If I were trading the S&P, I'd only feel comfortable using wider swing sizes than typical stock scalping techniques. Too many whipsaws in the 1-min to 15-min range. There are comments about the 90-minute SP Alternation cycle in LESSON 4. I'd likely gear my trading against that. So the holding period would probably be 30-min, 1-hr or 1 1/2 hours.

My daily charts use a MA rainbow set for 6, 13, 18, 50, 150 and 200 day EMAs. The intradays are set to 5 and 8 bars within a 13 bar 5-min BB. You will see a ton of references and examples as you go through the material about using that BB for intraday charting. These will definitely show you how I feel about them.

New low is generally a media term for new 52 week low. Relative low is used when a stock penetrates the last prior low that was followed by an bounce or rally. It's all relative to the time frame you're looking at. If something is wiggling up and down over weeks, its also wiggling up or down over days and 5-min bars. You're interest is primarily in the time frame you're trading and the next time frame above that.

I don't use MACD but do use MACD histograms. In either case, I would never make a prediction on a stock's direction solely upon a divergence with it. You'll note my point of view that the indicator supports the pattern, not the other way around. If MACD diverged, I would still not decide to buy/sell/whatever. I would probably get defensive and if not positioned, look for other reasons to buy or sell.

Its not the time frame of the market, its the liquidity. For highly liquid stocks, you can use candles just like on the daily. The limitations are the same. The trick with candle patterns is location, location, location. Best to focus your attention when they occur at the fringe of range (natural reversal points) and during dynamic ramping trend moves. Also try to insist on above average length although sometimes you can't get that.

I don't like fibs on 5-min charts most of the time. Ranges aren't wide enough to eliminate enough noise so the retrace levels aren't useful. I use them almost exclusively on daily charts. The trick is to overlay more than one to see where they converge.

Channels work great on very short term charts and are easier to find than simple trendlines. BBs for a 5-min are a different animal than a daily. You see numerous references to 5-8-13 on a 5-min. I couldn't trade without it. But a standard 20 period works fine on a daily and the patterns on an intraday BB and daily are very similar. The usefulness of comparing 5 against 15-min depends on your holding period. It needs to be very short to be useful. The best thing about a 15-min is that you can use it like a 5-min without the whipsaws, i.e. I don't really see it as the NEXT time frame larger than the 5-min (OK you got me on the x3 thing but its just my observation). I tend to look at time frame as intraday, daily, weekly and I usually base my intraday trades off something on the daily trend.

The flow is everything but no two situations are alike. The markets sets stuff up just to fool you. The SEEING thing will eventually get through past that.

The best place to start on one bar reversals are candlestick formations. If you don't have any book on them, here's an OK source:

Candlesticks

Looking at any one bar reversal, you need to take a giant step back and see where the day is in regard to the larger trend. What you're always looking for is CONFIRMATION. For example a double top confirms at the point where a stock breaks below the support of the bottom of the congestion containing the double top. Very often, all you're looking at is a short term swing, i.e. stocks wobble back and forth trying to find their way until a direction kicks in.

The violation of the band itself doesn't generate a signal in the opposite direction.

From PREPARATION:
A strong trend in either direction will exhibit price bars clinging to the top or bottom band like curtain rungs. Finally, when price shoots out the end of a band, it's overbought or oversold and should pullback immediately within its limits.

From: EXECUTION
Rallies and declines love clinging to Bollinger Bands. But when they move sharply into (or through) a band extreme, they often find momentum resistance. These predict short-term reversals that bleed your profit.

Both these observations respond to positions already held in the direction of the price movement, i.e. protecting profits by exiting on price expansion, for example. Look at the GIF I've attached to this e mail. Note the short-term reactions on the 1-min chart. These are the countertrend moves pulling price back into the bands. To consider them as trades is actually a relativity error since the trend is obviously down.

The comments relate to holding period. When your strategy stretches out over a longer period of time, both the gain you're seeking and the loss you're willing to sustain will rise. This allows you to stay in more positions through minor violations (and still trust the successful outcome). Intraday support/resistance levels have much more noise than daily ones. In other words, they get violated a lot more often.

Fibs are a KISS (keep it simple stupid) thing for me. I only use 38%, 50%, 62%. If a stock retraces 10, 15, 20%, etc and I don't have a retrace in a trend at 38, 50 or 62%, there's no trade unless something else triggers it. Fibs exist in other levels but you can drive yourself crazy looking for them and not get the job done. Remember that you're waiting for the trade to come to you.

