Quote from HolyGrail:
Here is a chart for Costco. As you can see this chart is potentially setting up for a bearish reversal signal. We have had 7 straight columns of lower highs and lower lows. Should this reverse to 67.00 it will probably move up substantially more.
What is more likely to happen is we will end up getting some other signal before this signal is reversed, but you still should be aware that a bearish signal reversed could be coming and look for an opportunity to go long on this stock on any bullish signal.
If you are a pattern trader it definitely looks like a pennant, but pennants are not automatically considered a buy signal in a pnf chart.
Quote from HolyGrail:
Sorry for the late response , I just got back to town. When I trade ES and NQ I do use a 3 box reversal with the .5, .75, and 1.0 charts.
On ym I use 4, 6, and 8 point charts.
Quote from HolyGrail:
Today is just a slow moving trend day so you will definitely get less signals on a day like this. I don't trade all signals, but on a typical day in es you will have 10-15 pnf signals.
Quote from hayman:
[To clarify: I am using QuoteTracker with IB tick data. But with QT, you have to specify a chart period, for a given chart, as well as box size and reversal. So, I have been using 50 bars. It will use the Hi/Low from each 50 ticks then, in making reversal determination. Is this a mistake ? Should I go with a lower chart (bar) period ???]
I want to scalp ES during the day.
Thanks again !
Quote from yayt:
The problem is, the signal came a couple days before its earnings came out, and while I knew this because I looked into the company and did some research before I went in, I thought it'd be helpful to warn people when holding onto longer term P&F based positions that news events (that you can know about in advance) may cause a P&F chart to fail you (like if earnings were TERRIBLE, compared to market expectations).
With regards to position trading, does it seem feasibly to take the private equity approach, and hope for lots of breakevens/slight losses and 1 or 2 homeruns?
Ideally, I would like to use P&F to do position trading which are less stressful and time consuming than intraday trades.
Quote from dentist007:
going back to youre discussion.you will have a bias for each chart depending on the box size.all the data is daily in p/f.
you can see with holygrail ...he is defining good tradeable signals on a specific box size that suits his time horizon
Quote from HolyGrail:
Ok, I am going to add a new facet to our discussion. This is basically for swing traders only.
It's called the bullish % index.
I've created an index of about 800 of the highest volume stocks. If you have nasdaq stocks or nyse stocks that are readily available you can do it on each index.
Basically what the index tells you is whether you should be looking for longs in your trades, or mainly shorts.
Now I have mentioned that I use bulls-eye broker for this. I love the program. I am not affiliated in any way with them. I don't make a commission on their sailes etc. It is just the only program that is pnf that does it that I am aware of. It also as previously mentioned, automatically changes box sizes based on price of the instrument you are trading. A very nice feature.
I do know other people on this board do something similar, so maybe we can get some insight from others on where they get their information.
Personally, I believe it is extremely important to be with the market. A rising tide does lift all boats.
Normally any time the index gets below 30% it is considered somewhat bullish that we are at or near a bottom.
When we are at 70% we are at or near a top. Personally I think anything over 60% is time to become cautious on your longs.
What this program does is scan the stock and looks for the last pnf signal. If it is bullish then it gets added to the bullish percent index.
It is recommended that you never add to your stocks while there is an 0 column as the current column. At least wait for a reversal before going long.
If you see any kind of breakout on this bullish chart it is even more bullish. If there is a breakout under the last column of 0's then it is extremely bearish to go long.
The key is not to add to your longs when we have an 0 column and not to add to your shorts when we have an x column.
Here is a current through today bullish% chart.
As you can see, we are still in bullish mode so we should be looking for longs in our swing trades. We have crossed over the 30% line as of today which is extremely bullish.
I know the world is predicting doom and gloom, but the chart says NOT RIGHT NOW. So trade based on it.