It is really hard for me to deviate from my forks. it is all i worked on,
Looking at charts with a fresh open mind. This is now what i see.
Inter daily charts are dominated by horizontal resistance based on previous pivots, This is form day traders. AS night falls, the after hour swing traders come in an correct any horizontal movement we let go out of bounds.Also during the day when if we do go out of bounds day time swing traders come in.
When stocks reverse trends (of a few days) It is because longer term swing traders have entered the market.
As a day trader the moves we try to cause have no effect on the momentum of a stock. Since day traders are blind to the greater picture (or just don't bother with it) our movement in the grand scheme of things is flat.
I must say this is very depressing, now all I have to look at is previous areas of resistance and todays high and lows. These areas are key in inter-day reversal and acceleration.
Keeping an eye on the longer term fork helps identify a major reversal. but usually the swing traders get that action as big moves don't happen inter-day.
so. I am left with a few key lines of resistance and a 50 50 possibility we will go up or down. I am starting to sound like a day trader now.
I hate simplicity, but im jumping to the conclusion it is that simple.
So there goes my goal of making billions, and now realistically we are looking at a few cents a trade. Its Ironic cause i feel swing traders make more money in a week or 2 then day traders would.
Anyways lets see how things go and try to build on data to see how probability plays in.
I will continue to bet big on selected resistance points but not based on forks.
Two things came to my mind when reading your post:
1. If all movement was overnight, all days would be range days. On range days you could make big money if you fade extremes, you could likely make much more as the range of the day, probably even more than the range of a nice trending day.
2. It doesn't matter how much you make per trade (as long as it is not so little that a large part gets eaten by comm and slippage). More important are other stats like RR stdev of profit how much you make per time unit exposed....
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well maybe im being a bit harsh and haven't looked at enough charts since this came to light. let me post one up/ you will find that even under a steep sloping channel if we add up all the daily ranges they will only represent a fraction of the actual range.
How many times have you seen at the market close a single bar take out the full range of the day!
no chart needed. lets look at ko coka cola. it just broke out of a down trend the range for the past 3 days has been 1 $
friday most interday traders had no clue we were about to have a reversal. thet were too busy playing there high probability trades.
markets closed, boom 1 bar with a range of 1$ the swing traders get the dollar day trdaers dont get a penny of it, markets ko should open higher then fridays close, its the start of a new trend lets see if price continues its journey up or if day traders are blind to the move, maybe even they will feel the gap up was too big and we should retrace a bit lowering price as it is flying up free of downward pressure.
If we open in the 68.90's it would not suprise me id day traders refrence last firday and monday and keep price flat.
momentum stops dead in its tracks at the openinging bell an then worsens to halt.
Every one is playing ranges . they care not of what the trend it. pull up any 5 min 10 or 15 day chart , you will see flat ness and a bunch of gaps, the gaps are the moves add them up and you will see your trend.
Some one tell me why inter day traders were so un aggressive on this break out ? we see a struggle all day fold by maybe a 50 cent spike. Then in the after hours swing traders come in and laugh at our move and drive it up another dollar.
IMO day traders are all range trading. sure price can go over resistance but then all we will do is try to go short at the next point of resistance,
as far as we know price can go to a new low. so we stall price movement with our inability to trade diagonal lines. any move through resistance
actually at around 3 pm we see some swing traders try to get there order in before market close. at 3 pm we typically see a correction start occur to where price should be.
So i guess even this 50 cent trade i gave to the day traders was made by the added 3pm volume of swing traders entering.
I really hope we did not belive it was the pro traders coming back from a 3 hour lunch break!
maybe I will see if i can play the 3 pm move with any success
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Last edited by traitor786; January 23rd, 2012 at 03:03 AM.
Reason: cause i suck at typing
I had a look, you are right, It doesn't trend well during the day, but I wouldn't call that range bound, I think you put it bettter in yourt last post: it simply stops dead in its tracks! Like paint that never dries! I would simply not trade it. I need a certain tick range covered over the day (don't care about the net range), volatility is just so wonderful....
true. but the fact that the movement at the end of the day is the right direction tells me its mostly swing traders. also i have heard many day traders say anything can happen near the close as if it is more random to them. if you look at the 3 pm moves they tend to be going to the closest line.
As for your chart it would be intresting to see a 5 min weekly chart that shows the after hour moves . i agree based on the last day there was little after hours.
This search for volume imo is basically a search for swing traders entering markets.
I wonder if day traders accept that swing traders dominate the market and we are just there in between playing with so few pennies that we need to forget everything and focus mainly on probabilities ? We are just trying to rip one another off untill the swingers come in and tell us how things will go
Also i see you use a moving average. there is some nice price action around them i can see one point where i would of been stoped out but haven't thought it through.
I have yet to use moving averages and price action. in light of the fact that there may be no use for trends lines during the day i may have start to use them.
I have no idea of where to take profits though looking at the chart.
but Heres a question i often wondered. Firstly around these moving averages there seems to be some hesitation that can have one get stopped out or on the wrong side of the market.
if you simply draw a random line through the chart and just make your moves along the random line would you not get the same results? Also if you do this, you would assume that your line will always be broken as it is not actual resistance. so 90% of the time the line will be breached. with even a 1 to 1 ratio you probably will do much better then a moving average. It seems its all about probabilities. why get in when there is confusion? why not get in when no one is getting in and avoid geting stoped?
I know its a hard pill to swallow. I just had a dose of some pills myself this week.
Its too easy to say it would not work. or that there is no way to be sure price will go to the line (just draw 5 lines)
try your system on a random line see what pops out ?
Yes I do use a moving average, but not that one, that is just in my default template for the simple reason of me being too lazy to delete it from the template....
Also the MA I use, I don't look too closely at it, just use it as a yardstick of how (quickly) price moves....