SCT High Velocity Profits Q and A Journal

[Grob109]

This is a journal for answering questions of persons who are trading using the SCT approach and who have made the commitment to passforward their knowledge and share profits with people who are solving problems in their local community.

In this journal the paradigm that is the foundation is one where knowing the market and sharing responsibilities with the market allows a person to be in the market continually and on the right side of the market at all times. The intention is to continually extract the continually offered potential of the markets.

The paradigm is in use here is not in confluence and doesn't overlap, but a little, the CW paradigm that uses a probability based approach that involves prediction, placing an entry and protective stop and using a satisfactory Sharpe ratio and some form of money management and a some form of drawdown considerations.

This journal is just a Q and A support for people not involved in other locations other than ET.

It may run in a similar manner as to the P&L jounal where only P&L posts are made and all other stuff is related to the prints is OT and so it is deleted. All of us can understand the difference between what is a P&L and what is Q&A as it relates to a person who is committed. As OP I guess, at this point I have an option to help the moderator maintain the journal. I understand that the mod is not expected to deal with substantive content.

For people who are just interested in the journal as readers, everything should work out quite well. For me selfishly, I am in great need of a comprehensive Q and A information set.

Since I do not know everyone who is committed, please just let me know if you think I haven't been introduced to you before. I never question whether a person is or is not, but this journal is restricted to these people for asking questions.

I will use links whenever possible and I would appreciate it if the Q has a link from the get go so everyone is on the same page.

I will post a few recent posts I have made by linking to them so I can forgo posting in those threads in the future.

 

[Grob109]

Quote from Grob109:

Here is a reference to a comprehensive comment on Friday's market for ES

http://www.elitetrader.com/vb/showthread.php?s=&postid=1179608#post1179608

Here is an additional location where I amplified the above a little to make a point on the potential of the market; it shows the annotated profit taking points on 30 actions.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=75678&perpage=6&pagenumber=5

This more or less sets the background: Ending the summer where the H-L is at a minimum and looking forward into the last half of annual earnings which begin just after Labor Day.

 

[Grob109]

Attached is a 2 pager that a person would be using a a person guide. The person fills in his personal view of the topics. It is here that the relatition ship of the trader and the market is established and the paradigm comes into existance for him.

 

[Grob109]

Here is the contemporary log being used for the current screen set up.

If you will post a screen set up on monitoring questions, at least the first time, it will give us all a break in terms of how well you are seeing the market. ET may not be able to handle all the screens in one attachment so do what you can to deal with this.

 

[5Pillars]

Grob.....I love to learn new methods, so what is SCT (the acronym)?


....and if you have time can you post some chart examples with the explanation (I sure am demanding...LOL)...thanks!

 

[Grob109]

Thank you Magna I appreciate your help and indugence.

 

[achilles28]

Hi Jack,

I am glad you are still posting. Thank you.

You may or may not be interested to know - I abandoned a formerly profitable automated FX strategy in favor of SCT.

After reading and applying your work intermittently the past year, I realized my edge only occurred inside the larger SCT framework.

My former edge exploited staircase trends that just so happened to occur at or near daily+ trendlines/channels...

What a revelation that was!!


And for awhile, I struggled with the idea of profiting from a trading philosophy that wasn't my own, but rather revealed to me.

I anxiously anticipated the day where i could proudly tell others "I beat the market!". I wanted to do it all myself - and take all the credit. EGO.


After papertrading SCT the past 4 months, I'm convinced. My old mechanical strat will have to wait for the day when I can find a programmer with the skills to integrate it with SCT. And even then, I doubt it'll be worth the trouble..


As far as the OT. I trade forex. My entire intent is to apply your strategy successfully to this market.

I am well aware FX holds little appeal to you because it lacks volume stats which you deem essential to the effective application of SCT.

The reality, in my experience - FX operates under the exact same principles as equities and indices - just faster with slight nuances.

Granted, volume is not available. But this market obeys the same laws. Instead, I just enter on Point 4 or 5 on the dailies on an intraday chart.

Traditional S/R are also used as buy/sell points derived from formerly valid SCT trendlines. As well, multi fractal trading is one of the cornerstones.

