two simple questions but no clear answers-post your answer please

[ford7k]

Here is something to think

When we go to a vegetable market most of the time we know the price of tomatoes or onions. We know what is a fair price.
BUT when we are in the stock market,we see traders not knowing what the fair price is and we see traders buying at all possible levels.

People are not aware of fair price in general.They are in confusion.hope,greed force them to buy at high prices.
------------------------------------------------------
NOW think in a different way.
-----------------------------------------------------
LET THE MARKET TELL YOU.
WHERE THE FAIR PRICE IS.

rule IS IF FAIR PRICE IS ABOVE THE CURRENT MARKET PRICE,PRICE WILL MOVE UP.
IF fair price is below the market,then price will go down.
Fair price is a sort of hidden thing like.
Since we cannot see or know the fair price readily, we have to wait till price moves and guide us in the right direction towards fair price.Big picture is needed.
Trend tells us which way to go-just follow the trend like a shadow.
dont trade against the trend.
try to enter the beginning of a new trend and continue with it and as end of trend comes,exit.
There lie the LOW AND HIGH in an uptrend.
of course with reference to your chosen timeframe.

That is how low and how high the price can move about.
Once you fix a timeframe,just aim at begin of trend,enter,continue with it and exit as you detect end of trend.
after that just wait till next trend begins.
repeat your process
---------------------------------------------------

 

[onlinegtrash]

hi onlinegtrash
you said

If anyone (or small group of traders) knows highs/lows and acts on the knowledge, what do you think will happen to the old predicted high/low level?
so what happens to your question now!?

question 2#:
What do you think the primary goal(s) of risk management & money management is?
if you figure out that first, you only need few more questions to get to the answer to your 2nd question
====================================================
what happens to old high or low? is what i asked how high and how low? it means these values are dynamic may keep changing and unless a trader is clear in his mind he cant face the situation. This means in effect you said nothing new except repeat my question.
Second thing- I request you to post few points on primary goals of risk management so that we guys can learn and update ourselves with your guidance.
that will be education for me .accept my thanks in case you post this info.
----------------------------------------------------------
I wonder what is there to run away in the first place.
This forum is there to educate traders and provoke thinking in right direction.

The point here of this discussion is-may be you have better answers to this puzzle.It is not to hit at each other with criticism or any such thing.

I appreciate your points.
First thing-only smart operator groups may have info on where they may force the market to reverse only if no counter groups come and sink them.and the scrips which they operate have very low volumes to help them operate easily.I havnt seen this in my experience but heard of it.
with big scrips with higher volumes this kind of manipulation had back fired in past with kp etc.

regarding risk,everybody is aware of stoploss use.
but what are the critical parameters that form the stoploss formula and which is better and what parameter values are best -is the question.
I said key support and key resistance levels-can you say something in clear terms about them?
cheers

you started thread saying traders will run away if you ask these questions, that's why I worded similarly... anyways no problem, just wanted to annoy you a little
btw if the trader runs away he should be a very very good one IMHO, because great traders are rarely great teachers, even if there were great teachers, most of their students will never catch up with their track records, the remaining few who can manage to replicate a partial success of their guru will do well anyways even without any teachers!

but I will post my thoughts because I am neither great trader nor great teacher (I am a good student
=========
Okay regarding tops & bottoms:
spotting support resistance is easy but spotting tops and bottoms in a liquid market place is impossible. sane people who shorted NASDAQ before dot-com crash all lost their shirts, even though they clearly spotted the bubble(that's why they are sane people!), but surprisingly the bubble went on depleting their accounts for entire 1999!
By definition insanity is supposed to be unpredictable (although it may tempting to say value investing loser bears should have waited till 2000, but its obvious only in hind sight!).

Here is another debate going on now: whats ahead of us deflation or inflation of historic proportions?
economics Ph.Ds are splitting their left over meager hair on their head, for such a two contrasting mutually exclusive paths. They are on each others throat saying the other one doesn't understand better! This goes to say how super hard its even to spot a tops/bottoms of big markets.

