Futures Indexes System and Tool Box

Discussion in 'Journals' started by bubba7, Jun 28, 2003.

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  1. bubba7

    bubba7

    Posted by jack hershey on 02-27-03 02:27 PM:

    The icebergs are smart enough to get out at end of beginner trade because they know the beginner trade ends in congestion and trading the "chop" until convergence and centering come up.

    FWIW My Jack-Stoch Trades 2-27

    Enter: Long @ 834.25 10:29
    Exit: Sell @ 839.00 10:43
    Total: +4.75 Day: +4.75 Week: +15.50

    Reason for entry: 10:20 5m Stoch(83.87, 76.34) MACD Hist 0.415. Bought the break over the 10:20 high (was also a new HOD).

    Reason for exit: Ok i bailed early. Mkt approached 840 which had been death resistance for the last 3 days so i got before it. Also the big vol spike 27k had me thinking exhaustion move. There was a MACD 5m XO at 11:10 with a low of 839.25 so i think it may have been the same price either way.


    2. Enter: Short @ 833.75 @ 2:333.

    3. Enter: Long @ 837.75 3:42
    Exit: Sell @ 836.50 4:00

    Total: -1.25 Day: +4.75 Week: 15.50

    Reason for entry: 3:35 5m bar Stoch(92.86, 77.23) MACD Hist:0.765. Bought a move over the high of that bar.
    Exit: Cover @ 832.50 @ 2:57
    Total: +1.25 Day: 6.00 Week: +16.75

    Reason for entry 14:05 5m bar Stoch(8.70, 22.90) Macd Hist:-0.473. Now i was hesitant b/c it was still within a channel on my chart that i had drawn from the afternoon chop so i wanted to see a little more downward movement. (see attached chart). SO we had several reversal candles and then a b/d out of the channel which is when i shorted.

    Reason for exit: Big vol spike at 2:35 bar and when the 1m MACD had a XO(2:42) and then a higher low on the new low(2:52) and the new low was on much lighter volume and the NQ did not make a new low i put a stop above the high of the 2:50 bar @ 832.50.


    Reason for exit: held to end of day. Sold at 4pm.

    Questions:

    1. What do you mean by contemporary volume.


    ****The prevailing volume for the last three events: mutual managers leaving, day traders shutting down and bottom fishing starting up.

    2. Are talking about end of day trend changes going throguh this process: volume decreases---->stoch goes to 50% (which stoch are you refering to?)------>volume picks back up and drives price

    ***** don't connect 50% to end of day. The 50% on the 14,1,3 was just a dwelling point. This kind of event is ALWAYS a possibility. It can always be something that can happen.

    Zillions of people trade out of the 20 or 80 on a hope that there will not be a dwelling point at 50%. some day i will go back with a few people who have records and they can see that a lot of failures to BO are exactly because the SToc goes to 50% and sits there before going back into a trend.

    Please follow just the volume description as a separate sequence.

    3. What does FBP mean? (edit: Flat bottom pennant. got it. saw it in an earlier post)

    Yes I will start using the different pace formations from here on out. We will focus on 5 min primarily and slip up to 15 min as good trends appear to understand formations. Then i will use the 1 min to pick off about four or so formations that set you up for logging stops for C&R purposes.

    You can google a little and see that all these topics are mostly untouched.

    What happens is that you build a signal vocabulary and that leads to have sequences of signals and finally sequences in a tree that tells you what trend possibilities are being eliminated. Once you see sequences then you are at KISS.

    Imagine slipping out of fast paces right into slalom reversals cleaning up point after point just like going down a black diamond trail or sweeping from side to side in a glider at ship speed when an updraft is racing up a canyon.

    By then we will just have to focus on the partial fill problems of linked reversals.
     
    #41     Jul 24, 2003
  2. bubba7

    bubba7

    A new comment follows:
    jack,

    I'm thinking you're showing some anger. Why? I'm not the only one who offered a different version of stochastics. There have several attempts to figure out exactly what you are saying. I don't fault you for that. What I disagree with is your almost constant attempt to denigrate the contributions of others to this thread that may not agree with your point of view. Or to put it another way, its your way or the highway.

    Take a look at this thread: http://www.elitetrader.com/vb/showt...?threadid=13888

    scroll down and look at the post entitled "A stochastic example". This guy, like me uses a doubly smoothed stochastic oscillator. Reviewing his *.gif files reveals he uses a time frame similar to mine for the NAZ index his are a fast line of 15 and a slow line of 65 whereas mine are a fast line of 15 and a slow line of 43.

    So the other day when I asked if anybody was trading the "Chop", I was curious, because there are other ways of trading stochastics than the ones you are describing.


    I replied:

    Hi nnnnn:

    The points you got from what I said are yours and enjoy.

    4 out of 5 people disagree with me. And you see that what I am starting with here is shown in back testing to be a failure by those who are doing back testing as a for a benefit to others.

