Keeping It Simple
- Thread starter dbphoenix
- Start date
Incidentally, I could have entered where you suggested, at 0947 @ 1019 (I'll be glad when the NQ appreciates so that it's not so easy to confuse price with time), especially since there were no reports due at 1000, but, as I said, I hadn't planned on trading at all today. However, the ES was leading so strongly that it seemed as though the market was giving money away. So I went ahead and entered where I did. Total point gain would then have been 19 rather than 16.
--Db
--Db
Looking at today's trend, I noticed something. You pick what I would consider to be "breakout" times to enter. Meaning if the trend is made up of little reactions that run counter trend, you choose to enter when the little reaction is being left behind. What I notice is that on longer term charts (LOL 3 or 5 minutes, it's all relative), these "breakout" times usually appear as a long bar or candle. Sometimes it gets broken up into maybe 2 bars or candles, depending on how the clock is ticking when the breakout comes.
Of course one can never know if the trend he is participating in is going to be a nice long and profitable one at the moment of entry. There are sometimes clues, but nothing is guaranteed. In a nice strong trend, the thrust or breakout from reaction area (where prices are moving strongly in the direction of the trend), appears to be a rather safe place to put a stop on a chart.
What I mean is that if someone were to not use rigid point value stop placement rules, a possible alternative could be to place a stop (when long) underneath a breakout or thrust bar. The breakout itself is usually related to a bunch of people buying at once. If volume were on the chart, there would probably be a spike to the breakout when compared to the volume on the counter trend reaction. At least for a healthy trend.
All of the buyers are looking to make money. Sure some are scalping, some are trying to join a trend in progress, and others are buying because the price action is exciting at the moment. But really the goal must be to make money. So, if you place an exit stop below the start of the excitement, it will serve a similar purpose as one placed below the entire reaction. At least it appears that way to me. For if the breakout "fails", all of the people that caused the breakout in the first place will have to at least consider looking for the exit.
I have noticed this before on other time frames too. I have even placed stops there myself in the past. The reality of it is, at least to me, is that if the trend is to remain healthy, that point will not be revisited until the trend is having real trouble keeping a good trajectory going.
I'm not bringing this up to dispute whether someone should use a fixed point value stop. It's more of a case I'm making to myself, that if I were to use a strategy similar to Db's, the stop placement may make complete sense after all. Or at least I have proven to myself that it can make sense.
I attached a chart.
Banker
Of course one can never know if the trend he is participating in is going to be a nice long and profitable one at the moment of entry. There are sometimes clues, but nothing is guaranteed. In a nice strong trend, the thrust or breakout from reaction area (where prices are moving strongly in the direction of the trend), appears to be a rather safe place to put a stop on a chart.
What I mean is that if someone were to not use rigid point value stop placement rules, a possible alternative could be to place a stop (when long) underneath a breakout or thrust bar. The breakout itself is usually related to a bunch of people buying at once. If volume were on the chart, there would probably be a spike to the breakout when compared to the volume on the counter trend reaction. At least for a healthy trend.
All of the buyers are looking to make money. Sure some are scalping, some are trying to join a trend in progress, and others are buying because the price action is exciting at the moment. But really the goal must be to make money. So, if you place an exit stop below the start of the excitement, it will serve a similar purpose as one placed below the entire reaction. At least it appears that way to me. For if the breakout "fails", all of the people that caused the breakout in the first place will have to at least consider looking for the exit.
I have noticed this before on other time frames too. I have even placed stops there myself in the past. The reality of it is, at least to me, is that if the trend is to remain healthy, that point will not be revisited until the trend is having real trouble keeping a good trajectory going.
I'm not bringing this up to dispute whether someone should use a fixed point value stop. It's more of a case I'm making to myself, that if I were to use a strategy similar to Db's, the stop placement may make complete sense after all. Or at least I have proven to myself that it can make sense.
I attached a chart.
Banker
I did some work on the numbers for the ES. Db uses 2 pts to enter, 5 pts for initial stop, and 1 pt for lrl/lrh for the NQ. This is basically 4 ticks to enter, 10 ticks for an initial stop and 2 ticks for lrl/lrh.
