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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: David Lind who wrote (2587)	8/9/1999 5:30:00 PM
From: Richard Estes	Respond to of 18137

"If you are a new trader and need assurances that technical indicators will ALWAYS protect you, then you are looking in the wrong direction, because they will not" Each person must have an emergency get-out point before entering any trade, it might be a $ or % amount. It might be as simple as a 89 EMA on a 5 min chart. If you say that your TA read might be wrong, I agree. But a total system/plan always must have a safety valve. You either use TA or the tingle in the seat of your pants. Which one is more reliable? last weekend, there was discussion here on there being many forms of daytrading. a 4-5 hour trade is different than a 4-5 min one. As you lower the time of trade or the target sought you begin to trade the noise or random events. None of the classic indicators trade noise. The "random walk" is flawed in design and execution. Pattern trading has never tested well. There is always a triangle or a H&S around every corner but a big correction or rally can't get started without passing through some moving average.

To: David Lind who wrote (2587)	8/9/1999 5:38:00 PM
From: Eric P	Respond to of 18137

David: Regarding bahasurf's question: Is anyone aware of any statistical analysis of trade setups and their probabilities of follow You responded: As just a single example, you can have the perfect setups on your charts, and if the underlying market falls away from you, you may make a trade in the wrong direction. Happens all the time. Was the computer programmed to appreciate the overall dynamics of the market and the current economic situation? Did it factor in the morning reports of fair value, and the probability of an interest rate hike in two weeks? Doubtful! That is why trading will always be a human endeavor. I beg to differ. Although the exact probabilities of success for various trade setup depend on precisely how that setup is defined, => it is possible to determine the probability of success for each trade setup. It is merely a matter of rigidly defining the particular trading system, then rigidly following the trading system and documenting the results. I have personally traded a number of trading systems in an entirely automated fashion. I do not review or approve a single trade or order. Some of these systems have traded for nearly a year, with well over a thousand trades completed. With this high number of trades and long time frame being studied, I feel very confident in the statistical probabilities identified (and wealth created) by these systems. Although I agree that daytrading is typically a "human endeavor", I can personally state with extreme confidence that automation is critical to my success. I believe that in 2-5 years, most successful daytraders will be relying on automation in some form. It's the future, and it's here to stay. Good luck, -Eric

To: David Lind who wrote (2587)	8/9/1999 5:49:00 PM
From: TraderAlan	Read Replies (1) \| Respond to of 18137

David, Every standard pattern is well-known these days and routinely violated and reversed (just look at YHOO last week) just to shake out those who jump on them. Traders these days relying on patterns (myself included) ALWAYS have to factor these violations into the decision making process. For me, it means standing aside on almost all common pattern breakouts (well some I don't <g>) and waiting for the fade to show up. The good thing is that a stock usually will eventually move in the direction predicted by the pattern. But the TRADE isn't "at the neckline" or "at the apex". It's jumping in when you see the shakeout has been completed. I have this trade called the 3:30 F Y low. It's where a stock stands a classic breakout point at 3pm, plays with it for 15-20 min, pops a tick or two into nirvana and pulls back and THEN drops like a rock into 3:30pm. Find the right support/retracement and buy the stock (in a OK market) and it usually finds it's way back through nirvana by closing. The bottom line is that there aren't any free rides in today's markets but serious traders (technical, LII and fundamentalists) already know that and are willing to take the game on its own terms. For every market edge that is no longer reliable, another one has just been created that will make you a lot of $$$. Alan

To: David Lind who wrote (2587)	8/10/1999 2:12:00 AM
From: bajasurf	Read Replies (2) \| Respond to of 18137

Probabilities, probabilities, probabilities, thats all that matters. The only one on this thread that has admitted that he knows the probabilities of his trades is Eric P. My point of bringing up "Random Walk Down Wall Streets" assertion that TA does not improve your odds is not that I want an indicator that ALWAYS works. I just want to know if anyone besides Eric has back tested the results of their set ups. Even trading the fade to a classic setup as Trader Alan likes to do is a "setup" All TA enthusiasts are looking at the same market action and every one is interpreting the results and deciding their course of action. Investors Business Daily promotes buying stocks that are breaking out to new highs on volume. Then you have others on the sidelines saying "aha, I'll short the inevitable fade back into conjestion. Obviously, each trader was looking at their impending trade through different perceptions. Some stocks breaking out on volume will continue higher. Some will fade. My point is, no matter what the trading period any of us are using, we are looking at something that we believe offers a clue which direction a stock is going to be moving in the next minute, hour, day or week. If we say that there are too many variables to evaluate then we are admitting that our ultimate decision is a guess. If we say that "YES INDEED, THERE ARE INDICATORS THAT I RELY ON, all I am saying is we should attempt to KNOW the PROBABILITIES inherent in them! All that you may know is "that its worked for me" and that may be enough for you. Anyway, there has been some good discussion on the point.