    In most efforts people make as a common thing, the most important activity is trying to understand each other. What I am constantly doing is putting forth in a proactive creative manner is how to begin to make some money consistently and steadily. I also feel, clearly, that the level to be made on a contract is the determinant of the level of success of the person.

    You see me as an angry dude. Enjoy.

    Thank you for the two stochastics examples. Their settings are examples of "bridging" with an indicator and as a consequence it does not gives "signals". I hope anyone who wants to use either does that. You make an example of a person who misses stuff in this manner. The market follows sequences and they should be taken advantage of at all times. We see almost every day at the end of each fast paced rocket, the advent of congestion, convergence and centering. After the centering there is a trend break out. You see "chop" and you also want to know something in regard to it. Others post and email me about it too. They are learning about what they want to learn about; I contribute my views.

    There is a connection, for me, between wash trades and the congestion, convergence, and centering (chop to you). By getting good at wash trades, a person can then do trades as he comes out of rockets (after he has made three times his initial capital).

    Trading into congestion is not a beginner or intermediate thing.

    What usually happens is "whipsawness". I can achieve some kewl stuff by combining rocket exits and wash trades. The important goal to evolve to is to get a person (beginner) to exit on the "away" side of a trend. This is on a long trend, the top. This is on a short trend, a bottom.

    If a person does this correctly then all I ask is that he double down on the contracts as well. I cover wash trades to do this as a warm up with some people (They will begin by reversing on washes). It is like a spinnaker jibe going down wind. You don't change the direction of the boat you just put the mainsail and spinnaker on the other side of your boat for your next move. Think of being stalled in a flat trade and reversing in the stalled flat trade. There is no loss at all. You are just at risk not making any money by being in a trade that is still flat. If I connect this stuff to an "away" exit on a rocket by reversing into the first retrace I am still making money. As the congestion sets the channel width we reverse into more profits and it is just a slalom along the channel from then on. You "see" chop. We see signal after signal until the centering is signaled and we sideline and set up for the BO out of the centering into another rocket.

    Stick with your settings, they bridge all these signals. You do not get to a point where you can use your default or the "smoothed" one. Smoothing is what makes it impossible to pickup a Fast line "slow entwining” in a congestion and then convergence sequence. That is why I presently have different middle numbers on different stochastics so people can see how the set up for making "nickels" on congestion.

    Your view of me is what you make it. Enjoy. Disagree and/or dislike to your hearts content. Be critical everyway that lets you vent. Whatever you do turns into an educational experience for others each time you step up to the plate and take your swings. I'm contributing to improve people's batting averages.
     
    #42     Jul 24, 2003
  3. bubba7

    bubba7

    2-28 FWIW My Jack-Stoch Trades

    Well I didn't take the opening trade although at the 9:45 5m bar Stoch(97.56, 88.08) MACD Hist:0.43 b/c all of the economic numbers at 9:45 and 10:00 spooked me. This trade cleared the 9:45 high when the economic came out and was all over the palce and so i passed. Looks like it was a winner of about at least 2pts.

    1. Enter: short @ 837.25 3:40
    Exit: cover @ 837.25 3:46
    Total: 0.00 Day: 0.0 Week: +15.50

    Reason for entry: breaking the low of day as well as out of the channel. The 3:35 5m bar stoch(11.76, 22.44) MACD Hist:-0.31. When I entered the current bar (3:40 5m bar) was below -0.4, but it was early in the bar and the mkt reversed a little and the bar did not close with a MACD Hist short signal so i got out at breakeven. Tried to anticipate a little and was wrong, but didn't get hurt.

    That's it. Good week. Look forward to see what next week brings.

    This week stats for my stoch trades:
    +15.50
    11 trades
    7 Winners (63%)(3.25, 3.25, 1.25, 4.75, 2.25, 4.75, 1.25)
    3 Losers (-1.25, -2.75, -1.25)
    1 Flat
    largest loser: -2.75
    largest winner: 4.75 (twice)

    I would be interested to hear anyone elses results for the week to see if can improve on entries and exits.


    Posted by ddddd on 02-28-03 02:27 PM:

    Two trades today...

    12:33 Short at 841
    12:45 Out At 840.50

    03:40 Short at 837.50
    03:50 Out at 838.25

    Minus 0.25 on the day.

    Am I happy? No, I'm thrilled. While I have not totally "accepted" Jack's methods, I believe in the entries. That has kept me out of the market when I should have been. I still need to "accept" the exits without second guessing the method.

    Obviously I wish that I had done better this week, but I have no complaints.



