Stochastics

[yoohoo]

private discussion - maths relationships but most will be obvious to all

 

[yoohoo]

Duh! forgot chart

 

[yoohoo]

when I said a channel is mathamatically perfect and a no-brainer, the last post is a very simple example. No discretion; no rejigging. All PA is math related and channels are the easiest to use to grasp this.

Simple, powerful. It's another indicator.

What do indicators give that PA alone dosen't. Visually obvious.

Sheesh, I could go on for days. Most of the meat is not on this chart.

 

[Goinglite]

Quote from CFerret:

After many experiments I removed all indicators from my charts and currently use just PA, volume (both raw and bid/ask) and S/R (both horizontal and trendlines).

In FX just PA and S/R for obvious reasons.

For me this turned out to result in earlier and better r/r entries.

When I used indicators, my fav. was CCI for it's ability to be fast enough.

I know people who use indicators and make way more money in % return than me, but they certainly don't just trade XO's too.

More like Yoohoo have posted - they get a feel of indicator as a clue before it actually confirms something by crossing or turning.

Very nice post.

You are right, most traders make the mistake of waiting for indicators like "Stoch's" to "turn" or "cross". Normally, by that time they have missed the best part of the move and are now are caught in "price noise" as the market starts to go against them for their late entries.

 

[Trader666]

Thanks for getting back to me. But you didn't answer ANY of my questions about your 3X daily range claims or show us a simple stochastics pattern. All you did was post "another person's signal system" with a stochastics indicator of unnamed parameters that you claim would have captured 3X the Mar 27th ES range... nebulous and evasive at best IMO.

Why no clear proof or specifics? Because in the past when you've described some of your methods in sufficient detail to backtest them, it didn't turn out well? Here are two examples. As you can see from the equity curves, the results are more consistent with your trading contest performance than with capturing 3X the daily range of anything.

"Rocket" testing methodology:
http://www.elitetrader.com/vb/showthread.php?s=&postid=1078242#post1078242

"Rocket" equity curve:
http://www.elitetrader.com/vb/attachment.php?s=&postid=1112121

Buying the 0 to 7 turn of the "P,V Boolean relation" methodology:
http://www.elitetrader.com/vb/showthread.php?s=&postid=1278985&highlight=buying+boolean#post1278985

"P,V Boolean relation" equity curve:
http://www.elitetrader.com/vb/attachment.php?s=&postid=1278986

I'd be remiss if I didn't post an equity curve of my own. You offered "an instruction book for creating a new kind of indicator" and I appreciate that as I'm always looking for fresh ideas. What did you mean? You weren't saying that your default parameters for STOCH and MACD makes them new, were you? Anyway... the system that produced this equity curve:

1) Is based on three simple indicators of my own design that gauge price, volume and their derivatives over multiple time frames.
2) Uses EOD data and makes all trades on the following day's open.
3) Can be run on any list of stocks without first filtering for RS, EPS, etc.
4) Captures small chunks of moves and works in all market conditions.
5) Is stable across all parameters. In other words, if you vary the indicator parameters +/- either way, the system is still roughly as profitable.
6) Most importantly, performs in real time as it does here.

This is the system I was going to trade when I challenged you to a trading contest last year. It can't come anywhere near to capturing 3X daily range but it would have done a lot better than -24%. Do you think I should go back to the drawing board because I'm stuck in the old paradigm? What would it take for me to go from the B list to the A list?

Quote from jack hershey:

Here is another person's signal system. I annotated on it to show the signals it generates in three colors.

the signal is the slow line and the white flags re where the unshown fast line crosses to generate the trade signal.

Obviously he has this automated and it turns out the segements long and short for an excess of 3 times the H-L per day. This was last Friday.

Do you want me to post 20 of these kinds of systems that are in use on ET?

Maybe I should post an instruction book for creating any kind of new indicator. would you like an instruction books for creating a new kind of indicator???

 

[jack hershey]

Quote from yoohoo:

Jack, you say...

"Trading is a precise mathematically based effort. There are no descretionary things like those that you raise in your Q's."

On some markets, like ES, there is an astounding mathematical precision, but it's not always there in the way we see it. Take channels as an example... they may give perfect reversals and then the channel fails. Someone else may see it as an exact fib reversal, but I was using channels and didn't see it until close to or at breakout.

I am convinced that channels are precise. It is known from Algebra that a line is precise in a mathematical sense.
Parallel lines are similarly precise. Ine the two equations representing the two parallel lines it is very evidence what is the same and what is different. I seek to know before the end of a channel that it is ending. Fortunately, agebraically expressed channels, overlap as an end effect (both ends) and a smooth transition from one to another (well before BO) always happens.

