Originally posted by dbphoenix
I have, but they're not terribly specific.
I ask these questions because I want to understand how you're using these words. Without that, there's nothing to discuss, much less debate. You don't use indicators and you don't use intraday charts. Therefore, you're not using price and volume bars or pattern. My question as to how you define "technical", then, is a legitimate one. If you'd rather not answer it, that's okay by me.
--Db
I use daily bar charts. I look at some of the moving averages on the daily bar chart, like the 10, 20, 50, and 200 day averages. I look at where the important trendlines are, and support and resistance. I look at the volumn characteristics.
I follow all of the important stocks like IBM, GE, GM, INTC, MSFT, MMM, C, etc etc. I also follow important sectors, like SOX, BTK, BKX, bonds. I follow these and other large numbers of stocks on both an intraday and end of day basis. My goal is to find out where the leaders of the index are going, since my active trading activity is focused around indexes.
I also follow tick, trin, and vix...I've followed tick and trin for years, vix since it originally started to received some publicity.
I pay particular attention to how the future acts when it nears or reaches an important point, like the prior day's low or high, or a prior major low, like the july low. Or when it reaches an important support or resistance point.
Note that the market tends to migrate between highs and lows, support and resistance....it's a price discovery mechanism. When it can't move farther in one direction, it tends to move the other direction.
Intraday charts don't add alot to the mix for me. I have them in my software package. I'll look at them periodically at night to refresh my memory of the day's action, or to see what you guys are talking about.
I pay attention to the news, in particular how the market responds to it. Today for example the market shrugged off a negative Michigan Sentiment index....a positive sign which if acted upon could have led to a large gain.
I don't have a system. My "method", such as it is, is more like that of a detective, searching for clues of the next direction.
Thursday for example after trading a little higher we rushed down to take the July low out. That's a negative of course. But in this case it turned immediately, and started back up. I love trades of this type, because they permit me to enter with a close stop, which is what I did. The result of this was a large gain almost immediately. I might add, I also review a set of technical indicators in the evening that I access through decisionpoint.com, indicators like the McClellan Oscillator, participation index, highs and lows, etc etc....standard stock market indicators.
Yesterday we took the prior day's high out with no difficulty at all, and then proceeded to fill the gap left from the day prior, trading up to what had been prior to this functioning as a kind of resistance area....800-810 basis the SP.
There was litterally no technical indicator of the variety that I watch that would have caused you to sell at all yesterday. In fact, with trin under .40 in the afternoon, the odds of an important reversal were extremely low....meaning reactions downward could probably be bought.
Again, I have discussed my methods in prior posts. Perhaps what's confusing is that I don't use the techniques that others here use. But I do use standard stock market techniques and standard stock market technical methods. I don't however use a system. I use my head. I don't normally scalp. I make a trade that I think is going somewhere important other than a couple of points. There are some days I don't trade because I don't understand what's happening. Other days I'm more active. I use mental stops rather than preset stops. I like to be in the decisionmaking mode rather than the automatic mode most of the time.
If I'm up on the week, I will increase my size. If I'm up on the month, I increase size. When I don't think I'm trading well, I decrease my size.
It works for me....whether it would work for anyone else is hard for me to say. I've been in the market a long time, making my first trade in 1965-1966. I lost most of my money trading sugar in 1969. Let's just say I have a long history with the markets, I'm not a newbie. My methods reflect my experience.
Back when I first started trading we couldn't possibly jump in and out like people do today. For starters, commission were way too high. The NYSE was still on fixed rate commissions ($80 for 100 shares), and most commodity brokers were $70-$100 per round turn. So when you traded a stock you needed it to make a move. Daytrading back then for most of us was not practical. So my experience partially reflects that.
Nevertheless, I've spent my time scalping, both on the floor and off. I think it's the route to small money. Maybe that's OK with you....it wasn't with me. I remember a guy on the floor named Glen. While the rest of us were scalping, he was holding positions for a longer time...perhaps the day, or maybe even two. This guy was a huge trader....and he made big money, lots of size. Glen was all of us scalpers idol at the time. While we were chipping out a living....this guy made the big dough.
Today what I believe I've learned is that the market changes constantly....this is why it's difficult to use indicators....things are never quite the same. The big money is in a bigger picture. But if you're focused on the small picture you'll always miss the big one. I don't want to be influenced by MACD, stochastics, etc. I want to see the market through uncluttered eyes hopefully for the reality of what it is at that time. When I take a position I'm willing to get out immediately if it starts acting wrong....but when it starts out right, I'll stick with it, ride it, make all I can make out of that particular move until something about it changes my mind, even if temporarily.
Hopefully this explains my views somewhat.
OldTrader
[Note: this is not newbie speculation but direct observation from my own trading.]