FREE ES Trading Strategy that works

Quote from Willyv:

I'm curious as to why it wouldn't be fashionable to say one likes Linda. Never heard that before. :)

Certainly Linda is a highly respected trader? I've spent quite some time in her room as well and attended her Chicago annual workshop. I see Linda as my main mentor and keep coming back to techniques I learnt from her.

Lately she's even giving some free webinars from time to time, highly recommended!

Willy
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Can you post the link to some of her webinars? Thanks!
 
She just did a webinar at thinkorswim. Go to tos website and find under Support->Software Support, thinkDesktop section. Or search for her name.
 
I hope everyone who has followed along has been having a good month.

I have had a few pm's that were similar in themes. They had to do with getting chopped up on narrow range days.

First off, when the ES is trading in a 4-5 point range for a few hours, you will be scratching out of your trades or taking small losses. It's just the reality of trading. You're not doing anything wrong, we can only take what the market gives. Best to recognize these periods and adjust.

If you keep track of your trades by time of day, you'll see that the best trends are the first hour and the last 90 minutes. If you notice that 11a-2:30pm est is not profitable to trade, then don't trade (lol). Oh yea, it's also June (same goes for July and Aug).

You can make money on narrow range days, just lower your expectations on your targets. You will find narrow range days tend to follow wide range days. My expectations going into today were for a narrow range day.

Here's a chart of my 3 trades through 12:30pm. The total range has been 10 points. I'm plus 3.75. I'll take it.

P.S. 3rd trade was a sell divergence at the .618% retracement of the previous down leg. I picked up +1.50 on that, I put +2.00 on the chart to show the drop. When the range is narrow, lower your expectations of the move, especially in the middle of the day.
 

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Don - what do you think about using this on the ES during pre-market hours? I'm mainly thinking of the 8am-930am EST since we can get some nice moves on econ news days.

Thanks
 
Quote from brownsfan019:

Don - what do you think about using this on the ES during pre-market hours? I'm mainly thinking of the 8am-930am EST since we can get some nice moves on econ news days.

Thanks
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When you get into a position a few minutes before an important number, 8:30am est or 10am est, you are gambling a bit on the reaction to that number. I find the volume from 8:45-9:15 est to be too light for me. Sometimes it will take 10 minutes just to fill up a 1000 tick bar.

I would encourage you to watch that time frame to see if it might be profitable for you.
 
I want to thank DonKee and the thread contributors for a very helpful and motivational thread. I first noticed this thread about a week ago, and have been trying it out by backtesting it over the past couple of months of data. For sure, my backtesting is not entirely accurate (scratches, etc), but I've got a good feel for how this strategy can be profitable over time.

DonKee, your information on the setup itself is very helpful. But moreso are the insights that you have dropped since the start of this thread, on how you use your system. Over the past week, I have been learning a lot more than just a way to use the MACD - and it is doing me a lot of good. Thank you.

Question: as people have pointed out already, this is a trend following strategy and as such does not work so well in non-trending markets. However from my limited experience sofar, I'd go as far as saying this is a *weak trend* following strategy. I have noticed that when the market starts moving strongly up or down, and tiny pullbacks or no pullbacks at all occur, we never get an entry signal.

I understand that the entry is designed to enter on the first pullback of a swing trend - but what do you do in the cases when price is just rocketing skyward and no pullback is offered?
 
Quote from Beezer-1:


Question: as people have pointed out already, this is a trend following strategy and as such does not work so well in non-trending markets. However from my limited experience sofar, I'd go as far as saying this is a *weak trend* following strategy. I have noticed that when the market starts moving strongly up or down, and tiny pullbacks or no pullbacks at all occur, we never get an entry signal.

I understand that the entry is designed to enter on the first pullback of a swing trend - but what do you do in the cases when price is just rocketing skyward and no pullback is offered?
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Your observation about a strong trending market is "right on".

As you watch that 3/10 histogram, you'll see a lot of instances where you can take a position aftert the first pull-back in the histogram. That first pull-back won't make it to the other side of the zero line. You'll need to take an entry when that 3/10 oscillator starts to move back away from the zero line.

There are two resons why you will generally see this occur:

1) The trend is so strong that we don't get much of a pull back

2) Volume is so light that using a 1000 tick bar is not describing the pull backs well enough for us day traders to scalp a few points.

Remember, we want that 3/10 histogram to describe what the chart is doing and tell us when pull-backs have completed. Put todays chart into a 500 tick chart. Take a look. As I mentioned a few days ago. Volume is going to be light until the end of August. If the 500 tick chart starts defining the action better for me, I will put that up, too. Adjust your targets and stops if you go down in ticks as the swings will be shorter and faster.

No doubt about it. It is completely frustrating to miss a big move or take a bunch of signals that don't follow through. It's just part of trading. Sometimes you'll lose a little on a big trend day. Sometimes you'll do very well on a narrow range day. It happens. The more you watch that 3/10 histogram, the better you will get at your entries and exits.

I always tell myself, "there will be another bus coming tommorrow".
 
Quote from DonKee:

Your observation about a strong trending market is "right on".

As you watch that 3/10 histogram, you'll see a lot of instances where you can take a position aftert the first pull-back in the histogram. That first pull-back won't make it to the other side of the zero line. You'll need to take an entry when that 3/10 oscillator starts to move back away from the zero line.

There are two resons why you will generally see this occur:

1) The trend is so strong that we don't get much of a pull back

2) Volume is so light that using a 1000 tick bar is not describing the pull backs well enough for us day traders to scalp a few points.

Remember, we want that 3/10 histogram to describe what the chart is doing and tell us when pull-backs have completed. Put todays chart into a 500 tick chart. Take a look. As I mentioned a few days ago. Volume is going to be light until the end of August. If the 500 tick chart starts defining the action better for me, I will put that up, too. Adjust your targets and stops if you go down in ticks as the swings will be shorter and faster.

No doubt about it. It is completely frustrating to miss a big move or take a bunch of signals that don't follow through. It's just part of trading. Sometimes you'll lose a little on a big trend day. Sometimes you'll do very well on a narrow range day. It happens. The more you watch that 3/10 histogram, the better you will get at your entries and exits.

I always tell myself, "there will be another bus coming tommorrow".
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Good stuff!

Btw, Donkee, if you don't mind me asking what is your YTD % return using this without deviation?
 
Quote from LEAPup:

Good stuff!

Btw, Donkee, if you don't mind me asking what is your YTD % return using this without deviation?
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I'm not quite certain what you're looking for.

I don't trade the same number of contacts all of the time. There are times when I'll add to a position. There are times when I reduce my exposure. There are times when I get in within the first hour and try to "hold a few" all day long. I have other reasons to to get into a trade. I use the 3/10 to fade the PP (this is a trade that is not available on a consistant daily basis). I'll trade a divergence in the 3/10.

As I've said many times before in this thread. I use the 3/10/16 to help me get an "edge" in my entry. I almost always see the market move in my favor for a few ticks or chop around my entry point. Why? Because you will almost never get caught entering a trade in the direction of the momentum when it is about to pullback or peak.

I am always buying a pullback or fading the momentum as it is rolling over.

I do grade my trades at the end of a day. I look at the 3/10/16 and the price chart and mark where I should have entered and compare it to the times of my entries. I then grade my exits. My entries usually get high marks, it's the exits that can always be better.
 
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