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Futures Indexes System and Tool Box
- Thread starter bubba7
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This is the beginning of version II of the stochastics thread. I have pared down the thread into month long excerpts. This version is a substantive abstract that is in a chronological arrangement primarily for reference purposes. The editing is very severe to pull together a factual learning chronology for those who have previous pro-active experience with the strategy. February is first block of content.
Bold print is the first time the idea is presented. I also have colored (Green) and changed point of type size for comments to 10 point.
For reference to orient you:
Here is the comment that lead to the Break Out of the thread:
âI don't want moving averages or stochastics, or any other squiggly line interfering with the price action. While these may be helpful to some, I have a problem with them. â¦.What I'm suggesting is that it's all in the price action.â
I responded to the post:
You can see here how not combining Magee, et al (TA) with indicators is a disadvantage in being able to think about what indicators are telling a person about a trade.
To get the stochastics straight, you can do two exercises:
First, just use it on paces of the market that are definitive (fast paces only).
Second, set up three defaults on the stochastics to find out what the settings are for. Use the original (14, 1, 3) and Pring's (5,2,3) new setting for good extremes. Pick another intermediate one (10, 2, 3) to show parts of the others.
What follows is all the posts as I excerpted them to show a dialogue that makes it clear how to trades the ES mini using a strategy that involves the indicator Stochastics and other stuff. At first I responded to others and at some point I initiated posts. You can tell what is going on by the sequence.
A comment by someone:
âIn fact over the past months I been thinking over what you allude to, i.e. enhancing one's decisions by additional input to an already solid foundational understanding. However the more I'm in the markets... and the simpler it's kept, the better it goes (for me). Yes I do utilize some other indicators. But have no doubt that too many nouveau traders believe "more is more" (or more is better)... when (imho) some of the best on-floor and off-floor/screen traders know that "less is (often) more".
My comments:
Look at ES on the 5 min today (17 FEB 03) using beginner's STOC (14, 1, 3). Now that's oversold!!! What happened was that the STOC stayed oversold and the price, as expected, continued a strong upward trend.
A relative indicator is always going to be at an extreme under these conditions.
It is an entry signal for fast pace markets and a "hold" signal for all other paces.
You also get to know that a prolonged "oversold" (ondersold) (outside of 20/80 band) leads to what?......the answer is a lateral period of congestion leading to convergence and centering. Where will the Stochastics arrive at at the end of this pattern of three formations?? Where else but on neutral....because it is a relativistic indicator and 50% is neutral point.
Reversals?? What is the indicator sequence for reversals on stochastics? Well there are three kinds of trends and only two pairs of them can lead to reversals. The other two pairs have as a first trend a lateral trend. When can you reverse? Not until you are making about 150,000 a year per contract on the ES.
Its best to do a wash trade several times a week as a warm up for reversals. Once you can do wash trades any day of the week you can then see where reversals are possibilities and how to extract yourself when you need to.
If the pace is fast and you are picking off 10 or more points on an ES trend, then you are seeing "overbought" all during your hold period. When you slip out of the trade, the stochastic is headed out of overbought and NOT to a reversal. Now that it is gone from "overbought" it goes to one of two places. The first place it must hit is neutral. From neutral it can chose to reform into the prior trend (resume as they say) or cool off from the prior trend into an opposite trend. No reversal here: neutral comes first.
When you get to slower trends than fast paced you will see all the typical formation patterns folks use.
A long trend at a slow pace with the 20-80 taped (intermediate level trading) looks like icebergs floating in a row (count three usually). You enter when "over sold" appears as first iceberg. You hold through the second and third iceberg. You didn't exit like in the fast pace when for a duration the "oversold was" sustained.
You exit only when the lines come out the other side of the tape which proves there are no more "rezooms". Each iceberg is, of course, a rezoom.
You can see how by building on the "fast pace only" beginner thing and including slow paces too that you creep up from 90,000 a year beginner level per contract to 150,000 by adding slow pace.
I know that the effort of using an indicator like stochastics to get started is not pleasant...maybe. To me it seems a good way to understand the market better and get into learning what sequences of patterns or indicator signals mean.
We still aren't able to trade reversals. first you have to do two more things. To get ready.
If anybody is reversing out of "overbought and is pulling down less than 150,000 per year, just stopping what you are doing will put you further into the chips.
If my stuff is hard to read to one of two things: use a yellow high liner to accent stuff. Or second after you highlight use black to kill about half the rest. Do not cross out the annual money made; you need to underline that in green.
A person comments on the chart set up:
Attempt at "Fast Trades"
In an attempt to learn more and it seems others are interested I am trying to trade jack's 'fast or rocket trades'. I have read through quite a bit to try and get it straight (MIF and Don Cameron's site) and will report here my trades and hopefully Jack can critique them and provide further insight to his method. I will also try my best to attach .gifs with the trades written on charts. I have my screen setup as Jack suggests:
5m Price
Volume
Stoch (5,2,3)
Stoch (10,2,3)
Stoch (14,1,3)
MACD (5,13,6)
and have a 1min screen with same info to get a better picture as what potentially lies ahead for the 5m.
Use the Stoch (14,1,3) enter LONG when both the fast and slow move above 80 and exit when both leave the 80. Enter SHORT when both the fast and slow are below 20 and exit when they both leave the 20. Ignore anything else on the stoch indicator.
I snipped many pages here
Here is what I found:
http://www3.sympatico.ca/donald.cameron2/
I have read several things Jack wrote in all the different places on the web. And the things you can read between the lines are very valuable. This goes beyond some simple rules for a Stochastic indicator These sites give a quick "primer" if you want it
http://sputnick5.www8.50megs.com/
http://mycoolstars.hypermart.net/jackdocs/
With only a very basic understanding of the method, and understanding that Jack may well have passed on some trades, I calculate a gain of 9 1/2 points on the day. This was achieved simply by taking all of the 14-1-3 signals on a five-minute chart.
Here is a comment on the back testing:
Running Jack's "system" through a back test over the last five years yields a juicy profit factor of .84. Nor is is fadeable since the test does not include slippage and commissions..â
Back to work:
You will find that in a while the slower chart (5 min) will go bullish. The 1 min chart can be used to anticipate the action on the slower chart. What is the message I am giving you here? I am suggesting that you use fractal pairs to trade. Trade on the slower and use the faster to anticipate.
Re: Question
. Assuming a 5 min. chart is being used, and both stochastic lines breach either the upper or lower band, is the proper methodology to wait until the close of that 5 min. bar to ensure that the stochastic lines do not retrace?
ENTER AS YOU WISH. (This is a new comment. By now you know that washing (flat turn) is in the picture)
Also, what is the entry point? Is it above the high of that last 5 min. bar, or is it above the close of that bar, or is it something else?
MARKET
As you watch on entries, enter when the slow line appears. Often it will disappear and come back again. It is slow and shy. When you have been making money for a while ,cheat a little and use just the fast line on the 5, 2, 3 then go back to the 14, 1, 3; this will allow you to make a lot more money sooner.
For leaving leave at the first opportunity on the 14,1,3. after a while watch the MACD (5, 13,6) if it is still on the same side of the neutral line, then hang in as long as more profits accumulate.
I will use Macd for trend, channels for range (and formations to show S and R), we are using stochastics to make money temporarily.
Bold print is the first time the idea is presented. I also have colored (Green) and changed point of type size for comments to 10 point.
For reference to orient you:
Here is the comment that lead to the Break Out of the thread:
âI don't want moving averages or stochastics, or any other squiggly line interfering with the price action. While these may be helpful to some, I have a problem with them. â¦.What I'm suggesting is that it's all in the price action.â
I responded to the post:
You can see here how not combining Magee, et al (TA) with indicators is a disadvantage in being able to think about what indicators are telling a person about a trade.
To get the stochastics straight, you can do two exercises:
First, just use it on paces of the market that are definitive (fast paces only).
