Quote from vanilla2:
Jack,
I agree that Ed's probably not using MAs. I've noticed you use the term fractal a lot, but I'm unclear on the context you're using it in.
*** I use it loosely. Your definition happens to fit the various bar durations that could be used to observe the market. I use about 7 different durations. I keep their separation as a multiply in the range of 5 or so.
When you say "He isn't using indicators, just price and volume and a fractal that he goes to to see whats up by zooming in after hours", do you mean that he's literally identifying a fractal formation in price, ie one pattern existing simultaneously in different timeframes?
*** yes. If you look at all theformations used in TA you see that they all have the same P, and V formation relationship. Just like a snowflake does physically. Ed could use the same investment analogy on any bar duration level. That takes care of price and volume. I believe he is also very astute on making money and minimizing risk. The zoom in thing can be illustrated to make it more clear. I'll do it below.
Thanks,
Sean
Fractal: any of various extremely irregular curves or shapes for which any suitably chosen part is similar in shape to a given larger or smaller part when magnified or reduced to the same size
Likewise, when you say "I'm looking at HOV, SIE ISIL and KMX today. I own them in multiples of 500 and 1000's. I look at price and volume on a fractal. (30 min for me, EOD for ED). I also watch MACD (5, 13, 6) bob, bob, bobbing along). Heart beat thing for me", does this mean that you're examining the relationship between the movement of price for a unit of volume in one timeframe and comparing it to the movement of price for a unit of volume in another timeframe?
*** good and precise question. I do not deal in units of volume.
Let me point out, by example.
Lets says we want no risk on trades. And lets say we want to move money into trrades only when the money velocity is higher than we are making presently.
We focus on what we have making money and what is available to get into.
To look at how we make money on out trading fractal is a routine thing. all the time we are looking at the part of the periodic function where the steep middle part of it is where our money is being held. We are in and looking to leave when a better deal comes into view.
Ed is in no rush we all know that.
He look at the EOD and for his investment the money velocity has been bobbing along. he asks: will this continue? By going from the EOD to the 30 min he can see that the money velocity is faltering more clearly by the sag shown there. similarly he looks on the 30 min at a potential choice. It appears to be picking up. So the next am, he swaps the capital out of the flagging stock into the improving stock.
Here is a personal example to make this more practical. I am in GZTC at max. I have multiples of 1000's up to my limit. I see the above situation. The next am I have to go out with 100,000 shares at around 28. It takes me a lot of blocks and I want to not jiggle the market too much. I go out in blocks the same size as those trading and I do not trade more, cummulatively, than 10 % of market. Okay I see by 1:30 that i am well over half way out and I see the market has reached the max. I stick with getting blocks through the mrket. I reach 100,000 shares after the market reaches 1,000,000 shares. by days end the volume hits 1.1 million and i have had to trade 31 blocks. My net is 17 points a share on average and I see that if I had done well my net could have been 200,000 dollars higher. It take this in stride.
I looked for a few days to get to the end of the trend. I decided to exit. I have a place for the money as well that is improving.
The HOV example is the same. Pull up a daily. Go to a weekly to see the picture.
Here is a trend from 10 dollars onward. On the weekly you see it lolling along on no volume. Then comes less volume. For me I am ready to make some money at this point. I go to the daily in NOV 01. This is a fractal shift.
Ed would go to 40 with it in JUN02. He would hold the DD to 25 go to 40 twice and now a days be at 50 with it.
For me I run a fractal faster. Instead of doing the EOD, I go to 30 min and rotate in and out by following the traverses of the channel. Fortunately, you can Google several of my trades.
You can see the fractal volume story on the weekly. The old min volume will not be seen again. You do see at the end of 2002, the minimumvolume is higher. And you see getting through resistance at 40 with highest volume didn't fly.
The context for making money is KISS.
By using the next faster fractal, you can maintain your money velocity all the time by timing your rotation out of a stock into another by leaving early and entering the next stock late.
Can you elaborate on the fractal relationship you observe?
****Yes. I see that expert investors have KISS systems. Ed's formations of price and volume are puurrfect. He knows to look at end effects (both exit and entry) to keep his investments working only during the high money velocity times. To see profits flagging you go to look at the picture on the next faster fractal. This is a zoom in. To see that a trend is being established you look at potential profits increasing on a potential buy.
Having done this you move money in a trading way to not wreck the market and to squeese out the last amount possible before the end of the trend.
I use the yellow brick road to see how much I can make on any given fractal. I choose the one where I have no risk, a high completion rate, and where I can swap out of one stock and into another.
As a consequence I trade equities on the 30 min and futures indexes on the 5 min. I use the next faster fractal to anticipate trades.
what you see clearly is that electrical engineers do not predict. Why bother. you can see that a system is involved with few variables and the formations of these are repeatable and normal just like "fluid dynamics". No one sits around Electrical engineering labs predicting. They look at how things work (the formations) the formations simply move along in a regimented flow.