    Posted by yyyyyy on 02-28-03 02:32 PM:

    Time Frame

    jack,

    I'll have to say, looking at both 3-minute and 5-minute charts, you are correct. Attempting to trade the settings I use for stochastics (43/15) & (172/60) is a real trial. However, using 1-minute bars, I can begin to get into the ballpark. I really chart and trade using tick charts, so can see the input I might make to this discussion is of limited value to people using the minute and higher charts. I can see how it would be difficult to trade the "Chop" using the time frames you are using. However, I believe these shorter tick charts are able to help identify nicely trending prices not noticed when using the longer time frames. That's what I came to recognize after I asked if anyone was trading the "Chop" the other day. Your update pretty much confirmed that several others were not seeing what I was seeing. Well, this is getting windy, as there is no need to post a picture to show my viewpoint.




    on that 12:31 trade

    XXXXX,

    i had no idea what to do...it was like middle of the day, but it is a clear setup...doh! i think what most important is that you don't get burned entering under these setups and if there is any rally/selloff you will definitely be in for it. It's like single, single, strikeout, strikeout, triple. Have a good weekend.[color]



    My follow up on the above (todays results and posts)

    I am really impressed. I liked the week's results too. I really appreciate how people are reporting their stuff here.

    Just as a simple comment. It is like adding light to a room. Each equal amount of light seems to change things in a large way at the beginning. The four lights we have burning are:

    1 .The knowledge that Stoc is relative and you can hold in the "over...." as a trend that is fast is a good achievement.

    2. Just doing fast paces only as a place to begin is equally great as an achievement.

    3. I appreciate everyone keeping the 20/80 taped so far.

    4. The biggest thing that I think occurred was knowing to stay out of lateral markets.

    For gggg, he can glance at our MACD 5,13,6 on the 1 min and see that the MACD telegraphs the reversals right on down the line. As the amplitude of the MACD absolute indication shrink you see the convergence and then the centering for a BO. The small numbers like 5 and 6 help with preventing bridging. On the 1 min the 14,1,3 stoc is always entwined and not readable for the congestion. The channel and the MACD stears you right along. By seeing it as the linked turns of a slalom you recognize the rythym right away.

    Another one of the same high quality:

    Here's a suggestion. You don't have to exactly trade Jack's method to learn from it. Write down all of his rules, then write down your version that you want to trade on a separate page. Trade your version if you like, but JOURNAL exactly how what you are doing is different from Jack's method. Go back through at the end of the day and compare how your system did compared to Jack's version. You will still learn Jack's method this way. As a matter of fact, I'm almost positive you will learn more this way.

    Just make sure you consistently follow one or the other of them. Finding a balance between consistency and adaptability is one of the hardest parts of trading.
     
    #43     Jul 24, 2003
  4. bubba7

    bubba7

    I now have the drill down; do it the hard way. lol

    Version I for each month is coming up.

    Version II then follows for each month..

    The above are chronological to support learning.

    I then do monthly spin outs of bold with part associations so you can go back to chron.

    Next it is alphanumerically rearranged.

    Following thay I write up each to the item as a topic to explain as either an idea or a term. Bolds in the write ups mean you can go to that asociated place to get collateral stuff. It will all fit together this way. Process versions and fact chron and reference.

    Over all it will reduce the 700 pages twice and also set up total cross referencing.
     
    #44     Jul 24, 2003
  5. bubba7

    bubba7

    Channels and finding points 1, 2, 3
    To nhkoi:

    Looking at your graphic It looks like the point 2 side will always be the "left" side with the right side on the point 1 and point 3 side. Makes a bit more sense now. I thought we were to look back in time from the point 1 to find point 2. Thanks...


    I thank you too. You are so very helpful. The numbers are arranged as they occur in time: 1, 2, 3. Right, left, right just like in marching out of step.

    It is very true that I am "fixing" people. I am chatting so that a neutral bias will always be creeping into a person's consciousness. Time is a left to right thing and that is how money is made. Entry is a time. Exit is a time.

    People also find out that they either have a vertical or horizontal orientation. When I was at IBM in the 50's we had to fight through that for computer logic design too. (See "think" magazine about 1957.) Right is the future; left is the past.

    If you have a horizontal orientation , you get to make money a lot easier.

    We are watching time move and our screens are always showing "NOW" on the right side.

    If you are in a vertical orientation, then making money is just a little more difficult.

    I can now see that I need to, when I introduce something, to go to basics.

    If everyone will, please go to chapter 20 of William J. O’Neil's How to Make Money in Stocks" and set up a landscape chart of he 18 common mistakes people make. Do a present inventory in third column and do two past ones as well in columns one and two, do: when you started to invest and half way to now. Pick a few common mistakes to drop immediately and then inventory periodically from now on.

    I will want to constructively get to you all on the difference between iterative refinement and building foundations and which one comes first. I taped out the 20/80 part of stochastics for a reason. We need to get to a basic objectivity on being rich. It is not difficult to be rich; and it doesn't take any significant amount of time or start up capital. What is does take though, is getting to a very conscious exciting mental and emotional state. I need to build some very kewl jiminy crickets here.


