To what extent do you use indicators?

[dandxg]

Quote from KPCURRENCY:

OOH. You were doing so well. I was right there with you.

* never exit a trade with a profit, continue moving stop in direction of the trade until the market takes you out. Livermore said, "being right and sitting tight, that's where the money is".

* Taking a profit at a target (or scaling out) is speculating on the future when it is not necessary to do so. If you believe it is not worth keeping your whole position on, then why wouldn't you just exit all of it?

* The amount gained by staying in the market that trends beyond expectations far exceeds the times when you are taken out with less profit than a target would of produced.

KP- Your post reminded me of some thought I have had on targets vs. trailing stops. I respect your opinion so here goes with a question.

So if you don't have targets you have trailing stop right? How do you determine the best trailing stop, ATR? Something else? I have started to experiment with almost no target, just a trailing stop, but I am having a hard time gauging the right trailing stop. Could you point me in the right direction? TIA

Dan

 

[KPCURRENCY]

Quote from dandxg:

KP- Your post reminded me of some thought I have had on targets vs. trailing stops. I respect your opinion so here goes with a question.

So if you don't have targets you have trailing stop right? How do you determine the best trailing stop, ATR? Something else? I have started to experiment with almost no target, just a trailing stop, but I am having a hard time gauging the right trailing stop. Could you point me in the right direction? TIA

Dan

Thank you for the kind words. Remember, I make no claims that what I say is Gospel. I am more student than trader. If that sounds a bit "Zen", it should. I am trying to take "Zen-like" approach to the markets. I want to surrender to the market, follow it. I want to get in tune with it, not try to get it in tune with me.

As to your question, I will start with the general. I look for the obvious areas the market is telling me: double tops, double bottoms, the highest high or lowest low in x amount of bars.
Pivot points (Pivots are defined as swing highs or lows).

KeyNumbers (aka floor pivots-this is wrong as they are not pivots but can become Pivots). Market profile levels, Fibs.

Generally, one should be looking for those areas where the market did find support or resistance. Or where price reacted.

More specifically, I use VSA. I look for signs of no demand and no supply. I look for a bar that has a higher high and not a lower low, that closes near the low of its range, and has volume less than the previous two bars (no demand). Or a bar that has a higher high, and a higher low, closes on the high of the bar, closes up from previous bar, and has volume less than the previous two bars (no buying pressure).

I look for areas where Professional Money comes in on the sell side (supply) and then the market absorbs the supply and we get a low volume test (a sign of strength). The optimal test would close lower than the previous bar, close on or near its high, have volume less than the previous two bars, and have a lower low but not a higher high than the previous bar. A Stop just under the low of the test bar is nice.

The test bar tells us that the Smart Money was looking for sellers at that level and found none. Which is why it makes a good place to place a stop. An Up-thrust would be the opposite case for a short trade.

In truth, these will usually occur at KeyNumbers or double tops, or Market profile levels. Because the Smart Money is "forced" to show their hands at these levels.

In the end it is about being comfortable being in the market and then letting the market tell where to place the stop. This is more art than science and thus not for everyone.

On a side note, if you day trade, get by the end of the day if the market hasn't taken you out.

 

[taowave]

Quote from dandxg:

KP- Your post reminded me of some thought I have had on targets vs. trailing stops. I respect your opinion so here goes with a question.

So if you don't have targets you have trailing stop right? How do you determine the best trailing stop, ATR? Something else? I have started to experiment with almost no target, just a trailing stop, but I am having a hard time gauging the right trailing stop. Could you point me in the right direction? TIA

Dan

Dan,i will gaurantee you that if you do enough simulations,you will see that there is a negligible difference between,scaling out,riding" and setting stops...The markets wont let you have a clear cut answer to this question..If you dont believe me,do some backtesting on ATR stops vs % stops vs time stops and come up with a clear cut answer..

Sure there will be instances when one works better than the other,but over time,its basically six of one,half dozen of another..My only suggestion to you is that you simulate it thru all types of markets and run long and short ..for starters...

KP's most telling remark is that the markets are not normally distributed and that tail moves will occur more often than one is led to believe...That is statistically true,but does not validate never to scale out...

