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Breakouts are seen when prices trade above a significant resistance level or below a significant support level.Price movements of these types are generally used to determine whether or not a trend is reversing or in continuation.Breakout traders usually buy an asset when resistance levels are broken, while sell positions are usually triggered when prices drop below support.

Weekly chart is to use to predict long term view of an instrument, as it shows more historic price movement than of same period day chart, Analyst view to see weekly chart can vary as the weekly line chart shows only closing price, bar chart shows opening and closing while candlestick chart will present open, high, low and close for the week.

An Automated Trader is generally focused on trends in technical analysis and sets trade entries to meet predetermined criteria. This type of trading carries with it specific types of risk, so traders looking to automate their processes should take position sizes into consideration so that excessive risk exporure is not seen.

Bar charts allow traders to see some parts of price behavior while isolating others. This enables technical analysis to take a more objective view of price activity and to not be distracted by external “noise.” Bar charts are often used by Elliott Wave traders rather than candlesticks because they feel it allows them to watch movements in the larger trend activity with more clarity.

5 minute charts are one of the most common time frames used by technical analysts. These charts can vary in appearance, depending on which type of chart is used (such as a bar chart of candlestick chart) but the essential price activity is the same, and this is also true for the highs and lows that are registered during each one five minute period. In some cases, these shorter term charts are used to identify reversal points in longer term time frames, such as hourlies or dailies.

One Hour charts are one of the most common time frames used by technical analysts. These charts can vary in appearance, depending on which type of chart is used (such as a bar chart of candlestick chart) but the essential price activity is the same, and this is also true for the highs and lows that are registered during each one hour period.

