OT: ThinkDesktop and Automatic Scaling

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    Posted: 02 March 2010 03:46 PM

    Up to today I have always relied on ThinkDesktop to scale my charts appropriately to fit everything on. However, as I have a tendency to question my methods every so often I have begun to wonder whether the use of automatic scaling has been causing me to jump into trades on a whim.

    To explain my situation, I have three columns showing AAPL in different timeframes. The rightmost column is a 2 minute chart and fits about 4 hours of price action. If AAPL becomes stuck in an ever-tightening range the chart keeps zooming in as the range gets narrower. You can end up with the chart being only 40 cents high.

    Then, if there is a sudden fake-out move in one direction, say 30 cents, on this scale of chart, it can end up looking like a much bigger move than it actually is because the bar looks a lot bigger relative to what is on the screen. On occasion this has caused me to jump on board only to be faced with a much more explosive move in the other direction up to 3 times larger than that first move. This is a classic volatility breakout.

    Of course, the chart then zooms out and that initial fake-out move looks a lot smaller and I end up wondering why I got in.

    In essence, what I am finding is that the autoscaling is robbing me of all sense of perspective of how large a move actually is. I have since switched to manual scaling and already can see that autoscaling is another supposedly “helpful” feature of thinkDesktop that is anything but helpful.

    Have you guys found this to be the case?

    As an aside, I have started to use Prophet charts a lot more for planning trades. Do people here tend to use one or the other, or both types of charting?

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    Throughout all my years of investing I’ve found that the big money was never made in the buying or the selling. The big money was made in the waiting. ? Jesse Livermore