Beyond the hype of hershey futures method journal

[jack hershey]

Quote from RoughTrader:

As mentioned in the previous post, my goal is to implement the Hershey method so that all trading decisions are implemented END OF BAR.

1) After reading some available documentation, I was left with the impression that traders who employ the method by putting in the screen time and manually entering orders in a DOM window take action intrabar. That is, depending on how price and volume are acting, orders can be entered any time between the start and end of a 5-minute bar.

If one is to allow order entry only at the end of a bar, one possible adjustment might be using a 1-minute chart for order entry, while using the 5-minute bars for channel creation / extension.

Comments please.

Next post

On different skill levels different reversal times are used.


Beginners use level 3 signals and only 4 to 7 occur during a day.

Advanced Beginners and Beginner Internals deal with about 15 reversals a day.

Intermediate involves beginning to become more effective and more efficient. the 15 trades being done are enhanced by about 2 ticks at each end of each hold. this adds 15 points per contract to the trading daily. you can see doing 15 reversals of profit sgments at Beginner level is less well accomplished than the Intermediate appraoch where another shell has been added to the skillls and knowledge. A person does this for a period of time to become accustomed to varying market conditions.

If you are reading this and are following a belief system based upon the conventiional orthodoxy, this may make little sense to you.

People who want to know how to get rich focus on prints nad stements and CPA reports. They do not get rich; they get cynical.

the year long syllabus of SCT was designed to start with a core and add shells. It take a bit of time on each level to see and understand the implications of different market conditions.


Long ago, the concept of taking data sets by sweeping on coarse, medium and fine levels was introduced. A sweeps chart in 9 colors was proferred. If a person can see the different colors, he can grasp the idea that different things are looked at at different times.

Suppose this is grasped. He sees within each color that a set ofdata elements is on the table. He also sees that the data sets are different. We posted the twin screen that behold the different locations of the places where the focus of the observation takes place. these areas of the screen are often different than what a person following the conventiional orthodoxy would have on his screens and ,further, which he would be staring at. Most stare at the same thing all of the time.

It is very exciting to become accustomed to moving one's eyes here and there in a purposeful manner. Connections are made and the interrelatedness of things becomes apparent.

going from 4 to 7 trades a day to 15 then, ultimately to 40 is a transitional experience where many many skills are acquired in the process.

It is simply unbelievable and astonishing to people who follow the conventional orthodoxy. That was their choice and it has its consequences. they do not understand SCT nor do they have a market display or annotations that make it possiible to see the market's activity. they never acquire a consciousness of what is possible and what is going on.

There is no hype in my comments. What I am conveying is a significant opportunity to become very very wealthy. Our posting automatically winnows greedy people out of the picture. the only people who can get to expert in SCT are people who learn the variation of market conditions at each level of competence and skill.

So comment 1. is correct and in many ways. Good work and observations.

 

[jack hershey]

Quote from RoughTrader:

2) I am very much puzzled with the timing of trades when new channels are being created. The concept of 1-2-3 triangle formation as the starting action of a new channel is clear enough. But it seems to me that the only way one could trade in the channel is to wait until the 1-2-3 formation has completed entirely.

My concern with this is that on whippy, sideways days, these formations can occur one after another in a "triangle-wave" type pattern, leaving the trader 180 degrees out of phase. OUCH!

Next post...

You need to review your conclusions.

Money is made continually in SCT. It is based upon three things:

1. being in the market

2. being on the right side of the market, and

3. price changing.

At point 1 of a channel you have a binary indicator that is communicating to you. It answers 1., 2., and 3..

You go in on the right side at time 1. As time passes you make money.

Beginners reenter the market on the next point 1. At that time they have to change sides of the market.

Because beginners only use level 3 channels, they do few trades per day.


Advance Beginners enter on level3 and level 2 point1's. They also take profits at points 1's. this concept involves a particular type of trade. It is called a reversal, the same trade the Beginner used. This trade kills two birds with one action.

You can easily see that conventional orthodoxy does not handle this mentality. The CO uses an entry and exit strategy whee there is no connection between and entry and an exit.

In fact, every good exit is also an appropriate entry. It is a Technical Analysis thing. Think about it. When a profit taking opportunity comes to an end, there is only one reason: the right side of the market has changed from one side to another.