A moving average crossover is a simple variation of the moving average indicator. It is also a trend following indicator (not to mention one of the most famous). It does not predict price but it shows price trends. This indicator uses two (or more) moving averages, a slower moving average and a faster moving average. The faster moving average is a short term moving average. It may be 5, 10 or 25 day period while the slower moving average is medium or long term moving average. This moving average involves 50, 100 or 200 day period. A short term moving average is "faster" because it only considers prices over short period of time and is thus more reactive to daily price changes. On the other hand, a long term moving average is deemed "slower" as it encapsulates prices over a longer period and is more lethargic. However, it tends to smoothen out price noises which are often reflected in short term moving averages. A moving average, as a line by itself, is often overlaid in price charts to indicate price trends. A crossover occurs when a faster moving average (i.e. a shorter period moving average) crosses a slower moving average (i.e. a longer period moving average). In other words, this is when the shorter period moving average line crosses a longer period moving average line. This meeting point is important as it gives us an idea of the optimum time to either enter (buy) or exit (sell) the market. In this article, we'll go into a semi-thorough analysis of the buy signal only. The image below gives us a picture of how a buy signal is triggered. A buy signal is triggered when the shorter moving average (red line) rises above the longer moving average (orange line). Figure 1 shows how moving average crossover works as a buy indicator. So why is it advantageous to consider two moving averages instead of one? The common dilemma of investors is in trying to make a moving average responsive to changes in trend while not allowing it to be so sensitive that it causes a trader to prematurely enter or exit a position. This is addressed by using the moving average crossover technical indicator. This indicator stands in the middle ground. It combines the shorter period moving average's price sensitivity and the longer period moving average's sense of reality, thus giving the investor a fairly accurate appreciation of price trends. The table 1 shows moving average crossover indicators grouped according to the number of days the crossover is sustained. Each indicator is given the following parameters: c=short term close price, moving average short period, w=weighted moving average, c=long term close price, moving average long period, w=weighted moving average, days crossover is sustained; couched inside the parenthesis. This article will explore the reliability of the moving average crossover indicator using the results of a backtested simulation. The test used close prices of 7072 US stocks from 4th January 1982 to 31st December 2007. Prices are in US Dollars (USD). The test reviews six (6) statistics: Profit Per Year, Simulated Portfolio Gain (in US Dollars), Median Signals Per Year, Median Profit %, Success Ratio and Maximum Drawdown Loss. Sell signal is placed at 15 % stop loss (after a 15% fall from any stock price). Profitability See attached worksheet The purpose of any good study is to determine which indicator could make a good profit. We did this by using three (3) statistics: Profit per Year, Simulated Portfolio Gain and Median Signals per Year. The Profit per Year column shows the average profit of simulated stock investment per year. This simply shows the return to investor of the money used to purchase the stock at the time of entry (simulation starting at $100k and investing 1% cash-at-hand for every buy). The next column shows the Simulated Portfolio Gain of each entire backtest over all stocks at the end of the historic data period. These two statistics measure the return of money or growth of investment as shown by increase in price of stock. In other words, these statistics tell us which technical indicator has historically yielded the highest possible profit for our investment. We are therefore interested with the indicator with the highest profit or portfolio gain. The third column Median Signals per Year is quite different from the two statistics. It does not give us direct measure of profit but gives us an idea as to how often we get buy signals triggered. If the value is too low, we wouldn't be able to trade, as there'd be nothing to buy. If on the other hand, the value is too high, it could also be hard to manage, as it would be impossible to buy them all as an individual. Here we are interested with the indicator having an average to high value. In terms of obtaining profit, two indicators (in green highlight) performed ahead of the pack (movx(c,5,w,c,50,w,1) and movx(c,10,w,c,50,w,1). These two are highly profitable technical indicators. Both indicators show an average of 12% Profit per Year compared to the others showing only 8-11% [1]. Also, we can see that both indicators are reactive. They triggered the buy signal 7000-8000 times a year. This means that stock trading is possible and manageable. This is even recommended for short-term trading as both indicators could easily alert the investor of an uptrend. However, we have also identified three indicators (highlighted in rose) which did not perform well in terms of profitability movx(c,10,w,c,100,w,3), movx(c,10,w,c,150,w,3) and movx(c,25,w,c,200,w,5)) [2]. These indicators, while having an average yearly profit, have one of the lowest, if not the lowest portfolio gains among all. We are of course not interested in indicators which do not yield a high portfolio gain for the investment. On a deeper note, it seems that group 1 in Table 1 is the group with highly profitable indicators compared to other groups. This group provides the highest gain, yearly profit and above average median signals per year compared to the last two groups. The best indicators for each of the statistic belong to such group. Thus, if we are looking for a profitable indicator, we should always look at the indicator with the shorter moving average (group 1 in Table 1). It may be best to show you the increase in portfolio one may expect from highly profitable indicators we have recommended so far. The image shows portfolio growth simulated using indicator movx(c,10,w,c,50,w,1) (one of the best performing indicator in terms of profitability) with 15% stop loss as buy signal for US stocks from 1983 to 2007. You can see that in a matter of 24 years, the stock value went from 94k USD to 700k USD or almost 7 times its initial value. This is a reasonable return for the investment. Risk Management See attached worksheet Table 2 shows moving average crossover indicators' performance in terms of risk management statistics It is of such importance for an investor to consider risk in arriving at a financial decision. Investment entails gain or loss depending on the reliability of one's technique and experience. This section will help the investor ascertain which indicators provide the most and least win-to-loss ratio as well as the "worst case scenario" in terms of possible losses. A correct appreciation therefore of indicator performance could save an investor from undertaking ventures which may not return profit as much as expected. If we are looking at risks, we should be interested first in measuring the likelihood of gain versus the likelihood of loss. This is shown by statistic Success Ratio (first column in Table 3). Technically, success here is where the stock price at the 15% stop loss sell point was above the buy price, and loss when the stop loss sell point was below the buy price. After determining the indicator which could provide more gain than loss, we also need to look at largest loss we can expect if we take the investment. This is maximum drawdown loss. It is simply the value of the portfolio after the largest string of losses assuming the investor acts according to the signals triggered. In other words, we need the indicator with a high success ratio because it is likely to gain which means safe investment for us. On the other hand, we are interested in the indicator with the lowest drawdown loss. For easy reference, the least risky indicators are in green (movx(c,25,w,c,200,w,1), movx(c,25,w,c,200,w,3,0) and movx(c,25,w,c,200,w,5)), while the risky indicators are in red. The least risky indicators gave us the one of the highest success ratios and the lowest drawdown losses. By using these indicators, you can expect a more steady return of profit compared to all other indicators in the list. The risky indicators, on the other hand, are those which gave lower success ratios and highest drawdown losses. These risky indicators could result to quite unstable return and high losses. Also, you will immediately notice how high the drawdown loss values are. Massive drawdowns like these suggest a risky market over a long historic period when investments are likely to lose a large portion of investment at some stage. This means that, using a moving average crossover alone is probably unwise. Some knowledge of market conditions would be quite helpful here. The image below shows yearly returns of US stocks from year 1983 to 2007 using indicator movx(c,10,w,c,50,w,1) with 15% stop loss as buy signal. The red line indicates the point where there is neither profit nor loss. Notice how the green line falls below the horizontal red line as much as it rises above it? This connotes that the stocks almost always have no returns as much as they profit. This suggests that there is just as much potential for wins as for losses during that period. Recommendations The moving average crossover is one of the most well-known technical analysis tools. It gives us an appreciation of the price direction of a stock. Knowing how and when to utilize an indicator such as the moving average crossover and what specific indicator to use fit for a particular trading purpose can delineate the line between potential gain or loss. This article, I hope, goes into some of the statistics of real-world performance of the moving average crossover. We have come to know which indicators suit what aspect and which indicators will not be much of a help. Thus to summarise we'll rate indicators according to overall performance. Table 3 below shows us which indicators are best for short-term, medium-term or long-term trading highlighted in green. From these simulations, I'd recommend indicator movx(c,10,w,c,50,w,1) for short-term trading. It performed ahead of the pack when it comes to profit and portfolio gain yet maintained an average success ratio and relatively high median signals per year value. It suits short term trading because it triggers buy signal more often and earlier. It reacts easily to price fluctuations. One downside is its high drawdown loss value but this only makes sense because the indicator only covers a very short period of time when there is yet no strong trend forming. On the other hand, two indicators proved useful to medium-term trading (movx(c,25,w,c,100,w,3) and movx(c,25,w,c,100,w,5)). These two performed remarkably in profitability statistics but still show one of the highest success ratios and one of the lowest drawdown loss values. As for long-term trading, one indicator seem to outperform the other long-term indicators in terms of both profit and risk (movx(c,25,w,c,150,w,5)). This indicator gave one of the lowest drawdown values we seek for in terms of long-term trading. Also, it has 42.94% win-to-loss ratio; one of the highest likelihood of gain compared to other indicators in the list. Overall, these four indicators topped the others. See attached worksheet MA Crossover.xls

