Futures Indexes System and Tool Box

[bubba7]

final comments on nailing down slow trends

Re: Re: Re: Re: Re: trying to find the slow trend

To summarize, there are 3 possibilities:
#1 failure to traverse -> new point 3 -> trend continuation
#2 failure to traverse -> CCC
#3 failure to traverse -> trend reversal

I don't think you can anticipate which one will occur.

#3 you would clearly benefit from reversal. #1 and #2 you'd have to be careful if you reverse, likely you'd end up washing. If you can detect CCC or new point 3 formation early on you can get out for a small profit.
To play it safe, you can exit after failure to traverse and reenter after new point 3, or upon confirmation of trend reversal.

Trades are picking up in skills displayed

4-21-03
1. long rocket

9:50 s(100, 90.94) macd hist +.45 10,080

long on the break was not happy about having number coming out at 10:00 a buying runup to the numbers, but held...mkt sells of on number...stochs leave rocket zone s(62,85) and exit when low of 10:00 bar is broken.

long @ 896.50
sell @ 894.50 -2.00

day: -2.00 24 days: +41.00

2. rcoket failure---->macd xo--->reversal

uptrend had already been broken, exited my long position (losing) and while i did not reverse immediately was looking for a reversal play...

10:10 reversal bar looking short...macd xo...short on reversal bar setup during 10:15 bar @ 894.50...funny thing is this is exactly the price i exited my long rocket position.

10:25 rocket short signal s(17.24, 21.75) macd hist -.83 9,941

market moves sideways, but stoch still in rocket zone...exit during 11:00 when tiny range is broken upward @ 890.00 and stoch pokes above 27.

short @ 894.50
cover @ 890.00 +4.50

day: +2.50 24 days: 45.50

3. ronge b/d--->rocket

2:05 break long uptrens that i had in place...got short @ 890.25...rocket signal at 2:20, but next bar is a low volume inside range bar and puts me on alter...first low breaks and then high is taken out...exit when high is taken out @ 890.00

short @ 890.25
cover @ 890.00 +.25

day: +2.75 24 days: +45.75

Trading Recap
24th day of trading was today...last weekly recap was on 14th day

last updates totals (14 days)
38 trades
16 winners
19 losers
3 flats

+29.75

24 day update (including 4-21):

65 trades
27 winners
34 losers
4 flats

+45.75 total gain

45.75 x 50 = 2,287.50 total gain

commish
65 x 2 x 2.40 = 312.00

24 day net gain on one contract = 1975.50

feel as if i got myself back on track after a horrid 4-7 to 4-11 week -1.50 on the week...and 3 day losing streak of -15.50 where i completely lost track of myself.


Great results tabulated above


Apr 21
Great job dawg, it looks as if you've tripled your initial capital in 2 months.
Nice morning reversal too.


My trades:

#1 rocket after synch
Long 894.25 9:45
Sell 896.25 10:01
Tough holding through a -1.75 drawdown on the 9:45 bar. Long channel from yest still valid -> 9:55 volume drops as it touches left side -> exit as price started dropping -> rocket fails
+2.00

Decided to take profits at away side and reenter if trend resumed.
Should've reversed at the same time though.

#2 failed rocket reversal. Reversed after closing 1st position.
Short 895.50 10:04
Cover 896.25 10:10
Sold at high of 10:10 bar as MACD didn't cross yet and 10:05 bar looked like a new point 3.
-0.75

#3 rocket at 10:20 -> entry after point 3
Short 890.75 10:32
Cover 889.25 10:55
10:40 channel break, MACD convg but stoch still good -> waiting for new point 3 -> volume dropped and it looked like congestion -> exit
+1.50

Was away from computer till 14:30

#4 VDU BO. Mkt was rangebound.
Long 890.75 14:44
Sell 892.00 14:50
Exit as volume on 1m dropped.
+1.25

Day +4.00
14 days +37.50 (39 trades)
Apr 22
#1 MACD convg -> rocket failure -> slow uptrend setting up -> tried an iceberg for the 1st time
Long 888.25 9:52
Sell 895.50 10:35
+7.25

10:01 high vol 1m down bar - ready to exit -> picked up on next bar -> BO to new high 2 bars later.
10:30 5m bar rocket signal -> exhaustion volume -> exit when it started to pull back as I had to leave for work in 15 min and I thought this would be a nice exit point.
Wrong. Rocket continued and 20 min later mkt was 5 pt higher.

In hindsight, if one stayed in till rocket failed the exit would have been at 11:05-11:10 between 895.50-897 for max 1.5 pt more.
A nice reentry at 11:40-11:45 on MACD x and rocket signal (15m was showing a rocket too).

The iceberg would've kept you in till 15:40 - exit at 909.00 for a whopping 20+ points! It looks as if today was one of those rare days when the market was giving away money ... I hope some people took it.
Afternoon chart
All in all a good day and week. Getting more confident and ready to switch to live trades.
Day +7.25
Week +11.25

Below is a contribution that came out of the blue

my contribution

Is the trend is a rocket or iceburg?

And, the answer is you look at first 1 minute, then 3 minute chart
use 3 ma to see what angle or slope it is. If angle is 45 degree or more you know it is a rocket, or else it is an iceburg. This is only a setup for the scalp, then use 13 minute chart for entry.

Mean time, double confirm it with stoch as it is a momentum indicator, and macd for to see if it is a real trend.

 

[bubba7]

Fri Apr 25
#1 9:45 rocket signal but numbers at 9:45 an 10:00 -> 10:15 rocket reentry, bounce off right side of channel (continued from yest) on strong volume

Short 905.50 10:18
Cover 898.75 11:37
+6.75

11:15 new channel broken on low vol, MACD and stochs ok -> 2nd point 3? -> 11:20 inside VDU up bar (no flaw) -> 11:25 downside BO -> 11:30 BO fails and stochs leave zone -> exit

#2 tried 14:55 VDU BO

Short 897.50 14:56
Cover 897.75 15:53
-0.25

BO was kinda weak but stayed in since it didn't reverse, and rocket was forming. Washed when volume picked up to the upside and rocket failed. Noticed slow channel only after the trade.

