The Stochastic Indicator

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Quote from Magna:

dawg and vorzo,

One very key element seems to be the infamous point #3, whether it's a continuation of the trend (simply forming a wider channel) or the beginning of a move in the counter-direction. What have you guys been using as a guide to either let #3 form (usually with stoch leaving the rocket zone, usually after an macd xo) or have you been generally just closing the trade and, like dawg yesterday, looking for a re-entry.

Jack, what do you suggest as an approach in allowing #3 to form a swing high/low as sometimes those counter-moves are very solid, and they don't stay counter for long forming the basis of a strong move in a new direction (eating up any profits or causing a loss). Or is allowing #3 strictly an intermediate strategy, and beginners have no place permitting such price movement against them, simply exiting when stoch leaves the zone. Thanks for any insights.
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Magna,

I know exactly what you are talking about. Sometimes I attempt some "rocket" trades. When you're in one, you start looking for a point 3, but sometimes stochastics leave the zone or a macd crossover occurs before it forms.

At the time, you don't know if the trade is going to be a total failure, or if a lesser angle degree channel is just going to form at the next point 3. I suppose the best trades will form point 3s with stochastics and macd still ok. So maybe a beginner should exit at the first signs of a flaw. If you're in a rocket, and a point 3 forms with everything else ok, then that's great, you just have another thing going your way and a new place to watch for flaws to develop.
 
Quote from Gordon Gekko:

Magna,

I know exactly what you are talking about. Sometimes I attempt some "rocket" trades. When you're in one, you start looking for a point 3, but sometimes stochastics leave the zone or a macd crossover occurs before it forms.

At the time, you don't know if the trade is going to be a total failure, or if a lesser angle degree channel is just going to form at the next point 3. I suppose the best trades will form point 3s with stochastics and macd still ok. So maybe a beginner should exit at the first signs of a flaw. If you're in a rocket, and a point 3 forms with everything else ok, then that's great, you just have another thing going your way and a new place to watch for flaws to develop.
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Thanks GG, you make some good points. Unfortunately stoch is leaving (or has left) the zone, and macd is crossing over (or has already crossed) most of the time while price is forming what might turn out to be #3. That's the dilemma.
 
Quote from dawg:

if your worst week is -1.50...you would wind up make a very nice living...considering when the market is moving you have nailing very good gains...just continue to refine your trading and you will be well on your way.

keep up the good work.
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Finally got to the end of this thread with good understanding. Didn't take notice of it until last week.

One question, what is considered good volume on the bars at the 1, 5, and 15 min levels?

This thread was way:cool:
 
May 13 Tuesday

No trades today. Several unexecuted buy orders. Don't like to chase on slow trend days like today.


buy order in at 943.00 11:21
cancel, don't like the 1.00 trin 11:21

942.50 buy order in at 11:58
stop at 5min trendline. on anticipation of slow trend.
cancel at 12:11 angle coming in too steep against the 1min trendline.

Missed the 1:35 little short rocket, busy doing something else.

2:40 may get in on break of low of day, if 5min macd doesn't xover to the upside.

buy order in at 940.25 at 2:44 (needs to trade down through to execute)
2:50, so far so good, slow pullback on light vol. 1min macd xo down. ah whatever, cancel buy order 2:54. Don't like the 1.00 Trin at all. not worth it.
 
Jack, what do you suggest as an approach in allowing #3 to form a swing high/low as sometimes those counter-moves are very solid, and they don't stay counter for long forming the basis of a strong move in a new direction (eating up any profits or causing a loss). Or is allowing #3 strictly an intermediate strategy, and beginners have no place permitting such price movement against them, simply exiting when stoch leaves the zone. Thanks for any insights.


My understanding for point 3 is that beginner rockets teach the entry point of the trade/trend, if rocket continues stoch entwined you made some money. Wash trades sharpen your entry point, refinement, so you have room to wait for a failed rocket to become an iceberg. If not exit for no lose. Iceberg continues to point 3 centers and becomes another rocket, starting the process over again until you come to a point of either continuation or change. Jack was right about one thing, he sure brought out this lurker. Any comments welcome, I've just recently started trading at a beginner level in equities, need all the help I can get.
 
Quote from dawg:

i have 5k, 11k, and 20k marked off on my charts....i use 7k or higher as good vol.
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Thanks, dawg.

