Classic Geometric Patterns and Narrow Range Setups
- Thread starter inandlong
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Nice oddi!
Once again the basic concept of consolidation-expansion has proven itself worthy of consideration by any trader.
I know there are some people on this board that are looking for 100% mechanical turnkey methods that will generate untold amounts of monetary wealth without having to do any work. You read the threads and the ads in the trade journals and think, "boy, I'd pay 10K for a system that works 'cuz then I wouldn't have to."
Those of you who fall into the category described above - and I know who you are because I read the threads and I see the whiners and complainers and naysayers and others like you who contribute nothing - need to realize that like EVERY other business in the world... the more you learn and apply what you know, the better you will be. But you have to learn, and you have to apply, ie., WORK.
Once again the basic concept of consolidation-expansion has proven itself worthy of consideration by any trader.
I know there are some people on this board that are looking for 100% mechanical turnkey methods that will generate untold amounts of monetary wealth without having to do any work. You read the threads and the ads in the trade journals and think, "boy, I'd pay 10K for a system that works 'cuz then I wouldn't have to."
Those of you who fall into the category described above - and I know who you are because I read the threads and I see the whiners and complainers and naysayers and others like you who contribute nothing - need to realize that like EVERY other business in the world... the more you learn and apply what you know, the better you will be. But you have to learn, and you have to apply, ie., WORK.
stocon... how are you man?
I'm sorry, I left just after posting and just now signed on again. I'll have to look up the slim jim trade, I remember reading about it and it sure seemed like a legit setup at the time. Plus, I don't get the emini's real time - unless the YM is free thru QCharts - I know shame on me for not having the futures side-by-side every chart.
Even worse, I don't have volume up either. :eek:
Good to hear from you though... and I know since you're still around that you're doing well so way to go!
I'm sorry, I left just after posting and just now signed on again. I'll have to look up the slim jim trade, I remember reading about it and it sure seemed like a legit setup at the time. Plus, I don't get the emini's real time - unless the YM is free thru QCharts - I know shame on me for not having the futures side-by-side every chart.
Even worse, I don't have volume up either. :eek: Good to hear from you though... and I know since you're still around that you're doing well so way to go!
Ah yes, I think you're right thin', thanks.
Okay I read up a bit on the slim jim. Actually the first time I ever read about this set up was in that book by the well-loved Oliver Valez. I don't think he called it the slim jim, but he sure praised it as a nice setup. I recall that he suggested two means of trading this pattern. It looks like this is a bread-and-butter setup for Kevin Haggerty.
One thing we know for sure.... it is a consolidation pattern. As I understand the slim jim - it is traded only as a continuation move. In our case with the YM we were looking to be long. A breakout never occurred.
This setup is traded by a number of outfits that want your money for a service. Haggerty is probably the best known of them... and some of his specifics can be gleaned from reading the intro page. One seems to be that there is a minimum number of 5 minute bars that must occur. The YM today probably qualified. Haggerty's demo was of a stock that gapped up significantly at the open. I wonder if that is a favaorite parameter.
It sure seems like you had a great setup that didn't signal an entry as it is meant to be traded. Regardless, thanks for the heads up on another very nice consolidation play.
Okay I read up a bit on the slim jim. Actually the first time I ever read about this set up was in that book by the well-loved Oliver Valez. I don't think he called it the slim jim, but he sure praised it as a nice setup. I recall that he suggested two means of trading this pattern. It looks like this is a bread-and-butter setup for Kevin Haggerty.
One thing we know for sure.... it is a consolidation pattern. As I understand the slim jim - it is traded only as a continuation move. In our case with the YM we were looking to be long. A breakout never occurred.
This setup is traded by a number of outfits that want your money for a service. Haggerty is probably the best known of them... and some of his specifics can be gleaned from reading the intro page. One seems to be that there is a minimum number of 5 minute bars that must occur. The YM today probably qualified. Haggerty's demo was of a stock that gapped up significantly at the open. I wonder if that is a favaorite parameter.
It sure seems like you had a great setup that didn't signal an entry as it is meant to be traded. Regardless, thanks for the heads up on another very nice consolidation play.
