The Stochastic Indicator

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Quote from ges:



Jack,

No doubt it is all covered in previous posts, but could you summarize your info on 'flaws' in one message?

g
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Use your sequence list for this.

Flaws are there at every branch point as blocks. Look at each branch. You see that either of two sequences will unfold. both branches take you somewhere. The one that contains the flaw takes you out of the trade because it cannot continue.

Here are some possibilities.

1. The most popular: I didn't start dong sequence lists yet.

2. I only have then for some parts of how one indicator works.

3. I have a lot of thenm listed but I didn't combine them.

4. I rethought it and it is too much work.

5. I know how they work in my mind ;I don't have to take notes.

6. I'm waiting for a short list of flaws so I can sprinkle them
around.

Okay here is a sequence on price primarily.

Congestion ends with a volume flaw(lower volume) so you stop slaloming and exit. The price goes into convergence, you stay sidelined and volume falls more ( no flaws so you continue to be sidelined) You see VDU and price centering. you have note on the departur of the odd harmonic in the congestion , the appearance of the even harmonic in the convergence and you see volatility shifting on and off in the centering. All no flaw sequences.

A price formation on centering appears to make it unsymmetric. Look at this as a flaw for a bracket entry. Be cautios. See a FTP or a FBP form. You branch to either of those and look for the sequence to give you increasing volume, and a price BO. What is the flaw here that can come up? Volume picks up slowly and is not sustained. This is a failure to BO indication. Sure enough you see that you are looping back into another round of congestion, convergence and centering.

The above is a nice package of sequences. As a one pager, it is the most important. You can put on a 5x 8 card the squence for washing as well as a close second.

The point for flaws is that you can do all the numbered stuff and gradually you develop a consciousness. Flaws are voids in squences usually. "What wasn't that?" If a gap occurs in a well etermined sequence you take it as a signal to optimize and exit and not reverse ever.

This is how you gradually get to KISS on this stuff. the topo map gets very clear.
 
choppy day. big time struggles.

1. trend line break long

macd was positive, stoch had left short zone and down trend line was broken...long @ 877.50. stoch cannot not aboe 50% (10:10 and 10:15 readings - trend still down) mkt reverses and exit at 875.50.

long @ 877.50
sell @ 875.50 -2.00

day: -2.00 16 days: +36.25

2. rocket long (early entry)

12:50 s(76.19, 77.48) macd hist +0.45

entered this rocket earlier then normal...saw a triangle break upward and increase in volume so i entered earlier than i normally would...doh!

stoch leaves zone and macd xo so i exited.

long @ 800.50
sell @ 879.50 -1.00

day: -3.00 16 days: +35.25

3. bo of convergence (triangle formation)

1:25 bearish engulf on increasing volume...1:35 looked like triangle/centering was breaking out down got short on trendline break....low volume was big concern...market quickly reversed...exited

short @ 878.25
cover @ 879.75 -1.50

day: -4.50 16 days: +33.75

4. rocket short

2:40 s(25.00, 24.12) macd hist -0.43

short on the break @ 877.50..looked good until verly low volume inside bar at 3:00 (volume 1,982) next bar was increasing green and trendline break...so i exited....promptly thru computer out window and banged head on table.

short @ 877.50
cover @ 878.25 -0.75

day: -5.25 16 days: +33.00

ugh. not a good day for me....after good day yesterday maybe i was trying to push something that wasn't there...not sure. very disappointed. i am going to stand in the corner...i need a time-out.

:mad:

edit: looking back volume barely ever over 10k on the 5m bar during trades or most of the day....clearly a warnign sign.
 

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Hi Jack,

Thanks so much for sharing your insights. I'm playing catch-up with this thread and would be grateful to you if you would help speed up my understanding.

(1) Please expand on your comments in your flaws summary that deal with congestion, convergence, and centering. Specifically, what do you mean by "harmonic," as in "departur[e] of the odd harmonic in the congestion, [and] the appearance of the even harmonic in the convergence"? Also, please explain what you mean by "see volatility shifting on and off in the centering." Does this shifting of volatility manifest itself in an indicator sequence or are you referring to price spiking up and down?

(2) How do you distinguish a market that is going into a slow trend (play ice bergs) from one that is entering congestion (slalom)? From my vantage point, slow trends resemble lateral movements especially at their inception. You've repeatedly said that congestion (along with convergence and centering) follow rockets. What is the precursor to a slow trend?

Thanks again.
 
Besides generating sequence lists are we done categorizing?

Where, when and how is the market pace for the day determined?

