Day-Trading 2.0 for small traders

"As you can see in the chart the 1st and 3rd trades would have been triggered +/-130 ticks and +/- 170 ticks above the original trigger based on the random line. (Either if you entry on the close above or if you waited for change of slope)."

Actually, I do NOT see that?!?!?

What is the actual trigger in this example according to your method?

 

TRO,
Thanks for posting charts.

Do you (or anyone) know where I can find a Tradestation compatable version of those cool color-changing MAs?

Thanks,
Trayo

 

Actually, I do NOT see that?!?!?
What is the actual trigger in this example according to your method? What is the actual trigger in this example according to your method (TheRumpledOne)

These are not the valid entries according to the original price trading plan (http://www.elitetrader.com/vb/showthread.php?s=&threadid=113456&perpage=6&pagenumber=49). I only introduced the indicators to show the potential influence of them in the outcomes of your trading plan.

Before the indicators the entries were at 1.4629 and 1.5648 as soon as you had a close above your horizontal line trigger every 0.050 (in these cases the 1.4500 and 1.5500) but if you would have traded according to a 25 HMA for wave analysis and trigger your entries would have been (depending if your trigger is a close above the HMA or after the change of “slope”) at: for the 1st trade 1.4755 or 1.4783 and for the 3rd at 1.5846 (both a close above the 25 HMA and change of slope)

I hope is clear now.

jjrvat
PS: I edited the exact values for entries

 

Why are your entries at 1.4629 and 1.5648?
Set plan of .01+ above the horizontal line?

Thanks for the post on indicators.
Their use as "visual aids" in a PBP makes much more sense; its about the price action not necessarily the indicator "triggers' which many perceive as the holy grail.

Great thread.

mktman

 

for your first question this is the entry because the plan is enter after a CLOSE above the horizonal line and that is where the entries are.
I personally think that if price action can be very unclear sometimes and using Indicators (espcially HMA's) is very useful if you know how to overcome their own downsides.

 

I posted them on www.kreslik.com Check the download section... TradeStation Motherlodes.

The name is _Indicator2.

 

"Option 2: If you are not carful you can misinterpret price and take a trade based only on the indicator and not on price analysis + you may not take a valid trade because of the indicator. In the case of the example the second arrow won’t be a valid entry anymore because is a lower high (when on reality price made a higher high (H1=1.4918 < H2=1.4929)"



Perhaps using a ZigZag indicator is better than using a moving average for wave identification?

Or maybe a combination?

jjrvat, thanks for answering my question but I think my confusion comes from the "mixing" of systems/methods/triggers.

If you could spell out the exact steps in each method for determining the trigger then the differences would be more apparent ( to me). Perhaps you have done that but I missed it somehow. I'll reread. Thanks again.

 

Mistake or failure#2 ?

Amitman posted a SPY 0.1 rng in which he highlighted a real example of timing failures in which price analysis was ok but the trigger and exits were not very consistent. I think this example can be very useful in the context of indicators.

A brief summary (amitman correct me if I got something wrong):
Direction Indicators (Macro direction): 144 WMA
Price Analysis Indicators (Wave analysis and current direction): 17 HMA “…the HMA17 is also my H/L waves analysis…”
Indicators for triggers, exits and failures (Timing): 17 HMA and predefined targets “…my trigger is when the I have a green bar that close above the HMA and at least Most of it is ABOVE the HMA…” and “…my exit and stops are based on fixed prices which is 20c for profit and 15 cent for the stop…”

The problem:
As you can see in the chart this was a bad trade according to his PBP ‘cause he got stopped out. What it was even worse is that after a few bars price confirmed that it was a valid trade but when that happened the indicators for wave analysis were not pointing out longs (LL and LH)… so what was the problem? Price failure?



It’s easy to analyze a chart ex post and blame the indicator. The 17 HMA was not good enough in this particular trade!!!. Look what happen if you have used a 25 HMA as wave and trigger indicator… A perfect entry with curiously (or maybe not) at a better price (9 cents cheaper) than the faster 17HMA (why?)



Of course claiming that a 25 HMA is better than a 17 HMA is very relative and I do understand why you used a faster HMA, SPY in a 0.1 rng chart is fast, and many times a change of slope (or even a close) above/below a 25 HMA can give you very but very late signals.
For example the last two trades before your example would have been winners with a 17 HMA and losers with a 25 HMA but the two trades after would have been almost perfect with the 25 HMA and not with the 17 HMA.

This exactly exemplifies the tradeoff between indicators/efficiency and price analysis/consistency. All of these trades (including your example) have something in common: they all are consistent with price analysis. You were right taking that long; it was valid long but your indicators were not pointing at that, even if you saw and knew that price was going up. Indicators blur analysis!!! …

Again nice in theory but sadly in reality we can’t take trades if we don’t have and objective trigger and without stops that are consistent with risk. So how can a small trader solve or find the right balance between efficiency and consistency?

I’ll continue later, but a good tip is: if basic price analysis tools explain and have better and more objective triggers than the ones given by your indicator… your indicator is either not good enough for your PBP or you are not using it properly… again the cui bono

jjrvat

PS: TheRumpledOne, yes zigzag is a very good visual aid for lasts Highs/Low. As always, use it but no abuse it.

 

Using a line chart for price gives a different perspective....

Price ( black ) bounced off the 1 Hour Vegas Tunnel ( yellow, brown ) twice in the past 2 days. You can NOT see the bounce now because it is a line chart. The bounce was visible in real time. (Something to think about.)

Using the 101.50 and 102.00 as entry triggers provided nice profits both times.

Also notice what happens to the price when it crosses the EMA(12) directional filter line( light blue ).

I believe I understand the difference between the two triggers.

Thanks again, jjrvat.

 

thanks ....
i am actually newbie in this and found the great information on Here i just wanna share it




Thanks