There is no Holy Grail of trading!!!Every indicator, system, and technical analysis tool out there has some weakness or drawback. Even fundamental analysis has its weaknesses. I will never say that the ERRC and TeamWork Channel are perfect and without drawbacks. If I did, even I wouldn't trust me!
The first, most obvious drawback is... ALL THOSE LINES make a very busy chart. To tell you the truth, when I first began working with TeamWork Channels, some of my teammates actually laughed at my charts. Did it hurt? Well,... the fact that I could put these channels to effective use, even if only for paper-trades, made it easy to ignore them.
Also, as mentioned in an earlier post, each line drawn in the chart adds a bit more workload for the CPU, and it's important for real-time charting to keep this to a minimum. As I've pointed-out before, you would normally reduce the total number of lines down until you only had those needed to surround the current price.
Unfortunately, because the ERRC, the Standard Error Channel, and the Standard Deviation Channel tools are designed to draw an upper- and a lower-line, you're always going to have and upper-band and a lower-band of channel lines, and almost always only of the two bands is doing anything useful. I've often wished there was a way to turn-off either the upper- or lower-line of the channels, to do away with the band that is doing nothing.
Drawing all the Std Err/Dev Channels needed for a TW Channel can be tedious. For now, one has to perservere, focusing on one's faith that the end-result will prove valuable. Creating one channel, and copying and pasting it, then changing the Units value is the best way to do this. There are other tips I can provide later.
If you happen to have some indicator in the chart, near where you are trying to drawn a TW Channel, it may tend to cause the channels to not drawn on the price plot but on the indicator. This is especially true of indicators that are placed in price window using the Overlay Without Scale option, like I do with my Serendipity Indicator.
On a chart like the one at the left, the thin solid-line of the ERRC is often hard to see amongst all those other lines.If you have a reason to make it stand-out, you can click on the ERRC line and choose to thicken the line, as shown in the chart on the right. You will find, though, that this will somewhat reduce the precision of the line's ability to chart the Support and Resistance points. I'm sure you'll see what I mean when you try it.
Finally, there is the the drawback of subjectivity. Before I came up with the ERRC, Raff Regression Channels were drawn in many different ways. In fact, I'd bet if you put 10 MetaStock users in a room, and gave them each the same chart to draw Raff Regression Channels on, no two charts would look alike. In fact, I'd be surprised if even one pair of channels between any of the charts shared the exact same dates for the Start Date and End Date.
The use of the Willaims%R indicator to draw the channel was, for me at least, the first step toward reducing the subjectivity of the Raff Regression Channel. The ERRC is a much more accurate and useful tool. It speeds placement, and increases the accuracy of the placement. The addition of my ERRC Color Coder Expert helped reduce subjectivity also. I've seen some charts on web pages that had Raff Regression Channels that not only were not extended to the right, but were willy-nilly drawn on every little switchback tertiary trend in the chart. To me, drawing these channels that way made no sense at all.
Extending the channel lines to the right helps validate/invalidate the channel, because it will show how effectively the lines 'predict' the Support and Resistance points. The parallel lines of a TeamWork Channel will also help validate the channel placement, and reduce subjectivity, by giving even more points for validity-testing.
We will never fully be able to eliminate subjectivity in drawing these channels, but I believe I have some strong and worthwhile ideas on reducing subjectivity to a minimum.
See you in my next post. -Robert
JUMP TO MY NEXT POST
=================================
No comments:
Post a Comment