I cant stress how important it is to read the entire thread. I done it several times and still look back often.
I've actually made a word document with all the important posts of this thread (total 47 pages long) so everyone who want it, just PM me with your e-mail.
TIME â The Forgotten #2 I am going to use TheRumpledOne GBPJPY example to show the implications of Time in a PBP. Keep in mind that I am only focusing on time and not necessarily on the particular or potential trades. Instrument = GBPJPY Timeframe = 144 ticks Direction Indicators (Macro direction) = NONE (just for the sake of the example) Price Analysis Indicators (Wave analysis and current direction) = Price with the visual aid of a 25 HMA (colored bars according to slope) Indicators for triggers, exits and failures (Timing): Triggers = If candle is green and price is moving up to the 00/50 line, go long on close or the opposite Profit Target = 5 ticks Hard Stops = Bar changing color if PT hasnât been hit. I leave you with the chart for your analysis (whipsaws? Risk? Targets? Time in the market? Stops?). There arenât many valid trades because of the particular trigger (which is not a problem but a plus) and all the trades marked on the chart are winners (5 ticks) (some with very poor risk/reward ratio) however the important issue here is looking at the impact of time on your PBP. When is the best time to apply this PBP? jjrvat PS: Floyd, I think your question has been answered. In any case and I am sorry to disappoint you,, I donât use indicators for triggers amitman, I have been compiling in a pdf the important posts in this thread with a few extras. I will make it available as soon as I finish the last sets on developing a PBP posts *** The MPR of the 5th TRADE is > 42 ticks
I have just read through this thread and would like to thank jjrvat for doing this, my hat is off to you, thank you. However, I have a few questions/topics to discuss please and would love to hear jjrvat's and everyone's comments on it. 1. Short term scenario this trading method is more suitable for - 1to5 min charts or fast intraday tick/volume charts. The overnight data in certain continuously traded instruments should be avoided. For example, futures like ES, ER and NQ are very thin and mostly untradable during the night. IMHO in cases of these futures one should not use the night data and only use RTH data for charting. The same goes for calclulating pivot points - overnight data should be avoided even if it made daily HH or LL during those hours. On a days when most important US reports come out 1 hour before RTH and market could run very far in the direction opposite to main trend, one should exersize patience and do not start scalping as soon as RTH begins and wait for trend to stabilize for HH/HL or LH/LL. In my opinion this scalping method shouldn't be used during highly volatile times times of reports or highly illiquid time of overnight trading in ES, NQ, Er and similar futures. For forex interbank it is the opposite as it is traded continuously around the clock with high liquidity. Any comments or opinions please? How about currency futures on CME? I never traded them but heard the volume is very low during the night but it is still tradable. Would you include or not overnight data? 2. You trade very fast charts for example, and your 240WMA is going down and you are taking scalps in short direction below it BUT markets have made HH/HL for the past three days BUT these three days is a correction and the market has come down in the past 2 weeks, and so on... I came to the conclusion that you have to ignore the trend direction on higher time frames as it will only confuse you, in other words, your 240WMA is the last "authority" on trend direction. 3. This question is to jjrvat directly. When you introduced the method, you said that one can only take the trades in the direction of 240wma when the price is above it for long and below it for short, then later on page 72 you had few examples where you pointed to valid trades where the price was on the wrong side of the 240wma, you went short when price was above falling 240wma and long when price was below rising 240wma and you replied to floyd: "Look at the slope of the 240 WMA is red. This is the key." Could you please clarify this point as it is very confusing and contradictory. 4. jjrvat, could you please explain more clearly how do you EXACTLY enter? You have mentioned that there are multiple ways to do it but you never elaborated on how YOU DO IT IN DETAIL. You are the one that have tested this method most thorougly and I believe by trail and error you have the best entry/exit technique. This would help people who would try your method enourmously. TheRumpledOne said it is by you "buying a tick above/below the first green/red cande after 6WMA changes color in your price analysis direction". Is that correct? On your later charts I don't see 6WMA, you changed it to colored bars. 5. jjrvat, I understand that trading is the ever developing and testing new things process. In this case it would apply to tweaking the small things and adapting the speed of WMA's to different instruments. But your "core price analysis" must stay the same as they say: don't fix what ain't broken. How long have you traded this method profitably with your "core price analysis" intact? I hope I don't offend you with my questions, just trying to get as much valuable information as possible. thank you
forexfox, I can not find any contradiction or confusion as you have stated coming out of jjrvat outstanding work. I am sure you will agree with my findings when you read the text starting from page 1 rather than page 72. I hope people here realize that this brilliant trading concept as offered by jjrvat is all freeâ¦jjrvat is not selling any indicators or asking for donation, so please at least show him some respect by reading his material from the beginning until you comprehend its meaning⦠Have a nice day!
