckoff in 2003, but none of my research led anywhere close at the time. Elder/Douglas at best.
Point being, because free advice doesn't get publicized, it's the hardest to find for newcomers. At least it was for me.