The basic premise has always been that volume (or money flow) may be a leading indicator to price action. This indicator is a variant of the more commonly used indicator On Balance Volume. They are both used to confirm price changes by looking at whether there is more volume on buying or selling sessions.

Richard Wyckoff was a pioneer of technical analysis. While Dow contributed the theory that price moves in a series of trends and reactions, and Schabacker classified those movements into chart patterns, developed gap theory, and stressed the role of trader behavior in the development of patterns and support/resistance, Wyckoff contributed the study of the relationship between volume and price movement to detect imbalances between supply and demand, which in turn provided clues to direction and potential turning points. By also studying the dynamics of consolidations or horizontal movements, he was able to offer a complete market cycle of accumulation, mark-up, distribution, and mark-down, which was in large part the result of shifts in ownership between retail traders and professional money. Wyckoff sought to develop a comprehensive trading system which (a) focused on those markets and stocks that were “on the springboard” for significant moves, (b) initiated entries at those points which offered the highest probability of success, and © exited the positions at the most advantageous time, all with the least possible degree of risk. His favorite metaphor for the markets and market action was water: waves, currents, eddies, rapids, ebb and flow. He did not view the market as a battlefield nor traders as combatants. He counseled the trader to analyze the waves, determine the current, “go with the flow”, much like a sailor. He thus encouraged the trader to find his entry using smaller “waves”, then, as the current picked him up, ride the current through the larger waves to the natural culmination of the move, even to the extent of pressing one’s advantage, or “pyramiding”, as opposed to cutting profits short, or “scalping”. “Trading Wyckoff”, then, is more than just relating price and volume. It is a complete trading strategy, ranging from finding the most attractive opportunities through strategy development and trade management to the best moment to close the trade, all with the least possible degree of risk. Below are copies of Wyckoff's Studies in Tape Reading, which has been reformatted into The Day Trader's Bible and is as good a place to start as any, along with Reminiscences of a Stock Operator by Jesse Livermore, a contemporary of Wyckoff's. Chapters from Wyckoff's original trading and investing course follow. [ATTACH]28582[/ATTACH] [ATTACH]28583[/ATTACH] [ATTACH]28584[/ATTACH] W VOLUME STUDIES (14M).pdf

So how does AMT play out in trading? There are several ways of locating the requisite support (upper limit), resistance (lower limit), and consolidations (or congestions or trading ranges or any sort of sideways movement). One can, for example, plot a volume distribution (the hinge is circled): Drawing a line below the bottom of the middle distribution gives one a zone on which to focus, particularly when price opens below this zone (price also opened below this zone the previous day, leading to another profitable trade): Or one can draw a box around the congestion: Or one can use plain ol' S/R lines, noting the test of the previous day's high: All ways of illustrating the same thing. And it doesn't require special software. This, then, is what one should have had for the day following the previous chart, at minimum. If one doesn't know in advance what he’s going to do at each point, then he’s not prepared. And this is what happened the day after that: Price finds support at B, resistance at C. Preparation, Execution, Review. Let's see how it all worked out (same chart but drawn with Sierra): Monday and Tuesday, price tested R ©. Thursday it bounced off the midpoint of the lower trading range (D) and tested R © again. Friday it dropped to S (E). The advantage being, again, that all of this can be plotted in advance, saving one from having to peer fixedly at his screen for however long looking for a particular type of bar. For the coming week, the setup was the same, keeping in mind that the interface between the two ranges, at 1970, might take on added importance. And as it turned out..... Note that while intraday data is included in these charts, the principles of AMT apply regardless of the bar interval of the chart, even if there is no bar at all (e.g., a tick chart or a T&S digital display). The high of the range is the high of the range, regardless of how one chooses to display it. Ditto the low of the range. And the bulk of the trades take place in the middle. Therefore, whether one trades off a tick chart or a weekly chart, he can incorporate AMT principles into his work. NEXT: [THREAD=12805]For Daytraders Only: the TICKQ[/THREAD]

