One of the unexpected side benefits that comes from doing this blog is when I get some thought provoking question from a reader that leads to a good blogging post.
"How to develop an edge" is always on new traders minds. Here is a way to burn high probabilities chart patterns into your mind.
I like to keep things simple and I am a visual person, not a touchy feely or over analytical type. Drawing ascending or descending triangles on charts will show you visual representation of what is happening. Ascending triangles means higher highs and higher lows, descending means the opposite. When the point of the triangle breaks through resistance or support , it means momentum and opportunity are present. Trade it. Grab it. look for more.
It's optimism and pessimism, buyers and sellers in control. Going with the flow. The patterns are not 100% guaranteed so just play the probabilities.
Print these out (black background will kill your ink though) or find the same patterns yourself and make "flash cards" out of them. Have a friend show you these one at a time in a rapid manner. Your job will be to identify what they are, what direction they are moving and decide on the probable, typical outcome within a second or less such as - ascending triangle--up--buy. Or descending triangle--down--short it. You can probably do it on computer as well but get out the scissors and make these little flash cards instead. It turns them into something tangible you can touch and makes them real.
A task like this will hurry your pattern recognition skills and decision making skills along.
An important note- I am not too picky about or debate whether a pattern is there or not or if tails are in the way. If I can see the pattern it is there. Don't debate yourself if it is not perfect.
Also if a pattern does not follow through, that gives you valuable information as well for a move opposite the probable or typical can mean an excellent and strong trade that way.
1 comment:
Joe Saluzzi and his firm have been very outspoken of HFT as soon as it became market dominant. His firm brokers for high net worth clients and their edge has been eroded by HFT trading (my best guess). I've had a few tweets with Joe back and forth. Here's one article:
http://blog.themistrading.com/?p=1372
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