Contrarian guys have some time tested methods like "if your grandma says to buy tech stocks because of its earnings, then probably you should be ready to short it!"
"if newspaper headlines say people running towards XYZ, then probably its about to reverse"... I guess it can help a little... (lately I heard Soros dumped all his silver!! am not sure about the follow up story...thou)
-----------
regarding risk & money management:

primary goal:
To keep you in the game without blowing up until the good times start rolling in.

so here are few critical parameters for position sizing I can think of:
a) your BIGGEST possible loss on a trade, your position sizing should with stand this shark attack. Position sizing not accounting for *drawdowns* are doomed.

b) people fight over fixed-fraction or fixed-ratio, optimal-f etc, whatever they use, I think that should be adjusted to include the point (a)

regarding risk management:
you know the drill, R ratios blah blah...

-----
from your questions, I think you are expecting more concrete answers which could be directly applied to charts... all I have is broad strokes of ideas that I have picked up here and there...

 

[Niranjanam]

Money is made by buying low and selling high . It is a universal truth. Trading cannot be different.The problem is many traders do not know where exactly the lows and the highs are.You need a slight change in perspective to know this.

Markets move in waves.There are two types of moves impulsive and corrective. Impulsive moves are momentum moves in the direction of trend and corrective moves are weak counter trend moves. Every wave is a probable range.Generally during trend periods corrective waves become ranges. Impulse waves too can become ranges especially during sideways market periods..I try to buy the range lows and sell the range highs.

A trend is a series of range breakouts.When the Markets break to new highs, it is always in the lower end of the range above.Once you become comfortable with this reality, you can always trade whether it is trending or ranging.

If you are not comfortable trading counter trend, stay with the trend. If the current price range is above the previous one, the trend is up, and try to buy the range low.If we are in a lower price range only attempt to sell the range highs

Niranjanam.

 

[Stock trendy]