    NEED HELP IN JACK HERSHEY TRADING STRATEGY
    hi all and good day for all esteemed traders here

    I noticed in the previous posts ( 51 pages ) that all people are discussing JACK HERSHEY methods ( stochastic ... macd ... rocket ) i real all the posts and I am confused that i could not understand what is the method is .... I am a FOREX trader , I have my own method and it provides good and consistent profits and would like to know more about JACK's method .... what time frames to apply ... could it be used to trade FOREX ... Metals ... and what are the rules to apply setup .. settings ... all required details when to buy or exit .... in trend or range markets .... what are the use of the three slow stochastic 5,2,3 -10,2,3 - 14,1,3 how do we use them what is meant by xo ... in some posts ....

    So kindly if any one can explain where can i find a simple pages / web sites / books for this method with all details explained all in one .... I appreciate a lot
    have a nice day


    Helpful response that is right on:

    Posted by nkhoi on 03-09-03 01:00 PM:
    There are no "simple pages / web sites / books" , info are all over the net, this thread is as comprehensive as you can get. And if it look complex then give it sometime, you don't learn to speak a foreign language in 1 day, do you.


    This is a correct viewpoint. what makes all of this so difficult is that it is dense and mostly foriegn. I took the road less travelled by just starting from scratch and reasoning for 40 years. I am taking you to where I am by going to where you are and bringing you to me. It is never possible to expect another person to jump right over to where you are. you can't easily jump to where I am. I am trying to get to where you are so i can put myself in your shoes and walk along with you.

    An unhelpful response I saved just for local color of March times:

    What? You mean after reading all 51 pages you still don't understand Jack's system? Don't worry, nobody else does either.

    Channel help worked:

    Jack, Scrutch and everyone
    wow. some real good info posted. thanks for for responses.

    i was definitely not looking for point 3 for channel formation, and didn't look at the 1m...was too concerned with my losing trade. the graphs and info put a real good picuture of what to look for in the future. thanks for all your help.



    How people were feeling about what was really going on:

    You must excuse me, I was in Chicago interviewing for a position. I did not trade on Friday 03/07/03. This was my loss, as this was yet another day to train with.

    You see, Jack is teaching us how trade, not to execute. The current market evironment has been tough, and I have noticed many executors and their systems have been failing. We have lower range days and the uncertainty in the market has lessened the swings and volatility that the intraday SP futures trader so badly needs. In this environment, it is neccessary to learn how to trade. That is...understand the changing character of the market and adapt.

    A system may be valid and work for a couple of years then it stops.....why? Perhaps it still works ...but simply adapt the wave-length, cycles, slices of time to evaluate with, or simply lessening the targets and stops.

    Anyway's what Jack is teaching is a simple day to day evaluation of the market and its character. It will always work! Your ability to use Jacks methods will determine your consistant "making of profit" daily.

    Now while we are beginners there will be up and down days as we have trouble decerning what the market is telling us. Pay carefull attention to the open and getting into "sync" early on in the trading day...this is your key! For me this tells me if I trigger of the 50% line or not....rockets may not be strong today...It is up to me to discover and sync the wave length. Tampa's discovery of the one minute MACD to time entries was important. I will use that. Just take one thing at a time master it, learn it, oberve the other indicators that Jack has given us and try to see realtionsips. Ask "what if" questions, keep a log, write down entries with these different ideas you come up with and track them. Jack cannot teach you this.

    REMEMBER DO NOT LET THE MARKET TRADE YOU.......YOU TRADE THE MARKET.

    I suggest we take the focus off of getting into sync with Jack's posts and understanding HIM....it will all come as we get into sync with the market and control what it is telling us. Jack will post in here from time to time to check progress, comment, hint to future lessons. It is up to us to struggle to understand how to time all these indicators to help us synthesize the waves into managable risk/loss levels.

    A pro trader....can simply put on a positon at the open and "add to", "deduct", reverse, or go flat and then start again. The point here really is not the direction....but I have witnessed pro's balance the trade with trade management to skew the result in their favor...even if they started the sync, out of time with the market. This is where your mastery of wash trades will shift in....and find your direction for you.

    Here is a quick observation, then I will shut up and go through Fridays trades and post them in a later post...but these are paper trades not "actual" for Friday. Concerning opening trades, I am assuming that many use "day session" charts and not 24hr. So the opening brings a noticable gap. Now if this gap is even or a few ticks within yesterday's day session close then there is no gap. So your indicators can continue on without "syncing" them with the one minute. So you may not need to wait 12 or 13 minutes to have confidence in your lagging indicators. Friday indicated a gap...so get into sync, recognize range, and make your decisions on your rockets. What mode are you in? Will this be a rocket day? can I try to get in early and observe one minute patterns for wave length?...or perhaps will this will be an iceberg day.

    Talk to you later.


    Quote from jack hershey:

    Today's open is a very important one to have down once and for all. Aside from the source of this mess, we need to know how to handle all opens for every day anyway. Overnight news always impacts. In this case there was profound stuff in the evening and the schedule for Friday was going to have high impact too.

