ES Journal Archive (2006 - 2008)

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Quote from hpeganz:

I think this was BLD on 5 minutes !!
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yes it was. You need to draw your lines across the bottoms of the RSI and CCI troughs instead of the peaks on BLD though.
 
Quote from Buy1Sell2:

There is a psychological reason that the MA flattening and a basing helps the reversal. Take today for examle where you have bears pushing the price down. There comes up a point where fresh sellers are not in abundance and the same bears try to push the price down farther. They may be able to for a bit but as time goes on the thrusts are smaller and smaller which causes the MA to flatten a bit. Most humans are built the same way, and get bored or panicked in generally the same amount of time. As I have said before, most TA traders are MA traders and as they see the MA flatten, they become afraid of losing their gains which they had already counted as income and may have actually spent. They begin covering the shorts. At the same time traders like myself are eagerly looking for the divergence that we know is caused by these psychological factors. We begin buying. The MA flattens and begins to turn upwards. More shorts cover, more MA traders and divergence traders begin buying. It begins to feed on itself, then the trend followers jump in and we get a furthe pop. Then prices break as day traders looking for two points take profits. Then people who thought they had missed the initial opportunity begin to jump in because they are afraid that they may miss the move and now they have a chance to still get in on the pullback. And on and on and on---

Notice how during that discussion, there was no mention of fundamentals.
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In this discussion, I realized that I failed to mention a group of traders. These are the foolish longs. Let me explain what a foolish long (or short) is. This is the trader that is overextended and has held on without using a tight stop initially. (overextended and highly leveraged traders must use stops). Most retail /public traders are overextended and highly leveraged. He has already gone well past his 2 percent of portfolio stop guideline and is now looking at his summer vacation money, his kids college money and/or the next mortgage payment etc slipping away from him( or may have to tell the wife). He then sells his position and gets out just near the bottom. He has feared that he is in front of a freight train and the next move down will destroy him(or his wife will). Of course, he has been in front of a freight train all the time and because of the overextension, he has put himself in this position. He must get out. These foolish longs sell (humans are built the same, there are other foolish longs selling near the same time that he is), and when they sell, it creates the final downward thrust as the divergence traders eyeing the chart are preparing to buy in. Then the foolish longs watch the price retrace upwards as they watch their fresh short positions getting whacked and they hold on to those. And the cycle goes on and on.

Note: Nowhere in this discussion do I mention anything to do with fundamentals. :)
 
Quote from Buy1Sell2:

The 240 is beginning to show signs of life, but not enough yet for me to add to my position. It may be Monday or Tuesday ----
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Do need a BLD?:p
 
Quote from hpeganz:

I think this was BLD on 5 minutes !!
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Hi HP, though this is a BLD, but I personally would not have taken this one, again due to the price range during the formation cycle. It did work, but one has to consider the odds of failure. And with a couple of points divergence, aiming to make 1.5-3 points on 5 min TF is not a safe bet IMO based on actually trading these signals. If I were you I would await range of 4 points in the divergence formation and don't be too greedy as well, you don't normally get a reversal divergence as a signal on the same TF, but a reversal might be triggered on a 1 min TF, or 2, or 3 or 15, so my advice is IF you DO decide to trade short time frame divergences have multiple TF open simultaneously and trust me it is a very exhausting way to trade, as you constantly have to be at your peak concentration wise.

All the best.

P.S. Bighitter, B1S2 has mentioned exactly what and how he trades, I would read the journal first, otherwise you are jumping the gun with your accusations. Of all genuine posters on ET, B1S2 is totally one of these people, I have followed this ESJ since day one. B1S2 - I hope you don't these sort of posts personally. All the best.
 
I very much like that tail outside the BB on the hourly chart. I'm not ready to add long yet though--I need more confirmation. ( 20 period MA beginning to lose steam as well).
 
Quote from Buy1Sell2:

I very much like that tail outside the BB on the hourly chart. I'm not ready to add long yet though--I need more confirmation. ( 20 period MA beginning to lose steam as well).
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What about daily B1? If cash breaks 1220 and by doing so creates a hook/equal level to 2nd trough on MACD, that just might create a triple BLD on daily, also supported by RSI making a third bottom @ 30 and obviously CCI going into OS for the 3rd time. Would you consider that a triple BLD or not?

I liked your post on foolish longs, in a way I could be one of them as I am long 1262.87 average at the moment and I do use high leverage, but that's where my short term trading helps offset, hopefully temporary, unrealised loss so far in this positional trade.
 
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