Attention Rocketeers...

Discussion in 'Strategy Building' started by easyrider, Feb 12, 2004.

  1. I have been looking at this strategy for a few weeks now. For those of you not familiar with it, it is reccommended by Jack Hershey for beginners and uses the MACD and Stochastic on a 5 min. chart for signals. When the 14,1,3 sto crosses the 20/80 and the 5,13,6 MACD histogram is plus +.4 or -.4 you go long or short when the slow line crosses and exit when the fast line crosses back. I have learned a lot from Jack so when my initial impression of this trade was negative I figured I must be missing something but after quite a bit of research it still looks to me that this setup often puts you in the market with a terrible entry. I would like to know if anybody is using this trade effectively. One person said he waits for the five minute bar to complete and then enters on the break above/below this bar but this did not improve things from what I could see. There must be some other qualifiers for this thing to work.
  2. gms


    I haven't rocketeered, but the long/short lines you referenced in your post: you mean the Stochastic, not the MACD, right? Hershey wrote about entering long (short) when both Stoch lines have crossed > 80 (crossed < 20), exit when fast crosses < 80 (> 20). In addition to the MACD > .4 (<.4), there's also the minimum volume requirement for the bar (was it 10,000?). There's more of that stuff on the hershey msn board, but the comments from the members there aren't very encouraging.
  3. You also need volume > 10k (5min bar).
  4. traderob


    Here is a chartscript that buys when stochD 14 crosses overbought (80) and exits when it crosses back down.

    The backtested results gave around 35% win rate but generally good gains so it was positive on the stocks I tested. I might be able to add some more parameters if I can figure out exactly what your entry exits are based on.
  5. dbphoenix


    No one has ever been able to make any money off of this except on paper, and usually not even then.

    Jack appeals to those who believe that trading is about the blue line crossing the red line. He has no appeal to those who know better.
  6. How would anyone know this?
  7. dbphoenix


    Read the threads.
  8. Like so much in trading this is old wine in a new bottle. Jack Bernstein popularized a method known as the "Stochastic Pop" probably 25 years ago. Instead of using stochastics as an ob/os indicator, you waited for it to actually cross into OB land to initiate a buy. I'm not sure if Jack has ever acknowledge Bernstein's originating this idea, and for all I know, in Jack H's long career perhaps he was the one who taught it to Bernstein.

    Using the MACD wouldn't seem to add much to me, as it lags. Also, what is the idea behind the 14, 1, 3 stochastic setting? The latter two numbers are the smoothing intervals. A one period average is not smoothing. So this is just a 14,3 "fast" stochastic, right? I use the term fast because most indicator packages smooth the raw stochastic and call it "fast."

    I backtested this on the big S&P contract years ago and decided it was useless, but of course I didn't have the benefit of JH's wrinkles.
  9. Currently I am not attentive to all of those to whom I would ordinarily respond. As Nhkoi has commented recently I am just interjected at points of interest to me. It has been determined that the scope and range of problems I have is determined and secondly, we will have a level of stability thatwill let me get things taken care of. I will be finishing the documentation on all levels of trading and investing that I do. All the cost stuff has been in hand for a while so there are no limitations.

    With respect to all posts here I will summarize the situation in the areas of interest.

    A types. Learning rockets is a warm up drill. The strategy I have is to get people past using their own money for trading. The key value of rockets is to triple your money and then remove the inital capital.

    There is a second thrust as well. Learning anything related to money is risky business. rocket have little or no risk, therefore there is less risk associated with the main effort a person is making. That is learning to learn about making money. It turns out you only get one real chance to learn about making money. If you blow it you are in a bad place. So I focus on not letting people blow the opportunity if it is still there for them.

    Everyone can easily understand what I said above. Making money is not difficult. Learning to make money is a process. But here in ET that concept is not understood broadly.

    A person either learns or not. Rockets open the door by preventing a person from screwing up the chance he has to learn. by only trading very low or no risk trades and getting the initial capital out of the market, a person arrives at a place to be able to go all the way to the top of the trading opportunity.

    The markets do not always offer low risk strong trends to trade. So as a very important learning experience, people get to not trade when it is appropriate to be sidelined. This is a process over time. As I cover each post in this thread you will better see what I mean.

    One caveat first. All sensing is associated with emotions. You either summon the emotion of your get it thrust upon you. Whenmaking money it is important to be sensing in a tip top way. Tip top means no bull$hit in the space. it means always summoning the emotions that are appropriate and healthy. Healthy means in balance and under control and always helpful and appropriate. Any emotions thatpop up and surprise you, especially at the "wrong" time, are sick emotions. Medically, they are inflamed. You can't trade if and when you have inflamed emotions. What is worse is how emotions affect learning.

