Spydertrader's Jack Hershey Futures Trading Journal

[Joab]

Quote from jack hershey:




You are posting here a chart and asking about volume and you do not have any rays on your volume part of the chart. Why punish yourself by not annotating?

It is 2007 and it is time to bear down a little and reflect the continuing support that is being offered.

If you put in the rays and if you refer to the three illustrations of money velocity (on 6 levels) , etc associated with these volumes, then you are getting warmed up and in the ball park.



You are not building a morass of tiny rules for every situation like putting electrical tape on a beat up hardball.



So do your part to establish the context in order to grow.



We work on our end too.

Jack,

I'm by no means trying to circumvent the process but being at a disadvantage of time and not being a student of the Equities Journal I was under the belief that it would be possible to jump in to this Futures Journal without the all the benefits of understanding the Equities processes?

If I'm incorrect in this thinking please tell me now and I can revisit this when I can dedicate more time to studying the entire process.

Mucho appreciated

 

[Bearbelly]

Spyder

Thanks for clearing that up.

The rule set you are referring to is:

ftt: enter in opposite direction then:

fbo: exit

bo: hold

ftt: reverse again.

Do I finally have this straight. The one thing I am not clear on is what to do if it goes against you immeditely. Would you reverse again when it takes out the bottom/top of the ftt bar?

 

[Spydertrader]

Let's take a look at Volume as a tool for trading the ES ....

If you notice my charts, you'll see several lines drawn through the volume bars.

Red Line - 2500 level
Blue Lines - 4500 and 7000 levels
Green Lines - 9000 and 19,000 levels

Everyone should add these levels (or an iteration there of) to their ES Charts.

These various levels represent the 'pace' of the market (I may have the levels slightly off, but Jack can provide the exact levels he uses). Think of it as what to expect from price when volume reaches these levels. The greater the level of volume, the greater the movement of price.

Mak posted his observations with respect to Volume, and I encourage everyone to review his post.

In addition, the Gaussians Attachment lays out our expectations for price movement based on continued volume increase. Note the Gaussian changes at the point of an FTT.

I hope everyone finds the above information useful.

- Spydertrader

 

[Joab]

I hope everyone finds the above information useful.

- Spydertrader [/B]

Spydie,

Quick Question:

I get the volume rays and I'm working on getting Ensign to add them.

My question is about the Guassians. In which contexts should we use the 5m ES or the 2m YM.?

If I'm jumping ahead please just tell me to shut up

 

[Bearbelly]

Quotetracker has the horizontal lines and its free.

 

[Spydertrader]

Quote from Bearbelly:

Do I finally have this straight. The one thing I am not clear on is what to do if it goes against you immediately. Would you reverse again when it takes out the bottom/top of the ftt bar?

Correct. One enters on an FTT (in the opposite direction of the current trend) then awaits for the market to provide one of the three End Effects (FTT, FBO, BO). The actions for each End Effect are as follows:

1. FTT (reverse)
2. FBO (Exit [beginner level])
3. BO (hold)

Keep in mind, we are only monitoring at this point - drawing trendlines, annotating price and adding volume peaks and valleys. If, for any reason, you felt you had an FTT, but realized later you did not, you place yourself back on the right side of the market by reversing - immediately. No need to wait. Mark the chart location for review and determine why you thought the price action created an FTT. Compare this chart point to known FTT's of the past. What differs between them?

Following this debriefing paradigm allows you to know where you made your error:

Did you forget to check Volume?
Were you simply impatient?
Were the trendlines incorrect?
Was it simply a flaw?

Jack advises an IF1 / IF2 'emergency exit' process for reversing if all else fails and a trader fails to recognize the signals provided by the market. We will discuss the IF1 / IF2 process after we have learned all the tools (prior to the 'Final Exam').

I hope you find the above information helpful.

- Spydertrader

 

[Spydertrader]

Quote from Joab:

My question is about the Guassians. In which contexts should we use the 5m ES or the 2m YM.?

When we add the YM (See Syllabus) we will use Gaussians on both the ES (5 min) and the YM (2 min).

- Spydertrader

 

[bucherwin]

spyder:

Pls educate Me on the following:

Do you think it is advantageous to use 8-day ma in trading es/ym? It rides concisely with price/vol movements.

Do you use 5min charts for both direction and execution of your trades?( maybe 2min is better for enter & exit?)

While it is in congested area that FTT battle with FBO & etc, do you take a break and wait to see for a clearer direct then act?

Is there a guild line for you about the amount of USD in referrence of time(bars) to exit your trade and what is the longest length of time that you stay on in one trade?

tnx, wen

 

[makosgu]

Quote from Bearbelly:

Mak

Could you please explain how you identified bar 4 as point 2 in the above example. Bar 4 volume was over bar 3 and bar 5 volume was larger than bar 4. I can understand bar 5 becoming a point 2 when bar 6 fails to go higher on lower volume. What am I missing here?

Sure... I just want to clarify that over the first 9 bars, I have 2 channels. A TAPE and a larger CHANNEL that encapsulates the TAPE. As with most days, I tape the first several bars simply to get the ball rolling on the day. In the context of the initial CHANNEL and/or TAPE, bar 5 is an FTT. Bar 4 touches the LTL. In other words, w.r.t. the TAPE, bar 4 is extreme. I use bar 4 simply due to it's relationship to the TAPE. Whether you use bar 4 or bar 5 to annotate a point 2 is a matter of whats valid given what you know. Either way, we both nail the channel and there is no question as to whether or not we have identified the channel. However, to reinforce Spyder's definition, moving forward I will be sticking to his layout so as to keep EVERYTHING/ONE on the same page and avoid any confusion... In other words, I will be tag teaming as much as I can...

Regards,
MAK!

 

[Spydertrader]

Quote from bucherwin:

Do you think it is advantageous to use 8-day ma in trading es/ym? It rides concisely with price/vol movements.

I have never used the 8 SMA. As such, I cannot speak to its advantages or disadvantages. My experience with the 20 SMA keeps it on my charts.

Quote from bucherwin:

Do you use 5min charts for both direction and execution of your trades?( maybe 2min is better for enter & exit?)

I stay on the 5 min ES.

Quote from bucherwin:

While it is in congested area that FTT battle with FBO & etc, do you take a break and wait to see for a clearer direct then act?

Since I never know when the next FTT will turn into a BO (and just keep on running), I try to take every FTT in these 'congested' areas. Sometimes (after six or seven FBO's in a row) I might get tired of monitoring and sideline myself. Nothing says a trader must take every FTT presented.

Quote from bucherwin:

Is there a guild line for you about the amount of USD in reference of time(bars) to exit your trade and what is the longest length of time that you stay on in one trade?

The market tells me when to enter, and the market tells me when to exit. The market's job is to provide signals, and my job is to push buttons. I let the market do its job, so I have time to do mine. As to 'how long' a particular trade might last, here are my own personal extremes - three trades within a single 5 min bar (FOMC day) for the shortest trade. Two hour hold for the longest trade.

Of course, your mileage may vary.

- Spydertrader