there was a guy called DBPhoenix who was apparently the one to ask for these sorts of questions. I don't tihnk he posts anymore, but you can search his posts here i guess
How important are basic trendline and price pattern analysis?
- Thread starter Wach80
- Start date
Couple of side notes
I was once like you - confused..., and couldn't find my ass with both hands..., and a flashlight - so I get it
Next
You're looking for black and white answers where only shades of gray exist
They're very few black and whites in this business
A few.., of the few
Set a SL with each trade - honor it
Set a PT for each trade - honor it
Price is always right..., and the final arbiter
Never risk more than you can unemotionally lose
All of us have losing trades
Uncertainty
================================
Backward testing vs Forward testing
Both have advantages..., both have disadvantages
Depending on what..., and how - one is trading
Both may be necessary
Then again
One may be necessary..., the other not so much
It all boils down to specifically what the hell one is wanting / trying to do with their trading
RN
In my opinion, every time I've tried to use a subjective entry condition I've had problems making money. Same with a subjective exit. if your entry is a cup and a handle, or a pennant, or whatever, then that puts you in the position of trying to decide whether the pattern is really what you think it is. And that's bad. Why?...because greed and fear will color your interpretation of the pattern. IMHO, any time you're trying to "decide" whether you're getting a buy-in signal, or trying to "decide" whether you have a sell signal, then you're setting yourself up for failure because you couldn't/didn't adequately back test your strategy. Stated another way, you're better off developing some kind of concrete, "no question asked" buy in condition and exit condition because it can be tested. Whether it comes from price action, or volume changes, etc. doesn't matter. Now, to answer your question, if your entry or exit conditions are difficult to impossible to code into software, it's too subjective to use. Again, this is all my opinion.
The real power or at some call it, secret, is the traders ability to determine when their carefully studied tool(s) are signalling that support or resistance is holding or failing.
Now, how people come to these conclusions, S/R determination and observation, is directly related to which tools (lines, indicators, channels, etc) they decided to master and backtest. There is no right answer, but hard work.
Now, how people come to these conclusions, S/R determination and observation, is directly related to which tools (lines, indicators, channels, etc) they decided to master and backtest. There is no right answer, but hard work.
You're asking alot of questions, which is good. However the way you ask is not necessarily going to help you much if it confuses you. Ask a bunch of traders a bunch of random questions, all you'll get is a bunch of random answers thrown back at you. Now, the discussion might be a bit interesting and there is gold here and there, or you might turn it into gold.. Which is the key. YOU have to turn it into gold. So I would suggest starting to be a bit more structured and get some overall clue what you may need to research first and prioritize. How you might build upon prior knowledge and learn how to discard knowledge, until later point in time, where it might become useful again..
Price action is simply the interpretation of price over time, observing moves and how they might sometimes seem to affect later prices. Now the exact same move sequence might have totally different outcomes at different times and markets, why might that be? Hypothesize relationships/connections and verify, that's what backtesting is really about. It helps to read alot, but don't just believe anything being told. The big exception is if you meet a guru that knows all about markets and can guide you all the way.
Indicators, like trendlines or overbought RSIs may sometimes indicate direction, and most probably will at some point stop "working". Why?
Since most of them are only a subset of price itself, price action, the raw input will always be superior.
These questions, you'll need to structure them better, in your mind or in a notebook, and start answering them yourself. You can be inspired by others, maybe even be lead, but all verification will need to be done by you.
Personally I don't backtest at all, but what may some day work for me, may not work for you.
So what's your plan to make this work for you? Continue asking questions hoping to be guided all along the way by random posters? If you're lead by 10 people, you may be going in 10 different directions.. By all means continue if you will. Might be entertaining and some ideas to be had, but I'm always trying to provide the best advice, and this is mine.
One sentence in my text is patently false and might really lead you astray and fuck up your life. Figure out which.
Price action is simply the interpretation of price over time, observing moves and how they might sometimes seem to affect later prices. Now the exact same move sequence might have totally different outcomes at different times and markets, why might that be? Hypothesize relationships/connections and verify, that's what backtesting is really about. It helps to read alot, but don't just believe anything being told. The big exception is if you meet a guru that knows all about markets and can guide you all the way.
Indicators, like trendlines or overbought RSIs may sometimes indicate direction, and most probably will at some point stop "working". Why?
Since most of them are only a subset of price itself, price action, the raw input will always be superior.
These questions, you'll need to structure them better, in your mind or in a notebook, and start answering them yourself. You can be inspired by others, maybe even be lead, but all verification will need to be done by you.
Personally I don't backtest at all, but what may some day work for me, may not work for you.
So what's your plan to make this work for you? Continue asking questions hoping to be guided all along the way by random posters? If you're lead by 10 people, you may be going in 10 different directions.. By all means continue if you will. Might be entertaining and some ideas to be had, but I'm always trying to provide the best advice, and this is mine.
One sentence in my text is patently false and might really lead you astray and fuck up your life. Figure out which.