KP quotes Livermore,one could easily quote Dan Zanger who does believe in scaling out...

I would backtest the shit out of these questions(I have),and then decide which method you can EMOTIONALLY deal with...

Good luck

 

[KPCURRENCY]

Wanted to show a pic but can't edit last post.

The small pink line shows the stop being trailed.

 

[dandxg]

Quote from KPCURRENCY:

Thank you for the kind words. Remember, I make no claims that what I say is Gospel. I am more student than trader. If that sounds a bit "Zen", it should. I am trying to take "Zen-like" approach to the markets. I want to surrender to the market, follow it. I want to get in tune with it, not try to get it in tune with me.

As to your question, I will start with the general. I look for the obvious areas the market is telling me: double tops, double bottoms, the highest high or lowest low in x amount of bars.
Pivot points (Pivots are defined as swing highs or lows).

KeyNumbers (aka floor pivots-this is wrong as they are not pivots but can become Pivots). Market profile levels, Fibs.

Generally, one should be looking for those areas where the market did find support or resistance. Or where price reacted.

More specifically, I use VSA. I look for signs of no demand and no supply. I look for a bar that has a higher high and not a lower low, that closes near the low of its range, and has volume less than the previous two bars (no demand). Or a bar that has a higher high, and a higher low, closes on the high of the bar, closes up from previous bar, and has volume less than the previous two bars (no buying pressure).

I look for areas where Professional Money comes in on the sell side (supply) and then the market absorbs the supply and we get a low volume test (a sign of strength). The optimal test would close lower than the previous bar, close on or near its high, have volume less than the previous two bars, and have a lower low but not a higher high than the previous bar. A Stop just under the low of the test bar is nice.

The test bar tells us that the Smart Money was looking for sellers at that level and found none. Which is why it makes a good place to place a stop. An Up-thrust would be the opposite case for a short trade.

In truth, these will usually occur at KeyNumbers or double tops, or Market profile levels. Because the Smart Money is "forced" to show their hands at these levels.

In the end it is about being comfortable being in the market and then letting the market tell where to place the stop. This is more art than science and thus not for everyone.

On a side note, if you day trade, get by the end of the day if the market hasn't taken you out.

On a side note, how long did it take you to learn VSA? I have looked at Joel's website and it is cheesy and unprofessional. I can hardly make out the chart, seriously. He makes corny jokes with his buddy Al, ok. I am not saying he isn't good at what he does, but his site needs a serious re-vamp.

I have sat through a few presentations, probably 1 tomorrow as well, with tradeguider and while I am picking off trades on price alone, Gavin just sits there and does nothing! He keeps saying not yet, not good, this that. TG if you are reading this please take this to hear. Why do you have Gavin, a non-day trader running a seminar on emini's,why?

It concerned me to when I hear Todd making some excuses for the software during other presentations. The software says this, but we know better because we can see that. Huh? That software is 2k, it better work flawlessly for 2k IMO. I am not saying it doesn't work, but for 2k I set the bar high.

I really feel that I could augment my trading for the better by understand PV relationship, but where to start? Tom Williams' book maybe? I have tried Jack/Spyder's threads but the charts are just too convoluted with channels. I can't make sense of them and I really spend some time trying to understand them. There is just way to much going on there for my eye.

I just bought Vad's book on tape reading for a primer.

Sorry to get off on such a tangent, but you appear to really understand PV, that's why I ask.

Dan

P.S After looking at your chart, it appears you are one of Joel's students. I didn't mean any offense just some constructive feedback, that's all. I guess I am a bit frustrated with what I have looked at so far.

 

[dandxg]

Quote from taowave:

Dan,i will gaurantee you that if you do enough simulations,you will see that there is a negligible difference between,scaling out,riding" and setting stops...The markets wont let you have a clear cut answer to this question..If you dont believe me,do some backtesting on ATR stops vs % stops vs time stops and come up with a clear cut answer..

Sure there will be instances when one works better than the other,but over time,its basically six of one,half dozen of another..My only suggestion to you is that you simulate it thru all types of markets and run long and short ..for starters...

