please share your thought process when you are looking at charts

[murray t turtle]

I focus on cluster of the orders. Lezz on the content of the bid ask of the bar

%%
That's how i do it;
except i wait until the end of the day+ other time frames + let all the bids add up.................................................................200 day moving average helps.
Mr mute9003;
NOT making a profit in an uptrending bull market aboVe 200 day moving average /entry is not my problem @ all, unless one keeps trying to swing trade spxs, spxu\ i'm not that silly on trends........................................................................................................
I cut a loss on FNGD today but better profits on QLD, UPRO today.[I have on my refrig'''PROFITS run........................................................................................................................................................................................... Art Cashin says panic sellers never win] Edit 5 minutes is noise= another problem. Good quesion+ 5 minUtes is noise, good way to blow up an account]

 

[mute9003]

Shit i didnt even see the rest of the pages
give me a minute to read theough them all

 

[deaddog]

I belive the immediate action on candlestick chart is what im having problems with..
like when i watch videos the traders are able to explain what each candle means individually and whats the most likely outcome.

im explaining the best i can

Do that then. Talk yourself through what you think is happening as the candle forms as though you were explaining it to someone else.

 

[mute9003]

That is correct. I dont understand the causes of price movement. which i assumed is part of being able to read the charts.

Im using webull with lvl2
But i only see like 30 orders in the chart
I dont think it shows the largest order by number of shares just the last 30 orders

There is alot of info that i dont understand how it all relates to eachother
Thats kinda my biggest bottleneck is trying to connect all that info together. most of videos i watched only tell you about patterns
None of them really explained the actual mechanics behind patterns and what is involved.
Essentially like you said i took signals without understanding... thats kinda what im trying to learn

Look: If price alone is all you have as sourche of information then the only thing you can do is bet on the return distribution of price itself as well as the return distribution of inflection points.

Meaning:
If you draw lines and count how many times the line was rejected or pierced by price and by how much, that is your return distribution of that particular line. For almost all lines you draw there is zero positiove expectancy, hence you just waste commissions in the long run.

Second, if you are trading against a move, you bet on mean reversion and if you trade break outs you bet on continuation. You can sum that up by looking if a time series is autocorrelated (Hurst). If you play breakouts in the S&P your chances are lower, because it has low autocorrelation.


BUT: that is also already additional information that a chart trader doesn't even know. For example, if I know that there is a big buyer in a stock at 100$ I can attribute more significance to a line at 100$. That's another puzzle piece that gives you edge.

Perhaps you have a lucky year and buy dips in 2020. You think that is because your charting is so good...instead you took signals without knowing the underlying force of that move -> you got lucky. On the other hand you could have bet on a further collapse of the S&P right after Covid hit and blew up, because every "resistance" got busted. You beat yourself up because you "don't read charts well"-> no...you just didn't understand the driving force of the market.

Some guys pride themselves for making 10-20% p.a. on charts...well, ok, but that's nowhere efficient capital/time allocation. If a billion$ fund makes 20% p.a. you should be making tripple digits with your 100k because you can find so much more edge the fund can't exploit because they're too large.

That said, you can use charts for entries&exits but in no way they give good alpha. There are thousands of resources available about patterns, candlesticks, indicators but this stuff just does not work. Turtle traders/trendfollowers...they just bet on positive autocorrelation with a simple ruleset.
Think about it like this: When information advantage, research advantage and speed provides edge, why would anything that is openly available to everybody hand out free money?

Most of retail trades what? S&P, FX, Oil because they are liquid and cheap in commissions and market access. And they use charts. If you ask one of them how the crack spread influences outright markets, they don't even know what a crack spread is.

I remember when I was starting out, there was a squawk box for the S&P pit. We always hit the bid once the guy said that basis traders were selling because this was a sign that the futures overshot the cash market. I had a price ladder and the squawk and nothing else and doubled my account in a month even with retail commissions.

 

[toucan]

I'm not going to be able to convince Mr. M that I trade just using charts. I agree that my experience helps because I have looked at a lot of charts over the years. A good part of my success I attribute to risk control, money management and keeping things simple.

What ever info I see when I look at a chart, whether it is subliminal or not, is what I use to make decisions on whether I should buy or sell. Saying that I'm using information I don't know that I'm using doesn't make any sense. Somehow or another that information filters through to my brain through the visual information on the chart.

Deaddog.

I agree risk control, money management and simple adds to trading success and profits

Cheers. Toucan

 

[tiddlywinks]

I belive the immediate action on candlestick chart is what im having problems with..
like when i watch videos the traders are able to explain what each candle means individually and whats the most likely outcome.

I may be able to help, a little.

As a bar forms it usually goes through a morphing process until the bar is closed.

If you were to study adjacent bars as a pair, you would notice there are only 10 possible configurations for any pair of bars. At times, the morphing results in a locked-in configuration such as an outside bar. Even if it appears 3 seconds into the bar forming, once an outside bar appears it is impossible for that bar to morph into anything else.

I am not saying an outside bar is more important than other configurations. What I am attempting to say is that by looking at adjacent bars as a pair, and being able to identify the 10 possible configurations, can give you heads up as to what to expect even before the bar is closed!!

I have attached a somewhat crude pic of the 10 configurations. FWIW, only "A" and "B" are "easy" money-makers. Also, to state the obvious, there is more to successful trading than adjacent bar configurations. For me, that includes volume.

If you have questions on these configurations, feel free to ask.

 

[mute9003]

I may be able to help, a little.

As a bar forms it usually goes through a morphing process until the bar is closed.

If you were to study adjacent bars as a pair, you would notice there are only 10 possible configurations for any pair of bars. At times, the morphing results in a locked-in configuration such as an outside bar. Even if it appears 3 seconds into the bar forming, once an outside bar appears it is impossible for that bar to morph into anything else.

I am not saying an outside bar is more important than other configurations. What I am attempting to say is that by looking at adjacent bars as a pair, and being able to identify the 10 possible configurations, can give you heads up as to what to expect even before the bar is closed!!

I have attached a somewhat crude pic of the 10 configurations. FWIW, only "A" and "B" are "easy" money-makers. Also, to state the obvious, there is more to successful trading than adjacent bar configurations. For me, that includes volume.

If you have questions on these configurations, feel free to ask.

So are you starting from a single last candle and then looking for confirmation with more and more candles?

 

[Leob]

the causes of price movement

That it!

 

[Bad_Badness]

whats your process when the chart is on the screen

On one hand I look for the specific patterns I want. Then I look for the known counter indications, which might be on another time scale, btw.

Then I look to see if it is tradable. Can I get an entry that is good enough win probability and R:R for the target and stop? Then if that entry comes around, is the pattern still intact? Has it gone sour? After I see the pattern developing, prior to the entry, I know what action I want to see and NOT see before pulling the trigger on the entry. A channel consolidation "flush", is a good example to study.

On the other hand, when not seeing the patterns I want, I watch the action and take note of the way the prices are moving, or not moving to provide a background for when I see the potential for my specific patterns.

Ditto on the exits.

BTW: some people use one time scale for setups and another for trade execution but there is room to mess up doing this. E.g. using the execution time frame for the setup and visa versa.

 

[Dr_Trade]

I always look for the plans that I have set but it does not happens every time so I look for another pair to trade where I can mitigate the risk.