I read somewhere recently -- and can't remember where -- having to do with Market Profile, I believe -- that most experienced traders will avoid trying to catch the tops and bottoms and focus on "the middle", waiting for confirmations to enter and confirmations to exit. However, since "the middle" is by definition where most of the trading is going on and is largely non-directional, there is also a lot of whipsawing in the middle, and that generates a lot of losing trades. One can sometimes avoid this by widening the stops, but, since the market always teaches us to do what will lose the most money, this will turn out to be an unproductive tactic. The safest and generally most profitable trades are found at the extremes. Therefore, you wait for the extremes. Wyckoff used a combination of events to tell him when a wave was reaching its natural crest or trough: the selling/buying climaxes, the tests, higher lows/lower highs, and so on, all confirmed by what the volume was doing and by the effect the volume had on price (effort and result). As a result of this work and of his exploration of trading ranges, he developed the concepts of support and resistance along with their practical application. Auction Market Theory (AMT) takes these investigations into support and resistance further, an “organic” definition of support and resistance like Wyckoff’s, that is, determined by traders’ behavior, not by a calculation originating from one’s head or from a website somewhere. Determine whether you are trending or “balancing” (ranging, consolidating, seeking equilibrium, etc), determine the limits of the range (support and resistance), and you’re in business. The notion of support and resistance has been and is the missing piece for many market practitioners. One can try to hit what appear at the time to be the important swings again and again and be stopped out again and again, hoping all the while that once one hits the true turning point, all the effort will turn out to have been worthwhile and the P&L will change from red to black. But by waiting for the extremes, one avoids most or all of those losing trades, and, even more important, avoids trading counter-trend. These boxes -- which are simply a graphic variation of the Market Profile distribution curve, whether skewed or not, or of the VAP (Volume At Price) pattern -- are nothing more than a means of locating those extremes. What I've found more useful about them is that they are encapsulated by time, i.e., the price and volume ranges have a beginning and an end. This enables me to see at a glance where the important S&R are, or at least are likely to be. Without them, one ends up with line after line after line until the S/R plots become a parody of themselves. All of this can be very confusing to someone who’s learned to view the market in a different way, perhaps less so to someone who’s just starting since he has so much less to unlearn. But backing up to the basic tenets of AMT, as well as to the concepts developed by (and in some cases originated by) Wyckoff, one can perhaps find a solid footing and proceed from there. To begin with, in the market, price is often not the same as “value”. In fact, one could say that since the process of “price discovery” is a search for value, they match only by accident, and then perhaps for only an instant. Blink and you missed it. Add to this the fact that for all intents and purposes there is no such thing as “value” but rather the perception of value. After all, what is the “value” of, say, Microsoft or GE or that little stock your stylist told you about? This state of affairs may seem like a recipe for chaos, but it is in fact the basis for making a market, that is, reconciling the differences – sometimes extraordinarily wide differences – in perceptions of value. As Wyckoff put it, if a stock (or whatever) is thought to be below “value” and a trader or group of traders see a large potential for profit ahead, he/they will buy all they can at or near the current level, preferably on “reactions” (or pullbacks or retracements), so they don’t overpay. If the stock is above what they perceive to be value, they'll sell it (or short it), supporting the price on those pullbacks and unloading the stock on rallies until they are out (or as much out as they can be before the thing begins its downward slide). “This”, he writes, “is why these supporting levels and the levels of resistance (a phrase originated by me many years ago), are so important for you to watch.” When price then begins to lose momentum and move in a generally sideways direction, you’ve found “value” (if value hasn’t been found, then price won’t stop advancing or declining until it has). Value, then, becomes that area where most of the trades have been or are taking place, where most traders agree on price. Price shifts from a state of trending to a state of balancing (or consolidation or ranging), the only two states available to it. The trading opportunities come (a) when price is away from value and (b) when price decides to shed its skin and move on to some other value level (that is, there’s a change in demand). This is also where it gets tricky, partly because demand is ever-changing, partly because you’ve got multiple levels of support and resistance to deal with and partly because we trade in so many different intervals, from monthly to one-tick. If we all used daily charts exclusively, it would all be much simpler, though not necessarily easier. But that’s not the case, so we must remember always that a trend in one interval – say hourly – may be a consolidation in another, such as daily. The hourly may be balancing, but there are trends galore in the 5m chart. Or the 5s chart. Or the tick chart. Regardless of how one chooses to display these intervals – line, bar, dot, candle, histogram, etc – there are multiple trends and consolidations going on simultaneously in all possible intervals, even if they’re in the same timeframe, even if that timeframe is only one day (to describe this ebb and flow, Wyckoff used an ocean analogy: currents, waves, eddies, flows, tides). To sum up where we are so far, and keeping in mind that there is no universally-agreed-upon auction market theory, the following elements are, to me, basic, and are consistent with what I've learned from Wyckoff et al: An auction market's structure is continuously evolving, being revalued; future price levels are not predictable An auction market is in one of two conditions: balancing or trending. Traders seek value; value is price over time; price is arrived at by negotiation between buyers and sellers. Change in demand drives change in price. One can expect to find support where the most substantial buying has occurred in the past and resistance where the most substantial selling has occurred. Now let’s translate all of this into a chart. I'm sure everyone has noticed that swing highs and lows and the previous days’ highs and lows and other /\ and \/ formations can serve as turning points and appear to act as resistance. However, this type of resistance stems from an inability to find a trade and is accompanied by low volume*. Price then reverts to an area where the trader finds it easier to close that trade. That's what provides that ballooning look to the volume pattern “A” in the following chart. "Resistance" in this sense, then, refers to resistance to a continuation of the move, whether up or down. *Volume may look “big” at the highs and lows, but the price points are vertical, not horizontal (as they would be in a consolidation), so the volume – or trading activity – at each price point is lessr than it would be if the same price were hit repeatedly (again, as it would be in a consolidation). Note that you may have more than one "zone of concentration" (this is how jargon gets started), as in the first balloon. Nearly all the volume is encompassed by the pink lines, but there is a heavier concentration within the blue lines because of where price spends the greater part of its time. The volume in the balloon “B”, however, is more evenly distributed throughout the zone, partly because price spends so much time in it and partly because it ranges fairly steadily within it. Instead of rushing to the limits and bouncing back toward the center, they linger at those limits, the sellers trying to push price lower, the buyers trying to push price higher. Thus there is more volume at these edges than in balloon “A”, but buyers eventually fail in their task as sellers do in theirs, and trading drifts back toward the center, providing, again, a relatively even distribution of volume throughout the range. Balloon “C” is similar to “A” but much thinner due to the fact that price has made only a single round trip to the bottom of the range. It lingered a bit in the middle, simultaneously creating that protrusion in the center of the volume pattern. But volume at each end is thinner than in “B”, thinnest at the bottom due to the \/ shape, giving the volume – if one is fanciful – something of a P shape. If price drops through one of these zones, those who bought within that zone are going to be miffed. Some of these people are going to try to sell if and when price re-approaches that zone. This is the basis of resistance. There's just too much old trading activity to work through in order for price to progress unless there is enough buying pressure to take care of all those people who want to sell what they have, then push price even higher (in which case those who sold may think they screwed up yet again and buy back what they just sold). However, those who bought or sold at the outer reaches of these zones will also be disappointed if they can't find buyers for whatever it is they just bought, not because there's too much volume but because there isn't enough. So how does one trade all this? First, you will have to monitor several intervals at the same time in order to (a) find out what interval you want to trade and (b) where price is within whatever range or ranges is/are in that interval. For example, if you’re most comfortable with a 5m interval, you’ll want to check a smaller interval or two to see what price is up to down there, but you’ll also want to look at larger intervals, such as the 15m or 60m or even the daily (I’m using time intervals here in order to keep this from becoming even longer than it will be, but the same approach applies whether you’re using range bars, volume bars, tick bars, candles, lines, etc). Second, locate the ranges. Box them or circle them or color them or in some other way highlight them. If you find a range that is wide enough for you to trade (that is, there are enough points from top to bottom to make a trade worthwhile), get “into” the range via a smaller interval in order to find a trend. Perhaps at some smaller interval, price is at the bottom of that range. That gives you a good possibility for a long (or it may be at the top of the range, giving you a good possibility for a short). At this point, you have three options: a reversal, a breakout, or a retracement. If, for example, price bounces off or launches itself off the bottom of the range (support), trade the reversal and go long. If instead it falls through support, short the breakout (or breakdown, if you prefer). If you don’t catch the breakout, or you prefer to wait in order to determine whether or not the breakout was “real”, prepare yourself to short whatever retracement there may be to what had been support and may now be resistance. A more boring alternative is that price is nowhere near the top or bottom of any range that you can find but rather drifting up and down, aimlessly. No change is occurring; therefore, there is no trade, or at least no compelling trade. Finding the midpoint of the range may be useful since price sometimes ricochets off the midpoint, or launches itself off the midpoint if it has settled there. Such actions represent change since price may be looking for a different value level. It may come to a screeching halt and reverse when it gets to one side or the other of the range and return to the midpoint, or it may launch itself through in breakout form and extend itself into the next range, if there is one, or create a new range above or below the previous range (in determining which, back off into larger intervals in order to determine whether or not price is in a range in one of those larger intervals). NEXT: [THREAD=12809]Getting Down to Cases[/THREAD]

