Technical Analysis 101

[Guest oilfxpro]

I don't trade ftse, it is not volatile enough to make money, I have stated this in the past.

 

In your case  you are at risk of applying the wrong system, at the wrong time i.e  unknown future of market.I only trade long and I only trade one system, it eliminates me going short when I should be long and vice versa.In you case technical  analysis works <50 % of the time, by the time you add long/short errors, wrong system errors and other mistakes, it is likely that success is a long way in a pipe dream.

 

I am thinking of starting a thread "the reality of technical analysis", then we can have  a smashing debate with about 20 videos debunking breakouts, chart patterns, indicators, failure of t/a set ups,randomness  and failure rate of 80 % of trends, along with about 20 videos on psychology "why traders are not in reality with technical analysis".

 

Your Brain Wasn't Built to Handle Reality

 

http://www.trade2win.com/articles/2216-your-brain-wasnt-built-handle-reality/p/2?group=methodologies&topic=psychology

 

Selective attention is the process of focusing on a particular object in the environment for a certain period of time. Attention is a limited resource, so selective attention allows us to tune out unimportant details and focus on what really matters.

 

Selective attention also means " missing out vital information on technical analysis".

 

[Guest oilfxpro]

Ftse is in a up trend still and the trend is your friend!

 

The ftse discussion is a clear example of how we  humans are no good at processing information.

 

 

 

[Guest Trader_1707]

Something  tells me (not techincal analysis) that the uptrend of FTSE is not for long time. It's an interesting situation to observe. 

[Guest oilfxpro]

[Guest oilfxpro]

Casey

 

can u post some more indicator technical analysis?

[Caseynotes]

Always a pleasure to teach as I know you struggle so. Below is this mornings 1 minute chart of the dax.

 

Notice the 8:00 am bar (vertical red line) breaks the 100 ema and then the 200 ema on the next bar, that tells us the price action is turning bearish and we wouldn't wont to be going long would we. Price then raced down confirming our bearish bias before returning to retest the 100 ema at the second vertical red line (9:30) and giving us a great entry for a short.

Price continued down for 85 odd ticks but notice that large red bear bar looks like an exhaustion bar so mid way back up not a bad place to exit. 

 

Hope this helps. 

 

 

[Guest oilfxpro]

where are the indicators ?I was long all morning on Dax for 12900, still made money.

 

Today I knew when Eur usd was flying higher, it was going to breakdown , due to low volume trading.Which indicator tells you that?

[Guest oilfxpro]

what is your current analysis on eur usd?

[Caseynotes]

Not very grateful for the lesson are you. Then you immediately ask for another. It may surprise you but moving averages ARE indicators, if that's all you need then that's all you need. Very pleased for you that you have finally worked out how to use a volume indicator, which (to answer your last question) is just the thing to tell you if volume is low.

[Guest oilfxpro]

I look at inter market indicators like eur usd   for dax, can you post some advance charts and trades?

 

Eur usd is tested res= supp

[Guest oilfxpro]

There , 

[Caseynotes]

This will also surprise you but, believe it or not, in the past when posting I would often be subjected to schoolboy level trolling that could get very tiresome. Maybe I'll try again for the new year and see how it goes.

 

As I posted in elle's https://community.ig.com/t5/FX-and-Cryptocurrency/EUR-USD-idea/m-p/18426#M2344  thread I think this pair will wait for the big data out tomorrow before deciding where to go from here.

[Guest oilfxpro]

You make a good teacher of technical analysis. All teachers post charts that are historical set ups.

[Situation]

I think a new thread where we can post trade ideas and discuss is a good idea.

 

In Elles post you just said the news will move it. Lets see what way it moves and it'll be good if we can see some pullback to a MA and a chance to get in for a trade.

[Guest oilfxpro]

I like technical analysis videos like these

 

 

 

[Caseynotes]

Good article charting the history of technical analysis from the 18th century Osaka rice futures market onward.

 

https://www.winton.com/longer-view/reading-between-the-lines-technical-analysis-through-the-ages

 

[Guest Trader_1707]

, you as Guru of technical analysis:manwink:,

what can you tell about so-called "jumping" of the price from the middle line of Bollinger Bands (also from other two lines of BB)?

is this statement correct or perhaps there are some tips and tricks?

[Caseynotes]

  keep your voice down or you'll get oilpro started again, not sure what 'jumping' means but remember that the central line on BBands is just a simple 20 period moving average (typical default) and the outer bands are standard deviations away from that on either side, typically 2.5. The 20 ma can be seen as a bull bear boundary especially on lower time frame charts and a price touch will often initiate new orders to continue the trend. Alternatively it might be attacked with force resulting in a large bar crossing the 20 ma to try to bring about a reversal (maybe that is the 'jumping').

 

's 200 tick charts posted (very low time frame) has shown both situations well. BBands are used by a large number of traders and the lines are treated the same as support and resistance lines. If you are going to break them it will usually need to be done with force and traders that are big enough to move a market know that and will use size to do it whether it's the central line or outer bands.

