Many times traders and investors make the mistake of not considering the potential changes in market conditions that will render their prior analysis invalid. Once a trading decision is made, many will not reconsider their position until a predetermined stop is approached. As most experienced traders and investors realize, the most well-thought-out analysis is always capable of failing. Markets change with the release of fundamental data or news events. Technical levels not properly taken into account will cause unforeseen reactions, etc.
This update underscores some interesting concepts in day trading and scalping vs swing trading. The larger entry areas are where swing traders will enter, sometimes scaling in over a period of dollar or percent changes of the underlying. The smaller entry areas are where the dayt raders and scalpers will enter. Some day traders will scale into a position but few scalpers will.
This 60 minute time-frame chart will show you the levels where the day traders are most active, and a 15 minute or smaller time-frame will show you the actions of the scalpers. Many fail to realize that the smaller time-frame traders are more often than not, the ones who are moving the market intraday. Swing traders only affect the day and weekly movements.
Knowledge is power. In trading, accurate knowledge is what leads to consistently high-percentage profitable trades.
Comments
charttrader
⋅
Could you please post an update on goog? It is really interesting to know your opinion after today's actions.
charttrader
⋅
Nice chart
oops
⋅
this is by far the most honest and constructive critic response I have ever come across of many platforms. chapeau !
timwest
⋅
Perhaps you could label the chart so that what you are suggesting is more clear. What I see is a green box where short term traders go long, but it fell from there and went down to the longer term buy-to-cover level. It looks like the short term buyers got wiped out, but the longer term short sellers made it big. It is confusing to some degree. Perhaps if you used different colored boxes, light shade of green for short term and dark shade of green for long term to differentiate the different buyers. Same thing for the sellers boxes too.
I'm glad you are doing well and are sharing with us. I feel like you are talking-down to us though, implying we don't have knowledge or that we don't have accurate knowledge or that we make mistakes or that we don't know when our analysis is invalid or that we don't re-consider a position or that we aren't experienced.... sorry for the run-on sentence but I hope my point is clear.
darcy_kincaid
⋅
Thank you for sharing your observations with us and being glad at our success. It's appreciated.
It is impossible, in a few paragraphs, to accurately describe a multi-dimensional analysis that will not be misunderstood or unclear to some or many. In many of our earlier posts we differentiated the entries as Very Short Time-frame, Aggressive, Intraday, Long Term, etc. Time constraints simply don't allow marking-up all the charts that we publish. However, by referring back to prior explanations we are certain that all
interested will clearly grasp the concepts of our analysis. Additionally on every chart we include a legend that clearly explains the color code.
Many traders rely on indicators, studies, trendlines, etc. on which to base their analysis. We only show them occasionally to a limited degree on charts to point out where others will likely react to a certain price level. Our analysis is based on our own in -house developed proprietary algorithms that deconstruct market action in real-time. (Yes, we are math geeks and former programmers).These algorithms have proven extremely accurate for more than 20 years, as our published charts demonstrate.
As we have stated in the explanation to some of our charts, we approach the market differently than most as we only trade in-trend Long Term, and only counter-trend Short Term on all time-frames. Each chart time-frame has both LT and ST, aggressive and very aggressive entries and targets but the concept is the same regardless of the time-frame. It is just a matter of knowing whom is trading which chart and what their objectives are.
Week charts are only traded by position and swing traders, Day charts are only traded by shorter-term swing and longer-term day traders, and intraday charts are only traded by short term, day traders, and scalpers. We determine the designations based on the price range each group is targeting for their entries and targets. These are our designations and may not be the way others would describe each group of traders. The terms trader or investor can be inserted wherever the individual prefers.
Any time a green box is shown, it shows where an attempt by buyers will occur to support price. Red boxes are the opposite scenario. So in this instance the chart plainly shows that there was indeed an attempt to support price at the first identified long entry range, for 8 hours. Our analysis of the price action is as follows; Intraday buyers bought exactly where expected(9:30 candle) slight bounce but with no follow through. Price spent the entire day trying to close above the original entry level but could not sustain buying. A huge red flag for buyers in our opinion, especially considering that the analysis clearly show 3 sets of shorters selling consistently.
With this information, a wise buyer would have either covered before the close or if they were very aggressive, put a very tight trailing stop to mitigate their down-side risk. Or conversely bought a weekly put to hedge at close. With the chart setup we would never have held naked into the close, but we are very careful in managing risks. Others have more risk appetite. The chart setup from 10/09 is a different story entirely, in our opinion. And apparently the market agreed today.
"I feel like you are talking-down to us though, implying we don't have knowledge or that we don't have accurate knowledge or that we make mistakes or that we don't know when our analysis is invalid or that we don't re-consider a position or that we aren't experienced.... sorry for the run-on sentence but I hope my point is clear."
We are a fairly jovial and fun bunch and do not intentionally "talk down to" or "imply" anything in our analysis and/or statements. Everyone is certainly free to laugh at, disagree with, ignore, or any and all of the above, everything that we publish. Judging by what little we have been able to peruse the site, it appears that the vast majority are newer/inexperienced traders which about 99.99% of the time would indicate that fundamental knowledge of how the markets really operate is lacking. Otherwise all analysis would match subsequent price action.
When we began trading we thought we knew how to trade. It was a humbling experience when the market chewed us up and spat us out. It was either admit that we needed to learn from those who knew or develop our own analysis. We were all willing to learn from others, but in those days(almost pre-internet) there was no one who actually knew that would share anything meaningful. Remember the old adage, which is mostly still true, "those who know don't tell, those who tell don't know". As for making mistakes, don't we all still, no matter how experienced?
