Impressive eye candy chart
What generates your trading signals?
- Thread starter Howard
- Start date
A quantitative model where raw market data goes in in one end and binary buy/sell (true/false) signals come out in the other end.
Actually there is multiple models working together, higher level models working as filters for lower level models. I quantify time into blocks/chunks so the models operate in their own time space.
All types of trading, all at the same time. Short term swing trades, multi-month medium term trades, multi-year long term trades in the major US indices.
I only look at charts for fun and entertainment, not so much for decision making in my trading. I also look at economic data, ISM PMI, unemployment, rates, yield curve, global macro, emerging markets, global capital flows, etc to have some kind of clue where the economy is heading.
Trend lines seem to work very well for generating signals, BUT, there are problems that needs to be adressed in order to create rules for consistency.
The most pressing matter is that of when a trend line is broken and when it's redrawn.
See picture below. Not the best example, but on this small violation of the initial TL, I wouldn't consider it a real violation of the trend line. For that to happen, I'll require a violation of say 2,5 points and/or a close below.
So, I then re-drawed the trend line. The result is a less steep trend line and consequentially, you'll get your sell trigger later.
Any comments on the matter? If you use TLs - how do you deal with drawing/redrawing?
Same thing going on in ES right now (fast chart). Initial line was very steep and while it was broken slightly, price simply went sideways. So I re-drawed it.
However, this break was deep enough and made lower lows that I considered it an actual break and took profit on my long entry (assuming I had one).
The most pressing matter is that of when a trend line is broken and when it's redrawn.
See picture below. Not the best example, but on this small violation of the initial TL, I wouldn't consider it a real violation of the trend line. For that to happen, I'll require a violation of say 2,5 points and/or a close below.
So, I then re-drawed the trend line. The result is a less steep trend line and consequentially, you'll get your sell trigger later.
Any comments on the matter? If you use TLs - how do you deal with drawing/redrawing?
Same thing going on in ES right now (fast chart). Initial line was very steep and while it was broken slightly, price simply went sideways. So I re-drawed it.
However, this break was deep enough and made lower lows that I considered it an actual break and took profit on my long entry (assuming I had one).
Trend lines can be very useful, but not always work. It is better to take more signals to support the trend lines like the Bookmap heat map that can validate the trend.
I agree that signal support is better and even necessary. But my specific question now (and one I think isn't very much adressed in trading books since they annotate after the fact) is how one deals with re-drawing trendline if an intial trendline break turns out to be a deeper retracement instead?
It's a common issue. And happened again just now:
Using the original trend line would have given a faster entry/signal. Using the re-drawn trend line would give a delayed trigger. How to deal with this specific situation?
Regardless, the price have now broken both trend lines, so a sell is triggered anyway.
If you're reading now - what does your Bookmap charts tell you about this move? Can you tell us if it's likely that this signal/turn will have some downside potential?