Day +6.50
Week +17.75
16 days (42 trades) +51.50

Another

Tue Apr 29th
Didn't trade yesterday Today:

#1 long rocket
Long 918.75 9:49
Sell 923.00 10:15
+4.25

Didn't know about report at 10:00 and was probably better off, I would've passed on the trade perhaps.
Exit after low up vol bar (report exhaustion bar suggested reversal). I felt like reversing but didn't have the guts.

#2 MACD cross -> short rocket
Short 916.75 10:39
Cover 910.50 10:53
+6.25

Exit on away side after exhaustion volume, and at yest afternoon's low. Had to leave for work and it looked like a good exit point.

A thought on reversals: most of the time you are better off reversing as soon as there is a flaw in the trend:
- if a reversed trend arises, you are in early and score nice points (today the short trade would've been +12.50)
- if it's a new point 3 or it ends in CCC, you wash for a small loss

Day +10.50
Week +10.50
17 days (44 trades) +62.00
Whoa.

vorzo on reversals
i agree on your point about reversals...if you feel strong enough that you no longer want to be long...then you shouldn't just exit but get short...it takes some guts(until you get used to it), but r/r can be huge...today it made the trade double the profit....i am not there either(by a longshot), but at least we know the goal we trying to achieve..

good luck and keep up the hard work.

Questions

Quote from vorzo:

We miss your posts.

I went over some earlier posts and I have a question about A/D: you mention repeatedly that it's an important factor of how markets work.
I am familiar with your trend scoring system - do you use A/D for stocks only or can it be applied to EMinis too.
How do you get the value for A/D - from the A/D indicator constructed as explained here:

http://www.incrediblecharts.com/tec...onstruction.htm

or is it a visual pattern on the chart?

Sorry for the gap. I will get my schedule readjusted shortly. as part of my sets of 1000 day life segments I am trying to finish up some stuff.

The A/D can be done using any one of many alternatives. My fav is BOP by worden bros. The ratings by IBD work too. For a while I worked through on this to get some maths for an analysis project on the east coast ( Harvard). For me, the best result turned out to be a MACD using volume. Because all the stuff going on was in the category "too good to be true", we could not really come to good understandings without going through a terrific amount of analysis.

As a fine point, for now, do this. Look at the cycle chart and see how the A/D is changing twice as fast as volume and see that volume changes twice as fast as price.

Sit there and think.

If you read all the ET posts by everyone and extrapolate, you conclude that a whole lot of people don't trade at a maximum potential. You simply see why too. They do not take advantage of the opportunities. You can clearly see that they do the A/D thing too frequently. In/out..in out..in out... This is what I speak of as the odd harmonics in the waveforms. This is the traversing of the channels. Think about it.

dawg is a great person ... he showed us a lot as we started out. remember his expressions for what it takes to stay in the trade.

He is growing into looking at the larger money making picture. The bridges he is building across his prior "early exits" are strong and remarkable achievements.

If you lookat how a person has to go through "rockets"it is amazing too. Buying as it passes 80 is not in the books it turns out. Actually their is a dumb notion in the books to reverse then because of the "invention" "overbought"...lol.

This is the A/D phenomena showing up in so many little places where people do not realize their potential.

Since you and others are knocking down some money now, I am going to overhaul everything in a couple of weeks. The STOC is a good thing to learn low risk trading and staying sidelined. (These two factors are what lead to success) It turns out when you know what you are doing any trade is a low risk trade.

I just read everything written here to see what people do not know. when we get the backtesters to learn how to do that stuff, then we will see a convergence of their results and they will have backtesting software that gets as long as the mechanical trading software.

So far the forward trading is getting good results for one contract trading. you can divide days into trades and into profits and see a convergence of results. 3 to five trades a day will give more than 10 points usually. the # of trades will pick up as you "feel better". Everyone can now look back and see that they "simply could have done what they thought was called for". thatgets the trade level at a good operating point. The consequence is that you do make more money per day. simply take what you make per trade now and see that the additional trades give you more profits per day.

If you get three times initial capital in the till , you have the right to make more money in two ways: trade in a more sophisticated manner and do 5 contracts from then on.

This is all about A/D and when it's A and when it's D. We need to hold through other's shiftiness to realize all of each move. I will overhaul this beginning to get that in a groove for you.

 

[bubba7]

Today’s trade:

#1 long rocket
Long 916.75 11:02
Sell 917.75 11:29
+1.00

Felt like exiting/reversing after it peaked at 11:11, at away side of channel, but there was no flaw so stayed in till channel was broken, rocket failed and MACD xed. Left 3 pt on the table.

another trade

Today:

#1 rocket -> point 3 -> entry
Long 918.25 9:56
Sell 921.50 10:08 bounce off away side -> reverse
+3.25

#2 reversal
Short 921.50 10:08
Cover 919.50 10:15 on what looked like a new pt 3 but volume was low = too early, no flaws yet -> the 2nd point 3 came at 10:25. Happy with the two trades though.
+2.00

#3 rocket reentry
Long 923.25 11:01
Sell 925.50 11:17 on failure to traverse = too early, no flaws
+2.25

Afternoon: saw an iceberg confirming after 13:35 but was not comfortable w/low vol and stayed out.

Today I was too quick on the trigger trying to exit at the away side - will wait longer for a flaw to occur.

Day +7.50
Week +19.00
19 days/48 trades +80.50. There's gotta be a losing streak around the corner

ps. if I stayed in the first trade w/out reversing:
Long 918.25
Sell 925.50
+7.25 - same result, one trade only. Hmmm.


Introduction to "change" strategy.

Jack,

what are your thoughts on exiting/reversing at away side of channel, with wash if CCC, or reentry if trend is continued?
I know your advice is to stay with the trend as long as there is no flaw, but you also mentioned slaloming a few times.
You put it very succinctly. I will try to catch up om my posts by going backwards from the most recent ones that have been made by others.

As skill develops, a person can add to their performance efficiency.

Going from just rockets to trends is the first step. Rockets give you experience in netting profits and learning to get out when a rocket doesn't materialize.

So you get to a place where you do stay in as a rocket unfolds and you make sure the STOC lines are entwined. This condition is complemented by high volume, and the MACD lines moving significantly off the neutral.

This is the character of a strong, profitable trend. We often see the strength lessen as a new point three emerges and we stay in the trend.

Most people work to learn to stay in at this point in their trading and as a consequence they pull down more profits as they stay in the market longer after each entry.

