SEYKOTA's method?

[Hercdriver]

Quote from jack hershey:

4. Cycles. Could you please explain how to determine the cycle of an equity. I assume you're doing something other than eyeballing it on the charts. Are you using a formula or a feature that's available in your charting program?

Yes to all parts of your Q.

The assessment sheet is a quicky eyeball thing. To get a name for the assessment sheet I go to my universe and to my universe add and delete effort.

Most people here have neat algorithms going and this stuff they just use to tweek their models.

I do score stocks using P, V and A/D in a binary manner. It is the smallest base I could find so as to not differentiate in the order of improtance any more than necessary. The P, V relation and the corollary give us the basic way to make money. The scoring simply expresses the relation and adds Accumulation/Distribution as another level of fineness.

So the cycle goes through 8 stages numbered 7 through 0 where the cycle counts down 7,6,5,4 for the up trend and peaks and goes 3,2,1,0, for the down trend. by letting increasin P and V be 1's and A be 1, I have a scoring system. This makes decreasing P and V and D a score of 0. The way the scores fit onto the cycle is counting backwards.

This does not work for everyone. People vary in lots of ways. My view is that it is a nifty way to make money all the time.

Here is what happens if you score. You know where you are in the cycle. You know what is next. And you know how fast the cycle is going. This is an advantage to some people and bullshit to others. Collectively people have named it for me. It is called getting tomorrow's newspaper today. You could write a TV serial using that title I bet.

Okay. Since we have a P, V relationship , we automatically have the maths to describe it. I generatd 7 equations for that prior to Y2K for TC2000 users. They dumped the ver 3.0 at y2k and you can't put the equations in their new data selling support system.

I am not a macro guy . I know macro approach doom you mathematically and financially. You need a micro universe.

The micro universe will be very very responsive to statistical success. There is a fork in the road somewhere. Phd's in math do not get to a neat place it turns out.

So the good news is that we can gt super and small universes that make terrific money velocity by "sorting".

I sort so I get certain scores form very very high quality stocks only. High quality means low risk.

My sort is a list who length I control by QA. The top is 7's the middle is 1's and the bottom is 0's. It is a little frightening to be me.

So there are some at the top that are picking up money velocity. The bottom part is stocks that are going to Break Out and the middle is stocks that are falling to the bottom.

It is like two lovers in slo mo running across a swiss pasture with flowers. I just watch my list get to KISS trading time.

So everhing is available to everyone.

you sort by restricting the list using QA. You rank the list by......ahhhhh...the daily % the volume has increased.

Naturally FRV is at the top and DU is at the bottom. The stocks of very high quality dance around on the list by going up a little and then retracing to the bottom.

My journal has some pics and charts that tell all about the above.

The easy place to sort is stocktables.com. USE EPS and RS percentiles to get QA, and sort by increasing vol. Bingo. In 1957 I did it by hand after I pencilledin the charts on my master graph. LOL..imagine having to do life manually.

But I can say I did lookover the possibilites.

I notice I doubled my performance 8 times over the years.

So yes, I use eyeball, formulae, and features. Now you can.

Google the formulae. They are there and someone told ET where they are a while back. And they were correct.

People who have canned this stuff as software get nominal returns of 11.1% every 6.6 days on average as beginners using their stuff.

I jave to admit you have little excuse for not being a millionaire in a while. Your Q's certainly just knock my socks off. I wish I were as smart as you.

Jack,

Thanks a million for being generous with your knowledge (and providing the spreadsheet). It is clear that you have found keys to profiting from price moves in capital markets. I am studying your method and reviewing your posts. I believe your methodology is logical and sound, and more importantly, it makes money.

Thanks again!

 

[cornholetrading]

I came up with a couple of question for you.

1. In your counting cycle you get a number for accumulation or distribution. How are you defining or determining which is which? I remember seeing your graph of this 8 point cycle and wondered how you can get increasing price, increasing volume, but classify it as distribution. So can you explain how you classify A/D?