Every tick is unpredictable ..what MarkDouglas says about it

1. Anything can happen. Why? Because there are always unknown forces operating in every market at
every moment, it takes only one trader somewhere in the world to negate the positive outcome of your
edge. That's all: only one. Regardless of how much time, effort, or money you've invested in your
analysis, from the market's perspective there are no exceptions to this truth. Any exceptions that may
exist in your mind will be a source of conflict and potentially cause you to perceive market information
as threatening.
2. You don't need to know what is going to happen next in order to make money. Why? Because
there is a random distribution between wins and losses for any given set of variables that define an
edge. (See number 3.) In other words, based on the past performance of your edge, you may know that
out of the next 20 trades, 12 will be winners and 8 will be losers. What you don't know is the sequence
of wins and losses or how much money the market is going to make available on the winning trades.
This truth makes trading a probability or numbers game.
When you really believe that trading is simply a probability game, concepts like right and wrong or win
and lose no longer have the same significance. As a result, your expectations will be in harmony with
the possibilities. Keep in mind that nothing has more potential to cause emotional discord than our
unfulfilled expectations. Emotional pain is the universal response when the outside world expresses
itself in a way that doesn't reflect what we expect or believe to be true. As a result, any market
information that does not confirm our expectations is automatically defined and interpreted as
threatening. That interpretation causes us to adopt a negatively charged, defensive state of mind, where
we end up creating the very experience we are trying to avoid. Market information is only threatening
if you are expecting the market to do something for you.
Otherwise, if you don't expect the market to make you right, you have no reason to be afraid of being
wrong. If you don't expect the market to make you a winner, you have no reason to be afraid of losing.
If you don't expect the market to keep going in your direction indefinitely, there is no reason to leave
money on the table. Finally, if you don't expect to be able to take advantage of every opportunity just
because you perceived it and it presented itself, you have no reason to be afraid of missing out. On the
other hand, if you believe that all you need to know is:
1. the odds are in your favor before you put on a trade;
2. how much it's going to cost to find out if the trade is going to work;
3. you don't need to know what's going to happen next to make money on that trade; and
4. anything can happen;
Then how can the market make you wrong? What information could the market generate about itself
that would cause your pain-avoidance mechanisms to kick in so that you exclude that information from
your awareness? None that I can think of.
If you believe that anything can happen and that you don't need to know what is going to happen next
to make money, then you will always be right. Your expectations will always be in harmony with the
conditions as they exist from the market's perspective, effectively neutralizing your potential to
experience emotional pain. By the same token, how can a losing trade or even a series of losers have
the typical negative effect, if you really believe that trading is a probability or numbers game? If your
edge puts the odds in your favor, then every loss puts you that much closer to a win. When you really
believe this, your response to a losing trade will no longer take on a negative emotional quality.
3. There is a random distribution between wins and losses for any given set of variables that define
an edge.
If every loss puts you that much closer to a win, you will be looking forward to the next occurrence of
your edge, ready and waiting to jump in without the slightest reservation or hesitation. On the other
hand, if you still believe that trading is about analysis or about being right, then after a loss you will
anticipate the occurrence of your next edge with trepidation, wondering if it's going to work. This, in
turn, will cause you to start gathering evidence for or against the trade. You will gather evidence for the
trade if your fear of missing out is greater than your fear of losing. And you will gather information
against the trade if your fear of losing is greater than your fear of missing out. In either case, you will
not be in the most conducive state of mind to produce consistent results.
4. An edge is nothing more than an indication of a higher probability of one thing happening over
another.
Creating consistency requires that you completely accept that trading isn't about hoping, wondering, or
gathering evidence one way or the other to determine if the next trade is going to work. The onThe only
evidence you need to gather is whether the variables you use to define an edge are present at any given
moment. When you use "other" information, outside the parameters of your edge to decide whether you
will take the trade, you are adding random variables to your trading regime.
Adding random variables makes it extremely difficult, if not impossible, to determine what works and
what doesn't. If you're never certain about the viability of your edge, you won't feel too confident about
it. To whatever degree you lack confidence, you will experience fear. The irony is, you will be afraid of
random, inconsistent results, without realizing that your random, inconsistent approach is creating
exactly what you are afraid of. On the other hand, if you believe that an edge is simply a higher
probability of one thing happening over another, and there's a random distribution between wins and
losses for any given set of variables that define an edge, why would you gather "other" evidence for or
against a trade? To a trader operating out of these two beliefs, gathering "other" evidence wouldn't
make any sense.
Or let me put it this way: Gathering "other" evidence makes about as much sense as trying to determine
whether the next flip of a coin will be heads, after the last ten flips came up tails. Regardless of what
evidence you find to support heads coming up, there is still a 50-percent chance that the next flip will
come up tails. By the same token, regardless of how much evidence you gather to support acting or not
acting on a trade, it still only takes one trader somewhere in the world to negate the validity of any, if
not all, of your evidence. The point is why bother! If the market is offering you a legitimate edge,
determine the risk and take the trade.
5. Every moment in the market is unique.
Take a moment and think about the concept of uniqueness. "Unique" means not like anything else that
exists or has ever existed. As much as we may understand the concept of uniqueness, our minds don't
deal with it very well on a practical level. As we have already discussed, our minds are hardwired to
automatically associate (without conscious awareness) anything in the exterior environment that is
similar to anything that is already inside of us in the form of a memory, belief, or attitude. This creates
an inherent contradiction between the way we naturally think about the world and the way the world
exists. No two moments in the external environment will ever exactly duplicate themselves. To do so,
every atom or every molecule would have to be in the exact same position they were in some previous
moment.
Not a very likely possibility. Yet, based on the way our minds are designed to process information, we
will experience the "now moment" in the environment as being exactly the same as some previous
moment as it exists inside our minds. If each moment is like no other, then there's nothing at the level
of your rational experience that can tell you for sure that you "know" what will happen next. So I will
say again, why bother trying to know?! When you try to know, you are, in essence, trying to be right. I
am not implying here that you can't predict what the market will do next and be right, because you
most certainly can. It's in the trying that you run into all of the problems. If you believe that you
correctly predicted the market once, you will naturally try to do it again.

