Edge types, efficiency, etc

Jack,

You're a bit hard to fully understand, but I appreciate your responses. I hope you don't mind additional questions.

I'm not sure I understand the intent of the comments regarding me being poor. I'm going to assume I misunderstant that because you nor he know what kind of wealth I come from or not. I do know how my friend got involved and he didn't start the way he is now. He had an in and took it places. He states that he attempted to teach one person (his cousin) and it failed miserably. He vowed to not risk the chance of creating additional rifts in his life. Apparently his cousin lost lots of money and he felt some guilt about that, I suppose. You're right though, there for one reason or another he wasn't interested in training me or interested enough to try hard to get me an in which says something. I don't think he read me though seeing as he essentially just won't talk trading with me at all. As far as the comment about not requesting anyone take me under their wing, it is certainly possible that this is so. However, he of all people should know that prior to his "in" he didn't speak the language either. He was an engineering student that knew nothing of markets when he stumbled upon the markets in the form of a job at the exchange.

Thanks for the insights on what he may be doing. Can you elaborate on how he front runs? Even a simple example of a setup would be useful if you'd be so inclined.

Jack, I do want to walk instead of talk that's why I decided to finally hop in here. I didn't want to be a complete neophyte and I think of done that much at least. How do I learn the sequence of events you refer to? Give me a means and I will give it more than an honest try. I admit that I don't know what I'm doing or what I must be, else I wouldn't be here. Once more, I'd appreciate honest suggestions. Thanks.

What does CW mean? How am I deeply committed to it? Furthermore, why is it not reversible? I can reverse from anything if it pushes me forward. Help me do that.

Thanks.


Quote from jack hershey:

continued.......

This person is doing two things: letting you down slowly and avoiding fees and commish by renting a membership. You cannot trade to make money the way he does; he knows that since he read you and you are poor so can't afford the perks.

He trades intraday market moves by frontrunning the herd. This is called reading the tape or tape reading, both are euphanisms. He uses three components of trading: value, agreement, and supply/demand. Value is measured by price. Agreement is measured by volume (the spectrum goes from none to full where low volume is disagreement and capacity volume isfull agreement). The Depth of Market shows the position of the majority on supply/ demand. your friend is always THE MINORITY. He trades by timing @ market and he front runs the herd who is represented by supply/demand.

so far you do not speak his language in any way. He will not be asking anyone to take you under their wing.


You will recognize that the market is counterintuitive after a while of repeating what you are doing. You are typical of most. Find out what lagging indicators are; you have that down cold and it does not work. some people go to prediction and screw up that way. there is a middle ground: read what is going on in NOW and fir that into the order of events that the market follows. So far you do not know the order of events. Your friend has the order of events down cold and that is how he trades. Today is an example of the order of event "folowing precisely" Look at the over 30 trades today. On the ES give your self 1,000 dollars for every point. Give your friend 5,000 dollars per point. Or don't. It is your choice to get real and begin to get to work instead of talking.

You do not know what you are doing and you do not know what you must be doing.

there is a whole range of people on ET. what you are likely missing is an orderly approach to thinking critically. you are deeply committed to the CW at this point by your past choices. Now you get the consequences. This is not reversable. How a person does a workaround from a false start is a difficult matter. Most people turn into people like the detractors here or people who just come and go here.
More...
 
Quote from New2thegame:

"...I may not be a trader per se, but one thing I do know is that to obtain excess returns requires one of two things: Luck and/or an advantage (read edge)....."

" .... However, it doesn't negate the fact that you still either require luck and/or an advantage; even if you don't know what the advantage is....."

".... I tend to think markets are more random than most traders and wannabe traders want to believe and far less than most professors would have you believe. This is where my interest and skepticism are bred....."
More...

Hello New2,

I am already kicking myself for reponding, as a rule I try not to, but your level of skepticism is very familiar to me. Depressingly so.

Look, most commodity markets have a very readable structure. If you enjoy crunching numbers you will start to see it. Every market, every day, has an open, close, high and low. Inside of this known occurance are mathmatical repetitions. Succesful traders are after one thing and one thing only [speaking of day trading] and that is the extremes of the days range. You will waste money trying to find the first extreme, but you can easily find the general price area of the second extreme. You can even know to a high degree of certainty in what general time of day these extremes will happen.

The commodity markets are very readable.

