Mental break-down from TA

C

cashmoney69

Here is my problem:

I'm a swing trader, and every day now i feel more and more confused about what I should do. If I'm in a position, I cant figure when to get out, and if I'm trying to get in, I have a hard time knowing what's the right price to buy/short. Here is a quote from Elder.


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Come into my trading room

"Amateurs grab a single timeframe, most often daily, apply their indicators and ignore other timeframes. This works until a major move swells up from the weeklies or a sharp spike erupts from the hourly charts" pg 130
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I feel, because of Elder, this is why I'm not as good a trader as I should be. For those of you that read my journal, it's obvious something is wrong. I have four different charts I look at. Daily, 15 min, 60 min, and weekly. I feel that if I dont have all these charts up, I'm going to suffer the consequence as Elder said in the above text that i made bold font.

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"The problem with losers is that their decision making process is a mess. To resolve the problem of conflicting timeframes, you should not get your face closer to the market, but push yourself further away" pg 131

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Obviously this is not yet working for me. I look at daily charts more than anything, but weekly seems TOO long.

Maybe my problem is that I dont have a solid holding period????

The reason I dont have a definite holding period is because I need to be flexible, and move with the market, not against it.

Telling myself that I'm going to buy XYZ and hold for "x" number of days I think is too strict for a trader.

However if you are flexible, you'll ride out the whipsaws and ride the stock in the desired direction.

This is why I look at so many timeframes. I want to know what has happened, and what could happen whether its 15 minutes from now or a week from now.

...but thats just part of the problem.

On the four charts I have up, I have over 12 indicators. It wears me down mentally, but I get lost with out them.

Daily (4 months):
* volume
* 50 EMA
* 15 SMA (high)
* 15 SMA (low)
* 20 SMA
* 7 SMA

15 minute (16 days):
* volume
* 7 SMA
* 15 SMA
* CCI (parameter set to 15)
* MACD

60 minute (8 weeks):
* 15 SMA
* BB's (with 20 ma)
* volume
* MACD

Weekly (4 years):
* 7, 15 SMA's
* 50 EMA
* BB's with 20 ma
* volume
* MACD
* ADX

without my indicators:

1. how do I tell if a stock is over priced?
2. How can I see crossovers without MA's and macd?
3. How can I tell where a price is heavily supported without volume?
4. How can I tell if the stock is going to reverse or continue its trend without MACD?
5. How can I tell how strong a trend is without ADX


The bottom line:

I'm lost. When I make a trade, its just a gut feeling.
 
1) Keep it simple. Take everything off your chart and only look at price and one oscillator. Moving averages, BBands etc. will only distort the way you look at the chart - why put filters on it?
2) Don't worry about exits, at this stage just predecide the number of pips/points you want before you put on a trade, put on the trade, walk away from the computer for a few hours (you are a swing trader right?), come back, if it's moved in your favor - move stop to BE. Then just hold on until either breakeven or target is hit - nothing to decide.
3) Look at charts at or above the hourly as the main chart that you trade off (as you are doing). The other stuff can be your fine tune charts - don't allow your 15 minute to fake you into a trade if it is so-so on the hourly. Better to hide the 15 minute until the 60 min. signal looks clear.
4) Study price action patterns that indicate high probability turning points. To learn it, trust your own eye-balls, not what you read on the internet.
5) Take frequent breaks. If the trade isn't readily apparent within say 30 seconds - you are probably trying to force it. If you are not sure about something - take a walk around the block and when you come back you will look at the chart from a fresh perspective. That walk around the block will keep you healthy and fresh - assuming you live in a safe neighbourhood.
 
My god man, you are WAY overcomplicating things. I doubt I could trade either if I had to make decisions based on all this. KISS (keep it simple stupid) works best for me.

Quote from cashmoney69:


On the four charts I have up, I have over 12 indicators. It wears me down mentally, but I get lost with out them.

Daily (4 months):
* volume
* 50 EMA
* 15 SMA (high)
* 15 SMA (low)
* 20 SMA
* 7 SMA

15 minute (16 days):
* volume
* 7 SMA
* 15 SMA
* CCI (parameter set to 15)
* MACD

60 minute (8 weeks):
* 15 SMA
* BB's (with 20 ma)
* volume
* MACD

Weekly (4 years):
* 7, 15 SMA's
* 50 EMA
* BB's with 20 ma
* volume
* MACD
* ADX

without my indicators:

1. how do I tell if a stock is over priced?
2. How can I see crossovers without MA's and macd?
3. How can I tell where a price is heavily supported without volume?
4. How can I tell if the stock is going to reverse or continue its trend without MACD?
5. How can I tell how strong a trend is without ADX


The bottom line:

I'm lost. When I make a trade, its just a gut feeling.
More...
 
Not that I'm a fan of elder I tried to read his latest book but ended up scanning most of it as repititious.

But I did not one thing that might help you. He described his triple screen in a way that finally made sense.

He said.
1. First define your favourite timeframe (the one you'd trade from which might be 5 minute for a day trader but might be 15 minute or 60 minute in your case (I can't tell)).
2. Then define your strategic timeframe one order of magnitude higher (so 30 minute bars for a day trade (3-10x the length of the lower timeframe).
3. On the third chart you have your entry method ... this doesn't have to be another timeframe.

So, if you're trading off the 60 minute chart then have your normal trade decision indicators on that.

On your daily chart have maybe a couple of emas that seem to act as support and resistance and volume (iff you've proved that its valid and tells you something you don't know from price alone). I like to mark support and resistance on this chart (using prior highs and lows and volume profile as I found it helped refine my idea of which support and resistance was most important to the other traders).

Then if your entry decision is just a bar break on the 60m then you dont need another. But if your decision is: daily says I should be looking for longs; 60 m says retrace is over go long now; then look for a pullback on 15m before i go long then you have the third chart.


Thats the triple screen as I now understand it. Strategic chart just says what u can do. Middle chart makes the trade decison. Lowest timeframe only required if you cant take the trade based on what is seen on the middle chart.

You can close the daily chart after you've written down "long only today." Then you have one chart to look at until you find a long. Then you ONLY open the lowest if you need it to place your entry/exit orders.

No confusion
 
I have a daily chart and a 5 min chart for my stocks. I just have 3 ma's (20, 50 and 200 ema). And I use one 5 min s&p futures chart (with the same 3 MA's).

I do not use any indicators like MACD, RSI, Bollinger Bands etc. I find them distracting.

Quote from cashmoney69:

NZDSPeCIALISt

Thanks, I'll try that, and see how my trading changes.

--

Steve, what do your charts look like?
More...
 
Sorry, missed that you were trading stocks (thought it was currencies where volume is less useful).

The other thing Elder did repeatedly say in his new book is that his student's charts got simpler as they got more experienced.

Typically a fixed width channel or a couple of emas and 2 other indicators (which to me is one or two too many).

Never forget that trading is about assessing a risk reward and then taking it. Too many charts and too many indicators creates a false illusion of certainty.
 
Very good point Kiwi_trader!


Quote from kiwi_trader:


Never forget that trading is about assessing a risk reward and then taking it. Too many charts and too many indicators creates a false illusion of certainty.
More...
 
If you have 20 and 50 period ma's on your chart, that equates roughly to what, a weekly and quarterly chart on your screen already, in trading days?
I messed around with the 3 window/screen methods, but found, ,no matter what, kept switching around time frames in case i was missing something, a doji here, a breakout there.
So i actually switched to a 3xmacd method, everything on one screen. Its still technically heavy, and can be confusing at times, but i prefer it to the 3 screen .
After all, your still looking at the price.
 
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