The indicator phase is something that probably everybody probably has to go through, whether it's MAs, stochastics, MACD, %R, VWAP, Market Profile (if you're looking only at the form if it), Pivot Points, Fibonacci, Bollinger Bands, chart patterns of one sort or another, candles, or even the price bars themselves (range bars, CVBs, tick bars, VSA, etc). And if one can make that endeavor successful by going through the necessary testing and developing the necessary plan, then there's absolutely nothing wrong with settling into that phase for the rest of one's successful trading life. Since all of this depends on its existence on the movement of price, however, it is all "price action", hence the confusion over what is meant by "price action". But trading by price means simply that one is following price flow (not order flow, but the movement of price) and the imbalances between buying pressure and selling pressure that prompt that flow. It has nothing to do with any kind of indicator or any sort of bar or even any kind of chart. Is it superior? Yes, if it makes more money than an indicator-based approach. If it doesn't, then no. Does it get one into moves earlier than an indicator-based approach (including those which focus on bars)? Yes, if one understands the buying-selling dynamics mentioned above. But getting in early is only part of what is required to make a profit. Otherwise, all counter-trend traders would be rich. Though there are undoubtedly price action people who look down their noses at indicator people, the PA people have no reason to feel superior. And contrary to the beliefs of some indicator people, the PA people do not fail to understand indicators; they just don't see the point (other than perhaps scanning a database for price movements). In most cases, the latter have in fact gone through all this, as mentioned earlier, and had insufficient success with it, just as they've been dissatisfied with the chat room phase and the newsletter phase and the advisory service phase and the red-green arrow software phase and the seminar-course-workshop-DVD phase and the trade-the-news phase and the chart pattern phase and have instead found a more comfortable fit with a focus on price flow. It's all about the money and how one chooses to go about getting it. There is no inherently better way, particularly if the trader doesn't care to do the work. A good fundamentalist, after all, will beat a bad technician any day. Therefore, if one is using indicators but has no idea how they're calculated, much less done the testing necessary to make the most of them, he is unlikely to reap the full -- or any -- benefit. If one is trading price flow but embraces irrational views of what constitutes support and resistance, he is similarly unlikely to reap the full benefits of that approach. Either way, it's all about study and testing and screen time. Without that, it makes absolutely no difference how one goes about the process of entering and exiting a position. NEXT: [THREAD=12808]Auction Markets[/THREAD]

