Errors in the Hershey Futures Method

Quote from Joe Doaks:

Error #1: inaccurate TREND AND CHANNEL LINES

Those of you who chart simultaneously in multiple time frames, as I do, recognize that trend lines and the channels drawn therefrom often look significantly different in the different time frames. This is because the higher the time frame, the greater the uncertainty in where within the bar the price extremes occurred with which the trend line and the channel are constructed.
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I'm glad this was brought up. I had planned to post in a similar vain this weekend.

My question - how do the pros address uncertain trend-line projection from higher to lower time frames? Specifically, from dailies to say, a 5 minute chart??

Since they are faced with the same dilemma (and tools) as we are, I arrived at some tentative conclusions:

1) Whenever possible, drop down to the lowest trading fractal to identify your points for trend-line/channel drawing. For example, draw your 2 hourlies, 30 minutes and 15 mins all on a 5 minute chart. This maximizes projection accuracy, and utility (theoretically).

2) When#1 is not possible, trend-line projection from higher to lower fractals - by definition - will always be inaccurate. Therefore, consider a support or resistance "zone" or range to be valid in lieu of highly accurate projections and monitor market action in these zones.

3) What does the market dictate? Does the market dictate a S/R "zone" for bounces off a daily trend-line? Or does the market routinely obey the daily point regardless of its projected position on the lower fractal?

Sometimes I consider all the above when making a trade. Often times, a wait-and-see approach is best when it comes to a major S/R test..

I think the Jackians will say volume is a great indicator for demarcation points.

I trade forex so we don't have that luxury. That withstanding, Jack is my new hero.

Comments welcome.
 
Jander, thanks for replying. I apologize for my obviously inadequate explanation. I am an old man, in the early onset stage of Alzheimer's. My point was this. You draw channels in five minutes. You cannot draw any trend line or channel until the bar being examined in finished. Suppose the first point occurred in the first minute of the bar, and the second point in the fifth minute of the bar. Or that the first point occurred in minute five and the second point in minute one. You will draw very different trend lines in five minutes than you will draw in one minute. The difference (error) depends on the separations in time and in price between the two points. It is trivial if both are small. It is significant if both are large. And it propagates the greater the time between drawing the trend line and the appearance of a potential FTT. Your point about making the decision intra-five-bar was not an SCT rule that I was aware of. Hazardous, I think, as at potential turning points there can be multiple reversals within five minutes time. But it does not invalidate my assertion, it merely potentially eliminates my postulated source of uncertainty in the candidate FTT bar itself.
 
Quote from nkhoi:

joe is not interest in proflogic, none that I recall anyway.
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ok, thanks.

it seems that he might have interest in someone who claims "perfection" in the markets.

regards, surf
 
Quote from trader225:

It's good to see an analytical critique of the method.
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This is so neat.

You think that the OP posted an analytical critique.

Very cool.

Lets see how many others got hooked as well.

Better still, lets see how many others didn't get hooked.
 
Surfer, I regret that, as Nkhoi stated, I have no knowledge of or interest in Proflogic. SCT is a sufficient source of amazement to me that I need look no further for entertainment.
 
Quote from Joe Doaks:

Surfer, I regret that, as Nkhoi stated, I have no knowledge of or interest in Proflogic. SCT is a sufficient source of amazement to me that I need look no further for entertainment.
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thank you, joe.

best wishes to you,


surf
 
Quote from Joe Doaks:


I stand (admittedly imperfectly) for the other extreme which requires either a single rule-based binary entry decision or an aggregation of them (red light/green light).... In brief, to me a system uses hard-and-fast rules to make unambiguous trading decisions.
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I think a rigid attitude towards entries/exists is self defeating.

The market, to my knowledge, doesn't work like that. At least on the variables that are known to yourself (or there would be no need for the original question).

The market has memory. What happened in the last trend tends to repeat in the current trend. There is no magic about this. Its just entrenched market psychology.

How does you're binary decision code accommodate for renewed market harmonics?

Something like a neural net may work for short term memory bias in the market.

But if not, how can you hope to capture ever evolving nuances in trend?

Ignoring in favor of 'statistical significance' won't make it go away. The market doesn't give a crap about statistical significance. It just helps those afflicted souls sleep better at night.

Observe the obvious. And don't be afraid to admit your approach was wrong or inferior to something else.

I had to swallow that jagged little pill and a much better trader for it.
 
Jack, you disappoint me. Rather than consider and directly attempt to refute what I said, you make an ad hominem attack. I would think that you would restrain yourself since you have been on the receiving end of the same your entire posted life.

To be perfectly clear, I am not attempting to improve SCT. I do not trade SCT. True, at specific times of the day I do draw channels, but that is not specific to you, Schabacker first introduced it in 1932. And I do monitor volume and its possible relation to price, but again, that is pure Schabacker. What I do is far advanced over SCT.