    The general rule is to let the market synch before we enter. This is an end effect issue for all: beginners, intermediate and advanced.
    .....
    Everyday is going to start the same way for us. Get the end effects out of the way. We have durations of 14, 13, 10, and 5 bars to get past from the prior day. But this is not the primary end effect; the discontinuity of data is more important as one part and the lack of agreement of cash and index is the other.
    ...Now just put in the picture what is done every morning at the open. Let the market synch by watching the csh and index values on the NYSE, or something you choose, come into price synch The formations on the 1 min will do this for you. This will happen coincidently after the 14,13, etc have passed to carryover from the prior day.

    ...
    Summary:

    There is never a trade within 12 to 15 mins of open. You always get out of a failure to rocket, as a beginner with a "wash" (flat) trade. Once you are an intermediate, for now, you ride icebergs until they are extinguished by an iceberg on the other side of the 20/80 tape..
     
    #45     Jul 24, 2003
  6. bubba7

    bubba7

    Start part 2 (March)

    3/07/03 Friday Trades

    I just want to state these are "paper trade hindsight" observations. I was not at the computer on Friday to catch these moves. But I would like to share my observatons for my own help and edification of others.

    I will not discuss the gap down opening....this is for Jack. His method may or may not use the statistical probabilities of gap fill within 1 hour or else! He has not eluded to skipping long or short trades built upon a bias......actually this may be very contradictive to the use of his relative stochastics use.

    Between 10:10-10:15est the fast line spiked aboe the 80 line on the 14,1,3 Stoch 5 min. The shy slow D line did not rise up to the occasion, so no long entry. Note: thst was a fast move that drove that spike up ...must have been a reaction from the overnight, or the morning report "pricing in" of News/report or impending news/report. The immediate correction of the next 5 min bar and the timing tells me this was a knee jerk reaction to a morning report. Often the charts tell me something is happening and I really do not need CNBC. This two 5min bars between 10:10 and 10:20est can be taped out so that you can see the real day. (tip: do not use duct tape).

    The next 14,1,3 long move on the 5min came at the 11:20-11:25est bar, instead of waiting 2 more bars(the real 14,1,3 long signal) at 11:30-11:35est. Do you want to know why the early entry? OK, I will tell you. Let's do it together. at 11:20est our open is at 823.50 and our 14,1,3 is right on our dashed 50% line. It troughed out at 11:10est with a good strong 5min green candlestick bar(retro-rockets firing and getting ready for blast off at the XO of the 50% line). At 11:20est (decision point) we were on a strong 5min MACD cross with a good MACD oscillator reading. "LETS GET IN" The Tampa 1min MACD was no help on this entry. What entry did we achieve? Well, considering that the open of this 5 min decision bar was the high and the low was 822.00, we could not go wrong! So we could get a good entry, with plenty of time. Now, when do we get out? This is tough...but if the 14,1,3 slow d on the 5min did what I think it did between 11:50-11:55est. I would be out. Even the 1min stuff(all 4 of them) would have scared me out at around 822.50. So we would have not made anything and according to the entry we would have a lost a few ticks. There is one thing that would have held me in the trade....that is the use of channels...but this is Jacks decision on when to introduce these...if he uses them at all. If anybody has any comments to the use of our current beginner indicators please comment. I must must master the use of these stochastic's together with MACD before moving up.

    The 13:20-13:25est short was tough - no comment.

    The 15:10-15:15est long was a sweet moc exit and Tampa's one minute MACD at 16:07est was key to the exit.


    Another narrative that tells you where people are in their thoughts:
    Where do I begin?

    09:50 S @820
    09:58 X @817.50

    Bailed on a volume spike – I would have also cut and run at 10:26 on a 5M MACD cross at about the same price. However, had I stuck around for the 5M Stochastic signal...an additional point and a half...(sigh)

    02:23 S @810.50
    02:25 X @811.50

    Stochastic signal, plain and simple.

    02:31 S @809.75
    02:48 X @810

    I “cheated” all the way on this trade. Entered with a -.25 Histogram. Toughed out a Stochastic exit.

    03:35 S @809.25
    03:48 X @806.25

    Bailed on a volume spike again. To be honest, profits have been so hard to come by that ANY EXCUSE to exit will do!

    I did not take the 1:50 long – just did not see enough volume, and did not want to buy with a 4+ TRIN.

    Bottom line: 2 wins – 2 losses Plus 3 ¾ points.

    A response to the above comments from an ET’er:

    If we play by all the rules set forth for the beginners don't we need to quit looking for price, volume and drop back to the 80/20 line? I'm sure that all this comes together here but the rules were specific as to condition 1 and condition 2 being true, then enter with condition 3 and exit with condition 4. Piece of cake... ? ? Course a lot of the posts made it pretty clear that we were allowed to cheat in this way or that, but how far can we take the cheating without reverting back to the way we were trading before?

