Hi Wayne,
"I just want to play the highest probabilities here. Since trends have momentum behind them, if a trend is in place (various durations of course) as meausured by zig zag, a moving average, dahl or another method that the probability of the trend continuing in the current direction is greater than the trend reversing at any snapshot in time."
I agree completely, I think. <ggg>
The indicators that you list are mostly intermediate term so the trend that they measure cannot reverse at any snapshot in time. What I mean is they are not giving you a measurement of todays price exactly. It is impossible, or at least very rare, for them to reverse in a day or two. They can and do reverse once the period that they are measuring has reversed, but by that time you can be and often are way down from the high and possibly your entry. The point, I think you will agree is that it is important to use the right indicator for the trend that you are interested in. So you probably wouldn't use Dahl to trade in the couple of days time frame.
I'm not an expert by any means but Dow theory basically has three trends:
Primary: Lasting 1 year or more with changes of 20% or better in either direction. These have significance.
Secondary: Lasting 4 to 13 weeks. These make up the primary trends and often have 3 to 5 slopes. These have significance. Kinda like long term Elliot waves IMO. Almost tried to do a report on this but didn't.
Minor trends: Lasting days to 3 weeks. "The Dow Theory holds that, since stock prices over the short term are subject to some degree of manipulation (Primary and Secondary trends are not), Minor trends are unimportant and can be misleading." Technical Analysis from A to Z pg.117.
I believe your ma of Zig Zag, moving averages, Dahl, and others have good abilities to predict the future continuation of both primary and secondary trends. I personally havn't had alot of success with predicting very short term price movements with indicators especially the longer term ones like Dahl. I completely agree that it is more likely for the trend to continue than to reverse when looking at the appropriate time frame.
Sidenote:I have had some luck playing retracements and breakouts from primary trends, secondary trends, and S/R. It's very nerve racking, I'm not rich, and I gotta keep shoes on my sons' feet so I don't do it much. Occasionally my gut forces me to do it when I just know I can't loose! <ggg>
David
I'm very new to TA and many here trade the minor trends. I don't, it's just not me. I'm open to education but I got a hard head. I'm sure that this post will get some responses from others than just you but thats how we learn. right? |
