http://www.elitetrader.com/vb/attachment.php?s=&postid=1097111
Quote from HAL 9000:
The move was over when volume was at its peak? Would you exit before the last red candle was finished? Or would you wait until the start of the nexzt green candle? Did you exit early because of something that happened with the volume chart? The peak was a signal?
On day 3, between #4 and #5, there are red volume bars that look the same, but in reverse. The price kept falling so is that a different signal for something else? Would you exit early there too?
How about day 6, and the red bars between #11 and #12? Would you exit early here? The red volume bars between #12 and #13 are like #1's, would you do the same and exit early here? Day 6's upward movement was larger than its down. Why then arent you trading up? Because it's a longer trend? Should beginners trade this because its longer?
What kinds of indicators do you use? Bolinger Bands, exponential movnig averages? How many days? 20, 50? Support and resistance levels?
Thank you.
PS you can post answers from my pm's here too.
Okay. First of all, I wanted everyone to see the relation of volume to price. The biggest move in price is the largest volume bar, the second largest volume bar was not the second biggest move in price, and because it occurred right after the largest movement and bar, this indicates the down trend is likely over. This does not mean you should be exiting here though. A lot of times in a big move there is a pause in price movement and volume, then it resumes. When this occurs in a stock that you're in short, wait, wait, wait for the trailing stop, as it is much more difficult to get back into a short after a big down move in a stock. For an ETF you don't have to worry about uptick rules, so if you wanted to you
could try to get out early, but I wouldn't. Patience is a virtue, this chart pattern could have dropped another .20 and possibly caused you three unnecessary trades along with a headache caused by missing .15 of it. Wait for confirmation that a reversal is coming when short in stocks, otherwise you may not see another uptick to get in on until the move is truly finished, ETFs don't really matter as much.
The peak was a signal, but it was not a stand alone signal. When the next candle comes up, I take into consideration that the stock is now headed in a new direction on significantly less volume, because of both volume and price, I'm not jumping back in after hitting a trailing stop. That's the signal.
Circles 4 and 5, not the same because volume didn't soar then fall substantially with a tighter price movement. No, don't exit unless you're hitting a trailing stop, then watch T&S for a new entry.
Circles 11 and 12, no because price was still trending down. Once higher volume comes on a new price direction after falling volume, I'm usually out.
Circles 12 and 13, it's not as significant of a drop in volume, but the price movement was very tight, good observation, and yes it it similar but again not an early exit in a short stock, ETF up to trader's preference. Usually it just means I'm not jumping back in with the same shorts. What and how you trade is up to you, but after hitting a few stops and seeing that many quick retracements, I probably would not have tried to widen stops and go long. I'm not trading because of it being a longer trend, I like long trends, I'm not trading because its chopping along after a big down trend.
What kind of indicators do I use? You're looking at them. I won't tell anyone that Bollinger Bands or Stochastics and the like aren't useful, they can be, I just don't use them anymore. I screen stocks based on specific fundamentals, but I don't enter and exit trades based on indicators other than price and volume. I do check news and market direction, among other things, to double check that my ass won't fall out of the trade. Moving Averages aren't exactly ideal for daytrading, especially if you're using 50 day. But to each his own...
Quote from Mike805:
The Q's are a sophisticated vehicle and, IMO, not suited for beginners. Good setups occur constantly on the Q's but you need patience and discipline to execute a winning strategy. From reading your posts, you still have so much to learn, I suggest you branch out and screen a variety of stocks that show good opportunities rather than just the Q's.
Also, I would think most (at least myself) would rather trade the NQ futs rather than Q's, due to opportunity cost.
At some point new traders will need to learn discipline, I'm not saying new traders should specialize in ETFs of any kind, but they'll help them trade with the same direction as the market (since they tend to mimic the market) and it will also allow them to learn and practice short selling. In this market, learning how to short sell successfully is difficult because it has been in a bull for a while now. New traders didn't have to learn how to short, and they could get by with that, but now we may be in the early stages of a new long-term bear like 2001-2003 or we may simply just be in a bull's hiccup. Either way, when are they supposed to learn? Plus I could think of many other places that would probably be much worse.
Quote from qxr1011:
===Good setups occur constantly on the Q's but you need patience and discipline to execute a winning strategy.===
First, he needs to develop this "winning strategy". When he'll have it, it will be irrelevant for him what to trade.
Since he does not have the "winning strategy", it also irrelevant for him what to trade, since result will be the same - failure.
So the best thing to trade for a novice trader is to trade on paper.... and to start developing the "winning strategy".
I don't know if I agree with the paper thing, but everyone does need to have a clearly defined strategy(ies), replete with appropriate money and risk management, and a good depth of knowledge for how the market works before jumping in...
