A move can be described as – a number of bars on a commodity price chart that can be viewed as belonging to a group.
Market Moves - what are these?
Imagine you are looking at a price chart, for corn. ‘Look at this short move’, you might say, pointing to bars that are moving in a downward direction. Perhaps there are sixty bars – not all of them are moving down - very often one or two move up before the next ones follow in the general downward direction of the whole group.
The group of bars will be a long move if they are moving upwards, of course. If a group moves sideways, you may refer to it as a flat move.
It is up to you to see the bars any way you like because there is no scale to the chart. Commodity prices do not move on any scale. If there are 12 price bars that show a sharp upward movement, you can call that a vigorous breakout if you want to.
So you are entitled to refer to moves of any length in any way you like. There are no rules. Knowing this is useful because it can help you to generate your own ideas without feeling you have to conform to anybody else’s ideas or opinions.
However, although there are no real rules, you will find that you will start adopting your own definitions and ways of viewing markets. People always want to do that – human beings are good at recognising patterns – whether they are there or not!
Wanting to see ‘moves’ is a good thing because there certainly are patterns in those price charts – they are not random, even if there is no common scale involved. Thinking about moves will allow you to find ways to describe what the markets are doing and help you to generate ideas about system rules that may produce positive expectations.
As a systems trader, you will never rely on rules that you may create that are based on ideas you get looking at charts. You will first test them out against real prices to see how the ideas work in simulated live market conditions. Then you may end up using your idea – probably after considerable further modification.
There are all sorts or ‘recognised’ moves that people talk about, that you might find it interesting to consider. Trending moves, zigzag moves, vigorous moves, flat moves, erratic moves, spikes, breakouts.
A price chart can look very different when it is furnished with lines such as moving averages and symbols representing events or occurrences. Garnishing charts in this way can help you to form views of the markets that may help you with ideas. You will realise that as you alter the scale of your view, the character and direction of moves will change.
Copyright David Bromley 2006
All Rights Reserved.