Mechanical versus discretionary swing trading
- Thread starter Jim_Nasium
- Start date
Okay. Start with simple and basic. It's easily digestible. And it's faster.
To begin with, this is trading naked:
If someone tells you he's "trading naked" and plots a moving average or six along with a little RSI and a little Fibonacci and "pivot points" and whatever the hell else, he's kidding himself as well as you. Trading Naked is what it is. No indicators. No crutches. No training wheels.
Based on this alone, you can see extraordinary trading activity at the end of July. Is this a good thing or a bad thing? Is it due to tons of buying, or are sellers just getting a second wind? For that, you look at price. Falling price is not only stopped in its tracks but reversed and reversed big-time. Is that due to seller strength or buyer strength?
'Nuff said.
Trading activity (volume) then drops off severely and rapidly. Sellers are done and buyers don't have to work hard to hold price where it is. How do we know that sellers are done? Because price rises with little effort on the part of buyers. All of this constitutes a potential buy scenario depending on your risk tolerance, which, if you've been losing for a while, is probably next to non-existent. But there is a buying opportunity after the test of the bottom five days later, either the following bar or the seventh bar via a buystop above the fifth bar.
Now let's plot your MAs:
If I understand your trading plan, your MAs provide an entry signal 18 trading days after the entry op I pointed out above. I call this late. Even if you were to wait until the following retracement (and higher low), where I've placed an arrow, the MA signal is still 8 days late.
Of course, one could ask "so what? There are still plenty of entry ops on the way to the eventual hesitations" and he'd be correct. However, if one doesn't take the best entry, any other entry will by definition not be as good, partly because other traders have more time to think but also because the later in the trend, the more likely it is to be winding down, or at least pausing to such an extent that a time stop becomes an increasingly-attractive option.
More to come.
To begin with, this is trading naked:
If someone tells you he's "trading naked" and plots a moving average or six along with a little RSI and a little Fibonacci and "pivot points" and whatever the hell else, he's kidding himself as well as you. Trading Naked is what it is. No indicators. No crutches. No training wheels.
Based on this alone, you can see extraordinary trading activity at the end of July. Is this a good thing or a bad thing? Is it due to tons of buying, or are sellers just getting a second wind? For that, you look at price. Falling price is not only stopped in its tracks but reversed and reversed big-time. Is that due to seller strength or buyer strength?
'Nuff said.
Trading activity (volume) then drops off severely and rapidly. Sellers are done and buyers don't have to work hard to hold price where it is. How do we know that sellers are done? Because price rises with little effort on the part of buyers. All of this constitutes a potential buy scenario depending on your risk tolerance, which, if you've been losing for a while, is probably next to non-existent. But there is a buying opportunity after the test of the bottom five days later, either the following bar or the seventh bar via a buystop above the fifth bar.
Now let's plot your MAs:
If I understand your trading plan, your MAs provide an entry signal 18 trading days after the entry op I pointed out above. I call this late. Even if you were to wait until the following retracement (and higher low), where I've placed an arrow, the MA signal is still 8 days late.
Of course, one could ask "so what? There are still plenty of entry ops on the way to the eventual hesitations" and he'd be correct. However, if one doesn't take the best entry, any other entry will by definition not be as good, partly because other traders have more time to think but also because the later in the trend, the more likely it is to be winding down, or at least pausing to such an extent that a time stop becomes an increasingly-attractive option.
More to come.
Quote from dbphoenix:
Okay. Start with simple and basic. It's easily digestible. And it's faster.
To begin with, this is trading naked:
If someone tells you he's "trading naked" and plots a moving average or six along with a little RSI and a little Fibonacci and "pivot points" and whatever the hell else, he's kidding himself as well as you. Trading Naked is what it is. No indicators. No crutches. No training wheels.
Based on this alone, you can see extraordinary trading activity at the end of July. Is this a good thing or a bad thing? Is it due to tons of buying, or are sellers just getting a second wind? For that, you look at price. Falling price is not only stopped in its tracks but reversed and reversed big-time. Is that due to seller strength or buyer strength?
'Nuff said.