I could tell you of some daily events that happen in some commodities with 97.6% certainty. The trick is in developing the method to exploit these tendencies. But all of this is for naught if you cant "see" the structure. If I can see it, everyone can see it, it just takes faith some times, faith in the statistical probabilities that what you "know" usually occurs will occur again.

Good luck on your endeavors.

[Oh, and speaking of luck, I have no use for her, but I hear tell she favors the well prepared

:) ]
 
Quote from New2thegame:

Hi Jack,

I like your optimism about daytrading. I will look more closely at the ES, etc and see if I can work out a way to take a point away each day as a start. I will watch YM as a leading indicator for it as well. As far as Gallacher being off base, that is certainly possible, but it seems as if he's a pretty highly respected guy, so it does create a bit of cognitive dissonance thinking of him as misinformed. I am here to learn though, not to stand relentlessly by anyone.

Could you elaborate at all on the comment regarding smart money as a leading indicator? Any hints how this might unfold?

You seem to suggest the bounds of which I am considering are narrow. Any examples of how to adjust my means of observing the markets as you point out?

Thanks
More...

In rational thinking, it is a challenge to prove something doesn't work. For him, he is able to operate on that turf that scientists do not occupy.

Over time, some people examine the work of others. Indicators were introduced into the financial industry early on. The designers and inventors used them successfully because of the basis of their work. A lot of people have failed to make use of indicators. Again, they have proved to themselves that something doesn't work. In thinking this is not a good example to follow.

There has never been any approach that has been subscribed to to the poiint of its then failing to work anymore. So I never have reservations about explaining anything to anyone.

Smart money trades a lot of contracts. There is a reason for this. Smart money has a lot of money. Having a lot of money and trading is, therefore, seen by anyone who wishes to observe. If you observe these people, then you will see how easy it is for your friend to make 200K a day.

So take a look. Smart money is trading the YM. It is an index that is "futures" oriented; therefore it has an "insurance value" to smart money. It is the same for wheat growers and bread bakers. No one has to lose money conducting their business because they "insure" it.

As a parasite of this effort they make, traders, speculatively, extract the market's offer as a consequence of price change. This you have not witnessed as yet (check out your work).

So below is your first success coming up.

there is a difference between the cash market and the futures market. At riskarb.com you see the difference for the start of each day. In what I am giving you, you will focus on the DJIA and the YM. One is a cash index and the other is a futures index.

The difference is a FAIR value and it has a name: PREMIUM.

During the day smart money trades the YM and the trading is "ahead" of the cash index, DJIA. You need to consider the premium for a moment to find out if the future loks bright or dark. Lets say you figure that out.

Then you can consider another aspect of trading using leading indicators.
Lets look at a bright future; this makes the premium positive.

For me I take this kind of knowledge and create indicators and scoring methods. To some extent they are transferable to others. The test is the rationality of the person and his mind. One thing here in ET, you can notice that some people do not "get it" and they like being angry for long periods of time. Neat choice on their part. So I have a bunch of indicators and a few are public.

Back to the smartmoney indicator. It is called Stretch/Squeeze or S/S for short.

If prospects are bright, then smart money makes the indicator say so when smart is going long and it makes the indicator say so when smart money is going short. the reason why is that the YM is not as sluggish as is the cash DJIA which has 30 stocks, in a weighte way, making it up.

This is difficult to think about for some people. Further, I trade an even more sluggish instrument the ES which is associated with the S&P 500 made up of 500 stocks in a weighted manner.

The nice thing is that the time lag from the YM>>>DJIA>>>ES>>>S&P 500 are each "long" times relative to the human mind's perception. There is a caveat. The item perception is the sum of two inputs: sensory and inference, in the ratio of 10% to 90%, respectively.

A person has to acquire inference. It is a process and it involves repetition. If a person is repeating the wrong thing, then he can screw up and get angry. So far that is what you have been doing.

Try to write on a peice of paper how Stretch/Squeeze works. You have the ingredients and you have been told how it works in both kinds of climates. You have ben given the complex and elegant sourse of the "premium" which is adjusted daily.

There is a thread that dances around dealing with ideas and verifying the ideas.

This idea shows the timing of trades all day long. It also shows when the market is in neutral. The basis of trades is very rich people who have a lot of capital in the market to insure their other activities. It is like going to the horses mouth.