In the sense of trending, I trade with the new trend and am in my position throughout the last nondominant retrace of the ending trend which becomes the dominant traverse of the new trend before and during the price travel to the point in time and price that is used to Agebraically define the left trend line of the emerging new channel. This hold through price change is a hold that profits by the total intitial width of the new channel.

People who trade Breakouts of channels give up profits for a while before they exit or reverse on the BO that they use as a signal for taking action. Because they enter the new channel late, they also sacrifice some profits that could have been theirs.

You have just asked three questions (good ones) related to these matters. As you see many people are in the same boat. In effect you are trading slow fractals channels compared to others who are trading one level faster than you. these people do not have your three questions since they are doing concurrent multiple channels that include yours and also their faster channel.

I gave you an indicator that works on a fractal two fractals faster then your trading fractal to eliminate the three questions uncertainties and the fix also involved the smart money which leads the herd.

My position is always within the channels that are active during the position I am holding.

Your channeling technique requires lots of trial and error, lots of adjustment and discretionary skill.

I am glad to learn that this is your viewpoint. It is possible that others do not have the same perception and, thus, this difference would be something that would allow them to complete all the suggestions that you have made so far. Having done this, they find that they are very comfortable with their trading performances.

People who handle my appraoch and embelish it with trails, adjustments, and discretion do learn of errors and failure. They generally quit fairly soon. We are both glad for them since quitting is what they need to do with respect to my approach.

It is also true that all the while it has been determined that it is my responsibility regarding their failure because of a rather long litany of my inabilities to get their job done for them.

Obviously people who are very successful and achieve what is possible using my approach are all flukes by the established standard. I am flukey too, for that matter.

I have to live with the situation but I am producing some books on these matters in order to support those who have been successful. I have been informed as to who these people are, in part.

The mathematical precision can be seen with hindsight but there were lots of adjustments made to the channel lines because of random noise within expected boundaries or channel breaks.

With three different fractals running concurrently and having the noise duly noted on an indicator that is one fratal faster than the fastest fractal cahnneled, I do not see what you see. channels are projected at the very first opportunity. the channel volatility can expand. If and when it does it is always on the left side of the channel (the direction in which more profits are made). No uncertainty exists when profits are expanded.

Noise is always there. If something is always present it usually does not take on imprecise valuations through measurement. Noise is not important for making money; therefore it is not a drawback when money is being made. Those extra profits can be handled from time to time.

It is not good to look behind you while trading. If you do you are definitely facing away from your display. The space on the display that is most important is the space ahead of NOW (the the right on a screen). What is there are empty portions ofchannels waiting to be filled. Likewise for indicators like the DOM and T&S and the OTR tic charts.

Sitting in the future, there are many goings on. what makes the market flow so meaningfully is the alternative pathways being closed off one after another as the futre moves into the Present with but one remaining possibility.

It is difficult to build this playing field, but it is there and available to those who choose it. You didn't and I did. We made choices and have the consequences. As you see here there is a lot of pure hate coming at me. I am glad to acknowledge it and I am responsible for a lot of people doing what they do. Obviously I take it too lightly or I would bow to this majority. I don't though I just change cartiologists every once in a while.

The way institutions use channels requires very little adjustment. It is all automated and when the precise mathematical relationship is reached it is clear, obvious and easily programmed.

Isn't it the truth, though. My heart goes out to them. The world of making money is very different.

I think what you are doing is so discretionary it would be impossible to programme.

As you say it depends upon the person. If the person concludes that it is not dicretionary, it turns out to be awhole new ballgame

I have seen attempts on ET to understand what you are doing and backtest it.

I have heard the same but I have never seen the coding used. There is this gap between the talk and the walk. Just today some equity curves made it to publication. No premises, no coding, though. I am glad that coding is taking place. It is a good beginning for anyone to do if they have that interest. For exmple the answer to the three Q's you asked is coded up and available for anyone to use. It is forward testing so to speak. Maybe someday there will be a backtesting place somewhere and the codes used to backtest will be there and many people will use the backtests to get the same conclusions, or the code will be fixed to show what is really going on.

It made me laugh because it's so discretionary such backtests are doomed to failure.

There are many causes of backtest failures. As you say I am to blame for their failure so far because the backtesters think I am a discretionary trader and they think they are exactly discretionary and they can do a backtest. My continuing failure to lay out the rules is what is considered the basic screwup. the set of forward testing successes that are there does relieve some of the pressures on this backtesting level of work.

Discretion is an essential part of any method where precise mathematical, mechanical rules cannot describe what the trader is seeing.

I am very risk adverse so I feel that eliniating risk dictates what math has to be used to define systems. So I have spent the second half of my trading career refining the use of that particular math thatI began with, namely Boolean Algebra. the feature I like about Boolean algebra is that it deals with a numeration base that has only two integers there is never any probability involved as a consequence.

