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On the fundamentalism of PA traders
- Thread starter Smurfie
- Start date
Quote from Smurfie:
I was sorta around this question in my first two posts; that charts are lagging indicators of price action as well and as much representations as the hated indicators. .............. As I understand it some drawing tools are okay since they are thought to be synchronous or leading indicators whereas my comfort blanket - the beloved MACD - and its buddies are lagging.
You guys are over complicating this, as usual. Please explain how a bar chart lags. The Close on the bar is constantly updated. Sure, if you make the assumption that you can only make a trade AFTER the bar is compete, then you can claim there's lag.
For the purpose of conversation though, I think it's reasonable to consider an indicator as a mathematical derivation
of C,H,L,O or V that utilizes AT LEAST two bars, which by definition, must lag. Any other trading structure such as price, volume, or other data on a chart, DOM, DOM Bars, spreadsheets, etc, are all updated in real time, hence no lag.
Because once you see your bar reacting off some S/R or whatever, the movement - by definition - is already under way. Just as it is already under way when your just as constantly updating indicator says there's a counter-movement.
If you trade before the bar is complete, then you may as well trade before you have the final indicator reading for that bar.
I hope we're talking about the same thing.
Cheers,
Smurf
If you trade before the bar is complete, then you may as well trade before you have the final indicator reading for that bar.
I hope we're talking about the same thing.
Cheers,
Smurf
Also, I don't know why some of you guys don't utilize volume. It's right there in real time too, why not use it? It does take more homework to understand, but its worth your time.
Quote from Smurfie:
Because once you see your bar reacting off some S/R or whatever, the movement - by definition - is already under way. Just as it is already under way when your just as constantly updating indicator says there's a counter-movement.
If you trade before the bar is complete, then you may as well trade before you have the final indicator reading for that bar.
I hope we're talking about the same thing.
Who says you have to wait for a movement to be under way. Price and Price-Volume traders operate in real time. You see.....you react or alternatively you have orders already placed, so that if price does X, your acct. trades or reverses.
Quote from AlpineTrout:
You guys are over complicating this, as usual. Please explain how a bar chart lags. The Close on the bar is constantly updated. Sure, if you make the assumption that you can only make a trade AFTER the bar is compete, then you can claim there's lag.
For the purpose of conversation though, I think it's reasonable to consider an indicator as a mathematical derivation
of C,H,L,O or V that utilizes AT LEAST two bars, which by definition, must lag. Any other trading structure such as price, volume, or other data on a chart, DOM, DOM Bars, spreadsheets, etc, are all updated in real time, hence no lag.
AT
You appear to be absorbed within the world of charting and not that of trading.
The difference may appear subtle and somewhat pedantic until you begin to trade and place expectations upon a correct fill.
It is at this point that the concept of lag becomes apparent if it has'nt sunk in already.
If the market is slow moving you will get away with it for the most part.
However if you chose to trade ES volatility, you will not.
To fill correctly is the essence of trading ES to me.
Every else is in a supporting role to this singular act.
regards
f9
Quote from AlpineTrout:
Also, I don't know why some of you guys don't utilize volume. It's right there in real time too, why not use it? It does take more homework to understand, but its worth your time.
I must have backtested dozens of systems with VOLUME and I confess there has hardly been any improvement when taking into account VOLUME.
Now, I observe that SOMETIMES volume spikes at important junctures, at turning points, at tops and bottoms, especially in the shorter timefrane, e.g. 1 min chart
But, in backtesting it is inconsistent. maybe I am doing something wrong... how do you use VOLUME?
Quote from Jahajee:
I must have backtested dozens of systems with VOLUME and I confess there has hardly been any improvement when taking into account VOLUME.
I played around with backtesting awhile ago, simply to learn something about trading that I didn't know about.
Backtesting vs. learning PA (&V) is sort of like having girlfriends vs. having a great wife. You can keep several girfriends going at the same time and work to change them around continuously OR just keep keep the same great wife and be happy. Different strokes....
Quote from AlpineTrout:
I played around with backtesting awhile ago, simply to learn something about trading that I didn't know about.
Backtesting vs. learning PA (&V) is sort of like having girlfriends vs. having a great wife. You can keep several girfriends going at the same time and work to change them around continuously OR just keep keep the same great wife and be happy. Different strokes....
nicely put Alpine..