How do you find your signals?

F

freewilly

I am talking about intraday trading. The period for a position could be few hours(if things go well) to few minutes(if things go completely opposite). I usually look at 5 minutes charts,, but sometimes 1 minute chartsa s well.

Assuming, just assuming, that you have a strategy that works, how do you find your signals to get in and out? Do you stare at the screen every second, all day long, or you have some sort of automated system to help you?

I am doing some simulated trading on IB, and so far I have no success. The problem for me is that every evening, when I pulled out the charts, the in and out signals are quite obvious. If I had traded with those signals, I could make very decent gains. However, during intrady real time trading, I often failed to get in the positions at the right time. I am usually 10 minutes to half hour late, so I missed big runs, and sometimes I get in right at the peaks, and I usually got burned really bad in those situations.

Exit points are a little easier for me to define since I can set stop orders or trailing stops. (However, I believe if I can stare at the screen all day day, I could do better than stop orders).

So, do you have an automatic system to help you for day trading? If so, how do i start? (I don't know much about programming, but if I have to, I will pick it up). Does IB have a nice platform to program my own autamatic trading system? (at least to prompt me for in and out).

Thanks in advance,

freewilly
 
Alright, first post for the year 2007 :D

Here ya go freewilly:

http://www.elitetrader.com/vb/showthread.php?threadid=76297

Most of the better platforms could give you an alert, and place the orders per your instructions, regarding conditions of the strategy used, with them squiggly lines.

TWS used to be solid, but with the recent barrage of upgrades, I think TWS is in a state of confusion right now :confused:

Happy, and profitable trading for the year 2007 to all,

Schaefer
 
I've always liked the CCI. A good sharp zero line cross on the CCI (14) indicator on a 5min chart should be a good signal on most days. The CCI should get you into the trade a few minutes ahead of some other slower indicators.

Keep in mind that for day trading, the CCI zero line cross should only be used during high volume trading times. Avoid trading during the mid day doldrums.

If you want to trade during low volume mid-day period, a whole different batch of signals should be used imho.
 
i don't use any lagging indicators like CCI, RSI, MACD etc.

however i do use audio alerts in case i am looking away from my screen and/or i don't notice something happening. i will set (premarket) audio alerts just prior to a # of key price levels, and other key reference areas (like premium divergence levels, etc.)

i will also set limit orders at numerous locations. i may cancel them if the price approaches these levels, and i don't like the action, however, this thing i can get my limit orders in before the cash market even opens (i trade futures) and get better fill potential

audio alerts are great, because if there is a lot going on, you can miss stuff happening

if you find you are missing stuff, set audio alerts to go off on your various signals
 
Thanks everyone for teh help.

I do like the post "simple prifot method" and have followed that thread for quite a while.

I am looking for more specific infomation on which broker can give me the alert that I want.

I have an account with TDAMERITRADE, but their alert seems based on daily charts. I want 9 period EMA on 5 minute chart, and once the criteria is met, it gives me an alert sound, email, etc). My primary interest now is intraday trading.

I also have an account with IB. I don't know whether that will give me the laert I want.

Happy new year to everyone.

Freewilly
 
Geometrics above all. Solid support and resistance. With that being said, lets move on to the techincals.

Bollinger Bands

They offer overbought and oversold signals, it's not perfect but with good money management and fast entry you can make good use of these because they work most of the time. Notice, most, not always :)

However, it's biggest strength comes from it's volatility indicator. The wider they are the more volatile the price will be and as a volatility indicator BBs are flawless. If the volatility is high you know you will require wider stops.

Fibonacci Retracements

In my humble opinion, they are godly. How many times have you seen an instrument retrace to its 50% fibs ? Many times I'm sure. Good for targets, for possible resistance or support. Great stuff.

DMA

I like 50. Only use one. Good for looking at the big picture.

RSI

It's quite possible for an instrument to continue to go down from an extremely low RSI, same with an extremely high RSI.

Sadly, RSI stops at 0 and ends at 100. However, same as BBs, most of the time an extremely high RSI will retrace and an extremely low RSI will recover somewhat.

Use tight stops because none of these indicators are flawless. Money management is the key here. Since most of the time instruments react to high rsi and low rsi then placing a tight stop is a good risk vs reward play.