Naturally, to make thinking easy while trading it is best to set up the Stretch/Squeeze pane to color code the direction of the trade.

This is something that is nice to test out because the results are so different from the CW AND CW is used to get the signals.

Rationally consider if this leading signal generator could ever fail to work. LOL...... The questions is: when will smart money screwup their insurance programs????? Another question is: why does thsi signal generator never preciptate drawdowns????

So here is a simple beginning point. your friend will give you a job if you get the Stretch/Squeeze rolling. BUT then, you won't need a job.

Inventing the Stretch/Squeeze was a heck of a lot of fun. Later, things got fairly easy when they invented the PC and the printer.

Think about why a person who has had the opportunity to use this has been rejecting it for years and years. It is amazing when you think about it.
 
To better see the market and less narrowly, junk all the filters.

After that get quality vendor information sources; it takes several and they have to be coordinated properly.

Third add the future to your display and put the envelope of the variables into that space for the variables to fill up. This is the remedy for hindsight and it does not include introducing prediction.

Lastly, make sure your display is calibrated. Or put it another way, eliminate the displays from having any scale changes in order that you be mentally calibrated for volatility, pace and money velocity. You are not at prsent.

Then if it is possible, in the future your unconscious mind will begin to give you clues as the the order of events. right now you do not even have their names in your vocabulary, glossary of meanings or as part of three main operators in your mind, namely: spatial, shapes, and movement. you also have to switch from induction to deduction. This probably will not happen for you.

You also lack oxygen in your brain at this point. It is stress induced. Read up on the Bohr Cycle. You also are dehydtated most of the time.
 
Thanks for your post. So, what types of commodities do you trade? As far as the comments on extremes, I agree. I suppose this is one reason I do believe there is real money to be made. I see the ranges and it grabs me and makes me feel as if I do know what's next. I do some backtesting, some walk forwards and find that assuming I am not messing up my own testing with some bias unbeknownst to me, that there is something of an advantage there. I get excited and see the numbers reduce, almost never below the point of profitability but rarely so glaringly obvious that I KNOW I have something big. I suppose an issue of mine is getting over the fact that if something were so easy or obvious it wouldn't likely exist. Perhaps I do need to become more willing to trust the things that have a slight tendency over 50/50 to occur and try to make something with it. Do you find the commodities you trade are easier to exploit than index futures?

Quote from Barth Vader:

Hello New2,

I am already kicking myself for reponding, as a rule I try not to, but your level of skepticism is very familiar to me. Depressingly so.

Look, most commodity markets have a very readable structure. If you enjoy crunching numbers you will start to see it. Every market, every day, has an open, close, high and low. Inside of this known occurance are mathmatical repetitions. Succesful traders are after one thing and one thing only [speaking of day trading] and that is the extremes of the days range. You will waste money trying to find the first extreme, but you can easily find the general price area of the second extreme. You can even know to a high degree of certainty in what general time of day these extremes will happen.

The commodity markets are very readable.

I could tell you of some daily events that happen in some commodities with 97.6% certainty. The trick is in developing the method to exploit these tendencies. But all of this is for naught if you cant "see" the structure. If I can see it, everyone can see it, it just takes faith some times, faith in the statistical probabilities that what you "know" usually occurs will occur again.

Good luck on your endeavors.

[Oh, and speaking of luck, I have no use for her, but I hear tell she favors the well prepared

:) ]
More...
 
I'm already there with viewing the plain chart, with volume alone that is. I'm not sure what you mean about the future on the display. Do you mind extrapolating on that a bit? I agree about a non-scaling chart. I very much dislike when anything is distorted. Why do you suggest going from induction to deduction won't occur for me? How is that a fair thing to suggest? Maybe it isn't unfair, but how would you come to this conclusion so rapidly?

Also, as interesting as the deduction/induction as well the dehydration and lack of oxygen to the brain comments are concerned, I'd have to argue that I'm really not that stressed considering I'm on the sidelines at the moment. I think I'd be more willing to agree if I were in at the moment making real time mistakes ;) You seem convinced about this so I'd love to hear the rationale behind it if you wouldn't mind to help me explore that. You're either brilliant or weird; help me decide which.

Quote from jack hershey:

To better see the market and less narrowly, junk all the filters.

After that get quality vendor information sources; it takes several and they have to be coordinated properly.