Second, set up three defaults on the stochastics to find out what the settings are for. Use the original (14, 1, 3) and Pring's (5,2,3) new setting for good extremes. Pick another intermediate one (10, 2, 3) to show parts of the others.
What follows is all the posts as I excerpted them to show a dialogue that makes it clear how to trades the ES mini using a strategy that involves the indicator Stochastics and other stuff. At first I responded to others and at some point I initiated posts. You can tell what is going on by the sequence.
A comment by someone:
âIn fact over the past months I been thinking over what you allude to, i.e. enhancing one's decisions by additional input to an already solid foundational understanding. However the more I'm in the markets... and the simpler it's kept, the better it goes (for me). Yes I do utilize some other indicators. But have no doubt that too many nouveau traders believe "more is more" (or more is better)... when (imho) some of the best on-floor and off-floor/screen traders know that "less is (often) more".
My comments:
Look at ES on the 5 min today (17 FEB 03) using beginner's STOC (14, 1, 3). Now that's oversold!!! What happened was that the STOC stayed oversold and the price, as expected, continued a strong upward trend.
A relative indicator is always going to be at an extreme under these conditions.
It is an entry signal for fast pace markets and a "hold" signal for all other paces.
You also get to know that a prolonged "oversold" (ondersold) (outside of 20/80 band) leads to what?......the answer is a lateral period of congestion leading to convergence and centering. Where will the Stochastics arrive at at the end of this pattern of three formations?? Where else but on neutral....because it is a relativistic indicator and 50% is neutral point.
Reversals?? What is the indicator sequence for reversals on stochastics? Well there are three kinds of trends and only two pairs of them can lead to reversals. The other two pairs have as a first trend a lateral trend. When can you reverse? Not until you are making about 150,000 a year per contract on the ES.
Its best to do a wash trade several times a week as a warm up for reversals. Once you can do wash trades any day of the week you can then see where reversals are possibilities and how to extract yourself when you need to.
If the pace is fast and you are picking off 10 or more points on an ES trend, then you are seeing "overbought" all during your hold period. When you slip out of the trade, the stochastic is headed out of overbought and NOT to a reversal. Now that it is gone from "overbought" it goes to one of two places. The first place it must hit is neutral. From neutral it can chose to reform into the prior trend (resume as they say) or cool off from the prior trend into an opposite trend. No reversal here: neutral comes first.
When you get to slower trends than fast paced you will see all the typical formation patterns folks use.
A long trend at a slow pace with the 20-80 taped (intermediate level trading) looks like icebergs floating in a row (count three usually). You enter when "over sold" appears as first iceberg. You hold through the second and third iceberg. You didn't exit like in the fast pace when for a duration the "oversold was" sustained.
You exit only when the lines come out the other side of the tape which proves there are no more "rezooms". Each iceberg is, of course, a rezoom.
You can see how by building on the "fast pace only" beginner thing and including slow paces too that you creep up from 90,000 a year beginner level per contract to 150,000 by adding slow pace.
I know that the effort of using an indicator like stochastics to get started is not pleasant...maybe. To me it seems a good way to understand the market better and get into learning what sequences of patterns or indicator signals mean.
We still aren't able to trade reversals. first you have to do two more things. To get ready.
If anybody is reversing out of "overbought and is pulling down less than 150,000 per year, just stopping what you are doing will put you further into the chips.
If my stuff is hard to read to one of two things: use a yellow high liner to accent stuff. Or second after you highlight use black to kill about half the rest. Do not cross out the annual money made; you need to underline that in green.
A person comments on the chart set up:
Attempt at "Fast Trades"
In an attempt to learn more and it seems others are interested I am trying to trade jack's 'fast or rocket trades'. I have read through quite a bit to try and get it straight (MIF and Don Cameron's site) and will report here my trades and hopefully Jack can critique them and provide further insight to his method. I will also try my best to attach .gifs with the trades written on charts. I have my screen setup as Jack suggests:
5m Price
Volume
Stoch (5,2,3)
Stoch (10,2,3)
Stoch (14,1,3)
MACD (5,13,6)
and have a 1min screen with same info to get a better picture as what potentially lies ahead for the 5m.
Use the Stoch (14,1,3) enter LONG when both the fast and slow move above 80 and exit when both leave the 80. Enter SHORT when both the fast and slow are below 20 and exit when they both leave the 20. Ignore anything else on the stoch indicator.
I snipped many pages here
Here is what I found:
http://www3.sympatico.ca/donald.cameron2/
I have read several things Jack wrote in all the different places on the web. And the things you can read between the lines are very valuable. This goes beyond some simple rules for a Stochastic indicator These sites give a quick "primer" if you want it
http://sputnick5.www8.50megs.com/
http://mycoolstars.hypermart.net/jackdocs/
With only a very basic understanding of the method, and understanding that Jack may well have passed on some trades, I calculate a gain of 9 1/2 points on the day. This was achieved simply by taking all of the 14-1-3 signals on a five-minute chart.
Here is a comment on the back testing:
Running Jack's "system" through a back test over the last five years yields a juicy profit factor of .84. Nor is is fadeable since the test does not include slippage and commissions..â
Back to work:
You will find that in a while the slower chart (5 min) will go bullish. The 1 min chart can be used to anticipate the action on the slower chart. What is the message I am giving you here? I am suggesting that you use fractal pairs to trade. Trade on the slower and use the faster to anticipate.
Re: Question
. Assuming a 5 min. chart is being used, and both stochastic lines breach either the upper or lower band, is the proper methodology to wait until the close of that 5 min. bar to ensure that the stochastic lines do not retrace?
ENTER AS YOU WISH. (This is a new comment. By now you know that washing (flat turn) is in the picture)
Also, what is the entry point? Is it above the high of that last 5 min. bar, or is it above the close of that bar, or is it something else?
MARKET
As you watch on entries, enter when the slow line appears. Often it will disappear and come back again. It is slow and shy. When you have been making money for a while ,cheat a little and use just the fast line on the 5, 2, 3 then go back to the 14, 1, 3; this will allow you to make a lot more money sooner.
For leaving leave at the first opportunity on the 14,1,3. after a while watch the MACD (5, 13,6) if it is still on the same side of the neutral line, then hang in as long as more profits accumulate.
I will use Macd for trend, channels for range (and formations to show S and R), we are using stochastics to make money temporarily.
.
A technical response I made:
Take a good look at the two indicators: Stoc is relativistic and MACD is absolute.
In strong trends, you will see the MACD go "away" from neutral and sit at the money velocity of the trend. On the other hand Stoc just goes to an extreme and pegs.
Once we start making some real money here we can get the MACD and Stoc coordinated because they really both give great signals that can be put in sequences to help us out on taking profits and reversing into the next trends if they are coming up.
For future stuff it is best to set your price chart to 10 point scale. We will not play on flat days. We will use MACD to tell us if the day is flat. Do this: check for flatness by staying sidelined when the histogram on 5 min is less than 0.4 for the time being.
Flat days do not have sufficient volatility to make money. They are valuable for practicing "wash" trades. Just do wash trades when you are in and not making money on a flat day. Do at least three to five a week if you get the chance.
Flat days were an initial problem. I introduced the MACD histogram and using a standard scale of 10 points to clarify what flat means visually. More details:
Getting ready for Monday.
If you have William J . O'Neil's book "How to Make Money in Stocks" set up a log of where you have been in increments of years of your choosing to see when and where you stopped doing the 18 common mistakes most people make as noted in chapter 20.Make a chart and form columns of the past and leave some space for the future.
If you get to seeing sequences, for example you will begin to see the market turn to slow motion. This also lets you catch on to the fact that by choosing signals from indicators properly, you then leave the premise that indicators are always lagging. Take the derivative of the fast line of the MACD and note that when it peaks and begins to lessen you have just seen a leading indicator signal. Use the 5, 13,6 set up.
A helpful comment that was posted for the group:
From a contributor:
Check this out. multiply the equity times 5% each day and you know what it costs you in IB commissions and how many points per trade and how many contracts and how many round turns to achieve it in 21 days.
