hmm.no edges in the markets
- Thread starter chimera
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Quote from Ol' Yella:
Interesting example again from Nodoji, a very impressive trade-- but I disagree with others that there is any edge being given away here. Looks more like a lucky guess, otherwise it's some kind of voodoo that allows one to pick market tops to the tick.
By TA standards that triangle looked more like an ascending triangle variety, due to break higher. Albeit it was in an overall down moving market but still. In any case a fine example of intuitive chart reading, thanks for sharing and posting the blotter!
Every individual trade is a guess, but the results of a series of trades should not be a guess. Trading the extremes of a range (in this case a range with similar resistance and slightly higher lows) is an anticipatory tactic (you're anticipating that a key level will hold) which means a tight stop relative to the potential profit should the other side of the range (in this case the rising lower trend line) be revisited.
On the 5-min chart if you connect the opening bar high to the 11:30 eastern time swing high, that trend line was at 3038.50 at the time price came up to revisit the previous 1-min 3038.50 R level. I left that 5-min trend line off my chart, but it was this confluence of levels and a technically feasible small stop that gave me 3 reasons to take the trade. The technical reason for my target was a previous swing low at 3033.25 and that was also right about where the lower trend line would be, so 2 reasons to place a hard target instead of holding for a potential breakout.
When there's more than one reason for a level to hold, the trade is a high probability trade, and when these sorts of trades work (which they do more often than not) it can seem like magic.
âAny sufficiently advanced technology is indistinguishable from magic.â - Arthur C. Clarke
Statistically, which isn't something you ever discuss (or I know that you don't understand), pointing a line down the price will project where it will be in the near future, and if that line points far enough away from your entry point you should take the trade.
This is called arbitrage.
Wick's aren't required, they just happen to show a high probability of movement but flies in the face of other ideas I have about trading.
This method would be a momentum based arbitrage trading system that works best when price is contained in the fair values of my trend following and pairs trading algorithms.
Selling at lows requires advanced mathematical analysis just as buying at highs does but the only reason people are all right buying high is because they think that the market always goes up and that they'll eventually be able to sell out of their positions at an even taller price. The short version of that will do the same in the other direction.
Catching a tail wick happens fairly often for me.
Interesting. I note my S/R lines and use those levels as places price is likely to visit if X occurs. I refer to that as "airspace" from the entry price to the next level. Before putting on a signaled trade I always calculate the airspace to the nearest level that is likely to be defended and compare that to the price at which I would place a technically feasible stop. This is my risk:reward and it's pretty much all I care about once a potential trade signals to me. If the R:R fits my plan, the order is placed. All the other thinking I do has to be ignored or I'll hesitate and miss out.
Can't say I fully understand their thought process, but a candlestick definition is pretty objective. A candlestick represents o,h,l,c positions as well as range of price movement within the sample interval (distance h to l during t to t+1). You could interpret that a long wick has an unusually higher range and has a tendency to revert from its extremes (against the general short term direction) ... but that's just my own perspective.
My airspace is the pairs levels I use, and they are not in any way based on price so to approximate the level I use basic autostops since experimenting with those approximations aren't possible to do all the time or the value doesn't make any sense. Is your calculation to that airspace part of your algorithm or discretion in an already coded algorithm?
Thanks, makes sense to me. Basically it's an attempt at reversal to the mean type ideas via an illustration ( candlestick)rather than numerical calculations. Seems very vague and open to interpretation.
Would I be too far off to say charts and candles are attractive to left brain folks more so than right brainers? Left and right brain meant in the traditional sense, not scientific facts.
surf
While I agree with that statement from only looking at a drawing... the concept is objective enough to be testable in an objective manner. I don't think they are looking at the concept in isolation, however (lots of other undisclosed thoughts are going into the decision making process); things like that are what make TA generally vague, and difficult to reproduce.
Opposite. Recall left brain is analytical, number crunching type; right brain is visual, artistic, intuitive type. I see left brain types as more logical, objective, quantitative oriented analysis, while right brain is more intuitive,subjective visual TA analysis. Each has strengths and weaknesses.
You could argue, both types are more left brain than the general population. But if I had to put them in a basket and make the division, that's how I would see it.
Ok I'll play.
An upper shadow (also called an upper wick) is created by sellers overtaking bullish action. A lower shadow (also called a lower wick) is created by buyers overtaking bearish action. The percentage of shadow in relation to the entire bar should be considered as well, with larger percentages being more supportive. IMO, as a single bar formation, a long wick, upper or lower, is NOT a reliable signal although it can be considered an "alert". In this context, my personal fav is a long-legged Doji (Not to be confused with the enticing long-legged NoDoji). A long-legged Doji alerts to a possible turning point in my analysis. But again, a single bar formation by itself is not a reliable signal: it's an alert. Generally speaking, I don't use candlesticks.