Since some are looking for long entries/targets and others are looking for short entries/targets we include both. Saves time, true, but the main reason is that everyone entering a trade should be slap-happy to be advised, in advance, of where those who are trading in the opposite direction will be entering and exiting. We don't attempt to sway other's decisions, rather we provide them a "road map" that shows where the hazards to their success are located as well as where others who are trading with them will act and react. What more does a trader/investor need? We don't see how a trader relying on someone else's directional bias will benefit in the long run. It seems evident that it makes them dependent and that is not our objective. We are competing against the market, not against any individuals.
Hope that clears up some of the misconceptions you expressed. If there are any other clarifications that would be helpful, let us know and we will respond as time allows.
On another note, we would appreciate any assistance you could render regarding the overlooking of many of our targets that have reached their bullseyes. We, like you and many others, spend a fair amount of time annotating charts to add value to this site and the only reward is in the acknowledgement of when the analysis is correct. We have noticed others are being overlooked as well.
Thanks again for your observations and any assistance you can provide.
admin
⋅
I'm looking at the chart. The legend says - green box is long entry, red box is for shorts. I see a red box, I assume your position is short. Price goes to green box, I assume you have now reversed position. Price continues to fall, so you stop out at a loss. Seems logical.
From what I understand, you are hedging and describing potential entries for both sides. If you place targets above AND below the price, it'll eventually move in one of those two directions and you are bound to get a target hit somewhere. But hedging is NOT the point of creating these charts.
You are a great and active contributor, and we appreciate your efforts (as I'm sure other traders do as well). But you need to pick a side, either Short or Long, and make it CLEAR and easy to understand where your Entry, Profit, and Stop. Just one trade per chart. Getting a bullseye is not an automatic right for hitting the price prediction - another factor is adding value in terms of education for other traders. If the chart is too confusing, it's educational value drops significantly.
To make this easier, we'll rollout an updated prediction tool next week. It'll have easy-to-create and very clear marking levels for adding predictions to charts. Also, charts without positions indicated will not be considered. Wait til next week, use the new tool, and clearly mark your charts.
darcy_kincaid
⋅
Thank you for your response and the compliment that we are a great contributor. We appreciate it.
It is understandable that you would not have the time or interest to read all of our published charts and explanations.
In a nutshell, this trade is a good example of our analysis because it shows multiple time-frame entries and targets. While the vast majority of traders/analyst fixate on a one-dimensional directional bias, we do not. We know there are many currents even in a small pond and it's foolish to ignore them in our opinion. As we stated before, LT Swing and position traders do not control intraday action except on the few occasions in which it coincides with their entries/exits. Shorter term and daytraders/scalpers control intraday.
In the context of this 60 min chart at the time in which it was published, the trend is down. Anyone trading on this time-frame must realize that any long entry at this point is a counter-trend trade. We use tight TRLSTPs on all counter-trend trades and therefore do not suffer meaningful drawdowns. A very high percentage result in very sizable gains.
We prefer to enter counter-trend trades on high beta expensive stocks exclusively with options. So no, we did not get stopped out for a loss. And no we did not change direction on the original short, we were still short in-trend on this time frame, expecting a steeper pullback, which occurred. When the short reached the first target that was the signal to put a tight TRLSTP on the short that was entered on this time-frame and in fact it triggered @ 744.50. But of course at that time we were still short the Day and 15 min time-frames.
This method is what enables us to consistently advise our clients where the entries and exits are on all instruments to such a high degree of accuracy. We don't have to constantly search for new ideas or opportunities as they are always presenting themselves. Consequently we identify an unbroken series of trades on all time-frames to our clients., though of course we only publish a fraction of our analysis here.
As regards whether we are hedging, that was a comment as to what others may decide to do if they wanted to remain long after the price action signaled failure of the first long. Their personal decision to make, not ours. Our analysis clearly indicated that the risk of remaining long overnight trading this time-frame was clearly unacceptably high. We aren't gamblers and therefore never have a need to hedge.
We analyze and trade many time frames, and the entries and targets may or may not coincide with different time-frames. If you check our longer time-frame GOOG chart, tradingview.com/v/lN8F50qE/, you will see that this 60 min chart is a subset of much larger trades.
That is the point we are illustrating by updating to a 60 min time-frame. As we noted in our comments to the chart when published "This update underscores some interesting concepts in day trading and scalping vs swing trading. The larger entry areas are where swing traders will enter, sometimes scaling in over a period of dollar or percent changes of the underlying. The smaller entry areas are where the daytraders and scalpers will enter. Some day traders will scale into a position but few scalpers will."
We have taken pains to mention the fact that all entries/targets are applicable only to the time-frame chart that they are shown on. We identify the ranges as areas in which the market is expected to react. Subsequent price action shows clearly that they are accurate levels and the market does react.
We hope this clarifies these points even as we realize the concepts presented are undoubtedly new to most if not all here. An associate is preparing some observations regarding your comments as to what constitutes a bullseye.
Thanks again for the response and compliment.
p.s. to all who may read this: Our comments about what traders/investors may do is a general comment and should not be construed to apply to any who read or publish here. We have no way of knowing what individuals do nor are we privy to their thought processes. All statements are our opinions on general market action.
admin
⋅
And thank you very much once again for the input and adding value.
charttrader
⋅
Wow, thank you very much for the explanation. It helps to understand and read your ideas properly. Please keep posting. Btw do you have a website and or twitter? Thanks.
darcy_kincaid
⋅
Thanks again for your assistance.
We think it may clear up some misunderstandings by offering the following comment:
Our comments about what traders/investors may do is a general comment and should not be construed to apply to any who read or publish here. We have no way of knowing what individuals do nor are we privy to their thought processes. All statements are our opinions on general market action.