A springboard can be said to exist when preparations have been made for, and the psychological moment has arrived for, a quick and important move . . . Auction markets are in continuous flow from trending states to non-trending states. If a trader is interested in movement and momentum, he will likely be interested in a trending market and try to avoid a non-trending market (what is often called "chop"). Springboards serve to alert him to upcoming changes from one state to another. They alert him to prepare for a transition (whether it turns out to be substantial or trivial) from non-trending to trending or vice-versa, i.e., that point at which price is on a "springboard" to an advance. One can busy himself with questions of who's doing what and why (weak hands, strong hands, professionals, amateurs, intent, prediction, and so on), but none of this is essential or perhaps even important. What is important is being prepared for whatever hand the market deals you. In this way, one can maintain calm and objectivity, not dither with last-minute surprises. What one does with what is in front of him depends largely on whether he is in a trade or he is looking to enter one. If he is in a trade, he's looking for signals that momentum is slowing. If he isn't, he may be looking for the same thing as an opportunity to enter, depending on what else is going on (e.g., is support being tested, is this the end of a parabolic move, has trading activity spiked or evaporated). However, before getting into all the possible tactics that can be employed to play these movements, I suggest that whoever is interested in this subject work toward finding these zones where traders are seeking balance (or equilibrium or fair value or whatever one chooses to call it). Again, these zones occur in all charts in all timeframes. And if one understands why they form, he is less likely to be freaked when his trade stops, much less retraces (he will, of course, have decided in advance what he is going to do when this unavoidable circumstance presents itself). To start, a chart of the DJTA over the past four years (originally posted in March ’07). It could be any instrument over any time period with any bar interval, but I'm being specific -- and using bigcharts, which is available to everyone -- so that anyone who's interested can follow along. I've also deleted the periodic volume bars and used dots rather than price bars in order to turn attention away from what is immaterial and toward the movement of price. Without any annotations whatsoever, one ought to be able to see that price is moving in a generally upward direction with occasional "pauses": If annotations are necessary, the following may be helpful: The exact lower (support) and upper (resistance) levels of these "zones" are not critical. What is more important in each is the general area in which the bulk of trades occur. What may also be important to the trader from a tactical standpoint is the "mean" within each of these zones toward which price will revert when bouncing around between support and resistance. Note that each time price trends upward, it then stops or pauses in order to find equilibrium (or balance or fair value or whatever). It may engage itself in this for minutes or years, depending on time frame and bar interval. Once it has found this equilibrium, it gets comfortable. This is a "safety zone", and the bulk of trades will occur here. These pauses are not as dramatic as the trending moves because it seems as though nothing is going on. But more trades are placed at these prices than at the prices within the trending move simply because these prices are traded again and again over a period of time. This process lays the groundwork for what may become important support and resistance later (as opposed to, for example, a swing point, which, while dramatic, represents relatively few trades). Eventually, there is an imbalance, or disequilibrium, and the springboard makes good its name. Price emerges from this "comfort zone" and either reverses the trend or resumes it. The emergence may be gradual, or it may be dramatic, as with a breakout. Here, in June of '04, it moves up 200pts and immediately forms a new zone. Only later, in October, does it make a more dramatic move. But that, again, reverts into yet another zone in which traders seek balance, this one lasting for 11 months. For those who aren't scalping and who like a deliberate approach to trading, the profit opportunities will most likely be found in the reversals which occur between support and resistance in these zones and in the breakouts which occur when price's state of equilibrium is fouled and it seeks a new one. But whether one trades reversals off of S&R or breakouts through S&R, he is working the edges and avoiding the "chop". If price isn't approaching S or R, much less testing it, he's waiting, and observing, and monitoring. Traders rejected 5000 in May ‘06, then again in July. 4200 was rejected in August and September. This is a wide range, the mean of which was 4600. Price worked the area between 4500 and 4900 for several months, again seeking equilibrium. This equilibrium was broken in February, but traders have now returned to their most recent "comfort zone". This is where they can find trades and reasonable safety. Price may remain here and find balance either side of 4800 (again, this was posted in March ’07). Or it may try again to resume the uptrend. The reversals trader who doesn't mind trading tight ranges might trade here. The breakouts/momentum trader will wait for some determined move out of the range, either up or down. But he will not likely be searching for trades in chop. If locating these zones or pauses in which these efforts toward balance and equilibrium take place is a problem, plotting "volume by price" can help: Note, again, that the bulk of trades are taking place within these zones. It is those areas with the fewest trades, those areas where traders are least secure, where the most potential for price movement -- often sustained price movement -- occurs. If one has no understanding of support and resistance whatsoever, much less where to locate them, this is as good a place as any to begin, and better than most. As for hinges, these are an additional aid to spotting those areas in which traders are seeking equilibrium. They are created by successive lower highs and higher lows and represent a tightening and compression. If interest is sufficient, this compression will eventually lead to a worthwhile move (if it isn't, price may simply dribble off into nothing worth bothering with). As Schabacker later said, these hinges or coils should be "filled with price", that is, there is no aimless drift but a struggle between those who want to move price ahead and those who don't. Therefore, price should bounce in an ever-tightening range which culminates in a release of pent-up energy and a tradeable move.

