7 I recently read a blog post written by Ricky Roma of the iBC blogger network (@ibc_bn) titled Revenge trading and shorting crazy momo stocks … like mating hedgehogs. Its a very good read that encompasses the psychology of a trader on any given day as I believe many have been there on many occasions. Overall a well written and detailed post.
In the comments section I mentioned how I like to inverse the charts when looking at shorts. For me this helps psychologically as I am constantly looking for bullish setups and the patterns start to get ingrained in one’s head. For me it is at times a challenge to look at the charts in the opposite way. While many others can successfully short, it is one thing that I am cautious of and in times when markets are like they currently are I either short with small capital or step aside.
The time frame for the inverse charts are on daily/weekly charts and not so much for daytrades. Reason for this is time in the trade and execution speed. On the inverse charts I am more looking for patterns, longer term targets, & using indicators while daytrading it is mainly price action and volume.
Below are the inverse charts of the major indices. While not sure of other platforms, I use thinkorswim and just put a minus sign in front of the stock/index symbol. So with the mindset of the chart in the up direction, even though we know it is inverse and would represent a short position, would you buy or sell these charts. Charts listed in following order from $DJI, $SPX, $COMP, $RUT.
7 Responses to “Have You Ever Traded This Way?”
zenhunter
It’s all about support and resistance. In your case, it is now resistance. Will the resistance hold?
Back to original perspective, the question will be, “Will the support hold?”
I’ve no idea; so I stay mostly in cash.
redman59
Yea I was trying to figure out how to word it but basically if one saw a bull flag on these charts, then they would take a short position since these are inverse charts. For me its easier to look at all charts the same, kind of reminds of leftside/rightside part of the brain. Also its kind of fun to look at them like this.
But overall yes I agree in that cash is the easiest thing to do and really puts the mind at ease instead of taking a hit in either direction as big intrady moves happen as in last week.
elizamae
Haha, I started doing the same thing with very favorable results last summer. I was using the snip tool and opening the file in MS Paint and doing a 180 degree rotate.
We’re fuckin high tech over here.
Anyway, all 4 of those that you posted look like charts that want to go ‘higher’, no? The last three in particular. Interesting stuff, thanks for sharing.
redman59
Haha, got to do whatever works! Yes I found the same thing, it makes it easier to look at all charts the same way, not push/pull on the brain. I was happy when a simple minus sign in fron of the symbol would flip it.
I agree these charts look like they are going higher, so market goes lower. Holding support & flagging and/or descending triangles depending how you use them.
Thanks for the comment.
Trin
Keep it simple, there are new trends, these i prefer best because you get a lot of momentum with these. And then there are the continuation trends, most likely if it looks like a obvious trend, you are too late to the party and it will whipsaw you out of the position or just go further against you than you could imagine.
Use the moving averages to determine all of this. A cross over of MA indicates a potential new trend, MA that is just moving in one direction with out crossing over is a trend that you might have missed. We all know the dangers of getting in too late.
redman59
I prefer new trends as well for reasons you stated. Another reason that I like to flip the charts. If one were always bullish and they looked at this chart they would think a good opportunity on the pullback, which would mean a bearish market outlook for right now.
Don’t Get Caught Up in the News « redman59
[…] above charts are inverse charts of the SPX. I state the reasons why I like the charts here. With many traders being long bias, it is a good way to look at the chart from another perspective […]