    Tampa, I thought this was supposed to get a bit easier as we went along. I had to do some field work today (maybe tomorrow as well) so I did not get to struggle all day for the short side of 4pts. That's got to be frustrating...

    I keep reading the rules and the posts and still think there is something that we are overlooking. Yet when it works, it works well.
     
    #46     Jul 31, 2003
  7. bubba7

    bubba7

    Seems I forgot something:
    Jack,

    ...what happened to the "tampa fix"?
    Here it is:

    Trend Paces.

    After starting with a trading basis composed of several tenants to assure continuing capital appreciation, the tasks expand as proficiency is attained.

    For those who are used to a return in their investments based on prior experience, two tasks appear: learning about this approach and integrating the appropriate parts into your existing performing system.

    Where we are headed is found 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 trade longer to be able to derive more profits. This involved finding three points to establish the trend channel. Point 1 is usually in the prior formation (comes first in time) and point 2 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 no 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 Break Outs (BO’s) 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 adjustment it turns out.

    We do this by setting a new point 3 when called for after the initial period of the BO. 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 the same way to attain the trend channel width. It is a little wider and it slopes less in money velocity.

    What has occurred is that we have gotten the market pace for the trend established. And we can take the flight more comfortably. Staying in for the whole run of the trend is out objective.

    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 “What’s wrong here?” 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. When the passing time occurs, people think and think hard, then they begin to act again. The trend moves along with the price then traversing the established channel. A micro cycle of A/D has occurred in this interval. (A/D is accumulation /distribution, the buyer/ seller market control thing).

    The adjustment of the point 3 that then comes up after the price bumps off the left side of the channel, is a repition of the above just later in time. By knowing and watching and adjusting, you yourself are calibrated as well to making profits more effectively. Ithappens to be that nature of ET 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 the 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 “tape” at that point. This tape is a band running at a given slope as a price channel. We are always day trading off the 5 min for the time being.

    The “Tampa Fix” is the process to go to the fractal that gives you a “Tampa Tape”, 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 “anticipate” there as well.

    You can see the Stoc, MACD, volume and price give you identical sequences as before. So there is nothing to learn except to relax. Yesterday this takes you through most of the day from beginning to end.

    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.
     
    #47     Jul 31, 2003
  8. bubba7

    bubba7

    Part 3 begin here

    Here are two records of trades. Note that people have their ways of operating and that they are merging facets of this stuff into those methods.

    ..it really could have been better

    10:18 L @814
    10:23 X @810.50

    A disaster from start to finish. The 1M MACD was against me going in, and an “execution” error cost me an additional ¾ of a point.

    10:45 S 806.75
    11:04 X 802.75

    Entered late because the 1M MACD was against me, but when it signaled an entry, I took it.

    02:21 S @805.25
    02:30 X @807.25

    Everything looked right – but it just didn’t work.

    02:39 S @805.75
    02:14 X @805.25

    Cheated all the way – that’s all you need to know

    03:35 S @801.25
    03:47 X @801.25

    The entry was correct – the exit was based on fear.

    Bottom Line: 2 wins – 2 losses 1 wash – Minus 1 point.

    As I learn more, and implement additional methods, it becomes difficult to report the “hows and whys” of each trade. Simply posting time and price really serves no purpose. To keep things (me) honest, I will continue to post an abbreviated bottom line kind of end of day accounting from now on.


    this is brief and a difficult situation. Note that the person is in and out in no time flat and on wrong side of trade.
    11 Mar 03

    10:15 L @ 813.50, exit 10:20 @ 812.25, -1.25
    10:45 S @ 807.50, exit 11:15 @ 805.00, -2.5 there is error here
    12:00 L @ 809.00, exit 12:05 @ 808.00, -1
    14:20 S @ 805.75, exit 14:30 @ 807.25, -1.5

    total –1.25 I changed it

    Now look at the intervals between the trades. Later we will slalom from the closes with reversals. That is we double contracts and go opposite trade. That yields 10 points profit approximately for the above.

    More news about trades

    3-11-03
    4 trades
    -3.75 on the day

    have not been able to post the last couple of days as i am getting ready for vaction. be back next week hopefully with a rested and focused mind. going to completely unplug from the market for first time in two years and recharge the batteries. good luck to everyone.



    a review of the past few days.
    It is very easy to quarterback after the game has been played.
    So I will do two things. Review and make some comments about today as well.

    A couple of thing will come up immediately. One is protection from losses. Another is the general comment that I am operating fairly loosely to make things work better. Each of these two things go together.

    The situation out there (the world and so on) is sort of suspenseful. Actually on ET we see a lot of folks posting distaff stuff about how hard it is. A kind of Rodney Dangerfield litany.

    This fertile market ground is where we are. So let me step in to the picture a little bit.

    Thanks for the person comments coming my way on my email. I do appreciate knowing that things are improving for the approaches many of you are using. Transference is what I shoot for primarily.