Combine your signals. Price hitting the upper BB and high RSI are stronger signals than BB or RSI by themselves. Now, you must LOOK at the big picture. If the stock is breaking out or the stock is falling down like an apple from a tree (no pun intended) then all indicators are out the window. Must look at the bigger picture.

Volume

Your best friend, he is a god. He will let you know when a move is meaningful or meaningless. Average volume signals help. Make sure you also pay attention to Nasdaq, Dow volume. During xmas time most of the market had abysmal volume, therefore you had to take this into consideration when looking at volume. This shit is not easy, so many variables to be concerned about. However, it's not impossible either. Far from it.

Again, none of these indicators work all the time. The answer why is obvious. However, when you combine their output then you get some pretty good signals. When I lose, I try to convince myself that it wasnt me, it was the indicators that lied ! Not my fault I say ! Now, as long as the loss is small. If the loss is big, then yes, all my fault and I deserve to kick my own ass.

It's also extremely important to ask yourself at all times. Are we in a bull or bearish market ?

That is all I use.

Hope it helps.

PS: Also look at VIX, TICK and the corresponding instrument ETF. Make sure you follow big economic releases and fed chats.
 
"How do you find your signals?" is a neat topic.

Your OP, the next post and you second post tie together, neatly, a common problem in finding signals.

So you, freewilly, schaefer and the OP of SPM, have a common well described situation with signals. Read carefully what is going on and, in particular ,how much it is costing.

Giving up profits is not something anyone wants to do and it is unfortunate to have frustrations in not being able to get a cure with signal selection.

In SPM it is not going to be possible to "find" a good signal. Secondly, during certain market conditions there are no signals possible from SPM.

In another thread the SPM OP is running, there is discussion and in it the mentioned that SPM has an adjunct like "tape reading" but more akin to "order flow" to get additional signals to make SPM more workable, especial during particular times when the SPM signals are not functional.

"How do you find your signals?" is still a good topic. It is an excellent topic that is rarely considered by persons running records of their performance in ET. This is a major missing theme of ET. Look at another long thread to see how B1S2 used a method for quite a while to examine its performance. He demurred after about 1000 pages and went back to a prior different method. An iterative refinement of the initial method was never undertaken by B1S2, unfortunately.

The "what if" part of "How do you find your signals?" comes up primarily as an iteratve refinement of the basic premises of a system that has been designed.

You have a system and you want (need) it to work as best it can.

It is best to give the system some exercise before you dump it outright.

What is learned is the possible range of adjustment and the limits of the range of adjustments ... effectiveness.

At the end of this you know better how to go about redesigning a new approach.

By doing this for say 10 ,20 , 30 or 40 years, it is possible to get a lot on the table. Go or it. Personnally, I enjoy following about a dozen contemporary methods in ET and looking at their spectrum of performance and their limitations and most of all, the best tweak that can be nmade to "fix" the contemporary system. Sometimes a fix can shift the method to a greater effectiveness than it's next competitor.

I looked at a chart posted by a person who rarely posts charts in his criticisms and it was a real eye opener. He simply was not looking at the market in the first place and was proferring suggests that were foreign in nature.

"How do you find your signals?"


You have to be in the ballpark first. Then you can "look" for signals.

To look for signals it is best to know hands down the intention and purpose of the thing that provides signals and it's scope and bounds for providing signals.

You have to cross the line from continuous functions to statistical mechanics that "ghost" or replicate continuous functons.

None of the examples given above have done either of these two things for the respective ballparks represented.

People say trading is ___________ and they say the learning curve is ____________. Neither of these things have to be the "truth of the matter"; they are just, in fact, personal reflections of the practioner's rocky road. This, as caused by their mental processes to get into the ball bark and then fail to "work" on iterative refinement. The lazy person is excepted from this conversation.

Why don't people understand what they are working with? Usually they have not examined the equations at work sufficiently. They mostly focus on the output of the equations as a continuing value (they are not looking at a continuing signal).

What if the persons cited above were to look at the equations and then look at the output of the equations as a continuous signal?

The common result, coincidentally is the same for all above mentined. And it is the most common cause of failure to make money as a result.

You will see what I mean as you make this effort. So that is the first part of "How do you find your signals?"

The second part is to "exercise" to find the limts of the "system" you are using. This is how you combine the elements and their "continuous outputs" to see which combination of specific out puts is an analytical "conclusion" of the performance of the system.