Essentially, I've had to 'jimmy' whats been expounded upon here to the FX market. True, it doesn't yield the hit rate that can be achieved with volume, but this 'bare bones' model is still very effective.


Thats where I'm at. I work a full time job which precludes me from posting often. Nevertheless, I want to share, contribute and learn as much as possible.

Thank you for taking the time!!

Btw, how did you figure out Point#1?? Was that taught to you or was it just a Eureka moment?

 

[Grob109]

Quote from 5Pillars:

Grob.....I love to learn new methods, so what is SCT (the acronym)?


....and if you have time can you post some chart examples with the explanation (I sure am demanding...LOL)...thanks!

SCT stands for Seamless Continuous Trading.

It is characterized by a lot of elements. To go from the more general to the specific, here is a list of elements.


1. Price change over time is the fundamental principle for making money in SCT.

2. The more time a person spends in the market while price is changing; the more money he will make during the unit of time defined as when the market is open. One day has a traget of 3 times the H-L value in ES.

In Arizona it is a part time thing; in NYC is is a full time thing. Cowboys have arranged their clocks to squeeze the daily open period of the markets into just the morning hours after breakfast and before lunch. In NYC lunch is in the middle of the day so the market is stalled then, usually, so eastern people can take lunch when no money is being made. Art Buchwald told me this as you can see from the style I'm using here.

3. Always being on the right side of the market is required to make money while a person is in the market.

4. A four step routine must be followed to achieve maximum effectiveness and efficiency, the two unified goals of making money.

The routine is designed to only have to deal with emotions at a time when you are remote as possible form decion making.

The routine is: monitoring; analysis; decion making and taking timely action. See the log and read it form left to right.

The parts of the routine use finite sets of information, usually in pairs. Each part of the routine uses different mental processes and different sets of information.

5a. Monitoring the market is de facto. The viewing is done to achieve data sets from the right place at the right time. A sufficiency test is always at play. Emotions are inextricably linked to the senses. Therefore, it is extremely important to use emotions as positive support only for the process of making money. emotions are part of the picture; so only constructive emotions are used. This set of emotions are linked to just the short lived biochemicals produced to run the brain and other remote memory sites.

There are finite data element sets for each of the 13 columns logged on the monitoring part of the trading log. Sweeping is always used to acquire the sufficient data set for analysis. No single data points are ever collected and used a singletons. The emotion most closely associated with collecting data sets is "Gee, I got that set collected!!!!". this means that a task was done and it was done with excellence and it is emotionally recorded as a success.

5b. Analysis is a comparitive process. A data set is compared against a "conclusion". there is a finite set of conclusions. They are available immediately for comparison purposes. The mind loves to do comparisons of two finite sets. Emotion persistence fades since their is no sensory component until the comparison is done. It can be done in silence with the eyes closed. The appropriate conclusion is "exported and analysis is done.

5c. Decisions are made next in the routine. There are but five and one dominates. They are, in approximate order of frequency: Hold, Wait, Reverse, Exit, or Enter. Capital letters are required since they are so important and well defined.

This set is paired with the analysis finite set. It is done once and for all as part of acquiring knowledge and skills and experience.. It is a simple job to do the mental pairing, again it can be done with the eyes closed and in silence (No sensory requirement.

Holding is intimately related to making money and is a very very important decision to keep making. Waiting is done only when you are sidelined and under conditions of noise dominance. Noise is usually the sound of NYC having lunch.

The three remaining elements have to do only with end effects of the market. Reverse is the important one for staying on the right side of the market. The other two are more or less incidental.

6. Timely action. This is the activity of locking in profits mostly and is related to housekeeping primarily. If you decide to take an action that requires a physical effort, then you do the physical effort as a physiological exercise where you are using motor skills and dexterity type stuff. Otherwise it is a mental activie that simply brings closure to a routine's fouth step. as a consequence the routine can be begun again.

7. annotating and housekeeping. These things are done to keep current in record keeping and making sure the screens have a place for the future to move into NOW. Monitoring involves the annotating in advance of taking data sets. Channels are involved always and at NOW, the channels are there moving from right to left from the future into the present. Ed note: there is a myth that channels are drawn in retrospect and after the fact. I think it stems from Good Housekeeping where the lazy bird screwed up at some point with kids.

