Aug 24, 2007

Spotting the 'Craziness'

No, this post isn't about the stock market in general. It's about looking at charts on my watchlist and spotting the action before my entry. Oftentimes if I can identify the 'craziness' in the price action and wait for a calmer, more orderly lead up to my entry point this will help get me into a higher probability trade. If I'm going short, I don't like to see lower tails preceeding my entry. If there are, I want my entry bar to 'take out' the tails with a strong down bar. I apply the same reasoning to long entries. Below is an example from last week, FRO (5-min).
 
First, I spotted the 'craziness' and waited...


 
Then, there was calm along the 38.2% level before my entry 'took out' the lower tail...

So, the point here is this... before entering a trade just check for the 'craziness'. It could mean the difference between a nice gain or a quick chop.

3 comments:

Jerry said...

Great acticle. how do you do that square that fade?

BTW, QT did answer my email finally. But they didn't solved all my problem in the new version. They made it worst...

OONR7 said...

jerry... thanks, I actually use a separate program to make the square (snagit). What question did you have for QT?

Jerry said...

I informed them problem with Historial chart backfill (stockwatch), they took it of the list on new version and said fixed it. Get service. Auto fib was never replied.

The number under bandwidth, does the bigger the number mean more cpu power used? So weird that I only us 10-15 symbols and no other program running and this still occured.