People of the CO persuasion deal with fear, anxiety and anger. this is a place from which it is difficult to reason. They struggle and commonly take things off the table that have burned them.
ranfeil, we see, has a Collective 2 operation that is flat and died. He needs to Phish for something that works after he has canned a failure. He goes all the way: TA does not work" he announces and he goes down the tubes with anger, anixety and fear statements. He is done. How could he see that a great exit is simultaneously a good entry? He can't even read SCT and PVT journals rationally at this point. he is a teacher. He is teaching how bad failure can become and how permenant it is.

as you examine the combination of levels 1, 2 and 3 and how they are nested, you can see how a person trades within level 3 as an advancedbeginner. You get to see at the expert level the trading is done on level 1. at this time about 40 levels 1's ocur during the day. you get to see all these point 1's are exits and then entires on the opposite side of the market AT THE SAME TIME. You then see that there is never any waiting.

You also get to see that if you make a mistake you also still make money when you fix the mistake. This is the antiwhipsaw part of SCT.

 

[RoughTrader]

Quote from jack hershey:

It is not possible to look at SCT through the eyes of a person who follows the conventional orthodoxy. This is not a negative statement; it is just a simple matter of fact. when a person comes to the fork in the road vis a vis what market operation paradigm he going to to use to view the market, he simply makes a choice of one or another system. The systems do not overlap very much.

Sentiment exists simultaneously on several levels. SCT uses three.

Hi Jack,

Thanks for piping in. The issue at hand is not of paradigm, but rather of quantitative implementation. An edge-based system, belonging to what you refer to as "conventional orthodoxy", can be described quantitatively under certain restrictions, as I am hoping SCT can.

SCT, as you have mentioned, focuses on the "here and now" of remaining in sync with unfolding price action. The channels are constructs which enable decision-making in the "here and now." Channels are formed, and channels expire. Seemlessly moving from one channel to another enables us to avoid losing "lock" on the market movements. Regardless of the "level" one is using exploit market action, the channels will always remain the universal construct to keep in sync with the market. I don't see how this cannot be captured with a model that updates each bar to reflect the "here and now" component in addition to projected channel lines, which are simply extended by knowing slope and price intercepts.

The restrictions I was referring to earlier pertain to soft decisions, i.e. those made by subjective interpretation of the trader. The very first issue I wish to address is the following: Does SCT rely on soft-decisions? If so, it is a method that contains stochastic decision points and cannot be captured by a numerical model. If the answer is no, then SCT can unequivocally be described by numerical models, no matter how complicated they are, simply because each decision is deterministic.

There is no answer in between yes and no regarding this issue. The decisions and rules are either hard, or they are soft. For a given "user level", or implementation complexity, there will be only ONE possible trade path of buy and sell points in a session. Soft decisions will yield multiple possible paths.

The question becomes: If we were to strip SCT down to the simplest beginner level, can it be captured by a quantitative model?

Burrowing further down, can one arrive at a singular solution for channel lines in a session using such a model? If the answer is yes, the result is promising. If the answer is no, parameter inputs to the system would determine the solution set, which would be one of many.

RoughTrader

 

[jack hershey]

Quote from RoughTrader:

3) SCT inside a channel. Is one supposed to stop-and-reverse and the price action ping-pongs against the left and right trendlines? This would yield profits with 100% efficient use of the unfolding action, but seems dangerous in two aspects.

Every channel will either expand with volatility or die at some point. Let's say we have bullish channel. Obviously, one wants to stay long as price is moving with the dominant traverse. However, once the price hits the left trendline, do we reverse short in expectation that the price will zag back down (or sideways) to the right trendline? This would be bad news if the price violates the left line, expanding the channel.

Similarly, if one enters long as price touches the right trendline, a loss would occur if a BO occurs to the downside. At this point, we would be on the wrong side of the trade in a bearish channel.

Next post...

Here you are discussing Advanced Beginner.

You trade level 2, the traverses of level 3. The point 1's of level 2 begin your new trades. About 15 a day.

Basically you are trading the long diagonals of parallelograms. This means that every trade begins on a RTL and ends on a LTL. soak this up for a minute.

At this point you can see that the slopes of channels vary. the steep ones are rolling along so well, that the non dom traverses are lateral. you are equipped at the advanced beiginer level to be able to make this observation.

take the verteran trader. he is doing exits and entries and he finds SCT. He likely will reject it like a person "shoots the messenger". We hope so: he will go away, often quietly.

