Spydertrader's Jack Hershey Futures Trading Journal

[cnms2]

Let me share a few thoughts:

The "forest" on 5 min, may become a "tree" on the 15 min, and a "tape" on the 30 or 60 min. The other way too: a 5 min "tape" becomes a "tree" or "forest on a faster fractal.

You should be able to trade slower fractal "tapes" as you trade 5 min "tapes". You just need a larger account, and ... the guts.

Faster fractals offer higher money velocity, and they trend more (larger price swings per time unit). On the other hand, commissions and slippage are relatively higher, and you have to think faster too.

In my experience, trading at "tape" level, irrespective the fractal you choose, prevents you from "guessing" and "hoping". I mean by that: when you trade the "forest" on the 5 min you're more tempted to think that the price goes only momentarily against you, and that it will turn back up your way. What's happening more often is that you end up with a bigger than expected loss. Actually on slower fractals you should expect larger individual wins and losses.

I want also to emphasize the importance of trading only in the direction of the slower fractal dominant trend, as long as you're not (yet) an expert and can be always in the market.

Quote from Spydertrader:

... However one chooses to learn to trade, the single most important facet is learning to differentiate between continuation and change. Which fractal one uses to do so, is immaterial.

- Spydertrader

 

[bi9foot]

Quote from ivob:

Hello,

I must admit I really don't understand much of what is written here. I guess I don't really know (yet) what is a "2 pair"....

Ivo

Here is a link back to a posting by txuk with an illustration of what a 2-pair and spike is.
http://www.elitetrader.com/vb/showthread.php?s=&postid=1297957#post1297957

Also refer to the links posted by nkhoi in this posting
http://www.elitetrader.com/vb/showthread.php?s=&postid=1568656#post1568656

I could not decipher anything when I looked at Jacks sketch, but after doing some research I now understand what the illustration shows.

EDIT: Mak also explains how to see the 2 pair behavior using price bars just by watching the painting of the bar.

 

[ericta]

Quote from nkhoi:

the trick is train your mind to stay away from p/l and keep focus on the execution, restrict yourself to 1 wash trade a day until you get use to it, no telling how long will this take.

what is a wash trade in this style trading? could you give an example ( forest level please )?

Thank you.

 

[bi9foot]

Quote from ericta:

what is a wash trade in this style trading? could you give an example ( forest level please )?

Thank you.

A Wash trade is when you exit or reverse after taking a position for a gain/loss of 1-2 ticks or no gain/loss because price did not move as you had anticipated.

As for an example, you enter on what you think is a pt 3 however, it turns out that the non-dominant traverse is not done yet and you don't have a point 3. So you exit ASAP.

 

[R/R]

Quote from Avi 8:

How to 'know' I have a pt 3....snip

Mike: very nice effort, thanks

 

[The Swordsman]

I'm sorry but in this market, if you anticipate a pt 3 incorrectly, you're not just losing one or two ticks. Generally you'll lose a pt to 1.5 pts before realize it. Its the nature of volitility

Quote from bi9foot:

A Wash trade is when you exit or reverse after taking a position for a gain/loss of 1-2 ticks or no gain/loss because price did not move as you had anticipated.

As for an example, you enter on what you think is a pt 3 however, it turns out that the non-dominant traverse is not done yet and you don't have a point 3. So you exit ASAP.

 

[ivob]

Quote from R/R:

Mike: very nice effort, thanks

I also like the summary. However, personally in order to dertermine a pt3 I watch the "tape breaking" which is not mentioned.

The tape breaking is very important for me of course only after having determined a point 3 is to be expected. (not just "any tape")

Then right after tape breaking we need volume in the new dominant direction, increasing PRV, etc.

regards,
Ivo

 

[R/R]

Quote from The Swordsman:

I'm sorry but in this market, if you anticipate a pt 3 incorrectly, you're not just losing one or two ticks. Generally you'll lose a pt to 1.5 pts before realize it. Its the nature of volitility

your post implies you missed the point. Bi9's post was to define "wash trade" in JH context, not trading a pt3 in today's market.

 

[The Swordsman]

He posted the example of misidentifying a point 3, not me. The idea of "wash trade" in the conext of only losing a tick or two sounds great, however its most likely not applicable in a mkt where the volitility is this high. Its all about context.

Quote from R/R:

your post implies you missed the point. Bi9's post was to define "wash trade" in JH context, not trading a pt3 in today's market.

 

[bundlemaker]

Quote from The Swordsman:

He posted the example of misidentifying a point 3, not me. The idea of "wash trade" in the conext of only losing a tick or two sounds great, however its most likely not applicable in a mkt where the volitility is this high. Its all about context.

Using none of the fine tools I'd say your right. But, after some late night epiphanies regarding the OTR chart in conjunction with the DOM, the only thing that could create larger losses is being slow with taking action. This assumes good enough liqidity that the market doesn't gap intraday.