Hey In,
In the old Tradehard guide, he wants the jim to be trading near the daily high or low, trading above the 50day and 200day, 8 to 10 bars on the 5min in a large SP stock. I couldn't determine if direction was picked ahead of time but if you want it near its daily high or low and above those MAs then I guess he intends to go in the directions of the MAs.
Everyday the market gives you a slim jim of sorts but they are loaded with fakes. Today, the intraday trend was down going into that ym jim or let's just call it a tight line. It did break dn for 20 pts not great but pretty good for today's range. How do you play these lines or tight consolidations? Do you buy/sell every break with a tight stop inside the noise or put the stop or stop reverse on the otherwise of the line? Where you risk a reverse whipsaw sometimes right at the pivot high or low and then right back into the range. Any thoughts on systematically or hints on how to pick a direction
TIA Steve.
In the old Tradehard guide, he wants the jim to be trading near the daily high or low, trading above the 50day and 200day, 8 to 10 bars on the 5min in a large SP stock. I couldn't determine if direction was picked ahead of time but if you want it near its daily high or low and above those MAs then I guess he intends to go in the directions of the MAs.
Everyday the market gives you a slim jim of sorts but they are loaded with fakes. Today, the intraday trend was down going into that ym jim or let's just call it a tight line. It did break dn for 20 pts not great but pretty good for today's range. How do you play these lines or tight consolidations? Do you buy/sell every break with a tight stop inside the noise or put the stop or stop reverse on the otherwise of the line? Where you risk a reverse whipsaw sometimes right at the pivot high or low and then right back into the range. Any thoughts on systematically or hints on how to pick a direction
TIA Steve.
I looked at the chart again just now and I realized that the strong move was Thursday, and the consolidation was all day today. That is my bad for not seeing that right up front. I think that when using the 5 minute chart, the strong move needs to be off the open on the same day as the slim jim. So on our YM chart... imo... there was no setup today at all.
Which leads me to another thought... imo... this time of year is absolutely horrible for trying to make money on intraday trades like this one. When there is urgency in the market then run-rest-run rules the day. But during the late summer, especially this six-eight week period that surrounds Labor Day.... stoc' I know guys that go on vacation through this time because trading is so bad during this period.
Entry on consolidation breaks occurs for me when the close of the bar in the time frame I am looking at is outside the boundaries of the pattern I have drawn. That is not as aggressive as buying the support etc., but that's the way I do it. I also don't need extremely great volume on that bar, but I do want to see a good amount of participation. I recognize that is subjective, but suffice it to say that I'd like the volume of the bar I enter to be similar to the healthier-looking bars seen during the first 45 minutes of the day. Not rocket science.
If the close of that first bar outside the pattern is 'too far', I won't take the trade. Again, subjective. But entering at the close of a long candle bothers me. I have no stats to justify my feelings, I just don't like to do it. I would rather wait and see if the price pulls back to the boundary in those cases. If suport appears to develop at the boundary - in the case of a long - I'll buy it there.
So let's say I'm long. The low of the bar that triggered my entry is going to be inside the boundaries. Depending on the width of the boundaries, I might use the low of the trigger bar, or the opposite boundary as a stoploss or stop/reverse, respectively. Just to be clear, I won't use the low of the trigger bar as a reversal because it is within the pattern, but I might use it as the stoploss. If the pattern is narrow enough, I will use the opposite boundary as a stop and reverse. 'Enough' means no more than a .45 loss. Forty-five cents is just a number I am comfortable with. I'm willing to lose 45 cents on the trade. More bugs me, less is too tight. That number is not absolute because I like to wait until the bar has closed. And we both know how quickly a bar can start running against us.
For me, the secret to not getting whipped repeatedly is drawing the boundaries. This actually was a process I worked out to help me not get whipsawed repeatedly when entering at a moving average. Sometimes those things are price magnets and can whip you. Overall it doesn't happen prohibitively often, but it stinks when it does. Say on the slim jim it breaks and you enter. The next bar or so reverses and you reverse. You also draw a line at the high of the first break you entered. Say price unfortunately reverses again. This time, unless/until the price breaks that previous high... you're out. And you also draw a line at the low of that second reversal. Now you have a nice set of boundaries, based on local highs and lows, with your next entry being a break of one of the boundaries. And you only had two small losing trades.