So for the ES it would be 1 pt to enter, 2.5 pts for initial stop, and .5 points for lrl/lrh. According to my charts it may make sense this way. I haven't done exhaustive testing yet, so it's hard to say for certain at this point.
I really do appreciate the fanning trend lines idea. I always had an inkling that something like that was possible having watched trends change course, but still remain in the overall general direction. This is much more exact though.
The real discipline in Db's "system" is following the stops. It also involves being honest in drawing trend lines, not grabbing at straws to pick a pseudo reaction high or low to base a line on.
Today the ES is kind of stuck in a range of sorts on the 10 minute chart. I'm waiting to see what develops.
Banker
So for the ES it would be 1 pt to enter, 2.5 pts for initial stop, and .5 points for lrl/lrh. According to my charts it may make sense this way. I haven't done exhaustive testing yet, so it's hard to say for certain at this point.
I really do appreciate the fanning trend lines idea. I always had an inkling that something like that was possible having watched trends change course, but still remain in the overall general direction. This is much more exact though.
The real discipline in Db's "system" is following the stops. It also involves being honest in drawing trend lines, not grabbing at straws to pick a pseudo reaction high or low to base a line on.
Today the ES is kind of stuck in a range of sorts on the 10 minute chart. I'm waiting to see what develops.
Banker
Off topic:
Does anybody know how to attach an exit stop order to an entry stop order with IB?
Meaning if I wanted to place an order like this, how would I do it?
-----------------------------------------------------------------------------------
Sell 1 contract ES stop 901.75 limit 901.50
*****if that fills, submit this order*****
Buy 1 contract ES stop 904.25 limit 904.50
-----------------------------------------------------------------------------------
I'm pretty sure it's possible to attach the two together with either Trader Workstation or one of the little programs that is based off of the platform.
Any help would be appreciated.
Banker
Does anybody know how to attach an exit stop order to an entry stop order with IB?
Meaning if I wanted to place an order like this, how would I do it?
-----------------------------------------------------------------------------------
Sell 1 contract ES stop 901.75 limit 901.50
*****if that fills, submit this order*****
Buy 1 contract ES stop 904.25 limit 904.50
-----------------------------------------------------------------------------------
I'm pretty sure it's possible to attach the two together with either Trader Workstation or one of the little programs that is based off of the platform.
Any help would be appreciated.
Banker
Quote from inandlong:
Hey Banker,
I know that Jasper, and brackettrader do it. Also, the TWS has just recently included this type of order so you are right. I don't have the documentation to do it on TWS. You might PM def for help. He will be way more reliable than someone you get on the phone.
Thank God!!!!
A dull market can put me to sleep. I don't want to miss any action if it gets "un-dull" if you know what I mean. Plus that type of order takes away the possibility of being undisciplined as far as following stops. This will help me diversify across time frames as well.
Thank you,
Banker
I thought about this some more. Instead of attaching a regular exit stop, why not attach a trailing stop? Such as, if you are trading the NQ, you would attach a 5 point trailing stop to the entry order. That way it's automated. When the NQ moves 5 points in your favor, the exit stop is automatically moved to breakeven for you. Then it just follows behind as the trend runs it's course, or until you start watching and doing it manually with trend lines etc. It's something I will have to consider.
I don't know if it will work as well for the NQ though. There is no way to make sure the ES is confirming the setup. The ES doesn't seem to have a restriction like that, at least from what I have witnessed.
Another nice thing would be to attach a market on close exit order. If the trailing stop is not elected by the regular session close, the position is closed at the market price as the session is ending. I don't know if that is possible though.
Banker
I don't know if it will work as well for the NQ though. There is no way to make sure the ES is confirming the setup. The ES doesn't seem to have a restriction like that, at least from what I have witnessed.
Another nice thing would be to attach a market on close exit order. If the trailing stop is not elected by the regular session close, the position is closed at the market price as the session is ending. I don't know if that is possible though.
Banker