Absorb What is Useful
I had a great conversation today with a TM Prime member when they reached out and asked me about two different styles of trading. He conflicted between two different styles of trading. He knew both, and favored one over the other, but still saw the potential in both. “Which should I choose?” My simple answer was “why not marry the two?”
Why choose? Perhaps they contradict each other? Or do they? Often times different strategies share similar (yet subtle) characteristics that when married together, can provide multiple signals.
The truth that I’ve discovered is that there are many similarities to one another… Though subtle at times in each strategy. Essentially the market is a living, breathing thing. These strategies have found ways to exploit it’s weaknesses in our favor. As a result, many signals tend to align. You can marry as many strategies as you want if you do it right. For example I use classic patterns, divergences, s&r, parabolic sar, volume profile, fibonacci, macro analysis, candle analysis such as inside/outside days, hammers, revups/downs along with count strategies like Demark, and Elliott Wave. Each of which I have taken pieces from that I found useful to build what works for me over time, and will continue to do so.
We discussed a few examples. He gave one that was ideal, stating something like “So if we’re looking at an ABC, and watching the C wave down, a falling wedge into a supply/support level would be good example of multiple signals.” Exactly yes. Throw in Demark exhaustion, a divergence, maybe an inside/up day… and you’ve got numerous signals on one name… and what I would call “technical alignment.” These sorts of “alignments” often create some of the best trades.
This is a great reason why you shouldn’t criticize the work of others that you don’t understand. In the end, there are likely pieces of each strategy that you can use to better their own.