Topic 9: candlesticks, system trading: mrtq13

1. You will always need Candlestick..........But the question is to what extent you will use Candlestick in your trading decision...........That you will have to decide on your own...........
Personally,I don't give too much emphasis on Candlestick now a days.As a beginner,I used to give emphasis on Candles,because I thought and read they work like a charm.They do,but not as charmfully as we think in DSE. As I got more and more involved in TA,I found there are several different things that are superior to chandlestick.......... I only look at candlestick just to know how the day was-bearish,bullish,neutral or what........That is it..........! My trading decision is not dependent on candles mostly...........
2. Besides knowing about normal candlestick,you need to know about Heikin Ashi. It is the most important one for DSE,as DSE is a volatile stock exchange. Traders sentiment is inconsistent here..........So,normal candlestick would confuse you,you need something that smooths out the whipsaws here.............
3. Use only one oscillator. Using more than one oscillator for the same purpose is technically wrong..........Macd is a bit slow. Besides,you can see the crossover of Macd(to an extent)in your candlestick chart with Moving Average............I prefer Stochastic. And STochRSI is better than Stochastic..........The choice is urs.........
4. You need to learn about Volume and how volume influence price action...........It is very important...........
5. Moving Average is important. They represent past price action and future price too! So,one should give emphasis on them..........
6. You should work on Buy,Hold,and Sell together..........We emphasis on Buy too much,whereas Hold and Sell are also important.............Especially,exit is more important than entry..............
7. You need to know about Pullback, Breakout,Reversal,and Rangebound trading style. And you need to find out which one is suitable for you to trade!
8. You need to find out a guide who will show you the way to TA. That way,your life will get easier in TA's world.It is a huge area,you will surely get lost in this world.........However,there is no guide around. So,you will have to do things on your own. So,keep going.........
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Now System Trading...........!
Let's make it simple..................! However,I don't know how to define it in simple term........
Well,let's see some rules..........
Rule 1 : Experienced traders here might have seen that when a price moves up,say for example 6%,from previous day,probability is it will rise further............
Rule 2: Again,some experienced traders here might also have noticed that when a stock has high volume with rising price movement,probability is it will rise further.
Rule 3: TAs here might have noticed that when MACD crosses the zero line,probability is the stock will rise further.
Rule 4: TAs here might have noticed that when short term moving averages crosses mid term moving averages,probability is the stock will rise further.................
Now,we have got four trading rules. We know when these rule appear in a stock,the stock usually rises...........We memorise those rules. See them in charts. We are happy...........Because we promise ourselves that whenever they will appear,we will enter into the stock........
Unfortunately,many times we can't...........Because we are driven by Brain. And Brain has limitation in processing data...........That is why,computer can defeat us in chess game..............
So,as computer can process data well and can give us the most perfect output,so let's use computer to process the data for us to trade...........
Now let's feed our trading software with the above four rules. And let's program it in such a way that whenever those four rules appear computer will tell us to buy...........
Now all we have to do is to buy after the computer tells us to buy..........
That is it..............
By system trader I mean,I program the software and give it the rules of my trading style. It then start to give me Buy/Sell/Hold signal. And I go by those signals............
This way,I don't have to think and get confused.............
Brain is a weak machine when it comes to data processing,computer isn't............
Below is an example of a trading system I am recently with...........I hope it will give you an idea of Trading System...........
-------------------**------------------ _________________1. Cut your losses short........... 2. Take your decisions on your own.... 3. Future can't be predicted.So,don't fight the market! 4. When in doubt,don't trade......... 5. Be aggressive with Bulls,be defensive with bears...