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The Chart Is All You Need
http://www.netpicks.com/chart-no-volume-indicator/
I want to continue on with my look
back on some of the pearls of wisdom
from Richard Donchian. There are so
many things th...
My first look can be found at:
http://www.netpicks.com/trading-wisdom-from-yesteryear/
These two Donchian wisdom's center
around volume however markets such
as Forex, being a market without a
central exchange,...
Trading Tip: Many traders who like to
incorporate volume will use the
currency futures markets in their
analysis but execu...
That being said, there are quite a few
traders who don't use volume for any
reason citing that they could not find
any sta...
Instead, the term "that's different" is
used which simply indicates that
something unusual has happened
compared to recent...
When something different happens,
trading opportunities are looked for.
I am going to use charts without
volume so you can...
Donchian talks about looking for a
volume climax especially when the
markets have made extended runs.
They can be tricky b...
Ensuring that price has advanced for a
length of time can be a variable in your
trading plan that you need to see
before t...
Trading Tip: Just because the market
"blows off", it does not necessarily
mean that a reversal is taking place.
Markets ra...
This chart shows a market that has
been in a steady run up for quite a
while. It's not in this graphic but the
market has ...
Also highlighted on this chart with the
red circles is a pattern that is called "3
pushes". While this is one is a little
...
At times it can be difficult to differentiate
between a climax move and just a strong
thrust that sets up a good pullback ...
Highlighting The End Of The Run?
I find the blow off type of action very
useful when using a multiple time-
frame approach. For example: This
chart shows y...
Trend Lines To Show Exaustion
Looking at the smaller chart laid on
top, if you were short after the flag
you'd be able to see that the strong
move down ...
When price moves from advancing to
a period of dull price action, you can
get a great position and be in for the
meat of t...
This is another guideline that can be a
little tricky when not actually watching
the volume indicator. It relies on
watchi...
1. Failure test of the low/high of the range
2. A buildup of a range of price
3. A continuation of the move with a
higher ...
and for context, we are coming into
this off an uptrend on this time frame.
I used a weekly chart for clarity but the
dail...
The #1 black line indicates the bottom
of the red candle which at that time
represented a the bottom of a small
range. You...
REJECTION!
Price didn't follow through and often
times moves beyond the current
extremes just represent an expansion
of the range as ...
Expansion Of Range
We get a smaller range indicated at #3
that is inside of the bigger expanded
range. The location is key as we see
that ran...
Smaller Range
Finding a trade location inside of this
smaller range given the location and
same time frame context, is not a bad
play. Y...
However, as mentioned previously, the
larger time frame does appear over
extended and at this point, a reversal
candle has...
The key for the over-extension and
possible climax is looking for price to print
a "that's different" look to it. When thi...
The second type explained above, for
me, is used to get into the current
trend unless higher time frame context
spells som...
Failing that, a smaller range forming
near the extreme of the range can
often make a great location to get into
the market.
While these may not be exactly what
Donchian was talking about, I wanted
to show that even without volume, the
chart itsel...
I encourage you to break out your
charts and see if you can identify
commonalities in various instruments
to not only veri...
Read The Chart For Trading Opportunities
Read The Chart For Trading Opportunities
Read The Chart For Trading Opportunities
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Read The Chart For Trading Opportunities

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Donchian talks about looking for a volume climax especially when the markets have made extended runs. They can be tricky because there are times that what looks like a climax, is really renewed interest in the instrument you are watching.

Ensuring that price has advanced for a length of time can be a variable in your trading plan that you need to see before thinking that the climax may signal a change of state of the market.

Trading Tip: Just because the market “blows off”, it does not necessarily mean that a reversal is taking place. Markets rarely immediately reverse but tend to balance out before changing direction.


http://www.netpicks.com/chart-no-volume-indicator/ - READ MORE

Publié dans : Santé & Médecine
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Read The Chart For Trading Opportunities