What is meant by? Set ES to 10 point scaling
**** Short answer. Look at the labels on your price graph. Make them read in a 10 point series: something like 830, 840 ,850.
Long answer: The software people are not traders. They are selling a product to you that they want to be appealing. They see "filling the screen" as more important than having a default that makes you money. To focus on market characteristics you need a consistent viewpoint. You can better achieve this with a constant scaling deliniation. The biggest ten point illustration is achieved by scaling up until a new scaling shows, then backing down so it just disappears again. In this way you have a consistent 10 point scale and the screen may not be filled. If we get some all day trends (like on news that the war has been cancelled or the war is beginning) then to stay on the screen we probably will have a 20 point or 50 point scale.We will get into scaling etc as we go further into fractal pairs as anticipation which is the replacement for prediction and back testing (back testing is a self fulfilling method of backwards predicting)
What is meant by... "always (last one in)" and "always (first one out)?
Short answer. There are two lines on the stochastic. One precedes the other. "last one in" means both lines must be there so the signal is the slow line. Verse visa, "first one out" means the signal is when the fast line leaves.
Fractal pairs is another way to turn lagging indicators into leading indicators.
Enter as both show on the 20 (short) or 80 (long) always (last one in)
Exit as fast leaves the 20 (short) or 80 (long) always (first one out)
A technical response I made:
Take a good look at the two indicators: Stoc is relativistic and MACD is absolute.
In strong trends, you will see the MACD go "away" from neutral and sit at the money velocity of the trend. On the other hand Stoc just goes to an extreme and pegs.
Once we start making some real money here we can get the MACD and Stoc coordinated because they really both give great signals that can be put in sequences to help us out on taking profits and reversing into the next trends if they are coming up.
For future stuff it is best to set your price chart to 10 point scale. We will not play on flat days. We will use MACD to tell us if the day is flat. Do this: check for flatness by staying sidelined when the histogram on 5 min is less than 0.4 for the time being.
Flat days do not have sufficient volatility to make money. They are valuable for practicing "wash" trades. Just do wash trades when you are in and not making money on a flat day. Do at least three to five a week if you get the chance.
Flat days were an initial problem. I introduced the MACD histogram and using a standard scale of 10 points to clarify what flat means visually. More details:
Getting ready for Monday.
If you have William J . O'Neil's book "How to Make Money in Stocks" set up a log of where you have been in increments of years of your choosing to see when and where you stopped doing the 18 common mistakes most people make as noted in chapter 20.Make a chart and form columns of the past and leave some space for the future.
If you get to seeing sequences, for example you will begin to see the market turn to slow motion. This also lets you catch on to the fact that by choosing signals from indicators properly, you then leave the premise that indicators are always lagging. Take the derivative of the fast line of the MACD and note that when it peaks and begins to lessen you have just seen a leading indicator signal. Use the 5, 13,6 set up.
A helpful comment that was posted for the group:
From a contributor:
Check this out. multiply the equity times 5% each day and you know what it costs you in IB commissions and how many points per trade and how many contracts and how many round turns to achieve it in 21 days.
What is meant by? Set ES to 10 point scaling
**** Short answer. Look at the labels on your price graph. Make them read in a 10 point series: something like 830, 840 ,850.
Long answer: The software people are not traders. They are selling a product to you that they want to be appealing. They see "filling the screen" as more important than having a default that makes you money. To focus on market characteristics you need a consistent viewpoint. You can better achieve this with a constant scaling deliniation. The biggest ten point illustration is achieved by scaling up until a new scaling shows, then backing down so it just disappears again. In this way you have a consistent 10 point scale and the screen may not be filled. If we get some all day trends (like on news that the war has been cancelled or the war is beginning) then to stay on the screen we probably will have a 20 point or 50 point scale.We will get into scaling etc as we go further into fractal pairs as anticipation which is the replacement for prediction and back testing (back testing is a self fulfilling method of backwards predicting)
What is meant by... "always (last one in)" and "always (first one out)?
Short answer. There are two lines on the stochastic. One precedes the other. "last one in" means both lines must be there so the signal is the slow line. Verse visa, "first one out" means the signal is when the fast line leaves.
Fractal pairs is another way to turn lagging indicators into leading indicators.
Enter as both show on the 20 (short) or 80 (long) always (last one in)
Exit as fast leaves the 20 (short) or 80 (long) always (first one out)
A technical response I made:
Take a good look at the two indicators: Stoc is relativistic and MACD is absolute.
In strong trends, you will see the MACD go "away" from neutral and sit at the money velocity of the trend. On the other hand Stoc just goes to an extreme and pegs.
Once we start making some real money here we can get the MACD and Stoc coordinated because they really both give great signals that can be put in sequences to help us out on taking profits and reversing into the next trends if they are coming up.
For future stuff it is best to set your price chart to 10 point scale. We will not play on flat days. We will use MACD to tell us if the day is flat. Do this: check for flatness by staying sidelined when the histogram on 5 min is less than 0.4 for the time being.
Flat days do not have sufficient volatility to make money. They are valuable for practicing "wash" trades. Just do wash trades when you are in and not making money on a flat day. Do at least three to five a week if you get the chance.
Flat days were an initial problem. I introduced the MACD histogram and using a standard scale of 10 points to clarify what flat means visually. More details:
Getting ready for Monday.
If you have William J . O'Neil's book "How to Make Money in Stocks" set up a log of where you have been in increments of years of your choosing to see when and where you stopped doing the 18 common mistakes most people make as noted in chapter 20.Make a chart and form columns of the past and leave some space for the future.
If you get to seeing sequences, for example you will begin to see the market turn to slow motion. This also lets you catch on to the fact that by choosing signals from indicators properly, you then leave the premise that indicators are always lagging. Take the derivative of the fast line of the MACD and note that when it peaks and begins to lessen you have just seen a leading indicator signal. Use the 5, 13,6 set up.
A helpful comment that was posted for the group:
From a contributor:
Check this out. multiply the equity times 5% each day and you know what it costs you in IB commissions and how many points per trade and how many contracts and how many round turns to achieve it in 21 days.
What is meant by? Set ES to 10 point scaling.
**** Short answer. Look at the labels on your price graph. Make them read in a 10 point series: something like 830, 840 ,850.
Long answer: The software people are not traders. They are selling a product to you that they want to be appealing. They see "filling the screen" as more important than having a default that makes you money. To focus on market characteristics you need a consistent viewpoint. You can better achieve this with a constant scaling deliniation. The biggest ten point illustration is achieved by scaling up until a new scaling shows, then backing down so it just disappears again. In this way you have a consistent 10 point scale and the screen may not be filled. If we get some all day trends (like on news that the war has been cancelled or the war is beginning) then to stay on the screen we probably will have a 20 point or 50 point scale.We will get into scaling etc as we go further into fractal pairs as anticipation which is the replacement for prediction and back testing (back testing is a self fulfilling method of backwards predicting)
What is meant by... "always (last one in)" and "always (first one out)?
Short answer. There are two lines on the stochastic. One precedes the other. "last one in" means both lines must be there so the signal is the slow line. Verse visa, "first one out" means the signal is when the fast line leaves.
Fractal pairs is another way to turn lagging indicators into leading indicators.
Enter as both show on the 20 (short) or 80 (long) always (last one in)
Exit as fast leaves the 20 (short) or 80 (long) always (first one out)
Take a good look at the two indicators: Stoc is relativistic and MACD is absolute.
In strong trends, you will see the MACD go "away" from neutral and sit at the money velocity of the trend. On the other hand Stoc just goes to an extreme and pegs.
Once we start making some real money here we can get the MACD and Stoc coordinated because they really both give great signals that can be put in sequences to help us out on taking profits and reversing into the next trends if they are coming up.
For future stuff it is best to set your price chart to 10 point scale. We will not play on flat days. We will use MACD to tell us if the day is flat. Do this: check for flatness by staying sidelined when the histogram on 5 min is less than 0.4 for the time being.