 

[ford7k]

Hi stock trendy

Thank you for your views.

When traders come to market their weapon is the knowledge and experience they possess.
One should not predict,
But one must follow the trends.
THe question comes down to two choices
do something or do nothing
we cant do something random.
so we need to develop a process
and process can happen only by putting together ideas.



There comes the problem,
uptrend is higher highs higher lows.

Once you define high then you can take step towards higher high.
similarly,you need low first and then go out to look for higher low.

However relative things are,you need to begin at a reference level.

one step here is define your timeframe. say my timeframe is daily.
then things become easy.
next define length of your observation zone-say 3months,6 months, or one year,.

I attach a chart of past 5 years nifty daily chart.
Each year has a different overall trend and has a different high and low.
One small hint here comes,once you spot a double top or bottom, chances are price may move in a way expected.

But there were occassions when sbi chart showed a tripple top breakout which normally never happens.
The elliott wave may be of help specially if one can spot wave 3, wave5 etc.
----------------------------------------------
To summarise, fixing a timeframe,length of observation period helps work effectively to locate high and low. the high and low are valid as long as next higher high or higher low do not showup.
Change is nature of markt. we need to adopt to it sooner the better.
--------------------------
please look at 5 year daily chart of nifty.

 

[Reggie]

Ford, Nice to see you ask questions and imbibe knowledge. Being receptive to ideas will take you a long way ahead. Good luck.

Hi stock trendy

Thank you for your views.

When traders come to market their weapon is the knowledge and experience they possess.
One should not predict,
But one must follow the trends.
THe question comes down to two choices
do something or do nothing
we cant do something random.
so we need to develop a process
and process can happen only by putting together ideas.



There comes the problem,
uptrend is higher highs higher lows.

Once you define high then you can take step towards higher high.
similarly,you need low first and then go out to look for higher low.

However relative things are,you need to begin at a reference level.

one step here is define your timeframe. say my timeframe is daily.
then things become easy.
next define length of your observation zone-say 3months,6 months, or one year,.

I attach a chart of past 5 years nifty daily chart.
Each year has a different overall trend and has a different high and low.
One small hint here comes,once you spot a double top or bottom, chances are price may move in a way expected.

But there were occassions when sbi chart showed a tripple top breakout which normally never happens.
The elliott wave may be of help specially if one can spot wave 3, wave5 etc.
----------------------------------------------
To summarise, fixing a timeframe,length of observation period helps work effectively to locate high and low. the high and low are valid as long as next higher high or higher low do not showup.
Change is nature of markt. we need to adopt to it sooner the better.
--------------------------
please look at 5 year daily chart of nifty.

 

[stock72]

Great post . How to put in to trade all ur thoughts is a question every one wish to have an answer for that .