  1. 1. The Chart Is All You Need http://www.netpicks.com/chart-no-volume-indicator/
  2. 2. I want to continue on with my look back on some of the pearls of wisdom from Richard Donchian. There are so many things that were valid decades ago that are still applicable to the trading of today.
  3. 3. My first look can be found at: http://www.netpicks.com/trading-wisdom-from-yesteryear/
  4. 4. These two Donchian wisdom's center around volume however markets such as Forex, being a market without a central exchange, don't have an accurate measure of volume.
  5. 5. Trading Tip: Many traders who like to incorporate volume will use the currency futures markets in their analysis but execute in the spot market.
  6. 6. That being said, there are quite a few traders who don't use volume for any reason citing that they could not find any statistical edge using volume.
  7. 7. Instead, the term "that's different" is used which simply indicates that something unusual has happened compared to recent price action.
  8. 8. When something different happens, trading opportunities are looked for. I am going to use charts without volume so you can see how you can use the "that's different" term in relation to two more Donchian guidelines
  9. 9. Donchian talks about looking for a volume climax especially when the markets have made extended runs. They can be tricky because there are times that what looks like a climax, is really renewed interest in the instrument you are watching.
  10. 10. Ensuring that price has advanced for a length of time can be a variable in your trading plan that you need to see before thinking that the climax may signal a change of state of the market.
  11. 11. Trading Tip: Just because the market "blows off", it does not necessarily mean that a reversal is taking place. Markets rarely immediately reverse but tend to balance out before changing direction.
  12. 12. This chart shows a market that has been in a steady run up for quite a while. It's not in this graphic but the market has been making the stair stepping trend pattern of higher highs and lows. Suddenly, price rockets to the upside and eventually rolls over.
  13. 13. Also highlighted on this chart with the red circles is a pattern that is called "3 pushes". While this is one is a little sloppy, combined with the "that's different" pattern, and occurring after the market breaks out of a range (again just off this chart), I think it is worthwhile to show.
  14. 14. At times it can be difficult to differentiate between a climax move and just a strong thrust that sets up a good pullback trade. The key is to look for some type of price action that shows that the lengthy move is coming to an end as in the candle I've highlighted with a green arrow in the previous chart.
  15. 15. Highlighting The End Of The Run?
  16. 16. I find the blow off type of action very useful when using a multiple time- frame approach. For example: This chart shows your standard trend-lines and the break through the bottom plus the "that's different" look of the three preceding red candles, can alert you to be cautious on the lower time-frame.
  17. 17. Trend Lines To Show Exaustion
  18. 18. Looking at the smaller chart laid on top, if you were short after the flag you'd be able to see that the strong move down is actually not just strong selling interest but possibly the end of the move. That would have you either tightening up the stop or getting out when the market begins to turn.
  19. 19. When price moves from advancing to a period of dull price action, you can get a great position and be in for the meat of the price move. So what do you look for in the period of dullness?
  20. 20. This is another guideline that can be a little tricky when not actually watching the volume indicator. It relies on watching a few patterns emerge on the chart that may indicate that there is a buildup of either buying or selling pressure. There are three things that I personally look for and they are:
  21. 21. 1. Failure test of the low/high of the range 2. A buildup of a range of price 3. A continuation of the move with a higher time-frame context Let's break down this next chart
  22. 22. and for context, we are coming into this off an uptrend on this time frame. I used a weekly chart for clarity but the daily chart shows the range in better detail. We are also overextended on a higher time frame so while not a perfect trading example, it's the concept that is important.
  23. 23. The #1 black line indicates the bottom of the red candle which at that time represented a the bottom of a small range. You can see the test of the low and price was soundly rejected and would have made a tempting trade location.
  24. 24. REJECTION!
  25. 25. Price didn't follow through and often times moves beyond the current extremes just represent an expansion of the range as seen with #2.
  26. 26. Expansion Of Range
  27. 27. We get a smaller range indicated at #3 that is inside of the bigger expanded range. The location is key as we see that range forming in the upper half of the larger range.
  28. 28. Smaller Range
  29. 29. Finding a trade location inside of this smaller range given the location and same time frame context, is not a bad play. You get a favorable position in this example prior to the break out of price.
  30. 30. However, as mentioned previously, the larger time frame does appear over extended and at this point, a reversal candle has formed on the higher time frame.
  31. 31. The key for the over-extension and possible climax is looking for price to print a "that's different" look to it. When this occurs after a steady state run in either direction, you can either look for a position in the opposite direction or using the higher time frame, filter out a trade that may be at a dangerous point in time.
  32. 32. The second type explained above, for me, is used to get into the current trend unless higher time frame context spells something different. I look for an obvious pause in price and a sign that price is rejecting, in this case, lower prices.
  33. 33. Failing that, a smaller range forming near the extreme of the range can often make a great location to get into the market.
  34. 34. While these may not be exactly what Donchian was talking about, I wanted to show that even without volume, the chart itself can often spell out what you need to know.
  35. 35. I encourage you to break out your charts and see if you can identify commonalities in various instruments to not only verify this information, but perhaps also build upon your own trading plan.

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