Unholy Grail to Success
- Thread starter saliva
- Start date
- Status
Whereas the MACD is the difference between EMA(12) and EMA(26), MACD-H is the difference between MACD and its 9-period EMA. Regardless, I have no idea why there must be any similarity between PMT and MACD-H as you seem to imply. PMT is based on nothing other than price, momentum, and time. No matter what other self-described garden-variety gurus might say, everything imaginable under the trading sun hinges on these three core principles. You cannot possibly succeed as a trader without first coming to grips with PMT. Unfortunately, its deceptive simplicity throws a lot of traders into thinking it's not valuable. After all, were't we conditioned to belive more is always better?Quote from investwthme:
I was a bit unclear of the use of the macd (actually the way I use it).
It's the histogram that I mainly use it for and not the crossovers of the ma's.
If you look in the graph where you pointed out the histogram shows a negative divergence. The momentum part is how high/low the histogram moves. I am not saying macd is the best indicator either I just wanted to see if there was any similarities between pmt and macd (histogram).
Time = Duration + Market Rhythm + Market Symmetry
I've been brooding over the issue of TIME for some time and this concoction occured to me today. None of these are new concepts, however, since each was elaborated in the past. I admit it ain't exactly a groundbreaking discovery, but I want it to put it in writing for future discussion.
Important note: Allow me to be blunt. I don't like to bitch anymore than I have to but there's a good reason why this thread was written in a chronological order. If you're new to this thread, start from page 1 and don't skimp on details!
I've been brooding over the issue of TIME for some time and this concoction occured to me today. None of these are new concepts, however, since each was elaborated in the past. I admit it ain't exactly a groundbreaking discovery, but I want it to put it in writing for future discussion.
_______________________
Important note: Allow me to be blunt. I don't like to bitch anymore than I have to but there's a good reason why this thread was written in a chronological order. If you're new to this thread, start from page 1 and don't skimp on details!
Thanks. I will explain things in next few posts. I would like you to do some preliminary reading about these topics:
1. The meaning of a displaced moving average. If T is number of bars, displaced moving average is moved by T/2.
2. Read the monkey trading problem introduced by yours truly in his financialtraders blog, and discussed at this link: http://www.elitetrader.com/vb/showthread.php?s=&threadid=144845&perpage=6&pagenumber=11
3. Do understanding and thinking on the dynamics of a Ponzi scheme, particularly when things are going well, the point where it tops, and the descent down. Ponzi schemes are important to understand in conjunction with trading.
Once you have done some reading, let me know. I will go to next steps.
Game Plan: Deconstructing PMT into Shreds
âGive a man a fish; you have fed him for a day. Teach a man to fish; and you have fed him for a lifetime. Show a man to sell fish; and he eats steak for a lifetime.â<p align="right">âUnknown rancher who hates fish</p>This is no exercise in self-grandeur. It's not my place to teach anyone how to fish, let alone sell the damn thing. I will not reveal everything that I know. That's a given. Having said that, I will give you the proper fishing gear and point you in the right direction, perhaps to where the damn fish can be found. Whether you end up catching one or many, or none at all, is not my concern. Just make sure you don't end up getting eaten yourself.
There's nothing elaborate or fancy about the way I trade. As a minimalist, I believe trading should be as simple as possible. Only ritual I strictly follow on a nightly basis is to find the HOD and LOD for the next day's trading range. If you have no idea what I'm talking about, you can find more information about "Retro" (aka Big Picture) here, there, and elsewhere. While you're there, you might also want to familiarize yourself with the remaining ingredients of TRAP: macro and micro.
I dunno about you but I monitor four charts throught the day: 5, 15, 30, and 120-minute charts. On each chart, important levels of S/R and TL are already marked well in advance ahead of the day's trading. The 120-minute chart reveals things that are not normally apparent on the daily chart. Then I reference the 30-minute chart with the 120-minute chart. The 15-minute chart is used as a backdrop to the 5-minute chart, which is used to make actual trades. Once in a blue moon, there will be some freak events when all four charts collide. You don't want to be asleep at the wheel during those crucial times.
Anyway, you are impatient to ask just what I'm specifically looking for on the 5-minute chart. But before I proceed, let me briefly touch on one note of caution: What you see is not what you get. Obviously, everything looks rosier in hindsight. I have no intention of minimizing such an important cliché. However, it's also worth noting that the past is our only reliable guide to the future.
On that note, consider the following chart. In this particular 5-minute chart, the price action is confined exclusively to the day in question, namely 12/23. I have refrained from using multiday S/R or TL to base my trading decisions. Here's what I would like you to do. First, note the letters used to denote entries and exits as outlined in the legend. Second, try to decipher why entries and exits were placed at those specific places. You should know by now that I utilize no technical indicators other than straightforward S/R and TL. Hence, I suggest that you look from that vantage point. Finally, once you are finished, compare it to the second chart.
