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Just looking for a little advice and thoughts, I trade the future index’s and I look for there things when I’m trading trend, timing, and momentum. I’m pretty good at determining a trend and timing but fall short with the momentum part. What I mean by this is sometimes when the markets go horizontal (flat or some same say low volume), my trades don’t work out. The reason seems to be because there’s not enough price change to carry thru on the trend.
I have started to look at a few things to try to correct this. One is to apply a form of bands or channels (such as boiler bands or Dr. Elder’s auto envelope). Then I wait for the price to break out above or below these indicators – by waiting for this it seems to show a possible breakout in that direction.
What do you think of that? Is there a different indicator I might look at to determine this concept?
Second I’m thinking about looking a volume but I’m not sure what evaluate in this area. Any ideas so get me started on how to use volume to determine momentum within the market?
I’m not asking any one to give me all there trade secrets and an easy answer to my question. I enjoy the research to learn how the values work and how the markets work. Maybe I’m completely off when I think that volume and some type out breakout indicators could determine momentum but hopefully it will improve my trading and it just might be worth looking into, so hopefully someone can offer me some indicators to look at or a book / web article to read.
I could also post a jpeg if my question is not a clear as it should be.
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I don't know if this will help you but IIRC Elder's thesis is that the vast majority of "breakouts" beyond his AutoEnvelope bands will fail, and that pros tend to fade these against the potential breakout. His use of the envelope is to buy/short near the middle range (around the EMAs) and sell/cover as the price approaches the outside band. Rinse and repeat in a trading-range market as the price cycles between the bands. I've read more than once that studies indicate most markets on average are in trading ranges about 80-85% of the time, and rarely trending.
If you want to play for a breakout to a new trend, either wait for confirmation that a breakout has occurred, or set very tight stops when you take a position because the odds are that it won't actually be a breakout.
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Rank: Advanced Member
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Joined: 3/23/2005(UTC)
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Really? interesting facts. I will have to take a look at that a little more.
But I always find when a trend is confirmed the price is outside the bands. And as long at the trend is not over bought or over sold (I determine that with few indicators), the market seems to carry thru another key thing seems to be volume. The higher volume thus the range in price and speed of the price is changing. A good example of what I'm talking about is 01.31.07 all morning the price was in a very tight range (between the bands - bouncing of the top and bottem bands), plus really low volume. Then at 2:20EST the price broke the bands plus the volume jumped, due to the FMOC meeting results - this jump turned into a really nice trend. Does that make any sense?
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Rank: Advanced Member
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Underground,
My experience taught me many breakouts are very short in nature until it breaks a trendline/supp/res in a longer time frame chart than the time frame i am trading-in.
Asish
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Rank: Advanced Member
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uasish wrote:
Underground,
My experience taught me many breakouts are very short in nature until it breaks a trendline/supp/res in a longer time frame chart than the time frame i am trading-in.
Asish
Asish,
What timeframe do you trade?
Sa
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