Is there a relatively simple way to trade without over-analysing the chart? And if there is, could you describe it in as much detail as possible? And I will do the rest, backtesting, etc.
Before writing my response, let me just say there are plenty of trolls on this website who are undoubtedly going to pooh-pooh everything I say, so bear that in mind. (I won't see anything they write because I have them all on ignore.) Second, though I believe there is a relatively "simple" (not to be confused with relatively "easy") way to trade without over analyzing charts, I would not encourage you to continue trading unless I were willing to reveal
exactly how I believe this can be done, which I'm unwilling to do. In other words, I'm not suggesting that you should, or shouldn't, keep on keepin' on. I'm just expressing my opinions as regards your post.
Ultimately, I enjoy responding to questions like yours for two reasons. First, I genuinely like trying to help people in, as much as possible, the way they asked for it (and will therefore do my best to share information that you might actually find useful); and second, I find it helps me to zero in on the aspects of my trading that are at the heart of its effectiveness.
So then, about that simple system...
I developed it myself, and I think this is a key point. When you develop your own system, you know exactly how it works, exactly why it works, and as a result, you have 100% faith in it; not to mention that you will be the world's foremost expert in executing it. Take the best of this and the best of that, and configure it (your Frankenstein's monster) so that it works best for you!
I looked into RSI, CCI, MACD, stochastics, harmonic patterns, pivot points, Fibonacci ratios, Elliot waves, etc... and threw it
all out!
The only thing I kept was simple moving averages and simple moving average envelopes (also proprietary moving averages and proprietary adaptive price range envelopes that I coded myself.)
However, I do NOT use 10, 20, 50, 100 and 200 period moving averages. Doing so makes no intuitive sense to me, personally. Also, I have read that the moving average one chooses is not as important as getting familiar with the way in which price interacts with it (or something to that effect). Yet, I
strongly disagree with this!
Norm Fosback, the former head of the Institute for Econometric Research, once stated that
"there are no magic numbers in trend following... It should be a basic requirement of any moving average trend following system that practically all moving average lengths predict successfully to a greater or less degree."
And yet, the way I see it, even Fosback's own statement suggests the possibility that there
are magic numbers in trend following; for if
"practically all moving average lengths predict successfully to a greater or less degree," then it follows logically that those which predict successfully to the absolute
greatest degree are the ones that
are the best! One simply needs to wade through all that data to arrive at these superior moving averages—which I now call "baselines" after hearing Patrick Victor use this term.
The above graphic shows my primary baselines for a particular time frame. (I conducted an exhaustive, painstaking investigation which I equate with running thousands and thousands of computer models to arrive at the moving averages which best reflect the primary trends in a given context.) However, they are NOT based on periods, but rather, on TIME. They are temporal in nature. And unlike the standard fare, where plotting a 20-period moving average on a five-minute chart is the same as plotting a 20-period moving average on a daily chart; a 60-minute baseline dropped on a five-minute chart is NOT going to be the same as a 60-minute baseline dropped in a one-minute chart.
As you can see from the arrows I plotted on the above image, I VERY MUCH believe in using pullbacks as the entry levels for the trades I execute. I also analyze charts from multiple time frames because it gives me different perspectives, providing me with a clearer and fuller picture, with higher time frame charts delivering an overall view, and lower time frame charts providing more details and greater precision. (By the way, for all the skeptics who say that moving averages are lagging, for me, the solution is quite simple: Just move to a lower [faster] time frame/chart.)
The above figure also illustrates how the right moving averages can make it very easy to see when there has been a trend reversal. The other tool I use for this purpose consists of typical price ranges (in multiple time frames, of course).
The adaptive price range envelope in this next chart serves as an example of how such channels can help me recognize when the odds of price reversing direction are higher than normal/average, not to mention when an expected reversal has NOT occurred and, if in a position, to REMAIN in the trade and let profits run.
It's just basic stuff... baselines and typical price ranges.
But to be honest, a fuller description of what I do (I will cut and past from stuff I've written previously) is to try to evaluate the synergy between such factors as typical price ranges, reoccurring chart patterns, horizontal support and resistance levels, trend lines, and market structure, all in multiple time frames—with the result being a graphical depiction of current conditions that I can then use to help me make precise, well-timed trades.
Accordingly, my final decisions on when to buy and when to sell are always made based on the consensus of various input data, sampled in multiple time frames—data which includes baselines, market structure, temporal support/resistance (I didn't even talk about this), horizontal support/resistance, price ranges, and reoccurring chart patterns, as stated above.
It is the consensus opinion of all these various factors that determines what I will decide to do in the final analysis. The moves I make depend on what each of these determinants means in light of all the others and how they all will affect and impact on one another. It is the interpretation of each moving part individually—and of all these assorted components as a whole—that constitutes my approach.
It is all about interpreting what's happening in the moment based on market generated information, which is to say, technical analysis. (I choose not to put my trust in non-market generated information—meaning fundamental analysis.)
It comes down to "ruling reason," which for me, is just another way of saying the numbers, or "the math" if you will—the summation of all those correlating data points that are a part of the market generated information.