Also, to be perfectly clear, I do not doubt that you personally can trade profitably using your screens. Spydertrader says you can, and I have absolute confidence in his integrity. Similary I believe that he can, that Nkhoi can, and that Easyrider can. But I continue in the opinion that it is too damned hard for most others to trade it, and the Journals thread and previous SCT threads support that.

To me it is suspicious that you decline to make hard-and-fast rules. Either you can't, or you don't want to because they could be tested. Everything I do I can test.

Debating with you would be fun and intellectually stimulating, if only you knew how to debate.

(As an aside to readers, we veer dangerously close to the catcalling that destroys all threads which question SCT's validity as ET's semi-officially endorced index futures trading method. This is not an accident. It is censorship.)
 
Quote from Joe Doaks:

Jander, thanks for replying. I apologize for my obviously inadequate explanation. I am an old man, in the early onset stage of Alzheimer's. My point was this. You draw channels in five minutes. You cannot draw any trend line or channel until the bar being examined in finished. Suppose the first point occurred in the first minute of the bar, and the second point in the fifth minute of the bar. Or that the first point occurred in minute five and the second point in minute one. You will draw very different trend lines in five minutes than you will draw in one minute. The difference (error) depends on the separations in time and in price between the two points. It is trivial if both are small. It is significant if both are large. And it propagates the greater the time between drawing the trend line and the appearance of a potential FTT. Your point about making the decision intra-five-bar was not an SCT rule that I was aware of. Hazardous, I think, as at potential turning points there can be multiple reversals within five minutes time. But it does not invalidate my assertion, it merely potentially eliminates my postulated source of uncertainty in the candidate FTT bar itself.
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I was on the same page, just wanted to make sure I was thinking what you were. I dont think this is worth debating to be honest. There are relatively few FTTs that present themselves throughout the day, and they are typically followed by a lengthy move in the anticipated direction. If you are trying to point out that with this methodology we cannot pinpoint the FTT to the tick since they may occur in the midst of a forming 5min bar --- then I say you are correct. I assume you will not deny that if it takes you 1 even 2 bars after the ftt to realize it, you will be just in time to take advantage of the increasing volume move in the new dominant direction. When you stumble upon a 'system' that provides red/green light entries to catch turning points to the tick, I trust you will enlighten us with that information.
 
Quote from Joe Doaks:

Gentlemen, your points are well taken. But what else would you call what SCT purports to be than a system? There are two extremes in approaches to trading. One is the intuitive approach, wherein the practitioner charts those instuments and price/volume functions which he considers to be relevant, and makes "expert" intuitive gestalt entry and exit decisions not constrained by absolute values of those functions or of relationships between instruments and/or functions.

I stand (admittedly imperfectly) for the other extreme which requires either a single rule-based binary entry decision or an aggregation of them (red light/green light). I think the former approach is overly egotistical. They might say I am overly analytical. In brief, to me a system uses hard-and-fast rules to make unambiguous trading decisions. From that viewpoint, SCT, or Spydertrader's version of it, is no system. Neither here nor there, perhaps, likely a matter of taste, but you asked.

But I await comments specific to the charge I made that FTT identification based on five minute channel construction has inherent and unavoidable uncertainty.
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Never worry about being overly analytical. It is not in your deck.

SCT does not use an entry/exit approach.

Try to imagine as a limiting case that any entry compared to any exit at the same moment in time for the correct moment in time is is correct. That is, when looking at the proper moment for an action, that the action is simultaneously and "entry" and an "exit".

What does a person who can understand this have knowledge of?

He is capable of understanding that the best (meaning effective, efficient and optimal) entry, and exit occur simultaneously.

Why is this always true? All entries and all exits are best made at turning points. Right on the turning point. Right at the turning point.

you at some point in time, may come to know that an exit of a long at the very end of the long is NON OTHER THAN THE OPTIMUM ENTRY POINT OF THE NEXT SHORT TREND.

Try to think. Try to gain an understanding of the above.

The only purpose of trading is to extract capital out of the markets. This is done in only one way: by erxtracting all of what is offerred in each leg (trend after trend) and continually all through RTH's.

An entry followed by an exit means that a person is coming off the sidelines having missed the prior trend and, then when he exits the trade, he then simply misses again, by being sidelined, during the next trend.

Any one with an entry exit mentality, hasn't gotten out od the double AA league in a small town somewhere.

SCT is major league in all of the time and we never do entries or exits during RTH's.

Entries and exits is another invention you are making up and assigning to SCT. no one worries that you do not know much about SCT. Anyone has the right to do anything they want to SCT. Assigning entry/exit resoning to SCT is going to eliminate more than half of the trading during a day. trading on FTT's only also eliminates most of the trading if an entry or exit is done on an FTT.

The humor is terrific, however. so far the "multi time frames" is as funny as the "analytic" humor.
 
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