Trade like a Cheetah by Hans Hannula, Ph.D. The cheetah. An endangered species who has survived against the odds. It has survived by using a simple set of two rules: be faster than anyone else, and be smarter than anyone else. Sound like a good trading principle? At a recent Market Technicians Association conference, in a discussion with Dr. Van Tharp, a trading psychologist, I learned something about top traders that I thought was unique to my own style of trading. What I learned was that many top traders use animals and hunting as a mental metaphor to guide their thinking when they 're trading. The metaphor I've always used is the cheetah. To understand the cheetah you must understand a little bit of its history. The cheetah is a member of the large cat family, but it is a very different breed of cat. It was nearly hunted into extinction about 2,000 years ago. It somehow survived by retreating from populated areas and living in a confined space. The price it paid for this survival was a great deal of inbreeding, which has genetically weakened the species. Nevertheless, the species still survives, simply by following two "rules": be faster and be smarter than other animals. It is knowing how the cheetah employs its two rules in hunting that can help traders. The cheetah hunts in six distinct phases, which I call the survey, the stalk, the spook, the chase, the kill and the rest. The survey finds the cheetah in its typical sitting position. This may look like laziness, but the cheetah is actually very busy mentally. If you notice, it will be sitting in a position of perspective, such as a treetop, on a mound or a hilltop overlooking a watering hole, and what it is really doing is analyzing a herd of potential food. It is surveying the territory, like a trader tracking a group of stocks or commodities on a long-term chart, calmly watching the progress of price and time. Like the trader looking for emerging patterns, the cheetah is looking for particular movements in the herd. The cheetah's next phase is the stalk, which is a patient stroll to more closely examine a particular opportunity more closely, perhaps a group of animals which may have separated from the herd. The cheetah leisurely walks toward or alongside that part of the herd, checking out the potential prey, focusing on such details as size, strength, nervousness and position. This is like a trader taking a closer look at a few stocks or commodities, following major trendlines, and observing cycles and oscillators. As a cheetah nears this smaller group of animals, he starts watching for motion, focusing intently on the weaker members of the group, much as a trader watches for the first price formation or trendline break or oscillator crossing that could indicate the start of a move for a stock or commodity. The cheetah is waiting for its prey to become fearful and panic, just like a trader waiting for other traders to build up fear or desire and go into a buying or selling panic. Every trader knows you make your big money when a stock or commodity moves fast. Both cheetah and trader are looking for the initial twitch that signals rapid motion. Both are waiting for the target to spook. As soon as an animal stalked by the cheetah selects itself, the chase is on. The cheetah kicks in the afterburner and sprints up to 70 miles an hour. At this point, the cheetah is in full control, driven by desire, while the target animal is in absolute flight, controlled entirely by fear. The cheetah feels confident that it can catch the prey, but also knows it can abandon the chase and select another animal. For the trader, this is entering, selecting a stop, validating the move and pyramiding the trade. This phase requires absolute confidence in your own skills, something that gives me and many traders problems. If a trader becomes fear-driven, the trader may become the victim and not the victor. Like the cheetah who knows there are other animals to be hunted, the trader must keep in mind there are other trades always coming along. Just as the cheetah does not risk exhaustion of all its energy in one chase, the trader should not risk exhaustion of all his or her funds in chasing one trade. Like the cheetah who has developed the judgment to tell when a chase is fruitless, the trader must develop the judgment to know when a trade will not succeed. This judgment is gained only from the experience of many hunts, chases, successes and failures. Failures are absolutely essential in this learning process and are simply part of the natural order of things. The cheetah has a distinct advantage over the trader here, in that it is dealing with energy and not money. Many traders believe that their own self-worth is measured by the money they make, so that a loss triggers inner doubts, and may put the trader into the fear mode. This drains even more internal energy, hampers judgment and can lead to the inability