We have, in effect, done a traverse from the left channel line to the right channel line and stayed in to follow the strong most profitable traverse that is coming along at that point.

Let's consider some fine points. There is a greater money making efficiency at times to reverse off the left line then reverse off the right line as well. The trend's strength determines the value of doing this. The stronger the trend the less valuable a reversing strategy becomes. In a strong trend, you make money all the time and one traverse direction is very profitable and the other is just a weaker rate of profit making.

As a trend goes towards a limit (like support or resistance), nowadays, you do look for lessening strength and as you say you begin to see possibilities regarding reversing.

This is a similar exercise as that of doing wash trades (flat trades). The difference is you are focused on profits instead of just getting out even with no loss.

Here is a consciousness element to learn to handle. If you have the "entwining", mathematically, there is a strength statement being made. The opposite of entwining is the concept of divergence. Entwining in terms of the P, V relationship represents "continuation" as in the "then" statement "then the trend will continue". Divergence is a statement that is contrary to "continuation". What is contrary to "continuation" in making money is "change".

Thus you see that you are easing into the next higher plateaux of consciousness in market operation. The market either continues or changes. This is so far from the trite Bull and Bear stuff. A person emerges from various biases into a neutral bias for making money. As that occurs, the person begins to view the market "physically" as in physics or science. In nature, things continue or they change rather than just go up or down.

You are transitioning into a rational place where the governing elements will now allow you to move to a level of making a hell of a lot of money.

Some of the quiet people here "slalom"; they are patiently waiting for me to unload the fundamentals really nailing the opportunity that they play now.

You see, now, that the trend is the continuation of movement (steadily making money). You see the nature of trends too. They are there in a spectrum of potential energies finally manifesting as kinetic energy also in a spectrum of values.

As you get into it you see that, smoothly, the market varies within its trend. You want to harness this phenomena to make money more effectively.

Go about it this way. Let the end of trends going into congestion be the guide for learning about how reversals work. Most people who are up and downers are also whipsawed types. The people on the next plateaux above them are using these people's limitations to siphon money from them as they trap themselves continually.

The people who go out on stops are UDW's (up, down,whipsawed). Slaloming people are their counterparts who extract money from them.

We are just looking at the players and we can easily notice that they are on differing intellectual and emotional levels. Loosers and winners, so to speak.

I will focus on how to choose which side to play on from here on out.

Let's go at this mechanically first, then tune it up with desecretionary stuff.

fisrt we need to know how to pick the point where what is prevailing is what. Either it is "continuation" or "change". As long as we are in "continuation" we hang with the trend. When the modus switches to "change" then we go into a reversal strategy. The easiest backtest for the turning point is to log the shift from "entwined" to "divergence". I may have to give the maths for this to keep back testing on a par with our efforts.

Use the 5 min today and pick out the point at 12:45 to see the "continuation" end and "change" begin. On tuesday observe at 14:35 to see the reverse: "change" goes to "continuation".

For anyone into physics, we are playing the Newtonian game here, First Law.

 

[bubba7]

Reversing when "change" is the modus.

The essential ingredient of using a reversal strategy to make money is to only use it when the market is in a state of "change" as opposed to a state of "continuation". Trends represent "continuation" but is is not a sufficient condition to try to determine if a trend does not exist. This is because there are three kinds of trends: long, short and lateral. A state of change exists only when end effects of trends are becoming paramount.

What this is all about is looking at where most people screwup and get emotional about things. The term parabolic is used here occassionally. This is a term for "oh oh, something is changing". VDU is another term for "this market is not functioning". We hear about "chop" too. "Chop" seems to describe "my algorithm isn't working again" when most people use it.

As any one of the three possible trends dissappears and another of the three begins, we need to know how to trade. We can use a strategy based on change to achieve this. Reversals will be the intantaneous technique we use to get on the "right" side of the market.

So far the warm up drill for this has been to sideline without loss. Because we know how to make a buck now, we are entitled to always keep on the "right" side of the market.

Read all the posts made in ET, they are a little thin in this arena it turns out.

Some common "Change" situations

You can classify a lot of the TA formations as "change" situations.
traderkay is stuck on trading after the pennant ones; she has learned that she needs to not enter around pennants because of her risk. This is a defined risk area for her and it falls into the general category of market change, non-trend (lateral included) times.

Another one that is always in the wings are gaps and their companion "retraces". Most people go through a lot of probability stuff on these two. It serves as a substitute for not having a technique of trading for them. "Stay out" "if the probability is that you will screw up is high" is the guiding principle here. This is all non-trend (including lateral) stuff where "change " predominates over "continuation".

By dealing with this important market condition, we get to develop and use another set of excellent tools in defined conditions.

The downside on this stuff is that it brings out two subgroups of people: the lurkers and the linguistic twerps. The fact is, however, that if you are ever going to extract all the potential money form the market, you simply have to know what is going on at all time and have a way to deal with it.

One of the tests we can introduce is comparing profits per trading session with the potential of the session. I like to use the H/L range for the day and come up with a multiplier for it as a performance measure.

Once you have trend following under control and then you deal with the nontrend (including lateral trends as part of trends) "change" intervals of market operation, you have a basis for making more money per day than just the traverse from one end of the daily range to another.

Ultimately, the algorithms that people use become limited only by how effectively they link to the performance of the market.

Jack,

Thanks for the great posts. The continuation-change concept is a killer - I believe it can greatly enhance one's perception of the market. I will aim to stay longer in strong trends and be wary of slower ones.

 

[bubba7]

Quote from vorzo:
I was going over some older posts - you mention a MACD using volume for A/D. Can you elaborate on this please: is it a MACD based on volume, or did you mean using the MACD AND the volume?

What we are beginning here at this point is to look at the market participants more closely and we are also beginning the process of separating the "smart money" from the "other money".

There are a few creative practioners who have gotten to the essential babis for making money and they are complemented by a class of analysts who have made it their business to translate certain crucial parts of the investment process into very excellent signals.

The entity traded is most ably characterised by value discrimination; the human element of the market is most closely interpreted by volume considerations. To link the two is the place where optimization begins. As you look at the history of market study and such, you can see the slow evolutionary progress being made.

