In a recent post I discussed a new indicator that I have built to identify pullbacks. Recently I was asked if I was trading the indicator. Absolutely not!
I use indicators for two purposes - firstly to identify specific criteria that are part of my trading plan, or a trade setup that I am testing. For example, I have an indicator that identifies swing high and swing low fractal bars. Using the indicator allows me to adjust the detailed criteria that define these price patterns so that I can speed up back-testing.
Secondly I use indicators as a measure of momentum, or more correctly, changes in momentum. This is easiest to understand using an analogy with physics. If an object is moving it has 3 characteristics: position, velocity and acceleration. I use price charts to assess position, price charts plus moving averages to assess velocity, and indicators to assess acceleration.
Saturday, 10 October 2009
Thursday, 8 October 2009
Target Reached
The title says it all!
+target.png)
And just as a reminder, here is the chart from when the target was first identified:
.png)
+target.png)
And just as a reminder, here is the chart from when the target was first identified:
.png)
Friday, 2 October 2009
EURJPY Gartley Outcome
Hot on the heals from the Gartley for GBPCHF, here is the outcome for the 2nd Gartley pattern that I identified, this time on EURJPY.
+outcome.png)
The pattern successfully identified the entry level (green line segment) and the target price (light blue line segment). Just to be very clear, this is not a retrospective analysis. The levels were identified on an earlier post whilst price was still moving upwards.
The final impulse move downwards is attributable to the Non Farm Payroll announcements at 13:30 (UK time) that delivered worse than expected results (although maybe not so surprising).
So now I'm getting quite excited by geometry!
More of a geometric challenge for me was the EURUSD posting from yesterday. The wedge geometry identifies a bullish move to a target price level. My entry price for a trade was below the level a the time, and it looked like I had missed the chance of an elegant entry. But a poor NFP result was expected to push USD higher, which could have created a move totally contrary to the geometric "prediction". So was looking like either the move wasn't going to happen, or I had missed it. I was curious to see how the geometry would deal with a significant news event. I thought it would just break the pattern, but actually the outcome was a bullish impulse move preceded by a spike downwards - giving me both my entry and a push towards my target. WOW!
.png)
+outcome.png)
The pattern successfully identified the entry level (green line segment) and the target price (light blue line segment). Just to be very clear, this is not a retrospective analysis. The levels were identified on an earlier post whilst price was still moving upwards.
The final impulse move downwards is attributable to the Non Farm Payroll announcements at 13:30 (UK time) that delivered worse than expected results (although maybe not so surprising).
So now I'm getting quite excited by geometry!
More of a geometric challenge for me was the EURUSD posting from yesterday. The wedge geometry identifies a bullish move to a target price level. My entry price for a trade was below the level a the time, and it looked like I had missed the chance of an elegant entry. But a poor NFP result was expected to push USD higher, which could have created a move totally contrary to the geometric "prediction". So was looking like either the move wasn't going to happen, or I had missed it. I was curious to see how the geometry would deal with a significant news event. I thought it would just break the pattern, but actually the outcome was a bullish impulse move preceded by a spike downwards - giving me both my entry and a push towards my target. WOW!
.png)
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