Flat days do not have sufficient volatility to make money. They are valuable for practicing "wash" trades. Just do wash trades when you are in and not making money on a flat day. Do at least three to five a week if you get the chance.
Flat days were an initial problem. I introduced the MACD histogram and using a standard scale of 10 points to clarify what flat means visually. More details:
Getting ready for Monday.
If you have William J . O'Neil's book "How to Make Money in Stocks" set up a log of where you have been in increments of years of your choosing to see when and where you stopped doing the 18 common mistakes most people make as noted in chapter 20.Make a chart and form columns of the past and leave some space for the future.
If you get to seeing sequences, for example you will begin to see the market turn to slow motion. This also lets you catch on to the fact that by choosing signals from indicators properly, you then leave the premise that indicators are always lagging. Take the derivative of the fast line of the MACD and note that when it peaks and begins to lessen you have just seen a leading indicator signal. Use the 5, 13,6 set up.
A helpful comment that was posted for the group:
From a contributor:
Check this out. multiply the equity times 5% each day and you know what it costs you in IB commissions and how many points per trade and how many contracts and how many round turns to achieve it in 21 days.
What is meant by? Set ES to 10 point scaling.
**** Short answer. Look at the labels on your price graph. Make them read in a 10 point series: something like 830, 840 ,850.
Long answer: The software people are not traders. They are selling a product to you that they want to be appealing. They see "filling the screen" as more important than having a default that makes you money. To focus on market characteristics you need a consistent viewpoint. You can better achieve this with a constant scaling deliniation. The biggest ten point illustration is achieved by scaling up until a new scaling shows, then backing down so it just disappears again. In this way you have a consistent 10 point scale and the screen may not be filled. If we get some all day trends (like on news that the war has been cancelled or the war is beginning) then to stay on the screen we probably will have a 20 point or 50 point scale.We will get into scaling etc as we go further into fractal pairs as anticipation which is the replacement for prediction and back testing (back testing is a self fulfilling method of backwards predicting)
What is meant by... "always (last one in)" and "always (first one out)?
Short answer. There are two lines on the stochastic. One precedes the other. "last one in" means both lines must be there so the signal is the slow line. Verse visa, "first one out" means the signal is when the fast line leaves.
Fractal pairs is another way to turn lagging indicators into leading indicators.
Enter as both show on the 20 (short) or 80 (long) always (last one in)
Exit as fast leaves the 20 (short) or 80 (long) always (first one out)
You mentioned using MACD (5,13,6) histogram to stay out when there are small ranges. I understand it would be used in conjunction with the stochastics indicator. I'm wondering if I have the correct understanding of how you would use the MACD histogram.
You mentioned the histogram value, ".4". By this do you mean only take long trades when the histogram is > .4 and only take short trades when the value is < -.4?
Short answer: Yes, exactly.
Long answer. I am using the histogram here in a simple way that represents divergence of MACD. The "C" part of MACD. The divergence of the 5, 13, 6 is corrordinated with the Stoc 14, 1, 3. The difference of 13 and 14 is small and either could be shifted a little so let's not bother with this dissonance.
Since the Stoc is relativistic we can't use values like we can with MACD which is an absolute indicator. Point four is a dividing line between flat and trending for beginners.
As we know, you can only make money when there is a trend (up or down). Lateral trends do not make money. The things that happen in lateral trends are opposite to each other: whipsaw and wash trades. A person can get on the wrong side of the micro cycles in a flat low volatility horizontal channel; this is called being whipsawed. On the other hand it is a good exercise to do wash trades for mental practice in such channels to prove to yourself that you can usually exit any entry with no loss of capital. By seeing that the MACD histogram is small and smaller you get used to pegging non trends right off and then stay on the sidelines. By staying out of non-trends you achieve a major thing: you are never in the market when it BO's (breaks out) against you.
If a person where always debriefing himself on his efforts, he would find, often, that the market "goes against him". You can now translate that statement to: "Beginners sit in non trending markets for some reasons, then when the market trend starts up there is a 50% chance that they are on the wrong side of it and they do not have proper protection either". The best protection is to be sidelined in non-trends. The second best is to have sequences that tell you trends are coming to ends and to be able to exit far away from your protection and not use protection for exiting. Third best is to be in a place where you can be entering (sidelines are nice place to enter from).
So I am making an effort to get to anticipation. You will see this showing up as your consciousness is raised notch by notch.
2) When using 5 min bars, do you only take trades upon close of the current bar? Or is it ok to enter/exit trades during an open bar if the stochastics give an entry/exit signal?
For example, say the last 5 min. bar did not give us a long signal, but the current bar is, although the 5 minutes have not completed. Is it ok to take the trade now, or do we wait until the bar closes to see if the entry is still there?
*** This is kewl place to be thinking. We will give it a shot when it occurs and not wait until the end of the bar. Check the 1 min to confirm your entry as you make it. If the trend goes flat just tough it out for a few mins and watch the next bar.
neat Q
This shows a lot of consideration and effort.
How would you suggest to fit the parameters to other markets such as the Euro Stoxx 50 Future? I have done some testing but maybe you have a more clear solution for that matter? Regarding Stoch, Histogram(Volatility mesurement), Macd
I am a strong believer in transference of ideas to other markets and to other people using the same stuff in the same market successfully. So go for it. What is extremely important is to keep track of the nuances as you tune it up iteratively. Most markets, today, have a strong PC and electronic trading influence. This stability of setting is very helpful.You also can work to find, intially, the best operating fractal..
The beginner stuff is just that. It is a truncated algorithm designed to make money using the fewest parts in an algorithm.
I deleted a discussion of the inconsistency of some backtesting here. What the comments came down to were that you need to use two fractals, etc. to get things to click. Also the exits and entries were when you saw them instead of locking into HLOC data. T
This is a response to an alternative back testing software:
You could do that - but you'll do a lot better simply sitting there keeping track of the trades on paper for a few days.
1) You'll reinforce the rules and method.
2) You'll begin to understand what you don't understand
3) Most importantly, you'll begin to believe.
When I first started reading Jack's work, I was convinced that he was a befuddled old man (no slight intended, that's what I am). The next step was to assume that he had something to say, but wasn't very good at saying it. Now I am at a level that truly has me alarmed - I am beginning to understand what he is communicating. Jack sees things a little differently than you or I do. That's what makes it worth the effort to figure out what he has to say. Back testing won't really do that for you.
You mentioned the histogram value, ".4". By this do you mean only take long trades when the histogram is > .4 and only take short trades when the value is < -.4?
Short answer: Yes, exactly.
Long answer. I am using the histogram here in a simple way that represents divergence of MACD. The "C" part of MACD. The divergence of the 5, 13, 6 is corrordinated with the Stoc 14, 1, 3. The difference of 13 and 14 is small and either could be shifted a little so let's not bother with this dissonance.
Since the Stoc is relativistic we can't use values like we can with MACD which is an absolute indicator. Point four is a dividing line between flat and trending for beginners.
As we know, you can only make money when there is a trend (up or down). Lateral trends do not make money. The things that happen in lateral trends are opposite to each other: whipsaw and wash trades. A person can get on the wrong side of the micro cycles in a flat low volatility horizontal channel; this is called being whipsawed. On the other hand it is a good exercise to do wash trades for mental practice in such channels to prove to yourself that you can usually exit any entry with no loss of capital. By seeing that the MACD histogram is small and smaller you get used to pegging non trends right off and then stay on the sidelines. By staying out of non-trends you achieve a major thing: you are never in the market when it BO's (breaks out) against you.
If a person where always debriefing himself on his efforts, he would find, often, that the market "goes against him". You can now translate that statement to: "Beginners sit in non trending markets for some reasons, then when the market trend starts up there is a 50% chance that they are on the wrong side of it and they do not have proper protection either". The best protection is to be sidelined in non-trends. The second best is to have sequences that tell you trends are coming to ends and to be able to exit far away from your protection and not use protection for exiting. Third best is to be in a place where you can be entering (sidelines are nice place to enter from).