Thanks Jack, and Tampa. This is an excellent way to analyze the market. My vision is just that much more clear.
:)
 
I don't have a hard rule for point 3, it's more on a case to case basis.
There is temptation to take profits at the away side but this isn't always the best solution, you miss on some nice moves if you don't reenter promptly. I am more inclined to exit early if the trend is weaker.
Generally I look for flaws. Usually the rocket is the first one to fail, so if that is the only flaw I'll wait. One flaw combo that works for me is a MACD cross before rocket failure with volume rising against the trend after peaking. Also cautious after moves on unsustainable volume.
I try to stay in longer and be less trigger-happy, it pays off more often than not.

For 1m volume, I look at "signal" volume - volume bars above the noise that caused moves. I find this to be a very reliable indicator of the current short-term trend.

vorzo
 
A day of lateral and slow trends - took early exits.

#1 short rocket -> lod break (dawg, I fell for it too)
Short 939.00 9:53
Cover 940.25 9:56 double bottom on 1m -> up volume rising -> rocket failing -> reverse
-1.25

#2 reversal -> iceberg?
Long 940.25 9:56
Sell 942.00 10:25 hitch at 50% -> snaps below -> failure at hod -> channel BO
+1.75

#3 long rocket
Long 942.50 10:59
Sell 942.75 11:25 MACD convg -> failure at hod = away side of lateral channel -> rocket failing
+0.25

#4 rocket reentry
Long 944.00 12:03
Sell 946.50 MACD x -> rocket failing. Didn't wait for pt.3 as the odd harmonics were getting weaker.
+2.50

Day +3.25
Week +8.25

Phew. Tough day.
 

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http://groups.google.com/groups?hl=...=en&lr=&ie=UTF-8&q=author:pjones%40yahoo.com+

Jack Hershey wrote in march 3 in 1999,

'for me I think it is INDU. That is what i have up on my split screen NYSE
on right and futures index on left. maybe it is my feed but they are in
sync after a point every day. I bracket my entry on two basis and i set
them 10 minutes before the open of INDU. I watch the overnight shifts get
cleaned out and have a preset spread for my futures index (DJ9H) to attain
relative to INDU as they get the that spread (20-30 points) then I know
they are going to start to move together. Up to that point the futures
index is a maverick as far as I am concerned. FYI for the last two days
the sync occurred at about 7:50 MST (9:50EST) or about twenty minutes into
the day. From that point on they remain in sync. As the spread varies it
becomes a powerful indicator of the lag in the DJ9H or SPOOS. the market
takes the trade on for me as soon as it hits one of the two bracket stops I
have in and the other is my first trailing stop. i note in a column next
to my working stops the next ones I will be setting from a line chart I
read continually. Once I write it down I will use it when I need to
tighten my stop as the trend continues. As soon as i can establish trend
in each of three separate concurrent ways, I go mostly on the confirmation
of the the three ways. right now I am on my fifth trade for the day. One
loosing ( a scratch out in congestion). this is as a consequence of
lateral motion that runs into a trend slope line to the right of my trend (
i have two displays of this characteristic one on a continuous line display
(DTN) and the other on a quote.com bar display. i use one min bars for
slope test.

i always have my bracket reentry settings developed with a phantom of the
market out thirty minutes. and i do this with two series of phantoms offset
by fifteen minutes. i try to set up for an accumulation of points over the
day on accounts that i trade sequentially to not crap up the market action.

i rum ICQ with another to confirm the phantom values and i have an ace in
the hole with whom i coordinate fills and when we are out because of
congestion.

This response has a punch line. The scalpers action is best seen by
comparing line charts DJ9H and INDU. when they are foling around I back
off my stops (or limits) on the side they are playing. I got axed on an
9303 today and improved my reversal by two points... and got a phone call
and an ICQ as a consequence......lol. It took me out of a long trend a few
minutes early (and lower than a phone call would have) but i only sat
through a narrow period where my new trend slopes weren't clean...some
emotion came up for me but the flack from two others chilled me out.

i left the market today at a little before 12:30MST, having accomplished my
desires for an average day. It is setting nicely for tomorrow, I didn't
think DJ9H would be below 9250 today.

I monitor CBS and DTN markets at a glance. I think the advance decline
stuff is on their minds as well as the volume of trading. I am very bias
in the volume area'.



Saul <pamnir@home.com> wrote in article <36DD7FED.54C67406@home.com>...
> Anybody know what the S&P floor traders are watching, that effect very
> short term moves?
> Here are a few possibilities:
> -Bonds
> -NYSE Tick
> -NYSE Trin
> -Dow
> -Nasdaq
> -Price levels, yesterdays high, low etc.
> -Others? order of importance?
>
> In Toronto we used to watch, the S&P screen, Dow, Bonds, and Gold
> (significant in Toronto)
>
> I assume the S&P traders are not watching the Toronto market :~)
>
> Thanks
> Saul
>
 
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