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Visavis wrote:
> About the pivot support and resistance you had mentioned can you please
> kindly elaborate more on this?
To Visavis,Norm,et all,
I guess I should have seen these questions coming. Thanks to Bob Hunt
for providing a good URL that covers the meat of the subject.
http://news.bridge.com/NEWS/gfiv4_10.html
I, like every other technician I've known, have twisted the basic method
to suit my own needs and experience.
Support and Res.
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I start with daily o,h,lo,c bars and consider(especially for stocks).
The previous high and low are the most important levels to watch.
If yesterday's low was lower than the previous low I'm looking to be a
seller, if yest. H > prev. high ,a buyer. Of course if yest was a
reversal day, I will go in the direction of the net change.
pivots(er.. sort of)
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I then only look at tick charts(last sale mostly unless the stock
doesn't trade enough to make a sensible looking chart, I'll go to 5,10
or more minute bars until I start to see some continuity). On the tick
chart I'm looking more for turning points in the swing high/low sense
more than a calculated pivot -sorry for the misuse of the term pivot in
my previous post. If i'm a buyer I want to buy breaks above the most
recent high pivot and set my stop below the most recent low pivot.
Basically its a simple trend following method (higher highs higher lows
for uptrend and vice vs. for downtrend).
Additional filters i use are harder for me to quantify. I try to use
some common sense insofar as not going against the current intraday
trend of the market and watching s&p futures and t-bonds for unusual
action which may persuade me to get flat or not reach too far to enter.
I try to be aware of where the stock is trading in relation to it's
recent average daily trading range. If the stock has made a 2 point
swing by 11 am est and normally has a range of 1 point I'm to going to
get to horny about it if I'm not already in and if I am my finger is on
the trigger. With time, this part gets sort of easier but the more you
learn, the more you learn what you don't know!
Caveats
---------
Obviously the method described gets whipped lots. It can only be
implimented as a full time job(although I find that on most days I make
most of my money in the first hour of trading.). Realtime quotes and
tick charts as well as direct and fast executions are absolutely
critical. Trading costs are relatively high so slippage has to be kept
low - meaning liquid stocks only and postitions small enough that you
figure you'll be able to bail out of on the current bid or ask.
Advantages
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Small losses, rides winners. You can be flat most days by the close(big
advantage these days with s&ps being up/down limit oten before cash
markets open!). Smaller capital is required because leverage can be used
to the max if you keep your eyes on your screen while holding positions
and flat at night. If one trades a few different issues(4-5 or so) in
different industry groups, you should see a fairly consistent climb in
equity. Like any good trading method/system this should help you make
steady, not mind boggleing, profits but you'll not likely be worried
about being in Niederhoffer's shoes.
Hoping this helps,
Rob:)
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