Third add the future to your display and put the envelope of the variables into that space for the variables to fill up. This is the remedy for hindsight and it does not include introducing prediction.

Lastly, make sure your display is calibrated. Or put it another way, eliminate the displays from having any scale changes in order that you be mentally calibrated for volatility, pace and money velocity. You are not at prsent.

Then if it is possible, in the future your unconscious mind will begin to give you clues as the the order of events. right now you do not even have their names in your vocabulary, glossary of meanings or as part of three main operators in your mind, namely: spatial, shapes, and movement. you also have to switch from induction to deduction. This probably will not happen for you.

You also lack oxygen in your brain at this point. It is stress induced. Read up on the Bohr Cycle. You also are dehydtated most of the time.
More...
 
Hey New2TheGame,
Just FYI... Jack Hershey tends to speak only in poorly written jibberish that no one else can understand. Also, to my knowledge, no one else can truly attest to him being even a remotely profitable trader. He has a following though, because his crazy writing style lures in the unsuspecting. He knows this and as such, continues to post constantly. Very, very sad.

Jason
 
It's also terribly difficult to prove something does work. In fact, empiricism really can't do either task. At best we can asymptotically get closer to truth.

I see your point however regarding throwing things out completely. Once more, this is why I'm here. If I took everything I have been trained for at face value, I wouldn't be here and if I were I'd be arguing support for EMH.

Interesting comment regarding feeling free to tell anyone anything. Clearly many disagree on this, both successful and not. For instance if my friend agreed, he wouldn't have such an issue with discussing details with me. I'm not sure how I feel about this yet, but it's good to see there is room for polarization there.

I think I catch the drift about smart money. Observing them through volume seems to be the message, but correct me if wrong.

It sounds to me that you're somewhat cryptically explaining the order of things in the form of vehicles impact on eachother's movement. I suppose I get a bit confused with your approach, but that's what I'm taking from it at the moment. As far as the dark or bright concensus is that something that comes internally or from something more external at that moment?

What is CW?

Sure, if what you state is a leading indicator for the ES or any other similar situations exist, presuming the time delta is large enough it would seem silly anyone wouldn't use it. That said, why does anyone choose not to?

Quote from jack hershey:

In rational thinking, it is a challenge to prove something doesn't work. For him, he is able to operate on that turf that scientists do not occupy.

Over time, some people examine the work of others. Indicators were introduced into the financial industry early on. The designers and inventors used them successfully because of the basis of their work. A lot of people have failed to make use of indicators. Again, they have proved to themselves that something doesn't work. In thinking this is not a good example to follow.

There has never been any approach that has been subscribed to to the poiint of its then failing to work anymore. So I never have reservations about explaining anything to anyone.

Smart money trades a lot of contracts. There is a reason for this. Smart money has a lot of money. Having a lot of money and trading is, therefore, seen by anyone who wishes to observe. If you observe these people, then you will see how easy it is for your friend to make 200K a day.

So take a look. Smart money is trading the YM. It is an index that is "futures" oriented; therefore it has an "insurance value" to smart money. It is the same for wheat growers and bread bakers. No one has to lose money conducting their business because they "insure" it.

As a parasite of this effort they make, traders, speculatively, extract the market's offer as a consequence of price change. This you have not witnessed as yet (check out your work).

So below is your first success coming up.

there is a difference between the cash market and the futures market. At riskarb.com you see the difference for the start of each day. In what I am giving you, you will focus on the DJIA and the YM. One is a cash index and the other is a futures index.

The difference is a FAIR value and it has a name: PREMIUM.

During the day smart money trades the YM and the trading is "ahead" of the cash index, DJIA. You need to consider the premium for a moment to find out if the future loks bright or dark. Lets say you figure that out.

Then you can consider another aspect of trading using leading indicators.
Lets look at a bright future; this makes the premium positive.

For me I take this kind of knowledge and create indicators and scoring methods. To some extent they are transferable to others. The test is the rationality of the person and his mind. One thing here in ET, you can notice that some people do not "get it" and they like being angry for long periods of time. Neat choice on their part. So I have a bunch of indicators and a few are public.

Back to the smartmoney indicator. It is called Stretch/Squeeze or S/S for short.

If prospects are bright, then smart money makes the indicator say so when smart is going long and it makes the indicator say so when smart money is going short. the reason why is that the YM is not as sluggish as is the cash DJIA which has 30 stocks, in a weighte way, making it up.

