Tuesday, March 17, 2009

Market Indicators and Tools: What Works?

Thought I'd offer a potpourri of thoughts and ideas as I catch up with email, blog comments, and a full day of meetings with traders:

* Does Market Profile Work? - That was the topic of an email that recently came my way. Apparently, one of the gurus of Market Profile has opined that the tool does not work as well as it once did. The writer asked my opinion on the matter. In a nutshell, I think it's the wrong question. Market Profile, like so many indicators and tools, was never intended as a source of mechanical trading signals. In my view, it's a way of organizing market observations, much as a physician's diagnostic system is a way of organizing data from a patient's history and physical. The question is, not whether it works, but whether it works for you. Is it a useful framework for organizing your observations of markets? A different framework would be Elliott Wave theory or chart-based technical analysis. If a framework helps you make sense of supply and demand and if it helps you see and act upon market patterns, it works for you.

* How to Develop as a Trader - Check out JT's comment to my recent post on upsets in the NCAA and in trading. He illustrates how to make use of the material on this blog--or any site for that matter. Instead of looking for answers from a guru (which I'm not!), JT uses material selectively for "study/replay" until he can see the patterns in real time. Trading is a performance sport, no different from football or chess. A site or blog can give you ideas for improving your football or chess performance, but it's on the practice field and chessboard that you'll develop yourself. The goal is to take away from the posts what is useful to you, put aside the rest, assimilate material from multiple sources, and integrate all of it into your own style of trading. It's the active work of culling out the important material (JT's folders) and bringing it into your practice that creates the learning and development.

* Twitter Explosion - When I started Twitter posts last year, I was quite pleased when 300 traders signed up for RSS subscriptions to the "blog within a blog". Now the list is up to 3000. I want to thank traders for their interest and feedback on the "tweets". The expansion of interest in the Twitter posts reflects, I believe, traders' need for real time information and mentoring. The blog's Twitter feature is still a work in progress; I will welcome future feedback regarding what is helpful and what is not when it comes to decision support. (Free subscription here).

* Tweetdeck - In case you missed my tweet about Rob Hanna's recommendation of Tweetdeck as a tool for organizing your Twitter posts, here's his post. A number of bloggers are using Twitter, some quite differently from how I use it. I encourage you to check out tweets from various sources and create your own list of people to "follow". If you see some innovative trading applications of Twitter, do feel free to share via a comment to this post. Thanks!