(On this slow trading day – Martin Luther King holiday – I thought I would reblog an earlier blog post on why I use weekly and monthly hi – lo trading bars on our model price charts. Also you should consider how ‘different’ you are in your research and trading style to maximize your trading and investing profits.)
I will always remember these words. See I was in Austin, Texas in August – the heat was unbearable – in the late eighties at the elbow of a famous commodity trader, observing and learning. He had a leased telephone line to the floor of the Chicago Mercantile Exchange (CME) trading S&P 500 futures contracts. Every once and a while, he would switch his charting software from 5 minute price bars to 7 minute price bars. And if trading profits were slim he would change to a 15 minute price bar. He explained if all the traders were using the same price bar trading profits were nonexistent because everyone was acting on the same bar and the boys on the trading floor were fading (taking the opposite position) against the trading masses.
On a another occasion I was in Incline Village, Nevada just outside of Lake Tahoe, at a famous commodity trader’s home. He welcomed people from all over the world to witness his trading style in the living room of his house. He was a trend follower, who fashioned himself after the famous “Turtles”. He planned his trades during off trading times. Before the market opened he placed his trades with his personal floor broker in Chicago. During market hours he invited his visitors to sit cross-legged in his living room humming Indian hymns while he beat a drum. After the markets were closed, he would call his broker for a rundown on his trades and plan for the next trading day.
See being different wins. Warren Buffett is different. He tells everyone, and I mean everyone what he is investing in. One would think there would be thousands of Buffett’s doing exactly what he was doing in terms of investing. I’m sure many try to emulate his style, based on his financial disclosures however in the end they seemingly all give up because they don’t have the discipline to follow through.
Who uses weekly and monthly charts?
Weekly price bars are my favorite. I see so much. I see supply and demand. (Look for the right tick mark in relation to the left. Right tick higher then the left, demand in control. Left tick mark over the right supply in control – at least for the week.) I see variability. How long is the vertical of the price bars. Long verticals mean volatility, short and stubby mean peace and quiet. What has been happening in the last few weeks or the last fifteen weeks?
I’m sure I’m the only guy on the web producing customized stock graphs on my blogs and Twitter accounts with weekly and monthly price bars – if you know of anybody please let me know. Hopefully this gives my readers and followers a different perspective from the usual daily charts offered and analyzed on the web. I have seen many canned software packages offering technical analysis that I have to admit look pretty slick and with beautiful colors! It reminds me of the fishing lure joke, where an out of town fisherman was looking at a beautiful fishing lure and asked the store owner whether the local fish would like the lure. The storeowner shrugged and commented that he didn’t know; only fishermen purchased the lures and not the fish!
As you can see my model price charts are programmed special for my use. I want no frills, just the striped down version, and the bare essence of the simple price bar. Simple is best.
What trading tools are you using? Are they different from the trading hoards?
At least you can say one thing about the material I’m producing in this blog and how I analyze individual stocks in relation to others on the web – I’m certainly different!