Alternative Technical Templates.

[tonymand]

Originally Posted by Mr Average

I guess that's the logical conclusion.

I suppose I was thinking that, assuming your basic/minimum requirements to take a trade are profitable in the long run (without whatever you might consider as additional confirmation), then you're assured of a positive outcome (well, as assured as you can be given past performance). And if that were the case, and you then weighted trades with additional confirmation with a higher percentage of risk, wouldn't that be a good thing?

For instance, say I identify my S&R zones and the dominant trend, wait for an IB or OB trigger, as well as divergence with stochs. That's my basic requirement and, based on past experience, I'm happy that this is enough to be profitable. However, say I also noticed that on the rare occasions when that basic set-up occurs in conjunction with one of the higher level fibs, the likelihood of success is even higher, wouldn't it be wise to put more behind those rare once-in-a-blue-moon trades when everything lines up?

I'm talking rubbish again, aren't I?

No you are not talking rubbish at all. I would simply say that the longer I go in this business the LESS I look to trade and the LESS trades I take. My profitability though has increased. My aim is exactly as jimmymac says a handful of trades per week. Of course your suggestion is rational just make sure you are not at any time diluting trade quality for the sake of trading

[Tess]

Originally Posted by Mr Average

I was just wondering if any of the thread's protagonists would be able to comment on something I've been thinking about. As I mentioned, I found that divergence improved the win/loss ratio, as did S&R entries on/around the 00 level.........

so I was thinking

Stop right there ...you're about to make the common mistake which virtually ALL newcomers make. They think far too much for their own good!!

You have a basic template here on this thread (support-resistance) which knocks onto the natural extension study of supply-demand behaviour.

You have a couple reasonable additional price action triggers (divergences & inside-outside bar formations at key levels) to assist along the way.

That's all you require to begin formulating a strategy which can keep you out of trouble & return decent % slices to your account over the mid to long term.

The perfect set up doesn't exist.

Multiple filters are totally unecessary. They'll merely serve to confuse & disorient you. Why confuse something so simple in it's observation & execution??

More isn't best.

You've got everything you need to begin making money in these instruments right there in the guts of your post.

Begin stacking & assembling the information you already have to best suit your specific needs & aims. As long as you adhere to sensible risk & (trade) money management templates, then you'll begin to assess whether this type of trading model has legs (for you) or not.

[johnnykanoo]

Tess when you come up with major s/r levels, How many times does a price have to touch a level for you to consider it significant, obviously the more price touches the stronger it is, but what is a minimal amount 2? 5? Also what do you think of bollinger bands for showing A.range, B.trend, C.S/R? Im sorry if Im asking to much but i read and reread your posts. You are a great teacher and amazingly patient, any thoughts would be great.
thanks, John

[Tess]

Hello John,

Price merely has to re-visit the area of significance for me to become interested in taking a level on. I'm not one for waiting around to witness excessive confirmation to be honest.

If a previously strong level or zone of s&r comes into view, & I get a signal from a specific set-up to engage, then I'll take it on providing it affords sensible risk & reasonable profit potential.

Jocelyn (& her crew) usually engages via the smaller timeframes as & when a level of interest comes back on the radar. It's to probe & test the level really, just to ensure it's playing ball & is setting up to repeat it's previous behaviour traits.

As an example, I'll throw up a couple charts of Cable to better explain my comments.

The 4 hour charts (2) highlight the specific zone of interest & the smaller 5min chart magnifies the levels for clearer decision making.

Essentially, I'm looking to see if this pair is displaying any propensity to "repeat" the shorting behaviour at this area of previous supply.

Jos has been playing the channel (long from the bottom - short off the top) & will continue to do so until it closes above-below on a daily candle basis with a solid test.

We don't observe Bollinger Bands John. Neither do we have any time for Gann, Elliot Wave, Moving Averages or any other supposed "market enhancing" nonsense.

Price action & it's behaviour on & around previous levels or zones of supply & demand is all that interests us. Understanding & interpreting the psychology of market participants as & when prices begin vibrating around these levels tells us all we need to know.

Anything else (indicators) is merely an unecessary distraction.

[Jocelyn]

She was going to follow up on that last post, but unfortunately got called away from the office.

The levels Tess mentioned in the prev post have continued to play out into today's market action. The concept of support-turns-resistance & vice versa can be applied to each & any level or zone of importance.

What you're looking for are these pressure points to either garner support & break thru, or fade on rejection of the test.

A picture is worth a thousand words, & I guess you've already observed the behaviour via your own charts anyway.

The clincher of course is whether or not a smaller timeframe trade plan is part of your arsenal & whether or not you possess a set-up or 3 to take advantage of this type of activity.

It won't suit all tastes, but those who prefer to tout their wares on a multi-timeframe canvas will have a ball trading off this type of activity.

[Jocelyn]

Another example on the EURJPY. Similar observation tactics & behaviour traits as price buffers the previous supply zone.