âGive a man a fish; you have fed him for a day. Teach a man to fish; and you have fed him for a lifetime. Show a man to sell fish; and he eats steak for a lifetime.â<p align="right">âUnknown rancher who hates fish</p>This is no exercise in self-grandeur. It's not my place to teach anyone how to fish, let alone sell the damn thing. I will not reveal everything that I know. That's a given. Having said that, I will give you the proper fishing gear and point you in the right direction, perhaps to where the damn fish can be found. Whether you end up catching one or many, or none at all, is not my concern. Just make sure you don't end up getting eaten yourself.
There's nothing elaborate or fancy about the way I trade. As a minimalist, I believe trading should be as simple as possible. Only ritual I strictly follow on a nightly basis is to find the HOD and LOD for the next day's trading range. If you have no idea what I'm talking about, you can find more information about "Retro" (aka Big Picture) here, there, and elsewhere. While you're there, you might also want to familiarize yourself with the remaining ingredients of TRAP: macro and micro.
I dunno about you but I monitor four charts throught the day: 5, 15, 30, and 120-minute charts. On each chart, important levels of S/R and TL are already marked well in advance ahead of the day's trading. The 120-minute chart reveals things that are not normally apparent on the daily chart. Then I reference the 30-minute chart with the 120-minute chart. The 15-minute chart is used as a backdrop to the 5-minute chart, which is used to make actual trades. Once in a blue moon, there will be some freak events when all four charts collide. You don't want to be asleep at the wheel during those crucial times.
Anyway, you are impatient to ask just what I'm specifically looking for on the 5-minute chart. But before I proceed, let me briefly touch on one note of caution: What you see is not what you get. Obviously, everything looks rosier in hindsight. I have no intention of minimizing such an important cliché. However, it's also worth noting that the past is our only reliable guide to the future.
On that note, consider the following chart. In this particular 5-minute chart, the price action is confined exclusively to the day in question, namely 12/23. I have refrained from using multiday S/R or TL to base my trading decisions. Here's what I would like you to do. First, note the letters used to denote entries and exits as outlined in the legend. Second, try to decipher why entries and exits were placed at those specific places. You should know by now that I utilize no technical indicators other than straightforward S/R and TL. Hence, I suggest that you look from that vantage point. Finally, once you are finished, compare it to the second chart.
Last edited by a moderator:
Game Plan: Momo & Micro
I've already written plenty about momentum so I'll spare you the needless detail. Micro has also been extensively covered and requires no lengthy introduction. Before venturing further into the land of momo, however, I think it's appropriate to point out that you must have a solid understanding of price action, namely S/R and TL. No offense, but this ain't exactly written with the noobs in mind.
First and foremost, you need to understand the following diagram. If you lack analytical skill like myself, simply memorize it.
From the price swing, you then (1) determine momentum and (2) condense momentum down to a candlestick formation.
Individually, momentum is applied to each candlestick. The strength of each candlestick is then used in reference to price swing and its market rhythm. Here, market rhythm plays an essential role. By guaging the pulse of each price swing, you can accurately predict where one price swing should end and another begin. You can then assess the strength of price as it nears the end of the cycle to determine whether the current trend will hold or fail.
I've already written plenty about momentum so I'll spare you the needless detail. Micro has also been extensively covered and requires no lengthy introduction. Before venturing further into the land of momo, however, I think it's appropriate to point out that you must have a solid understanding of price action, namely S/R and TL. No offense, but this ain't exactly written with the noobs in mind.
First and foremost, you need to understand the following diagram. If you lack analytical skill like myself, simply memorize it.
- <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2206721 width=640>
From the price swing, you then (1) determine momentum and (2) condense momentum down to a candlestick formation.
Individually, momentum is applied to each candlestick. The strength of each candlestick is then used in reference to price swing and its market rhythm. Here, market rhythm plays an essential role. By guaging the pulse of each price swing, you can accurately predict where one price swing should end and another begin. You can then assess the strength of price as it nears the end of the cycle to determine whether the current trend will hold or fail.
Last edited by a moderator:
Excellent thread Saliva. You are putting up some great info that works like a charm. Thanks for continuing to post while getting heckled by the critics.
By no means is this everything but I feel I have shared what I consider as the most essential elements of my system. Hence, the time has come for the curtain to come down. Although this thread required more work than I initially anticipated, I learned quite a lot in the process. I hope you enjoyed this thread as much as I did writing it. On a personal level, the journey of self-discovery as a trader took me nearly 10 years. I hope my contribution here, however small it may be, will make a similar voyage much shorter for ya.
Good luck!
_______________________
Oh, by the way, I almost forgot this important public announcement: Allow me to be blunt. I don't like to bitch anymore than I have to but there's a good reason why this thread was written in a chronological order. If you're new to this thread, start from page 1 and don't skimp on details!
Good luck!
_______________________
Oh, by the way, I almost forgot this important public announcement: Allow me to be blunt. I don't like to bitch anymore than I have to but there's a good reason why this thread was written in a chronological order. If you're new to this thread, start from page 1 and don't skimp on details!
Well done and good trading to you Saliva.
- Status