metalblue
Well-Known Member
Hi mate,
I wasn't suggesting that more that price action has two components (IMO) the first is the fundemental aspect (a straight line between two points in time will show you that) and the second is the "human" aspect of trading, the noise around that fundemental action. Now the fundemental line isn't a predictor, you simply wouldn't know if you are capturinga point of price noise. So if you wanted to look a a basic charting technique have a google for "trend line" that is used to suggest areas of support and resistence in the price, the idea being you can either use it as a predictor for where the market will "hold" (not go below, therefore you buy or not go above, therefore you sell). I personally don't find them that good for that but more as areas of breakout, so price goes through my support line I would then think about selling, you can build on these trend lines when the support and resistance lines converge you get into an area called the apex, when the price breaches either line it is expected to move as much as the difference between the widest gap between the two lines. Again this is all very textbook, when I use support and resistance lines I like them to touch as many price points on the chart as possible where others like to pick only two (possibly 3) extremities but much of that is my view that they aren't especially good predictors for me. Now moving averages is something I do like and use.
Your second free lesson of the day is: There was a very simple trading model designed in the 70s where the question was asked are traders born or can they be made (think trading places) it was based on a breakout signal and was quite successful but not because of the entry/exit signal but because of the money management. So lesson 2; manage your risk. The rules are freely available on the Internet, look for "turtles trading" do not pay for the rules (a few con merchants out there).
I wasn't suggesting that more that price action has two components (IMO) the first is the fundemental aspect (a straight line between two points in time will show you that) and the second is the "human" aspect of trading, the noise around that fundemental action. Now the fundemental line isn't a predictor, you simply wouldn't know if you are capturinga point of price noise. So if you wanted to look a a basic charting technique have a google for "trend line" that is used to suggest areas of support and resistence in the price, the idea being you can either use it as a predictor for where the market will "hold" (not go below, therefore you buy or not go above, therefore you sell). I personally don't find them that good for that but more as areas of breakout, so price goes through my support line I would then think about selling, you can build on these trend lines when the support and resistance lines converge you get into an area called the apex, when the price breaches either line it is expected to move as much as the difference between the widest gap between the two lines. Again this is all very textbook, when I use support and resistance lines I like them to touch as many price points on the chart as possible where others like to pick only two (possibly 3) extremities but much of that is my view that they aren't especially good predictors for me. Now moving averages is something I do like and use.
Your second free lesson of the day is: There was a very simple trading model designed in the 70s where the question was asked are traders born or can they be made (think trading places) it was based on a breakout signal and was quite successful but not because of the entry/exit signal but because of the money management. So lesson 2; manage your risk. The rules are freely available on the Internet, look for "turtles trading" do not pay for the rules (a few con merchants out there).