i have not read robin sharma's
famous best seller
"the monk who sold his ferrari",
but i just sold mine
- my technicals!
it took me 2 years
of focused
single-minded
fanatic-scale
effort
to study rsi and william%r
besides some other indicators
and tools
(albeit to a lesser extent).
despite all this
hearts of hearts
i knew that the market monster
was not tamed!
recently
i even went to the extent
of admitting that no technical
can crack the market code!
technicals help
but not we retail traders.
they help
market forces
to provide
endless supplies
of victims!
this led me to the door of
next search!
and with god's mercy
i got IT
much sooner than i had expected...
"just follow the market's direction"
no technicals
no indicators
no graphs
no computer
no analyses
no prediction
just dumb shameless remorseless
following!!!
(i have explained these in detail
in my posts of last week)
i tried the new methods
and i had to pinch myself
to believe the results!
--
and what a coincidence it is
when i see right before my eyes
a statement from
none other than
Alexander Davidson
"....technical analysis doesn't work except to a limited extent in short term trading situations"
--
though i was not a monk
but definitely a wandering trader!
though i had no ferrari
i definitely loved my rsi and william%r
more than a ferrari!
though i have not sold my "ferrari"
i just left it behind!!!
Showing posts with label turning point. Show all posts
Showing posts with label turning point. Show all posts
Sunday, January 16, 2011
Tuesday, January 4, 2011
1-2-3 over!!!
(comments from discussion on trade 3
http://www.mudraa.com/singlepost.php?messid=76185)
dear sim,
this golden rule
that market forces can't change direction
more than 3 times in a day
is more or less an empirical one derived primarily from observation and experience.
as i said, market forces can't change direction too often and too quickly.
otherwise it is not the change of direction, but vibration.
i would like to picture the market forces more like an elephant than a deer!
(rather, a trader is a deer)
and we rarely see an elephant go round and round except when mad.
first decisive direction can be deemed to have been taken
when the price breaks the boundary it marks for itself in the first half hour or so.
the second direction may not be taken throughout the day
if a strong trend is there.
otherwise, the second direction is likely.
this second direction generally is the last one of the day
except when the markets are range bound
with high participation
with bags of money
raring to go
like bulls after red!!!
during trends
second direction is generally strong.
but the second trade hardly leaves any time for the third one!
third one happens only when second one fizzles out.
but the third one is rarely big.
by that time
'law of diminishing returns' come into play
both the hunters and the hunted are tired.
hunters have their belly full
and the hunted want to escape with life!
Obviously, there is no room for the forth shot!
http://www.mudraa.com/singlepost.php?messid=76185)
dear sim,
this golden rule
that market forces can't change direction
more than 3 times in a day
is more or less an empirical one derived primarily from observation and experience.
as i said, market forces can't change direction too often and too quickly.
otherwise it is not the change of direction, but vibration.
i would like to picture the market forces more like an elephant than a deer!
(rather, a trader is a deer)
and we rarely see an elephant go round and round except when mad.
first decisive direction can be deemed to have been taken
when the price breaks the boundary it marks for itself in the first half hour or so.
the second direction may not be taken throughout the day
if a strong trend is there.
otherwise, the second direction is likely.
this second direction generally is the last one of the day
except when the markets are range bound
with high participation
with bags of money
raring to go
like bulls after red!!!
during trends
second direction is generally strong.
but the second trade hardly leaves any time for the third one!
third one happens only when second one fizzles out.
but the third one is rarely big.
by that time
'law of diminishing returns' come into play
both the hunters and the hunted are tired.
hunters have their belly full
and the hunted want to escape with life!
Obviously, there is no room for the forth shot!
the reversal switch
in day trading
stop loss is not to get out of the market,
it should be used
to reverse the trade direction,
but with a golden rule
not to switch direction more than 3 times at all!
when stop loss is used
as a reversal-switch
the trader is under pressure
(and rightly so)
to think thrice before
setting the stop loss
and triggering it spot on!
this is likely to force him/her
to learn indicators hard
and have a clean dependable method!
stop loss is not to get out of the market,
it should be used
to reverse the trade direction,
but with a golden rule
not to switch direction more than 3 times at all!
when stop loss is used
as a reversal-switch
the trader is under pressure
(and rightly so)
to think thrice before
setting the stop loss
and triggering it spot on!
this is likely to force him/her
to learn indicators hard
and have a clean dependable method!
changing direction
nobody knows
what the market forces exactly want to do.
nobody knows what the market forces have in their mind.
you can only estimate it with indicators.
it is very important that we keep following the market whereever it goes.
we must not feel guilty
when we are required to change direction too early,
provided the indicators say so.
but we also must ensure
that we don't change direction more than 1-2 times in a day.
in extreme condition, don't even think of changing direction more than 3 times.
if we need to,
we are surely doing something wrong.
we are either reading it all wrong
or are panic-driven.
what the market forces exactly want to do.
nobody knows what the market forces have in their mind.
you can only estimate it with indicators.
it is very important that we keep following the market whereever it goes.
we must not feel guilty
when we are required to change direction too early,
provided the indicators say so.
but we also must ensure
that we don't change direction more than 1-2 times in a day.
in extreme condition, don't even think of changing direction more than 3 times.
if we need to,
we are surely doing something wrong.
we are either reading it all wrong
or are panic-driven.
Wednesday, December 15, 2010
high probability turning points
from my experience i have seen that price has high probability of turning at the following
signals:
level 1 signal: william%r reaches extreme, rsi still away
level 2 signal: william%r stays at extreme, rsi reaches extreme
level 3 signal: william%r and rsi together reach extreme
only a very powerful rally can bulldoze all these three levels of signals.
this information can be used to trade at specific points with stop loss.
just make sure that both rsi as well as william%r are of same duration
e.g. if u r taking rsi(14) then william(14) should be taken
and if u r taking rsi (10) then william(10) should be taken
also, same duration chart is to be taken, whether 1 month or 1 year or 5 days etc.
signals:
level 1 signal: william%r reaches extreme, rsi still away
level 2 signal: william%r stays at extreme, rsi reaches extreme
level 3 signal: william%r and rsi together reach extreme
only a very powerful rally can bulldoze all these three levels of signals.
this information can be used to trade at specific points with stop loss.
just make sure that both rsi as well as william%r are of same duration
e.g. if u r taking rsi(14) then william(14) should be taken
and if u r taking rsi (10) then william(10) should be taken
also, same duration chart is to be taken, whether 1 month or 1 year or 5 days etc.
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