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Strategies & Market Trends : Technical Analysis - Beginners -- Ignore unavailable to you. Want to Upgrade?

To: Ronald P. Margraf Sr. who wrote (11667)	3/10/2001 7:16:48 AM
From: David N. Jones	Read Replies (1) \| Respond to of 12039

Hello Ron, "I have 2 sons that traded by the percentages, both to the upside an the downside, only to stop themselves out of money. All I'm saying is that the T/As afford you the opportunity to make choices." All TA is history; how we interpret that history is what determines our success. My aim is to be right more times than I am wrong. Every time I place a trade I am expecting the trade to move in my favour as quickly as possible. The stop is my unemotional protection. Regardless of whether I was wrong by a minute or a week if the trade moves against me then I am wrong and out with a predetermined loss. When my TA is right 100% of the time I will stop worrying about minimizing losses. With TA there is always a new train leaving the platform. David

To: Ronald P. Margraf Sr. who wrote (11667)	3/10/2001 11:32:58 AM
From: Dick Brown	Read Replies (2) \| Respond to of 12039

I look at everything as %.. I didn't start trading yesterday.. I use it to determine my 'uncle point'.. I don't use it for exit as I cannot predict the future(I'll take whatever I get<g>) so patterns of lower lows and lower highs is one way to get me out.. If I start looking at actual $$ then it gets too emotional for me.. TA should diminish( ideally extinguish) emotion and allows you to trade in a structure.. BTW I don't trade penny stocks nor do I have a desire to.. Full agreement on the KISS principle.. I try to trade where the smallest movement will reveal that I am on the wrong side of the trade ala Wyckoff..BTW that isn't in the middle of a trading range for example<g>.

To: Ronald P. Margraf Sr. who wrote (11667)	3/10/2001 11:38:42 AM
From: Michael Watkins	Read Replies (3) \| Respond to of 12039

Morning Ron, This could be an interesting discussion - thanks for starting it up. I have been in positions that have moved 20-30% to the downside shortly after I have taken them only to have them move 50% to the upside in a few days. If I was to sell every time a stock moved to the downside, I would eventually stop myself out of money where I couldn't buy anything without putting in new money. Based on what I've been reading from your comments, can the following observations be made: - you mentioned that you gave back a large chunk of profits last year, so I'm assuming that your strategy (your 'program') works better in a bullish market - you primarily trade on the long side? - you are looking for big moves in most every position? I have 2 sons that traded by the percentages, both to the upside an the downside, only to stop themselves out of money. Stops in themselves are not a complete answer, risk management involves sizing a position based on the risk presented and your how large the position is as compared to your available trading capital. New traders very frequently "overbet". New traders also tend to believe they need to be "right" much more often than not, in order to be profitable. This sets up a dangerous bias in a trader, since it means they are bound to allow for larger losses - because they have a bias that they are right more often than not. This bias is going to be particularly deadly when a major trend changes - such as the tech market direction changing last spring. Reading through the threads on SI back then we see a lot of moaning about how "TA doesn't work any more". Well since technical analysis is all about measurement, and since measurement doesn't change - a cup of sugar is a cup of sugar today, yesterday and tomorrow - then its not technical analysis that has stopped working, it was the traders use of the tools that suddenly became inappropriate given the change in trend in the market. Bias within these traders kept them continually trading their old strategies - mostly on the long side for the vast majority of 'traders' - because their methods provided no clear method of detecting the change of trend in the market or their stocks. Oops, I'm getting off topic here a bit. I have been in positions that have moved 20-30% to the downside shortly after I have taken them only to have them move 50% to the upside in a few days. If I was to sell every time a stock moved to the downside, I would eventually stop myself out of money Aside from perhaps evaluating how you allocate funds and determine risk, let me put forward another potential tool for your arsenal. I'm going to assume you go long more than short but the technique works well irrespective. Just reverse it ;) 1. Your analysis suggests that its time to enter a position 2. You place fairly tight stops below 3. If it moves up from there, terrific. Move your stops to break even as quickly as you can; how you then manage your profit is a subject for much more discussion 4. If it moves down and stops you out, that also is terrific. By placing a very tight stop you have limited your loss and can live to fight another day. When you are stopped out you need to evaluate your analysis - was it flawed? Or is it noise? Sometimes its difficult to tell, and if we can't tell, then IMO its best not to be in the position. 5. If your review of your analysis suggests that the stock is still worthy of trading long, then consider placing buy stops at some appropriate level just above the down bars. Thus should the move against you be a temporary 'dnoise' move, you will be stopped back into a position when it moves up. That last point is most important - you are allowing the stock to prove to you that it wants to go up. Once stopped in, you can place a sell stop just below the bar that took you into the trade (i.e. the prior down bar's low). I agree with you an Dick about MM but so is IM. If your IM is good then your MM will follow.;-)))))))) What's "IM" ?