Simple Profitable Method

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Not all wet, just not in possession of the facts

Fact is, a significant percentage of price action is due to programs

Look at today's action. Observe how price breaks up or down and then "spikes" back up. What do you think that is? It isn't "price expressing itself". It is a smart programmer (or several for that matter) taking you folks out of the game. What I mean by that, is that you "take a signal", you try to hold on to obtain the best profit, and suddenly you find yourself on the wrong side of the market, "stranded". You have a few ticks loss at the least, you are wondering how you got there and whether to get out or wait it out.

So what is the piece of the puzzle you are missing. Well I have just supplied part of it. You have to remember that price is moved not just by individual traders, but by institutions, some of whom have deeper pockets than you do. Learn to characterize the market. Under what conditions can you take a signal? How far can you expect to ride a winner before you have to take profits? How can you avoid those reversal spikes? You have to learn to be a good observer on a daily and intraday basis.

Good luck
Steve
 
Steve,

You are 100% correct in everything you just said.

The problem is, after thinking about it, I do not have the
answers to your questions. (wish I did, tho).

1). Your right the charts are pretty, but does pretty make any money. Doubtful very doubtful.

2). I realize that this is a hugh "fakeout" game!!! It is what it is.

3). What we are trying to do is determine which signal to take, because (some if not most) signals are their to burn you. But which ones?

4). It's a game being played by sharks with their rules. But it is playable, but you gotta know what your doing!!!

All suggestions are welcome!!!

Thanks, keep them coming...

snarlyjack
 
'How can you avoid those reversal spikes?'

Steve, if we are talking real spikes then in the main you can't avoid them, we have to live with them, accept them, take the haircut and move on. By their nature they are unpredictable to most of the market players and no amount of market knowledge or signals will give you prior warning of them.

If on the other hand we are talking about sudden reversals that may just go deep into prior highs and lows, and possibly beyond, in order to catch some juicy sitting orders/stops etc. then you have to understand the market you're in and you might just recognise the behaviour of the price action before you. You can then either exit if it is against you or join in the fun. Not being a great reader of books about systems or analysis I'm not aware of any teachings that can help anyone in this regard. Nothing like experience even if it means learning through the bitter and expensive variety. Maybe you have some answers/advice that could help others in this regard???
 
Quote from steve46:

Not all wet, just not in possession of the facts

Fact is, a significant percentage of price action is due to programs

Look at today's action. Observe how price breaks up or down and then "spikes" back up. What do you think that is? It isn't "price expressing itself". It is a smart programmer (or several for that matter) taking you folks out of the game. What I mean by that, is that you "take a signal", you try to hold on to obtain the best profit, and suddenly you find yourself on the wrong side of the market, "stranded". You have a few ticks loss at the least, you are wondering how you got there and whether to get out or wait it out.

So what is the piece of the puzzle you are missing. Well I have just supplied part of it. You have to remember that price is moved not just by individual traders, but by institutions, some of whom have deeper pockets than you do. Learn to characterize the market. Under what conditions can you take a signal? How far can you expect to ride a winner before you have to take profits? How can you avoid those reversal spikes? You have to learn to be a good observer on a daily and intraday basis.

Good luck
Steve
More...

Thanks for the feedback Steve. I am aware that program trading is responsible for a significant percentage of market moves but haven't yet determined how to identify the intraday reversal times before the market opens.

I do observe repeated patterns in the markets. Stop gunning almost always occurs after the quiet period just before the afternoon move starts. I also see a lot of two wave moves, retests of prior S/R, etc.

Given the variables I suspect programmers work with, I think time of reversals, duration of moves and number of contracts may provide clues as to how the programs will function. I need to do more work along those lines.

All I know how to do at this point is learn the repeating patterns by watching day in and day out and then anticipate those that recur with high frequency.
 
I think as some have pointed out, you need an edge. Once you have that edge, you need to realize that you will have losing trades.

You will never find a system where there are no losers.

So then the next step is money management in that you set how much a % you will risk per trade knowing in advance no matter how much you believe the trade is going to win, there is a possibility it will lose for what ever reason.

Then you set a stop and a profit target. The higher the probability that your edge gives you for a winning trade, the lower your stop can be.

Does the simple method outlined in this thread give you an edge, I don't know. It seems that the original trader makes money using it, but he as stated before uses art more than exact science getting into and out of a trade. So those that try to make a mechanical system of this will probably fail in backtesting, since their rules are too exact. The author of this method has mentioned certain times of the year and others have mentioned certain times of the day, that it may be wise not to take the signals. So this then goes to experience and your psychology.

The problem with non-mechanical systems is that its against human nature to let winners run and kill losing trades. The traders that master this, are then able to win over time if they also have an edge.
 
hey Jack and Snarly;

Snarly, you have pretty charts but if you can add some arrows where you believe the buy/sell signals are it would help me.

I think Jack jumped on you Snarly because he maybe he wants you to figure P/L on his signals. I will try here, but I don't have the exact times of the trades.

Always in the market with 1 YM contract.

1. 9:30 B1 12608
2. 9:48 S2 12598 -10
3. 10:20 B2 12606 -18
4. 10:40 S2 12610 -14
5. 11:05 B2 12613 -17
6. 12:00 S2 12604 -26
7. 12:30 B2 12603 -25
8. 12:40 S2 12605 -23
9. 1:25 B2 12608 -26
10. 1:40 S2 12620 -14
11. 1:50 B2 12620 -14
12. 2:55 S2 12627 -7
13. 3:20 B1 12622 -2

Jack, lots of very smart analytical guys can't help but be condescending and the sensitivity to even realize what an azzhole are.

Are you trying to show us something? Its seems like you want to help. Why can't anybody understand you as anything but a showoff?

Thanks, don't mind me I'm very bitter, I drew down below the $2K mark and can't trade my IB account anymore. It took me a month to blow the last $1k I put in the account. I think I'm losing a little more slowly now, so that's an improvement.
 
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