Some of these people don't. BUT they have to SWEAT for a while. Sweating is a cleansing process. If you have trained yourself to enter and exit and sit on the sidelines for a while before entering again, you are very used to two sets of emotions: one is being in the market and the other is being safe on the sidelines. anyone doing entry/exit goes through a very alrge emotional swing with each entry. they dread this emotional swing. Reed the OODA drills Steenbarger coaches his "Greenspoon" types with. They are so psyched most of the time that they scalp for a living. Get in and get the fuck out NOW is their mantra. think of the "early exit" syndrome so familiar to the CO types. Look at the "leak detector" quants doing reversion to the mean.

The entry/exit world belief system is a bitch for staying in the market all of the time and staying on the rigt side of the market.

Right now the DU of SCT has been reset on a 1600 bar regime. It has now gone to 7200 or 7500 depending. the reversal strategy of SCT is performing one way according to CO practioners and for SCT practitioners it is "something else"!!!.

CO people are freaking out with today's type of market. So it the media and any person who is trading without a nonCO plan.

You may be going through a transition form CO to SCT. The baggage will be realting moslty to the shift from entry/exit to hold and reverse. One thing is for sure. After you soak awhile and are in the market all of the time you get to have just one set of emotions: support, comfort and confidence.

I have some colleagues that are coming up to "sports memory" trading levels. as they get greater %'s of time in this state, they have vocabulary changes and they go way past getting fatigued while trading. It is like "coasting" and driving a car or sports skiing on great powder. It is FUN!!!

when you reverse on a point 1 or an even channel point, you are on the right side of the market headed along a retrace, which at BO runs into a reversal that continues along the same right side of the market. What you are experiencing at the time is "front running" the herd. you jumped on board as the retrace to the RTL happened and you just took the ride through the RTL as a BO and then the beginning of the first dom on the new channel. All of this is during what is called the "channel overlap".

 

[RoughTrader]

Quote from jack hershey:

You need to review your conclusions.

Money is made continually in SCT. It is based upon three things:

1. being in the market

2. being on the right side of the market, and

3. price changing.

Yes, agreed.

At point 1 of a channel you have a binary indicator that is communicating to you. It answers 1., 2., and 3..

You go in on the right side at time 1. As time passes you make money.[/QUOTE]

You lost me here. If you have references to other posts describing this further, they would be much appreciated.

This is what I have gleaned from your document on channels:
The first three 5-minute bars of a session are used for sync. Let's make a key assumption: we have no channel information feeding from the previous session, so all we have to work with is three 5-minute bars. In many cases, a simple 3-bar 1-2-3 formation can be made, establishing the first channel of the session. If the channel is sloping up, what do we do? if the channel is sloping down, what do we do?

You can easily see that conventional orthodoxy does not handle this mentality. The CO uses an entry and exit strategy whee there is no connection between and entry and an exit.

In fact, every good exit is also an appropriate entry. It is a Technical Analysis thing. Think about it. When a profit taking opportunity comes to an end, there is only one reason: the right side of the market has changed from one side to another.[/QUOTE]

I agree completely. Even though my systems are edge-based (yes, I do take losses), I never exit until the end of the session. I reverse my position whenever the rules tell me the setup has reversed, and a reversable entry point has been defined. There is no reason to break a position unless 1) the market becomes illiquid, as it is in the overnight session, or 2) the market tells me conditions favor the opposite side of the trade.

People of the CO persuasion deal with fear, anxiety and anger. this is a place from which it is difficult to reason. They struggle and commonly take things off the table that have burned them.
ranfeil, we see, has a Collective 2 operation that is flat and died. He needs to Phish for something that works after he has canned a failure. He goes all the way: TA does not work" he announces and he goes down the tubes with anger, anixety and fear statements. He is done. How could he see that a great exit is simultaneously a good entry? He can't even read SCT and PVT journals rationally at this point. he is a teacher. He is teaching how bad failure can become and how permenant it is.[/QUOTE]

That's too bad, I'm sorry to hear that.

as you examine the combination of levels 1, 2 and 3 and how they are nested, you can see how a person trades within level 3 as an advancedbeginner. You get to see at the expert level the trading is done on level 1. at this time about 40 levels 1's ocur during the day. you get to see all these point 1's are exits and then entires on the opposite side of the market AT THE SAME TIME. You then see that there is never any waiting.