The classic trade strategy swing trades in ranges and momentum trades in trends. Swing areas are loosely defined by constrictive upper and lower boundaries, as you note. Indicators like MACD and moving averages should flatline or go sideways during swing periods and move up or down during trends, along with price. Swing trades work best off forward indicators like stochastics (when the backward ones like MACD flatline).

Negative feedback is generally associated with range while positive feedback is associated with trend. One manifestation of negative feedback is contracting price bar range. Think of negative feedback as noise and positive feedback as signal.

Momentum indicators flatline or decline in negative feedback and trade strategy shifts over to oscillator type indicators, such as stochastics. Momentum indicators rise in positive feedback and trade strategy shifts over to indicators such as MACD and ADX.

You've come across one of the great advantages of using candles over bars. Some trends/channels fall naturally across the ends of the "shadows" while others require placing them within the shadows all the way up to the main body. Put them wherever it works (i.e. to draw a straight line). Some of that takes experience.

Candles provide an excellent method to deal with the added "noise" in today's markets. Twenty years ago, trendlines were much cleaner than they are today. Much of it has to do with the technical analysts that work for and with the market makers and specialists. In other words, they know where those lines are just as well as the traders. So they will intentionally violate them to go after the stops. The end result are shadow penetrations on candlesticks.

I traded for years with only Level I. Then I went with Level II and have found it adds little to my trading It's very hard for new traders to stay away from LII because it's so SEXY and really being pushed by the brokers and data companies. But beyond scalping strategies, you're likely to not be able to perceive longer term direction by watching the big boys move shares. It also forces you to add another layer of skills to your trading, i.e. reading LII is different than reading pure price and the two may conflict at times.

Different brokers have different execution paths for NYSE. Some are good and some stink. The discounters use 3rd party markets which match specialist quotes. Again some are good and some are bad. RTIII adds one outstanding element: their charting module is great. I've also heard real good things about quote.com's new charting.

With a small account, I wouldn't go with a day trading broker. The transaction costs will eat you alive. And you're trying to learn execution while managing risk. The EDT brokers just won't let you do that. You find yourself unable to get out of positions when you want to.

Nison and Morris try to differentiate between different types of candle patterns but, in the end, the descriptions all sound alike. You don't want to throw out an interesting pattern because it meets some but not all the rules. Conversely, other patterns are picture perfect but, in the end, provide little or no useful information about what the stock will do next.

The defining element here is always location and timing. Patterns that appear at the end of extended trends are much more valuable than those in the middle of ranges. Hammers and dojis appearing at natural reversal points are more valuable than those occurring in the middle of nowhere. Any and all patterns occurring on high volume are more important than those on low volume.

Psychotic trendlines are a Hard Right Edge original so I can't point you to other references. These lines (often channels) develop over the course of months or years. The origin appears to be nothing more than traders noticing two or more points that defined a straight line in the past.

When price moves to those levels, some subset of the trading crowd sees them and they act as support or resistance. The important thing is to recognize they usually won't have the same power as a trendline that has been hit and successfully supported price over multiple times. Nevertheless they are very important for short-term traders who are dependent on locating temporary swivel points (where price is likely to stop and reverse over the short-term).

The rule I use for pivots is to expect the line to always hold on the first hit unless price gaps through it. That tendency allows a trade if other conditions (perhaps that line is also at key support) cross-verify the trade. The short-termer can also watch these points for price bars to expand through them and treat it like a channel break, i.e. if price pulls back, you can enter a trade in the direction of the break.

Trade size itself is a strategy. Only commit what is right to each entry, which often is not the same thing as what you have. Over the years, I've rarely used margin. Just can't seem to find a trade that's worth that much commitment. Starting out, you can control risk by reducing your size until your win/loss statistics support larger positions. Try to forget exactly whats in the account and pick your lot sizes carefully.

Well you have a lot of books. The secrets are in there if you look. I teach TA so thats my focus. Elder's Trading for a Living was a must read. Also Murphy's TA of the Futures Markets and Edwards/Magee's TA of Stock Trends. Electronic Day Trader and Day Trading into the Millenium provide a good background on LII. You can access level II without going the electronic day trading broker route by adding it to a quote.com or Signal real time quote account. Don't do anything without a good quote system, regardless of the rest of your decision making.

