For those about to give up

[ocd]

This thread is for the guy that is 5 trades or less from being out of the trading game and feels like he has lost his confidence. He is confused, scared/timid and gun shy at the keyboard. This thread is NOT for someone who is experiencing moderate success that wants to shoot down the technique.

The one thing I've noticed is that there is no shortage of advice on the internet on how to day trade. Because of the various techniques and strategies the average guy becomes massively confused. When someone is phasing themselves out of the market it is because their head is so filled with gobbly goop, they can no longer make easy decisions.

So how do we get your confidence back up? With a simple, visual system that is so obvious that you can explain it to your 10 year old nephew. Keep an open mind that my agenda is to help you have several successful trades in a row so you get your edge, attitude and account back to normal. Here we go...


Time frame: 15 minutes

Chart indicators: WMA (weighted moving average)...3, 5, 8, 13, 21

Lower indicators: CCI (default settings of 14, 6)


How to use...

First off, I highly recommend a stock that has high volume. If there are plenty of eyeballs watching it then it will be easy to get in and out of a trade. After that, don't use volume bars to determine your trades.

Second, use only the 15 minute time frame, nothing more. You do not need to look at 3 different time frames for this method.

Third, for the WMA, each number gets its own color. You pick the color of your choice but, as an example, 3 = green. 5 = yellow, 8 = red, 13 = blue, and 21 = black. A person may ask why would you just use the 3 and 21 WMA and skip all the others...that's because you need to see everything line up perfectly before you can take action. You need to have ONE successful trade and then another and then another and then another.

These lines will consolidate like one thick rope strand just before they move...that's something you will want to look for. So if you were gonna go long the WMA lines would begin to separate themselves from one another and you would see (in this order according to my colors above) green, yellow, red, blue and finally black lines. The opposite is true for going short.

The CCI is only to confirm using the signal line crossing over the zero line the general trend.

Remember, we are trying to get your confidence back and all of these visuals will do just that.

I will attach several charts so you can see exactly what it looks like. One will do a zoomed out 10 day visual so you can see the lines constricted then I will do a 5 day so you can see the lines spreading out giving the buy sign, then a closer look using a 2 day chart. Hopefully you will be able to see them. If not, I will load them another way.

 

[ocd]

Glad to see the chart. Now I will zoom in so you can see it a little better.

The program I'm using won't allow me to make annotations but on this chart I have used GREEN circles to show where you would have entered a LONG position and a RED circle to indicate where you would have entered a SHORT position.

I have NOT shown you where you would exit your position for a reason...just so you can see the obvious, where to enter.

Notice how the WMA lines have all fanned out showing you where to enter safely? That's the key.

 

[ocd]

When you look at the chart, specifically the lines, the safe entry is when there is space between the lines...this is crucial.

Green, space, yellow, space, red, space, blue, space, black..once you can see this pattern - it is safe to enter your position. (just the opposite for going short)

Looks like I'm maxed out on attachment memory for today so I'll post another zoomed in chart tomorrow and talk exit positions.


I genuinely hope this helps somebody out there.

 

[rangarajan]

When you look at the chart, specifically the lines, the safe entry is when there is space between the lines...this is crucial.

Green, space, yellow, space, red, space, blue, space, black..once you can see this pattern - it is safe to enter your position. (just the opposite for going short)

Looks like I'm maxed out on attachment memory for today so I'll post another zoomed in chart tomorrow and talk exit positions.


I genuinely hope this helps somebody out there.

Very encouraging.
WMA used is SMA or EMA or by default u get as WMA.Ignore if my question is too basic

 

[ocd]

Very encouraging.
WMA used is SMA or EMA or by default u get as WMA.Ignore if my question is too basic

rangarajan,


Yes this a very clean and basic way to trade successfully. The WMA is similar to SMA and EMA but seems to follow the price closer...visually cleaner.

If I did not use WMA then I would use the SMA with the same numbers. The SMA gives the same information only it is a little slower than the WMA.

The EMA is the slowest of all 3 when you compare them for giving the buy signal, almost 4 candles later in some cases.

 

[anayash]

Looks like I'm maxed out on attachment memory for today so I'll post another zoomed in chart tomorrow and talk exit positions.

Use http://imageshack.us/ or http://imgur.com/ to upload your images & copy the forum code here!

This way you can upload unlimited images...w/o deleting the previous ones!

 

[ocd]

Right on Anayash!

Okay, here we go...this is taking place right now. The momo is changing from bear to bull and I will be buying in a short while.




Well, it won't let me upload any more files telling me I've exceeded my quota. But here's the link just in case...

http://i.imgur.com/wIFru.gif


Woohoo! That worked good enough...just click on the link

 

[ocd]

Now this chart is from today only showing the detail of the last few charts. As you can see, the 3, 5, and 8 have already crossed each other...just waiting on the 13 and 21 to do their thing.

Once they all line up I will buy on the next candle as it opens. BTW, I use Heiken Ashi candles but you can use regular candles, not a big deal.


Here's the link:

http://i.imgur.com/beSA9.gif

 

[ocd]

This is just a few minutes later and you can clearly see the momentum is changing to bullish sentiment. Look at the lines ON the last candle and compare it to the last chart froma few minutes ago.

http://i.imgur.com/IguKN.gif


Soon we will see a consolidation of the lines and then they will spread out. They won't be close together for very long though because of the buying pressure...it will fan out quickly (the lines will separate).

 

[ocd]

This is about 4 minutes later and you can see it happening. Notice the WMA 8, 13, 21 lines consolidating?

http://i.imgur.com/oTfwT.gif

Probably the next candle will be my entry. We'll see.