This is a form of market analysis that does not use economic indicators but instead, utilizes technical indicators and repetitive price action as indices for future price determination. Technical analysis depends heavily on chart analysis and the ability to recognize chart formations. When using these chart formations, technical analysts will be able to develop a trading system that incorporates highly probable trading setups to establish long and short positions based on a well-researched trading strategy. The basis of technical analysis is that price patterns tend to repeat themselves, and by using technical indicators to detect these price patterns, a trader can use the information to make a bet on the price direction of the asset in question. Technical analysis works very well in forex because the market is a 24-hour market, providing a continuous stream of data which traders can put together to analyze. It is more difficult in other markets because of the reduced market hours, which produce price gaps on the charts.

There are many different periods from which moving averages can be based. For example, a ten period moving average on an hourly chart will show you the average price for the previous ten hours. A ten period moving average on a weekly chart shows you the average price for the previous ten week. In general, traders use moving averages are a means for identifying trend direction.

When trading strategies are backtested and are shown to be successful over long periods of time, there is a greater probability that the same strategy will work in future markets. It is impossible to track all of the historical data manually, so traders tend to run software programs which open and close positions when certain conditions and requirements are met within the market. Backtesting is a technical analysis practice and is not generally used by fundamental traders.

Good day everyone. Finally I have pursued the profession I have been planning for a long time. While I have gathered knowledge and skills on technical analysis, volatility, correlation, yield curve, etc., I am feel I still have so much to learn. I am looking forward to join the discussions. Thank you.

In My personal views Gold posted its Short term Low on last Tuesday which was 1663. NOw if it will close above 1730 then it will be move again throughout 1800 or more.on 1730 its 50% retracement will be complete and if it will fail to break that level than we can open our sell again for 1670 or 1660.

Any trader who wants to make money from trading the financial markets knows that the markets function by timing. In the markets, timing is everything, and what a trader does is to look for indications that the price action of the underlying asset is about to behave in a particular manner. Such indications are given by using technical and fundamental indicators for analysis.

Resistance levels are not usually a fixed price point. Rather, it is more correct to say that there is a zone of resistance. Usually, the highest point in that zone is assumed to be the maximum point of resistance. You can identify resistance levels when an upward swing of prices have reached a certain point and then stalled, before retreating. For a zone to qualify to be a resistance point, the prices must have tested that level several times. After the resistance has been tested several times, two things may happen. Prices may reverse fully, or eventually break through this point in an upwards direction to continue with the pre-existing trend.

MACD is used to spot price divergences at tops and bottoms. It is composed of two lines (MACCD line and signal line) and a histogram. When the MACD line is above the signal line, the histogram is positive (crosses above 0 into positive territory) and this is a buy signal. When the MACD line crosses below the signal line, the histogram is negative (crosses below 0 and into negative territory) and this is a sell signal. On its own, the MACD does not give reliable signals and it must be combined with other indicators to produce a reliable signal.

Lately we've seen markets ignore what most people perceive to be negative market moving news. We've also seen markets ignore what most people perceive to be positive market moving news when prices have a muted reaction. But one very common misperception is thinking that markets are moving because of how individual investors are trading. It’s simply not true. Studies show that 60% of trading volume is automated -- based on algorithms. These algorithms trade on many indicators that are overlooked by almost every mainstream service. Believe it or not -- and this is going to sound totally impossible to some -- the media is constantly drilling into your head a false picture, false assumptions, and pretty much lots of B.S. If analysts or the media have nothing to say, or if they say: “I don’t know,” then they will cease to exist. So they just spit out whatever they can to stay in business. You don’t want to know how I could know this for a fact. But ask any insider in the financial media business who truly knows, and they can say the same. It’s scary. I’m talking MAJOR networks where they create stories and where the talking head “analyst” has an earpiece with someone telling them what their opinion should be. Sure, much of the time, they are correctly reporting on why markets are doing what they are doing in the short term, when it’s obvious, but they almost never get it right when it comes to the FUTURE, and that’s because the short-term movements they report on have virtually no predictive power in the stock market. Their hedge: There’s usually no way to prove that the reasons they give for market movements aren’t accurate. The real predictive power of short, medium and long-term is in technical analysis. If markets are moving in a trend, then THAT’S what’s going on -- and nothing more. Big investors don’t decide to start buying or selling stocks and then, as soon as they do, call media outlets and show them their cards. The media often just attaches a reason for movements in the market and -- as scary as it seems -- convince the world that what they are saying is a fact. It’s like astrology. One can read ... “The New Moon in Sagittarius offers up new possibilities for adventure. This is a great day to plan a trip to a place you've always wanted to go.” … and then look around and find several possibilities for adventure. The horoscope seems to be spot on. I admit, this comparison may be a stretch, but after being an investment insider in many aspects of the business for 15 years, I can tell you it’s really not very far off. And the astrologist isn’t putting a major part of your life at risk. If anything, they make you more positive. The financial media does serious damage to your investment account -- no joke! Markets can only move when people are acting on their sophisticated research. They don’t move on “stories” as much as they move on “action”. Why do bear markets bottom out long before the economic recovery is “underway,” and the before media starts reporting reasons for the bounce? Think about this: rookie money manager are able to literally move stocks 20%, 50% or 100% if they were small cap stocks that only traded 50,000 - 100,000 shares per day. This was with NO NEWS on the company. Just based on their humble opinion that it was worth more. In fact, anyone reading this article can use what they have in the market to actually move certain stocks up 30% or so, if those stocks trade light enough volume. I’m talking illiquid stocks. This is because a) there aren’t many shares outstanding, and b) there isn’t much of a market (not many sellers of the stock you’re buying). But when a few people can change directions of stocks like Exxon Mobil, Intel and Microsoft that have 5-8 billion shares outstanding and trade 20m to 200m shares per day, you know those people have the cash to get the true story. And when the market closes, you’ll hear the media creating reasons why it happened (they have 5 easy canned reasons that apply to any move -- just in case). Listening to those reporting on what financial markets are doing can often do more harm than good. If everyone knows this already, then why do they bother to keep listening? ANSWER: Because they don’t feel confident enough to formulate their own opinion on the market. But I’m telling you right now you DO have that ability. You can formulate your opinion based on what the power players with the market-moving money are telling you. They are speaking to you whether you know it or not, just as a crime scene speaks to a crime scene investigator, or the way a body speaks to a doctor or coroner. Big players leave clear footprints, and history repeats itself. Price action tells the true story. You can formulate your opinion by understanding technical analysis. These players are casting their votes with dollars every day. You just have to do two things: Understand how to hear what they are telling you (simple education of technical analysis that anyone can grasp). Actually bother to listen to what you’re hearing (which means fighting your own human emotion that causes the most seasoned technical analysis veterans to stray from their time tested indicators and systems). Syndicated from Tycoon Report

In the early days of online trading, traders were forced to manually adjust their stop loss levels in order to protect any profits made in the market, while following the market to maximize profits. With the advent of the trailing stop tool, a trader can wait for the market to become profitable, then activate the trailing stop tool, setting it to a pre-determined trailing distance. This protects the profits in the trade by staying still when the market moves against the trader, and continuing to trail the market when it moves in the trader’s favour. If the market moves against the trader to get to the trailing stop, the trailing stop now functions as a stop loss to close the trade but this time, in profit.

Support is probably one of the most used terms that a trader MUST encounter every trading day. In reality, support levels are not just one fixed price level, but rather a zone. The more times a support level is tested without being broken, the stronger the support. If a support is tested repeatedly several times, at some point the price will either reverse totally or break through the support level if the downward trigger is strong).

Market speculation is a risky venture. Speculators do not hold positions for the long term. They aim to enter and exit positions as fast as possible. Speculators aim to make the maximum gain from the smallest of price movements. They do this by leveraging positions so as to maximize the profits they can make from price fluctuations. To explain this better, rather than wait for 20 trading days to gain $1000 from 100 pips in the market, a speculator will aim to make the same amount of money, using a lower number of pips but with a high leverage in a shorter time frame.