Lawrence:
<<I do have one comment/question for you, 'tho. A few posts back you mentioned your confidence in TA to trade, but not for the long term. But you mentioned using a 90 day period for the Moneyflow. Not sarcasm or an attack here, but could you explain?>>
You misquote me somewhat. Here's a brief treatise on Casey's Approach to TA, Part I.<g>
First, I stand by all my earlier TA posts with no change in wording.
My premise is that, imo, TA is useful for short term trading, but not for long term forecasting of price action. I patently disbelieve in TA pattern analysis for predicting price action. By this I mean using the occurrence of 'head and shoulders top', 'double bottom', 'triple bottom', 'cup and saucer' etc. as a basis for taking a postion. For every case where someone puts forward an example where these price patterns have confirmed the TA prescription for ensuing price action, I can find you many, many more that dispute it. Further, some people see patterns where others don't, a lot this stuff is in the `eye of the beholder'. From this you can draw the inference that I think Elliot Wave and like theories are pure nonsense. All just imo, of course.<g>
Now, what I also said is that I have discovered a price - volume indicator that for me, has a predictive accuracy of ~90%. I also agreed with Gary that this pattern gives no accurate timing for the predictive occurrence. I also pointed out to Gary that it requires a few trading days to form as a pattern (~10+). For these two reasons, this is not what I consider a short term predictive trading tool such as stochastics and other momentum oscillators.
So, when I discover the bullish convergence forming, and I decide to try to trade it, I do it this way: (I never short, so the only pattern that interests me is the price-moneyflow bullish convergence. Also, I have experimented with put and call options, but it's too costly because of the spreads, so I stick with one action - going long the stock). I place an 'on stop buy with limit' order at a price point just above a key resistance level on a good until 'x' basis. If the price keeps declining, I may adjust my on stop buy downwards. If the bullish convergence dissipates, I remove the order. If I get my expected price pop, then I'm long the stock. If the volume on the price pop is low or only in line with the daily average, I sell immediately even if there is a small loss or trivial gain. If the volume is large, I put in a sell order just under the next key resistance level. I will typically exit the order (or be taken out) within a couple to five days - on some paper trades, I would have held longer. I haven't had one yet, but if the stock price really started to run, then I would place an `on stop sell' - with no limit, (so that it will become a `sell at the market'), just below the most recent support level (if there is one) and then tighten this up or sell if the price actions starts to level and volume falls. I never put the buy or sell on a round amount. It is always an odd price i.e. $3.01 for a buy, if I judge a resistance level of $2.90 - 3.00 that has to be broken through; say $2.99 for a sell if I judge $3.00+ as a support level. This is because most buy and sell stops, in fact most buy and sell orders are placed at the rounded prices.
Now in one of my earlier posts, I gave a url where one could clearly see the bullish convergence for TTRIF. I spotted it in early March. I didn't trade it for three reasons, 1. TTRIF is on the Naz -can't put in on stop orders; 2. by that time I already owned stock, so, I used it to average down; 3. the problem with this is, the whole lead-up and trade has to be monitored very closely. When you have a full time job, it's difficult to monitor and execute properly. That's why I said to Gary that this was something that I would be doing when I retire to supplement my income in my geriatric years.<g> BTW, the theoretical TTRIF trade would not have been much better than a wash anyway - I would have been in at a little over 1 « and stopped out at a little above this within three trading days, unless I would have been more aggressive and were able to monitor the whole lead-up and trade in real time.
I'll post Part II of Casey's Approach to TA separately. It deals with the understanding of the phenomenon of `support and resistance', which is critical to successful trading, imo. I have to dig it out from an earlier post I made on another thread a few months ago.
Oh, btw, please message me an address where I can send the bill.<g>
Casey |
