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Strategies & Market Trends : Strictly Buy and Sell Set Ups -- Ignore unavailable to you. Want to Upgrade?

To: hubris33 who wrote (8561)	3/24/2006 7:12:04 PM
From: chowder	Read Replies (5) \| Respond to of 13449

>>> After all if one reads Malkiel one would find this: "Technical strategies are usually amusing, often confusing, but of no real value." There is a whole chapter where he debunks the 'myth' of using TA to trade. That from a Princeton PhD with reams of data to support it. <<< I'm glad you mentioned that. It brings up, what I think is an important point. I've got the book and read it. Malkiel like a lot of people, even those who use TA, are focused on the wrong technical data. They are more concerned with a 20 day simple moving average vs a 21 day exponential moving average. They look for moving average crossovers. They look for Fibonacci lines and some use Fibonacci twice, one for the long term trend and then overlay it to the short term trend and look for places where the two will meet. Put enough lines on a chart, and price is bound to hit one of them, hence providing us with false data on price movement. It isn't the lines we should be focusing on. The lines just confirm for me the direction of the trend. The direction of the trend determines my set ups. If the trend is up, 90% of the time I'm looking for an opportunity to go long. If the trend is down, 90% of the time I'm looking for an opportunity to go short. If the trend is sideways, I do nothing. Someone who reads this message board, subscribed to TCNet and PM'd me, asking if I would share my chart templates with him. When he saw my chart set ups, he was surprised at how simple and clean they were of most of the squiggles and lines that most people use. A good technician focuses on price and who is driving it. Bulls or bears, professional money or retail money. It don't get no easier than that. Malkiel had an agenda. His focus was on pushing the Vanguard funds. If one has an agenda, they can find the data to support their view. But here's the point, it doesn't matter what one uses to enter the trade. It isn't the entry that will determine their success or failure, it's the exit. The greatest trick Wall Street has pulled on the retail market is that it has us focusing on the entry while all of the time knowing it's position sizing and the exit that we should focus on. Where do we cut out losses? Where do we take profits and how much? What is the ideal position size and how do we determine that? Position sizing and money management is the key to success. I use TA to time the entry, not to buy it cheap. I'm looking to catch the early stage of a Stage 2 uptrend, regardless of the cost. It's price movement I'm looking for, not bottom dollar. Finding opportunities where price is getting ready to move is where TA has it's value. You can't determine price movement without it. When we buy a stock, each of us is an employer. We are hiring that stock to do a job. The way we manage that employee will determine if we get the most out that employee. If the employee is lazy and unproductive, how much do you put up with before firing that employee and replace them with someone else? How do you mange that employee if they are very productive? Do you micro manage and take away their initiative, or do you give them room to do their job? It's how we manage our positions, after the entry, that determines our success or failure. dabum