Trading Price:Phase One:Observation

[k p]

93 views but only 6 replies. I'll have to find something more interesting.

Don't go!

Bar 18 ends up forming the ultimate low, but given the shallow nature of the SL that you could draw over the tops, you probably wouldn't know to get out till about bar 27, if you were waiting for the break.

Bar 23 forms a higher low, perfect to signal you to start thinking long. Bars 25/26 form another higher low.. more trouble if you are still in short.

Heading up to bar 41 follows the DL nicely, and bar 42 that breaks it is a decisive down move, the perfect type of break. The move down to bar 48 is more than a 50% retracement of the up move, so this shows weakness of the rally up. We therefore end up having lower high at bar 53.

The most important thing I see on this chart is that drawing in SLs and DLs and following the rules would have results in profitable trades!

 

[k p]

Also, you could make a case for a hinge from the high of bar 14 to about bar 26, at which point it breaks out to the upside.

 

[deaddog]

So to say that sellers want price to fall and buyers want price to rise makes no sense, unless you're the sort who goes to the grocery store and wishes that bananas were more expensive (if you own shares in a banana plantation, sure; otherwise, no).

Don't some sellers want the price to fall. What about the short seller or someone accumulating a large position who throws supply at the market to bring the price back down.

 

[dbphoenix]

Don't go!

Bar 18 ends up forming the ultimate low, but given the shallow nature of the SL that you could draw over the tops, you probably wouldn't know to get out till about bar 27, if you were waiting for the break.

Bar 23 forms a higher low, perfect to signal you to start thinking long. Bars 25/26 form another higher low.. more trouble if you are still in short.

Heading up to bar 41 follows the DL nicely, and bar 42 that breaks it is a decisive down move, the perfect type of break. The move down to bar 48 is more than a 50% retracement of the up move, so this shows weakness of the rally up. We therefore end up having lower high at bar 53.

The most important thing I see on this chart is that drawing in SLs and DLs and following the rules would have results in profitable trades!

All of this has to do with finding entries for trades, but the thread isn't about breaking lines and thinking long or short because you're not trading. There are no "rules". This thread is about observing. If you don't know what you're looking at, you won't be able to trade it. So first learn how to observe.

 

[dbphoenix]

Don't some sellers want the price to fall. What about the short seller or someone accumulating a large position who throws supply at the market to bring the price back down.

The short-seller is a different kind of seller. While the seller has unloaded what he had to unload and has his money in hand and can relax for bit because he's not "in", the short-seller had nothing to begin with, borrowed something to sell, and eventually has to buy it back. So, yes, he does have a stake in seeing price fall. Which is another reason why I suggested focusing on price movement rather than the players. If one begins examining everyone's motives, the price picture gets all cloudy, unnecessarily so because motives don't matter at this stage.

As for professional accumulation, this takes place at or near the bottom, not at or near the top. The kind of selling that takes place in a cascade is the result of panicked amateurs trying to sell what they have for whatever they can get. The professional stands aside and watches all this, then begins to pick up a little of this and a little of that in preparation for the next cycle.

 

[1in10]

At first blush:

Bar 18, for what ever reason is a low.

It is followed by a series of higher highs and higher lows until it reaches a high price at bar 41.

Price cascades to a low at bar 48 with a more aggressive stride than the bars between 22 to 40 and rebounds with an equally aggressive stride until it pivots at bar 53 with a lower high.

The stride down shortens its length....perhaps into a range.

 

[SIUYA]

DBP -
Trading like this is pretty boring, but we are not paid to do things we are paid not to do things until its time to do the simple things. Then we wait again....you know the drill.

and if you are getting 96 views and 6 replies - holy cowpat batman thats about that 5% rule - is that like some fibotrading mystical number?

 

[dbphoenix]

At first blush:

Bar 18, for what ever reason is a low.

It is followed by a series of higher highs and higher lows until it reaches a high price at bar 41.

Not so fast there, podnuh. What about all the bobbing and weaving?

Price rises from 18 to 21, then falls from 21 to 23, then rises from 23 to 24, then drops from 24 to 26, then . . .

Which are rises and which are falls? What are the relative extents of each? How long do they last? When do the falls stop? What happens after the "falls" stop?

 

[dbphoenix]

DBP -
Trading like this is pretty boring, but we are not paid to do things we are paid not to do things until its time to do the simple things. Then we wait again....you know the drill.

and if you are getting 96 views and 6 replies - holy cowpat batman thats about that 5% rule - is that like some fibotrading mystical number?

Just trying to make everybody feel guilty.

This is deceptively important stuff. As I've said two or three times, if one doesn't understand what he's looking at, he sure as hell isn't going to be able to trade it profitably. I've also learned that schools no longer teach what one needs to know in order to be able to do this, like what the scientific method is, and how to test (much less how to control variables). If one doesn't know any of this or how to do it, how the hell is he going to be able to put together a consistently-profitable trading plan?

 

[kut2k2]

A Harvard professor once asked his students to do a special report on fish. His scholars went to the library, read books about fish, and then wrote their expositions The students were shocked when, after turning in their papers, the professor tore them up and threw them in the waste basket. When they asked what was wrong with the reports, the professor said, ‘If you want learn anything about fish, sit in front of a fish bowl and look at fish.’

– William O’Neil​

O'Neil is an idiot. First of all, this sounds like one of those bullshit anecdotes some people just make up to 'back up' whatever lame point they're trying to make. Second any professor who tore up his students' work without even grading them would be brought up on disciplinary charges. No legitimate teacher would do such a morally and intellectually bankrupt thing (except in the minds of people like O'Neil).

And the idea that knowledge and even wisdom can't be imparted by books flies in the face of all progress. What's the point of having books if everything you can learn has to be observed directly?

Finally the idea that you can learn all about fish by watching goldfish in a confined space is so stupid, it's hard to know when to stop laughing.

N.B. I am not knocking the importance of direct observation. It is the beginning of knowledge. I am knocking a ridiculous anecdote that distracts from rather than illustrating the point the anecdote is supposedly about. People have been observing fish worldwide for ages, and much of that knowledge has made its way into many books and articles. Comparing this to observing price is silly because not as much wisdom about price movements has made its way into books. In other words, ichthyology is a far more advanced science than price analysis. So the analogy is stupid.