So I am making an effort to get to anticipation. You will see this showing up as your consciousness is raised notch by notch.
2) When using 5 min bars, do you only take trades upon close of the current bar? Or is it ok to enter/exit trades during an open bar if the stochastics give an entry/exit signal?
For example, say the last 5 min. bar did not give us a long signal, but the current bar is, although the 5 minutes have not completed. Is it ok to take the trade now, or do we wait until the bar closes to see if the entry is still there?
*** This is kewl place to be thinking. We will give it a shot when it occurs and not wait until the end of the bar. Check the 1 min to confirm your entry as you make it. If the trend goes flat just tough it out for a few mins and watch the next bar.
neat Q
This shows a lot of consideration and effort.
How would you suggest to fit the parameters to other markets such as the Euro Stoxx 50 Future? I have done some testing but maybe you have a more clear solution for that matter? Regarding Stoch, Histogram(Volatility mesurement), Macd
I am a strong believer in transference of ideas to other markets and to other people using the same stuff in the same market successfully. So go for it. What is extremely important is to keep track of the nuances as you tune it up iteratively. Most markets, today, have a strong PC and electronic trading influence. This stability of setting is very helpful.You also can work to find, intially, the best operating fractal..
The beginner stuff is just that. It is a truncated algorithm designed to make money using the fewest parts in an algorithm.
I deleted a discussion of the inconsistency of some backtesting here. What the comments came down to were that you need to use two fractals, etc. to get things to click. Also the exits and entries were when you saw them instead of locking into HLOC data. T
This is a response to an alternative back testing software:
You could do that - but you'll do a lot better simply sitting there keeping track of the trades on paper for a few days.
1) You'll reinforce the rules and method.
2) You'll begin to understand what you don't understand
3) Most importantly, you'll begin to believe.
When I first started reading Jack's work, I was convinced that he was a befuddled old man (no slight intended, that's what I am). The next step was to assume that he had something to say, but wasn't very good at saying it. Now I am at a level that truly has me alarmed - I am beginning to understand what he is communicating. Jack sees things a little differently than you or I do. That's what makes it worth the effort to figure out what he has to say. Back testing won't really do that for you.
Comments to a backtester:
You will see in the journal that I just want to establish a trend as being there. This means the market is no longer flat. I am using, on the 5 min, a range of MACD (5, 13 ,6) between +.4 and -.4 as the flat zone on the histogram. This is a band about neutral on an absolute indicator.
This is a fine point but I was capturing magnitude of the initial divergence of the MACD as an indication that a trend is under way. The histogram is just a measure of divergence at all times. As a trend romps along the divergence gets smaller and often varies between plus and minus as the A/D (Accumulation/Distribution) changes during the parts of a trend.
MACD momentary measure:
You ignored the "momentarily" meaning at the start but not continuing after that.
So just put it in, momentarily, before or after the one or both lines (14, 1, 3) come into the picture. Once you have entry at the time of the arrival of the second line, then kill the need for the MACD.
You might want to work ahead a little and pick up the Wash trade sequence on back testing so we can see the extent of really doing it often and well when a trend goes no where and we need to exit before losses begin.
Once we put stop logs on the table and begin to use them, then we will be watching for the point when no new stops are required. This is going to be our signal to go to the other side of the channel to start to max our exits as far away from stops as possible.
This is a response to a quip made (that was delete) about how much money may be made.
It is hard to make the point of how money is made to get to a place to make a living trading. It takes less profit per day than is generally understood.
I prefer to stay with one contract until the money velocity gets high enough. But your point of using small profits and adding contracts as cash on hand allows, is okay. These are net gains per day and to get to a reasonable income stream is possible with small daily profits and few contracts.
No matter how you choose to express it the whole thing blows up (speaking in a positive manner).
Nevertheless as people accumulate capital, I am going to focus on the normal ways all loss prevention enters the picture. The wash trade is always there. There is no reason to use protective stops as exit points. The target/ stop goal setting with entries is null and void from now on as a method from my point of view.
With ES it is hard to get to a point where you get partial fills and slippage
The entry and exit continued to be a difficult consideration:
Short answer. There are two lines on the stochastic. One precedes the other. "last one in" means both lines must be there so the signal is the slow line. Verse visa, "first one out" means the signal is when the fast line leaves.
question:
If the above information is correct then how are trend continuation handled? When the slow line stays in the zone but the fast line moves out of the zone and back in. Should reentering be avoided at beginners level or how would this be handled with this method? Without the consideration of cheating.
These are key questions. I use the expression "entwined" once we get started. the term "entwined is what you are describing and it is a good idea to stay in a trade when you have this context as today. You will see that when both leave that the Stoc goes into divergence. Be out at that time. Your comments above are precisely accurate. So if the fast line go out and entwining hasn't been going on, then you will see this divergence right off and you are out of the trade.
All this is sensitizing you to two things: a low volatility trend (entwining is the representation of this with stoc) and learning to do wash trades.
You will see in the journal that I just want to establish a trend as being there. This means the market is no longer flat. I am using, on the 5 min, a range of MACD (5, 13 ,6) between +.4 and -.4 as the flat zone on the histogram. This is a band about neutral on an absolute indicator.
This is a fine point but I was capturing magnitude of the initial divergence of the MACD as an indication that a trend is under way. The histogram is just a measure of divergence at all times. As a trend romps along the divergence gets smaller and often varies between plus and minus as the A/D (Accumulation/Distribution) changes during the parts of a trend.
MACD momentary measure:
You ignored the "momentarily" meaning at the start but not continuing after that.
So just put it in, momentarily, before or after the one or both lines (14, 1, 3) come into the picture. Once you have entry at the time of the arrival of the second line, then kill the need for the MACD.
You might want to work ahead a little and pick up the Wash trade sequence on back testing so we can see the extent of really doing it often and well when a trend goes no where and we need to exit before losses begin.
Once we put stop logs on the table and begin to use them, then we will be watching for the point when no new stops are required. This is going to be our signal to go to the other side of the channel to start to max our exits as far away from stops as possible.
This is a response to a quip made (that was delete) about how much money may be made.
It is hard to make the point of how money is made to get to a place to make a living trading. It takes less profit per day than is generally understood.
I prefer to stay with one contract until the money velocity gets high enough. But your point of using small profits and adding contracts as cash on hand allows, is okay. These are net gains per day and to get to a reasonable income stream is possible with small daily profits and few contracts.
No matter how you choose to express it the whole thing blows up (speaking in a positive manner).
Nevertheless as people accumulate capital, I am going to focus on the normal ways all loss prevention enters the picture. The wash trade is always there. There is no reason to use protective stops as exit points. The target/ stop goal setting with entries is null and void from now on as a method from my point of view.
With ES it is hard to get to a point where you get partial fills and slippage
The entry and exit continued to be a difficult consideration:
Short answer. There are two lines on the stochastic. One precedes the other. "last one in" means both lines must be there so the signal is the slow line. Verse visa, "first one out" means the signal is when the fast line leaves.
question:
If the above information is correct then how are trend continuation handled? When the slow line stays in the zone but the fast line moves out of the zone and back in. Should reentering be avoided at beginners level or how would this be handled with this method? Without the consideration of cheating.
These are key questions. I use the expression "entwined" once we get started. the term "entwined is what you are describing and it is a good idea to stay in a trade when you have this context as today. You will see that when both leave that the Stoc goes into divergence. Be out at that time. Your comments above are precisely accurate. So if the fast line go out and entwining hasn't been going on, then you will see this divergence right off and you are out of the trade.
All this is sensitizing you to two things: a low volatility trend (entwining is the representation of this with stoc) and learning to do wash trades.
Thus you see my response was to follow the directions given. Another comment follows. The comment shows how difficult it is to consider things. It certainly is difficult.
If you had done it Jack's way...
