[Help needed for newbie trader] A question on Indicators

[jackpinion]

(04-19-2021 06:37 PM)lalala852741 Wrote:  "there are MANY INDICATORS that can and DO PREDICT where PRICE IS MOVING TOWARD" tell me an indicator that doesnt use price as a derivative/computation

I never said there was an indicator that doesn't... LOL. Of course that's what they USE. What other BETTER resource is there to use OTHER than actual PRICE in order to predict movement?

[v555]

@jackpinion :

Thanks for your reply.

Entering a trade and Exiting with a small loss at the next candle if gone against us, is not at all a concern here; my question (implied in the first post itself) is how to avoid Entering the trade itself even while seeing that everything in your setup - candle color, both RSIs, both LWMAs and the EMA - is favorable to enter a trade when a candle is forming.

Probably this is too much to ask, anyway I thought of asking in here.

[jackpinion]

Then I really do NOT understand your question... If everything LOOKS good but you want to AVOID entering the trade?

Then do NOT enter the trade.

I'm sure I'm MISSING something in your question however... Maybe restate it in a different way?

[v555]

@jackpinion :

OK, let me try rephrasing my question....

After the market opens on a day, mainly these things happen:

(i) one stock follows a trend (up/down) throughout the trading day,

(ii) a second stock goes up/down for some time, then retraces a little and again follows the original direction it started in,

(iii) a third stock goes up/down for some time and completely turns around and goes in the opposite direction, and

(iv) a fourth stock does not follow any trend and goes in a sideways direction throughout the trading day.

Any and all stocks follow just these patterns, and it is obvious that they react strongly at specific Support and Resistance levels. But again, these SR levels are constantly changing. Is there a way to anticipate the correct SR level for a stock more accurately ?

In my last picture, the 3rd scenario above has occurred, i.e, the stock has reversed its course in the third candle of the day. This implies that there has been some hidden Support level at the second candle. It doesn't seem to be the M15 pivot levels of ordinary candles - the price had crossed the pivot level and retraced back. So, what is that Support level more likely to be ?

If that level is known, one could avoid entering the trade at the second candle - that is what I meant.

Or, are you of the opinion that such hidden SR levels do not exist, and we just will have to enter/exit a trade as it happens?

Your approach seems to be the latter, while mine is finding those hidden SRs in both of my pictures. That is where I asked for help.

Also, please note that I am specifically interested in Stock markets only, not any other market including Forex, crypto, etc.

[jackpinion]

(04-20-2021 01:45 PM)v555 Wrote:  @jackpinion :

OK, let me try rephrasing my question....

After the market opens on a day, mainly these things happen:

(i) one stock follows a trend (up/down) throughout the trading day,

(ii) a second stock goes up/down for some time, then retraces a little and again follows the original direction it started in,

(iii) a third stock goes up/down for some time and completely turns around and goes in the opposite direction, and

(iv) a fourth stock does not follow any trend and goes in a sideways direction throughout the trading day.

Any and all stocks follow just these patterns, and it is obvious that they react strongly at specific Support and Resistance levels. But again, these SR levels are constantly changing. Is there a way to anticipate the correct SR level for a stock more accurately ?

In my last picture, the 3rd scenario above has occurred, i.e, the stock has reversed its course in the third candle of the day. This implies that there has been some hidden Support level at the second candle. It doesn't seem to be the M15 pivot levels of ordinary candles - the price had crossed the pivot level and retraced back. So, what is that Support level more likely to be ?

If that level is known, one could avoid entering the trade at the second candle - that is what I meant.

Or, are you of the opinion that such hidden SR levels do not exist, and we just will have to enter/exit a trade as it happens?

Your approach seems to be the latter, while mine is finding those hidden SRs in both of my pictures. That is where I asked for help.

Also, please note that I am specifically interested in Stock markets only, not any other market including Forex, crypto, etc.

