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Are Smart/Custom charts and indicators really needed?


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Lately, you will find a number of articles posted on the web (and even here on Barchart), which promote "Smart" charts and "Custom" index views and such. For crying out loud - technical analysis is technical analysis period. There are a set of tools you can use for charting and drawings which are all standard and the only thing a "Custom or Smart" Chart or indicator does is interpret the chart in a different way perhaps. Sort of using a magnifying glass versus a set of binoculars maybe.

Folks, the more "Smart and Custom" words I see associated with Charts or Indicators - the farther I run away from them as they all reek of "you need to pay big bucks to use them". If you learn to chart the simple way, and begin to recognize some candle patterns and then learn to draw some basic lines for studies - it is all you will need to make trading decisions. The biggest thing of course is a trust in yourself to prove your learning and hold the reins for "patience".

That is all a trader should need. Run away from "Custom & Smart" - you smart people. Do things that are simple to understand. The only reason it is Custom or Smart is that they don't want you to understand! Here is some simple analysis based purely on price action (no custom oscillators, or smart indexes here) for the Emini S&P as of trading into the 3 pm hour this Friday afternoon (Our simple explanation of this measurement is also presented below the chart rendering.

Chart of the Emini S&P

es-chart-71219

So what is this "non-Custom" yet intelligent measurement? We measure a simple Fib long extension from high we made this past Tuesday [2987.50] to the high [3014.25] we made as of this writing. You see the classic dip into the support (commonly called a STOP), and then a continuation higher after the stops are taken out. This gives us what? A suggested pullback entry long into Sunday night/Monday of 3000.75, with a possible Early entry at 3004, and a profit target of 3020.50 and a stop of 2995.50. Simple enough? We suggest traders to trade the smaller timeframe while relying on longer term charts.

If you like what we do, come visit us at https://www.tradeguidance.com and fill out a contact form and tell us what you like trading and what your style is. Regardless of the size of your portfolio or trading account, our service provides you with undivided attention where our Lead Analyst takes a personal interest in your financial success with one-on-one mentoring.



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About the author


Murali Sarma, Vice President of Business Integrations Inc., is an internationally known commodities analyst, author, trader and business consultant who has demystified commodity trading and introduced numerous futures trading strategies and indicators to traders - professional, non-professional and the novice trader - throughout the world. Murali began his trading career in the pre-dot-com bubble in 1998, electing to seek instruments to trade which had lesser volatility and offered more predictable analysis. From about 1999 to 2002, Murali traded out of the UK and moving to the US after that and working mostly independently with individual traders while learning from some of the best analysts and traders. While not being formally certified as a commodities trader, Murali preferred to hone in on his analysis and trading skills versus adding academically to his credentials. Murali believes that is isn’t about being right or wrong on your calls, it is about making money!

Murali has helped several traders become successful over the last 10+ years of active futures trading and has a strong following of traders who like to seek out opportunities in the futures markets on a daily basis versus following the old “buy & hold” investing adage. While not being opposed to switching hats and becoming an “investor” every so often with swing trades in the equities markets, Murali prefers to trade what he can see on charts using multiple timeframes and handcrafted indicators suited for all types of markets. Murali excels in trading sideways and choppy markets with a scalping style of being in-out of intraday markets when there is no defined trend, and on most other days prefers trading to his own computed target levels during the intraday timeframe, while following the trend.

In recent months, Murali has started a Twitter based alert service for intraday futures traders who like to trade commodities and index futures, and elected to blog post his daily analysis in commodities like WTI Crude & Gold and index future instruments like YM, NQ, ES & RTY. You may contact him via his email at info@tradeguidance.com

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