09:35 Short at 843
10:20 Covered at 840.25
Plus 2.75 points.
Using other methods Jack has spoken of, you could have done even better.
Of course the "Back testing Boys" would have not taken the trade, since the method doesn't work. Some others would have passed because they were once on a message board where some Guru was wrong.
Another part of the transition:
This is a tough one...the MACD Histogram said no, but the one-minute chart said yes - at least as far as I am concerned.
10:30 Short at 839
The MACD was right, I was wrong - would have resulted in a one point loss.
Another tough call - everything looks good, but the MACD Histogram is not quite there...
11:15 Short at 837.25
I was somewhat distracted, and took the trade...when I saw that the Histogram was not where it should be I bailed with a 1/4 point.
Playing by the rules, as I understand them, I did the right thing - I think. It appears that this is no "rocket"
My comments:
This is a fine call and that is how it is for now. I am introducing "entwining".
Your next comment is great too the MACD says no and this indicates a flat market. You can see the money velocity on such a trade is very low.
Here is where you practice wash trades if you took on the trade.
For ice berg people: you are in the trade short from almost the open. Keep the 20/80 tape on still. You see that by 11:15 when the market goes into slow gear that you held the trade through the am. Now the 4 o'clock drift will set in. You can use the guidance of the MACD (being below neutral) as your guide.
Here is the spectrum of how back testers have reported:
.84 for a loss of 5,878 over five years; .71, for a loss of 12,735 over five years;
I hope this (back testing participation) continues to parallel the effort.
The next most helpful runs will be based on :
1. "entwining" observation and being put into practice.
2. Wash trading when no trend is here.
3. beginning stop logs so we can have trailing stops.
4. Using the end of trailing stops as a signal to exit on the other side of the channel for max profits
5. Beginning icebergs
It will become observable how each iterative refinement improves the back testing. What also emerges is the software to run the stuff mechanically.
The best part of all of this is the way the Neuro Linguistic Programming changes for people. So far we have a neat spectrum of views that do depict quite well how most people are programmed.
The pictures we see have no negatives in them. If people have market rules that are expressed negatively; the mind is not created the picture they desire. The rules have to be restated to make them work as pictures.
"Don't fall down on the ice."
"Walk carefully on the ice."
Okay now you get it.
If you had done it Jack's way...
09:35 Short at 843
10:20 Covered at 840.25
Plus 2.75 points.
Using other methods Jack has spoken of, you could have done even better.
Of course the "Back testing Boys" would have not taken the trade, since the method doesn't work. Some others would have passed because they were once on a message board where some Guru was wrong.
Another part of the transition:
This is a tough one...the MACD Histogram said no, but the one-minute chart said yes - at least as far as I am concerned.
10:30 Short at 839
The MACD was right, I was wrong - would have resulted in a one point loss.
Another tough call - everything looks good, but the MACD Histogram is not quite there...
11:15 Short at 837.25
I was somewhat distracted, and took the trade...when I saw that the Histogram was not where it should be I bailed with a 1/4 point.
Playing by the rules, as I understand them, I did the right thing - I think. It appears that this is no "rocket"
My comments:
This is a fine call and that is how it is for now. I am introducing "entwining".
Your next comment is great too the MACD says no and this indicates a flat market. You can see the money velocity on such a trade is very low.
Here is where you practice wash trades if you took on the trade.
For ice berg people: you are in the trade short from almost the open. Keep the 20/80 tape on still. You see that by 11:15 when the market goes into slow gear that you held the trade through the am. Now the 4 o'clock drift will set in. You can use the guidance of the MACD (being below neutral) as your guide.
Here is the spectrum of how back testers have reported:
.84 for a loss of 5,878 over five years; .71, for a loss of 12,735 over five years;
I hope this (back testing participation) continues to parallel the effort.
The next most helpful runs will be based on :
1. "entwining" observation and being put into practice.
2. Wash trading when no trend is here.
3. beginning stop logs so we can have trailing stops.
4. Using the end of trailing stops as a signal to exit on the other side of the channel for max profits
5. Beginning icebergs
It will become observable how each iterative refinement improves the back testing. What also emerges is the software to run the stuff mechanically.
The best part of all of this is the way the Neuro Linguistic Programming changes for people. So far we have a neat spectrum of views that do depict quite well how most people are programmed.
The pictures we see have no negatives in them. If people have market rules that are expressed negatively; the mind is not created the picture they desire. The rules have to be restated to make them work as pictures.
"Don't fall down on the ice."
"Walk carefully on the ice."
Okay now you get it.
Jack
1. "entwining" observation and being put into practice.
2. Wash trading when no trend is here.
3. beginning stop logs so we can have trailing stops
4. Using the end of trailing stops as a signal to exit on the other side of the channel for max profits
5. Beginning icebergs
I did not answer this set of questions at that time. Here are the comments now:
1. Entwining is a phenomena that indicates âsteadinessâ in the trend. Several descriptors are included: consistent volatility; narrow price tape (filled channel) on the correct fractal; steady market pace of the trend.
2. We will have a full schedule of activities during all times. One activity is to learn that you NEVER have to loose money. The wash trade is the learning tool. A flat entry /exit is a common thing to do when the trade you take on is no longer developing. A flaw usually comes right up and all bets are off. Once you have a flaw, then you act. The commonest action for beginners is to sideline. We go into a capital preservation mode. This is where you learn to get out even and then wait for an entry signal. By rushing it, you may take a little loss. By perfecting it, you learn that the price you need to have to get out even is going to come up promptly. You have as much time as the âsteadyâ volume allows. Volume is your stop watch for time available. Once volume moves it will support the flaw.
3. The stop log teaches you that stops are set by market action or performance in the very short term. There are no âstandard fixesâ for doing stops. The log teaches you to keep track of values that closely relate the micro formations of participants in the market trading. These key values are very important because the people who created them base their decisions upon them. We keep track and we place stops for protection against the irrational actions of these people.
4. As you log stops, you will notice there is nothing to do occasionally. This is a prima facia statement just like the lighthouse keeperâs shout âWhat wasnât that?â for sure we need to not be at risk. If you are in the market, exit. If you are not in the market (like right after the exit just mentioned), then set brackets for entry.
5. This is a comment on where a person deems himself to be. As a non dictator, I have to let people do their thing. To learn best, you start as a beginner and continue until you triple your money. Then you take out the original capital and trade profits only for the rest of your life. What you learned was how to have an emotional state that says: âI cannot loose anymore.â I am always making money from this point on. This mental picture is a necessary and very powerful one. It is equivalent to the unrelenting pressure students get at Ivy League colleges to adopt ânoblesse obligeâ as a responsibility. Getting through beginner is positive; on the other hand, pressure is an artificial thing that leads to irrational thinking. I was subjected to a pervasive âknowledge and thoroughnessâ theme; so Iâm rich, lol.
1. "entwining" observation and being put into practice.
2. Wash trading when no trend is here.
3. beginning stop logs so we can have trailing stops
4. Using the end of trailing stops as a signal to exit on the other side of the channel for max profits
5. Beginning icebergs
I did not answer this set of questions at that time. Here are the comments now:
1. Entwining is a phenomena that indicates âsteadinessâ in the trend. Several descriptors are included: consistent volatility; narrow price tape (filled channel) on the correct fractal; steady market pace of the trend.
2. We will have a full schedule of activities during all times. One activity is to learn that you NEVER have to loose money. The wash trade is the learning tool. A flat entry /exit is a common thing to do when the trade you take on is no longer developing. A flaw usually comes right up and all bets are off. Once you have a flaw, then you act. The commonest action for beginners is to sideline. We go into a capital preservation mode. This is where you learn to get out even and then wait for an entry signal. By rushing it, you may take a little loss. By perfecting it, you learn that the price you need to have to get out even is going to come up promptly. You have as much time as the âsteadyâ volume allows. Volume is your stop watch for time available. Once volume moves it will support the flaw.
