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Price ... Time ... Volume. Those three TOGETHER offer opportunity to buyers vs sellers to enter and exit the market. ALL indicators are derivatives of one of those three.
Another way to say it is:
Price = Value (balance)
Time = Momentum (speed)
Volume = Liquidity (interest)
Personally, I view cumulative volume delta within a sequence of time and price value as the best "indicator" to identify trade opportunity. All three work INTER-DEPENDENTLY to create buy/sell opportunity.
Ken "COTtrader"
P.S. djkiwi attempts to include those very three components into his trading plan. Price indicator (market profile); Time indicator (renko and time based chart) and Cum Volume Delta showing extremes in buying/selling.
* If investing gets too difficult for a seventh grader to understand, the system is needlessly complex
* Markets produce an enormous volume of information, much of which is redundant
* In every game and con there's always an opponent, and there's always a victim. The trick is to know when you're the latter, so you can become the former
Indicators are the devil
I have picked on a few people with indicators everywhere but it's only because I too went
down that road. Indicators may not be the spawn of Satan but they can certainly cloud the
issue. If I have pivots and moving averages and keltner channels and bollinger bands and MAC
D and RSI and ..................... How on earth am I supposed to spot support and resistance
under all that spahgetti? Hmmm?
There are funds out there making a ton of money using automated systems based on
indicators. Some common and some proprietary. But they all have inherent weaknesses. (AND
I promise you a bunch of them lost money this week) The advantage that you and I have is
the ability to think, to judge situations. As we have seen there was a ranging market from mid
April to mid June, followed by an uptrend from mid June to mid July where the current down
trend started. There are different approaches to trending and ranging as we have definately
seen this week and last. (I told you August was a monster) But fornately, we have the ability
to "change up" as the situation requires.
What Billy Ray started with this thread, and what I fully endorse, is simplicity in trading. A
system that the average person can grasp fairly easily. If you can't, then we probably didn't
explain ourselves that well and no we don't mind questions about the overall strategy. Just
don't expect someone here to trade for you. So in the interst of thread purity I limit my
analysis to horizontal S&R and diagonal TL's and Fibs on larger TF. and of course horizontal
S&R trumps all. It really is that simple and when we add indicators we only handicap
ourselves. (and yes zero lag indicators still lag)
10
BRV S+R Trading
Trust me, you really can trade off horizontal support and resistance, you really can be
consistent with it and you really can trade for a living and you don't have to watch 20 pairs of
currencies to do it. Ask me how I know?
More on why indicators are NOT needed for S+R trading
My phillosophy in trading matches my phillosophy in life. I have two plans available to me at all
times. One plan for when things go right and one plan for when things go wrong. No system is
perfect, including S/R trading but the guidlines are simple and easy to follow and with patience yield a pretty good equity curve.
There are two markets out there we must contend with, the ranging market and the trending
market. Now this is why I say you don't need indicators. If we say I am trading a range bound
market then we can get out the stochastics and the MACD and buy and sell the oversold and
over bought conditions. The result will be many small winners and when price breaks out you
will get a big loser that (more times than not) wipes out your previous 10-20 winners. Not to
mention what the whole ordeal does to you psychologically in terms of future trading. If we
trade the trend then we get out the moving averages, maybe throw in some Bollinger Bands
and we wait for price to tag the opposite band and then go with the MA's as long as price is
above them or below them depending on trend direction. The result will be a lot of small
annoying losses and eventually a big pay off if you stay with it.
But waiting for confirmation on indicators is like waiting for a connecting flight at O'Hare
Airport. Maybe it's on time and maybe it's not. (maybe it's cancelled) I like how Billy Ray puts
it. "WHile other people are deciding if the trade is a good one, I'm already up 20 pips."
A quick look at a 4 hr chart will tell you what kind of market you are in and thus the two plan
philosophy.
If it is ranging then I can play a few bounces with tight stops.
If it is trending then I look at where price is and look for a good level for price to pull back to
and get with the trend. We tend to address larger trades here but if you have read BRV's post
on scalping it is very good for intraday trading.
I have used just about every indicator out there (and here's a dirty little secret from the vaults
of trading history that the Guru's won't tell you) Everything works in a trend. Bull and bear
markets are very forgiving. What's drawdown really mean if you are with the trend? Assuming
you didn't over leverage youself.
But C-note, I'm not here to convert anyone. I assume that is done when people choose to stay
with the thread. I am here because I agree with the philosophy of the thread, and because
helping people appeals to my humanitarian nature.
I hate to see anyone lead astray by these self-appointed guru's that would relieve innocent
people of their hard earned money (money that they could buy food with or even trade with) in
return for some supposed turn-key-indicator-ladden-get-rich-quick system.
So if it seems I have overstated my response to your staement, I apologize. My feeling is that
one indicator leads to another and to another. It's like offering someone a plate of cookies
where only a small amount of dog poop fell in the mix before baking. It probaly cooked out
and I doubt you would taste it at all. So who want's a cookie?
* If investing gets too difficult for a seventh grader to understand, the system is needlessly complex
* Markets produce an enormous volume of information, much of which is redundant
* In every game and con there's always an opponent, and there's always a victim. The trick is to know when you're the latter, so you can become the former
Volume is the truest and most reliable indicator of the market’s ability to facilitate a trade...A market that is not facilitating trade will not survive long
* If investing gets too difficult for a seventh grader to understand, the system is needlessly complex
* Markets produce an enormous volume of information, much of which is redundant
* In every game and con there's always an opponent, and there's always a victim. The trick is to know when you're the latter, so you can become the former
