jack i must say that i am having a hard time following you what with the acronyms and the way you generally describe the events. you're sounding a lot like that murry turtle dude. can you spell things out a bit more in the future? thanks.
this is a clean up of an earlier post in the TA stoc thread. Trend Paces. After starting with a trading basis composed of several tenants to assure continuing capital appreciation, you can expand your tasks as you become more proficient. For those who are used to a fair return on their investments based on prior experience, two continuing tasks appear: learning about this approach and integrating the appropriate parts into your existing performing system. Improving trading is a continuing iterative process of refinement. Where we are headed for with this approach is posted in the beginning of the journal. Where we are now is getting down about four of five things a week as time progresses. Recently, we added a measure to handle the difficulty involved with staying in a given trade longer to be able to derive more profits. This involved finding three points to establish the trend channel. We havenât spent much time on formations in the price chart as yet. At the end of every formation , a new trading segment begins. Most formations lead to Breakouts (BOâs). A most important consideration is whether a formation is within a trend already running or whether it is a market situation that leads to a new trend. New trends. Three points may be used to set up a trend channel. On the right side two points give the slope of the channel. On the left one point provides the initial width and thus a parallel line can be drawn through this point to show channel width. Point 1 is usually in the prior formation (comes first in time) and point 2 comes next and tends to define the width and volatility of the channel. Finally point 3 shows up on the same side (right side of the forming channel) as point 1. Points 1 and 3 form the side of the channel from which, at the end of the trend, a breakout (BO) will occur. We will not use this to exit the trade if at all possible since this point is not the point of maximum profit; it is just the end of the trend. Having this basis established we can make use of the situation. First, we see it as a beginning and second we must be prepared to modify it one particular way. Trends begin as Breakouts (BOâs) of prior price formations. The initial period is very significant and it is not perfectly sustainable. This surge settles down somewhat in almost all cases. We can use this knowledge to make one important adjustment it turns out. We do this by setting a new point 3 when called for after the initial period of the BO. Use it with old points 1 and 2. Think of an airplane taking off. It climbs steeply at a relatively low velocity. As velocity is attained the angle of the climb is lowered for the rest of the length of the haul to the assigned flight altitude. This is a two step process. The initial channel is adjusted to attain the more reliable trend channel width. It is a little wider and it slopes less in money velocity. Also, what has occurred is that we have gotten the market pace for the established trend. And we can take the flight more comfortably. Initially, I have dealt with this to help people stay in trades. To get them past the place in time where they look very diligently for the answer to the question âWhatâs wrong here?â What is wrong is nothing and a trend is making point 3. This occurs on the first decline of volume in the trend. The lesser volume affects the momentum of the BO. As time passes, people think and think hard, then they begin to act again. The trend moves along with the price then traversing the established channel. This move away from the right line makes a lot of profits thus it is impotant to get past the point 3 time and stay in rather than find a reason to exit. A micro cycle of A/D has occurred in this interval. (A/D is accumulation /distribution, the buyer/ seller market control thing). Coming to point 3 is the distribution happening briefly; many people here (experienced traders) are routinely part of that distribution (getting out too soon). As volume picks up to start the profitable traverse across the channel, accumulation is what is setting in. This will continue until the left side of he channel is reached. The adjustment of the point 3 comes up after the price bumps off the left side of the channel, is a repetition of setting up the original point 3 just later in time. By knowing and watching and adjusting the channel, you, yourself, are calibrated also. And as such you will be well to making profits more effectively. It happens to be that the nature of ET is to have a predominant flavor of very short trades, often several within a trend. This is a kind of thing that glues a person efforts together (A sort of need to be doing something at all times.) The best thing to do passing time is to log protective stops from price formations. We will get to that. I choose to focus on making money for the time being and we will get to lesser goals later. Main Point. We have channels understood. Now we learn to use fractals to lengthen the money-making period. This will be the most relaxing part of this whole trip to being rich ASAP. There is another tape to deal with. You can determine the market pace by simply looking for this particular tape. Use yesterday. Go form 5 min to 1 min and see things get jumpier. Go back to 5 min , then 15 min and finally to 30 min. Look at what happened to the channel you drew in. At some point you see that the price bars fill the channel like a child painting (coloring) between the lines. This is a âtapeâ at that point. This tape is a band running at a given slope as a price channel. The tape is defined as price bars filling in the channel continually. Think of it as electrical tape wide enough to fill the space of the channel. We are always day trading off the 5 min for the time being but the tape appears on slower fractals than the usual 5 min trading fractal. The âTampa Fixâ is the process to go to the fractal that gives you a âTampa Tapeâ, i.e., a tape that fills the channel up with price bars. You sit on this fractal and trade. You use the next faster to get your stop log and you âanticipateâ there as well. By slowing down your visualization of the market, you are getting yourself âsmoothed outâ and you stay in the channel with the trade. Again, this is like taping out the 20/80 part of the Stoc so you do not use any false info in between for the time being. You will see the Stoc, MACD, volume and price give you identical sequences as before. So there is nothing to learn except to relax and calibrate yourself.. Yesterday this approach takes you through most of the day from beginning to end. You can see this on both the 15 and 30. Big Point. Also from now on make your channels interday ones when possible. We are day trading; we get out at the end of the day for one reason: our margin requirement is ½ that of position trading. There is a major reason as you all know. We can resume our trade the next day using our prior knowledge and practices.
You can use the P, V relation to "prove in" all formations. What comes of this is that you have a broad basis for how markets work. The key variables over time turn out to be price and volume. All data of the market is related to these two variables. I add A/D as the next direct variation that is at play. One or the other is usually temporarily in charge of the market. Use my description of how two lines (buyers and sellers) stand before a table and get executed. I will try to find it in this forumand post it. if someone knows where it is please post it.
this is the over all flow chart I use for getting people stared with a daily routine. The yield on this is limited to short term trading results in the range of 10% every 6 to 8 days. transference to others for a 6 month period is 11.1% av and 6.6 days duration.
How much money you make is determined by how well you link into the market potential. I use the "yellow brick road" to chacacterize markets and their potential. this spread sheet can be changed to anything and you can plug in stuff as well. As it turns out, I believe we get less able to play a given fractal as the duration of the fractal gets shorter. It is possible that after a while you need to lay off capital from a given algorithm because of it's capital limitations. The yellow brick road helps you find this stuff out. If I filled in all the equations it would not be as useful to a person trying to learn. you also can change how you put the efficiency stuff into the maths if you recognize that this is too simplistic. It does show in its present form that the performance windows are fairly narrow. ET people as a rule are not testing their profitability limits to any great extent. The auguing is fairly close to it's potential though. I can't find the floppy it is on. I will get it on here as an attachment soon