It is definitely possible to pick the bottom.
Everyday just predict that this is the bottom, at some point you will have "PICKED" a bottom, so this would prove it is definitely possible.
Can bottoms be picked consistently enough to make more than you loose attempting to do it? This might be a better question.
It may depend on the time frame.
Every day, as a directional trader, (using 1, 5 & 15 minute charts with various indicators and averages and many of the relationships also mentioned by "Super Ego" [as he points out the angle/direction of the five bar moving average is very important, and I find this to be true on any timeframe] I make decisions that could be considered attempting to pick bottoms or tops on a short term basis. I use a money management approach of normally three incremental entries and normally one or two exits for a position.
Depending on the setup: this &, this &, this &, etc. I reach a confidence (PROBABILITY) level that I will be able to exit the trade with a profit (given a reasonable stop) I take 1/3 position. I will add fairly quickly as my first position becomes profitable. I use a two stop approach. The furthest away that is in stone and will not be changed, which generally gives me a reasonable expected risk, and the nearest which I can and do change depending on the development of the conditions in the setup. By doing this I am able to exit many positions with a very small loss or even a small profit even though they do not follow through as expected. Many of my entries are at pivots, extensions, retracements and other "POTENTIAL" bottoms or tops based on the intraday time frames I am trading. These are at the same time both my most profitable and least probable entries. The setups which require confirmation are less profitable but much more probable and make up a much larger portion of my profit. I am only comfortable doing this intraday. I have learned from experience that there is much greater risk with this (bottom picking strategy) when carrying overnight. The last time I tried to pick a bottom overnight I had sold my WMT in August in the low forties as I recall. Late one Friday three minutes before the close it broke under $30. I bought back in at 29 7/8 (what a bargain, lots of things told me this was the bottom or at least close enough) The first trade Monday was $20. This was October 1987.
Lundy, I am interested in your indicators and approach. I was interested in Super Ego's approach and indicators also (and still am). I think anyone attending a seminar by Oliver Velez, Tony Oz, Chris Manning, Larry Williams and many others who learns nothing is either asleep or ONE SMART SOB.
I have learned almost everything I know about trading by standing on someone else shoulders and peeking in. Most often I take what I have seen and adjust it to fit my (current/changing) style.
There are definitely many ways to skin this cat called the market.
I enjoy elite trader (especially darkhorse) and don't post my fair share but I do learn from this site (some threads at least).
Good Luck
Everyone (especially Lundy you're going to need it
just kidding you)
If anyone wants to help me become a better more profitable trader I am all for it!!!