    You cannot remember under some circumstances you get into. Think about trading as a monitoring process. It starts with sensing and there is always an emotion coupled to sensing. same with studying. You are sensing and there is an emotion coupled to the sensing. If and when that emotion is screwed up (inflamed), it acts as a blocker. It blocks the path to your memory area and nothing is recorded in your memory for later use.

    Most self taught traders have a lot of common characteristics. One of then is failure that has been well learned by repetition ad nauseum. They are busted for sure. You may have heard about people blowing out. The inflamed emotion that stepped into the picture at the time it chose (this time is referred to in ET as the "wrong time"). Caveat over.

    So Rockets are done to eliminate "blow out" of capital and replace blow out with a low risk strong trend type trade that makes money when a couple of conditions slowly creep into view and only last while a trend is "taping" to it's ending in a short time. Taking out profits after tripling inital capital also stops blow out in that intialcapital can never be blown out after that.

    So rockets are not atrding method just a stepping stone to getting into trading. When I mentor, I put people thorugh a lot in a short time. So if we mess up, I write them a check. This keeps their emotions in a state that I need to fast track them along. We can beat up any emotions that need beating up. I am looking for them. And we treat out of control stuff with repairs immediately and quickly get through the tough times when a beginner doesn't know very much. I feel that learning comes first and then making money will follow.

    Lets look at what the people here are saying and why.

    Easyrider is a millionaire. His emotions are inbalance and he is a self learner just going alone clarifying day after day. And he is staying out of trouble too. Because he has reviewed so much stuff he is no longer a beginner and has used the stuff he finds to add to his regular approach and strengthen it. It's a powerful place. the compound interest fornula makes him a millionaire. He is seeking the qualifiers to make this thing work. What he will find is how to be one of the four levels of being an Iceberger then he will find the expert levels leading to and including SCT.

    gms will start reading a book that is being stocked at Amazon in about two weeks if he get there soon enough. Not everyone can learn. gms can though. In learning, to begin you have to take a chance to start. I lectured in the dept of Psychiatry one this to their faculty and the Education department as well. The key for teaching and for students is to be able to start. The height of the first step is set somehow. If it is too high, the learner will not take the step. It turns out anyone who considers learning about something looks at the scope and bounds of the subject. They never see the whole picture. Never. What they see is part of the picutre and what they think is the first step. It is a perspective.

    What is lousy about trading and investing is the picture almost always seen. The size of the step needed to get along to a high enoughplace is the step needed to learn to not lose money. It is too high and is always seen by people who test out like gms. The admoniton given him way back turned out to be an insult.

    I need to give a full picture of the whole nine yards to lower the first step's risk. The step will be smaller if the whole height of the picture is seen. Rocket trading is child's play but losing money is a gaint step to overcome. I think I'll watch and lurk.

    So roberk can't do tests. That is not a problem. What will be most helpful is getting an understanding that learning is what is involved. And that it is a process. The emotions are what need assessing. When I ask some one to tell me their entry time and price each time I broadcast, I am really asking for are report outs on emotions of each person in the group. Roberk trades. Rockets happen. Easyrider listed the conditions and 1contract cemented some volume in the picture Add prorata to the monitoring). If you went to broadcasts you saw day afterday the PR volume being typed in. As I mentor I hear it at least five times abar, always. SCT trading deals with prorata volume too. 5 min bars all have their formation and history before they are finished. Memorys come from this. Emotions get balanced by repetition of workable stuff.

    ET will always have db types who are dead in the water. I like the counterpoint. It is very clear that db is stuck for some reason.
    I do not think his ROI or his equity curve is improving at this point....

    JB does not use the same signals I use (his are incorrect or high risk situations; have just looked over the stuff he notes on charts). He does not use several differing STOC periodicities. I would have a difficult time using his stuff since I do not use what he uses. AA belt you may want to read his stuff again. I deal with sustained OB/OS only.

    There are nine levels of learning for getting to expert trading. Learning is a process. I will have the books done this year. The hardest part to get them done is to get all the emotional stuff into the picture at every stage.. Luckily in Tucson the med people are converting Weil's stuff into a new format. There, a lot of health related emotional stuff is on the table; I get to be a fly on the wall because of my engineering training. Liz is a scheduled speaker this month. So all the copy will be under review here and abroad in a colleagual way.
    #10     Feb 12, 2004