Trading activity (volume) then drops off severely and rapidly. Sellers are done and buyers don't have to work hard to hold price where it is. How do we know that sellers are done? Because price rises with little effort on the part of buyers. All of this constitutes a potential buy scenario depending on your risk tolerance, which, if you've been losing for a while, is probably next to non-existent. But there is a buying opportunity after the test of the bottom five days later, either the following bar or the seventh bar via a buystop above the fifth bar.
Now let's plot your MAs:
If I understand your trading plan, your MAs provide an entry signal 18 trading days after the entry op I pointed out above. I call this late. Even if you were to wait until the following retracement (and higher low), where I've placed an arrow, the MA signal is still 8 days late.
Of course, one could ask "so what? There are still plenty of entry ops on the way to the eventual hesitations" and he'd be correct. However, if one doesn't take the best entry, any other entry will by definition not be as good, partly because other traders have more time to think but also because the later in the trend, the more likely it is to be winding down, or at least pausing to such an extent that a time stop becomes an increasingly-attractive option.
More to come.
At this point, the fearful trader has most likely already been stopped out because that spurt upward after his entry (at the arrow) has failed bigtime and he doesn't want to give this trade any room whatsoever, no matter how good the signs that the line of least resistance lies upward.
So what can he do? One option is to connect the first two swing lows to give himself a sense not only of the direction of price but also of the strength of that direction. If he prefers a mechanical approach, this also enables him to stick with that instead of getting all Zen about the activity.
And if that diagonal line isn't enough, he can also draw a line underneath the swing low (the dashed one). When price looks as though it's going to come back and reverses just above it, this should provide him with the added confirmation -- and courage -- he needs to stay the course and stick with his assessment of what's going on. In any case, the line isn't broken, the swing low isn't breached, so there's no reason to exit.
Search for reasons to stay in, not to bail. If bailing is required, price won't be coy about letting you know.
More.
I'm with you
Quote from dbphoenix:
At this point, the fearful trader has most likely already been stopped out because that spurt upward after his entry (at the arrow) has failed bigtime and he doesn't want to give this trade any room whatsoever, no matter how good the signs that the line of least resistance lies upward.
So what can he do? One option is to connect the first two swing lows to give himself a sense not only of the direction of price but also of the strength of that direction. If he prefers a mechanical approach, this also enables him to stick with that instead of getting all Zen about the activity.
And if that diagonal line isn't enough, he can also draw a line underneath the swing low (the dashed one). When price looks as though it's going to come back and reverses just above it, this should provide him with the added confirmation -- and courage -- he needs to stay the course and stick with his assessment of what's going on. In any case, the line isn't broken, the swing low isn't breached, so there's no reason to exit.
Search for reasons to stay in, not to bail. If bailing is required, price won't be coy about letting you know.
More.
If you're still with me, take it one step further: extend that diagonal line all the way to the right. Then copy it and paste it to the upper limit, beginning at the first swing high. Extend this as well. Locate the mean of this channel and plot that as well.
If you've begun reading anything re auction market theory, you know that the best entries are found at the extremes, noted here with arrows. You will also note that by October trades have reverted to the already-established mean, and they ride it for six weeks before rallying to the upper limit. If time is not an issue, any of these entries would result in profit. But it should be clear that a tight stop is a non-starter if you want to make any headway, much less build enough for early retirement.
Note also that there's nothing touch-feely here. It's all mechanical. Just listen to the market and do what it tells you to do.
I need to think about this before commenting
Come on guys, this thread is a hoax, a setup. this new guy comes in and drinks the cool-aid and keeps the hoax going.
LINES, trendlines, channel lines, support/resist are all indicators.
Wycokoff is indeed a subscription, fee based training program etc. first the book, then do the ole bait and switch.
I have said my peace and will not be bothered by this "STEALTH VENDOR" thread anymore.
If it quacks like a duck, looks like a duck, ........it is a duck...
LINES, trendlines, channel lines, support/resist are all indicators.
Wycokoff is indeed a subscription, fee based training program etc. first the book, then do the ole bait and switch.
I have said my peace and will not be bothered by this "STEALTH VENDOR" thread anymore.
If it quacks like a duck, looks like a duck, ........it is a duck...
Why did you choose a stock which had gapped? I know I took a trade in this stock but it seems you noticed the gap and decided it would be a good example for what you are showing me. Are gaps a requirement for these trades?
You suggesting I am in on a scam?
YOu got any evidence this guy is a vendor?