Question on developing trading method

[wzcalling]

As a new trader, I have a question how to develop personal trading method. As the market can be categorized as trend or swing market, shall we try to find a or several indicators to work well all the time? if not and we need to trade differently in both markets, then how to let the system know it's the time to switch? Hope you can share your thoughts:clapping:

 

[bunny]

Before developing any trading system, the first thing you may like to know is the phase in which the market is. There are 4 phases:

1. Accumulation
2. Mark up
3. Distribution
4. Mark down

Google for more info on the phases. The purpose of any trading system you build, should be, to identify the phase in which the stock is. Once you identify it, it is only a matter of time before your position shows profits.

 

[veluri1967]

I hope this link helps to uncover market phases.

http://www.coveredcallswins.com/chartpatterns/FourMarketPhases.html

 

[kaly422000]

thanx for a good link.

 

[jagankris]

As a new trader, I have a question how to develop personal trading method. As the market can be categorized as trend or swing market, shall we try to find a or several indicators to work well all the time? if not and we need to trade differently in both markets, then how to let the system know it's the time to switch? Hope you can share your thoughts:clapping:

It is an excellent question.

Positional trading systems especially trend following systems gives lot of whipsaws during a trading market or range bound or consolidation phase.

A way I could think is to distinguish a trending and trading market is trend strength.
(A wild guess - A combination of ADX,OBV true range,Momentum,Volume)

A trend strength indicator could be a possible solution for this problem.

Seniors please advice.

Also please let us know why stocks consolidate ?
What happens during the consolidation phase ?
How to determine if it is an accumulation or distribution phase ?

Thanks in advance.

-JK