It took years and years for hard copy to be used. It was simply a case of the software langauges coming into being and beginning to have utility.

If you system is not discretionary, get it programed and make a fortune.

Wonderful Boolean algbra statement. Not inductive even. I think you've got it!! QED

You can see that by getting to a great conclusion, it may be possible for others who show up to get to the same place.

 

[Stealth Trader]

Quote from yoohoo:

as close to realtime as I can copy, highlight and post.

Indicator tells me here - no noise - before green candle is complete - reverse.

I don’t trade candles, time based bars, textbook patterns, or trend line breaks. Nor do I try to get in at the top or bottom. My main objective is to preserve capital by taking high probability trades with little to no heat, and in doing that, taking a clean slice out of the middle AFTER trend reversal is confirmed is the method of my madness.

Again, with after the fact charts, hindsight is always 20/20. Your entry could have just as easily went against you in real time, as that squiggly line was no doubt fluttering at the cross and could have crossed back down a few bars later. However, I note you have an outside green bar. Although it didn’t take out the bottom of the red bar, it did not break below and closed green at an area of some sort of cryptic support. I don’t use these setups, but can understand the merit of the trade from what little is there. I seriously doubt you can trade with any positive consistancy before the green bar closes on just the fluttering cross as you claim (I know, your secret sauce is the magic link missing, LMAO!). That said, there are probably as many trades elsewhere on your chart that didn’t fare well. Not painting the entire chart is a sign something is being hidden, aka, as cherry picking. But I’ll humor you and give you the benefit of doubt until you prove otherwise.

I don’t have ready access to GBP data, so I’ll just make use of your chart. Given the limited view of the chart displayed, broken down with CVB’s, my entry would most likely have been at the arrow I annotated on your chart, and perhaps would have shown a DB. Without having an actual chart, that is merely and educated guess at this point.

BTW, aren’t forex traders typically those who blew out their accounts and then scratched up a few dollars on their wifes credit card to open a forex account due to the extremely low minimum required?

http://i31.tinypic.com/30sfuqp.jpg


In edit: the "private" charts being posted publically is telling. There are dozens of places to post charts privately, and yet we are supposed to believe that the only motive for doing so here is a private conversation behind the scenes? Those doing so are showing their true colors.

 

[Stealth Trader]

Good day, chaps and ladies,
The manure is getting deep in here! And my goodness, don’t any of you have a life outside of this cesspool? It’s spring time, get your lazy butts outside and enjoy it!!!

YH, I’m sorry you waited by your screen all weekend waiting for me to reply!! But not to cause you any more anxiety, I’ll make a couple of quick notes to ease your tension. Consider yourself special, because I rarely post during market hours. We cave dwellers need every ounce of power that our two brain cells can muster chiseling those elementary trade setups on our stone tablets. Uggg!

To the thread, whenever anyone starts posting charts and then won’t explain what they are looking at under the guise of “it’s a secret,” it sends up a red flag to me. If someone doesn’t want to share their chart setups, I sincerely respect that. However, if they don’t want to reveal their strategy, then don’t post the chart, as it serves no purpose other than being pompous. That behavior comes across as either trying to impress the newbies or convince the masses that they are somehow are a god to trading hoping for attention and bowing at their feet. It would be a safe bet to say anything invented by those participating on ET has already been done by many others before them and most likely discarded to the trash bin several times over.

When people flavor their replies with “I trade huge size, I’m not going to show my hand, I don’t want “them” to go after my stop, etc.,” I find they are either play acting floor trader or are paranoid. It is a safe bet that “they” don’t have super computers scanning every word of ET searching for your stop. Furthermore, bloviating in lengthy empty rhetorical discourse how their superior insight is far above those they are trying to convince while remaining cryptic and giving nothing of value other than “I can’t reveal that” also brings out the red flags.

GL, you said I puzzle you in the manner I respond to some people. I simply have a low tolerance for bull$hitters, flipfloppers, and utter nonsense. On a lesser note, as an example, I will use your comment you have helped many traders. Great! But the real question is, are they making any money?!!!! You say so and so uses X indicator as if that somehow validates its use. And saying some floor traders use stochastics, well one only has to point to a certain bankrupt charlatan named oscar to discount that remark as having any value. You comment X is a good trader and profitable. Unless you are his CPA, and you very well may be, it serves no purpose other than trying to convince others that your way has merit if you do not disclose how you came across that information. Statements like these are what I consider empty rhetoric. All noise, no substance. Same as posting an after the fact chart void of any explanation pretending to be seeing something no one else is able to. This is where I start poking with sticks. I mean none of the above in a demeaning manner, and it’s certainly not directed towards you personally, as you have been nothing less than a gentleman. I’m merely making an observation.