I watch MA's as an indication of the public progress. First their were long term MA's for price, then shorter ones showed up. IBD at some point introduced volume MA's for the DJ average. To make money you have to work to realize the potential of the market. At some point you become part of a smaller group who are doing quite well by the standards perceived among experts. That group distinguishes itself by a KISS orientation to the essential defining market character.

The A/D aspect of the human element is a factor, when understood, characterized and monitored, puts you in a place that is ahead of the "smart money".

The market is different than most things. I go by plateaux to articulate what is what. You will see comments by 4 out of 5 people who do not share my views. The primary reason is that they are simply in places that do not allow for a breadth of consideration that may be required.

The land of opposites is "the mine field" of investing. Opposites do not apply to the upper reaches of the plateaux of investing.

I introduced the time pair related to trends and change of trend. You can see how people go through this stuff. First some see nothing. Then it appears that there are up and down trends (This is the Bull and Bear levelcof living). Advertising and brokerage folk operate here and avoid understanding more by the tangential stuff called asset allocation and long term this and that. Some where lateral trends become part of the consciousness. Occassionally a person can see the sequence of congestion, convergence and centering. But usually the people go through having a congnicense of "patterns" and formations for specific "end effects of trends that fit into S/R factors or market "off to on" functions (pennants).

It is hard to get to understanding there are three trends (up, down, and lateral) and also and just as important there are time intervals in the market process that are defined by "change". It is almost paradoxical to talk about trends as "continuation"; most people are simply stuck at a level where a trend is change (it is, of course, but in only one aspect of the market called price).

To get to seeing stategically how to use market tools is a long gruelling trip for some. On the other hand for others it is an exciting segment of making money that is super enabling.

The big chunk of information here is that you use reversal strategies during "change" periods and you use "optimization" strategies during "continuation" periods.

To detect the time when you change strategies is best done using signals and indicators related to volume. (Actually a combo of price and volume is what the most accomplished analysts would use. Three of them are the P, V relation inventor, the RSI inventor and the BOP inventor.

The combo of indicators that is best for illustrating the sequence in equities is a fast MAV 5, RSI (See Pring values that he adopted recently), and a slow MAV's (30). The two MAV's relate to an MACD for this. The signal sequence (minimums for an end of a down) is in that order. I have a limited paradigm for equities. This means that I cannot deploy more than a given amount of capital. No one can really and when they do they they limit making money. to normalize, I use shares as the capitalization determinent. My rule is: 100,000 shares max (think 30 dollars a share); never entering or exiting in blocks larger than T&S immediate average; never having cummulative amount of traded shares be over 10% day's volume. The ratio of blocks in to blocks out is 20:30. A prior stipulation is that ,at present I use the IBD recommended min/max float range (5:30MM)and a universe of 150 nominal as determined by adjusting the EPS and RS to highest values possible or 90/90 whichever comes firt.

We are going to use this stuff for the ES mini. I will have to go through a few clarifications as the days go by. Markets don't always give you examples right off of situations you want to use. The nuances we will look for are those where we can be in fundamental trends but, because they are so slow, we will regard them more as tipped S/R ranges.

Right now the most fundamental market driving phenomena is the general malaise of commission driven financial industry people trying to get money back into the market. because the NAZ is up 35% and the DJ over 15%, they types of people are getting to a point of steady commission income flow and it is acting as a narcotic it looks like.

What I am going to do is use the indicators we have on hand and just presume that people have been making money and enough of it for a while. This is a condition where we can get to a KISS orientation and not have any significant "fear" type garbage driving performance.

I think it is safe to assume that a person can make more per day than the H/L range. This is past the plateaux related to all the back testing and "edge" stuff and W/L ratios, etc.

We want to, just understand market operation, and use a combo of strategies to optimize trends and also during "change" pahases learn to stay on the "right" side of the market.

This lets you be in the market a relatively high percentage of the time and also sets up a continual accumulation of $.

I equities today I am holding 5 items, I buy in multiples of 500 shares. It is a mixed market and the current daily profit I have on these 5 ranges from 4.15 min to 6.28 max. The maximum # of accounts where these multiples reside (under POA's in many cases) is 11.

My point is that I do not care what the market is doing; it is simply my practice to continually grind away at making money.

We need to get ourselves calibrated so we can "see" what is going on. The set up we have for ES has actually allowed for much of this to be out of the way.

We need to pull down more than 3 to 5 points a day per contract. We had a real seige of folks here who say that they can't make any money. Now they are going to have to give up this orientation.

End of April.

 

[bubba7]

May began with much commentary from very skeptical people. I did the red/green thing for clarity. The object is to get as good a set of descriptive elements for understanding scepticism
Vorso,
Good luck with the above, lol.

Maverik1,

Skepticism is always called for in this business, but I must say that Jack has improved my e-mini trading...without a doubt. His writing style my be confusing and maybe his profit claims are overly optomistic, but he does have valuable information.

It's helping me trade better.

another

I agree, ges.

I only wished i knew what Jack was going on about!

Is there a simplified posting of his method anywhere?

no, the reason is it just lead to more confusion.
LOL! Thought as much!

I certainly do, and it greatly improved my trading. Nothing of real value is free. If you want to understand it, you just gotta try harder - think of it as the price you have to pay. Compared to what commercial gurus are charging and the cliche crap you get in return, this is gold.

As if to disprove what I just said, today I completely f#&*ed up.

#1 rocket -> entry on 9:50 break
Long 931.75 9:54
Sell 930.50 9:56
-1.25
Reversed on falling volume on up bar, rocket failing, MACD convg.

#2 Reverse short
Short 930.50 9:56
Cover 932.50 10:02
-2.00
Reversed AGAIN on what looked like new point 3 on rising volume, rocket reentry

#3 Reverse long
Long 932.50 10:02
Sell 930.50 10:14
-2.00
Reversed YET AGAIN, on down volume picking up after unsustainable vol bar at 10:00, rocket failed, MACD x

#4 Reverse short
Short 930.50 10:14
Cover 930.25 10:40
+0.25
Washed as I finally realized that this was CCC.
Day -5.00

Gruesome day. It all stems from one "minor" detail that I overlooked: the big picture. Mkt was in a lateral trend since Fri at noon - see 15m chart in next post. Coupled with a sick compulsion to reverse and lousy execution.
The losing streak is here..

finally some new questions came up

Quote from nwbprop:

Jack,

You mentioned in an earlier post to use RSI, MAV 5, and MAV 30 to help determine "change". What settings does one use for RSI?
I googled RSI and found that the common settings are 11, 14, and 24. Thanks.

