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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (22444)	3/25/2000 1:13:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 42787

A break or failure of an uptrend as you mentioned does not necessarily mean the end of a longer term move. This frequently means consolidation, which can be in the form of a pullback. So when I see price action negating a direction, I usually comment in this carefully worded way: "Looks like price will not be moving up much further for the time being. It will either consolidate or move down from here.". Now this move down in my time frame may be profitable if there is a setup to provide me an entry that is worth taking to the short side. But in the longer time frame, it may just be a pullback, a blip in the current trend. As a further note, I find traders preoccupation with trend overstated unless their approach specifically requires a trend to be in-place. And sometimes they do not understand what underlies the success of the setups they take in this regard. I find that I can carefully trade markets against the trend as long as the trend is not what I consider very strong. This is good for at least a couple point or more scalp to the downside. I also make my best trades to the short side. They resolve quickly. But timing has to be very good. However, price before it sells off tends to give me signals that I can respond to in this way. One caveat with this approach is when price makes a very extended move up. The topping action may take up some time with multiple false starts kind of like a rounding top before a short setup will resolve once triggered. Of course much of this has its application for a market in a downtrend. A market like the SPOOs is in congestion most of the time, and this is true for many markets. This is one observation very important to understand. Even when it is making headway either up or down, it still can be trading in a form of congestion with overlapping price patterns and individual price moves that do not follow through as well as they would in a more strongly running market. And what is trending in one time frame is in congestion in another. This is another important observation that allows me to use Stochs in larger time frames to determine possible pullback points of a running market in a smaller time frame. This concept of congestion, how it occurs in the market that is being traded, and it early detection, is one important area that many traders including experienced ones miss out on. This is where the trader is trading setups that have been working for them and all of the sudden they come across a series of losses because they are being whipsawed out on their trades. They failed to notice that they were trading in a congested market, and often signs that the market was moving into congestion were there some time before they made their trades. Only after they make multiple losing trades out of frustration do they then realize the market is not working for them. Of course this has also happened to me. One solution for this problem and others including there being a psychological aspect to the losing trades is when I encounter two losing trades in a row, I then stop, sit back, and reevaluate. The market may have changes how it is trading in there being a congestion now, or I may have lost on a stupid trade near the beginning of the day that I am trying to make up for. This is what makes the essential perspective difficult to retain that needs to be regains, for I find the market is very good at enticing the trader into losing their perspective and pursue losing trades. This is particularly true in the shorter time frames. I also have a loss limit for the day in terms of points, not a dollar amount, which is very important. Just some thoughts. I want to be sure to add that much of what I have said with regards to the "other" traders also has applied to me through my learning curve. I am no one special in this regard. :-) Bob Graham PS: Thanks for the acknowledgement on the challanges provided by trading the SPOOs. I am finding that it makes my experience with stocks and options a picnic in comparison, along with what the day trading component adds to my experience.