Back to YH. The above may not apply to you, and make note that I made no reference that it did. But to be perfectly honest, I’m on the fence as to whether you are genuine or not. So far, your replies are full of holes and come across as nothing but delusions of grandeur. Of course, I most certainly will give you the benefit of doubt until you show otherwise. Moving on, one example is your claim of how you can magically see the future with moving averages when dipped in your secret sauce. The fact is, moving averages’s require many subjective settings, Exponential vs. simple, vs. weighted, vs. smoothed, etc. Then there is the infinite lookback period that must be decided. Is a 10 bar period better than a 50, or a mystical fib, or your mothers birthday, the month the moon lines up with the earth, etc. Of course, you can claim that your immeasurable wisdom of the market structures allows you to choose the perfect formula/number combination that allows you crystal ball clarity ahead of price movement. And we mere mortals can accept that empty response on face value or we can instead look to your own acknowledgement that channels can be built with mathematical precision. Given that channels are essentially two trend lines one above the other built on absolute values derived from price points that require no secret sauce, that pretty much blows your moving average theory out of the water, or any other indicator for that matter. Simply put, price being king to all else still stands on its own merit. If you need some magical make believe voodoo to reinforce the validity of an indicator, the indicator has no merit, as you can just as easily point your genius hocus pocus towards price alone and leave those “fluttering” indicators in the drawer. Admittedly, I haven’t studied your replies in-depth, and it is dark here in my cave, so feel free to so embellish further on my ignorance. I’m sure the troops will enjoy it.

Perhaps while everyone is thumping their chest comparing penis size, someone might take the time and ask little jimmy why he praised jack’s writings on page 40 and then attacks him several times later beginning on page 46. Especially those who continually patted him on the back for posting those “nice looking” colorful charts, as it didn’t do much for your credibility. Perhaps that will enlighten the group on the tone of some of my replies.

With all due respect, I maintain price is still the main ingredient and anything else is just fluff. I refer you to HolyGrails excellent description on page 22 of this thread. I couldn’t have said it any better myself. Contrary to the accusations, this is not Neanderthal “belief,” but the result of many years of my own research, spread sheets, and countless thousands of hours of screen time. Price doesn’t “flicker” and it doesn’t need to be “stiffened.” After 50+ pages, no one has statistically proven otherwise. And the ludicrous fallacy that traders first learn price action and then move on to indicators is as ridiculous as saying momentum leads price. And believing one lone stochastic doesn’t provide much information, but by stacking on an additional stochastic or two, you get clear cut signals. Priceless! Nonetheless, regardless of what one uses, newbies should be exposed to both sides of the equation. It is clear why so many fail at this game, thus my response.
Again, for clarification, I do not use textbook chart patterns or breakouts and those are not what I consider price action for the context of this thread. That type of trading will have the smart money cleaning your clock at your every move, so to speak. As for everything else, I have already explained my perspective on pages 12 and 32.
In summary, no proof, no merit, duly noted. From my cave in the land of Neanderthals, I remain in total awe of the genius's at work here in the Land of Oz, a.k.a. ET.

Best regards to all,

st

 

[shortorlong]

Thanks Stealth. Waiting to catch a smaller piece of a move after the direction has been confirmed is something that I need to get better at. Instead, I am always perched at the edge of my seat waiting to catch the beginning of the reveral - but why bother? 2 points at 90% consistency is worth a lot more than 4 points @ 60% consistency. It might not intuitively seem so but since I am only trading 1 car at the moment, I can scale up several times to capture 'more' of that 2-point move before needing to capture more points overall.

 

[yoohoo]

Well, I guess ST sums it up pretty well. There are PA traders who take the tops and bottoms, and those who like ST take the middle, more like Dow Theory. Nothing wrong with that - the big guys add to their positions where ST is likely to trade as the move has proven itself then.

Those who asked have been given all they need for hand holding proof and training that's results in excellent profits taking tops and bottoms using squiggly lines.

It's the old story: those who seek with an open mind find.

To those who take up my suggestions by PM, especially those who invest in some hand holding training on squiggly lines - it would be beneficial to return here in 3 months and say how you have progressed.

What you decide to reveal will be between you and Bill as I'm not sure how much he will allow you to show.

All I can say ST regarding moving averages is I demonstrated how they project into the future and yes, the settings were my personal settings. I am not suggesting they are the only settings nor the best settings - just what I use. They were not kept secret and I shared the template including the automatic drawing of future S&R and reversal times. It is just a method I employ and that I shared, that's all.

I also showed how to use EVRAA in realtime for two weeks. But I have no intention of giving everything I use away, especially to those who have already decided that squiggly lines don't work.

I think I have given as much as I can here and I never meant to argue a point - only show where further enlightenment is available.

So I shall go into retirement as far as this thread is concerned.

Good trading and every success in whatever trading style lights your fire.