The settings I recommend are 5,3,3. For a short going to a long, you will see a spike down as the signal prior to the trend (long) commencing. the MAV5 does a dip, then RSI, then MAV30. The Xover of MAV5 on MAV30 was what we used to show the D to A shift. The RSI falling between the two relative minimums of the MAV's extablishes a nice sequence to take the emotion out of things.

Posted by vorzo on 05-07-03 10:20 PM:
Wed May 7
One trade today:

Long 931.00 10:45 short channel BO -> rocket signal
Sell 932.75 11:23
channel BO -> rocket failure -> MACD cross. No reversal
+1.75

Week -3.25


Posted by vorzo on 05-08-03 10:13 PM:
Thu May 8
Tough morning, definitely a "change".

#1 slow uptrend -> rocket
Long 929.00 10:31 (HOD, didn't look at 1m to see it peaking)
Sell 926.75 10:37 failed rocket
-2.25

#2 point 3 bounce, up volume rising
Long 926.50 10:51
Sell 926.25 11:03 washed on failure to traverse (slippage due to lousy execution). This was in fact CCC.
-0.25

Day -2.50
Week -5.25

Can't get a good grip lately, always in-out too late or too early. Will stick to the basics for a while.

Additional comments on trading
Quote from nwbprop:

I thought that I would share in hope of sparking interest in this thread again. In terms of optimization, i find that we enter our normal rockets which should be long when 5Mav is above 30Mav and short when 5Mav is below the 30. Before when we had a rocket we would build our channels on the 5 Min using points 1,2, and 3. The predicament i saw was that i was losing money made before during the point 3 pull back. I find that in terms of optimization that i should be getting out before the pullback of point 3. What i should be doing to optimize is get out when the 1 Min trend breaks or the fast line of the stochastics breaks 80. Whichever one is first. THe next point in optimizing the up trend is to get relong on the next 1min xover of the MACD and anticipate it turning into a rocket again. OF course, if our rezoom does not materialize, we get out for a wash. If it does rezoom, we either have trend continuation or consolidation. If price fails to break the previous high or the price doesn't reach the other side of the channel, we would have hopefully reversed and am ready for consolidation or the reversal.
This is only what i think Jack means by optimization of the trend. I am sure there are other things i am missing so feel free to critique.

In reply

Reverse-reentry sounds very easy and the sensible thing to do but it's a bitch to pull off. It's subject to considerable second-guessing and will eat away the profits locked in through the early exit. It takes NO HESITATION and fast execution to stay on the right side.
From my limited experience, you're better off staying in if the trend is strong - Jack posted on this a while ago. The retrace will be limited in a strong trend thus not offering much reward.
As I got burned a number of times, I'd attempt a reverse only if there were a convergence of flaws (MACD x, rocket failure, vol rising against the trend).
It would be interesting to see if your 1m MACD x works - please keep us posted.

I will try to add the MAV-RSI to my chart - not sure if I can plot it in WatchPro.

A papertrading commentary. to make it easy i used two colors

Vorzo,

A short while ago you mentioned about being more confident and closer to trading for real. Have you started yet, or is it still paper-trading? I ask, not to discredit the latter if that's the case, because I enjoy your posts and commentaries. But I would like to see your progress and insights when real dollars are on the line, even if it's only 1 contract. Good trading to you.

Magna
Still paper. I thought I'd be wiser to wait for a losing streak instead of starting live with overconfidence. Call it a self-fulfilling prophecy, but I was right.
Thanks, good trading to you.

Posted by dawg on 05-09-03 11:30 AM:
vorzo
how has this week been for you...b/c it has been tougher for me as of now +9.00 on the week including today's trades.
__________________

 

[bubba7]

Posted by Squarepants on 05-09-03 03:12 PM:
Hi Dawg and Vorzo,
Been following this thread since it started. I've learned a whole lot in the process from both of you guys and Jack. Started papertrading again last week after i noticed I was getting out too early on most of my real trades...
Last week was nice 23 1/2 points, using 1min trendlines as stops(along with the p/v relationship thing). This week was a bit harder for me as the trends were slower to form, if at all. Down 7 points for the week, mostly because of not waiting for the market to move, among other bad habits that I'm determined to break.
Anyway, thanks for posting your trades. It's a real help. I go through every day and compare yours to mine to see how i did.
Keep up the good work. I've been hesitant to post my trades here because I didn't want my own foibles to discredit this way of trading, but hopefully soon I'll have a better handle on things. Thanks again. To you too Jack, I'm havin more fun trading now than I have in a long while. Thanks for taking the time.

vorzo

how has this week been for you...b/c it has been tougher for me as of now +9.00 on the week including today's trades.

dawg,

Real tough - down 1.50 this week = first down week. This week trends were slow and shy, lots of lateral trending, lots of CCC. Glad to see you scored 9 pts - very nice work. Can you post your trades?

Today:

#1 long rocket
Long 927.50 11:01
Sell 929.00 11:22 failure to traverse, MACD x, down vol rising
+1.50
Too early, new point 3 at 11:55 and trend resumed.

#2 VDU BO -> rocket reentry
Long 929.75 12:01
932.00 12:39 rocket failure -> channel BO -> MACD x
+2.25

An iceberg started at 14:40 and lasted until close but I was second-guessing it so I stayed out.

Day +3.75
Week -1.50
23 days/58 trades +79.00

On going comments:

Squarepants,
Glad I could be of help. You should post your trades too.

vorzo
if your worst week is -1.50...you would wind up make a very nice living...considering when the market is moving you have nailing very good gains...just continue to refine your trading and you will be well on your way.

keep up the good work.

New trade log starting

Posted by Squarepants on 05-12-03 01:57 PM:
my first trade log
Well here goes...This is my log for the day. I figure I'll just post the entire thing. All trades are on the S&P emini and are based on what I've learned from this thread + my own limited experience.

May 12 Monday

9:57 Waiting for rocket signal to begin the week.

10:05 naz testing yesterday's high.