You also get to see that if you make a mistake you also still make money when you fix the mistake. This is the antiwhipsaw part of SCT. [/QUOTE]

And so my investigation of SCT continues. If there is no element of subjectivity in the method, a model should be obtainable.

RoughTrader

 

[jack hershey]

Quote from RoughTrader:

4) In the building channels for wealth document, YM is used as a leading indicator for ES. I personally don't have any fundamental objection to this, but instead fail to see the necessity. I hope I haven't misheard, but isn't the method employable on ANY electronically-tradable instrument, particularly for intraday timeframes?

It should work equally well on ER2, NQ, EC, ZG, QM, or any instrument that can be traded with sufficient liquidity. If this is the case, to trade this method mechanically on ES, why would we need anything more than price bars and volume? Furthermore, can the rules be formulated without even looking at volume? are the OHLC bars sufficient in and of themselves?

next post...

You will soon enough.

The addition of the YM introduced Intermediate trading to SCT.

the last stages (sheels) of beginner got two levels working and this provided 15 trades a day.

Since YM leads ES at turning points we can use this concept to polish the turns learned in Beginner.

Since their are 15 reversals and 15 prifit takings, the end efects are improved for each end.

2 tick improvement is normal. 2 times 2 give 4 tick per profit leg. There are 4 ticks in a point.

15 legs times 1 popint a leg is 15 points.

Think of an intermediate trader. he is likely running 20 contracts by the time he reaches intermediate.

At 20 contracts, adding 15 points is something that I recommend thatyou take the trouble to improve. A point on 20 contracts is more than 100 dollars; it is 1,000 dollars.

15 points on 20 contracts is called 15,000 dollars a day additional income.

Look at it from the viewpoint of a person's purchasing power regarding one's life style. have diner out once a week and choose somewhere in the world that a rented jet can get you to door to door for the evening. Go see a movie where a guy takes a gal to diner by jet. there are many such movies.

SCT works on 25 exchanges throughout the world. and it work on any time frame. This is what is called good news.

With SCT, it is not a good idea to apply inventions to it. Look at the disaster Hypopotomus created over several years.

by intermediate, you are doing a good base income with 20 contracts and adding YM gives a little tweak. You may want to consider this core and a couple of shells is a boon to you and it will last a lifetime.

Maybe you noticed that PVT traders are doing four times better than the posted results of Syder the first year of the journal. this is the osmosis that occurs with symbiotic action (at a distance). Some of those ealy folks are now expert SCT traders as well.

At some point this template which is common to both, is going to be noticed by someone out there. This is 2007 and we are coming to the end of the passforward of PVT and SCT by the journal leader.

 

[jack hershey]

Quote from RoughTrader:

5) The FTT. The concept is clear enough, but i'm still confused unfortunately. As an FTT is forming, what must we look for as a confirmation that the bar indeed is an FTT? Is it not possible for a bar to potentially be an FTT, only to see price continue on to reach the LTL (for the long case).

My point is, starting from the point where price is sitting on the RTL, there can be many bars that fail to reach the LTL. There still exists the possibility that eventually the price will make its way back to the LTL without a BO to the downside. If this is the case, do we need to wait for the close of a bar to BO of the channel to confirm we had an FTT one or more back?

My central problem is the timing of the stop-and-reverse as the bullish channel morphs into the bearish channel (meaning, the channels overlap). If we wait for the confirmation as described in the previous paragraph, we've already missed the opportunity. We've either taken a good hit to our open profit, or worst case, the open trade has turned into a loser.

RoughTrader

An FTT on level 3 is and FTT on level 2 and the FTT on level 2 is an FTT on level 1. what follows an FTT on level 1 is a BO of the level 1 RTL.

you also have the S/S going off 20 to 30 ahead of the FTT's and you have the WALL on the DOM showing up at least four ticks before the Wall becomes the turning point on the BBid/BAsk.

by sweeping over to the OTR chart you will notice that thranslation stopped a while back and the beore two pair DOM has been going on. finally you are seeing an even or odd harmonic based two pair playing out.

At some point by spending a month or two on each level of skill and taking data sets by sweeping you will get clued into what is going on.

