ES Journal Archive (2006 - 2008)

[billp]

I may be totally wrong but I like method 2 the best as one have used the 'scare tactic by market' to benefit on both sides ie :
getting a better price for the futures/stock while profiting from the short side (which acts as a hedge and income producing instrument). So what is meant as shaking the weak hands out, have actually benefitted us.

My thoughts. Is it so simple as this? Nope. But in principle this is a sound method. The tricky part is managing the 'hedges' and recognising when one's view is wrong so that one can cut one's losses

B1S2,
Advise please. Thanks

 

[Buy1Sell2]

Quote from billp:

B1S2,

Thanks.
You mentioned that :
'By the way, what I meant with the adding shorts would be a net position of shorting, You would have sold your longs with part of your sale.'

In your situation (where long term you are still bullish but short term you are bearish, would you

1) have sold your long and go net short (ie sell futures)
or

2) kept your long, but sold more calls ie net short. And you continue to sell more calls and buy futures (ie average down futures price. Most likely you will double the buying at the support level) as price kept going lower until the point where you think the reversal to upside is beginning.Your position will be increasingly net negative
or

3) what is the method that you use?


Of course, if one turns out to be wrong, then, one have to cut losses immediately.

Thanks

When trading around a long term long position with short term trades, you would sell your long position as a matter of course when you shorted on say, and hourly or daily chart. This is what I meant by ending my experiment with two accounts. Let's say you were long 1 contract and intraday you saw a short opportunity and wanted to apply 4 contracts. You sell the 4 contracts and buy them back lower(hopefully) and all you are in essence doing is adding the intraday profit to your account while remaining long when you buy the 4 contracts back. Remember, the only time you would do this is on a different time frame as the upper chart that you are viewing is still in long term uptrend. Otherwise you would want to exit the whole position and perhaps reverse if the chart indicates. As regards number 2, you may also do that but it is for longer term benefit than a short intraday type of trade . I like the call selling as well. They expire worthless in general as we know and privode a great income stream and hedge when the market has risen significantly. (Look at my name--get the idea?) I typically use the second method more.Thanks for asking!

 

[billp]

B1S2,

Thanks. Yes, it is usually more than for intraday and agree on the timeframes.

Some more questions.
First, like to say I am not that familiar with your grails. If I'm correct, it is usually something to do with divergences (seen from macd and rsi).Anyway, not much of an indicator person myself. I've just read the definition/computation of macd and rsi and did some thinking.

1) Am I correct to say that you will not necessarily take all the grails that are present? My thoughts are that you will take some grails and not some others. [This assumption is based on how I visualise the indicators and grails will look like versus how the price charts look and price behaviour]

2) If you are willing, usually how many points/ticks will you place the stop loss above/below the last reaction high/low. Although I do not trade ES, I'm trying to compare it with the instruments that I trade and I think that it will be useful.

Thanks

Quote from Buy1Sell2:

When trading around a long term long position with short term trades, you would sell your long position as a matter of course when you shorted on say, and hourly or daily chart. This is what I meant by ending my experiment with two accounts. Let's say you were long 1 contract and intraday you saw a short opportunity and wanted to apply 4 contracts. You sell the 4 contracts and buy them back lower(hopefully) and all you are in essence doing is adding the intraday profit to your account while remaining long when you buy the 4 contracts back. Remember, the only time you would do this is on a different time frame as the upper chart that you are viewing is still in long term uptrend. Otherwise you would want to exit the whole position and perhaps reverse if the chart indicates. As regards number 2, you may also do that but it is for longer term benefit than a short intraday type of trade . I like the call selling as well. They expire worthless in general as we know and privode a great income stream and hedge when the market has risen significantly. (Look at my name--get the idea?) I typically use the second method more.Thanks for asking!

 

[apex82]

You can buy any of these blue zones tomorrow if the market gets down there with a 3 pt stop and a 6pt first pft and 12 pt second profit target.

 

[romik]

Getting back to PTs based on R:R vs reverse grails, I have a question which is based on common sense and experience.

When making an entry based on say a Long grail risking 2 points and aiming for a preset 6 (1:3) how many times that position will not reach the final destination of 6 points intraday? That approach makes this system partly mechanical due to its reward expectations. What if it goes 5.75 and reverses? What if it goes 3 and reverses? Etc. That happens a lot during the day as our predetermined intraday PTs are not necessarily in agreement with the market or vice versa (doesn't matter). In following a reversal grail formation a position theoretically would benefit from not being stopped out upon a presence of a reversal based on a reversed Short grail. Yes in that specific case a R:R could be 1:1, so what? Next trade can benefit from 1:2 or 1:3 or 1:5, when the first approach of waiting for 1:3 can happen say 1 out of 4 trades.

