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Would you be able to help in the following situation?
The picture at i.snipboard.io/s94DjX.jpg shows 15-minute charts of 2 stocks separated by the pink line. Left side is of one stock going bullish after the first candle of the day. Right side is of another stock going bearish after the first candle of the day.
Is there one or more indicator(s) which can help to predict the direction of the second candle of the day after the long first candles in each of the above?
That is, how can one avoid going Short on the left side stock? And how can one avoid going Long on the right side stock?
Indicator like RSI is useless here, since prices can stay oversold/overbought for long periods of time. And indicator like MACD is useless too since it is lagging.
Although the picture is specific to the first candle of the day, obviously it applies during any time throughout a trading day.
Your suggestions and opinions are welcome; your answer will help all forum members looking for similar answers.
Thanks in advance.
Can you help answer these questions from other members on NexusFi?
1) I believe there is a way to get your image into the post just using the link, but I tried what I thought would work and it didn't. I don't know why, possibly just a short-term brain malfunction on my part. Maybe someone else will know or remember how.
But since there is almost always more than one way to do things, I put your link ( i.snipboard.io/s94DjX.jpg ) into my browser and it pulled up the image just fine, and then I used the Windows snip tool to get the image, copied it to the clipboard, and then pasted it in here, like so:
Now we can see what we're talking about.
2) If I understand you correctly, the image on the left is one stock beginning at the open of the day and the one on the right is a totally different stock beginning at the same time, and the question is whether you can tell what to do, if all you have is just the first strong bar -- since price went one way for one stock and not for the other.
Although the question is about stocks, it clearly applies to any liquid competitive market that you are charting, including futures.
I think the answer is that there is no way in the world to do that. They are two independent stocks being driven by different buying and selling by different participants in the market for different reasons, and they will each go wherever they go, driven by whatever is motivating the traders who are trading them. The issue is whether one big bar means that the buyers are enthusiastic enough to keep buying, or whether they have done all they are going to do and are now exhausted, or whether the sellers will just come in and knock them down. I don't think the one bar tells you enough to know.
So what else would you need? Well, some context for one thing. Is the stock, and for that matter the market and the industry group it belongs to, currently in a trading range or in a trend? Does this stock tend to have strong follow-throughs from opening moves? How about from other moves? What is it (and the market) doing in terms of volatility? Is there chart resistance at or just above the first bar, that the stock has to get through? Then, there is the question of actual follow-through: if the next bar is strongly higher, as for stock 1, you might expect one thing, but if it immediately turns down, as for stock 2, there is at least room for doubt.
You can also look at what buyers and sellers are doing in terms of order flow (an arcane art I know nothing about), or you could have a longer-term market or volume profile showing areas of interest based on what they have been doing, and no doubt more.
You could ask many similar questions, but the point is that you need to know more than just one bar. And in fact, I think you always do.
Maybe someone else will jump in here with other views.... It's an interesting question, well worth the time to work out some answers.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
Yes, your understanding of my question is exactly to the point.
I tried to display an image here, but since the OP was my VERY FIRST post at futures.io, I was not allowed to do so till my post count was 5, hence I had to link externally. Thanks for taking the time out to display the image properly here.
Regarding the question:
You are right in saying that just one bar is not enough to interpret anything meaningful - however, that one 15-minute bar is just a combination of three 5-minute bars (the TF I usually Trade) - so in that case, the same question arises in M5 too instead of the current M15 time-frame.
Regarding the 'context' things you have mentioned, I tried to look at them from different contexts, but could not arrive at a definite conclusion, and they all appear to be independent occurrences. Experts who have come across some valid conclusions are welcome to post your opinions here since it would be useful for others.
In terms of 'chart resistance' and 'areas of interest' known to me ONLY AS A beginner, they are not helpful in any significant way - sometimes they are respected and other times not. Experts here are welcome to post your views on more significant levels that are actually useful in the situation.
I tried looking at the day's news about the stock in question, but again, they are not consistent - I have noticed that even if a company has a (seemingly) good/bad news on the day, [say announcement of bonus, announcement of profit/loss for the quarter, expansion of the company overseas, appointment of new management, etc] it has no significant effect on the stock resulting only in unpredictable movements most of the times.
I agree that it is 'well worth the time to work out some answers' and hope more experts would join this discussion with their views, so that many members can benefit since the question applies to any liquid competitive market that you are charting, including futures.
I think that the problem is that the level of advance knowledge that you are asking about is not possible in trading. You can't know what the next bar, or bars, will do. You can think you know what they probably will do. Sometimes you are right.