I find this works very well on sixty minute and longer moving averages because the small losses that might be incurred are nothing compared to the larger gains that accrue when the price once again deviates substantially from the mean.
As far as picking a direction, I tend to use the MACD to give me an idea of what is going on. My MACD oscillates above and below a zero line. I remind myself though that I don't know which direction it might go... especially as the time frame gets shorter.
Which leads me to another thought... imo... this time of year is absolutely horrible for trying to make money on intraday trades like this one. When there is urgency in the market then run-rest-run rules the day. But during the late summer, especially this six-eight week period that surrounds Labor Day.... stoc' I know guys that go on vacation through this time because trading is so bad during this period.
Entry on consolidation breaks occurs for me when the close of the bar in the time frame I am looking at is outside the boundaries of the pattern I have drawn. That is not as aggressive as buying the support etc., but that's the way I do it. I also don't need extremely great volume on that bar, but I do want to see a good amount of participation. I recognize that is subjective, but suffice it to say that I'd like the volume of the bar I enter to be similar to the healthier-looking bars seen during the first 45 minutes of the day. Not rocket science.
If the close of that first bar outside the pattern is 'too far', I won't take the trade. Again, subjective. But entering at the close of a long candle bothers me. I have no stats to justify my feelings, I just don't like to do it. I would rather wait and see if the price pulls back to the boundary in those cases. If suport appears to develop at the boundary - in the case of a long - I'll buy it there.
So let's say I'm long. The low of the bar that triggered my entry is going to be inside the boundaries. Depending on the width of the boundaries, I might use the low of the trigger bar, or the opposite boundary as a stoploss or stop/reverse, respectively. Just to be clear, I won't use the low of the trigger bar as a reversal because it is within the pattern, but I might use it as the stoploss. If the pattern is narrow enough, I will use the opposite boundary as a stop and reverse. 'Enough' means no more than a .45 loss. Forty-five cents is just a number I am comfortable with. I'm willing to lose 45 cents on the trade. More bugs me, less is too tight. That number is not absolute because I like to wait until the bar has closed. And we both know how quickly a bar can start running against us.
For me, the secret to not getting whipped repeatedly is drawing the boundaries. This actually was a process I worked out to help me not get whipsawed repeatedly when entering at a moving average. Sometimes those things are price magnets and can whip you. Overall it doesn't happen prohibitively often, but it stinks when it does. Say on the slim jim it breaks and you enter. The next bar or so reverses and you reverse. You also draw a line at the high of the first break you entered. Say price unfortunately reverses again. This time, unless/until the price breaks that previous high... you're out. And you also draw a line at the low of that second reversal. Now you have a nice set of boundaries, based on local highs and lows, with your next entry being a break of one of the boundaries. And you only had two small losing trades.
I find this works very well on sixty minute and longer moving averages because the small losses that might be incurred are nothing compared to the larger gains that accrue when the price once again deviates substantially from the mean.
As far as picking a direction, I tend to use the MACD to give me an idea of what is going on. My MACD oscillates above and below a zero line. I remind myself though that I don't know which direction it might go... especially as the time frame gets shorter.
In,
I agree it was not tech. a slim jim but these type of long 5 min consolidations are so numerous that I would like to come up with some rules on how to play them. Could you tell me a little more on what you are looking at on macd and does the speed by which the bar runs up to the boundary effect your decision making process? When you talk of .45 for a stop, the would supercede the stop at the low of the candle if it were greater than .45? When you talked of building boundaries on the whipsaw trade you described, you talked of drawing a line at the low of the second reversal, is this within or below the congestion?
TIA Steve
I agree it was not tech. a slim jim but these type of long 5 min consolidations are so numerous that I would like to come up with some rules on how to play them. Could you tell me a little more on what you are looking at on macd and does the speed by which the bar runs up to the boundary effect your decision making process? When you talk of .45 for a stop, the would supercede the stop at the low of the candle if it were greater than .45? When you talked of building boundaries on the whipsaw trade you described, you talked of drawing a line at the low of the second reversal, is this within or below the congestion?
TIA Steve