Care to put that on a chart Burglar?
Cheers Sir O
May I ask why?
So in terms of the exit signals you would have used are based on price action and the formation of a lower high, lower low formation. As a secondary confirmation you'd use a low term moving average and some of the current volumetrics.
Sounds good....is it always that easy?
Cheers
Sir O
I had accepted your challenge!
I had put it on a chart.
Due to my computer being riddled by corrupted files I am unable to display it here!
The line I drew was a straight line touching lows of mid Feb2013, late Jun, late Jul and end Oct2013.
It did indeed, slice through a large red candle in mid Nov2013 at around $21.50
Cheers burglar
For exit signals I use price action and volume.
For example, can you tell from price action and volume where where the market is starting to top out at the end of a bull run? Maybe it can be done or maybe it can't, but it's not as easy as keeping Dow's definition of a trend in your back pocket.
As for why I wouldn't hold for that long, I don't like money doing nothing for me and at risk. If a stock is in a side ways action I would exit and wait for the breakout. You may say this would reduce profit but my money could be doing other things while waiting. I would miss the initial surge from the breakout but I also wouldn't be holding through all the downswings. Some of those trading ranges lasted for months. That's months your money is not doing anything for you. You're actually losing money due to opportunity cost. Now we don't know they would have lasted for months but normally I would give up after a week of not seeing anything happen and come back to the stock later, especially since I would be using options a lot of the time for stocks that allow it. I can't afford time decay.
Exactly!
How did you know?
... Why didn't you transact at either of those points?
Cheers
Sir O
Lets drill down on this comment Valued...why? Can you explain for me why price action is so important in your analysis rather than say...pattern analysis.....or the use of an indicator or three?
Sir O
Because I'm not good at this game ... yet!
I did notice the small breaks as I drew the line.
Just couldn't see the relevance/importance.
I am guessing that the type of stop-loss employed
would leave a little room for running the winners.
Now you'll be asking me, "How much room do ya leave?"
I do use indicators but mostly I use them to get a feel for where a stock is at. I use the 200 SMA as well as short term SMA and EMA just to help define the price action and show in a different way what has been happening to the price both short term and long term. Indicators lag behind the price. They are a derivative of price action and can only present the price action in a different way. That's the only reason I use them, to present the price action in a different way to candlesticks or bars.
There is no publicly available evidence that pattern analysis works. The issue with pattern analysis is that patterns are merely a symptom of price action and if patterns do work, then they are based on psychology of the market. Patterns are simply another lagging indicator, a derivative of price. Drawing patterns only presents the price in a different way (or at least allows you to see it in a different way) but it's the same price action. There is nothing special about patterns but it may help someone perceive certain price action in a way that their mind works. For example, someone may be able to recognise an ascending triangle better than they could see higher lows bumping up against resistance. However, I would say that you should consider the source, the price action and volume rather than relying on patterns which are symptoms or derivatives. The symptoms could be wrong and price action and volume may paint a different picture than what the pattern suggests.
Of course, anything can be wrong too. The last two days I had two stocks that were up about 5%, gave off a no supply signal the day before, and both got absolutely smashed on open, faster than I could sell my call options. Thankfully I only lost a small amount on one and was able to break even on the other. The increased volatility can soften the blow of a plunge in the intrinsic value.
ADD THE WORD---PARTICIPANTSthey are based on psychology of the market
Historical low for entry.
Historical high for exit.
Cycle 5 yrs.
Length of Trend (peak to valley) and angle very similar to the historical high of 5 yrs. ago.
Time of trend Jan to Jan (a year) also the same.
So end of cycle for me.
So you're looking at data from 2009-2010....does past price action have a use-by date?
Sir O
I do use indicators but mostly I use them to get a feel for where a stock is at. I use the 200 SMA as well as short term SMA and EMA just to help define the price action and show in a different way what has been happening to the price both short term and long term. Indicators lag behind the price. They are a derivative of price action and can only present the price action in a different way. That's the only reason I use them, to present the price action in a different way to candlesticks or bars.
There is no publicly available evidence that pattern analysis works. The issue with pattern analysis is that patterns are merely a symptom of price action and if patterns do work, then they are based on psychology of the market. Patterns are simply another lagging indicator, a derivative of price. Drawing patterns only presents the price in a different way (or at least allows you to see it in a different way) but it's the same price action. There is nothing special about patterns but it may help someone perceive certain price action in a way that their mind works. For example, someone may be able to recognise an ascending triangle better than they could see higher lows bumping up against resistance. However, I would say that you should consider the source, the price action and volume rather than relying on patterns which are symptoms or derivatives. The symptoms could be wrong and price action and volume may paint a different picture than what the pattern suggests.
http://thepatternsite.com/
ADD THE WORD---PARTICIPANTS
Done and am doing a lot of work on Patterns.
Flatly don't agree.
Evidence indicates they are like a road map to sentiment.
Some far far better than others.
In context of chart life also far more valuable.
Single bar and cluster bar price action coupled with volume ---I would argue is simply another pattern.
A read of Market participant psychology.
Subjective.
Well if it is its not a pattern worth consideration.---in my view of course.
They tell me history repeats!
Bet you were grabbing a scotch 5 yrs ago!
So for the newbies...that's a no. Price action doesn't have a use by date. Agree? Disagree?
My experience is that regardless of timeframe the market has a memory.
At times though it will display Alzheimer's at others it will be photographic.
And therein lies the problem with T/A for newbies. We are all controlled by our biases. If you are new to the game T/A isn't much better than a dart throw for predicting future movements. If you have seen the game 1000s of times you're more likely to be biased by the pattern and general market rather than hope. Just like any field, what counts is experience not the tools.
If your in a crowd YOU will pick out your mothers face from 1000s
Others wont recognise her.
We don't normally sell into markets that are actually rising (as opposed to markets that just were rising and stop - that's a good time to sell).
Indeed I will, ...
... have a nice Profit ...
... Should I have re-entered ...
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