Rule of 10 Journal

[volente_00]

Quote from Spooz Top:

wow.........a whole thread devoted to rule 10....wait until pekelo invents & informs everyone of the rule of 10 x 2,3,4 &5 during whipsaw/volitlity times.

rule of 10 + multiples there of ,are measuring tools for dow/S&p & provide occasional entry....but when rule of 10 (x) coincides with other techs like fibs,fib confluence,TL`s,coast to coast move,etc is when you want to be all in or close to it with size.
i believe that taking the rule of 10 entry just for the sake of doing so with a 3 point stop is a losing proposition over time......support of other techs is when odds are skewed in your favor & the better bet.

Howdy ST, I was wondering if you would show. Tell us the story again about the fellow you knew in chitown that used to run the algos off of 100 point intervals in the dow.

 

[volente_00]

Quote from SWhiting:

I do have one question, jagmont:

This morning the swing low was 1271.25. We went short at 1281.25 but the price (after entry) went to 1282.25 (a new swing high).

Shouldn't we stop & reverse at 1272.25? This will give us a profit of 9 pts. (ignoring slippage, etc.).

This is where trailing the stop comes in handy. I don't know if it will move, 2, 5, 10, 20. or more points after entering the trade. All you can do is enter the trade and manage the risk.

 

[jagmot]

Quote from volente_00:

Howdy ST, I was wondering if you would show. Tell us the story again about the fellow you knew in chitown that used to run the algos off of 100 point intervals in the dow.

I also know of someone who traded a similar strategy since the early 80s. Buying and selling resistance at 100pt intervals (ie buying at 12101 and selling 12199, etc) on the dow.

That is why I am interested in round physchological numbers and trading strategies behind it. If we were to use a 2pt stop and an 8pt target...see what happens.

Starting at the close last yesterday. We saw a move from 1290 to 1280 (+8) then back to 1290 (+8) and back to 1280 (+8). This time the rally fails (-2) and moves to 1270 and rallies back to 1280 (+8), fails there a few times before going back to 1270 (+8)and fails (-2).

Keep it simple! +36 points
Today is the exception on w/l ratio... (yesterday would have been all stop outs until the close) but it is a profitable system.

 

[SWhiting]

Quote from volente_00:

This is where trailing the stop comes in handy. I don't know if it will move, 2, 5, 10, 20. or more points after entering the trade. All you can do is enter the trade and manage the risk.

Per jagmont's post above, the answer to my question would be 'No'. In other words, we do consider other trades (swings) once we are in a trade. This makes sense for the purpose of being able to 'put on a trade and walk away'.

I might do some paper trading based on the Rule of 10 but using more active management. Still, I'm very anious to see how this method works out.

 

[Pekelo]

I am going to comment on the overnight action, supposed the strategy was automatized.

Quote from Pekelo:

Also a way of avoiding missing an entry after let's say 9.5 points move is to have half of the position at 9 points, another half at 11 points of the move...

From the overnight high of 1274 it dropped 9 points and bounced from 1265 to 1269... If strictly going by the 10 pts entry, then no entry overnight...

Edit: 1264 now would be a valid long entry...

 

[volente_00]

Quote from Pekelo:

I am going to comment on the overnight action, supposed the strategy was automatized.



From the overnight high of 1274 it dropped 9 points and bounced from 1265 to 1269... If strictly going by the 10 pts entry, then no entry overnight...

Edit: 1264 now would be a valid long entry...

What was wrong with the short signal from yesterdays 63.5 at 73.5 last night

 

[jagmot]

Quote from jagmot:

We are currently flat with the r10 and just had our first success. Remember that one of the rules implemented is 2 stop outs in a row and we stop trading for 24 hours. This is to guard against multiple stop outs on a trend day.

At the current chart and time frame, we have a reaction high of 1272.25. I would (or an automated system) would enter in a buy at 1262.25 and a stop at 1265.25.

For a short, we have a reaction low of 1263.50. I would (or an automated system) would enter in a sell at 1273.50 and 1276.50. Once one of the trades is hit (some sort of alarm) I could then cancel the other trade. Of course an automated system would do this much better, hence why I made the rules very simple and easy to program (and would of course put the associated target buy or sell in place as well).

On a side note, I am glad to see so much excitement for this thread.

Buy stop up there was 1259.25 not 1265.25 (my error)

Overnight while sleeping our sell was hit at 1273.50 and then covered at 1263.50.

2 for 4
+16.75 points

 

[jagmot]

Setting up for the next trade, the last reaction high was 1273 (approx 7:25EST)

We would place a new buy at 1263 with a stop at 1260. Note this trade would not have been executed yet, as we were still in the previous trade. (you could argue otherwise since we exited the trade around that same time...also it would have been another winner)

The last reaction low was 1262 so we would place a new sell at 1272 and stop at 1275. (looks like we are about to get executed)

Short executed 1272.00
954AM EST

 

[jagmot]

Quote from jagmot:

Setting up for the next trade, the last reaction high was 1273 (approx 7:25EST)

We would place a new buy at 1263 with a stop at 1260. Note this trade would not have been executed yet, as we were still in the previous trade. (you could argue otherwise since we exited the trade around that same time...also it would have been another winner)

The last reaction low was 1262 so we would place a new sell at 1272 and stop at 1275. (looks like we are about to get executed)

Short executed 1272.00
954AM EST

Stopped out
-3.25

2 for 5
+13.50 total

 

[monti1a]

I suspect that taking these trades without any filter will cause it to bomb as the system reverts back to it's mean due to the law of large numbers...imho...