Scalping and day trading are actually two different things. Level II traders without TA backgrounds scalp off the bid/ask of the market maker's buying and selling behavior but there are universes of day trading strategies apart from that exercise. Even holding a stock 1-3 hours gives you a wide range of trading options that aren't bound by capturing 1/8th and 1/4ers.

That price expansion marks the exchange between support and new resistance. The flipping, especially between intermediate and longer MAs, is a powerful crossroads. However, MAs tend to develop S/R between each other. IOW when a short-term MA moves to a longer one, it is a natural support reversal point. Often, the short MA will demonstrate the oscillation of a heathy trend and almost have a sine wave look to it. It's important to choose your MAs carefully. They should represent clear short-term, intermediate and long term intervals that align with your trading interest. For example, for real short-term daily, a 5-13-21 hits all the periods. For "normal" position trading, 20-50-200 or 20-50-150 works fine.

I probably advocate the "1 hour" rule above the other ones. Where the stock is trading at that point is often where the insiders wanted to place it in the first place. Of course, much of the profit may already be gone so that doesn't help you much if you're contemplating an opening play.

The rapid movement is generated by either (a) suckering in the retail money who are itching to jump near the open or (b) a real breakout move. You have to be skilled enough to tell the difference. (a) will fade and cause a lot of pain and (b) will turn a nice profit. I usually take the coward's path and wait for the first thrust to develop and fade and THEN see how well the stock trades, i.e. how high in the range it holds, what the congestion pattern looks like and exactly what time it is. Good morning trends should re-exert themselves between 10:10 and 10:20a (so the insiders can get the stock where they want it by 10:30a).

If you look at section 2a4 - Congestion, you see that trend-range is attacked from both a pattern recognition view and a quantitative view. The graph showing CPQ in the empty zone contains a series of price ROCs from 3 to 11. At the trend-range interface, these points tend to converge with each other and near -0-. Also this point can often be located using a volatility measure, such Raschke/Connors Historical Volatility, where the volatility drops into a zone where a reversal is often imminent.

NR7 is the narrowest range of the last 7 bars. It's origin is Tony's Crabel's book on the futures markets (a tough read) called Day Trading with Short-Term Price Patterns. Its use is popularized by Linda Raschke, who is also the source for the bottom graph, which she uses in some of her seminars.

There are ton of technical trade trigger points, some very minor, some major. Whenever price hits one of of these levels, not only will traders act, there will also be prepositioned stops that are executed. The MMs/specialists are aware of where these orders are and will pull a market toward them to grab the volume. Many times, they'll trigger the stops just to see if any demand or supply THEN comes in the door, pushing a directional trend. If not, the market will swing back in the other direction.

Sure they can. That's why it's not a fair marketplace. BUT consider one phenomenon that's hard for fundi types to understand but somewhat easy for us esoteric technical types. It's also a very powerful concept: fundamental information will come out right at classic support and resistance points.

You're assuming a short sale market order gets filled immediately. In a decline, there is often a scarcity of upticks and heavy shorting demand. Many upticks can pass with a market short unfilled. So the option to withdraw often exists for some minutes after placing such an order.

Four things would have motivated me defining the Action Zone in Geocities: a. the moment the gap was actually closed (piercing the top of the earlier shooting star candle), b.the whole number of 80, c. the horizontal support/resistance also defined with this chart at 80, d. (this one isn't from the course) the 8am V Bot which is a scalp trade I defined last year.

If I recall the passage, it's regarding short sale entry. Price has no problem rising on decreasing volume. Price is dictated by supply and demand, not pure volume. Weak demand in the face of weaker supply will cause price to rise. Following a selloff, so many sellers are pulled out of the market, a stock can rise on mild covering of short positions and not much else. But as prices rise, new selling pressure is created by those who missed the first exit.

I use TICK religiously. Its uncanny in picking up the intraday swing. I'll also follow an index that match my markets. For blue chips, use the DJ-30. For NAZ, of course the Comp is good to watch and the SP Fx is more relevant.

In theory, you should be able to watch your triangles and channels and trade well off them. BUT this is an odds game and you need to do everything possible to increase them in your favor. There are always movers that buck the trend but knowing which will do that is real hard. So layering some rules keep you safe.