Okay... Now I GET where you're coming from and I do look at both support and resistance before entering a trade but for me personally... Because I trade the Forex market, I'm more interested in the extremes of support and resistance. For example... Let's say everything I've discussed thus far suggests I get ready for a new BUY trade. The first thing I want to do is scroll back on my Daily Chart to see if that particular currency has ever broken through that level before. If it hasn't broken through it within the last six months to a year? I won't take the trade. I won't because chances are, that particular currency has already maxed out. Same with going short. If that currency has never broken through that level before? I'm not taking a chance on a new buy or sell trade that I make is going to be the trade that miracle happens on. LOL.

Having said that? I would suggest considering using a series of moving averages all together on a chart as DYNAMIC support and resistance levels. Just like the usual horizontal support and resistance areas you'd manually plot on a chart, these moving averages should be treated like zones or areas of interest. The area BETWEEN moving averages could be considered as a zone of support or resistance.

I've read the following MANY, MANY times... Almost everyone... Even in the financial world utilizes one or more of the following EMAs (applied to the close) on their charts...

15 EMA
20 EMA
50 EMA
100 EMA
200 EMA

Why is this important to KNOW? Because MANY, MANY traders... Even in the financial world make buying and selling DECISIONS utilizing one or more of these EMAs. To confirm that for yourself? All you have to do is PLOT every one of those EMAs on your chart. I will almost guarantee you that one or more EMAs are going to BLAZINGLY stick out at you as dynamic support and resistance levels.

Even though I personally trade with Heiken Ashi candles, I still have chart templates with all kinds of moving averages plotted on them. It doesn't even take me a minute to switch templates on any currency I'm considering making a trade on. Why do I do this when I rely on Heiken Ashi candles? Confirmation... Plain and simple. For instance, I might not get into a buy trade if overall price action is below the 200 EMA because that tells me that OVERALL? The trend is moving DOWN and it's just a matter of time until price turns around and continues moving on down with the 200 EMA.

I would submit to you that whatever stocks you're observing in the market? Some or all of them are reacting to one or more of the above EMAs. In other words, traders are making decisions based on price piercing those moving averages either UP or DOWN.

The nice thing about this is that all you have to do is plot all the above moving averages on your template then scroll backward to see which EMAs your stock is really paying attention to.

For instance... I don't trade stocks but I have traded them before and I've found moving averages are no different when it comes to dynamic support and resistance levels when it comes to stocks or forex.

Take a look at this 15 Minute chart of EURUSD with all the above EMAs plotted on it:

As you can see from the above image, EURUSD is REACTING to the 10 EMA, the 20 EMA and to a degree... Some of the pullbacks or retracements even react to the 50 EMA.

There also seems to be some room BETWEEN the 20 and 50 EMAs that price is reacting to.

Let's plot a 34 EMA in there (DarkOrange) and see how price action reacted to it:

Why a 34 EMA and not say... A 30 EMA or 35 EMA? Because 34 is a Fibonacci number. In fact? We can create a 15 Minute Chart with nothing but Fibonacci EMAs as some financial institutions do in fact utilize Fibonacci EMAs:

As you can see... It almost doesn't matter which series of EMAs we use as they are very similar to each other. Most likely because Traders OVERALL... Both Private and Financial Institutional Traders utilize one or more of all these EMAs above.

So I guess what I'm saying is to go ahead and experiment with these on your charts... See what moving averages both Private and Institutional Traders seem to be RESPONDING to. You're eventually going to see PATTERNS when it comes to TRENDS and RETRACEMENTS. This is where I should point out that this is what I pretty much live for... Getting in on the beginning of a TREND -- jumping OUT of the trade during a pullback, then jumping back into a new trade AFTER a retracement or pullback has completed itself.

I personally believe most private and institutional traders ALSO do this which is WHY we SEE this kind of price action in the first place.

Anyway... As I understand it, you can use these EMAs as Dynamic Support and Resistance when it comes to jumping into trends after a retracement has completed itself.

Let's take our image with the traditional EMAs as an example...

The image pretty much speaks for itself... Personally, I would have entered that trade on the first DodgerBlue Heiken Ashi Candle but for the purpose of this example and to make this a bit more CONSERVATIVE, we entered the first BUY trade on the first DodgerBlue Heiken Ashi Candle to PIERCE UPWARD THROUGH THE 200 EMA. This is a SOLID SIGN that we are in a good, strong UP TREND.

See how both the 10 and 20 EMAs were RESPECTED during this UP trend?