#1 b934.25 at10:05
stop at 933.50 10:11
NAZ moving along here
stop moved to slower 1min trendline while watching P/V.
15min macd has xover up.
10:24 touched 1min trendline.
10:31 stop lowered to 924.25 from 1min trendline.
s934.00 10:32
- 1/4

#2 buy order in at 935.25 at 10:46
on anticipation of slow away trend
b935.25 10:47 stop at 1min trendline
s939.00 at 10:59
+ 3 3/4
exit at away line, and last week's high. Maybe a mistake but 11:00 time seem's like a possible pivot. Watching p/v on pullback for new #3.

11:06 preparing to get in on break through 940.00.
11:11 5min Macd convergence. Good trend so far, shallow pullback on light vol.

#3 b939.25 at 11:15 on breakout of vdu, stop at 938.00
s937.75 at 11:17
-1 1/2

11:30 watching for break above 939.50.

#4 b940.00 at11:35
stop at original 1min trendline
may exit at away line again.
vol good on breakout.
s942.75 at 11:51 exit at away line.
+ 2 ¾

2:19 buy order in at 944.25
stop at trendline. (*needs to trade through to execute)

2:21 cancel order (after quick breakout failed)

2:52 waiting for pullback because 5min macd not there on rocket signal.

order in to buy at 945.75 at 3:21
(keeps testing the high of day946.50.)
cancel buy order at 3:22 after getting through hod.

3:35 5min Macd turning down. Not gonna wait for short rocket against a low $TRIN today.
+4 3/4 for the day (not a bad day for me).

dawg,

Thanks for your encouragements. You are doing an excellent job yourself, keep it up. +10.75 pt. on a tough week - that's awesome.

Today I took almost the same trades as you - I had to leave so I exited early on the reentry.

#1 rocket-> lateral channel BO
Long 934.00 10:07
Sell 935.25 10:29 rocket failing -> MACD about to x -> channel BO with intention to reenter if new point 3.
+1.25

#2 new pt 3 -> rocket reentry
Long 935.00 10:43
Sell 938.75 11:00 at away side, had to leave for work.
+3.75

Day +5.00. A good day to trade.

I have overlaid 5MAV and 30MAV in the volume pane. Will try to figure out if it's useful - maybe these settings apply only to daily charts? Any suggestions Jack? Gotta look up formula for RSI as it's not built in.

comments

[color=greenSquare, nice trading.[/color]

more comments:

Posted by nwbprop on 05-13-03 09:59 AM:
I think we might have a rezoom starting at 11:45. It was a reversal failure and the 5 min stochastics bounced of the 50% line.

dawg and vorzo,

One very key element seems to be the infamous point #3, whether it's a continuation of the trend (simply forming a wider channel) or the beginning of a move in the counter-direction. What have you guys been using as a guide to either let #3 form (usually with stoch leaving the rocket zone, usually after an macd xo) or have you been generally just closing the trade and, like dawg yesterday, looking for a re-entry.

Jack, what do you suggest as an approach in allowing #3 to form a swing high/low as sometimes those counter-moves are very solid, and they don't stay counter for long forming the basis of a strong move in a new direction (eating up any profits or causing a loss). Or is allowing #3 strictly an intermediate strategy, and beginners have no place permitting such price movement against them, simply exiting when stoch leaves the zone. Thanks for any insights.

Comments

Posted by Gordon Gekko on 05-13-03 01:32 PM:

Magna,

I know exactly what you are talking about. Sometimes I attempt some "rocket" trades. When you're in one, you start looking for a point 3, but sometimes stochastics leave the zone or a macd crossover occurs before it forms.

At the time, you don't know if the trade is going to be a total failure, or if a lesser angle degree channel is just going to form at the next point 3. I suppose the best trades will form point 3s with stochastics and macd still ok. So maybe a beginner should exit at the first signs of a flaw. If you're in a rocket, and a point 3 forms with everything else ok, then that's great, you just have another thing going your way and a new place to watch for flaws to develop.

From magna:
Thanks GG, you make some good points. Unfortunately stoch is leaving (or has left) the zone, and macd is crossing over (or has already crossed) most of the time while price is forming what might turn out to be #3. That's the dilemma.

 

[bubba7]

Volume assistance

Finally got to end of this thread with good understanding. Didn't take notice of it until last week. One question, what is considered good volume on the bars at the 1, 5, and 15 min levels?

on 5min
i have 5k, 11k, and 20k marked off on my charts....i use 7k or higher as good vol.

May 13 Tuesday

No trades today. Several unexecuted buy orders. Don't like to chase on slow trend days like today.

buy order in at 943.00 11:21
cancel, don't like the 1.00 trin 11:21

942.50 buy order in at 11:58
stop at 5min trendline. on anticipation of slow trend.
cancel at 12:11 angle coming in too steep against the 1min trendline.

Missed the 1:35 little short rocket, busy doing something else.

2:40 may get in on break of low of day, if 5min macd doesn't xover to the upside.

buy order in at 940.25 at 2:44 (needs to trade down through to execute)
2:50, so far so good, slow pullback on light vol. 1min macd xo down. ah whatever, cancel buy order 2:54. Don't like the 1.00 Trin at all. not worth it.

Questions:
Jack, what do you suggest as an approach in allowing #3 to form a swing high/low as sometimes those counter-moves are very solid, and they don't stay counter for long forming the basis of a strong move in a new direction (eating up any profits or causing a loss). Or is allowing #3 strictly an intermediate strategy, and beginners have no place permitting such price movement against them, simply exiting when stoch leaves the zone. Thanks for any insights

My understanding for point 3 is that beginner rockets teach the entry point of the trade/trend, if rocket continues stoch entwined you made some money. Wash trades sharpen your entry point, refinement, so you have room to wait for a failed rocket to become an iceberg. If not exit for no lose. Iceberg continues to point 3 centers and becomes another rocket, starting the process over again until you come to a point of either continuation or change. Jack was right about one thing, he sure brought out this lurker. Any comments welcome, I've just recently started trading at a beginner level in equities, need all the help I can get.

