I thought I would come back with a few more observations on the post about TA, on SHM, that Hera was asking about. I see another member came back with some TA, and that's fair enough, as each and everyone of us have their own methods. The point I was making, was that volume gives the price action more validity. As an analogy, say you took a survey to see if voters were favoring either Lib or Labor at the Federal level. Which would be the more accurate survey, the one with 1000 respondants or the one with 60,000 respondants. Clearly the one with 60,000 respondants would be the better representation of voters intentions as it has a greater sample size, and so, in a similiar way, that is what volume helps to define.
Just common sense.
And the reality is that there is no rule in TA that says you need to have volume to read a price chart, it just helps. There is no Statutory rule, and as far as I know, the only TA certificate is through the ITAA (from memory) of which only a handful of traders do, which precludes those trading rules from being in the mainstream education realm. In fact, the more I read, and understand trading 'rules', the more I realise that they are just an expression of common sense. Nothing more.
And as strauss has pointed out, when I see the arguing from different posters about the correct form of TA, I really wonder how much common sense these so-called traders have.
And that's what gives TA a bad rap. The fact that so many argue about it misses the point. It's not about the chart, but solely what the chart represents. You see a so-called daytrader arguing about supply....without understanding any thing about that supply......is it false supply, or could it be supply at a resistance level that goes on to become a rising triangle....is it market induced supply because of a bad day on the markets, or supply because of a large fund re-positioning or supply for many other reasons. Chart reading should be a case of helping to understand the underlying instrument, not a case of arguing amongst other traders.
I really wonder how many good traders are here. Not many I suspect.
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