I'm certainly no expert on using EMAs as dynamic support and resistance... This was just an introduction based on my own limited knowledge. There are TONS of YouTube videos and articles that explain this so I would certainly recommend you seeking those out.

I can even give you the first one...

Code:

https://tradersbulletin.co.uk/moving-averages-as-support-and-resistance/

I hope that helps... Even just a little. If I at least managed to POINT you into a direction to seek more knowledge? Then this was beneficial. I know it was beneficial for me because it forced me to go back over this information and education and knowledge is always USEFUL when it comes to any kind of trading so THANKS for that and GOOD LUCK!

jack

[v555]

@jackpinion :

It seems we are sailing in different boats!

While your approach may be best in the Forex market or in Positional trading in which a trade can be held for a few days, my initial question was focused only on d-a-y trading the Stock market in which lots of movement happens within couples and dozens of minutes each day only in certain stocks. Although both may share some characteristics, they are definitely not the same, at least for my purpose of study.

I was expecting to hear something related to Daily-Weekly-Monthly Pivot points, Volume Profiles, ADRs, ORBs, MFI and similar things.

However, since this section is specific to Forex, I don't expect members to be much knowledgeable on this; But I had no other option to post my message, since this is the main section discussing trading (although Forex in particular, not Stocks or even General Trading).

I thank you for the time taken to vividly explain things with your knowledge. While I certainly learnt one or two things from your posts, I must say, without hurting your feelings, that my initial question has still not been answered.

I will go through your recommended readings on HA based on your posts here and in another thread too.

Cheers!

===

On the other hand, members who feel can help in this situation, are welcome to post their opinions; TIA.

[jackpinion]

I guess I'm still not understanding you...

If you're just interested in playing a specific stock on the 15 minute chart during the day... A get in -- make some money -- get out type of thing? I don't understand why you wouldn't just observe say... The 5 minute and 15 minute charts.

I'd still use Heiken Ashi candles... Because they indicate trend better than traditional candles. You could also use GRaB Candles and the 34 Wave simply to OBSERVE trend if you're more used to traditional candles. There are even TREND CANDLE indicators you can use... Trend candles allowing you to decide what built-in moving average you want them to utilize to signify upward and downward trends.

Based on what you've told me thus far? I'd have the stock open on at least a couple of charts like the 5 minute and 15 minute (especially since you're using the 15 minute chart to trade).

Wait for a bullish heiken ashi, GRaB, or Trend candle to form on the 5 minute chart... Plot moving averages as discussed here on the same charts to see if it's LIKELY that you're in an upward or downward trend.

If you're paying attention to the 5 minute chart and it's in a trend, it should be easy to jump in to a new 15 minute candle going in the same direction and then get out at the first sign of the trend waning, pulling back, or reversing.

If you use confirmation indicators on all this like HA, GRaB, or Trend candles... Moving averages, and the RSI plotted at the 50 level? you have everything you need to get IN and OUT of that trade whenever you want.

Either that or I'm still not understanding what you're asking... As I said, I've traded stocks in the past but ditched them over the leverage Forex gives me i.e., much less overall investment for a higher overall profit so I'm no stranger to any of that but when it comes to pivot points and all kinds of support and resistance lines? I went through ALL that in the beginning of my journey with stocks and Forex only to eventually figure out (at least for me) it was OVERKILL.

I don't want a JOB. I want to get in and get out as well over anywhere from 3 to 90 days depending on the trend.

When I was trading stocks? I mainly focused on stocks that GAPPED significantly UPWARD when the market opened and then rode that move upward for as little as 5 minutes all the way up to an hour -- hour and a half. I did pretty well most of the time but d*** if it didn't turn out to feel like a job. LOL.

By the way... I know in Forex, there are tons of indicators that can do just about anything... Another reason I enjoy Forex because I can easily try them out on Demo accounts and see what their results are and see if they FIT into my style of trading.

In Forex, there are plenty of indicators that plot out support and resistance lines... Point Zero trading puts one out for instance that shows thicker lines for STRONG support and resistance lines. The weaker those support and resistance lines are? The thinner the lines are on the chart.

