Finding the Holy Grail

I have many unanswered PMs but within this thread I will try and answer one of those PMs. The underlying assumption is daytrading.

Gyrations
This is a neutral description I use for the intraday price swings. An overbought/oversold criteria is not used. In CL I use a minimum of 40 points to delineate price swings, open to close. You can calculate them in hindsight and monitor them live as they develop and follow each other during any trading session. For example on Thursday (Nov 10, 2011), open to close, CL had 15 sequential swings at a mean average width of 69 points per swing, offering a maximum of 1043 points.

Trend
I don't use trend or trends, so called. What trend anyhow? From today, from yesterday, from 29 minutes ago or from 1929? And when are you going to join it? At the beginning or near the end or was that just another bend in the trend? Its a mindf**k you don't need. I prefer accuracy and swings are an arithmetical observation that circumscribes the ballpark within which you are a player (eg CL).

Targets
While you can use a target strategy to lift set gains from your trading signals, I normally use a trading system of signals and countersignals. In other words I buy on a buying signal and exit (or reverse) on the next selling signal. Or vice versa I sell on a selling signal and exit (or reverse) on the next buying signal.

:)
 
Hi Cheese,

I understand the trend and target points. But I'm still confuse about the "gyrations' one. Do you call a gyration an up swing straight up or it can reverse a little bit? I can't get to 15 gyrations on CL I get like 8.

If I simplified your strategy you will buy the start of an up swing and let it ride until you see a reverse sign right? And you really don't care about the day mood (up or down)?

Thanks
 

Attachments

Howdy, I have been thinking about the ideas of 'playing the gyrations,' as one of the problems to solve, along with finding useful metrics.

There is something I was thinking about. Just based on the GENERAL idea of playing the gyrations with no other logic applied to it such as timing, or any other metrics that would fit into any type of predictive model. So that's a ways out.

But for instance, if you were looking to trade the gyrations that occur...... take a volatile instrument, for example CL. Let's use an arbitrary reversal/minimum length of 40 tics. So that anytime price makes a new High/Low, and reverses by more than the 40 tics, a gyrational top/bottom will have been put in place.

CL on 10Nov2011, there where 7 gyrations, or 14 swings using a minimum size of 40 tics. The mean average of those 14 swings was 71 tics per swing. So in between 8-1:30 CST, there where MAX 994 tics on offer to be grabbed. The RTH range was 194 tics that day.

Those swings where:
-56, +45, -98, +57, -75, 89, -43, +125, -52, +58, -71, +88, -79, +58

Again this is just thought going into one portion of the puzzle, and this is not including ANY other metric beyond the arbitrary length of swings to be measured. But if you decide to choose 40 tics as the reversal length for counting swings, this would suggest that you would have to wait for an entry that is 40 tics beyond the gyrational top/bottom, which could be considered a pretty wide turn-around. Also ONLY using the crude swing length as the signal for entry, it would be the exit/reversal as well. So that in effect would be pulling out 80 tics from any swing that occurs, what is left over would be the profit as you'd pretty much be in on every gyration.

So above shown the swings with the max profit possible, or the difference from the reversal length at both ends. The absolute worst case scenario using the crude idea of just trading gyrations, with no predictive model in place, that would look like:
-24, -35, +18, -23, -5, +9, -37, +45, -28, -22, -9, +8, -1, -22

Obviously not effective for a way to trade, but just a thought I had.
 
Quote from kut2k2:

I keep reading stuff like this here and elsewhere. It is always stated as gospel without a shred of evidence to support it. Most trading failures are the result of NOT having a plan, or decent keys. To state that having these things would make no difference for most traders is merely groundless cynicism.

As Jack Shwager said: trading should be easy, but only if you've done all the hard work (designing, testing, money management) ahead of time.
More...

+1
In reality if you think you're failing because of problems with "discipline" your profitable system is probably imagined.
 
It's nearly impossible to be disciplined if you don't have a trading system that have some kind of forced money management principles behind it.
To handle the brutal situations we get our self caught up in, when the market seem to be out to get us, is not easy at all.

Even with many years of trading experience behind us, the streaks of loosing periods is a fact, they'll come, no doubt about it.
If we are not protected when they do arrive, we don,t have a chance in the long run. We might handle it the first time around and the second time but eventually the fluctuation of events will bring us down if we are not protected.

A money management system should take over when our predefined parameters are violated. We have to be totally concentrate on our trading so the setup and protection of our trading accounts has to be done before the trading session starts.



Setup of predefined parameters and money management
 
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