Posted by vorzo on 05-13-03 09:33 PM:
Point 3
I don't have a hard rule for point 3, it's more on a case to case basis.
There is temptation to take profits at the away side but this isn't always the best solution, you miss on some nice moves if you don't reenter promptly. I am more inclined to exit early if the trend is weaker.
Generally I look for flaws. Usually the rocket is the first one to fail, so if that is the only flaw I'll wait. One flaw combo that works for me is a MACD cross before rocket failure with volume rising against the trend after peaking. Also cautious after moves on unsustainable volume.
I try to stay in longer and be less trigger-happy, it pays off more often than not.

For 1m volume, I look at "signal" volume - volume bars above the noise that caused moves. I find this to be a very reliable indicator of the current short-term trend.


Posted by vorzo on 05-13-03 09:55 PM:
May 13
A day of lateral and slow trends - took early exits.

#1 short rocket -> lod break (dawg, I fell for it too)
Short 939.00 9:53
Cover 940.25 9:56 double bottom on 1m -> up volume rising -> rocket failing -> reverse
-1.25

#2 reversal -> iceberg?
Long 940.25 9:56
Sell 942.00 10:25 hitch at 50% -> snaps below -> failure at hod -> channel BO
+1.75

#3 long rocket
Long 942.50 10:59
Sell 942.75 11:25 MACD convg -> failure at hod = away side of lateral channel -> rocket failing
+0.25

#4 rocket reentry
Long 944.00 12:03
Sell 946.50 MACD x -> rocket failing. Didn't wait for pt.3 as the odd harmonics were getting weaker.
+2.50

Day +3.25
Week +8.25

Phew. Tough day.

Posted by manz66 on 05-14-03 05:59 AM:
Jack Hershey's 1999 S&P method
Check this link

http://groups.google.com/groups?hl=...l=en&lr=&ie=UTF-8&q=author jones%40yahoo.com+

Jack Hershey wrote in march 3 in 1999,

'for me I think it is INDU. That is what i have up on my split screen NYSE
on right and futures index on left. maybe it is my feed but they are in
sync after a point every day. I bracket my entry on two basis and i set
them 10 minutes before the open of INDU. I watch the overnight shifts get
cleaned out and have a preset spread for my futures index (DJ9H) to attain
relative to INDU as they get the that spread (20-30 points) then I know
they are going to start to move together. Up to that point the futures
index is a maverick as far as I am concerned. FYI for the last two days
the sync occurred at about 7:50 MST (9:50EST) or about twenty minutes into
the day. From that point on they remain in sync. As the spread varies it
becomes a powerful indicator of the lag in the DJ9H or SPOOS. the market
takes the trade on for me as soon as it hits one of the two bracket stops I
have in and the other is my first trailing stop. i note in a column next
to my working stops the next ones I will be setting from a line chart I
read continually. Once I write it down I will use it when I need to
tighten my stop as the trend continues. As soon as i can establish trend
in each of three separate concurrent ways, I go mostly on the confirmation
of the the three ways. right now I am on my fifth trade for the day. One
loosing ( a scratch out in congestion). this is as a consequence of
lateral motion that runs into a trend slope line to the right of my trend (
i have two displays of this characteristic one on a continuous line display
(DTN) and the other on a quote.com bar display. i use one min bars for
slope test.

i always have my bracket reentry settings developed with a phantom of the
market out thirty minutes. and i do this with two series of phantoms offset
by fifteen minutes. i try to set up for an accumulation of points over the
day on accounts that i trade sequentially to not crap up the market action.

i rum ICQ with another to confirm the phantom values and i have an ace in
the hole with whom i coordinate fills and when we are out because of
congestion.

This response has a punch line. The scalpers action is best seen by
comparing line charts DJ9H and INDU. when they are foling around I back
off my stops (or limits) on the side they are playing. I got axed on an
9303 today and improved my reversal by two points... and got a phone call
and an ICQ as a consequence......lol. It took me out of a long trend a few
minutes early (and lower than a phone call would have) but i only sat
through a narrow period where my new trend slopes weren't clean...some
emotion came up for me but the flack from two others chilled me out.

i left the market today at a little before 12:30MST, having accomplished my
desires for an average day. It is setting nicely for tomorrow, I didn't
think DJ9H would be below 9250 today.

I monitor CBS and DTN markets at a glance. I think the advance decline
stuff is on their minds as well as the volume of trading. I am very bias
in the volume area'.

 

[bubba7]

Part II of Jack Hershey S&P method 1999
Link:http://groups.google.com/groups?hl=...l=en&lr=&ie=UTF-8&q=author jones%40yahoo.com+

> It would seem to me that bracketing a thinner market such as the DJ
> might result in your stops get picked off occasionally on false
> breakouts engineered by locals. Has this ever been a problem for you?

I get picked off several times a week...always, ugh, always because of my impatience. I am in a stupid mindset where I always think things are moving faster than they are. (My hobby is glider acrobats.) That often is the cause of the market reaching to me and turning a stop into a market order. If I'm doubling then usually I'm just in earlier and the results are moot. I know my broker loves the market (the floor) more than me...lol but I resist the idea that engineering is going on for chump change compared to the profits in the main events.

> > I watch the overnight shifts get
> > cleaned out and have a preset spread for my futures index (DJ9H) to >attain relative to INDU as they get the that spread (20-30 points) >then I know they are going to start to move together.
> Does this preset spread(20-30 points) take into account the daily
> shrinkage of the premium number? It is a slow migration actually and
>there is also an over lay of the intermediate term trend of the market >as a whole. so i was a little cavalier in my comment. but there is a >spread that shows up; its value is there day to day and you will actually see the two indicators slip into place... then there is the power you gain in analysis once you are calibrated...it is then you see the lag of the futures index and you can use it on a secondary level to judge the strength of the significant trend of the day. I am a little fractal here. I try to minimize my number of trades in a day primarily because of the emotional level that that achieves for me. i don't really know what a loose goose is but I prefer being one rather than a hyped humming bird. So I try to use the spread oscillation (it ranges) to keep me connected to the slowest trend of the possible trends on the table. If the rate of movement picks up I watch the spread like a hawk to pick off the end of a leg. By overriding a working stop with a phone call and grabbing a bounce with a
double. If it is the usual situation I then go to a short bar screen and check the drop off in volume..expect a congestion pop out of the bounce on a phone call. And wait for the ensuing sequence where i graphically determine my bracket back in after it centers.
>
> > Up to that point the futures
> > index is a maverick as far as I am concerned. FYI for the last two days the sync occurred at about 7:50 MST (9:50EST) or about twenty minutes into the day. From that point on they remain in sync. As the spread varies it becomes a powerful indicator of the lag in the DJ9H or SPOOS. the market takes the trade on for me as soon as it hits one of the two bracket stops I have in and the other is my first trailing stop. i note in a column next to my working stops the next ones I will be setting from a line chart I read continually. Once I write it down I will use it when I need to tighten my stop as the trend continues. As soon as i can establish trend in each of three separate concurrent ways, I go mostly on the confirmation of the the three ways. right now I am on my fifth trade for the day. One loosing ( a scratch out in congestion). this is as a consequence of lateral motion that runs into a trend slope line to the right of my trend I use a moving linear regression line to try to accomplish this, but it is not always on the right side(as opposed to left side) of the trend.
> Is there a better way?
>

