Yes keep your TA usage to just simple stuff to help with execution and risk management. Tape reading is more important the shorter your holding period is (day and swing trading). In the developed US market the tape reading game uses level2 market maker boxes that show the market depth of order books. Not sure if they have those available for Philippine markets, but there's a lot of stuff you can do with just time & sales too. In the US markets, smart money sometimes "paints the tape" to manipulate people. Your market conditions may vary.
Some food for thought on trend following entry execution:
Your goal is to get in at the best possible price without it jeopardizing the trend. In general, you go for entries on pullbacks, zooming in on a smaller timeframe to read the price action and optimize the entry. I wouldn't place too much emphasis on trendlines as they can be manipulated (happens often in US markets). but you want a mental picture in your head of what should happen at the general area surrounding the trendline if your trading idea is correct. If an up trend is super obvious, but it breaks anyway because some fund starts dumping shares (ideal spot for them to do so since they anticipate buying from technical traders) then you need the discipline to get out faster than the less disciplined traders as soon as you realize what's going on. The most important thing is figuring out how others are reacting to the price area, whether the smart money is using it as an opportunity to sell, or buying more before the price runs even higher. Good tape readers have an edge in identifying the reality of the situation, while optimizing their entry points for maximizing their gain if correct, and minimizing loss of incorrect. |
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