One of the examples, above, is one that gives you money and then takes it away during a day (as it's current operation and use is recommended by the OP) This is an example of "system" performance lack of analysis and then making corrections.


Once you find out these basic considerations and how giving such coniderations works,you are ready to go back to the drafting board to learn how to design appoaches for making money.

There is a consideration here of whether synthesis or analysis is the best approach to designing a system to make money. It has to be understood that you synthesize with tooling and you do analytical approaches with the market.

A person here spend 1000 pages doing B and has posted elsewhere that if you compare methods A and B; he finds A is better for making money. He used a lot of A to try to do B and failled after 1000 pages. Failure is not the right word. He just didn't make much money so he is going back to making money now.

Did he approach making money from a synthesis of tools way or from analysis of market operations. No he didn't. That is the point. He comments on how long a post is and why a long post cannot hold his attention.

In arizona, the booths at cafes are scarred by such an orientation. Pistol gun handles and spurs cause such damage. You can recall the first ad Marlboro ran with a Brooklyn male model who had his spurs on upside down as a consequence of a costuming error. Go to Sveiller's in Hudson, Wyoming to talk the the bartender who pointed it out after the shoot on South Pass. They have a blow up next to a moose in the bar today.

You have to take off your spurs and gun belt (be open to input) to begin to get trading down and to make the money offerred.

My first comment on SPM to the OP was the solution to the OP's, freewilly' and schaefer's (may not know yet) problems.

This was suggested came about by my following the path:

Analysis of market>>>>see signals for making money>>>>>get tooling>>>>>calbrate tooling>>>>> use individual tool prime signal>>>>> combine with the other tool prime signals>>>>>tune the combo for a leading indicator of price.

Actually, because of seeing this problem that others have been perpetuating, I actually use the problem as a way of putting the method on the spectrum to determine if I should track it in ET.

So, freewilly, you have some choices ahead. First of all congratulations of do ing the analysis to determine that you have problems. Second congratulations for determining that the signals you are getting are poor or nonextistant and articulating that. third congratulations for formulations a kind of general and potentially germain question that relates to your poblems.

To move forward, you do not have to take off your sixshooter like a lot of people here do. You do have to examine whether you will do synthesis or analysis or their combo to begin to get to having a trading approach.

If you do that, then you get to begin to tool up by learning how tools work. This is difficult from a resourse basis. Because knowing how to know comes into the picture. Many resourses no longer have utility because their authors did the work on the tools before the PC era. All of the example I have given write in ET that they have missed this point so far.

You have a long way to go. There are no short cuts. There are many blind alleys and branches to climb out on.

I made an effort to show some direction on this recently and the post had to be deleted because, as the moderator said, it would cause to many questions to be asked.

Keeping questions at a minimum in ET is an objective that is necessary for reasons of keeping activity lower.

You question, however, I feel is a great one for you personally; it is not the question for fixing SPM or the other examples, however.
 
Why should it matter if it's intraday or not?...the only difference is time frame for the trade... MA crossovers happen on 1 min charts as well as daily, but what ev. I think all traders that use indicators should have at least one kind of momentum indicator in their tool box. After all, momentum is what makes and breaks trends. I like to use ROC and MFI to help generate signals.

cm69
 
fwiw, i use no indicators intraday (for index futures) and have found them next to useless (for me)

on swing and longer term, i do find them useful

but on swing and longterm, i also incorporate fundamentals, which are relatively useless when scalping, obviously
 
Quote from freewilly:

...Do you stare at the screen every second, all day long, or you have some sort of automated system to help you?...
More...

I use a rule based methodology and no automation as a price action only trader (no indicators).

It's also volatility based methodology and because of such I tend to get pattern signals when volatility is most likely to appear.

Therefore, I don't need to stare at the monitor all day because the market has numerous dead zones in relationship to my pattern signals appearances.

Of course its not perfect and I do miss some trade signals while away from my computer because the pattern signals occured at a time when I tend to not get trade signals.

What I'm suggesting is that you either need to know what type of strategy your using or know when your pattern signals tend to appear.

The latter statement above can easily be done via statistical work.

For me...my heat map shows I need to be ready to trade between 0930am - 1045am est and then from 1:30pm - 3pm est.

I have another less important zone between 1145am - 1220pm est on particular trading days.

Simply, know your strategy and know the price action you tend to get trade signals.

Mark
 
You must log in or register to reply here.
Back
Top