The Importance of Simplicity

[wally_]

Here are the days this November only when this pattern occured (the retracement to 61.8% level within the first 30 min bar) and could have been profitably exploited with 2.5 pt stop-losses and at least 6 pts of profit: 11/18, 11/11, 11/07, 11/06, 11/05. That's 5 out of the last 12 trading days, the frequency higher than 30%!

The reward to risk ratio is better than 2:1 and in some individual cases even better.

 

[dbphoenix]

Quote from wally_:


Today we had yet another example of this phenomenon, a pullback in ES took us to the 62% FR level and then we proceeded in the same direction scoring at least 6 points. This is not so infrequent from what I have noticed. However, it's good to have some additional reasons to enter at this level, namely you want to see that the pullback is weakening and today it was the case indeed. The stochastics were very divergent in 1 min chart, you could see a triple divergence and then a realiable candlestick pattern indicating a top.

Perhaps you could provide a chart that shows what you're talking about.

--Db

 

[wally_]

Quote from dbphoenix:



Perhaps you could provide a chart that shows what you're talking about.

--Db

Well, I did not know that it was such a foreign concept on this board.

I once tried to do it though, but somehow did not succeed.
Anyway, because my time today is limited, I will not elaborate on it right now, but I believe that if you know what Fibonnacci retracements (FR) are you will have no problem uderstanding what I mean. If you have a charting software that draws FR, check out the dates I mentioned and you will see what I meant. That's really simple.

 

[dbphoenix]

Quote from wally_:



Well, I did not know that it was such a foreign concept on this board.

I once tried to do it though, but somehow did not succeed.
Anyway, because my time today is limited, I will not elaborate on it right now, but I believe that if you know what Fibonnacci retracements (FR) are you will have no problem uderstanding what I mean. If you have a charting software that draws FR, check out the dates I mentioned and you will see what I meant. That's really simple.

I do know what Fibs are, but I'm afraid I don't see what you're talking about. If you don't have the time, tho, I won't pursue it.

--Db

 

[Girlpower]

Take a look at the chart I posted and read the explanation. It's along the lines of what you seem to be thinking. Anyway, It's something I do often to find the entry point. I just don't think of it in those terms. That's one of the advantages of subdividing into smaller chunks like 15 mins as I did or 5 mins or whatever rather than using the actual 30 mins bars religiously.

As to the % times of a deep retracement. I can't check right now, but I'll get back to you when I have some idea. I won't be going back much before october though....

Natalie

 

[wally_]

Quote from Girlpower:

Take a look at the chart I posted and read the explanation. It's along the lines of what you seem to be thinking. Anyway, It's something I do often to find the entry point. I just don't think of it in those terms. That's one of the advantages of subdividing into smaller chunks like 15 mins as I did or 5 mins or whatever rather than using the actual 30 mins bars religiously.

As to the % times of a deep retracement. I can't check right now, but I'll get back to you when I have some idea. I won't be going back much before october though....

Natalie

Great, I think checking through October would be enough to get a better idea how well it works. Where is the chart? Any problems with that? I had some too, that's why I am asking.

Using smaller bars is a necessity, of course. I use 3 min bars, along with bigger ones (7-8 min) to see the structure of the first 30 min bar and the next 30 min bar. That gives you a better idea where the best entry set-up will possibly be.

 

[Girlpower]

Quote from wally_:


Where is the chart?

Somewhere on page 22. The explanation of what I did that day is a few posts later or page 23 perhaps...

I'll check back through my data and come back to you.

Natalie

 

[wally_]

Quote from Girlpower:



hi Wally,

Any books in particular you could recommend to read (Plus if you know where to obtain it)?

thanks
Natalie

OK Natalie,
sorry, but did not check this thread out for many days, so I am responding only now.

I recommend both Sperandeo's books, but there is some overlap between them so you may want to choose one or the other. Check them out from your local library, or from Amazon.com. I also recommend 'Sniper Trading' by George Angell, it has some good ideas, specifically tailored towards SP trading.

Hope this helps.

wally_

 

[wally_]

Quote from Sophomore Jinx:

That's interesting - because today looks like it would've been a pretty good day for a downside breakout of the opening 30-minute range, provided one could just sit there, hold the position, and watch the market putter all day.

If you mean 11/11/02, then yes, you could have traded it successfully on a pullback (61.8% FR), along with many other days where this pattern occured (see my other post with such days in November listed).

 

[wally_]

I saw your chart.

I would short by the green trendline on the upswing if it reached 61.8% FR and if I had some reasons to believe that the swing is weakening (for instance, a stochastics divergence in a smaller time frame). That would give me some extra points if it went my way, but it would that day as you see.

Of course, I don't know if I had reasons to do it, I don't have any data for this time, so cannot see a subtler stucture that would inform me what to do.