    I'm pushing for people making small amounts of money steadily day after day on one contract. The picture is this: as you accumulate wealth you have more to play with and if you don't get sophisticated, even, things do work out. I want people to ease on down the road doing just easy (fast paced) trades; then I want them to get into washing out regularly and maybe reversing washes to tack over to the next opportunity.

    Here I am adding something to loosen you up a little as you go along.

    It involved desensitizing you to the brief quirks that seem to screw up people who are used to driving on dirt roads or something. It's definitely not as bad as driving on the AlCan hyway after the thaw however. (I always carry duct tape to keep the holes in the windshield covered after taking a rock from a passing truck).

    Lets focus on the trading fractal. I am trying to pull tampa to the 5 min in several ways. He is there on the 1 min and MACD. We could compare the posts of everyone for the last day and we see that not too many were concurrent. They happened at different times for different folks.

    I want to get tampa on the 5 min. and I am going to "tape" his MACD. Actually I want to push Tampa way back "away" in two ways. Simultaneously I am going to loosen up the Stoc rocket people.
     
    #48     Jul 31, 2003
  9. bubba7

    bubba7

    Lets set up the MACD for Tampa.

    Don't use any signals between +1 and -1 on the 5 min. Don't use the 1 min for anything for a while.

    divide the MACD signals into two groups: "entwined" and combos of convergence, xo (crossover), divergence all outside the +1 to -1 tapeout.

    "entwined" inside +1/-1 (+/-1) count as congestion, convergence and centering. When centering occurs I will get you in but that comes later.

    "entwining" outside of +/-1 is an "away" trend. All trends are tradable. The further "away" the stronger the money velocity.

    Exit on divergence out of "entwining" as long as it is to the +/-1 tape. This makes the fast line "inside" (nearer) 0. If there is just an offset, stay in the trade.

    Okay now for the sequence : convergence, xo, and divergence.
    As you see this, reverse. You are AWAY (greater than +/-1 on the 5 min. You can choose to reverse as fast line gets most away (peak or trough), next when convergence starts, next when xo, next when divergence. I don't care for now. The rule is wait until you are comfortable. My rule is "make money".

    NOW. You must go the slowest fractal to do this. I know that you have to recalibrate the Tape and the "away" values. Get with it and do that.

    Today, march to 15 min and 30 min and just sit in a short from the open. If you look at the 5 min just see the MACD weaving along "away" short in a range. Do not crap out every time it hits -.5. Go back to the15 or 30 min and relax so you can't see it on the 5 min. You aren't even thinking of going to the one min.

    Now my review. I suggested going to slower fractal several days ago. I showed the "tape" channel on the 15 and 30 min, then the second day we had to go to 30 and 60 to see tape channel.

    Tape channel means the bars filled the channel.

    Today we are on a nice 15 min tape channel.

    Why can't I get tampa off the one min?? If making money is able to intefere with his thoughts, then he will go to the slower fractals and calibrate the MACD.

    For rocket folk, you are in heaven on the longer bar fractals. All trends look like rockets and now you can just go there and soak up the money.

    BUT, you can never start to learn to trade there on the 15, 30 ,and 60. The reasons are clear, you do not have enough capital. You do not know about protective stops. You do not know how to perceive ends of trends. And the slower fractal trends you see are not fast paced short profitable trades to make money and learn to SIDELINE.

    On the slower fractals the money velocity is much smaller. It takes more time to make money.

    It is best to make money fast and wait for another chance as a beginner.

    My first try with Tamps to boost his money velocity was to make him an "iceberg" intermediate. This present attempt is the same thing using MACD on slower fractals.

    What I am trying to do is this: He doesn't go for Stoc rockets; he has a hair trigger on MACD 1 min which is exit oriented from loosing in the past. I need to make him back a lot of lost money in the past. This is to get an even keel in the picture. Once we get past hair trigger exits, we make money.

    See how the point 3 thing worked for some people here. There was a feeling that they could focus on doing something that distracted them from hair trigger exits. It was finding the trend. Getting points 1,2,3 allow you to see a trend.

    I showed hoe the volume pick up took you back into making money. I repeated it again to do the "two step" on point 3. The airplane takeoff example.

    Here we are looking at several days of world conditions being a steady drag on the equities markets which reflect into the day trading ranges of the futures indexes.

    We trade several times a day and we don't care about the world; BUT by looking at the longer duration fractals, we can relax and enjoy the trip.

    This does bring up protective stops. And it does bring up calibrating the absolute type indicators and their signals.

    So be it. We can do what is required anytime something comes up. You will get the picture soon enough that all things lead to a KISS operation through one simple consideration: you know what you are doing and it is simple. It is the "I don't know what he's talking about" that appears just before you do "know what he's talking about" and it is a very easy at that point, kind of feeling that you constantly have. I know tough sentence to read.