You're asking alot of questions, which is good. However the way you ask is not necessarily going to help you much if it confuses you. Ask a bunch of traders a bunch of random questions, all you'll get is a bunch of random answers thrown back at you. Now, the discussion might be a bit interesting and there is gold here and there, or you might turn it into gold.. Which is the key. YOU have to turn it into gold. So I would suggest starting to be a bit more structured and get some overall clue what you may need to research first and prioritize. How you might build upon prior knowledge and learn how to discard knowledge, until later point in time, where it might become useful again..
Price action is simply the interpretation of price over time, observing moves and how they might sometimes seem to affect later prices. Now the exact same move sequence might have totally different outcomes at different times and markets, why might that be? Hypothesize relationships/connections and verify, that's what backtesting is really about. It helps to read alot, but don't just believe anything being told. The big exception is if you meet a guru that knows all about markets and can guide you all the way.
Indicators, like trendlines or overbought RSIs may sometimes indicate direction, and most probably will at some point stop "working". Why?
Since most of them are only a subset of price itself, price action, the raw input will always be superior.
These questions, you'll need to structure them better, in your mind or in a notebook, and start answering them yourself. You can be inspired by others, maybe even be lead, but all verification will need to be done by you.
Personally I don't backtest at all, but what may some day work for me, may not work for you.
So what's your plan to make this work for you? Continue asking questions hoping to be guided all along the way by random posters? If you're lead by 10 people, you may be going in 10 different directions.. By all means continue if you will. Might be entertaining and some ideas to be had, but I'm always trying to provide the best advice, and this is mine.
One sentence in my text is patently false and might really lead you astray and fuck up your life. Figure out which.
My questions are not random , the subject might look random , the goal of my questions is to create a direction towards the *gold* stuff , its important to separate important stuff from not so important stuff and good from not so good early so that your direction will be better otherwise it might take ages to realize the true meaning behind what you are doing. Ofc the specific and focused stuff is something i have to do myself by working hard but now i have a much better idea about what to expect from what im studying and doing. The answers in these threads are really good and helped me a ton to improve my understanding of trading.
I have a big background with strategic games and from my experience there are those who take years to succeed because their study is not directed toward the important stuff and it takes years for them to finally realize whats important and there are those who are lucky and have a good coach to guide them in the correct way and they become successfull very fast , i have been in both positions and it was only when i tried without guidance that i realized how important a coach is , its like the most important thing for fast success , no matter i think its close to impossible to get a good coach at trading since they gotta be really.... expensive , so asking in a forum is the only way i have but it has been a good way so far , i get detailed and high quality answers.
Last edited:
Just stay away from the studies. All you need is a 20, 50 & 200 MA line and draw your trendlines on a tick chart. Small time frame. 133 ticks. Then use a larger time frame for the same instrument. All the studies are bullsh*t. Why? Because they're all lagging indicators. Only real indicator is price itself in real time. If you can read a chart in real time then you don't need a study to confirm something that already happened.
Yes , i understand that , right now i consider it the most important thing *read the price itself* , btw to those who follow this approach (i guess all) , can you show me a chart or two about what you consider good price conditioning? i would be thankfull , i want to see if it match what i think , right now i translate it in my mind as *trends who last a lot* and i think you long term analyze the trends aswell for further validation and thats why you use two time frames right? the one for the real trade and the other for analysis? btw whats the time gap between the time frames? 1level? 2level? how much.
Last edited:
Not counting payouts/dividends et. al., price is what you'll be trading, unless you go directionless. This is why real traders are fanatic about "price action". Most talking-heads, however, are about a specific technique, not about their own subjective interpretation of price, what eventually will be the foundation of your own trading engine, or backtesting first if you prefer. Which is why nobody on this forum can provide you a clear-cut answer, because you'll have to find your own style that works for you.
4-5 times for each timeframe/"level" is usual. Why? Price/cycles often halves, even two times. After that, it becomes noisy from that level of perspective. 20/4 = ~5, which is just about minimum for defining a whole sinous-like cycle. Each possible timeframe is diverging from all the others though, so possibilities are really endless. At the same time, shorter timeframe can define many higher timeframes perfectly, so depends on your maths. Nothing magical about higher timeframes, but they are different from the lower ones in how groups of times are aggregated. I personally don't use different timeframes now, but have tried to incorporate a few up to all of them.
It all depends on what your goal is, what you want to be trading and how you will accomplish it. If you don't really know, you don't have a trading plan, thus are just guessing. Better than hoping, but not by very much.
Many say they "read price", but start incorporating volume, volatility, other stats and patterns more and more and more. Nothing wrong with that if the statistics say so, but not necessarily something that will ultimately "move price" in all the other instances you're not currently looking at. Price won't be constrained by your clever algorithms, not by mine either. Price is free, it will break free, which is kind of beautiful, but also scary.
Having walked some of the path already, I have to say: anybody who tries to copy someone else, I just don't get how they can get anywhere other than deluding themselves and others. Maybe I'm just dumb, but this is complex for me and no final answers ready other than the obvious. I know you can just buy & hold or similar and pray to God in the meanwhile (money not that important for life anyways), but if you want to define a risk-level or two that you can have some real faith in, you're gonna have to work for it!
Last edited: