Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

rgudgeon

How Much Weight Should One Put on Market Direction?

Recommended Posts

I am basically a trend trader. I have been out of this market now for some time as it (the market) has been up a down and sideways now for months. We have been in a sideways pattern for weeks and now we have seen a parabolic up move that just looks like it might blow off at any time.

 

The problem is that when I am out of the market I make no money - but don't lose any either.

 

Is it better to sit back and do nothing when the market is like this or should I just look for setups and work them regardless of having no direction from the market?

Share this post


Link to post
Share on other sites

Is it better to sit back and do nothing when the market is like this or should I just look for setups and work them regardless of having no direction from the market?

 

:2c:

rule number one is Capital preservation.....so sitting and waiting is best if it does not suit your system/style of trading. Plus unless you have setups that are robust, then they are not good setups, and taking them regardless at best might feed your broker but at worst will mess with you mentally and financially.....if that makes sense.

 

If you are a trend trader then these markets can be difficult unless your time frame is small enough, OR your trend entry system allows you to take a view and enter retracements and you happen to be bearish....then opportunities abound :)

 

If you feel you need to play, why not play very small size, or paper trade for a bit, or only take those setups you feel are the very best...(this last one is of course the hardest to sit and wait for). While you need to participate to win, you also need to be able to afford to play when it suits YOU.

Share this post


Link to post
Share on other sites

Is it better to sit back and do nothing when the market is like this or should I just look for setups and work them regardless of having no direction from the market?

 

Commonsense says IF there is money lying on the table, pick it up.

 

IF you have (or can research) a method which makes significant money after trading costs, why would you not trade?

 

And IF you don't have such method, why would you trade?

Share this post


Link to post
Share on other sites
I am basically a trend trader. I have been out of this market now for some time as it (the market) has been up a down and sideways now for months. We have been in a sideways pattern for weeks and now we have seen a parabolic up move that just looks like it might blow off at any time.

 

The problem is that when I am out of the market I make no money - but don't lose any either.

 

Is it better to sit back and do nothing when the market is like this or should I just look for setups and work them regardless of having no direction from the market?

 

Re: How Much Weight Should One Put on Market Direction?

 

if you are an option trader, NONE.

 

 

if you are a trend trader, what is a trend to you?

can you define it?

describe it?

articulate it?

quantify it?

visualize it?

Share this post


Link to post
Share on other sites

The significance of market bias (direction) depends on the context...off the open, it is critical...and I spend a lot of time and resource trying to determine what that bias will be

 

Why? Because when I get it right it is possible that I will be in the trade all day long, which is what I want to do...

 

If we are talking any other time of day, then it is questionable because other factors enter into the equation, such as time of day, news, programmed execution, price action of other markets, and several other factors. At other times I rely on tests of TBP and other factors including local volatility and momentum (as seen on the tape).

 

Good luck folks

Steve

Share this post


Link to post
Share on other sites
The significance of market bias (direction) depends on the context...off the open, it is critical...and I spend a lot of time and resource trying to determine what that bias will be

 

Why? Because when I get it right it is possible that I will be in the trade all day long, which is what I want to do...

 

If we are talking any other time of day, then it is questionable because other factors enter into the equation, such as time of day, news, programmed execution, price action of other markets, and several other factors. At other times I rely on tests of TBP and other factors including local volatility and momentum (as seen on the tape).

 

Good luck folks

Steve

.......... what is context?

Share this post


Link to post
Share on other sites

Context is the framework of data that surrounds the market. For example the context of the current market is primarily news driven, and that news is mostly about the European Debt Crisis. On any day that can change as events take place, and/or as economic reports are released introducing new information into the markets.

Share this post


Link to post
Share on other sites
Context is the framework of data that surrounds the market. For example the context of the current market is primarily news driven, and that news is mostly about the European Debt Crisis. On any day that can change as events take place, and/or as economic reports are released introducing new information into the markets.

 

how could you know the context has changed?

Share this post


Link to post
Share on other sites

attachment.php?attachmentid=26609&stc=1&d=1320598016

 

Trading is both science and art. The science is in your trade plan rules - signal setup, entry here, stop loss there, profit target here, manage the trade... whereas defining/reading market context is one aspect of the art-part of trading.

 

I agree news, time of day, open values, close values, 5th wave of Elliot wave, 930 cross, slingshot, 123 setup, ross hook, etc… etc… etc… all are part of reading context but I submit you can look at from a higher point of view.

 

Take any chart, the first instant you look at it - what do you see?

 

This is the basis of what defining context is about...

 

Do you see an uptrend?

Do you see a downtrend?

Do you see a sideways motion?

 

 

attachment.php?attachmentid=26610&stc=1&d=1320599432

 

Say for example you see an uptrend.... and yes things depend on your definition of uptrend, me I have found I like a chart for at least 3 time frames of the market I'm trading – I find conforming context in all three is more comforting and conclusive.

 

Do you believe that there are only 3 possible directions the market moves? I do and they are: up, down or sideways, what else is there?

 

I believe profit becomes available when the market context changes. Nothing makes me happier than to help others get out of bad trading decisions – enter where they exit.

 

Therefore, if it's already up, what are the remaining possible direction changes? Sidways or down.

 

Get the idea...( I think that makes for 9 possible combinations...I find it interesting how other techniques come together at some basic levels).

 

So if you see an uptrend...(by whatever means you define up trend) and as time rolls on you start to notice that for whatever reason you now see sideways or down movement...

 

ding ding ding context change

 

It’s important where this change occurs... it may be a reversal forming or it may be a pullback leading to continuation....ask yourself what else is there?

 

Now THINK...(actually this should be done outside of trading hours during nightly research/review, the science of trading should kick in here)

 

When do the best pullbacks to trade occur? During the beginning of the trend, the 1st pullback...which occurs after a reversal.

 

When do reversals occur? At the end of the trend with exhaustion or final flag sideways motion on the failure of the test of the prior extreme... (thanks Al Brooks for showing me this)

 

attachment.php?attachmentid=26611&stc=1&d=1320599765

 

 

Reading context is not mathematical in nature, if it were we would all have automated scripts to trade these moves...(ok taking it to the limit in millisecond timeframes - maybe)

 

Understanding this, thinking this way, is what I see as the basis of market context...

 

Other components I consider are: is price rising into a well-established resistance area... how many times has it done this 3-4 means reversal? How much profit potential is there in this setup versus risk burden? When did it last do this? Is this just before the well-established 10:00 EST news hour? Is this occurring on the 4th minute, 14th minute, 29th minute, 59th minute? Is price at 94 rising to 100(round numbers)? Did it spike on low volume thus is this a probe? Was there just a huge volume spike? Where are the prior reversal /swing points, does it want to head back there? Reading context gets complex... but It adds significantly to your confidence when you read what is going on correctly – confidence leads to consistency. Reading market context requires you to summarize the infinite number of market influences that come into the equation. (if you know differential equations, consider solving one with an infinite number of and ever changing constants).

 

With all this said, don’t over complicate things, pick one concept and master it, then move onto the next.

 

happy trading...

science_n_art.jpg.329d1acc832c4a1b17558d8dd14aa596.jpg

up-dn-sid-2011-11-06_1009.png.ce2e530ae12751489293665d945aa7da.png

example-2011-11-06_1014.png.14146d3e7963965a651d1606699e9ed3.png

Share this post


Link to post
Share on other sites
Steve, what is TBP? You probably explained it somewhere but i missed it

 

In my thread "An Institutional look at S&P Futures" I introduced the idea of pivots based on time ("time-based pivots" or TBP). Essentially the idea is that the market is moved by institutions that want to reach profit goals based on time (yearly, quarterly, monthly weekly and daily open high and low). As we move through time, each period assume more (or less) importance....so for example....as we reach the end of a week (say thursday or friday afternoon) and price is near to that time period's open, you may see the market test and then move up off of that price as institutions try to defend it....the same would be true of the end of month, and quarter year for instance.

Share this post


Link to post
Share on other sites
By observing how each market reacts to news of the day.

 

how could you know certain reaction was due to certain news?

is that a subjective decision?

Share this post


Link to post
Share on other sites

How can you "know" anything?

 

I think you have to rely on your training, and your track record of betting correctly on your analysis of the situation.

 

I was trained by skilled professionals and when I look back on my own experience I see that I am generally correct....

Share this post


Link to post
Share on other sites

Saw some of these other posts...

 

Certainly there is a mythology that everything is "in the chart"...therefore you need only look at the chart and see where it is going up, sideways, down.....and for the one dimensional thinkers in the crowd, I guess that is the solution you end up with.

 

Unfortunately that just doesn't "get it"....first a chart is just a display of data.....what happens in front of that...is that PEOPLE WHO CONTROL A LOT OF MONEY MAKE DECISIONS TO BUY OR SELL....THEN THE CHART IS CREATED...

 

I don't expect everyone to understand, but if one can obtain a good understanding of what motivates those people to buy or sell, you really have something...One of the purposes of Time-Based Pivots is to show how participants are motivated to act BEFORE the chart is created...If you know what participants are likely to do at specific times (and prices) then you have an edge over folks who simply watch a chart and then have to decide whether to react (or not) to what they are seeing.

 

While I were addressing this, I remember that Richard Dennis was asked once "Is technical analysis dead"?.....he is reported to have smiled and said "I hope not".....I think that about sums it up for me as well.,

Edited by steve46

Share this post


Link to post
Share on other sites
I am basically a trend trader. I have been out of this market now for some time as it (the market) has been up a down and sideways now for months. We have been in a sideways pattern for weeks and now we have seen a parabolic up move that just looks like it might blow off at any time.

 

The problem is that when I am out of the market I make no money - but don't lose any either.

 

Is it better to sit back and do nothing when the market is like this or should I just look for setups and work them regardless of having no direction from the market?

 

Hi rgudgeon

Strange name?

If you are not trading, how are you supporting your family?

The present conditions are NOT going to change before 2013

Trade small , BUT trade.

Kind regards

bobc

Share this post


Link to post
Share on other sites
I am basically a trend trader. I have been out of this market now for some time as it (the market) has been up a down and sideways now for months. We have been in a sideways pattern for weeks and now we have seen a parabolic up move that just looks like it might blow off at any time.

 

The problem is that when I am out of the market I make no money - but don't lose any either.

 

Is it better to sit back and do nothing when the market is like this or should I just look for setups and work them regardless of having no direction from the market?

 

One of the reasons 'old school' trend traders tend to trade multiple markets is for this very reason. On a well chosen basket of instruments (not too correlated of course) one or two will usually be trending.

 

Another possibility is to sample your data differently (a pretentious way to say look at another time scale :)) For example an instrument that has been stuck in a range for weeks and months will often (usually) be making great 3 4 5 + day 'trend' runs from the top to the bottom of the range (and back again). If you observe this on lets say on an hourly chart these they can look like (and be traded like) epic trends.

 

Incidentally quite a few commodities and currencies have had some great trends recently (depending of your perspective of course).

Share this post


Link to post
Share on other sites
One of the reasons 'old school' trend traders tend to trade multiple markets is for this very reason. On a well chosen basket of instruments (not too correlated of course) one or two will usually be trending.

 

Another possibility is to sample your data differently (a pretentious way to say look at another time scale :)) For example an instrument that has been stuck in a range for weeks and months will often (usually) be making great 3 4 5 + day 'trend' runs from the top to the bottom of the range (and back again). If you observe this on lets say on an hourly chart these they can look like (and be traded like) epic trends.

 

Incidentally quite a few commodities and currencies have had some great trends recently (depending of your perspective of course).

 

Hi Blowfish

I rate this best advise given in 2011

MMS will have to give you a prize.

Kind regards

bobc

Share this post


Link to post
Share on other sites

That's kind of you to say Bob. The bit on price behaviour was a bit of an aha moment for me. "Looking at a higher time frame for context" is a fairly well established concept however that idea is seldom fully explored. If you scratch a bit deeper and really look at how things fit together, you can come up with a really robust understanding of overall market structure.

Share this post


Link to post
Share on other sites

I never thought that I have to be in the market everyday. Sometime not trading is the best trade. Markets give us plenty of opportunities, missing a couple of them wouldn't kill you...

Share this post


Link to post
Share on other sites
I never thought that I have to be in the market everyday. Sometime not trading is the best trade. Markets give us plenty of opportunities, missing a couple of them wouldn't kill you...

 

It is true that there are a lot of opportunities to enter the market, but it is completely untrue that missing a few will not kill you. If you miss the good trades, at best, you could end up the year as wounded shark bait.

Share this post


Link to post
Share on other sites
One of the reasons 'old school' trend traders tend to trade multiple markets is for this very reason. On a well chosen basket of instruments (not too correlated of course) one or two will usually be trending.

 

Another possibility is to sample your data differently (a pretentious way to say look at another time scale :)) For example an instrument that has been stuck in a range for weeks and months will often (usually) be making great 3 4 5 + day 'trend' runs from the top to the bottom of the range (and back again). If you observe this on lets say on an hourly chart these they can look like (and be traded like) epic trends.

 

Incidentally quite a few commodities and currencies have had some great trends recently (depending of your perspective of course).

 

adding to this, we can also look at spreads. calendar spreads are probably the best place to start.

 

Take a look at heating oil:

 

HO.png?

 

(image from Scarr Trading if i can say that - im not affiliated or even subscribe to their service, but this just shows the point graphically)

 

Its usual for the back months to trade at a premium to front months due to insurance and storage charges. This market isnt. Buy the July, sell March contracts?

 

Spreads to trend more than out-rights with less volatility due to the fundamental drivers behind them. You also get margin offsets meaning you can take bigger positions to make up for the lower volatility or trade in a more risk adverse way, risking little.

 

So with BlowFish's idea of looking at other markets, you have 100's in which to find a trend. When you include calendar spreads you have 10,000's. Including inter commodity spreads you have 100,000's of markets. Taking BF's idea of other time frames to all of the above, you have 1000000000000000000000000000000000000000's of different markets.

 

Still say you cant find a trend? :haha:

Share this post


Link to post
Share on other sites
here is a quote for you: when in doubt get out

 

the problem is,

 

we were so certain we were right,

that we would go long in the face of an impending avalanche,

and when the slide begins,

we were so sure that it was only a minor correction, and that the market will go back on its upward trend in no time.

when the slide did not stop, we find justifications to allay the doubt,

when the doubt finally takes hold, we are already 3 feet under.

the wishful trader would look for a small rally to get out,

which never happened.

By the time DOUBT is confirmed, the trader is 6 feet under.

Share this post


Link to post
Share on other sites

RGUDGEON

"Is it better to sit back and do nothing when the market is like this or should I just look for setups and work them regardless of having no direction from the market"?

 

To.Mitubishi, and Tams

 

My answer: “when in doubt get out” was to the above question and intended to rgugeon I think it is the best course of action for him

 

Rgugeon even answered his own question “at least I did not lose any money”

 

And here is another quote for you Mitsubishi. “A trader become a real professional when he/she does not feel bad if they missed a trade” The biggest edge any trader has is: they don‘t HAVE to trade all the time

Edited by khamore1

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Similar Content

    • By Donald
      So I've been messing with the indicators and learning about them. Made me curious what does the majority use here and why?
      Currently I'm using Bollinger Bands, Awesome Oscillator, Moving Average, Belkhayate Timing and Parabolic SAR.
      From all these Belkhayate is my favourite so far, it almost only made me win trades. While Parabolic is almost like MA, I still can read it more clearly on how the market moves.
  • Topics

  • Posts

    • Date: 11th July 2025.   Demand For Gold Rises As Trump Announces Tariffs!   Gold prices rose significantly throughout the week as investors took advantage of the 2.50% lower entry level. Investors also return to the safe-haven asset as the US trade policy continues to escalate. As a result, investors are taking a more dovish tone. The ‘risk-off’ appetite is also something which can be seen within the stock market. The NASDAQ on Thursday took a 0.90% dive within only 30 minutes.   Trade Tensions Escalate President Trump has been teasing with new tariffs throughout the week. However, the tariffs were confirmed on Thursday. A 35% tariff on Canadian imports starting August 1st, along with 50% tariffs on copper and goods from Brazil. Some experts are advising that Brazil has been specifically targeted due to its association with the BRICS.   However, the President has not directly associated the tariffs with BRICS yet. According to President Trump, Brazil is targeting US technology companies and carrying out a ‘witch hunt’against former Brazilian President Jair Bolsonaro, a close ally who is currently facing prosecution for allegedly attempting to overturn the 2022 Brazilian election.   Although Brazil is one of the largest and fastest-growing economies in the Americas, it is not the main concern for investors. Investors are more concerned about Tariffs on Canada. The White House said it will impose a 35% tariff on Canadian imports, effective August 1st, raised from the earlier 25% rate. This covers most goods, with exceptions under USMCA and exemptions for Canadian companies producing within the US.   It is also vital for investors to note that Canada is among the US;’s top 3 trading partners. The increase was justified by Trump citing issues like the trade deficit, Canada’s handling of fentanyl trafficking, and perceived unfair trade practices.   The President is also threatening new measures against the EU. These moves caused US and European stock futures to fall nearly 1%, while the Dollar rose and commodity prices saw small gains. However, the main benefactor was Silver and Gold, which are the two best-performing metals of the day.   How Will The Fed Impact Gold? The FOMC indicated that the number of members warming up to the idea of interest rate cuts is increasing. If the Fed takes a dovish tone, the price of Gold may further rise. In the meantime, the President pushing for a 3% rate cut sparked talk of a more dovish Fed nominee next year and raised worries about future inflation.   Meanwhile, jobless claims dropped for the fourth straight week, coming in better than expected and supporting the view that the labour market remains strong after last week’s solid payroll report. Markets still expect two rate cuts this year, but rate futures show most investors see no change at the next Fed meeting. Gold is expected to finish the week mostly flat.       Gold 15-Minute Chart     If the price of Gold increases above $3,337.50, buy signals are likely to materialise again. However, the price is currently retracing, meaning traders are likely to wait for regained momentum before entering further buy trades. According to HSBC, they expect an average price of $3,215 in 2025 (up from $3,015) and $3,125 in 2026, with projections showing a volatile range between $3,100 and $3,600   Key Takeaway Points: Gold Rises on Safe-Haven Demand. Gold gained as investors reacted to rising trade tensions and market volatility. Canada Tariffs Spark Concern. A 35% tariff on Canadian imports drew attention due to Canada’s key trade role. Fed Dovish Shift Supports Gold. Growing expectations of rate cuts and Trump’s push for a 3% cut boosted the gold outlook. Gold Eyes Breakout Above $3,337.5. Price is consolidating; a move above $3,337.50 could trigger new buy signals. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Back in the early 2000s, Netflix mailed DVDs to subscribers.   It wasn’t sexy—but it was smart. No late fees. No driving to Blockbuster.   People subscribed because they were lazy. Investors bought the stock because they realized everyone else is lazy too.   Those who saw the future in that red envelope? They could’ve caught a 10,000%+ move.   Another story…   Back in the mid-2000s, Amazon launched Prime.   It wasn’t flashy—but it was fast.   Free two-day shipping. No minimums. No hassle.   People subscribed because they were impatient. Investors bought the stock because they realized everyone hates waiting.   Those who saw the future in that speedy little yellow button? They could’ve caught another 10,000%+ move.   Finally…   Back in 2011, Bitcoin was trading under $10.   It wasn’t regulated—but it worked.   No bank. No middleman. Just wallet to wallet.   People used it to send money. Investors bought it because they saw the potential.   Those who saw something glimmering in that strange orange coin? They could’ve caught a 100,000%+ move.   The people who made those calls weren’t fortune tellers. They just noticed something simple before others did.   A better way. A quiet shift. A small edge. An asymmetric bet.   The red envelope fixed late fees. The yellow button fixed waiting. The orange coin gave billions a choice.   Of course, these types of gains are rare. And they happen only once in a blue moon. That’s exactly why it’s important to notice when the conditions start to look familiar.   Not after the move. Not once it's on CNBC. But in the quiet build-up— before the surface breaks.   Enter the Blue Button Please read more here: https://altucherconfidential.com/posts/netflix-amazon-bitcoin-blue  Profits from free accurate cryptos signals: https://www.predictmag.com/ 
    • What These Attacks Look Like There are several ways you could get hacked. And the threats compound by the day.   Here’s a quick rundown:   Phishing: Fake emails from your “bank.” Click the link, give your password—game over.   Ransomware: Malware that locks your files and demands crypto. Pay up, or it’s gone.   DDoS: Overwhelm a website with traffic until it crashes. Like 10,000 bots blocking the door. Often used by nations.   Man-in-the-Middle: Hackers intercept your messages on public WiFi and read or change them.   Social Engineering: Hackers pose as IT or drop infected USB drives labeled “Payroll.”   You don’t need to be “important” to be a target.   You just need to be online.   What You Can Do (Without Buying a Bunker) You don’t have to be tech-savvy.   You just need to stop being low-hanging fruit.   Here’s how:   Use a YubiKey (physical passkey device) or Authenticator app – Ditch text message 2FA. SIM swaps are real. Hackers often have people on the inside at telecom companies.   Use a password manager (with Yubikey) – One unique password per account. Stop using your dog’s name.   Update your devices – Those annoying updates patch real security holes. Use them.   Back up your files – If ransomware hits, you don’t want your important documents held hostage.   Avoid public WiFi for sensitive stuff – Or use a VPN.   Think before you click – Emails that feel “urgent” are often fake. Go to the websites manually for confirmation.   Consider Starlink in case the internet goes down – I think it’s time for me to make the leap. Don’t Panic. Prepare. (Then Invest.)   I spent an hour in that basement bar reading about cyberattacks—and watching real-world systems fall apart like dominos.   The internet going down used to be an inconvenience. Now, it’s a warning.   Cyberwar isn’t coming. It’s here.   And the next time your internet goes out, it might not just be your router.   Don’t panic. Prepare.   And maybe keep a backup plan in your back pocket. Like a local basement bar with good bourbon—and working WiFi.   As usual, we’re on the lookout for more opportunities in cybersecurity. Stay tuned.   Author: Chris Campbell (AltucherConfidential) Profits from free accurate cryptos signals: https://www.predictmag.com/   
    • DUMBSHELL:  re the automation of corruption ---  200,000 "Science Papers" in academic journal database PubMed may have been AI-generated with errors, hallucinations and false sourcing 
    • Does any crypto exchanges get banned in your country? How's about other as Bybit, Kraken, MEXC, OKX?
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.