Okay that is a brief answer on what SCT is. I attached a chart of Friday past that shows only the ES part of the screen. All the leading indicators of ES as shown on other parts of the screen. Oh dump the RSI it is only there to illustrate something else.

 

[bigmoose]

Jack,

I don't think I have yet gotten the proper and complete understanding of "end effects" in your lexicon. Do you mean the unusual activitity of the market near the open and close? Like the 9:45-9:55am ish reversal period in equities. Or the end effects of your entry and exit on the market? (Only relevant for large position sizes.) I am probably missing the obvious, but thought we ought to tie this down early in the discussion.

 

[Grob109]

Quote from achilles28:



snip


Btw, how did you figure out Point#1?? Was that taught to you or was it just a Eureka moment?

Thanks for the report on FX.

As time passes for any market, more and more data becomes SOP. Look at the Sidney exchange for what the future bodes datawize.


For FX, as it relates to data and SCT you have hit the nail on the head. Multi fractals add a degree of freedom in the absence of the volume degree of freedom.

I must say that when we hand out the mechanical version of SCT in software a lot of the degree of freedom knowledge and understanding in the financial industry will be greatly enhanced.

The point 1 occurance doesn't draw much of the deep interest you know it deserves.

If there is an application of iterative refinement that deserves attention, point 1 and thinking about it deserves a "NB" rating.

What a great opportunity. This point deserves to be being brought up here.

Entwined, are the concepts of market operating point movement and the overlap of channels. The underlying, is the psychology of people which ranks along side the concept of "value" which is there as well.

People make the markets persistent in terms of value and value's changing setting. Value resides in a setting.

In SCT people make money by holding as profits accumulate while they remain in the right side of the market.

The change of people's sentiment occurs at point 1, speaking in terms of degrees of freedom of data. This change is the gating function for data processing from one focus to another where the subsets of degrees of freedom are different focus groups.

While traders and players continually limit the range of values that are possible at any given time, they also determine how fast values and their limited range can migrate to newer ground in a trending situation.

The pace of this change is a collective parameter just like the extent of sentiment that people express is. So this pace and that sentiment both become the gating mechanisms for focussing on different degrees of freedom subsets as time passes.

Overlapping channels are the geometric result and point 1 is always in the prior, pace based, channel limits. Sentiment acts like a chameleon, though, and it is measured in terms of acumulation and distribution.

Traverses within trends are always there and the failure of the dominant traverse under way, signals a coming change of sentiment as the non dominant traverse goes on after the FTT. FTT is point one, a precursor of the "fixing" (like photochemicals do) of sentiment for the next trend that contains dominant and non doinant traverses as well.

By being in the market at all times and reversing to stay on the right side continually, we get to see and deal with pace and sentiment as constantly present gauges of the score the market creates. The log is the lyrics in our words.

Point 1 is THE instantaneous moment of an end effect occuring that ends a former pace and records the new color of the sentiment for the next pace as the old color disappears.

Sports memory when it begins to function for a trader, is like an activation that allows a person to be able to forgo the mental training for the event in the future. In taiko drumming the 11 hours a day of training are split betwween physical training and other drumming. The day is mostly physical because of the stamina required to sustain the energy output required to drum. Early logging required 8,000 calories a day for example.

In one of the pieces the Shidara did to win the 2002 international competition. Four drummers are in perfect drumming synchronization throughout the piece. This is from sports memory functions that they have acquired and use.

SCT connects to the market like a taiko piece connects a drummer to a flowing or raging stream. Synchronicity between the market and the trader is paramount.

Going through point 1 enough times allows it to be found and put into the tool box. Then it, after a while, can be explained and practiced as part of a synchronized partnership with the market.

Typing in point 1 as an annotation is usually a drag function. you type it when you know its coming up. You keep it in the vicinity. as you sweep about 13 data elements of the data set go through their independant sequences. As they spin to their collective settings over and over, it is clearer and clearer that an FTT is coming up. You take the action to lock in profits and change sides of the market. You annotate the chart and fill in the log. You do it over and over each day. Each time it arises you know it is coming before it arises.