2. The other question was about how you are calculating your DU volume. It sounds like you look at the first couple of hours to get your volume calculations. Is this 65 day MA of volume calculated and compared only to the volume in first couple hours of each day or compared to the 65 MA of volume for the entire day? So after 2 hours into the day are you looking to see if the FRV BO is higher compared to the DU volume for the past 65 days 2 hrs into the morning or higher then the past 65 days total volume for the day. Hopefully what I wrote made some sense.

 

[jack hershey]

I commented within the quote. See the ***'s.
nice open today. I'll use HOV as an example. It just passed Mr Market's target for 4 to 6 weeks out this am and we are now most of the way through the short term cycle I use.

Quote from cornholetrading:

I came up with a couple of question for you.

1. In your counting cycle you get a number for accumulation or distribution. How are you defining or determining which is which? I remember seeing your graph of this 8 point cycle and wondered how you can get increasing price, increasing volume, but classify it as distribution. So can you explain how you classify A/D?

****I classify the A/D by using anyone's indicator calculated results. A good example would be BOP of the Worden Bros. The IBD A through E rating can be used also, for example. There are many others.

The phenomena occurs kind of neatly. If you recall in the STOC thread we spent a lot of time getting people to make all the money in a given trend. The whole issue centered on the way people were jumping ship prematurely. We had to come to anagreement that the trend was continuing and we watched trends bounce off the right channel line and stayed into to incerease the profits by two or three more traverses in the channel.

What we saw in their prior behavior was a switch from A to D prematurely. This stuff is all caused by the approaches they use and their emotional history. Some beginner approaches include setting price targets. Using signals called overbought" for relative indicators ( trends are usually "overbought" for most relative indicators. Not knowing how mostly any of the market measures work; especially: volatility, P, V relation, RSI, etc. These people, if stuck in beginner land, have serios difficulties in listen to others if something new enters their "world". they are also very far away from asking about stuff.

The premature exit and other actions like it is seen several times in the cycle. Buying at the high is your next stop on the path vis a vis A/D. They buy aftr the first retrace when you see the D go to A near the peak (Score 3).

The scoring is most elegant. You will note that is is perfectly symmetric as the balance of scoring plays out through the cycle. At the peak and trough all variables flip. Midway through trends 2 of 3 flip. At the money velocity change points (As Barauch said just make the middle 50%) the least flipping is noted (the smart money flips).

Went you have an elegant micro maths element in each facet of your trading, you will notice your money velocity is high and that it is like driving a 12 cylinder car ( my preference currently is the 750il).

During a cycle several statistically significant things happen. That door has opened for you. If you are a backtester and not trpped by end of bar data, you can see these things. If not, not.

BRB for other answer.

2. The other question was about how you are calculating your DU volume. It sounds like you look at the first couple of hours to get your volume calculations. Is this 65 day MA of volume calculated and compared only to the volume in first couple hours of each day or compared to the 65 MA of volume for the entire day? So after 2 hours into the day are you looking to see if the FRV BO is higher compared to the DU volume for the past 65 days 2 hrs into the morning or higher then the past 65 days total volume for the day. Hopefully what I wrote made some sense.

 

[TM_Direct]

Quote from jack hershey:

I commented within the quote. See the ***'s.
nice open today. I'll use HOV as an example. It just passed Mr Market's target for 4 to 6 weeks out this am and we are now most of the way through the short term cycle I use.

What a crock of shit!!! NOW that HOV has passed NFI you are a stock picker again.......This was my original point: You never took a side or position to the NFI....You never gave a prediction on it, all you did was criticize and show your charts...whoop de doo!!!

I'll give you credit on HOV, but truthfully, almost any Homebuilder is a good play right now....the difference is MR Market actually GAVE a target...you are still not giving targets,....you are just waiting until after the fact and then saying " i told you so"

 

[jack hershey]

Quote from cornholetrading:


2. The other question was about how you are calculating your DU volume. It sounds like you look at the first couple of hours to get your volume calculations. Is this 65 day MA of volume calculated and compared only to the volume in first couple hours of each day or compared to the 65 MA of volume for the entire day? So after 2 hours into the day are you looking to see if the FRV BO is higher compared to the DU volume for the past 65 days 2 hrs into the morning or higher then the past 65 days total volume for the day. Hopefully what I wrote made some sense.

