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Thursday, April 26, 2007 |
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I enjoyed this quote by Teresa Lo so I thought you might too:
"I think most people simply don't realize that the market only has 2 modes:
trend (directional or grinding) and chop (trading range or consolidation pattern).
The most profitable is the directional trend mode, and there are only two setups:
retracements and tests.
New traders should attempt to trade the bread and butter setups, i.e. only the retracements and tests in the directional trend.
That's
why the oldest piece of advice is: "The trend is your friend (trade
retracements) until the end (test), when it bends..."
That's
all there ever was, no matter what anyone says, and the key it to KISS.
So many traders and educators make it seem like they have an "arsenal
of weapons" for trading, but in the end, it's all moot, if they cannot
identify, which of these few conditions they are attempting to exploit,
and I am sure that we can do this without even going into multiple time
frame analysis by slapping on a few moving averages..."
Forex Trading
april 2007
forex
trend
Personally, I find these comments close to meaningless. I can't identify trending/choppy conditions (other than with the twisted mirror of hindsight). If I could, I would be a very rich man indeed ... which I am not. I, on the other hand, think she is completely correct. Ditch the moving averages though, if you can't see what is going on just by looking at the chart... They ARE meaningless. I wonder if people like her ever make money trading. Personally I doubt it. I agree with her and completely with Craig (ditch the moving averages). Combined with good money management it's pretty easy to make a profit. There are two separate issues here, the validity of the comments and if the person making the comments makes money trading. The fact that she seems to sell forex trading courses would indicate (to me) that maybe she isn't the best trader, however this does not invalidate the truth of the comments. (To Caravaggio) Take a look at the EUR/USD, if you can't tell that this currency is consolidating after a trend on the daily, then I would politely suggest you save your money until you can. EUR/USD has been on a strong uptrend today. On the daily charts going back 100 days it is also on a strong uptrend. On the weekly and monthly charts it is also on a strong uptrend. I fail to see the consolidation. I suppose it depends on one\'s time horizon. Anyway, my point is that historical information may be used to judge momentum to an extent, but I can\'t use it to say whether EUR/USD is still on an uptrend, with any certainty, or whether it is truly consolidating. The past is the past. Looking at a chart (with or without the decoration of additional indicators) can be insightful, but I fail to see how we can infer an obvious trend or consolidation, in reference to future price action.
I believe comments these (Lo\'s) from the so called educators sucker in the newbies, conning them in to believing it is easy to make money in trading. It\'s wholly unjust. I don't think anybody is saying it's easy, I agree with your comments on educators. On the EUR/USD, it seems to have ended pretty much where it started, so I also think it's in a consolidation phase also (a least though the second half of the week). All one has is past price action, if you disgard this, how do you actually make a trading decision? Hi Craig, I'm not saying past price action is meaningless. For some, it is the be all and end all, and I am not qualified to judge. I think it was just Lo's comment that <i>" ...I am sure that we can do this without even going into multiple time frame analysis by slapping on a few moving averages..." </i> that got my goat, because she makes it sound easy. |
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Last Updated ( Thursday, April 26, 2007 )
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