Sunday, July 12, 2015 5:57:54 PM
Buy low Sell high..."relative" to what?
"Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble ... to give way to hope, fear and greed." Benjamin Graham
Have a look at these Bands "relative to Price"...
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=80559436
"The truth is that trading, both successful and unsuccessful, is more about psychology than tactics." - Jack Schwager
Math aptitude will help you become a dealer, make Markets if you dare, excute customer orders, but you won't be able to make $$$ by speculating in the Markets. You can't, you're not smart enough. The Markets aren't predictable enough. 90% of all trading is "technical analysis" which you are too lazy to learn. The other 10% of Market movement comes from rogue waves of economic data shocks, which surprise and wash everyone overboard, destroying the latest chart pattern you were following. Its never been truer: How do you make a small fortune trading the Markets? Start with a large fortune and you might have a chance. You don't want to do this for a living. Get out while you can. ...Chris Rupkey
These are ten of Bob Farrell’s most famous observations:
1. “Markets tend to return to the mean over time.” For those of you who’ve taken statistics, you know exactly what this refers to: stocks often move too far in one direction as euphoria or pessimism clouds people’s thinking. Investors lose perspective and start believing the little devil on their shoulders.
2. “Excesses in one direction will lead to an opposite excess in the other direction.” I think of it like bungee jumpers whose cords stretch out and then compress multiple times before they come to rest or achieve equilibrium.
3. “There are no new eras – excesses are never permanent.” As the latest hot sector climbs higher and higher, you inevitably hear variations of the chorus shouting “it’s different this time”. Of course, human nature does not change so it never really turns out to be any different.
4. “Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.” The smart money locks in profits which leads to significant selling and inevitably to a correction.
5. “The public buys the most at the top and the least at the bottom.” It’s been this way since humans invented commerce.
6. “Fear and greed are stronger than long-term resolve.” Research in behavioral finance has shown that stock market gains make us exuberant; they enhance well-being and promote optimism which makes investors like to buy. Losses, on the other hand, bring sadness, disgust, fear and regret. Fear increases the sense of risk which thereby makes investors shun stocks.
7. “Markets are strongest when they are broad and weakest when they narrow to a handful of equities.” Think of it as strength in numbers. Broad breadth (i.e. market participation) and big volume is important. When wide ranging momentum channels into a small number of stocks, the top is near.
8. “Bear markets have three stages – sharp down move, reflexive rebound and a drawn-out fundamental downtrend.”
9. “When all the experts and forecasts agree, something else is going to happen.” Farrell suggests that patient buyers who raise cash in frothy markets and reinvest when sentiment is darkest can profit nicely.
10. “Bull markets are more fun than bear markets.” It has been my observation that historically the markets have rewarded optimists to a far larger degree than pessimists. I prefer to play in the bulls’ camp.
Trade well; trade with discipline!-- Gatis Roze
Bollinger Bands=Volatility Bands=sentiment...price at the outer bands frequently suggest excesses=overbought/oversold/buylow/sell high. These bands frequently will act like "pivot points"="reversals" on the way to "mean reversion". Price does not always stop at the "mean"=the moving average contained within the parameters of the Bollinger Bands...
Mean reversions out of extremes are the most powerful and profitable forces in all the financial markets. Riding one has enormous benefits for your wealth.
Financial-market prices and sentiment are like a giant pendulum. The farther they are pulled to one extreme by excessive greed or fear, the farther they necessarily swing to the opposite extreme in the subsequent mean reversion. Like pendulums, these reversions don’t magically stop right in the middle at normal again.
Their kinetic momentum carries them through to the opposite ends of their arcs.
But overshoot extremes don’t last for long, as the universal greed necessary to fuel them quickly burns itself out.
John Bollinger estimates that 85% of a security’s daily closing prices will fall within the channel (Bands). (...I suggest its more like 95% of all closing prices will close within the Bands...)
Bollinger also devised a computation he refers to as %B, a ratio, to describe where the price rests within the channel. The calculation is the closing price minus the lower band, and this
difference is divided by the difference between the upper band and the lower band
%B INDICATOR is PRICE contained within the parameters of the Bollinger Bands...%B simply stretches the bands out flat= where 1 on the indicator= the upper Band or the2 standard deviations above the "mean"/average...0.75= the one standard deviation Band above centerline (mean/average) =0.50 = the moving average/mean...0.25 = the one deviation band below the "mean" and "0.00" = the lower 2 standard devation Band. These 2 outer Bands can be considered as overbought/ oversold level on the %B indicator and attemps to answer the question "overbought/oversold "relative to what?...and buy low sell high "relative" to what?...and so; you can expect these bands to act like pivot points/reversal levels at the one and two standard deviations from the "mean"/average.