I'm out of HOV. I use a MACD peaking and "away" and x over on declining volume. I went out at the 5 min interval where the VDU occurred. The VDU means that no one agrees on the price. This extreme decline in volume is a flaw. what gave us the gap today was a lot of opening volume which just ate through a lot of "target type asks". I don't focus on specific targets but the 59 plus was a good return. The money velocity is gone by this point as it is post peak.



There are values I get from analysis. All of the volume values are EOD values. I look at a 6 months graph and pick off the three values. DU, FRV and peaking. There will be at least five profit cycles in each 6 month period. If the stock has moved it's operating point vis a vis volume I use the current set.

I am used to entering in a time slot after volume takes off (leading indicator) and before price moves (anticipated indicator). I believe the market has three parts to it daily. Therefore, I usually take action in the first period.

Years ago I posted four emails to seven groups of folks. One before open, one at sync (15 mins into day), and two more during the first 1 1/2 hours. They were forwarded to others on at least 4 levels I know of. Executives of many corps say they got them.

In those posts were all the numbers for several lists: potential sell, hold, and potential buys. This was before q charts etc.

So you see that I monitor and I calculate the pro rata volume of the values I have chosen. Now adays they have 65 day averages and an "unusual" column on the software so I just look at the quote sheet and relax. You can see the market myths still in place. High rising volume is called "unusual" by the people who run this software stuff. They are macro types and they have a standard related to the indexes annually.

To make a lot of money in short times you have to actually be unusual. when you start getting insider trading citations from the SEC you fit into the wierd and unusual category. I do not mind this because I can straighten them out if they cite me. The software people will not be able to support making money becasue they are serving the masses who do not make money especially.

If you look at the knot head responses to my posts, you will see how tied to whatever some people get. They are "stuck". This mental condition has a lot of emotion associated with it as well. It is qite strange that people are unwilling to think about making money. They have fixations about it.

By watching the simple acceleration of volume to 3 to0 4 times yesterday's values (DU) you get to see a pending event in price.

Because there are market tools for entry, you do not even have to bet on the direction of the trend. further you can eliminate the risk of being taken into a "failure to BO" by offsetting your entry tools. We do want to enter late anyway to just have high money velocity Holds.

So your comments are focussed and you understand what I am suggesting. There are now software conveniences too.

I just do a pro rata thing with respect to three volume values and it gives me ahn anticipatory method that makes at least 10% every 6 to 8 days. HOV was 4 days and I am moving on.

thanks for thinking about this stuff. Your comments and questions certainly must help others who can't understand what I suggest. It's definitely a win win for me.

 

[jack hershey]

Quote from TM_Direct:



What a crock of shit!!! NOW that HOV has passed NFI you are a stock picker again.......This was my original point: You never took a side or position to the NFI....You never gave a prediction on it, all you did was criticize and show your charts...whoop de doo!!!

I'll give you credit on HOV, but truthfully, almost any Homebuilder is a good play right now....the difference is MR Market actually GAVE a target...you are still not giving targets,....you are just waiting until after the fact and then saying " i told you so"

My position on NFI was that it was not a buy long, a sell short. and that is was in an inverted saucer formation.

I do not predict as a part of my approach to being rich.

I showed you chart after chart after chart. I think of this a drawing a picture for you. I was unsuccessful.

Mr Market gave a target. I do not give targets. I just exited HOV at the target Mr Market set. I suggested that he swap into HOV from NFI. Actually I suggested HOV to make the swap possible and keep it simple stupid. MR Market may or may not have swapped; he likes the Armenians in HOV which is part of his fundamental analysis criteria.

I'm not an "I told you so " type person. Mr Market and I are making money as we see fit. He makes about 8% a year it looks like. You dig what he does.

