Trading with price action

[doctoroe]

To clarify one thing. Price action is the PRIMARY factor I use in trading, followed by the futures. Then comes stochastics, moving averages and sometimes volume at price.

The moving averages particularly reduce risk for me when the markets are choppy and uncertain (which is often).
Good trading, all.

 

[dbphoenix]

Quote from doctoroe:

The moving averages particularly reduce risk for me when the markets are choppy and uncertain

As does noticing lower highs and higher lows.

--Db

 

[j0m0]

Quote from wally_:



He needs to be more systematic and use less jargon.

Jack seems to have some experience in this matter, so it would be good if he presented his ideas in a more organized way, preferably in a new thread. This thread was meant for something else, anyway.

I ask those who want only to criticise to stay away from this new thread.

Don't want to distract or offend the Hershy-ites...but,

I remember this Jack Hershey saga
playing out several years a go on
Misc. Invest Futures...for all I know it
still is.

Some things never change.

(1) Jack was "new" to message posting and couldn't figure out how to attach charts.

(2) Someone disagreed/laughed about his approach and he was "offended". He threatened to leave. (Don't worry he'll be back) Many pleas for his return
"convinced" him to come back.

(3) Grateful grail seekers offered to help out with posting charts, etc., etc. (I believe that how the Don Cameron MSN was originally established)

(4) Much long winded back & forth replies from all parties concerned.

I wouldn't go so far as to say you
can't learn a thing or two from him,
but if you're into complexity, Jack's your poster boy.

If you're really worried about him
leaving this thread or Elite...don't be. He's on several threads and sites elsewhere. Some of the devoted Hershy-ites are sure to know where.

As you'll come to find out, he thrives
on this. If you want the info. w/o
all of the above mentioned distractions
and searches;

http://sputnick5.www8.50megs.com/

 

[wally_]

Quote from j0m0:


Don't want to distract or offend the Hershy-ites...but,

I am not a Hershy-ite, and the only thing that connects me with Jack is that I too use stochastics in a less than standard manner whenever it is possible. I do however use it in standard ways as well. Unlike Jack though, I don't tend to talk much about it because I do not believe that this is a Holy Grail in itself, just a useful method of entry and exit that might have been discovered by other traders before too.

Thanks for more info about Jack.

 

[profitseer]

Load em up, strip em down. I do it all the time. Like today, I just put up the 1 min chart. No ma's no nuthin. But even then, it doesn't take long before you are looking for hammers and pennants.

You just set up your chart so it helps you see what you are looking for. Sometimes that means more and more indicators. And sometimes you can't see anything no matter what.

I figured this out one day when I had a great day and when I went back later that night to admire my system indicators, realized I was trading the system, then fading it, then trading it again.

 

[flier6]

Quote from inandlong:


Nope... I use indicators, ma's and macd specifically. They work great for me. And it appears that stochastics work great for you.

I began the thread out of curiosity as to what people meant when they said they traded by price action alone. Are you saying that you consider yourself one who trades by price action alone and you do it by incorporating a stochastic?

Either way, you have started an interesting discussion about the use of the stochastic indicator, so I will split your posts off to a new thread entitled, 'The Stochastic Indicator."

Thanks for your posts.

Inandlong,

Would you share how you use MA's and MACD when you're trading? If you've already done this (I know you're good about sharing and helping others), would you direct me to the post please?

Thanks

Thanks

 

[inandlong]

flier I use the 40sma and the 12-26-9 macd for position trading stocks using the daily chart. It is not an always in approach, even though my signature might lead one to believe that.

The concept I am trading is that price deviates from the mean. That's it. A moving average represents a mean. It doesn't really matter which length you choose, although I use a length that is very popular because I want as much money moving in the same direction as I am as possible. I know that the institutional money is also looking at the 50 and 200, as well as others. So on every chart I have the 20, 40, 50, and 200 along with the macd.

I use only the 40 sma for entry and reversal. It is simply this, when the price crosses the 40 and is going to close on the new side, I get in... either at the close or the next morning. If the close of the next day is back across the 40 in the opposite direction, I reverse, unless I am strongly biased... which would be by the macd. Then I might exit and wait for another cross instead of reversing.

Although the reversal... the reason for my signature... is important for two reasons. The first is because I don't know that the original trend is not going to continue, and if I don't take the reverse I will have only taken the loss. The second reason relates to the first because almost always the reverse trade shoots up at least enough to recover the first loss.

When to exit, etc is a different matter. I don't have a specific exit strategy. That is the hardest part for me. I try to use trendlines, reversal patterns, gaps, etc to maximize the profits.

I use the macd to highlight divergences. This is the most powerful indicator to use for this purpose imo. The stochastic and the RSI will show divergence too, but they are too quick and too slow, respectively, again imo.

But if you select candidates that historically deviate well from their mean, and enter when they cross the 40 and especially if they have formed an macd divergence and then are crossing the 40, you will have put yourself in a very good position to profit.

Typically the first objection is that the whipsaw will kill you. I suggest that you put a daily chart on line or close only setting, and use 1-2 years of data, and pull up chart after chart. If the chart has a history of clinging to its average, it probably whips a lot, but would not be a candidate anyway. For charts that deviate well, check those out. Here are a few, GM, EXPE, IBM. Sure once in a while you get crossed up, but overall, it doesn't hurt you.

Don't hesitate to PM me if you have questions.

 

[flier6]

Thanks a lot for the reply.

Do you think this would work with a 3 or 5 minute chart?

Do you think it would work with the ES or NQ?

Thanks again.

 

[traderkay]

interesting concept inandlong. u're in fact filtering out markets that have a historical tendency to chop around MAs, and try to trade those that "deviate" well.

 

[inandlong]

Quote from traderkay:
u're in fact filtering out markets that have a historical tendency to chop around MAs, and try to trade those that "deviate" well.

Right t'kay. That is exactly it. And when you look at these kinds of stocks using the line setting instead of bars, you see how few times really that they cross and close back and forth causing you to reverse.

And compress those babies. Find four good ones crossing a major average and get in. Because if the tendency is for it to deviate well from the mean, then you are getting in at a known zero point. And again, using eod data, when you do get whipped, it feels more like a slap than a whipping. Relative to the profit opportunity, it only means you are one trae closer to a profit move.