two ways to get the regression to tip you off. make a pinwheel of three regression lines where their ratio of period is 4:2:1. the right sides of the lines are always flush on "now" don't offset them to have them rotate on their half lengths. you are really in a good place with regression. Very quickly you will begin to observe the rotation of the pinwheel is a tip off for the reversal of trend. and you will see easily when you are in congestion: they will all swep into a "flat" ahead of time. You can also get a look at the "centering value" to see what the possible bracket reentry might be.

i ease people into day trading on three successive levels of using slopes to set stops. Predicting the market is absolute bullshit as you have probably gathered from my comments. But anticipation is thr name of the game. the pinwheel will really give you a kick. But try this too. i tried to get Mark to consider making nodes of market conditions by pairing formation and slope characterizations then linking them. It is a blast to do it. Several evolutions will occur. what shows up finally is a map that can be operated upon by using Alexander's method (lol.. some of the second WW vets are going to see how old i am here...it is a technique to establish how to fight a war with the least communications...see saving priv Ryan). Okay map time. what you discover is that different conditions occur most frequently according to the velocity of the trading.. Viola.
Always know the period of the velocity of the trading. I got these
periodicities by analyzing. Punch line: you have to set your slope
indicators always to the right of the chart for the market far enough so to intercept them only when the natural volatility won't let them be
intercepted. Just keep in mind for a while that it is possible.

Envision your goal is to use slopes as trend triggers (to get out..and know if it is a reversal to get into or not get into). The first priority is getting stoped right up there on a long or right down there on a short and not being too close to get faked out. I use a phantom bar that is based on the two most recent bars. and I vary the bar duration according to the periodicity the market is operating in. Then I have that bar out ahead of the current bar showing me where to set the slope line to hit the bar end. how I construct the bar is the absolute nuts. it turns upside down (changes color for me so I know it happened and it tells me a reversal is coming). people who use it really look at me funny when i meet
them...lol.

To be more relaxed during the day I often use a longer duration of
periodicity than the market is dictating to me. And even more humourous I run two of the phantoms where they are staggered by half of the periodicity that I am using and i use slightly different colors. From a cold start it takes about three days to adapt to this stuff and after that whoever their broker is, he wants to get on a plane and find out how they know what is going on.

Oh the other great value of this stuff is that if I am out I then use it as my rentry brackets for taking on trades. the scalpers factor themselves into the values automatically as well.

 

[bubba7]

Posted by manz66 on 05-14-03 06:33 AM:
Part III of Jack Hershey S&P method 1999
link: http://groups.google.com/groups?hl=...l=en&lr=&ie=UTF-8&q=author jones%40yahoo.com+

'> > i always have my bracket reentry settings developed with a phantom of the market out thirty minutes. and i do this with two series of phantoms offset by fifteen minutes. i try to set up for an accumulation of points over the day on accounts that i trade sequentially to not crap up the market action.
>
> Jack, crap up the market action? Please explain.

oh this is an issue when you put on trades. causes floor whiplash. Just like i woludnt trade a stock with a big float since it lacks the volatility to aqppreciate capital, i wouldn't consider trading a futures index that is too high in average volume and priced in a range that is relatively narrow. So i stay out of the way of the big guys and i am the size frog that is appropriate for my pond. i take a lot of heat on this and i am easily recognizable as a chicken in this regard. So be it. i prefer lots of bags of chicken feed delivered at the capacity of the country road I live on..

> > This response has a punch line. The scalpers action is best seen by comparing line charts DJ9H and INDU. when they are foling around I back off my stops (or limits) on the side they are playing.

that is mostly noise in the system once you get it tuned to listen to.
>
> > stuff is on their minds as well as the volume of trading. I am very bias
> > in the volume area.
>
> The S&P futures seem to lead everything out there. I will have to check out Jack's comment about the INDU. The only thing that I have found that moves concurrently is surges in upvol or downvol.

Okay this is excellent. switch to the derivative of the volume. go to the rate of change of volume. first look for sign changes, then go to a second derivative to pick off the max's and min's of the volume rate of change. Tha amplitude of the actual volume is not as important as its delta or change. this is equivalent to how floor traders use the change in noise level of trading to pick off trends..ask any wizzard or anytrader who retired from the floor and tried to go PC.

Hi Jack,

Thanks for the great comments. You've given me alot to think about. I
will let my tortoise-like mind work on them for awhile longer. I do have
a few comments. Please see below.

Jack Hershey wrote:
> > > Up to that point the futures
> > > index is a maverick as far as I am concerned. FYI for the last two days the sync occurred at about 7:50 MST (9:50EST) or about twenty minutes into the day. From that point on they remain in sync. As the spread varies it becomes a powerful indicator of the lag in the DJ9H or SPOOS.

OK. Up to this point my assumption has been that the futures (dj & sp)
lead most everything. Your comment got me thinking that it is possible
that they both lead and lag the index depending upon with side of the
trend the divergence of the spread occurs. Alright, that's as far as I
got with that one so far.

I watch the INDU if I am in a trade. Actually before the market opens, I place an alarm at +45 and -45 for the Dow and if I happen to get into a S&P trade and hear the alarm go off for the Dow, I get out of my trade because it seems soon after the S&P makes a quick change in trend. I believe at +/- 50 points, computerized program trading stops which definitely alters the trading in the Spoos. After I get out, many times I can get back into the trade after this mini correction at better prices'.
Oat