 

 

[phillo]

here's something from Friday  "Just as an example"

[phillo]

that was the Dow Jones Industrial Index on a 100 tick chart

[Guest ChrisP]

Just a reminder to keep this discussion on-topic, as I've had to remove several posts that aren't in keeping with the theme of this thread. 

[Guest Trader_1707]

i think the most suitable applying of technical analysis is in several steps:

1) considering fundamental analysis;

2) "walking around" on different  timeframes from lower  to higher and analysing on which timeframe the price will change;

3) using of Dow theory (higher highs, lower lows),  price action;

4) matching previous 1,2,3 items with  technical analysis indicators.

 

 

 

 

 

[Guest oilfxpro]

My simple question is "how do you make money using technical analysis?"

 

Show me proof, so I can start using it to make money.Call 20 trades in advance, I have challenged Casey to post 20 trades in advance, he has declined so far.I would like to see, if it is profitable to use t/a and how, not in hindsight but foresight.

 

I making money by using very little technical analysis, it is only a road map, the road map does not tell you what is going to happen next.When I start using technical analysis,  trends and price action, I lose money because it does not tell me more than 30% of the time , what is going to happen next using t/a, p/a and trends.This junk science is 33 % of the time market will either do nothing or go up or go down.Even a coin toss will give better than that.

 

All mentors educators teach technical analysis,price action  by showing hindsight set ups that worked, they can never call foresight  trades, like I do.Flaming ?No I speak the truth.

 

 

[Caseynotes]

Certainly worth taking a stepwise approach, I prefer to start on the higher time frames and work down and try to get a match the sine waves (as it were) of price action on all time frames. Fundamental input I think of as a reset button and so look for new direction or increased force in the current direction. The higher highs, higher lows (or visa-versa) confirm trend even if just short term and provide the jump in/out points in price moves between the periods of consolidation. The auction market does not change and so the same principles apply now as they did hundreds of years ago.  

[Caseynotes]

Oh and he's off again, just baiting and then will come the flaming, same as usual. You keep pretending your now multitude 'set in advance systems' can predict the market, they can't. I follow the chart in real time and decide to enter or not on a minute by minute basis, predictions have nothing to do with it. Besides, you have told us all you haven't made money even after 10 years of trying (except of course on your £10 million demo account)

 

The key of course is risk management, using TA to identify an entry that is as close as possible to the point that will signal immediately that you are either right or wrong such as when price turns at a recognised level so that the obvious stop level is close (therefore low risk). So then, even with your made up random 33% you can still be profitable.   

[Guest Trader_1707]

Of course, technical analysis does not imply the creation of  exact signal to enter the market. Technical analysis, Dow Theory, price action,… etc are just auxiliary tools for market analysis. There were times, when I used only step by step multiple time frame analysis without any indicators - for example, by analyzing the higher time frames, I see that now it’s not a good time to enter the market, but to wait 2 or 3 hours, to check the behavior of price and only after to make a deal - is the best variant.

[Guest oilfxpro]

In theory it is all fine , but tight stops is good for forex bucket shops, in reality it does not work.Most tight stops get taken out, as per image here. This tight stops is good for bucket shops in forex, maybe all this t/a , p/a and trends  was started by brokerages and bucket shops, if it worked, they would be employing their own staff to trade and make money.They don't , FXCM  tried it , it lost money for clients.There is a higher probability of tight stops getting hit, than much wider stops of 1 * atr. 

 

George Soros real trader did not use t/a, he used fundamental analysis.Warren buffet, another successful person looked at fundamentals, My profitable trades are looking at buy low sell high, if you buy high using p/a , t/a and trends, you are going to lose money buying high and selling lower, as I just did this tight stop guru advice.

 

Oil rose not because of t/a ,which is nonsense, it rose due to fundamentals.Cold weather supply/demand and dollar weakness.

 

 

 

Nobody baiting and flaming, somebody is giving you a good discussion, that all this t/a beliefs you spread .

[Guest Trader_1707]

buy low sell high

Definitly, there's something in it.

may be this will better work out on flat market? 

[Caseynotes]

Yes , even the last candle is just a lagging indicator, best to stand back and see, maybe that level (or MA or trend or channel line) that was recognised and significant in the past will be so in the future, lets see what price does when it gets there. History wont always repeat itself but it often does which is why it is also worth keeping an eye out for patterns.

[Caseynotes]

oilpro, Soros, hedge funds, et al do look at charts (therefore TA) but are big enough not to care about the daily noise (we aren't) and yes they are also looking at FA and QA (quantitative analysis) to base there decisions on. 

 

There are many prop firms employing many traders nearly all of whom use some type of TA. They are actual trading firms not analysis firms. 

 

In the chart below where would you place your stop on entry and how would you trail it?

The entry point doesn't actually matter does it.

When you see a chart blatantly recognising a dynamic or static level that is precisely where the stop should be because if the level is breached the premise for entering the trade is gone.