You will get to the point where you can do as well as he and "beat" the indexes. Your original point was whatever. You chose a stupid point to make. It is your point and you look sort of stupid as usual.

Annualize some stuff and see what is what.

MR Market says 15% every 4 to 6 weeks.

Mr Market's record as determined by others based up on his method if done as he suggests is about 8 % plus.

I suggest to people to do "natural" short term cycles. take 6 to 8 days to make half the potential (half is 10%). Do 50 cycles every 3 years.

Your current ROI is a sideline produced value. All you do is make stupid points for us to learn more about you. So far you have made no money by your actions related to trading/investing.

There is no need for you to change what you do. We all need a variety of examples of how peeople think and feel.

I hope what I am saying here sounds condescending. By placing yourself beneath me, you get the consequences of your actions.

If you were an ostrich, you wouldn't even need sand to protect your head.

Here is picture 1 of what it is all about.

 

[murray t turtle]

Quote from jack hershey:



Yes.

Key indicator is volume as a % of the 65 day av.

The details. When the volume is in creasing a trend will continue. From the 21st on a 30 min you can see what volume is required to drive price on HOV. You can see the am volume on the 23rd was sig enuf to push price solidly. The DU (dry up) on the pm of 28th did not continue thru the end effects of he 28th, i, e., the volume picked up and the price moved into the high ground for the day.

This is a formation indicator which is a FTP (flat top pennant)
The Gap up with no retrace is happening in a setting of high volume. In my counting scoring this is a 7. Meaning Price 1 volume 1 and Accumulation 1 give me all three variables as 1's 1,1,1 in binary and 7 in decimal. my scoring cycle goes 7,6,5,4 to get through a Long trend 3,2,1,0 score a short trend.

with volume running high this meand "continue" THe flagging of volume with price up is a score of 1,0,0 (Accumulation goes to distribution (a 0 score)). 4 is the number that ends the trend.

So when i see the volume flip, then I know i need to consider going out.

I do not go out on stops. I go out as the price rises to the peak, traverses the peak and begins to slip off the peak.

I am in a multiple trade setting here to enter or exit because of he quantities i trade. They are well above each transaction on a T&S flow sheet (print as some guys here say). I do not trade larger blocks per trade than the Time and sales size blocks that ordinarily go through. And I do several account in parallel on POA besides mine.

Go to a MACD (5,13,6) and see that it is entwined and away and rising. This all means the money velocity is rising on HOV. The time price goes into a peaking effort, there is a prior period where the money velocity slows a bit. My reality is that I swap out on the place where money velocities are equal and the exit velocity is falling and the entery velocity is rising. This stuff is far away from strategies based on stops. Stop protect you and your strategy on money velocity is what keeps you pulling profits out of the market.

You always need to orient to "lost opportunity costs". you must keep velocity high as possible or you are encountering "costs".

The punch line on your question is this.
***************************************

I keep lists of sequences trends go through. I look for "what wasn't that". If a failure to follow the sequence occurs, then i have a "flaw" in the trend. This is way before stops come into play to protect you.

The attached chart shows a comparison on NFI nd HOV from a starting swap point. exit NFI and go into HOV weds PM. It's from another thread where i wanted to make a point.

Anyway, watch for flagging volume and also a sequence of items that fail to show up. you can then go out at the peak plus and minus.

*******************************************
Jack Hershey;

Good volume on this letter, interesting that you mentioned moving -average-convergence-divergence. You may be right about Ed not using moving averages now ;Ed Seykota does [ In Jack Schwager interview and more in '' Trading Tribe '' writing] have a pattern of mentioning them in 2003 also.

Nice ,precise, improvement of William O Neill volume studies Jack.

Another advantageof selling a bit early is you may get a better [positive slippage] fill. I tend to take profits a bit early in downtrends;
probably take profits a bit late in uptrends, with lots and lots of due diligence.


Obvious to me Ed Seykota works a lot or has worked much in the past, or both ,
painting pictures like ''pride is a great banana peel''

Back to the UPtrends,watching out for banana peel.