I'll leave those of you interested enough to drill down into the intraday timeframes to witness the peak-trough activity as it rejects the levels & attracts the speculative interest.

[johnnykanoo]

Thank you very much, I appreciate such a well thought out presentation to my query. I can see that you guys are only interested in price action as it relates to s/r. Tess is it your opinion that I am wrong to use indicators? Because I don't even come close to your wisdom. Ive been trading the markets for only a year or so and seriously only for a few months. Im trying to develope my own template and I want to make the market predictable to me. I have a hard time with supply and demand coz I think I can so many lines to my chart that it becomes nonsense. I know you have answered this before about what timeframes you like to draw s/r from and even by your examples. So what I will try to do this week is delete the bb which is about all I use that and stochs. I will evaluate all the r/s that I will find relevant and try to watch the price action. It just seems so subjective to me I know you like to be flexible and move with the market and that is what I want too. I just want to feel I am making consistant good decisions that are predictable. Anyway this post is long enough.

I greatly appreciate the input and I can't tell you and Jocelyn and Tony and everyone how much I value your opinions an expereice.

[Tess]

Originally Posted by johnnykanoo

1) Tess is it your opinion that I am wrong to use indicators?

2) Im trying to develope my own template and I want to make the market predictable to me.

3) I know you have answered this before about what timeframes you like to draw s/r from and even by your examples. So what I will try to do this week is delete the bb which is about all I use that and stochs.

4) I just want to feel I am making consistant good decisions that are predictable.

1) It doesn't matter what I think. As long as whatever you're utilizing is of positive benefit, then use it whilst continuing to explore & develop your other preferred area's of study & market observation such as s&r etc.

2) And you will if that's what you really wish to do. Trouble is, it often takes an awful long while before you go full circle & realize that the simple tactics are quite often the most productive.

It's all a matter of trial & error. But don't completely abandon your current mode of market observation. All it will do is frustrate & irritate you. Like I said, if you're extracting profit from your instruments, then continue & develop alternative area's of study.

3) Experiment with your timeframes. Take a look at the Daily & focus on 2 or 3 real big, obvious levels (if they exist) & draw your horizontal line, tying them all up. Cascade the line down onto all the lower timeframes & leave it there until price begins threatening that level.

If the Daily is of little value, then repeat the process on the 4 hour and/or 1 hour timeframes. Only plot those levels which really stand out & hit you as soon as you look to the left on your chart.

If your technical charts allow you to zoom out, then all the better. The more price activity you can squeeze onto the specific chart reference, the better.

Get used to plotting the big, ballsy zones first & leave the lower tiered (minor) levels until you begin to get accustomed to the process.

Remember: take bite sized chunks out of your learning process. That way, you won't become overwhelmed & discouraged with the educational journey.

4) That takes time, & experience comes with time. You can't rush or fast forward this element of your education unfortunately.

It can be made a little less stressful by maybe taking heed of others warning signs & advice, but generally you need to experience the failures & setbacks to make the success all the more tangible.

Determination & patience will take you a good lick down the road. Don't be in a rush to give all your trading account money to the brokers. Take your time & flip to demo mode each time you wish to test out a particular item of interest.

Ensure you're fully conversant with whatever it is you're using before commiting real money to the game.

and ENJOY it.....it's meant to be mildly pleasurable at the very least

[johnnykanoo]

thanks for the advice. The good news is Im still learning so I havent developed any bad habits. Ill be implementing more horizontal lines and less diagnals. Ive always felt that systems that involve many indicators is bad. I will continue to pour over yours and your sisters posts. You should write a book (if u havent already), definatly an asset to this site. One question, what is your favorite moving average and why?
thnks, john

it occurs to me maybe you dnt like moving averages. I know ive read some commenting about others use of ma's well if you dnt then dnt mind me ive been reading and reading and after a while i can't tell heads from tails. anyway news time gotta go

[Tess]

Originally Posted by johnnykanoo

I wish I could give back to you guys.

Tess you and your sister spend so much time responding to posts like mine and tony too, I can't even come close to your level so for me to contribute is impossible but i wish i could.

No worries. It doesn't take up a whole lot of our time to sling up the odd comment or graph. If folks can make use of some of it, then that's great.

Sometimes all it takes is a snippet of info here & there or a graph with a simple line or two highlighted to spark interest in a particular item of market relevance, which in turn switches on a lightbulb inside the head.

We just relay the gist of how we observe & work price activity. It's nothing new or mysterious. It's not going to change the (trading) world, but it might encourage folks to explore the potential benefits of maintaining a degree of simplicity & looking at the technical chart from a slightly different angle.

In reply to your question regards Moving Averages:

No, we don't observe or plot them at all. But again, if you or anyone else finds them useful in guaging s&r in tandem with the obvious levels or zones, then continue to use them.

Just be very careful about how you utilize them. Especially the adoption of mov avg crossovers as a signal trigger.