Then the sweeps turn into a sport memory exrecise and you ar just doing reversals on anywhere from 50 to 250 contracts 40 some times a day.

A veteran CO trader used to running 7 or 8 digits all day long, can't take observing SCT trading for even an hour in the beginning.

I'm nearly 75. What is a dilligent sweep for a focussed trader is a glance for me. Why? Simply because I have done it zillions of time for a long time.

This is not rocket science it is simply a case of learning how to do a routine of monitoring, analysis, decision making and taking timely action.

The information that a person needs is available, organized and discussed. A person has to go through the shells shell by shell to have the experience of seeing differing market conditions.

 

[RoughTrader]

Quote from jack hershey:

You will soon enough.

The addition of the YM introduced Intermediate trading to SCT.

the last stages (sheels) of beginner got two levels working and this provided 15 trades a day.

Since YM leads ES at turning points we can use this concept to polish the turns learned in Beginner.

Since their are 15 reversals and 15 prifit takings, the end efects are improved for each end.

2 tick improvement is normal. 2 times 2 give 4 tick per profit leg. There are 4 ticks in a point.

15 legs times 1 popint a leg is 15 points.

Think of an intermediate trader. he is likely running 20 contracts by the time he reaches intermediate.

At 20 contracts, adding 15 points is something that I recommend thatyou take the trouble to improve. A point on 20 contracts is more than 100 dollars; it is 1,000 dollars.

15 points on 20 contracts is called 15,000 dollars a day additional income.

Look at it from the viewpoint of a person's purchasing power regarding one's life style. have diner out once a week and choose somewhere in the world that a rented jet can get you to door to door for the evening. Go see a movie where a guy takes a gal to diner by jet. there are many such movies.

SCT works on 25 exchanges throughout the world. and it work on any time frame. This is what is called good news.

With SCT, it is not a good idea to apply inventions to it. Look at the disaster Hypopotomus created over several years.

by intermediate, you are doing a good base income with 20 contracts and adding YM gives a little tweak. You may want to consider this core and a couple of shells is a boon to you and it will last a lifetime.

Maybe you noticed that PVT traders are doing four times better than the posted results of Syder the first year of the journal. this is the osmosis that occurs with symbiotic action (at a distance). Some of those ealy folks are now expert SCT traders as well.

At some point this template which is common to both, is going to be noticed by someone out there. This is 2007 and we are coming to the end of the passforward of PVT and SCT by the journal leader.

I understand. The use of YM in this context is to squeeze a little more juice out of that orange known as the ES.

For the time being, a good objective for myself is to thoroughly grasp the fundamentals of SCT, examining only the beginningest beginning level for beginners. If I can achieve what you are talking about with SCT, even the most beginner levels of SCT would thoroughly transform anyone's CO trading

Looking forward to more "good news".

RoughTrader

 

[jack hershey]

Quote from RoughTrader:

I wouldn't waste my time posting meaningless questions. I firmly believe that a system should have concrete rules based on price action, and can be numerically described (even if complicated). Any "system" that employs soft, on-the-fly human decisions in the slightest sense cannot be verified at all. Its rules are stochastic in nature, largely determined by the subjective interpretations of the trader.

I'm not interested in debunking this work. I see many claims about it, but no one has put in any effort to SYSTEMATICALLY VERIFY the method. If indeed this method requires soft decisions by the trader, it is unverifiable from a quantitative standpoint. The only recourse is to study, put in the screentime, and practice it until it either works for you or you simply cannot make it work at all.

Given the available documentation, it seems to me that this method can be captured by hardline quantitative rules. That is my objective at this point. I simply do not understand the method enough to define the rules, that is the information I am seeking in this thread.

RoughTrader

Your wish has been granted. There are posted hardline quantitative rules.

So far you have just done a partial once over lightly, if that. Don't worry you will get there.

Several people have taken this up to second derivatives and their work was correct. None are Americans. LOL...the work ethic seems to be dead here for most people.

 

[jack hershey]

Quote from RoughTrader:

Actually, the example I made about the sideways chop wasn't a good one. Quite to the opposite, it seems that if one were to build a channel around the chop starting with a 1-2-3 formation, then you could remain synchronized with it unless it constantly breaks the trendlines of the channel.

I apologize, I'm still trying to understand the proper trade timing inside the channels.

Roughtrader

Google "slaloming" go back into the mid or early 90's.