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

To: TraderAlan who wrote (9067)	6/20/2000 6:18:00 PM
From: Pierre Borczuk	Read Replies (1) \| Respond to of 18137

TA, everyone in "daytrading Fundamentals" gets a free signed copy right? PB

To: TraderAlan who wrote (9067)	6/20/2000 6:43:00 PM
From: booters	Respond to of 18137

Alan <I think the Net forced a major change on TA. It brought it into the common trading knowledge and altered the crowd chemistry> Very interesting. I was wondering why the old stand by patterns have not worked as well as they did 18 years ago when I learned them. I still think most of it is just me being rusty after all these years but your comments make me feel alittle better. I guess now I'll have to read your book and learn some new stuff. boots

To: TraderAlan who wrote (9067)	6/20/2000 8:45:00 PM
From: WaveSeeker	Read Replies (1) \| Respond to of 18137

Alan, A few observations based exactly on the phenomena you are describing: 1. The increase in the number of swing shakeouts. Classic case from the other day. GENE has a 1-2-3-4 pullback in a strong uptrend, closes at 26 1/8 after breaking the previous day's high. The next day (in the absence of news), it gaps down 1 1/4 points, blows out the swing stops near the low of the day, then proceeds to swing to new intermediate highs. 2. The improved performance of countertrend systems. For example, look for a high-cap tech stock (or any sector index to eliminate individual stock risk) ending the week on a low. The following week, buy the sector / stock on a two standard deviation break of the previous low. 3. Anticipation trading - a way to front run patterns generated by real-time scanning systems, i.e., get in before the breakout crowd. WS

To: TraderAlan who wrote (9067)	6/21/2000 9:11:00 AM
From: Robert Graham	Respond to of 18137

I find price patterns cannot to be taken as "black and white", which many want to do with their recipe approach to trading chart patterns. The way the market is trading has to be considered including the price action seen on the chart which as an end result can significantly end up altering the pattern from what is considered "standard" to still have it trigger and resolve. Or perhaps the pattern will not end up resolving at all. And if using multiple time frames, I find the market will tend to "operate" in one or more ranges of time frames where the price action makes sense and the patterns that show up will tend to work, while in other time frames the market does not "operate" in, the patterns there will not work or partially follow through before reversing and running in the other direction perhaps even more strongly. The larger time frames tend to be like the "inoperative" intraday time frames. And even when they do work, time in those time frames provides much "space" created by the available time for many detours that price can take before actually resolving the pattern. This can very easily whipsaw traders out of their position at a loss or a much smaller profit compared to the profit potential of the trade that ends up being realized. One explanation I heard about this phenomenon relates to when a trend line becomes apparent on a longer time frame chart. Here the market has allot of time to consider and prepare for the "inevitable" outcome of price coming into contact with and crossing the trend line. This is also similar to the way many traders look at the larger H&S patterns with neck lines. This is when the market can whipsaw many out of their trades when price crosses the trend line (or neck line), the crossing of price being expected by much of the market by the time it happens. This is apparently one reason why smaller patterns on the chart ten to work better. And even when larger patterns can trigger, it pays to enter on a smaller setup for timing purposes. Or at least wait for the initial whipsaw to take place to clear the resting stops, as some traders do. Otherwise the trader needs to allow for a much more significant stop loss on their trade. In one interesting situation, I have seen the SPOO go past the trend line enough to provide an opportunity for traders to commit to a position before it ended up reversing. I find this is not an uncommon event with the SPOO. Many traders do indeed like to draw theeir trend lines whenever they can on their chart. Here I have seen price stop at a peculiar point PAST the trend line almost as if it was saying something like "YOO HOO! HEY STUPID! LOOK OVER HERE!". Then it promptly reversed and flew in the other direction trapping many traders on the wrong side of the trade. So when price behaves in this way, hesitating at a peculiar point past the trend line for what I consider a notable period of time, it is telling me it is going to reverse. This has saved me from some losses in the past when trading a setup coincided with the breakout of a trendline. Now I watch those trendlines carefully for this and other reasons. The downside to this approach is when this happens in slower markets helping to undermine my ability to judge this condition. The two common characteristics between how price can behave with trendlines in larger time frames and how price can hesitate just outside of the trendline, which can happen successfully in the smaller time frames, is time itself. The market needs reassurance. The market needs to be right. Time when it shows up in this way on the chart allows more market participants to be fooled into placing a trade on what turns out to be the wrong side. Money is made by smarter traders when price moves in the other direction where those traders who have already put on positions have to not only cover their position but reverse. This doubles the volume which can also allow for a nice move in the direction against their original trade. Just some thoughts. Bob Graham