You can put together a trading method that you can understand and apply consistently. You can make an hypothesis about the current situation, when you think you have enough information, and you can make a trade. You will be extremely fortunate to have as high as a 60% win rate over time; it is possible to be profitable with 50% or less if you manage your losses properly and keep them small. You will not ever approach 100.
Your success will come from maintaining a consistent and reliable response to the market in terms of your method and trade selection, and then mastering your human emotions brought on by uncertainty, and then controlling your losses.
So your decision in any trade will be something like, "I think it is worthwhile to expect a long to succeed here, based on something I have found to generally work, and I'll commit x amount to that, and will exit the trade immediately if it does y instead. If it succeeds, I will hold it until z happens." The x, y and z conditions are the crucial things, and are what trading is about. Perfect, or even good, foreknowledge is not.
It is all tactics and strategy under conditions of uncertainty. If certainty were possible, everyone would be a billionaire. They aren't.
The edge you have over pure chance will not be as large as you like, and the things that will help you the most over time are discipline and tight loss control.
Sorry, probably not the answer you wanted.
My opinion anyway.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
On the other hand, I believe there is no 'advance knowledge' involved here. While we cannot know what the next bar(s) will do, it is quite possible to predict where a stock is headed to - at least in certain markets - once (and only after) a suitable strategy has been devised. Those who have observed their market for sufficient lengths of time would have noticed that there are commonly occurring patterns for which definite causes can be attributed to in most of the cases except in those circumstances like heavy involvement of FDI, FII, etc. Those who understood it would probably keep it a secret while reaping the rewards discreetly. I thought one or two such members would be generous enough to share the secret, but it can be understood if it can not be shared publicly here.
I also do not agree with the 60% win rate. I know at least 4 traders who employ their own, completely different, strategies to achieve more than 90% S/R - one swing trader and the other three intraday traders - each earning consistently not less than 1% per day on average.
We don't disagree. My point was about knowing what is probable, not what is certain. Everything you mention is, for me, part of "context" -- what a market is likely to do, based on conditions that are larger than a few bars. I do not think it is possible to know for certain what it will do, but it is possible to make reasonable trades based on what is most likely, given past experience.
We don't disagree here either. My point is that you will be fortunate to have a 60% long-term win rate, not whether you can do better. Also, I want to emphasize that a much lower win rate does not rule out profitability if you have larger winning trades and much smaller losing ones.
You need much less to succeed at trading than is often believed. But if you don't manage your emotional responses and limit your losses, you will not succeed. This in fact is a very big thing, and is not at all common. That's why I emphasize it.
I will not comment on things I don't know about. As to whether this is generally attainable, or whether the expectation of these returns should drive a trader's efforts, does it matter? You can do well with much less.
And, to be clear, any such returns will be very seldom achieved. And are totally unnecessary for trading success. I am trying to be polite here, but I have a degree of skepticism about any reports of large returns. You are free to believe as you like, of course. Just don't pay anyone to teach you their secret system. That is always going to be a losing trade. If it's real, it's not for sale.
I suggest being satisfied with less, and have money in hand from consistent results. This will be hard enough.
Bob.
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By the way, to tag someone, you can use their full forum name, like @bobwest, not an abbreviation like @Bob. That way, they will get an email notification that they were mentioned and can decide to respond (or not.) You will see that the system recognized the name because, when it posts, the name will be bold and underlined.
When one door closes, another opens.
-- Cervantes, Don Quixote
US corporate earnings season is fast approaching, and Big Tech’s announcements will be key to the market’s direction. Wall Street has been cutting numbers for some names (GOOG, AMZN) and not raising estimates for AAPL, MSFT or FB. The good news is that the Street expects every Big Tech company to print Q3 results that are BELOW Q2 actuals. That’s likely too pessimistic; 2019, for example, saw no seasonality between Q2 and Q3. Big Tech may not be Q4 leadership (cyclicals should be), but they should be no impediment to a market rally later in the quarter.
It’s payroll day, and unlike most releases it kind of feels like there is a bimodal distribution to the outcomes today: either the figure is weak enough to stop a taper next month, or it isn’t.
However, if history is any guide, the stock market's reaction is anything but bimodal.
In fact, beat or miss, for 9 of the last 11 months, S&P 500 futures have rallied in the six hours following the non-farm payrolls report.
Beat Or Miss, Buying Stocks On Payrolls Day Has Been A Big Winner For The Last Year
Friday, Oct 08, 2021