to act. Even to stop the loss. I find it very helpful to tell myself that money is just the grease for the skids of life, and only determines how fast I can move, just as the cheetah's energy level determines how fast it can move. The next phase is the kill and the cheetah kills its prey very cleverly. Since the lightweight cheetah does not have the jaw strength of big-boned cats, it kills by pulling up alongside its prey at 70 miles an hour, reaching over and tripping the animal with one smooth kick. The prey crashes to the ground, usually breaking its neck. In the worst case, the cheetah will have to pounce on the prey and clamp its jaws on the throat of the already damaged, weakened and nearly dead animal. This is just like the trader who waits for a fast move to crash into a channel top or Fibonacci resistance point, waits for the change in momentum, and then closes out the trade. The final phase is the rest. The cheetah and, I believe, the trader need a rest after a series of intense chases. Neither can run at high speed constantly. After the kill, the cheetah eats, celebrates and rests. I believe the trader should do the same. A good practice is to always reward yourself with a special lunch or dinner, paid out of the trade's profit, then rest from trading for a while. My rule is that after a trade, win or lose, I don't trade for a time. This allows me to refresh myself, stabilize my thoughts and return invigorated to the hunt. Think like the cheetah when you trade. Break your trading into the same six stages. Remember it is absolutely essential to be in control, and not in a state of fear or panic, during the excitement of the chase. What gives you the confidence is doing the homework, the technical analysis, so you understand what is happening and can plan your approach. As I'm sure Dr. Tharp would tell you, you need a clear mind to trade, unburdened by preoccupations. If you achieve all this, you can be a clean, lean, mean trading animal.
forexfox First thanks for your kind words. Short term scenario this trading method is more suitable for - 1to5 min charts or fast intraday tick/volume charts. The overnight data in certain continuously traded instruments should be avoided. For example, futures like ES, ER and NQ are very thin and mostly untradable during the night. I donât completely agree with you on this one: Itâs true that in certain instruments overnight data should be avoided and they are untradeable given the low liquidity (ER for example), but have you traded the âsedatedâ ES during European hours?. Just try a 35 ticks chart (with a lot of patience) and let me know if you can steal your 10 ticks a day in a couple of trades. Of course donât expect massive waves in seconds ⦠which in my opinion is even better. IMHO in cases of these futures one should not use the night data and only use RTH data for charting. The same goes for calclulating pivot points - overnight data should be avoided even if it made daily HH or LL during those hours. Depends. By default I use full data. From a strictly economic point of view the Highs, Lows or any other price during those hours are valid and in a 24/7 globalized financial markets for example IBM stocks are traded in Frankfurt Stock Exchange, London Stock Exchange, Brussels Stock Exchange Euronext Amsterdam, Swiss Exchange among others during this time reflecting a real price set by the market than definitively will be taken into consideration (Dow) later when the US market opens. From your comment, the only explanation I may find to avoid overnight data is because you think your indicators (Moving Averages, Pivots) are been distorted by this data?. This may be true if you are trying to tweak pivot points as visual aids but is not necessarily true for effectively trading these instruments. Can you expand (better with an example) on this âcause I donât quite understand what you want to discuss? On a days when most important US reports come out 1 hour before RTH and market could run very far in the direction opposite to main trend, one should exersize patience and do not start scalping as soon as RTH begins and wait for trend to stabilize for HH/HL or LH/LL. In my opinion this scalping method shouldn't be used during highly volatile times times of reports or highly illiquid time of overnight trading in ES, NQ, Er and similar futures. For forex interbank it is the opposite as it is traded continuously around the clock with high liquidity. Thatâs excellent for discipline and consistency (not necessarily good for all traders). Yes during illiquid times any instrument is bad for daytrading, however one should recognize the difference between calm water and empty water ⦠I prefer to fish in calm waters. How about currency futures on CME? I never traded them but heard the volume is very low during the night but it is still tradable. Would you include or not overnight data? If you are trading the 6Jxx YOU CANT wipe TOKYO from the equation!!!! 