Every tick is unpredictable ..what MarkDouglas says about it

1. Anything can happen


. Why? Because there are always unknown forces operating in every market at
every moment, it takes only one trader somewhere in the world to negate the positive outcome of your
edge. That's all: only one. Regardless of how much time, effort, or money you've invested in your
analysis, from the market's perspective there are no exceptions to this truth. Any exceptions that may
exist in your mind will be a source of conflict and potentially cause you to perceive market information
as threatening.
2. You don't need to know what is going to happen next in order to make money. Why? Because
there is a random distribution between wins and losses for any given set of variables that define an
edge. (See number 3.) In other words, based on the past performance of your edge, you may know that
out of the next 20 trades, 12 will be winners and 8 will be losers. What you don't know is the sequence
of wins and losses or how much money the market is going to make available on the winning trades.
This truth makes trading a probability or numbers game.
When you really believe that trading is simply a probability game, concepts like right and wrong or win
and lose no longer have the same significance. As a result, your expectations will be in harmony with
the possibilities. Keep in mind that nothing has more potential to cause emotional discord than our
unfulfilled expectations. Emotional pain is the universal response when the outside world expresses
itself in a way that doesn't reflect what we expect or believe to be true. As a result, any market
information that does not confirm our expectations is automatically defined and interpreted as
threatening. That interpretation causes us to adopt a negatively charged, defensive state of mind, where
we end up creating the very experience we are trying to avoid. Market information is only threatening
if you are expecting the market to do something for you.
Otherwise, if you don't expect the market to make you right, you have no reason to be afraid of being
wrong. If you don't expect the market to make you a winner, you have no reason to be afraid of losing.
If you don't expect the market to keep going in your direction indefinitely, there is no reason to leave
money on the table. Finally, if you don't expect to be able to take advantage of every opportunity just
because you perceived it and it presented itself, you have no reason to be afraid of missing out. On the
other hand, if you believe that all you need to know is:
1. the odds are in your favor before you put on a trade;
2. how much it's going to cost to find out if the trade is going to work;
3. you don't need to know what's going to happen next to make money on that trade; and
4. anything can happen;
Then how can the market make you wrong? What information could the market generate about itself
that would cause your pain-avoidance mechanisms to kick in so that you exclude that information from
your awareness? None that I can think of.
If you believe that anything can happen and that you don't need to know what is going to happen next
to make money, then you will always be right. Your expectations will always be in harmony with the
conditions as they exist from the market's perspective, effectively neutralizing your potential to
experience emotional pain. By the same token, how can a losing trade or even a series of losers have
the typical negative effect, if you really believe that trading is a probability or numbers game? If your
edge puts the odds in your favor, then every loss puts you that much closer to a win. When you really
believe this, your response to a losing trade will no longer take on a negative emotional quality.
3. There is a random distribution between wins and losses for any given set of variables that define
an edge.
If every loss puts you that much closer to a win, you will be looking forward to the next occurrence of
your edge, ready and waiting to jump in without the slightest reservation or hesitation. On the other
hand, if you still believe that trading is about analysis or about being right, then after a loss you will
anticipate the occurrence of your next edge with trepidation, wondering if it's going to work. This, in
turn, will cause you to start gathering evidence for or against the trade. You will gather evidence for the
trade if your fear of missing out is greater than your fear of losing. And you will gather information
against the trade if your fear of losing is greater than your fear of missing out. In either case, you will
not be in the most conducive state of mind to produce consistent results.
4. An edge is nothing more than an indication of a higher probability of one thing happening over
another.
Creating consistency requires that you completely accept that trading isn't about hoping, wondering, or
gathering evidence one way or the other to determine if the next trade is going to work. The onThe only
evidence you need to gather is whether the variables you use to define an edge are present at any given
moment. When you use "other" information, outside the parameters of your edge to decide whether you
will take the trade, you are adding random variables to your trading regime.
Adding random variables makes it extremely difficult, if not impossible, to determine what works and
what doesn't. If you're never certain about the viability of your edge, you won't feel too confident about
it. To whatever degree you lack confidence, you will experience fear. The irony is, you will be afraid of
random, inconsistent results, without realizing that your random, inconsistent approach is creating
exactly what you are afraid of. On the other hand, if you believe that an edge is simply a higher
probability of one thing happening over another, and there's a random distribution between wins and
losses for any given set of variables that define an edge, why would you gather "other" evidence for or
against a trade? To a trader operating out of these two beliefs, gathering "other" evidence wouldn't
make any sense.
Or let me put it this way: Gathering "other" evidence makes about as much sense as trying to determine
whether the next flip of a coin will be heads, after the last ten flips came up tails. Regardless of what
evidence you find to support heads coming up, there is still a 50-percent chance that the next flip will
come up tails. By the same token, regardless of how much evidence you gather to support acting or not
acting on a trade, it still only takes one trader somewhere in the world to negate the validity of any, if
not all, of your evidence. The point is why bother! If the market is offering you a legitimate edge,
determine the risk and take the trade.
5. Every moment in the market is unique.
Take a moment and think about the concept of uniqueness. "Unique" means not like anything else that
exists or has ever existed. As much as we may understand the concept of uniqueness, our minds don't
deal with it very well on a practical level. As we have already discussed, our minds are hardwired to
automatically associate (without conscious awareness) anything in the exterior environment that is
similar to anything that is already inside of us in the form of a memory, belief, or attitude. This creates
an inherent contradiction between the way we naturally think about the world and the way the world
exists. No two moments in the external environment will ever exactly duplicate themselves. To do so,
every atom or every molecule would have to be in the exact same position they were in some previous
moment.
Not a very likely possibility. Yet, based on the way our minds are designed to process information, we
will experience the "now moment" in the environment as being exactly the same as some previous
moment as it exists inside our minds. If each moment is like no other, then there's nothing at the level
of your rational experience that can tell you for sure that you "know" what will happen next. So I will
say again, why bother trying to know?! When you try to know, you are, in essence, trying to be right. I
am not implying here that you can't predict what the market will do next and be right, because you
most certainly can. It's in the trying that you run into all of the problems. If you believe that you
correctly predicted the market once, you will naturally try to do it again.

