Thanks for your encouragement Jack. Here's a link to the first of the 12 charts. Hope this helps!
http://www.elitetrader.com/vb/showthread.php?s=&threadid=15072&perpage=6&pagenumber=2
The Stochastic Indicator
- Thread starter jack hershey
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Thanks for your encouragement Jack. Here's a link to the first of the 12 charts. Hope this helps!
http://www.elitetrader.com/vb/showthread.php?s=&threadid=15072&perpage=6&pagenumber=2
This is direct quote from eSignal website, where Joe Dinapoli wrote about how to use MACD and STOCH correct way, and it looks like similar to what Jack is teaching here other than rocket entry (slalom, iceburg).
'A Methodology for Using the DiNapoli Preferred Stochastic and the DiNapoli MACD included in the eSignal Application
The methodology I am about to describe is designed to address the problem of entering a market with utmost safety and minimal risk. I believe the money in a trade is made upon proper entry. If you enter right, youâre likely not to be stopped out before it goes your way. If you enter in the right direction but at the wrong price, youâre gone before the market goes your way.
To set the stage for this unconventional trading strategy, certain assumptions must be agreed to about the way markets behave. If you donât agree with the assumptions, the methodology will not make sense, and you should not use it. Also, I would expect anyone attempting to employ these strategies to have a minimum of one year of experience actively trading. A three-year minimum is preferred. You should also have a working knowledge of the conventional use of the Stochastic and MACD indicators.
The reason for this can be summed up by those of you old enough to have heard Jack Benny play the violin. He knew how to play the violin UNconventionally to get the results he wanted because he knew how to play the violin conventionally -- very well.
The assumptions we will start with are:
1. Markets are in run-away trends infrequently.
2. Markets consist of a series of actions and measurable reactions.
3. Buying or selling breakouts is a dangerous way to trade.
4. Buying dips in an up trend and selling rallies in a down trend is a much safer way to trade.
5. Using predefined profit objectives ensures a high percentage of winning trades.
If you agree with 1 and 2, you can see why points 3, 4 and 5 are valid.
Rules regarding the use of the DiNapoli Preferred Stochastic and DiNapoli MACD indicators (included in the eSignal application):
1. I use the DiNapoli Preferred Stochastic and DiNapoli MACD as trend-defining tools only. I do not use them as overbought / oversold oscillators or momentum indicators. The DiNapoli Detrended Oscillator, also pre-programmed in eSignal, can be used for that analysis and is far more effective.
2. An up trend signal in either indicator is given by the fast (blue) line penetrating the slow (black) line from below. A sell signal is given by the fast line penetrating the slow line from above. The position of the lines is unimportant in the scale of the indicators, but the angle of the penetration is significant. The sharper the angle, the closer to 90 degrees, the better for determining the quality of the subsequent trend. (See Chart 1.)
3. eSignal has gone to considerable trouble to make available to you the correct formulas and numerical inputs to make these studies effective. Many years of development have gone into their development. Change them at your own risk.
The idea behind this pair of studies is pretty straightforward. The DiNapoli MACD is the strong trend-defining indicator, and the DiNapoli Preferred Stochastic, deliberately weakened, defines counter-trend rallies.'
link: http://www.esignalcentral.com/learning/likepro/jdinapoli/default.asp
'A Methodology for Using the DiNapoli Preferred Stochastic and the DiNapoli MACD included in the eSignal Application
The methodology I am about to describe is designed to address the problem of entering a market with utmost safety and minimal risk. I believe the money in a trade is made upon proper entry. If you enter right, youâre likely not to be stopped out before it goes your way. If you enter in the right direction but at the wrong price, youâre gone before the market goes your way.
To set the stage for this unconventional trading strategy, certain assumptions must be agreed to about the way markets behave. If you donât agree with the assumptions, the methodology will not make sense, and you should not use it. Also, I would expect anyone attempting to employ these strategies to have a minimum of one year of experience actively trading. A three-year minimum is preferred. You should also have a working knowledge of the conventional use of the Stochastic and MACD indicators.
The reason for this can be summed up by those of you old enough to have heard Jack Benny play the violin. He knew how to play the violin UNconventionally to get the results he wanted because he knew how to play the violin conventionally -- very well.
The assumptions we will start with are:
1. Markets are in run-away trends infrequently.
2. Markets consist of a series of actions and measurable reactions.
3. Buying or selling breakouts is a dangerous way to trade.
4. Buying dips in an up trend and selling rallies in a down trend is a much safer way to trade.
5. Using predefined profit objectives ensures a high percentage of winning trades.
If you agree with 1 and 2, you can see why points 3, 4 and 5 are valid.
Rules regarding the use of the DiNapoli Preferred Stochastic and DiNapoli MACD indicators (included in the eSignal application):
1. I use the DiNapoli Preferred Stochastic and DiNapoli MACD as trend-defining tools only. I do not use them as overbought / oversold oscillators or momentum indicators. The DiNapoli Detrended Oscillator, also pre-programmed in eSignal, can be used for that analysis and is far more effective.