2. You trade very fast charts for example, and your 240WMA is going down and you are taking scalps in short direction below it BUT markets have made HH/HL for the past three days BUT these three days is a correction and the market has come down in the past 2 weeks, and so on... I came to the conclusion that you have to ignore the trend direction on higher time frames as it will only confuse you, in other words, your 240WMA is the last "authority" on trend direction. Conflicting timeframes and paralysis in the analysis are common shortcomings when using multiple timeframes. However, multiple timeframes are not necessarily bad if used properly and making an indicator (240 WMA) untouchable is a big mistake in my opinion (remember that the long WMA is a VISUAL AID only). I briefly mention the use of DOUBLE WAVES you can check somewhere in the thread (TheRumpledOne has been posting multiple timeframes in his charts too). I will expand on this later because I think for now it can only distort the discussion on developing a consistent PBP. In general it is just another option for visualizing macro direction. When you introduced the method, you said that one can only take the trades in the direction of 240wma when the price is above it for long and below it for short, then later on page 72 you had few examples where you pointed to valid trades where the price was on the wrong side of the 240wma, you went short when price was above falling 240wma and long when price was below rising 240wma and you replied to floyd: "Look at the slope of the 240 WMA is red. This is the key." Could you please clarify this point as it is very confusing and contradictory. The important issue is not the side but the slope. There will be divergences only when macro direction is about to change. Check my post. Pay particular attention to the 2nd chart where the long WMA is not aligned and thatâs why it is only a small target scalp. http://www.elitetrader.com/vb/showthread.php?s=&threadid=113456&perpage=6&pagenumber=5 If you are new with wave analysis and want to develop consistency and discipline in your PBP you should only stick to 100% perfect setups (you wonât regretâ¦btw, 85% of my trades are perfect setups), meaning the long WMA slope (macro direction) has to be aligned with wave analysis. Forget about the rest until you master this. 4. jjrvat, could you please explain more clearly how do you EXACTLY enter? You have mentioned that there are multiple ways to do it but you never elaborated on how YOU DO IT IN DETAIL. You are the one that have tested this method most thorougly and I believe by trail and error you have the best entry/exit technique. This would help people who would try your method enourmously. TheRumpledOne said it is by you "buying a tick above/below the first green/red cande after 6WMA changes color in your price analysis direction". Is that correct? On your later charts I don't see 6WMA, you changed it to colored bars. For obvious reasons I am not going to post my PBP and I will recommend you to do the same if you have one. Look if you have been following this thread I think you will have enough information to develop your own triggers. The purpose of the ORDER of ANALYSIS when developing a PBP is to point out the importance of delimiting your trading field so any trader can find his/her own trading system that is unique and only valid for his/her particular circumstances. 5. jjrvat, I understand that trading is the ever developing and testing new things process. In this case it would apply to tweaking the small things and adapting the speed of WMA's to different instruments. But your "core price analysis" must stay the same as they say: don't fix what ain't broken. How long have you traded this method profitably with your "core price analysis" intact?. I donât like talking about this in forums and I wonât lie or show off about my PBP. I can only tell you that it was a long way until I got some results even after I âunderstoodâ by heart the core principles of my trading plan. In any case some of the concepts I am sharing in this thread come from the very first day I started trading, some others were there and I didnât rationally notice until I sat down and learn from my mistake but the only important issue is that PRICE ANALYSIS is unmovable. jjrvat
I understand you don't want to divulge certain information, the finer points of any method need to be discovered by each individual by trial and error. Thank you for the reply.
You are right about the levels.. I had the lines on the chart. Stop? think about it... if the price goes against you and hits the next level down, which way should you be trading?
After a discussion with JJvrat we decided to delay the publish of the system until it's over. So for all of you who PM'd me, have some patience, or better, just read this thread from the begining. Good week everyone. Amit