Another option instead of price having to go down (counter-trend) to a moving average, is that price consolidates for a while until the moving average catches up to it. This is one (not only) negative to going counter trend - that price does nothing but wait for the moving average(s) to "catch up" to it.
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We are in a pretty narrow Balance area over the last two days. A cornerstone of Market Profile is that Balance leads to Imbalance. Between the the 4th of July holiday and this range may not get much movement. Hopefully Friday's Unemployment Report can generate a directional move.
I use Moving Averages that stem from Range charts. The market would have to consolidate for a long long time for the moving averages to "catch up". The Moving Averages I use are an 8R 25 SMA and a 14R: 25 SMA; 75 SMA and 150 SMA. Having 25 14R bars consolidating seems unlikely. You do make a good point however that price will either move to it's average or it's average will need to move to price. It seems to depend on the time frame and size of the moving average however for the latter to occur.
Well Friday's report has such a low expectation this week that I am kind of sure we will overachieve :-)
Add light volume end of week and holiday extension to the mix, and you can already foresee probably the lightest volume of the year - which usually ends up floating up all day long.
In such low volume days, it is much easier for "them" to manipulate the market and push it up into the weekend.
I won't be surprised if we flush on opening and float all day up in the case of bad report, but the most probable scenario is just float up all day long on Friday.
Successful people will do what unsuccessful people won't or can't do!
Good point! Range bars (and other price based charts) moving averages interaction with price is much different than time-based charts moving average interaction with price. Thanks for responding to my reply post.
Here is a screenshot from todays trading. I use Stochastic and the MACD to help but I'm most interested in price. Price is the truth. Some hate standard indicators. I learned them from Dr. Barry Burns so I use them. I like Stochastic. I've seen some use it as a momentum indicator. I use it as a cycle indicator mainly but there are times when it can be used for momentum as well. I like divergences on the cycles. If it comes all the way down to the 20and starts a new cycle I consider it now a momentum indicator- especially if price can't get to the previous high.
This thread is about honesty to myself and to make myself accountable to myself. To discover the truth and to discover the lies and falsities I often tell myself. My last post displayed a chart from yesterdays trading. I was arrogant. I wanted to show everyone how great my tools are and all the great things they're capable of. I wanted everyone to see that they can capture every little move and every turning point in the market.
Here's the problem and here's the moment of truth. The problem is: where in my initial post did I ever say I was a volatility trader? Where did I ever say that I was out to capture every turning point? How many times did I define what type of a trader I was? My own Trading Plan identifies my trades- what I look for and when and where.
Nowhere in my plan has it ever said I should try to capture every turning point. I have been racking my brains trying to do that. Always asking, "What do I need to see to capture every turning point?" That is the wrong question. It is a question that isn't designed to follow who I have defined myself as a trader to be. It would be the right question if I was a volatility trader. But I am not a volatility trader. You have no idea how long I have asked myself that question. Too long. I'm embarrassed.
My anger and my being disgusted with myself is because I missed this entire move down. I could have caught the entire move down if I had followed my plan and followed through on what type of a trader I am. Instead, I was too busy freaking trying to do something and to find something that isn't who or what I am as a trader. Nor is it what I ever, ever defined myself as a trader to be.
Right now, my DOM reads $0.00 and it reads it in red. It should read more than that- a lot more in green. All because I was trying to do and be something I am not.
I am a Support & Resistance at Moving Averages Trader. That is who I am. And that is all I need to be. The sooner I get that through my thick skull the sooner I can begin to make the money I'm capable of making. To make matters even worse, much worse, I wrote down these exact words on a piece of note paper several days ago. I wrote, "I AM a Moving Average Support/Resistance trader."
I write this in the hopes that someone, at some point, perhaps a new trader, can learn from my experience and be wiser than I am. Know who you are as a trader. Knowing that is the first essential step.
Last edited by Aragorn; July 5th, 2012 at 09:37 AM.
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