3. The stop log teaches you that stops are set by market action or performance in the very short term. There are no âstandard fixesâ for doing stops. The log teaches you to keep track of values that closely relate the micro formations of participants in the market trading. These key values are very important because the people who created them base their decisions upon them. We keep track and we place stops for protection against the irrational actions of these people.
4. As you log stops, you will notice there is nothing to do occasionally. This is a prima facia statement just like the lighthouse keeperâs shout âWhat wasnât that?â for sure we need to not be at risk. If you are in the market, exit. If you are not in the market (like right after the exit just mentioned), then set brackets for entry.
5. This is a comment on where a person deems himself to be. As a non dictator, I have to let people do their thing. To learn best, you start as a beginner and continue until you triple your money. Then you take out the original capital and trade profits only for the rest of your life. What you learned was how to have an emotional state that says: âI cannot loose anymore.â I am always making money from this point on. This mental picture is a necessary and very powerful one. It is equivalent to the unrelenting pressure students get at Ivy League colleges to adopt ânoblesse obligeâ as a responsibility. Getting through beginner is positive; on the other hand, pressure is an artificial thing that leads to irrational thinking. I was subjected to a pervasive âknowledge and thoroughnessâ theme; so Iâm rich, lol.
Here is a set of trades that allowed a lot of commentary. After a while it got terse.
As I see it...9:45 Short 843 +2.75
01:30 Long 835.5 -1
02:50 Long 834.25 +.5
03:50 Short 832.75 +1.5
All trades = "Beginner Level" 4/RT +3.75 points.
Just thought I'd mention that it appears you used the fast stochastic to enter and exit. OK with me, but Jack had said to use the slow line to enter, the fast line to exit.
That short at 3:50 looks like it should have been at 831.75, a point lower. It's not clear to me how you exited this or when.
There's no foolin' you, nnnnnnn.
Yes, I do use the "fast" line for entry. As for the 03:50 trade, it is a real one - I can't explain why you think it should have been a point lower...as for the exit, it came a few minutes after 4PM...and was closed simply because of the time.
This popped into the above series of trading efforts.
So Jack, basically you agree that the "beginner fast pace stochastic" method as you first laid it out, is un-profitable when backtested? And now you're adding additional rules and "stuff" and you're telling us that as they get added, the results of backtesting will improve and get into the profitable territory? I'm just trying to understand soo we're clear on what's going on here.
I did not respond to this because I felt it was more baiting. Baiting from people is something that is just like being cautious in learning something new. For reading this as a condensation, it is a good idea for me to leave in stuff in this tenor once in a while. In ET at the time, it was the dominant theme it turned out. On the other hand there was curiousity as well:
Nevertheless as people accumulate capital, i am going to focus on the normal ways all loss prevention enters the picture. the wash trade is always there. there is no reason to use protective stops as exit points. The target/ stop goal setting with entries is null and void form now on as a method from my point of view.
Another thought:
It might be interesting to post theoretical trades in which the stochastics signal a trade, but for which the MACD does not confirm. This would provide a method to determine the actual usefulness of this filter. FWIW
A "wash trade" is to exit at break even.
FWIW My "Jack Type" Trades
1. Short below the 9:45 Bar stoch(5.77, 12.82) already had a MACD reading below -0.4, but waited for low of day to break (only 0.25 difference) b/c market opened below the 20 line.
Short @ 822.75
Cover @ 819.50
Trade: +3.25 Day: 3.25 Week: +5.25
Reason for exit: Double reversal candles, large vol print 24k @ 10:00, MACD 5m XO @ 10:15.
Did not look for trades until after 1:15
2. Long above the 1:20 5m bar stoch(100, 91.67) MACD Hist 0.44.
Long @ 825.50
Sell @ 822.75
Trade: -2.75 Day: +0.50 Week: +2.50
Reason for exit: 1:35 bar stoch(56.00, 70.50) broke low of this bar.
3. 1:55 bar Stoch(95.24, 80.87) i viewed this as a re-entry of the current trend, so was not looking for the MACD reading although it did go over 0.4 on the bar I entered. I waited for the HOD to be borken and bought on the b/o.
Long @ 827.25
Sell @ 828.50
Trade: +1.25 Day: +1.75 Week: +3.75
Reason for exit: 2:35 bar Stoch(64.10, 76.07) went below low of this bar and i sold.
4. 3:20 bar stoch(82.76, 83.65), several MACD hist readings above 0.4. Buy above 3:20 5m bar.
Long @ 834.50
Sell @ 839.25
Trade: +4.75 Day: +6.50 Week: +8.50
Reason for exit: 4pm close
Thought people might be interested. So far it has been majority of grinding type-breakeven trades with a few real nice winners, but if there is any extended trending you will definitely get a good portion of the move. Like a lot of trading a few winners may make up the bulk of the profits. Not making any conclusions just observing the results so far.
As I see it...9:45 Short 843 +2.75
01:30 Long 835.5 -1
02:50 Long 834.25 +.5
03:50 Short 832.75 +1.5
All trades = "Beginner Level" 4/RT +3.75 points.
Just thought I'd mention that it appears you used the fast stochastic to enter and exit. OK with me, but Jack had said to use the slow line to enter, the fast line to exit.
That short at 3:50 looks like it should have been at 831.75, a point lower. It's not clear to me how you exited this or when.
There's no foolin' you, nnnnnnn.
Yes, I do use the "fast" line for entry. As for the 03:50 trade, it is a real one - I can't explain why you think it should have been a point lower...as for the exit, it came a few minutes after 4PM...and was closed simply because of the time.
This popped into the above series of trading efforts.
So Jack, basically you agree that the "beginner fast pace stochastic" method as you first laid it out, is un-profitable when backtested? And now you're adding additional rules and "stuff" and you're telling us that as they get added, the results of backtesting will improve and get into the profitable territory? I'm just trying to understand soo we're clear on what's going on here.
I did not respond to this because I felt it was more baiting. Baiting from people is something that is just like being cautious in learning something new. For reading this as a condensation, it is a good idea for me to leave in stuff in this tenor once in a while. In ET at the time, it was the dominant theme it turned out. On the other hand there was curiousity as well:
Nevertheless as people accumulate capital, i am going to focus on the normal ways all loss prevention enters the picture. the wash trade is always there. there is no reason to use protective stops as exit points. The target/ stop goal setting with entries is null and void form now on as a method from my point of view.
Another thought:
It might be interesting to post theoretical trades in which the stochastics signal a trade, but for which the MACD does not confirm. This would provide a method to determine the actual usefulness of this filter. FWIW
A "wash trade" is to exit at break even.
FWIW My "Jack Type" Trades
1. Short below the 9:45 Bar stoch(5.77, 12.82) already had a MACD reading below -0.4, but waited for low of day to break (only 0.25 difference) b/c market opened below the 20 line.
Short @ 822.75
Cover @ 819.50
Trade: +3.25 Day: 3.25 Week: +5.25
Reason for exit: Double reversal candles, large vol print 24k @ 10:00, MACD 5m XO @ 10:15.
Did not look for trades until after 1:15
2. Long above the 1:20 5m bar stoch(100, 91.67) MACD Hist 0.44.
Long @ 825.50
Sell @ 822.75
Trade: -2.75 Day: +0.50 Week: +2.50
Reason for exit: 1:35 bar stoch(56.00, 70.50) broke low of this bar.
3. 1:55 bar Stoch(95.24, 80.87) i viewed this as a re-entry of the current trend, so was not looking for the MACD reading although it did go over 0.4 on the bar I entered. I waited for the HOD to be borken and bought on the b/o.
Long @ 827.25
Sell @ 828.50
Trade: +1.25 Day: +1.75 Week: +3.75
Reason for exit: 2:35 bar Stoch(64.10, 76.07) went below low of this bar and i sold.
4. 3:20 bar stoch(82.76, 83.65), several MACD hist readings above 0.4. Buy above 3:20 5m bar.
