The Stochastic Indicator

[bubba7]

Quote from illiquid:

Do people really need stochastics to tell them something is reversing from an "oversold" condition? If you trade a single vehicle, whether it be a stock or future, and are capable of sitting down and watching it day in, day out, noting where the levels of resistance and volume are, you will be way ahead of any price/volume derived indicator out there.

Stochastics will not tell you ...."something is reversing from an "oversold" condition?". You are making a very common mistake.

 

[bubba7]

Quote from oddiduro:




This post has been pivital for me.

I went back over the last 4 days and re-read this entire thread. It is notable that the reading has been MUCH easier. Something clicked. It was like Neo seeing the Matrix for what it is. The market moves in slow motion now, I wish I could truly relate why.

I have seen the flaw in using the moving average ribbons.
I have also seen the flaw in using Gann 1/8ths. These are how I made money in the past.

One was great for trends, the other great for range bound markets, neither handled the transition well at all, which is why I finally opened this thread after watching it sit for 2 months.

I understand clearly now the ability to make money every day.
Reversing out of the failed rockets and using the 1 min chart to slolom back across the channel was my primary key. Points 1-2-3 was the other key.

Thanks for the fix, Jack. Thanks to Dawg and Vorzo, and Tampa, for documenting their own process of evolution.

Regards,
oddi

thanks for posting. I really appreciate your incites.

Everyone here is able to see getting rich is a personal process rather than anything else when it comes right down to it.

when you "set stuff", you never will experience it leaving you.

The most important part of this thread, without any question, is the process people contribute here over time that states how they do, how they feel, and how they learn and what they understand.

I am canning all this for reference, etc. But the fact is, it is the day to day process where people achieve their plateaux is where its at.

A lot of people hit this thread, read it, and that is sufficient to absorb stuff to meld with their personal approaches. Later on it can stand as a comprehensive strategy for both equities and futures indexes. The process is getting us there.


If a person wishes, there is a point where using several contracts is a good idea. Even if you are not expert and have the whole picture, it is clearly possible to use intermediate stuff and trend following to begin to pull down a good money flow.

We are now months away from the backtester syndrome of forums. For what ever reason I am seeing a lot of threads that deal with a wide variety of substantive content that is showing people making good returns. Also I notice that many people here are not making strange funny noises any more. All of this is giving us a chance to get more focused on upgrading the levels of everything.

 

[nkhoi]

Quote from oddiduro:


It was like Neo seeing the Matrix for what it is. The market moves in slow motion now, I wish I could truly relate why.


Regards,
oddi

now if you speed up your posting then we can see where it going simultaneously.

 

[dawg]

fast stoch on 5m bar, and i wait for close
and i reverse out of succesfull rockets most of the time...especially if their are divergences.

 

[oddiduro]

Quote from nkhoi:



now if you speed up your posting then we can see where it going simultaneously.

I will make an effort to do so.

BTW, I understand that you are the one who brought Jack here. Seeing that this is the most viewed thread on this site, thanks would be an understatement, but I'm doing it anyway.

 

[oddiduro]

Okay, when the stoch leaves the tape( 75 - 25 ) and MACD is good, do we enter, or should we wait until price breaks it's channel?

Conversely, if price re-enters it's channel on an apparent failure, should we hold as beginners until stoch re-enters the tape, or should we exit immediately?

Now if we wash, that would answer the question, but I don't want to assume anything at this point.

If we do in fact wash, and price re-enters the old channel along with stoch falling below 75, Am I presuming that it is okay to slolom back to the base of the old channel using 1 min MACD crossovers?

Lastly, as long as we have a twirling stoch, we should hold the rocket until point 2 and 3 of the new channel appear(as point 1 will be in the old channel), is that the correct premise?

Thanks!

Dawg, these question are to Jack, but I think it is established that you are his star apprentice, so if you would like to chime in, I am all ears.

 

[oddiduro]

Quote from oddiduro:

Okay, when the stoch leaves the tape( 75 - 25 ) and MACD is good, do we enter, or should we wait until price breaks it's channel?

Conversely, if price re-enters it's channel on an apparent failure, should we hold as beginners until stoch re-enters the tape, or should we exit immediately?