KP's most telling remark is that the markets are not normally distributed and that tail moves will occur more often than one is led to believe...That is statistically true,but does not validate never to scale out...

KP quotes Livermore,one could easily quote Dan Zanger who does believe in scaling out...

I would backtest the shit out of these questions(I have),and then decide which method you can EMOTIONALLY deal with...

Good luck

I appreciate the feedback I will take a look. Right now I am without backtesting software so that will have to wait a bit. Bad exp with AIQ and not enough support, as a newbie, for Amibroker for me.

 

[KPCURRENCY]

Quote from dandxg:

On a side note, how long did it take you to learn VSA? I have looked at Joel's website and it is cheesy and unprofessional. I can hardly make out the chart, seriously. He makes corny jokes with his buddy Al, ok. I am not saying he isn't good at what he does, but his site needs a serious re-vamp........P.S After looking at your chart, it appears you are one of Joel's students. I didn't mean any offense just some constructive feedback, that's all. I guess I am a bit frustrated with what I have looked at so far.

First, I am not a student of Joel’s at this point. I have been to a live demo and seen first hand his ability to read the charts with just price and volume. In my opinion he is second only to Tom Williams (the father of VSA).

You are correct about the site. The quality is poor. But how many slick sites have you been to that have no substance? A slick professional look is not a necessary condition for substantive material.

Joel would say he is a trader first and would rather have his work (trading) and his students speak for him. The site does need some work nonetheless.

Quote from dandxg:

I have sat through a few presentations, probably 1 tomorrow as well, with tradeguider and while I am picking off trades on price alone, Gavin just sits there and does nothing! He keeps saying not yet, not good, this that. TG if you are reading this please take this to hear. Why do you have Gavin, a non-day trader running a seminar on emini's,why?

I was under the impression that Gavin was a day trader. If you watch a demo by Joel and then watch one by Gavin, it is clear who is the better tape (chart) reader. Joel is using price and volume to make trading decisions and Gavin is sitting there waiting for the software to tell him what to do.

The webinars used to be better when Todd, the company's educator did them. He mainly does ones for customers only now. Which is another reason I am upset with them. But if they want to be system vendors rather than champions of VSA, it is their right.

Quote from dandxg:

It concerned me to when I hear Todd making some excuses for the software during other presentations. The software says this, but we know better because we can see that. Huh? That software is 2k, it better work flawlessly for 2k IMO. I am not saying it doesn't work, but for 2k I set the bar high.

Actually I have to side with Todd on this a bit. An individual will be better than the software because the rule sets can't capture every nuance. Having said that, I think the software sucks too. I do not like the black box elements it contains. They wont even tell their customers the length of the moving average used on the volume histogram.

On the other hand, all of Joel's code is completely open source. Of course there is not much code as he is really looking at price and volume.

Quote from dandxg:

I really feel that I could augment my trading for the better by understand PV relationship, but where to start? Tom Williams' book maybe?

Tradeguider recommends the book, Joel recommends the book, every serious student of VSA recommends the book. It is truly the Volume Spread Analysis bible. At $100.00 it is a good place to start. You do have to put up with the tradeguider software focus though.

I am still learning myself. The more time you spend in with the book and in front of the screen, the easier it gets. Continue to attend the webinars looking for some small nugget of information, and think about the boot camp.

If you want to move to the elite level, Joel's course can certainly get you there. Again, I do not recommend it only as I have not yet taken it myself. I do have ever intention of doing so however.

I feel the more you look at charts, the more you will begin to see that Volume Spread Analysis offers a path to understanding what is actually happening in the market. It is all about supply and demand.

 

[ElectricSavant]

to what extent do I use indicators?

I use the sign on the bathroom door to find the right bathroom on the fly...(for the fly)

 

[dandxg]

KP,

Thanks for taking the time to respond. If you don't mind me asking, approx. what does Joel charge, if you know? And you are right, I have found some good things that didn't come in the shiniest packages.

Dan

 

[Neet]

I totally agree about not selling but using a trailing stop instead of an actual sell.

That one is easy.

The hard one is deciding on the details of the trailing stop itself.