 

[billpritjr]

Well, since May we had 18 pages of posts on this thread, and obviously the "data" shows that this topic was a popular one.

With that said, no one, Jack Hershey included, has convinced me that Ed is ** NOT ** using MA's to identify trends. Jack mentions how Ed went to MIT and I believe Jack points out that he also went to MIT.....not sure why we need to know this, Jack are you leading me to believe that you are a Seykota II or what?

Again, in Tharps book, Trade your Way to Financial Freedom, he (in plain english) states that Ed used to teach a college course in which he taught trading using 10 and 20 day Moving Averages.

In addition, most of us have here have some familiarity with Ed's bio data. Ed was a large fan of Richard Donchian, arguably the "father" of trend following. Observe that Donchian used breakouts and Moving Averages, and basically introduced those ideas into the world.

Someone posted that "MAs could not explain Ed's success." Well, at least on the internet, the most common example of Ed's success (and no argument, definitely an accomplishment), was turning $5000 into $15 million over 12 years.

So I ask, WHY NOT would MA's explain his success? If you take $10,000 in year one, and (using long and short) double it every year, with pyramiding, you will have $1.2 million+ in 8 years.

Obviously with stocks, currencies, futures, the margin and other parameters vary, but you see my point. Could someone not (again, using long and short trading) double their money once a year? With MA's? Why NOT?

I do agree with the observation that Ed uses cycle analysis and other tools.

Someone mentioned Ed is "clearly using" more advanced stuff? Well, where do you get that idea? WHY do you think he DOES NOT use MAs? On his own site, and on other sites, all I repeatedly observe are "keep it simple", "follow the trend", "dont try to figure it out", "relax", etc, etc, ad nauseum. This does not follow the idea that Ed is using 3-D modeling (!!!), electrical current flow patterns, nuclear engineering, fractals, jet fuel, or any other wild ideas as a trading system.

I suppose my end summary is to say that I am still convinced that MA's work as a simple and damn decent way to trend follow, even in 2003, and I think Ed uses them also (again likely with other tools)

take care everyone

Bill

 

[bubba7]

Quote from billpritjr:

Well, since May we had 18 pages of posts on this thread, and obviously the "data" shows that this topic was a popular one.

With that said, no one, Jack Hershey included, has convinced me that Ed is ** NOT ** using MA's to identify trends. Jack mentions how Ed went to MIT and I believe Jack points out that he also went to MIT.....not sure why we need to know this, Jack are you leading me to believe that you are a Seykota II or what?


snip

Sorry I mislead you. I'm an EE (1955) also and so are Soros and Ed. After EE I studied Theoretical Physics and I halve a MS in Technical Writing, minor EE. I did not attend MIT; I went to RPI.

I am just an amateur investor since 1957.

It is true that I have lectured at MIT, in several departments; a while back my wife was the Ida Green Scholar one year.

It is common for EE's to look at stuff from a viewpoint like Ed has.

You will find that Ed does stuff with people at the level they are at. The MA stuff is probably understandable to BA's etc.

MA's have intrinsic problems that would drive any EE away from them. The market is periodic and EE's have one heck of a lot of knowledge about that stuff especially as it relates to communications and analysis and bandwidth.

Where you are is neat for you. 18 pages of ET count a lot for you; I will watch your posts to learn what I can from you.

 

[billpritjr]

well, that is great but I am yet to read reasons, articulated facts, as to WHY, HOW, etc.

"MA's have intrinsic problems that would drive any EE away from them. The market is periodic and EE's have one heck of a lot of knowledge about that stuff especially as it relates to communications and analysis and bandwidth"

1. what are the problems?

2. One heck of a lot of knowledge? Uh, please articulate your reasons, facts. I am not sure what a heck of a lot of knowledge is, but with extensive creds, I am quite confident you can further articulate this beyond "heck of a lot"

3. Communications, analysis, bandwith? "Especially how it relates to....." (!!???!!)

are we talking about high speed internet or trend following

I am interested in your "how it relates to" explanation