Meaning you don't try to somehow buy at/near the *absolute* lows (say, by throwing out a bid below current price)... but rather, you typically enter on "standard buy setups" -- i.e., after a series of bars with lower highs/red bars/(possibly) lower lows, you enter the first time a preceding bar's high is taken out? Or something else?
Is price action trading the most insightful(& most accurate)?
- Thread starter orbit23
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Yes. If yesterday's high was lower than the prior day's high, and the uptrend set-up conditions are still in place, I set a buy order (all my entries are via pre-set orders) just above yesterday's high. If this price is breached it can be interpreted as a trend resumption. If it is not breached and today makes a lower high, I would simply drag the order lower to match this (again, as long as the uptrend set-up is alive). All pretty standard stuff.
If you KNEW that KO or GOOG or MMM equities were going to absolutely flat for the next 90 days, could you make money from that? Apparently, you can't right now. And that's okay! But when you answer "Yes! YES! Ohhhh YES!!!"
That's a day when such a sideways trend will become "valid" in your world.("If your only tool is a hammer, then everything starts to look like a nail"?? Yep.
)If you're suggesting that trading sideways ranges is "my" world -- it's not, I don't trade them.If you KNEW that KO or GOOG or MMM equities were going to absolutely flat for the next 90 days, could you make money from that? Apparently, you can't right now. And that's okay! But when you answer "Yes! YES! Ohhhh YES!!!"
("If your only tool is a hammer, then everything starts to look like a nail"?? Yep.
But I have seen a few traders appear to successfully trade them. As to somehow "knowing" that a given stock "would go flat for the next X days" -- never seen anyone who could do that, or who claimed to be able to do that.
The sideways range traders I've seen typically require two or more touches of relatively the same price area (/"level") to define a potential "major support (MS)/major resistance (MR)" area. When a stock appears to establish a sideways range between apparent MS and MR levels, combined with additional context -- e.g., flat MAs, width, apparent "stage" (a la Stan Weinstein) based on the location of the range relative to the bigger picture chart, and the width, volume & volatility of PA within the range, etc. -- then they will consider buying MS and selling MR. (They also use additional general context applicable to *any* trade -- overall market, RS/RW, time of day, etc., etc.)
Examples of typical entries might be either putting out a bid below and trying to catch the reaction off MS, waiting for a standard buy setup in that area, or playing any semi-climactic move down to that area.
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Regarding why successful traders may tend to think that "their way is the only way," and why they may mock traders who use other approaches -- my own theory is that it may be due to three factors: 1. They've seen 95%+ of traders around them fail, vs. their own approach work. 2. They haven't learned other methods to the degree necessary to achieve success using them... or the other methods they tried simply were a bad fit for their own personality/situation. (Or yes -- maybe the method was truly not a valid edge.) 3. Ego.
A sideways range consists of uplegs and downlegs around a mean price or between two price extremes depending on which way you want to look at it.
But if price is moving in opposite directions that cannot be a trend. It is at best two short opposite trends and whether they have a tendency to repeat or not I couldn't say.
As I say, the trend definition I use only makes sense in the context that I will trade it. It doesn't define or delimit what is or is not a trend the way that someone else might trade it. But whatever definition is used, a trend must consist of a price movement in a single direction only, not a series of opposing price movements.
Its only semantics unless these range traders actually trade off the range in the assumption it will behave like a trend - that would be irrational.
Uptrends and downtrends both typically experience temporary moves in the opposite direction, right? Pullbacks in an uptrend by definition are "countertrend" -- i.e., temporarily moving in the opposite direction of the primary, larger TF trend. Rallies in a downtrend are similarly countertrend reactions temporarily moving in the opposite direction of the prevailing, bigger trend.
If you mean price that moves in opposite directions such that the overall moves higher are roughly equivalent to the overall moves lower -- well, then depending on how one chooses to define it, that could be referred to as either a "trendless, sideways range," a "range," or a "sideways trend." Semantics -- which was my original point/contention.
Momentum within a set point of time and overall is actually one of the most consistent and usable things in my experience. The reasoning is:
#1 Unless "x" amount of momentum happens in "x" amount of time there is no need to even think about placing a trade. So this is a filter in and of itself to help avoid taking trades that had no probability to begin with, aka chop, noise, not clean movement or whatever terminology you want to use.
#2 Once you get "x" momentum in "x' amount of time. It makes levels / ranges that can be used as a decision point for taking a new position long, new position short or taking profits and etc.
#3 Previous levels / ranges that price hasn't filled back in yet also are generally magnets of price so it also helps with identifying very tight means reversion ranges which become targets for you if you're currently in a long or short position.
I answer momentum because not only can there be a strategy built around it, but it also assist in your read naturally, because you can't even initiate a trade until minimal requirements are met.