This is difficult to think about for some people. Further, I trade an even more sluggish instrument the ES which is associated with the S&P 500 made up of 500 stocks in a weighted manner.

The nice thing is that the time lag from the YM>>>DJIA>>>ES>>>S&P 500 are each "long" times relative to the human mind's perception. There is a caveat. The item perception is the sum of two inputs: sensory and inference, in the ratio of 10% to 90%, respectively.

A person has to acquire inference. It is a process and it involves repetition. If a person is repeating the wrong thing, then he can screw up and get angry. So far that is what you have been doing.

Try to write on a peice of paper how Stretch/Squeeze works. You have the ingredients and you have been told how it works in both kinds of climates. You have ben given the complex and elegant sourse of the "premium" which is adjusted daily.

There is a thread that dances around dealing with ideas and verifying the ideas.

This idea shows the timing of trades all day long. It also shows when the market is in neutral. The basis of trades is very rich people who have a lot of capital in the market to insure their other activities. It is like going to the horses mouth.

Naturally, to make thinking easy while trading it is best to set up the Stretch/Squeeze pane to color code the direction of the trade.

This is something that is nice to test out because the results are so different from the CW AND CW is used to get the signals.

Rationally consider if this leading signal generator could ever fail to work. LOL...... The questions is: when will smart money screwup their insurance programs????? Another question is: why does thsi signal generator never preciptate drawdowns????

So here is a simple beginning point. your friend will give you a job if you get the Stretch/Squeeze rolling. BUT then, you won't need a job.

Inventing the Stretch/Squeeze was a heck of a lot of fun. Later, things got fairly easy when they invented the PC and the printer.

Think about why a person who has had the opportunity to use this has been rejecting it for years and years. It is amazing when you think about it.
More...
 
Quote from New2thegame:

[1]"... As far as the comments on extremes, I agree. I suppose this is one reason I do believe there is real money to be made. I see the ranges and it grabs me and makes me feel as if I do know what's next......"

[2] "... I do some backtesting, some walk forwards and find that assuming I am not messing up my own testing with some bias unbeknownst to me, that there is something of an advantage there...."

[3] ".. I suppose an issue of mine is getting over the fact that if something were so easy or obvious it wouldn't likely exist...."

[4]".. Perhaps I do need to become more willing to trust the things that have a slight tendency over 50/50 to occur and try to make something with it. Do you find the commodities you trade are easier to exploit than index futures?..."
More...


Let me start by addressing the concept of a "holy grail" in trading.
I believe in it. I also believe that there is a "holy grail" for each and every trader. Each grail contains 80-90 % commonality with every other "grail", ie.= Discipline, money management, time frame, leverage, etc.. The unbelievably difficult component is the 10-20% of the equation that is only right for you, the component that only you can supply to make the endeavor successful. So my answers to your questions are coming from my perspective and experience.

1) The averages of the daily range, opening range, closing range, pit session averages, over-night averages, net delta of volume at a given support level, divergences in net bid/ask volume at key range or support levels are like a canvas on which the days "picture" will be painted upon. With that said, I would advise you to drop the "know whats next" and focus on knowing whats happening at the key points of the "picture". Start with the opening range, as one the price extremes is almost always set in this time frame. Remember, day traders need one of the extremes to make this business work. All of the chart that is not at the areas of the extremes is rubbish. Keep your eye on the prize, the two extremes.

2) You are thinking this into the ground. Keep it simple my friend. Simple is very good in this business. [This is why I responded to your thread, I had the same tendency to think my setups into inaction. You will lose, except that fact, but you can win much more than you lose.]

3) The market is neutral. It offers its potential and possibilities to all comers. It is in OUR heads that turns a simple task of monitoring a known and repeatable sequence of probabilities into a hellish nightmare of doubt, fear and the need to "know" the next ticks direction. It really is easy and obvious. See the structure, know the average structure, sleep the average structure.

4) I would not trust anything slightly over 50% LOL. Why do you have such a low expectation ? If you think I am full of hot air when I tell you that there are set-ups everyday that have statistical probabilities ranging from the low 60's to the high 90's, then you have not crunched the numbers far enough. Look to the Ags first, the structures are very easy. As far as the Indexes are concerned my advise would be to not start with them or the currencies.
 
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