Long @ 834.50
Sell @ 839.25
Trade: +4.75 Day: +6.50 Week: +8.50
Reason for exit: 4pm close
Thought people might be interested. So far it has been majority of grinding type-breakeven trades with a few real nice winners, but if there is any extended trending you will definitely get a good portion of the move. Like a lot of trading a few winners may make up the bulk of the profits. Not making any conclusions just observing the results so far.
We are using "wash" here as an entry and exit at the same price.
Later when we get into the details of ends of fast trends, we can take up the opposite of getting whipsawed . This is when you do trades with the congestion, convergence and then set up "brackets" on the centering.
Everyone must wonder who is making money when others are getting whipsawed. There are many people who play the cycles of congestion and convergence. Also there is a slow motion version of this for head and shoulders and double tops and bottoms.
Right now we are using beginner technique to learn one basic thing: How to stay out of a market that is not making money.
The opposite of getting whipsawed in congestion is a technique for making money is rapid continuing reversals. We can do this as a way to enhance wash trades to get out at better than even. Wash trades are essentially to take you out of a trend that didn't play out. What happens when a trend doesn't play out often is congestion. Once we can determine the sequence set (the series of signals from our indicators and price formations) we get the opportunity to improve washing and go into being on the right side of whipsawing.
Sidelining
Do not worry about being out of the market. Siting around not losing money is a great idea whose time has come. You probably noticed that those posting their trades are making over 90K a year prorata. We will begin to see wash trades soon.
Uncle, uncle...
OK, I give, I'll do it Jack's way...
Using a 75-25 Stochastic trigger:
10:30 Long at 839.50
10:35 Out at 837.75
02:50 Sold at 828.00
03:00 Out at 827.00
Bottom line: Minus .75 on the day.
To this point I can see no benefit to using the 75-25 trigger...the 80-20 would have served me better, not only today, but all week.
FWIW My Jack Trades 2-26
1. 2:45 Short @ 830.00
3:36 Cover @ 827.75
Total: +2.25 Day: +2.25 Week: +10.75
This trade was during the bar, mkt was b/d out of a channel and MACD and Stoch were well below the area so I shorted. Used the 1m to anticipate (look at 1m and see little consol. 2:40-2:44 right at 830.25 and shorted as it broke)
Reason for exit: 5m MACD XO at 3:15- that bars high was 828.75 and was using 829.00 as a stop at that point. Mkt sold off and made a new low by 0.25 , but on lower volume (NQ did not make a new low). 1m MACD made a higher low. MACD Hist did not turn negative but stayed positive and was a reversal candle. Put stop above high of candle @ 827.75. 1m MACD also XO zero at 3:36. Exit at 3:36 @ 827.75.
I used the 75-25
Re: Chop
I've been watching the ES contract today. Has anybody been trading the chop since about 11:15 EST? Reason I'm asking is there have been some nice up and down runs that stochastics have captured.
VVVV and some others are tuned into this. They are working it using an orientation that comes from wash trades being improved by trading on the right side of congestion. They are simply using the end effect of a fast paced trade going into congestion and trading the opposite of getting whipsawed.
As you saw this (chop as you say) ending, after convergence with a flat bottom pennant (FBP) centering. All of this (FBP centering) leads to the 13:15 daily event. Today 13:15 occurred at 14:05+/- and the beginners drop into a short fast paced trade while the intermediate ice bergers have been in since the first chop bottom at 12:10 +/-.
You can see that the volume took everyone out of the chop because the chop only operates on less than a trend sustaining volume. Soon we will add three levels of volume as horizontal lines so everyone knows how to be trading as experts according to the volume level situations.
It is important to know when things are going to be beginning and you can tell this by tracking volume levels since you can easily see their transitioning to new levels before the price action begins.
Trading Jack...I think
A really bad connectivity problem, I was late getting in, and too scared to stick around on the first trade:
10:32 Long @835
At one point I had better than 5 points, but could not get out until +3.50
I did not take the short signal at 02:30, as the Histogram did not confirm. Not really knowing what to do, I entered at 02:40 when the Histogram dropped below -0.4. The price action did not make me happy, so I "washed" at 02:53.
03:47 Long @837.50
03:56 Out @835.50 minus 2 points
For the day: Plus 1.50 points.
Later when we get into the details of ends of fast trends, we can take up the opposite of getting whipsawed . This is when you do trades with the congestion, convergence and then set up "brackets" on the centering.
Everyone must wonder who is making money when others are getting whipsawed. There are many people who play the cycles of congestion and convergence. Also there is a slow motion version of this for head and shoulders and double tops and bottoms.
Right now we are using beginner technique to learn one basic thing: How to stay out of a market that is not making money.
The opposite of getting whipsawed in congestion is a technique for making money is rapid continuing reversals. We can do this as a way to enhance wash trades to get out at better than even. Wash trades are essentially to take you out of a trend that didn't play out. What happens when a trend doesn't play out often is congestion. Once we can determine the sequence set (the series of signals from our indicators and price formations) we get the opportunity to improve washing and go into being on the right side of whipsawing.
Sidelining
Do not worry about being out of the market. Siting around not losing money is a great idea whose time has come. You probably noticed that those posting their trades are making over 90K a year prorata. We will begin to see wash trades soon.
Uncle, uncle...
OK, I give, I'll do it Jack's way...
Using a 75-25 Stochastic trigger:
10:30 Long at 839.50
10:35 Out at 837.75
02:50 Sold at 828.00
03:00 Out at 827.00
Bottom line: Minus .75 on the day.
To this point I can see no benefit to using the 75-25 trigger...the 80-20 would have served me better, not only today, but all week.
FWIW My Jack Trades 2-26
1. 2:45 Short @ 830.00
3:36 Cover @ 827.75
Total: +2.25 Day: +2.25 Week: +10.75
This trade was during the bar, mkt was b/d out of a channel and MACD and Stoch were well below the area so I shorted. Used the 1m to anticipate (look at 1m and see little consol. 2:40-2:44 right at 830.25 and shorted as it broke)
Reason for exit: 5m MACD XO at 3:15- that bars high was 828.75 and was using 829.00 as a stop at that point. Mkt sold off and made a new low by 0.25 , but on lower volume (NQ did not make a new low). 1m MACD made a higher low. MACD Hist did not turn negative but stayed positive and was a reversal candle. Put stop above high of candle @ 827.75. 1m MACD also XO zero at 3:36. Exit at 3:36 @ 827.75.
I used the 75-25
Re: Chop
I've been watching the ES contract today. Has anybody been trading the chop since about 11:15 EST? Reason I'm asking is there have been some nice up and down runs that stochastics have captured.
VVVV and some others are tuned into this. They are working it using an orientation that comes from wash trades being improved by trading on the right side of congestion. They are simply using the end effect of a fast paced trade going into congestion and trading the opposite of getting whipsawed.
As you saw this (chop as you say) ending, after convergence with a flat bottom pennant (FBP) centering. All of this (FBP centering) leads to the 13:15 daily event. Today 13:15 occurred at 14:05+/- and the beginners drop into a short fast paced trade while the intermediate ice bergers have been in since the first chop bottom at 12:10 +/-.
You can see that the volume took everyone out of the chop because the chop only operates on less than a trend sustaining volume. Soon we will add three levels of volume as horizontal lines so everyone knows how to be trading as experts according to the volume level situations.
It is important to know when things are going to be beginning and you can tell this by tracking volume levels since you can easily see their transitioning to new levels before the price action begins.
Trading Jack...I think
A really bad connectivity problem, I was late getting in, and too scared to stick around on the first trade:
10:32 Long @835
At one point I had better than 5 points, but could not get out until +3.50
I did not take the short signal at 02:30, as the Histogram did not confirm. Not really knowing what to do, I entered at 02:40 when the Histogram dropped below -0.4. The price action did not make me happy, so I "washed" at 02:53.
03:47 Long @837.50
03:56 Out @835.50 minus 2 points
For the day: Plus 1.50 points.
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