speed26 wrote:Im currently composing in a document all posts of relevance (to me) from Lukz thread.
es/pip, dragon, mo, adaseb...just trying to filter the relevant stuff, it gets crazy in there!
I think it isnt just a case of 'rules' for ZL/Momo. Im starting to see multiple dimensions to the markets. Only certain ones make coin consistently, meanwhile zl's and momo are a guideline, a 'heads up!', the market showing its cards on momentum/exhaustion.
Meh, just rambling here...
You are not rambling here lol. You are actually quite right spot on.
ZLines and Momo do work.
From what I see the easiest way is to look for extremes, since at any extreme, there are always people leaving the market to create retracements. If there are enough people leaving to make the retracement become a reversal, price WILL tell you through Zlines and Momo. Its almost sure profit.
Say if you see a Zline broken by a Momo on a M30 chart off a D1 or W1 or MN1 extreme, try checking the PA on a M1/M5 level. There is a high chance you will see a 'reversal pattern' like triple top or head&shoulders there. This is the part many do not understand, even myself till recently. Even through I understood PA on a micro vs macro level, I had to find some way to 'link them up correctly'.
IMO a lot of it boils down to 2 problems on the whole :
Charting Methodology problem :
Generally a technical issue
The best we have are candlestick charts with OCHL. This chart has all the information we need, but is not so perfect.
These candles are not meant to be read individually, but to read them as a whole with some kind of context. The context used can be either price or/and time. This means we have to find ways to 'link' them up.
This is the hard part. With experience it gets easier, but certain indicators do help at some level. The problem is which indicator? Basically any indicator that does not add to what price is telling you, but tells you more clearly what price is doing.
There are various ways to do :
-Edges from Statistics/Follow Candle Body Color (time + price based : e.g. TRO)
-CC/Momo/ZLines (time + price based : e.g. MO, dragon, ES)
-P&F/Renko (price based e.g. Snap, MO)
-Zigzags/Waves/Swings/Trendlines (time + price based e.g. Ray Barros, Masterforex, MO)
If it takes you too long to interpret, its usually the following problems :
1-Its the wrong indicator as it is adding to the price action data unnecessarily, not making the true PA come out. Our brain can only handle at the most 4-6 pieces of information at any one time. Here there are 2 approaches :
a-Keep it as simple as possible. Most of the time these methods involve drawing a few horizontal lines at the right places. Then trade off how market reacts to these lines.
b-Make an indicator to do the reading for you, then summarize the result in the most simplest and most straightforward way possible
Try to get the best of both worlds. However both approaches face the same problem : you must be very sure that the methodology is timeless and enduring, regardless of market changes. We have to define what is 'need'. The simple answer is 'whatever that works'. Its either you :
a-try it purely off the advice of other successful traders WITHOUT adding anything to it. This needs time and experience. This is actually the best way, since the successful trader can also correct your psychology for you (if you allow him). The problem is that not all good traders can teach just as well, since trading itself is an art and can be difficult to 'impart'. And not all students are willing to let go and change their ways. Sometimes its a personality/emotional issue as well.
b-do your own research. This needs time and experience again. This is hard if you don't know how to do coding / data analysis / actual PA research.
c-a combination of both, the obvious ideal
2-It is the right indicator, but the trader has not let go of his previous incorrect interpretations about it, which prevents him from using it correctly. This is regardless of level of experience. This is also why someone new at trading can actually be successful, but later start to slowly fail.
Finally, not to mention that almost all trading platforms are created with the broker in mind, not the trader. When you know this, your thinking about handling the markets WILL change. One will be asking oneself why go through all the trouble when they are trying to fool us anyway.
Why bother to complicate and make a science of possibility false information? (reminds me of Signalbender/Stealthtrader LOL) Might as well keep it as simple as possible.
Find out what is the reality of price action, then use it straight off. A lot of this is just pure simple observation (without interpretation, the slow but sure way) and statistics (the faster but possibility problematic if one does it wrongly).
The best way to solve these problems is to start anew with a naked chart(!!!) Its painful, yes.
This is a very very thin line. I am guilty of it more than once, but its a good learning and humbling process. Which brings us to the 2nd problem.
Trader problem :
Generally a psychological issue
Letting go of all previous perceptions/interpretations and relearning how to see.
The trader still has to deal with himself eventually. Up is up, down is down. A lot of traders (including myself) like to ask additional questions like 'how much? when?' These happen because of fear. Fear of what?
a-fear of the methodology not working or using it wrongly when you actually got both the methodology and usage is correct. This is easier to solve if the stronger trader is trading beside you.
b-having a right methodology but using it wrongly. Again, the stronger trader is trading beside you will be able to spot this for you.
c-having a wrong methodology and also using it wrongly. This is the hardest to spot. Most traders are here. They get the wrong mentors to assist them with their trading. It aren't totally their fault, really.
Admittedly speaking, if one 'solves' the charting methodology problem, handling the trader problem does get a lot easier. But its not the all in all solution.
Yeah, like how others said it before, it does take some time. Don't rush it.