Now; look at the %B indicator on this USO chart...
Looking at the next price chart with the 3/5/10 Grail averages=you will frequently see these averages converge at the one standard deviation band and "Price" starts trending...(...the trend is you friend...) so the one deviant Bands are also significant relative to what the faster moving averages are doing and telling you. (price has to get above the 3 and 5 average in order to turn them UP...reverse from being Down...simple math and you're an expert...)
Same chart with some red and green arrows pointing at reversals at the Standard Diviant Bands/Volatility Bands. You will also notice the Stochastics setting of 20,3...I did this to match the parameters of the Bollinger/Volatility Bands 20,2...stochastics is a sentiment indicator and I want to read sentiment based on the past 20 days ...the blue vertical lines are when stochastics 20,3 crossed above the"20" stochastics oversold signal line giving a buy signal.
Same chart but with 60,2 Bands...as pivot points...
Now, I can overlay a 20,2 Bollinger Band on top of the 60,2 Bands and it will be a short term view of price contained within the parameters of an intermediate timeframe=3 months. The 20,2 Bands works like a river current in a 60,2 river...and the goal in this Casino of overbought and oversold is to go with the flow...currently we are looking from a very oversold condition...
Now we have both 20,3 and 60,3 stochastics oversold=oversold "relative to the near term and the intermediate term...same for the CCI 20 and the CCI 60...but on the %B 20; it says near term BUY (...this proves price is always the best indicator...) and the %B intermediate term is oversold...If you took this trade maybe you would start with a larger sized position because price is so very oversold on both short term and intermediate term...
So in this Casino all price reversals happen "relative" to Bollinger Bands/Volatility Bands and signal lines on your technical indicators...in this case relative to the 20 day average and 60 day average. The chart will always tell you what its doing...you only have to listen and KNOW where you're at=relative to the parameters of the Bollinger Bands...
If you don't know where you're at and how PRICE got there...How will you know where you're going?
The only thing that is going to have a more immediate impact on these technicals is NEWS and how the Market re-acts...the rest is sentiment/psychology based on the Market's re-action to recent NEWS.
...90% of all trading is "technical analysis". The other 10% of Market movement comes from rogue waves of NEWS...economic data shocks, which surprise and wash everyone overboard, destroying the latest chart pattern you were following.
Enjoy...
Good Trades
Buy low Sell high..."relative" to what?
"Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble ... to give way to hope, fear and greed." Benjamin Graham
Have a look at these Bands "relative to Price"...
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=80559436
"The truth is that trading, both successful and unsuccessful, is more about psychology than tactics." - Jack Schwager
Math aptitude will help you become a dealer, make Markets if you dare, excute customer orders, but you won't be able to make $$$ by speculating in the Markets. You can't, you're not smart enough. The Markets aren't predictable enough. 90% of all trading is "technical analysis" which you are too lazy to learn. The other 10% of Market movement comes from rogue waves of economic data shocks, which surprise and wash everyone overboard, destroying the latest chart pattern you were following. Its never been truer: How do you make a small fortune trading the Markets? Start with a large fortune and you might have a chance. You don't want to do this for a living. Get out while you can. ...Chris Rupkey
These are ten of Bob Farrell’s most famous observations:
1. “Markets tend to return to the mean over time.” For those of you who’ve taken statistics, you know exactly what this refers to: stocks often move too far in one direction as euphoria or pessimism clouds people’s thinking. Investors lose perspective and start believing the little devil on their shoulders.
2. “Excesses in one direction will lead to an opposite excess in the other direction.” I think of it like bungee jumpers whose cords stretch out and then compress multiple times before they come to rest or achieve equilibrium.
3. “There are no new eras – excesses are never permanent.” As the latest hot sector climbs higher and higher, you inevitably hear variations of the chorus shouting “it’s different this time”. Of course, human nature does not change so it never really turns out to be any different.
4. “Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.” The smart money locks in profits which leads to significant selling and inevitably to a correction.
5. “The public buys the most at the top and the least at the bottom.” It’s been this way since humans invented commerce.
6. “Fear and greed are stronger than long-term resolve.” Research in behavioral finance has shown that stock market gains make us exuberant; they enhance well-being and promote optimism which makes investors like to buy. Losses, on the other hand, bring sadness, disgust, fear and regret. Fear increases the sense of risk which thereby makes investors shun stocks.
7. “Markets are strongest when they are broad and weakest when they narrow to a handful of equities.” Think of it as strength in numbers. Broad breadth (i.e. market participation) and big volume is important. When wide ranging momentum channels into a small number of stocks, the top is near.
8. “Bear markets have three stages – sharp down move, reflexive rebound and a drawn-out fundamental downtrend.”
