For all the guys who have winning strategies

1.6180340 · Apr 13, 2007

Hi Jack,

A few questions on price-volume:

1) Do you suggest that an increase in volume precedes a price increase? I guess this is true in a rising market, but what about a falling market? If there is selling pressure I also expect an increasing volume. Basically I would expect volume to follow the trend. Am I wrong?

2) You mention 'high quality stocks and commodities', and specifically mention ES. To what extend do the same rules apply for commodities and futures contracts?
My thinking is that the dynamics of the stockmarket are not symmetrical; selling stocks involves different emotions than buying stocks. You can see that in the way market crashes look compared to bullmarkets.
However, for some commodities, this may not apply. For example in case of currency futures I don't think there is much difference between going long or going short. Being long in one half of a currency pair automatically means being short in the other.

3) You mentioned a ~6-7 days cycle. If I understand you correctly, you are riding this cycle (more or less) and use volume to find the optimum entry- and exitpoint on an intraday basis. Since you assume a ~6-7 day cycle, that means holding for a few days and risk an overnight gap (which of course could also be in your favour). Is that understanding correct?

Thanks

Cruzan · Apr 13, 2007

Quote from 1.6180340:
1) Do you suggest that an increase in volume precedes a price increase? I guess this is true in a rising market, but what about a falling market? If there is selling pressure I also expect an increasing volume. Basically I would expect volume to follow the trend. Am I wrong?

Thanks
More...

I'm not Jack but IMHO statements like price follows volume are vague to the point of being confusing and meaningless. In my experience what I see again and again is that trend reversals follow volume. A peaking stock very often has peaking volume as the 'smart money' dumps it. Likewise a stock that has hit bottom (and maybe has gone sideways awhile) will have high volume as it starts to be accumulated before another rise.

Bitstream · Apr 13, 2007

i say it again...volumes are for ladybabies.

jack hershey · Apr 13, 2007

Quote from 1.6180340:

Hi Jack,

A few questions on price-volume:

1) Do you suggest that an increase in volume precedes a price increase? I guess this is true in a rising market, but what about a falling market? If there is selling pressure I also expect an increasing volume. Basically I would expect volume to follow the trend. Am I wrong?

Yes it is symmetric. The scoring and the unusual volume sheet are vry helpful in this regard.

2) You mention 'high quality stocks and commodities', and specifically mention ES. To what extend do the same rules apply for commodities and futures contracts?

The template is the same. I am not using the convnentional orthodoxy (standard orthodoxy Lo, Repin, Steenbarger, 2005) but a pool extraction paradigm. We are running separate journals to be able to follow a specific regime where we add shells to an onion so to speak. we go from coarse to medium to fine
What happens is that the belief system acquired has basic principles and you are making money from day 1.

My thinking is that the dynamics of the stockmarket are not symmetrical

That is a difficult postion to keep. Often people begin with a long bias and never get over it. There is also the issue of quality. you have to remain with quality. then, as you do, you get to see the repeatability and realability of the instruments. most people deny themselves that oppotunity because they are not selective about their universes. There is some reasoning involved to get to make money at high money velocities. It is just not going to ever be seen by most people because they prefer the choicedes that they have made and cannot iteratively refine their approaches.

; selling stocks involves different emotions than buying stocks.

Emotion comes before choice (Shull. 2007). in the conventional orthodoxy, there are emotional attributes that occur that leesen performance under conditions of failure (Lo, Repin, Steenbarger, 2005). These are negative and include fearm anxiety and anger. Selling begins and ends trades according to the type of trade. So does buying. you have just stated a non neutral biased statement. you have made a long biased statement here.

Th poll extraction paradigm is based on making money by being on the right side of the market. BY doing a stanadrd routine in NOW, a person has a different emotion set as a consequence. the set resembles support, comfort, and confidence for a set of reasons attributable to the paradigm's orientation to making money and the way a "sufficiency test is continually passed on taking a data set. Also the absence of probablilities in the paradigm contribute to a partnership with the market.

you are choosing the convnetional orthodoxy so you get the consequences of that choice emotionally speaking. You have that syndrome now and you are continuing to reinforce it. It is not fun to do what you do.

You can see that in the way market crashes look compared to bullmarkets.

Yes and I love going both ways. It is no secret that the money velocity of profit taking is in a 9:27 ratio, long to short. It is absolutely wonderful to have the variety all the time. The 27th of FEB was magic day

However, for some commodities, this may not apply. For example in case of currency futures I don't think there is much difference between going long or going short. Being long in one half of a currency pair automatically means being short in the other.

I cant say directly. I do know people doing it successfully and I do not that some currency traders do not understand the application. See a person with over 10k posts.

3) You mentioned a ~6-7 days cycle. If I understand you correctly, you are riding this cycle (more or less) and use volume to find the optimum entry- and exitpoint on an intraday basis. Since you assume a ~6-7 day cycle, that means holding for a few days and risk an overnight gap (which of course could also be in your favour). Is that understanding correct?

Yes that is the beginning level. Then a number of optimizations occur. At the top of the list is running the compound exponent from 40 to 80 which helps and then doing just the high velocity portions of the cycle. Here you about triple the rate.

Thanks
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mikesmithv · Apr 13, 2007

Quote from jack hershey:
It is no secret that the money velocity of profit taking is in a 9:27 ratio

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Not to quibble but wouldn't that be a 1:3 ratio? Still equally impressive though.

jack hershey · Apr 14, 2007

Quote from mikesmithv:

Not to quibble but wouldn't that be a 1:3 ratio? Still equally impressive though.
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Ugh my bad.

The ratio is 8:27.

The values are related to cubes of small whole numbers as a result of large number theorem.

ShoeshineBoy · Apr 16, 2007

Quote from ChrisMMM:

I heard from this guru that it is really not possible to trade of indicators alone. Like, it is very hard to base a strategy based on if fast moving average crosses over slow moverage average and RSI is something... the buy next bar.

What he said, is that you base all your entries and exits on price action. Indicators because they are used to measure the markets, are best used to filter the trades?

Thoughts?
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This is partially true from what I've seen. You can trade successfully using indicator(s) at a given level but only in certain mkts. Thus, to use indicators you have to know the kind of market you are in.

That's just my two cents. Some guys have posted that they use them successfully...

da-net · Apr 21, 2007

does anyone know of any serious study that has been done on the use of trend lines?

i have used trend lines, and have been chasing more indepth info around the internet, but have not come across anyone that has really studied the subject. perhaps some of you do.

thanks

Allaces · Apr 23, 2007

Quote from jack hershey:

Ugh my bad.

The ratio is 8:27.

The values are related to cubes of small whole numbers as a result of large number theorem.
More...

You are such an idiot

ShoeshineBoy · Apr 23, 2007

Quote from jack hershey:

Ugh my bad.

The ratio is 8:27.

The values are related to cubes of small whole numbers as a result of large number theorem.
More...

I find it very hard believe that anything market or stock related obeys any "law of cubes". If it's some curve-fitting thing, why cubes? Why not squares and why are there no other lower value terms?