What will the days’ pace be?
i) Slow paced solid trend
e.g.. 11/27/02 01/06/03
where macds: 30m div 5m entwining 1m cycling
ii) Faster paced solid trend
e.g 03/17/03 03/25/03 03/28/03
where macds: 5m div 1m cycling
iii)Psycho Fast whiplash kind of day a.k.a. Greenspan
e.g. 11/06/02
where macds: 5m and 1m have violent +/- swings
iv)A nontrend but slalom kind of day
e.g. 04/03/03 morning session
where macds: 1m peaks and troughs with a marginal h/l rnge
v)Do nothing, ‘is the paint dry ?’ kind of day
e.g. 12/24/02
where no volume, no h/l range, nada

Any other types of day to be categorized ?

(KEWL)
 
Quote from colina:


v)Do nothing, ‘is the paint dry ?’ kind of day
e.g. 12/24/02
where no volume, no h/l range, nad

(KEWL)
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...and Merry Xmas to you too.
 
It sure was a choppy day today as mkt hit Fri congestion area.

#1 the phony channel BO got me too dawg. Fast stoch rising above 50. I fumbled the execution and entered at the very top.

Long 878.25 10:18
Sell 876.00 10:24 sold as fast stoch failed at 50, trying to sell on the ask gave away almost 1 pt.
-2.25

#2 rocket signal, channel BO, MACD hist>+0.4. Didn't know about rumor.
Long 879.50 10:56
Sell 878.50 11:12 held through the correction and sold when low of 11:05 bar was broken. 11:05 bar was an inside low volume bar = flaw, should've exited right away.
-1.00

Day -3.25
Week 8.25

What did me in was clearly not staying on the sidelines despite recognizing the chop factor. Overconfidence from yesterday and trying to squeeze a quarter by buying bid/selling ask. Bleah.


On the sunny side, I figured out how to test for intrabar signals but ... my WealthLab trail expired. Damn.
If anybody running WL is willing to test it please PM me and I'll give you the script. LOL or you can give me your registration number and I'll do the testing.

Good trading tomorrow.
 

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Vorzo.

You might find some one on the www.wealth-lab.com site itself who is willing to program the system for you. In fact having over 600 systems on the site I am sure there is one that has part or all included. If you post the logic there I will take a look.
 
vorzo,

I can backtest for you but I have limited data. I think traderkay has 3 years worth of data and would be willing to do a backtest for you.

pretzel
 
if it thought i sucked yesterday..the only way to explain my trading today is vomit. pure vomit. yesterday too agressive today too jittery....traded like crap....last two days feel like big steps backwards....fear of losing got to me today...total choke fest. ugh.

1. long rocket

10:05 s(93.75, 82.64) macd hist +.835

long on break...vol spike at 10:15..saddam crap...new crap put on alter for exit...exited at 886.25

long @ 882.75
sell @ 886.25 +3.50

day: +3.50 17 days: +36.50

2. short rocket

s(9.76, 19.22) macd hist -0.99

short on break, there was big vol on signal bar (21,435) worried about exhaustion bar.. .11:30 low volume inside bar(6,229) still well within trend macd ok, stoch ok and it exit on the break of high of low vol bar @ 877.75.

short @ 867.75
cover @ 877.75 -1.00

day: -2.50 17 days: +35.50

now i had chances to get back in, but did i...nope. choker. even saw the 11:50 tiny vol/price, but didn't do anything when it broke lower...all i could think about was yesterday whip fest.

anyways this trade should have been a whopper...i even had the range break spotted on my charts (11:15-881) but waited for rocket signal.

real trade=whopper
me=idiot/choke

moving on...

2:00 failed bo, but didn't bit so was looking for a reversal rocket....

3. long rocket

2:25 s(85.00, 79.21) macd hist +.54

missed my entry (first one ever) and then chased (brilliant!) entry to 872.25 and it basically reverses in my face.

long @ 872.25
sell @ 869.50 -2.75

day: -0.25 17 days: +32.75


4. rocket fail macd xo reverse

so the rocket fails and i reverse, but do i reverse right away (of course not)..short at 868.75...mkt reverse...i am getting chopped to death...cover @ 871.75

short @ 868.75
cove @ 871.75 -3.00

day: -3.25 17 days: +29.75

i have pulled the plug on my trading at this point

3:10 is a rocket signal...no chance in hell i am taking this trade...pass.

3:40 mkt breaks longer uptrend channel break...pass (good trade)

it's like i see the pieces but just can't get it all to work right...not enough confidence. ugh.
 

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If it's any consolation, your past winning trades went a long way towards reinforcing for me how this system works. Now your losing trades (and the subsequent replies) are helping me to see some of the "flaws" and how to respond to them. Thanks a bunch for posting.
 
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