The Stochastic Indicator

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Jack,

Thanks for answering my questions. Your insights are helpful and equally challenging, as always :)
I'm still working on backtesting - I am comparing results from single line vs both line entries, high/low break entries (a la dawg), in both NQ and ES, entry on bar close vs. middle of bar. Should be done in a few days.

I haven't read through the whole thread yet - will print it out today and read the part about points 1-2-3.

dawg,

Thanks for your answer. Another question - you seem to take some of your entries based on MACD crosses - is this discussed earlier on in the thread or is it your own strategy?
 
yes. after you have been trading rockets for a while it was suggested that instead of just exiting your position when a rocket ends (or fails) you could reverse into the opposite direction(double your contracts on the exit)...while there are potentially different points to reverse/exit a rocket for example: macd peaks, macd xo or macd divergences (after a xo), exiting near top of channel and reversing, channel break....i happen to use the macd xo after a rocket exit for reversal point.

generally it goes like this:

rocket trade--->stoch leaves rocket zone--->price breaks trend channel--->macd xo

So normally you would just exit at some point along that chain and recently i have been looking to reverse into a new trade. your two most likely outcomes i believe are : congestion, convergence, centering OR reversal. The first outcome c,c,c leaves you with a small gain/loss or wash trade and the reversal sets you up early for a potential rocket trade.

i would catergorize it as the next logical step after the rocket trade.

some times I will get a 'rocket alert' that will not setup (break hi/low of bar) and then i will be on the look out for the macd xo. in that case there is no reversal just an original trade, but the process is really the same.

rocket alert/no setup--->stoch leaves zone--->macd xo

there is not a lot of black and white to the methodolgy and this is all my opinion of how to use it...or how it fits me best right now. at first reversing from a rocket was too much to think about. i was looking at all these indicators and drawing trend lines, etc., but slowly some things have fallen into place.
 
dawg,

Great post thanks. Clarified some stuff for me. Can you please go over the point 1 2 3 channel drawing?

Today I sim traded ES for a change. Volume is much higher, and it whips around more and faster than NQ. In this sense NQ is probably better for beginners.

Tried my hand with a few wash trades in the morning since the market didn't seem to trend much. Then tried a MACD cross after a failed rocket and got out when it stalled at congestion. This was somewhat of a wash trade too. Quite the laundromat but it's nice to be able to go in and out without hurting yourself. Now I gotta work on the timing of the washes.

Then a long rocket started to set up. Got in on the high volume bar at 11:12 861.50 and stayed in as it retraced from 864.00 after fast line left the 80 area as it seemed to be entwining. Then volume dried up on the next bar (5,200) so got out for a small gain. Then gave up as DU settled in.
See notes on chart.
I tried to draw a point 1-2-3 channel, not sure I got it right.

Good trading in the afternoon (I'm off to work).
 

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Quote from vorzo:


Tried my hand with a few wash trades in the morning since the market didn't seem to trend much.
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These 'wash' trades may be good for learning, but they can attrit your account badly.

Last fall I made my first foray into NQ trading. My two month result was $40 positive, but after adding in commissions I lost several hundred dollars. Lot of 'wash' trades, but commissions tilt against you.

g
 
Dawg,

I was wondering why you didn't get into the 13:45 short rocket? Were you not at your computer or was there something else in your decision process that kept you out of that trade? Or maybe I'm not reading the indicators/charts correctly?

Your trade posts are a great supplement to Jacks posts.

Thanks
 
the volume kept me out

1:35 s(0.00, 7.14) and the volume was 2,031 (which is just pathetic) and with the choppiness of the day so far i wanted more volume.

volume picked up at 1:45 to 6,609 (still not great) but at that point i did not want to chase.

hope that helps.
 
Quote from vorzo:

dawg,

Great post thanks. Clarified some stuff for me. Can you please go over the point 1 2 3 channel drawing?

Today I sim traded ES for a change. Volume is much higher, and it whips around more and faster than NQ. In this sense NQ is probably better for beginners.

Tried my hand with a few wash trades in the morning since the market didn't seem to trend much. Then tried a MACD cross after a failed rocket and got out when it stalled at congestion. This was somewhat of a wash trade too. Quite the laundromat but it's nice to be able to go in and out without hurting yourself. Now I gotta work on the timing of the washes.

Then a long rocket started to set up. Got in on the high volume bar at 11:12 861.50 and stayed in as it retraced from 864.00 after fast line left the 80 area as it seemed to be entwining. Then volume dried up on the next bar (5,200) so got out for a small gain. Then gave up as DU settled in.
See notes on chart.
I tried to draw a point 1-2-3 channel, not sure I got it right.

Good trading in the afternoon (I'm off to work).
More...

My version.
 

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Quote from bassocat5:

Dawg,

I was wondering why you didn't get into the 13:45 short rocket? Were you not at your computer or was there something else in your decision process that kept you out of that trade? Or maybe I'm not reading the indicators/charts correctly?

Your trade posts are a great supplement to Jacks posts.

Thanks
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Could you post the chart you are looking at ,please
 
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