9. “When all the experts and forecasts agree, something else is going to happen.” Farrell suggests that patient buyers who raise cash in frothy markets and reinvest when sentiment is darkest can profit nicely.
10. “Bull markets are more fun than bear markets.” It has been my observation that historically the markets have rewarded optimists to a far larger degree than pessimists. I prefer to play in the bulls’ camp.
Trade well; trade with discipline!-- Gatis Roze
Bollinger Bands=Volatility Bands=sentiment...price at the outer bands frequently suggest excesses=overbought/oversold/buylow/sell high. These bands frequently will act like "pivot points"="reversals" on the way to "mean reversion". Price does not always stop at the "mean"=the moving average contained within the parameters of the Bollinger Bands...
Mean reversions out of extremes are the most powerful and profitable forces in all the financial markets. Riding one has enormous benefits for your wealth.
Financial-market prices and sentiment are like a giant pendulum. The farther they are pulled to one extreme by excessive greed or fear, the farther they necessarily swing to the opposite extreme in the subsequent mean reversion. Like pendulums, these reversions don’t magically stop right in the middle at normal again.
Their kinetic momentum carries them through to the opposite ends of their arcs.
But overshoot extremes don’t last for long, as the universal greed necessary to fuel them quickly burns itself out.
John Bollinger estimates that 85% of a security’s daily closing prices will fall within the channel (Bands). (...I suggest its more like 95% of all closing prices will close within the Bands...)
Bollinger also devised a computation he refers to as %B, a ratio, to describe where the price rests within the channel. The calculation is the closing price minus the lower band, and this
difference is divided by the difference between the upper band and the lower band
%B INDICATOR is PRICE contained within the parameters of the Bollinger Bands...%B simply stretches the bands out flat= where 1 on the indicator= the upper Band or the2 standard deviations above the "mean"/average...0.75= the one standard deviation Band above centerline (mean/average) =0.50 = the moving average/mean...0.25 = the one deviation band below the "mean" and "0.00" = the lower 2 standard devation Band. These 2 outer Bands can be considered as overbought/ oversold level on the %B indicator and attemps to answer the question "overbought/oversold "relative to what?...and buy low sell high "relative" to what?...and so; you can expect these bands to act like pivot points/reversal levels at the one and two standard deviations from the "mean"/average.
Now; look at the %B indicator on this USO chart...
Looking at the next price chart with the 3/5/10 Grail averages=you will frequently see these averages converge at the one standard deviation band and "Price" starts trending...(...the trend is you friend...) so the one deviant Bands are also significant relative to what the faster moving averages are doing and telling you. (price has to get above the 3 and 5 average in order to turn them UP...reverse from being Down...simple math and you're an expert...)
Same chart with some red and green arrows pointing at reversals at the Standard Diviant Bands/Volatility Bands. You will also notice the Stochastics setting of 20,3...I did this to match the parameters of the Bollinger/Volatility Bands 20,2...stochastics is a sentiment indicator and I want to read sentiment based on the past 20 days ...the blue vertical lines are when stochastics 20,3 crossed above the"20" stochastics oversold signal line giving a buy signal.
Same chart but with 60,2 Bands...as pivot points...
Now, I can overlay a 20,2 Bollinger Band on top of the 60,2 Bands and it will be a short term view of price contained within the parameters of an intermediate timeframe=3 months. The 20,2 Bands works like a river current in a 60,2 river...and the goal in this Casino of overbought and oversold is to go with the flow...currently we are looking from a very oversold condition...
Now we have both 20,3 and 60,3 stochastics oversold=oversold "relative to the near term and the intermediate term...same for the CCI 20 and the CCI 60...but on the %B 20; it says near term BUY (...this proves price is always the best indicator...) and the %B intermediate term is oversold...If you took this trade maybe you would start with a larger sized position because price is so very oversold on both short term and intermediate term...
So in this Casino all price reversals happen "relative" to Bollinger Bands/Volatility Bands and signal lines on your technical indicators...in this case relative to the 20 day average and 60 day average. The chart will always tell you what its doing...you only have to listen and KNOW where you're at=relative to the parameters of the Bollinger Bands...
If you don't know where you're at and how PRICE got there...How will you know where you're going?
The only thing that is going to have a more immediate impact on these technicals is NEWS and how the Market re-acts...the rest is sentiment/psychology based on the Market's re-action to recent NEWS.
...90% of all trading is "technical analysis". The other 10% of Market movement comes from rogue waves of NEWS...economic data shocks, which surprise and wash everyone overboard, destroying the latest chart pattern you were following.
Enjoy...
Good Trades
Buy low Sell high..."relative" to what?
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