Code:

https://www.pointzero-trading.com/Products/view/PZSupportResistance

Since you're specifically asking about support and resistance... You may want to see if someone has created an indicator like that for stocks that will work for whatever trading platform your friend is using. I have it on one of my templates and always check that template out before entering a trade.

At any rate... Good luck!

jack

[v555]

@ jackpinion :

Thanks for the followup.

The thing is, I have noticed on several occasions that the price pierces through the EMAs and either continues in that direction or retraces !

Same is the case with horizontal SRs too. While the price may respect a particular horizontal line in one time frame, it easily surpasses the same line in another time frame; and the next day, the price may surpass the horizontal line in the first TF while respecting the same line in the second TF. [say M5 and M15 or M15 and M30 or M5, M15 and M30 all together.]

As I said, I have not observed any consistency. What I say is with respect to one particular Market during one particular duration of day in my country, and it could be different entirely in another scenario - say another market or another timing.

And perhaps no retail trader will know about this secret, and even if one or two people who come to know about this shares it, it will soon become invalid as more people begin using it.

So, let me see for how long I will be beating around the bush in this regard, while at the same time continue being profitable using other strategies [including using the fabulous one which you had kindly shared.]

Thanks a lot for your responses in this thread.

[jackpinion]

(04-22-2021 09:04 PM)v555 Wrote:  @ jackpinion :

Thanks for the followup.

The thing is, I have noticed on several occasions that the price pierces through the EMAs and either continues in that direction or retraces !

Same is the case with horizontal SRs too. While the price may respect a particular horizontal line in one time frame, it easily surpasses the same line in another time frame; and the next day, the price may surpass the horizontal line in the first TF while respecting the same line in the second TF. [say M5 and M15 or M15 and M30 or M5, M15 and M30 all together.]

As I said, I have not observed any consistency. What I say is with respect to one particular Market during one particular duration of day in my country, and it could be different entirely in another scenario - say another market or another timing.

And perhaps no retail trader will know about this secret, and even if one or two people who come to know about this shares it, it will soon become invalid as more people begin using it.

So, let me see for how long I will be beating around the bush in this regard, while at the same time continue being profitable using other strategies [including using the fabulous one which you had kindly shared.]

Thanks a lot for your responses in this thread.

LOL. Exactly! I went through ALL that same garbage with SUPPORT and RESISTANCE lines which is why... Except for the extreme high and low support and resistance lines, I've all but abandoned them. All I can say about them that I know happens about 85% of the time is that if a trend upward or downward hasn't broken through a support and resistance line for the last 6 months or longer? It probably isn't going to this time around.

Does it?

Of course it does... Just not all that often but I don't have to worry because I won't be in that trade anyway.

After all the trading I've done throughout the years... I've found nothing better than basically SPOTTING a TREND and then OBSERVING it through it's FIRST RETRACEMENT.

In fact... You can even plot a 50 and 200 EMA if you want to be CONSERVATIVE. In my humble opinion, being conservative doesn't mean profiting LESS. It simply means taking on LESS OVERALL RISK.

With or without HA Candles, one can plot out a 50 and 200 EMA and then WAIT for the 50 EMA to cross above or below the 200 EMA to signify a trend upward or downward.

*NOTE: In my opinion, this strategy works BEST on the 1-Hour, 4-Hour, and Daily Charts.

Instead of jumping in right away... The conservative approach suggests OBSERVING the FIRST RETRACEMENT complete itself and upon its completion, let it run all the way back UP or DOWN (depending on the Trend) until it HITS a NEW HIGH or a NEW LOW (again, depending on the Trend). Then draw a horizontal line at that new high or new low.

Place a PENDING order at the new high or low...

Find the closest closing candle to the 50 EMA and plot your stop loss there...

Measure the distance in PIPs between the new high or low and the stop loss.

Plot out a TAKE PROFIT 1.5 times this distance for a 150% return on investment.

Exit trade when you hit your take profit.

The reason I've added this here is because of all the PMs I've been getting from those of you wanting a good but conservative trade strategy.

This is one of the best if not the best I've ever come across...

See the image below.

[v555]

@ jackpinion :

Thanks again for the above post. It should be useful to those who are looking for the same.