Now if we wash, that would answer the question, but I don't want to assume anything at this point.

If we do in fact wash, and price re-enters the old channel along with stoch falling below 75, Am I presuming that it is okay to slolom back to the base of the old channel using 1 min MACD crossovers?

Lastly, as long as we have a twirling stoch, we should hold the rocket until point 2 and 3 of the new channel appear(as point 1 will be in the old channel), is that the correct premise?

Thanks!

Dawg, these question are to Jack, but I think it is established that you are his star apprentice, so if you would like to chime in, I am all ears.

After thinking about it some, I have concluded that if the Stoc and MACD both indicate a trade should be taken, then we should take the trade, regardless of postion of price in the channel. If price bumps the channel and reverses, we can still just slolom down to the base of the channel.

Nkhoi, I cannot trade everyday, as I am a nurse supervisor ( yes, I am male) and I take a lot of on call stuff. But if you all would like me to follow something on a slower fractal, I could do that. I could also screen for equities that are within a channel, and we could watch for the rockets, and get some stuff in on trading the slower fractals.

 

[vorzo]

After a one week absence, I tried some trades (simulated) this afternoon.

#1 centering -> VDU BO (bracketed)
13:43 long 1012.50
13:454 sell 1011.75 failed BO
-0.75

Passed on rocket signal at 14:00 as MACDhist wasn't there; resistance at 1014.00

#2 centering -> VDU BO (not bracketed)
14:19 short 1011.75 late entry
14:21 cover 1012.75 failed BO
-1.00

#3 short rocket
14:44 short 1011.25
14:49 cover 1011.25 failed rocket
0.00

#4 rocket reentry -> low bd
15:05 short 1010.00
15:08 cover 995.25 huge spike down -> started to whip up
+14.75

Turns out trades below 995.75 were busted so I'd still be short 1 car at 1010.00 -> cover after IB bulletin was released.
16:07 cover 1001.75
+8.25

#5 MACD x -> point 3 bounce
15:38 short 1005.50
15:45 cover 1000.75 after bounce off 1000.00 support
+4.75

Day +11.25 / 5 trades.

Screwed up on the VDU BOs with late exits; bracketing ensures an earlier entry and lesser loss if BO fails.

Got lucky on the short rocket - I hope some people nailed some nice cash on that spike. This is the second error causing a major spike in two weeks - protective stops certainly save your ass in such situations.

 

[nkhoi]

Quote from oddiduro:



Nkhoi, I cannot trade everyday, as I am a nurse supervisor ( yes, I am male) and I take a lot of on call stuff. But if you all would like me to follow something on a slower fractal, I could do that. I could also screen for equities that are within a channel, and we could watch for the rockets, and get some stuff in on trading the slower fractals.

don't worry about real time call just interest in your 'insight' of this method as oppose to MM or Gann.

 

[oddiduro]

Quote from nkhoi:



don't worry about real time call just interest in your 'insight' of this method as oppose to MM or Gann.

Sure, to sum it up for me: STRENGTH OF TREND.

Gann is based on the time of a move, in a nutshell. He used astro, and natural cycles to time the market. Fine, the only problem is with whipsaws. Being whipsawed all over creation is the problem I would say most traders try to fix without losing half of their profits first. Jack fixes this with the rocket => failed rocket=> slolom sequence and wash trades.

Murrey Math is modification of Gann 1/8ths and is a nice system. I don't have anything negative to say about it, except that because it is Gann derivative, it has the same flaw, which is objectively determining strength of move, and the potential reversal zone for MM is very large, in my opinion.

Jack has covered almost anything that can happen in a market scenario. Slow and fast trends, lateral trends, range, congestion and centering, and even how to apply trailing stops.

Yesterday, I switched to a 30 min fractal to get the channel because of the large gap up. The 3 point channel worked to perfection. Multiple time frames is something I could not do before this thread.

Bill Williams' Profitunity is not half bad either, except, once again, a lateral trend can whipsaw you into oblivion.

So, as I belabor this point one last time.

The Rocket Method is the only method that effectively handles the lateral trend, for me, anyway.

Thanks

Oddi