Trading Basics

ironchef · Nov 16, 2023

Jzwu2017 said:
As for spotting a trend early on, I got to say it’s a big fallacy. I myself used to think that way and found out that I could never capture a big trend.

Later, I realized that the big trend thing is purely an illusion. It’s in fact a complete hindsight. You never know in advance if any move will be a big trend or a trend at all. The only certainty you have is within a very short timeframe most of the time. Very rarely a big trendy day is obvious early in the day.

Now I only try to capture segments of price movement and don’t think in the way of a big trend. There’s no home run because you simply don’t know beforehand.
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This post is revealing.

From this I know you are already there or almost there.

padutrader · Nov 16, 2023

ironchef said:
I took your words seriously and studied everything you said sir.
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only that post that comment

ironchef · Nov 16, 2023

padutrader said:
only that post that comment
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Every posts.

I took your pontifications seriously. Some are actually quite helpful.

padutrader · Nov 16, 2023

ironchef said:
Every posts.

I took your pontifications seriously. Some are actually quite helpful.
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i meant i was sarcastic only in that comment/post

padutrader · Nov 16, 2023

schizo said:
Here's a heady stuff to mull over. It could just be another useless psychobabble for some or Ram Dassian enlightenment for others. I'll leave that to your imagination.

The following quote is from M.S. Jenkins' The Geometry of Stock Market Profits (1996):

The initial thrust in the stock market, of stocks coming off the low prices or on a breakdown from the top prices, are what we term "impulse waves." They are a lot like the trajectories out of these cannons, whereby, we can take measurements on these trajectories and forecast where they are going to go.

With this as a backdrop, we retum to the theory that the subconscious mind of man is connected with the price level of stocks, on a day to day basis, which has something to do with time cycles that are influencing human beings and their behavior, so we can make the following conclusion: The price level at which a stock trades tells us something about its own internal time cycle. This is the major secret key to the stock market! That is, if a stock goes up to $50 and it tops out, and then goes down, we can say that the $50 price is more than just price, for price also has an intricate connection with the time cycle.

Indeed, the time cycle has a mathematical numerological equivalent of 50, just like the price of $50, and we will find turning points in the future of that stock at units of 50 time periods. These units can be 50 minutes, 50 hours, 50 days, 50 weeks, 50 months, 50 years, but all the units of 50 from that high price will be evident in future cyclical behavior.

This can be proven conclusively to anyone by looking at any chart, whether it be stocks, commodities or even the prices of used cars (see below). One takes the high price, takes that time unit and measures over in days, week, months. The unit you want to use, should be applicable to the trading horizon. If you are a long term investor, you would use weeks and months. If you are a short term investor, you might want to use days and hours. However we measure it, we will find the turning point in harmonics (fractional mathematical parts) of the major high or low.

Now, when that stock at $50 goes down and makes a new low, say $30, and it turns up, we now have the same effect from the lows. The $30 low will spin out time cycles, based on 30, not 50, but every 30 units over, and these will have a tendency to be lows to lows or highs to highs. For instance, the $50 price might spin out a high every 50 time cycles, and the $30 low might spin out lows every 30 time cycles.

What we find is that the solution to the stock market enigma is nothing more than keeping track of all the fluctuations of the past.All the day to day highs and lows are spinning out these future cycles, based on those highs and lows of past history. This is very similar to throwing a handful of pebbles in a pond. We know if we throw in one big boulder we get a giant wave, and if we throw in a little pebble, we get little tiny ripples.

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this is Gann. but i do not understand those time and price squares and how it comes abouut.

better not to get into stuff like that,

gann was amazingly right but he was badly off too at times

padutrader · Nov 16, 2023

schizo said:
Here's a heady stuff to mull over. It could just be another useless psychobabble for some or Ram Dassian enlightenment for others. I'll leave that to your imagination.

