Trading using with candlesticks only and nothing else

[deaddog]

How do you know what's institutions and what isn't?

Volume & price action

 

[longandshort]

So only investment banks and hedge funds get to make money because they have the best strategies, and everyone else who's profitable is just on a lucky streak? If that is the case, why is aggregate hedge fund performance always below that of the spx?

You’re not hearing me. There are ways for retail traders to make money, such as trading momentum. Candle stick patterns and technical indicators are not predictive, however, and no matter how good you get at reading charts the fundamental problem is that they are random. It’s like thinking that studying astrology will actually help you make predictions in real life. Sometimes you will be right! But about as frequently as any other random test.

 

[longandshort]

Volume & price action

How do you know that it's an institution?

 

[spectastic]

You’re not hearing me. There are ways for retail traders to make money, such as trading momentum. Candle stick patterns and technical indicators are not predictive, however, and no matter how good you get at reading charts the fundamental problem is that they are random. It’s like thinking that studying astrology will actually help you make predictions in real life. Sometimes you will be right! But about as frequently as any other random test.

So the argument isn't whether trading candlesticks works or not, but pointing out that putting in the time to identify fundamental catalyst is the better way?

How do you know that it's an institution?

because retail don't have enough money to move markets

 

[longandshort]

and I'm saying that's fine to be wrong, so long as the winners are bigger than the losers and the traders has specific points on the chart where he's wrong and a likely target for when he's right. why wouldn't that work?

What's the difference between that and randomly buying/selling with a tight stop? You don't need charts and patterns.

because retail don't have enough money to move markets

Actually that's not necessarily true. Almost anyone can move the market, but the question is whether that move can be sustained. See: Nick Leeson.

 

[longandshort]

So the argument isn't whether trading candlesticks works or not, but pointing out that putting in the time to identify fundamental catalyst is the better way?

I'm not really talking about fundamentals. The only profitable strategy for retail traders on technicals is to harvest price momentum. But you don't need charts and patterns to trade it-- in fact, adding charts & patterns will just add noise. So just focus on having a simple trading system of measuring momentum in a stock and trading its autocorrelation (buy and sell trends).

Stop-loss strategies with serial correlation, regime switching, and transaction costs (mit.edu)

• Stop losses only help traders when they are able to identify momentum stocks, otherwise you just lose money

2019.12.16-Underreaction-Overreaction-and-Dynamic-Autocorrelation-of-Stock-Returns.pdf (upenn.edu)

• Stock price autocorrelation (momentum) varies over time, so monitor it

cwpe1322.pdf (cam.ac.uk)

• Moving averages are simple tools that can help identify price momentum, so use them if you do not have a better way

If you want to improve upon your momentum trading, do not spend time analyzing charts. Instead, overlay fundamental or other quantitative analysis or other sources of information.

 

[deaddog]

How do you know that it's an institution?

Because of the volume and how the price moves.

 

[deaddog]

I'm not really talking about fundamentals. The only profitable strategy for retail traders on technicals is to harvest price momentum. But you don't need charts and patterns to trade it-- in fact, adding charts & patterns will just add noise. So just focus on having a simple trading system of measuring momentum in a stock and trading its autocorrelation (buy and sell trends).


If you want to improve upon your momentum trading, do not spend time analyzing charts. Instead, overlay fundamental or other quantitative analysis or other sources of information.

I cannot think of an easier way to gauge momentum than by looking at a chart.

Overlay this other information on what?

 

[longandshort]

Because of the volume and how the price moves.

Where did you learn or pick that up from? What tells you that it's not just a bunch of retail orders?

 

[longandshort]

I cannot think of an easier way to gauge momentum than by looking at a chart.

Overlay this other information on what?

Yes going through 50 charts of stocks is much easier than sorting a list of stock by the momentum criteria you seek...