Question for Steve46.... trading the open

[arzoo]

Hi Steve,

dont know if you remember, a while back you mentioned about trading the open.

i'm very thankful for your advise and have been doing a bit of research and testing with some of the index futures. Looks very promising to me though I hope you can help me with regards to a few things that seem to be bothering me... i cant seem to figure them out too well. Again, that’s probably my inexperience and inability at this point.


WIN LOSS

Since the examples you used were on the ER2, I guess I’ll use that as the example. I noticed that the time figure really depends of each one’s taste, though generally the win-loss ratio is give or take 50%, but this is taking all entries and no pattern recognition involved. Will still need to work that.

Also noticed that the method is effective for volatile markets.

It looks okay but I know you do better than that % and was hoping you could guide me towards steps on improving what I have so far this.

As a follow up to this, when to you choose to not take an entry on the break.


INIT STOP

Initial stop loss, basically I’ve tried a few, one to place at the opposite of the range, and the other at a certain % of volatility based on the market’s 10day avg range. However, there are still quite a few days, every now and then that break one side and in the next bar or 2 goes the other side and fakes again, causing 2 losing entries, and chops… only to break out maybe 10-15min later. Is there a way to avoid these?


ENTRIES

Do you keep the range on for the whole day, and keep going long & short on the breaks even later in the day or just take a fixed amount of entries for a day.


NEWS

Also wanted to ask what is the best way to handle economic releases at 9:47 and 10am,

if you are on board at the time? Do you get out to limit risk or hold through the news?

if you aren’t in the market at the time, how long is the range valid? This is seldom because of the volatility though, but just wondering.

when the break of the range occurs at or just 1 min or so of the eco release, would it be advisable to go? I ask because of the choppiness I notices that occurs right in the 2-3mins after I’d guess with people guessing how the reaction is and trying to hit the gates earlier than others… so is it better is stand aside and let it settle or get in quick. I guess what I’m asking is if the risk is worth it or not based on experience.


EXITS

I’ve been trying some exit techniques but cant seem to find a good exit technique. Based on experience which is better, fixed, trailing,etc.?


DURATION

This would, I believe be related to the exits… as to knowing how long to hold. When does a trade that you get into become stale, by that I mean, isn’t doing much so time to move on. And what signs to say, let’s stay just a bit more.

Still probably have at least 3-4 months of watching and figuring out before having anything satisfactory. Hope you don’t mind my silly questions…

Thanks so much!

 

[steve46]

Hello:

I understand your questions.

Lets take the first one. Win/loss

I assume that there are a limited number of TYPES of market days as follows:

1. Days when the market consolidates (chops) during the first hour
2. Days when the market runs (trends) during the first hour.

For Market day #1 (choppy) we want to refer to the previous days action. What was the size of the range from low to high? Is it enough to trade? For me the previous day's range must be at least 1.5 points. This relates to another of your questions, when to pass on a trade.

For Market day #2 (Trend) I want to catch days where price runs. For that reason, I look at the previous day's action. On a possible trend day, it is likely that the previous days open will have a range bigger than 1.5 points (Russell contract). In that case, I will look to establish a long or short position from the second to the fourth bar.

This is a general orientation that you should be able to build on depending on the market you choose to trade. I assume for the purpose of our conversation that you have internalized the info you got during our previous communication.

Hope this helps.
Steve

 

[steve46]

You know, this new time limit for posting (10 min) doesn't seem to work for me. If you don't mind, I would rather have you PM me with your additional questions.

Thanks.
Steve

 

[sevenfirs]

Steve

I would like to follow your and Arzoo's discussion. Following your various comments on these foums I acquired a copy of The Logical Trader, now working on opening range and pivot ranges, and generally observing "ripples" in prices.
I have looked at one or two scalping methods but I have come to the conclusion that they are not for me

Thanks in advance.