What we learned about price levels
This is part 2 of a two part blog. Read the first part here. Quick summary: to test the validity of price levels in markets, we created a test in which we showed a bunch (1,535) of traders 20 panels of charts. Each panel included two charts which were essentially the...
When is a human better than a machine? Using human discretion in quantitative testing.
First, thank you to each of you who participated in the experiment/quiz. We have stopped collecting data, but you can re-take the quiz and see which answers were right or wrong here. Let me start with the conclusions up front, and then I’ll explain what we did and...
Daytrading the S&P 500: Intraday trend structure and setup
Thinking in checklists is useful, especially for shorter-term traders. Every market situation is full of rich and complex nuance. Every moment in the market (or in life) is unique because the precise conditions that have existed before do not exist this time. We...
I need your help: an opportunity to participate in a research project.
I’ve tested market patterns, technical tools, and fundamental factors in thousands of combinations over the years. For me, this work is a quest for both truth and profits—the truth behind how markets really move, and the logical conclusion that someone who understands...
Markets stress… trader stress
Here’s a bit of a stream of consciousness post in response to today’s (5/13) market movements. First, these types of moves are often called ‘risk off’ moves because we see nearly one-sided trading in different assets—people rush to sell assets that are perceived as...
Are the secrets of price action hidden in randomness?
This might be a more challenging blog post than most, but if you’re interested in really understanding price action I think it’s very important. Over the past several weeks I’ve been doing some deep dive coding and quant work. (Stuff like looking at correlation and...
Ranges and measured moves
Here’s a quick look at two concepts that should be a part of your chartreading: ranges with pressure, and measured moves. There are two common approaches to chartreading, and I think both can be improved upon. One is to look at “big” patterns spanning many bars (think...
Being right being wrong (and multiple timeframe analysis)
It’s great when all stars align and every signal tells you to do the same thing. That’s the idea behind multiple timeframe analysis (which, by the way, is a topic that should be more controversial!)… imagine the profits that can result when forces on different...
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