 

[Stock trendy]

Please read the Bold letter .... First sentence of my earlier Post.
That was copy past from a Book Trading in the Zone by MarkDouglas.
You can Liston to him in a video Mind over Market
http://www.youtube.com/watch?v=GhKJ9P3agRc

 

[ford7k]

My friend stock trendy
thank you for providing good link to educate us.

Let me express my gratitude and thanks for forum moderators for encouragement and support.

Regarding what is high and what is low,here comes an answer from MARTIN PRING,who had researched data of over 200 years.

he says
ONE INDICATOR that has consistently and reliably called major lows in us equity market is A SIMPLE 18 MONTH RSI.
his CHART for over 208 years shows whenever RSI had fallen to 30 oversold level and reversed up,the stock market has almost always bottomed out.
(you may observe same phenomenon on a daily chart with RSI(18),THEN CHECK IT ON WEEKLY AND FINALLY MONTHLY CHARTS-MOST PEOPLE HAVE NOT ENOUGH DATA ON MONTHLY CHARTS-so take it easy)
One thing to remember is RSI replicates price patterns in a more vivid manner than price itself. whatever price patterns may seem hidden, may be easier spotted on RSI chart.

One clever way of using RSI is USING RSI AND ITS EMA OF 9 PERIODS.
Whenever rsi crosses above its ema,buy. when rsi cross below its EMA ,sell
(it is similar to macd and its signal line).

WELL that was one answer from expert MARTIN PRING.


ANOTHER ANSWER I found was SAM SIEDENS SUPPLY DEMAND APPROACH.
Here the biggest problem is how to draw the supply demand zones on a chart.
One thing is supply zone has a top line that contains resistance and bottom line that contains support,but very close to resistance.similarly demand zone.


Major supply zones on higher timeframes like monthly, weekly are highprice areas that act as barriers to price rise.THAT IS HOW HIGH PRICE CAN GO .
Major demand zones on higher timEframes like monthly,weekly are LOW price areas that act as barriers to price fall.THAT IS HOW LOW price can fall.
ONE WAY TO SAFEGUARD your trading is have higher timeframe supply-demand levels marked on lower tf charts and avoid shorting at demand or avoid LONG trades at supply areas.

A third answer is JESSE LIVERMOORE,S SECRET KEY.

Well I could not understand it much,would ask Savant sir or smart_trade
to comment on that when they find time.