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Which lines are essential on YOUR charts?

Discussion in 'Beginners Bootcamp' started by RMSTrader, Jun 14, 2010.

  1. RMSTrader

    RMSTrader Private

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    In the quest for clean, stripped down charts from which to work from in an uncluttered environment, which S/R lines are essential for you? Previous Day Low/High? Previous Week Low/High? Year Low/High? Obvious limits of current Ranges (in multiple time frames)? Obvious other strong S/R levels?

    I'm still struggling with things getting cluttered fast on my charts as I identify these levels on the various pairs I troll looking for trading opportunities. I find myself constantly 'cleaning' things up, day-to-day, and I don't feel that I have an adequate systematic approach to managing this yet.

    How do YOU manage the ongoing updating of important levels/areas on your charts from day-to-day? Obviously, your time frame is going to affect this...I am a day trader, but would like all input from both successful day traders as well as longer term traders.

    Thanks in advance!
     
  2. Ricex

    Ricex Sergeant

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    Hi,
    the importance of a S/R line is the number of times it has been tested and held. I use the 4hr time frame to start this process and look to 15min charts to define intraday ranges.

    Previous day and week levels are an important guide to where price is going, for example USD/CHF which I have been watching recently has finally broken it's PWL and come out of a large rangebound period. Price has now bounced off the previous swing low level @ 1276 which now becomes an important support line to watch for a further move south...... if this USD weakness continues (?)

    I have a clean trading chart that has what I need for my strategy, and a demo chart with other lines that help me reference the bigger picture and experiment. I guess it's about finding what works best for you.

    What I want to try and aim for is a line that the big money have on their chart and are looking at as well.

    I think your cleaning or adjusting of your charts is fine, I do it all the time at least at the start of the week, maybe others do it differently.
     
  3. Cyclon

    Cyclon Company Representative

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    Trendlines and Dynamic S/R

    Trendlines and Dynamic S/R

    What Ricex suggests about keeping an open view with 'clean' chart while
    using another chart to place technicals into is a good idea.

    There is only one thing I would actually 'Draw' on a chart which may
    eventually need cleaning. That is trendlines.

    Markets pay far more heed to trendlines than horizontal S/R lines imo.
    Also when it comes to S/R you must realize they are ranges and not set
    in stone as a line. Price levels such as round numbers will only some
    times hold or temporarily hold. I would rather see a drop ending at .83 or
    a rise to .19 than get comfy at .00 level for any reversals.

    One method to use for clearing a chart of trendlines is to use a template
    to load your clean setup and then your drawn objects just disappear.

    Believe me there are no 'forgotten' trendlines. Another extremely
    important thing to use is dynamic S/R which is found with moving
    averages.

    For the minimalist try a 144 and 241 EMA for your dynamic S/R using
    multiple timeframes to get opposing views.

    Here is an example:

    [​IMG]

    I admire the consideration of whether you have a proper methodology
    or system in place. That is crucial.


    Cheers,
    Cyclon
     
  4. Forexwatchman

    Forexwatchman Sergeant

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    I would say that if someone were having a problem with an over cluttered/overcrowded chart day by day, then they should re-evaluate their strategy and their system because keeping things simple is the key. I use two separate charts, one where I have about 80% of my indicators, and the other which I keep at a bare minimum. At the end of each week I actually go back and evaluate what to keep and what to get rid of, and this process also serves as my review of what I missed and what I can improve upon as well as a cleaning up period. The main thing I get rid of are old trendlines and support/resistance lines that haven't proven relevant anymore. I do actually get rid of fib lines usually the next day as they can become very cluttered after only having 2 or 3 drawn into the chart.

    Flipping back and forth between the two charts can have profound effects on your perspectives and decisions because often times we see what we WANT to see instead of what's actually there. So often times, especially after a long drought of winning trade setups, I might think I see several indicators in agreement, only to realize I missed a classic reversal candlestick pattern when I switch to my stripped down chart.
     
  5. RMSTrader

    RMSTrader Private

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    Very useful info from Ricex, Cyclon and Forexwatchman.

    I spent most of 10 hours today cleaning up my charts (no trades for me in this 'change of sentiment' environment) and reviewing / revising my trading system, with the end goal being to un-clutter things.

    I have now adopted a totally clean chart to start with each day, another semi-clean chart that only shows PDL/PDH, PWL/PWH, YH/YL...and 5 EMA / 10 EMA which I will now update daily, and a 3rd chart that has my other indicators (RSI, Stochastics, MacD).

    I'm trying to 'ween' myself off most of these indicators (taking Ricex's advise) and learning to trade just looking at price action and patterns. But alas, my psychological need to see an EMA crossover still precludes me from jumping in ALL the way on that! I'm working on it, tho.

    Keep the great info coming everyone. Thank you.

    RMSTrader
     
  6. RMSTrader

    RMSTrader Private

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    Yes! The holy grail, as it where. The $64,000 question. WHAT is the 'Big Money' looking at? We just want to hitch rides on their backs from day-to-day!:D
     

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