The following quote is from M.S. Jenkins' The Geometry of Stock Market Profits (1996):

The initial thrust in the stock market, of stocks coming off the low prices or on a breakdown from the top prices, are what we term "impulse waves." They are a lot like the trajectories out of these cannons, whereby, we can take measurements on these trajectories and forecast where they are going to go.

With this as a backdrop, we retum to the theory that the subconscious mind of man is connected with the price level of stocks, on a day to day basis, which has something to do with time cycles that are influencing human beings and their behavior, so we can make the following conclusion: The price level at which a stock trades tells us something about its own internal time cycle. This is the major secret key to the stock market! That is, if a stock goes up to $50 and it tops out, and then goes down, we can say that the $50 price is more than just price, for price also has an intricate connection with the time cycle.

Indeed, the time cycle has a mathematical numerological equivalent of 50, just like the price of $50, and we will find turning points in the future of that stock at units of 50 time periods. These units can be 50 minutes, 50 hours, 50 days, 50 weeks, 50 months, 50 years, but all the units of 50 from that high price will be evident in future cyclical behavior.

This can be proven conclusively to anyone by looking at any chart, whether it be stocks, commodities or even the prices of used cars (see below). One takes the high price, takes that time unit and measures over in days, week, months. The unit you want to use, should be applicable to the trading horizon. If you are a long term investor, you would use weeks and months. If you are a short term investor, you might want to use days and hours. However we measure it, we will find the turning point in harmonics (fractional mathematical parts) of the major high or low.

Now, when that stock at $50 goes down and makes a new low, say $30, and it turns up, we now have the same effect from the lows. The $30 low will spin out time cycles, based on 30, not 50, but every 30 units over, and these will have a tendency to be lows to lows or highs to highs. For instance, the $50 price might spin out a high every 50 time cycles, and the $30 low might spin out lows every 30 time cycles.

What we find is that the solution to the stock market enigma is nothing more than keeping track of all the fluctuations of the past.All the day to day highs and lows are spinning out these future cycles, based on those highs and lows of past history. This is very similar to throwing a handful of pebbles in a pond. We know if we throw in one big boulder we get a giant wave, and if we throw in a little pebble, we get little tiny ripples.

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ther can be no doubt that market action is beautifully symmetrical but to take it further and try to predict price and tops etc using symmetry as a rule is stupid.

stock prices cannot be predicted

murray t turtle · Nov 16, 2023

schizo said:
I'm in the process of cleaning out my library of dusty trading books. So I'll be outlining here some tidbits of wisdom that I find inspiring.

For instance, spotting a trend continuation early can be very lucrative. More so than spotting a reversal.

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Did you know trading is more about market rhythms, which are manifested in price swings.

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%%
Amen \i would give that book away also, \no moving averages on it LOL

schizo · Nov 16, 2023

As far as I'm concerned, the following rule is all there is to know about trading. It's enough to make you money, and a lot of money if you know how to use it properly.

Courtesy of Al Brooks' Trading Price Action Trading Ranges (2012). Comments in italic are mine.

Whenever there is a breakout, the market eventually pulls back and tests previous significant prices. (True)

When the market pulls back to the area of the breakout, bulls who are already long (or bears who are already short), whether or not they scalped out of some of their position on the breakout, will use the pullback as an opportunity to buy or sell again. (Of course, only in a strong trend. Note the key word: "again", or better known as "leverage")

On the flip side, you have the failed breakouts. Those are applied in the same manner (well, almost the same) in reverse.

By the same token, it's worth noting that there are minor pullbacks and failed pullbacks within the existing trend. These are also applied in the same manner.

schizo · Nov 16, 2023

This is the classic textbook definition of Triangles.

Where are you focusing your gaze? Most traders believe triangles are all about breaking out of the support or the resistance. But what if I said it's more about HL and LH?

schizo · Nov 16, 2023

3-Bar Reversal. Simple and yet powerful. So simple that people ignore it altogether (at their peril).