 

[romik]

Quote from romik:

Getting back to PTs based on R:R vs reverse grails, I have a question which is based on common sense and experience.

When making an entry based on say a Long grail risking 2 points and aiming for a preset 6 (1:3) how many times that position will not reach the final destination of 6 points intraday? That approach makes this system partly mechanical due to its reward expectations. What if it goes 5.75 and reverses? What if it goes 3 and reverses? Etc. That happens a lot during the day as our predetermined intraday PTs are not necessarily in agreement with the market or vice versa (doesn't matter). In following a reversal grail formation a position theoretically would benefit from not being stopped out upon a presence of a reversal based on a reversed Short grail. Yes in that specific case a R:R could be 1:1, so what? Next trade can benefit from 1:2 or 1:3 or 1:5, when the first approach of waiting for 1:3 can happen say 1 out of 4 trades.

I will track all reverse grail signals today and will post them at the EOD.

 

[murray t turtle]

Quote from Buy1Sell2:

....... I like the call selling as well. They expire worthless in general as we know and privode a great income stream and hedge when the market has risen significantly. (Look at my name--get the idea?) I typically use the second method more.Thanks for asking!

=======================
Like a selling plan with anything.

Wish I could remember the guy"s name, think he does real well over a long period of time, mostly selling options, about a 100 million managed , i believe over a long period of time.[10 years +]

He has been mentioned before on elite trader;
his selling call options tends to do less well in 4th quarter , due to historical strength tendencies then, now

Interesting to see if ES, NasdaQQQ gets above thursday gap.

 

[tradequicker]

romik.........here is something from my past.......point target was es 5 pts........for some of us........6 for some and 8 and 10 for others .....10 traders in room.....4 contracts and worked up to 6 with plans to 20 each on the big board and money to do it with no problem.........i immediately recognized that we almost hit 5 points most of the time......this was in 2000........runs were huge then compared to now.....15 to 20 pts avg.......2 and 3 times per day........stops were 10 pts......inverted and dangerous as we never were allowed to move the stop to breakeven......your question is excellent.........i would, if 3 pts is commonly SEEN...that is another key.......take it when you see it not when you think the fill is good......i would exit contract/s at 2.....seen...always put some money in bank when 2 seen....then go to breakeven with rest of contracts.......then exit more at 3 SEEN..or 4 seen......Let the rest ride until?...

 

[Buy1Sell2]

Quote from romik:

Getting back to PTs based on R:R vs reverse grails, I have a question which is based on common sense and experience.

When making an entry based on say a Long grail risking 2 points and aiming for a preset 6 (1:3) how many times that position will not reach the final destination of 6 points intraday? That approach makes this system partly mechanical due to its reward expectations. What if it goes 5.75 and reverses? What if it goes 3 and reverses? Etc. That happens a lot during the day as our predetermined intraday PTs are not necessarily in agreement with the market or vice versa (doesn't matter). In following a reversal grail formation a position theoretically would benefit from not being stopped out upon a presence of a reversal based on a reversed Short grail. Yes in that specific case a R:R could be 1:1, so what? Next trade can benefit from 1:2 or 1:3 or 1:5, when the first approach of waiting for 1:3 can happen say 1 out of 4 trades.

If the market moves 5 pts most of the time after a signal, it would be best to exit all at that point. As far as whether or not it is better to let the whole trade ride to an actual reversal, I say yes. You will make less each day, but will hit the big winner and it more than makes up for not taking the profits at 5. Remember we are using trailing stops in each scenario. The bottom line is that if your target is 3 , let it run to 3 not 2.5. If it is 5 let it run to 5, if it is until there is a reversal, let the whole thing ride until reversal.

 

[romik]

Quote from tradequicker:

romik.........here is something from my past.......point target was es 5 pts........for some of us........6 for some and 8 and 10 for others .....10 traders in room.....4 contracts and worked up to 6 with plans to 20 each on the big board and money to do it with no problem.........i immediately recognized that we almost hit 5 points most of the time......this was in 2000........runs were huge then compared to now.....15 to 20 pts avg.......2 and 3 times per day........stops were 10 pts......inverted and dangerous as we never were allowed to move the stop to breakeven......your question is excellent.........i would, if 3 pts is commonly SEEN...that is another key.......take it when you see it not when you think the fill is good......i would exit contract/s at 2.....seen...always put some money in bank when 2 seen....then go to breakeven with rest of contracts.......then exit more at 3 SEEN..or 4 seen......Let the rest ride until?...

A question of scale out's efficiency is discussed in another thread, here we are trying to establish whether to go for specific targets based on R:R or upon a presence of a reverse signal. I am in favour of the latter personally.