|February 8th, 2012, 09:43 AM||#11 (permalink)|
port charlotte, florida
Futures Experience: Beginner
Favorite Futures: Oil
Posts: 94 since Dec 2011
Thanks: 54 given, 70 received
What I like about this site is that by providing my opinion, I help myself to see what I am doing and need to do, as well as hopefully help others like yourself. This thread has triggered a lot of thoughts so this post will be a little longer. Enjoy (or not)
It doesn't matter which chart you use. All a chart does is provide an interpretation of what price has done - in the past, recent or distant. Almost all charts use some technique to summarize price action which both provides information and hides information at the same time. For example a daily bar chart is great to show you high/low/open/close for the day but it hides from you any other information about what happened during the day. No matter what chart you use you get some information and lose other. One solution to this of course is to watch a few charts.
I actually keep a 1 tick range chart which when I open it spreads across two monitors. That shows totally what happened with no summarizing process. You can use this to see support/resistance, areas where price stayed most often, etc. If you squint some of the major characteristics become visible. All that the various 'bar' charts do is take this same data and summarize it.
As one of the other posters said, chose your chart(s) and spend thousands of hours watching them until they make sense for you. When you do this, however, it is important to understand exactly what the chart is and is not telling you (as in the day example above). The challenge and your decision is to choose what information you want and don't want to use. If you had a huge number of screens you might be able to have one of every chart and I guarantee you would never be able to make a trade. Too much information and too much conflicting information. If a huge number is too many, how many is enough? I would rather use one chart and know it inside out than have more than one chart and get confused by them. Having said that, I do think a 'few' charts that you can use to clarify a pattern or setup is appropriate. Don't get caught in analysis paralysis, pick a few and then stick with them until they are your friends.
On top of picking one or more charts to watch you have to decide if you are going to use indicators. Once again, indicators are interpretations. Not good, not bad. The trick is to understand how they work and what they do, chose some or not, and then stick to your plan on how to use them.
Finally, it is important to realize that there is no holy grail of charts. At the end of the day it is all about trade management. It has been shown that absolute random entries with proper management can produce a consistent profit. It's how you manage your losers and winners which in turn depends upon how you manage yourself. Why do most traders lose? Fear, doubt, greed, over confidence etc. - emotions. Not keeping winners and holding onto losers.
Knowing how to use the chart and price action once you are in a trade is the most important aspect of trading.
To start with, keep it simple, learn and then when you are experienced and successful, keep it simple.
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