ES Journal Archive (2006 - 2008)

[smilingsynic]

Quote from TrendPro:


It occurs to me this also ties back into this debate of trend .vs. counter-trend. It is my observation counter-trend traders (faders) are very susceptible to this behavior. The fader believes so strongly the trend is reversing as to step in front of the established trend with a live trade. The market will almost always give the fader a few ticks of confirmation reinforcing the initial analysis / belief the trend is in fact reversing. Unfortunately ( for the faders ) the retracement is usually short lived and the price trend will then continue on with the next volume driven impulse move forming yet another clear reversal signal (with the fader holding a small loss from the previous signal). It is this rhythm of initial confirmation of the reversal signal, followed by an additional clear reversal signal which tends to draw the fader into this destructive habit of fighting the trend (reactively adding to a loss). Eventually the faders loose confidence in the series of false signals give up and throw in the towel, at which point the trend usually comes to an end...

This analysis begs a couple of questions:

1. That one can read the mind of a countertrend ("believes so strongly") trader. I have seen many strong believers in the so-called "trend" trading camp. Indeed, Michael Covel is more an evangelist for trend trading than a trader.

2. That countertrend faders "reactively add to the loss" by necessarily adding on to their position. Disciplined "faders" may get stopped out several times before getting one major move. Sometimes, once is enough, and the fader will smoothly shift to the other side. Many on this thread reject scaling down, pointing out that 9/10 of the time it works, but the other 10% of the time, creates a disaster, monetarily and psychologically.

Although I sometimes "fade" the market (I sometimes fade the faders), I see the entire countertrend-vs-trend trading debate pointless, and largely a matter of semantics. I look for places where traders tend to put their stops, and study the price action (speed and volume) around those points. In other words, I am looking for places where traders--countertrend, trend, whatever--may get trapped.

 

[Spectre2007]

buy signal off both internal, and external, and indicators, high probability signal for a test of 1500.

 

[jagmot]

Quote from callmate:

volente a resident on this thread uses this method whereby one fades the move after a 10 point move in ES intraday, usually for 2 points or more.

I'm trying to understand the rule of 10 as well, it seems interesting but I'm not sure this rule can be used before the fact, it seems to me that it can only be used after the fact and say wow this move was approx 10 points.

Could you explain to me how you traded friday's or monday's action on the rule of 10? Also what risk/reward were you using?

Thanks,
jag

 

[Spectre2007]

woo woo. last major wave of premium build up....could end higher but 1500 is the closest resistance.

 

[Spectre2007]

60 minute

 

[jagmot]

Quote from Pekelo:

Rule of 10 on Friday:

1. Premarket high at 1479, first big bounce 1459.
2. Next high is at 1466, a decent bounce at 1456 and low at 1454.
3. From 1454 low it overshot a bit to 1467, but 1464 wasn't a bad place to go short.
4. From the LOD of 1450 it rallied exactly 10 pts to 1460....

I agree with the analysis for the most part, but my question is how do you know that 1454 is LOD and make a trade until after the fact (and then consequently 1450 being LOD)? My answer, you can't. By the time you realize either is LOD and then use that as the new anchor point for rule of 10, the market has moved too much to make this trade because the risk reward is no longer favorable.

 

[jagmot]

Quote from JSSPMK:

are you serious? Papertrade wins/losses have nothing in common with real money trades ImO & ImE.

Agree 100%. I made one trade today (only trade of the day because I was traveling) and it was near session lows at 1443 (long). Even though my system still had a buy signal, I sold at 1446. With a paper trade, I probably would have let it ride and would have made much more in 'paper profits'

 

[callmate]

Quote from jagmot:

I'm trying to understand the rule of 10 as well, it seems interesting but I'm not sure this rule can be used before the fact, it seems to me that it can only be used after the fact and say wow this move was approx 10 points.

jag

Whatever. I don't trade the rule of 10 myself, I was merely responding to someone's question. No one is inviting you to use it as it stands, you will have to formulate your own strategy in terms of risk/reward if you are interested. See the search button on the right hand side at the top, use it to do your own research.

Good trading

 

[Spectre2007]

daily,

1560 target.

 

[jagmot]

Quote from callmate:

Whatever. I don't trade the rule of 10 myself, I was merely responding to someone's question. No one is inviting you to use it as it stands, you will have to formulate your own strategy in terms of risk/reward if you are interested. See the search button on the right hand side at the top, use it to do your own research.

Good trading

Call,

Please don't take offense to my question. I wasn't asking just you in particular, just using your quote since you were the last person I saw comment on it.

I'm also being somewhat contrarian (I guess) as lately on this board I've been seeing more and more people call out rule of 10 on ES, although the vast majority seem to be calling it out after the fact (which is akin to posting non live trades).