2. An up trend signal in either indicator is given by the fast (blue) line penetrating the slow (black) line from below. A sell signal is given by the fast line penetrating the slow line from above. The position of the lines is unimportant in the scale of the indicators, but the angle of the penetration is significant. The sharper the angle, the closer to 90 degrees, the better for determining the quality of the subsequent trend. (See Chart 1.)
3. eSignal has gone to considerable trouble to make available to you the correct formulas and numerical inputs to make these studies effective. Many years of development have gone into their development. Change them at your own risk.
The idea behind this pair of studies is pretty straightforward. The DiNapoli MACD is the strong trend-defining indicator, and the DiNapoli Preferred Stochastic, deliberately weakened, defines counter-trend rallies.'
link: http://www.esignalcentral.com/learning/likepro/jdinapoli/default.asp
I had something happen today.
I was doing a basic rocket.
Volume went against me and I washed twice. I wanted to follow the rules strictly today and not take any drawdowns.
Of course, an iceberg trade would have been profitable.
My question is, should we allow a trade to go slightly negative if the stoc is still above 80?
My inclination thru experience now is to take the iceberg and ride the icberg to the other side, regardless of drawdown.
Of course I see the purpose of washing, but shouldn't we allow some degree of drawdown if we are in an iceberg?
Thanks
Oddi
I was doing a basic rocket.
Volume went against me and I washed twice. I wanted to follow the rules strictly today and not take any drawdowns.
Of course, an iceberg trade would have been profitable.
My question is, should we allow a trade to go slightly negative if the stoc is still above 80?
My inclination thru experience now is to take the iceberg and ride the icberg to the other side, regardless of drawdown.
Of course I see the purpose of washing, but shouldn't we allow some degree of drawdown if we are in an iceberg?
Thanks
Oddi
The reason I am asking is because sometimes getting in a rocket means getting in closer to point 2 than to point 1, so when we retrace to find point 3, the trade will go negative.
I don't like to exit a trade unless it breaks the low of point one, or fails to traverse after the second point 3.
Is that correct behavior?
I am going through the expensive process of 'proving' to myself that nothing interesting happens when 5min vol avg is well under 9k.
However, I caught all of the afternoon iceberg (after a momentary exit due to the volume over 20k, which has been a strong reversal signal over the past couple of day), and ended up 1.5 points on the day (disappointed in myself, but at least its a positive number)
I have index cards.. tonight we build a flaw box. I've already got a running start on some sequences.
regards,
laz
I read several times both of your posts.
I know my chart was after your post.
You are good a making rational judgements at this point.
Do what looks best. After that be very aware of the market and sequences. The result will be that you will make larger % of the entries to begin. You are working on getting trades completed as a first order of business. As they pile up, you will understand that you are doing quite well.
Thenyou will gradually do better still.
My graphic may just look casual as it sits there. You are working your way along every millimeter of it using a few solid principles. Get used to the market at any instant hnding out a price value of some sort. But keep the picture of the situation in hand too.
The market goes along. It, at the time of your entry is flawless. You figured out a big chunk of facts to enter. You entered. Flaw box sitting there. The actual fact is that it could be closed as you enter. As you sit, you at some point will get the urge to open it up. Well if something gets your attention, it has to deserve your attention. You open the box when the sequences, as they roll along, put you in a place where you say: "Gee another neat thing to tuck into the sequence list" or "Uh oo..theres a fly on the chart" It's not a fly but it is not a positive sequence backup reinforcing neat addition.
This is not laboring the point.
Your two posts are really inciteful and terrific. You can and will stand a little gaff (being a little bit across the line) once in a while. I am leaving the line there now in this post. I could make you erase it maybe. We want to leave it thee in light yellow though. Make it a little harder to use for judging. Make it there just for observations related to monitoring.
My post is important and casual sounding. No alarms going off. I am reinforcing you as part of my job here. I like my job too.
OT Today was three days long. It felt that way to me. I was sooo glad to see that volume hen the move. I stayed on 15 min for a moment and went down to 5. I haven't seen the 1min today. I have seen daily and 60 and 30 though.
Quote from laziz314159:
I am going through the expensive process of 'proving' to myself that nothing interesting happens when 5min vol avg is well under 9k.
However, I caught all of the afternoon iceberg (after a momentary exit due to the volume over 20k, which has been a strong reversal signal over the past couple of day), and ended up 1.5 points on the day (disappointed in myself, but at least its a positive number)
I have index cards.. tonight we build a flaw box. I've already got a running start on some sequences.
regards,
laz
Do the flaw cards. The only volume one to put in at first is: "steady decling volume" On the verso put "A change is coming up, be prepared.
the next one can be done in gold leaf: VDU. Verso says: Go to change reversal modus. Do C&R on stop NOW.
Well, I am glad that my instincts appear to be improving. It is funny that as you get proficient with the tools there is a discretionary aspect that seems to come out in the trader.
I am thinking that going in at 50 will solve a lot of drawdown issues.
Looks like we need to be ready for change mode (lower bias) tommorrow.
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