Actually I think you have stated what might be a nice filter for you using the ADX. When the ADX is signalling the stock is trending, we all know the MACD falls short in that it will manifest divergences that do not materialize into a trend reversal. So maybe a filter such as you suggested, either a decreasing ADX or a low ADX might help reduce trades from false divergences.
Had more time than I thought and wanted to get this done. I will describe each trade as they happen for better understanding. In this case, I entered long. Take a look at the stochastic on this trade. There were three consecutive higher lows made. Price also made a triple bottom technically and both shared a common low made by the 10:05 candle. I always find the six critical points of my divergence trade. 2 on my sto, 2 on my MACD and 2 on price. This is absolutely critical and helps filter any noise. We will talk about this more as time goes on. I entered on the 11:25 green candle which hooked the sto up. The MACD will always go first and provides notice of a possible set up. Depending on the situation, I will set my stop on a DOW trade at 20 - 40 points, 2-4 points ES. I made a typo on the stop above. Generally it should be set at 20 points below the pivot low. On this trade my entry was a little early on a long up candle. More often than not, you can wait for a retracement on the next candle and get in at a better price if you get a long candle. Sometimes price will run from you, but not usually. Ideally, you want this trade at the bottom of the channel. In this case, I was looking for a run up to around 9340 the high for the day. Obviously, it did not happen. I got out at at the top of the channel when things went sideways. I always get flack about my risk:reward. Let's not get into that in this thread. I am a high risk trader. My comment is....incorporate your on trade management style. If I risk 20. I like to make a minimum of 40 on the DOW. Risk 2 on ES, make 4 minimum. This is a good set up and as TS said, "the 5M will run". Hopefully, we can get more of these on better volume days. If I get three consecutive on the sto and macd, I will almost always take it. I will add a couple more comments in a separate post. Here is the chart.
Couple of thoughts: I would encourage you ES traders to pay attention to Momma DOW. It is my obvservation that she dictates (normally) what the S&P does. Like a small duck the ES follows her. So set up the DOW with your divergence indicators. If you get a DOW signal and not an ES. Watch the ES respond to the DOW signal. I watch both on the 5M which gives me more opportunity to trade. I like them both. IMPORTANT: Many times you will question a bottom on the ES based on your divergence, a glance at the DOW will give you guidance and help your timing. Rarely will the ES move significantly before momma DOW lets her. Also, watch for small DT's and DB's within a sto and macd turn. These are extremely powerful. It just happened on the ES on the 15:00 candle. Again, there was no divergence signal on the ES for me, but it was obvious on the DOW and the entire channel was covered in a move up. I had several long term diveregences occurring at this time also. Would give me confidence to trade it on a down day. You may not agree with all that I say, I don't blame you. There are many who are smarter than me. Watching a divergence system is truely an art. I will discuss the small things I notice in the sto and macd and maybe we can exploit them for some $. Learn your six points. Don't watch every bump in the sto and macd.
No, I sleep during the night, but the market doesn't. The futures trade all night. If there are significant moves in the Asian or European markets, the S&P futures will reflect them, that's why you see can see the big gaps when the market opens in the morning. The night-time market is long, from 4:30 pm all the way to 9:30 the next morning. On a 5 minute chart you have pages of candlesticks to go through where nothing happens. Then when things heat up at about 1:00 am you may see some price action, but still it's very slow. On a tick chart, all those hours are compressed to reflect only the actual transactions that took place. ON a busy night you will have more bars, and a slow one will have just a few. At a glance you can see if it was a wild night or calm one... You may not want to trade off something like this, but may want to keep a page with that chart on it you can flip to for reference. Cheer, kp
I have never traded the night-time market, but I must say I have held overnight--accidently. I foolishly held on to a position right up to the close (to squeeze the last drop of blood out of it) and didn't get filled before the ES shut down at 16:15. The problem was that it was FRIDAY, and the market didn't open again until Sunday afternoon. I got a very excited call from my broker (I only had margin in the account for day-trading) and so I exited the position Sunday when the market opened back. Fortunately for me it didn't gap against me, so I was happy. Sorry for the 'war story.' I couldn't resist. If you are interested in trading the night market, Tom Busy from DTI is big into that. He has trade setups that look at how the Asian and European Markets behave, and then trades the early US pre-market accordingly. HOWEVER don't pay him the $5000 he wants to teach you. Glean it from his free presentations. Cheer, kp
Tradestation 7.2 does not include the Pulsescan Swing VIX indicator as best I can tell. Does anybody have this written in easy language that could post it for us.
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