    We are just moving up a little in intellectual thought bites. I'm the type of person that people request a continuation of classes after graduation so they can finish up a few things. It turns out you never do get finished.

    Lets make some money here. Hang in there longer on your trades.

    For beginner rocket traders, you can sneak up to the 15 to not exit quite so soon if you have already doubled your money.

    For disciplined rocket beginners, who have doubled, you can do 2 contracts now.

    Here is a response to the above:
    Jack, thanx for all the help - it is much appreciated.

    Of course you are right about my hair trigger, and so I have taken your advice and packed in my one-minute chart...(sigh)...and replaced it with a 15-minute.

    It will take awhile to digest all that you have passed along, but I think that I understand, and will study it tonight.





    The 15 min today on the MACD gave us some good definition type examples. Late yesterday and this am you got to see an "offset". The fast line ran ahead (meaning lower values in the short) by a specific offset during this period.

    Then you got to see the maximum money velocity occur when the fast line "troughed". Following this the money velocity was a constant accumulation of capital (See this as "entwined" lines.).

    Finally, the volume crept into the basement (low low volume) the bars alternated red and black. Then four increasing volume black bars allowed the MACD to diverge back towards 0.

    Rocket beginners using the 15 min would exit here. The most sophisticated folks would take this divergence as a signal to reverse. For what I suggested to tampa, it is just an exit.

    All others would see that the Stoc 14,1,3 hung on the 50% for the 15min. You can glance back along the 50% on the 5 and see that it comes up at times when during these days for position traders, it is "riding the support". You also see that the support dissolves as well.
     
    #49     Jul 31, 2003
  10. bubba7

    bubba7

    Don't worry about not understanding. You should consider picking out a few skeptics (not the dumb ones) and just track their comments. What happens to a skeptic is that after a while they decide to make some real money. When they do they cut to the chase with cogent questions. At that time, if and when it occurs, I will do some really sharp interrelating the various principles to their comments.

    What gets a person to being a skeptic is how they persist in carrying along their attitude in a way that enables them to replace just making money with being right. Think about it. A person who is a professional in a few fields is used to "fixing" stuff that is busted in a fee based manner. This type of constant money velocity situation is very different than iterative substantive refinement and growth.

    About the third or fourth time we double our ROI here, it will begin to strike home that the "fixing" they are focussed upon has slipped outside their operating box. Then there will be an effort to fix the box.

    I hope everyone enjoyed going over to the 15 min today and relaxing In equities the sequence of mutual funds mgrs, day traders leaving and bottom fishing is classic. Having it happen around 800, gives us, as we get into the groove, a way to pull down the green through the day on the 15 min.

    Read the sequencing I am slipping into this as a statement of the P, V relation I posted in the Journal.

    Notice the "long " tape starting up this PM is wide (volatile). I am tuning everyone to significant figures here and statistical significance as well
    points 1,2,3
    This post continues and correlates with the 15 min comments at the bottom of the post.

    Beginners on the 5 min are being sure to catch the new trends as a way of hanging in a little longer on trends.

    You have a trend running at the start of the day from yesterday. This three day long short has been adjusted in width (the tape thing) occasionally.

    The pm developments that start at nominal 13:15 were neat today. The four oclock drift on low low volume (use 5 min for all of this) came to a smooth landing with the Stoc 14,1,3 centering on the 50% and staying out of site behind the 20/80 tape.

    You see the right trend line easing on down the line. It's 13:00.

    The slow start of the new long trend is set up with some icebergs long. These can be easily slalomed by the nice rhythm they always have. This is intermediate expert stuff we will come to. the clue is trying to get out of the end of the trend with greatest profits (away from the right trend line) that leads to slaloming.

    Since the trend tape was on the 15 min and the MACD did it's divergence to the center, that was seen by these folks as the slalom starting gun. Ice bergers would go long and sit tight for the trend start up.

    Everyone is doing the point 1, point 2, and point 3 thing as it turns out. And the points came up like clock work; therefore the old "short" trend is gone. It may come back and for sure we will catch it. In the mean time, we are long or slaloming as intermediates or advanced people.

    Beginners see that the trend ended and a new one is under way. We are mentally oriented; all of us and we are making money. beginners getting in the three times they did to anticipate rockets, did pull down a profit each time as a better effort than just the usual washing. If you are making nickel and washing you are right there and on the ball as a full time participant in the opportunity that is there for you for your skill and wealth level.
    more point 1, 2, ,3.
    Look at your points. look very hard at the volume sequence as you turn in your three ring binder to the first posts I made on trend channels. Take the time to get it out.

    See that every time you hit the right trend line the volume is declining. (read the P, V relation "if, Then"). Check off that it works.

    Look at the price bounce off the right trend line as the increasing volume pushes profits into your pocket as it traverses to the point 2 side. Watch price poop out on the left side as the volume fails to continue to increase.

    You people who are slaloming, just feel how the linked turns are hitting your knees as you posture your bod for the turns. I always did 30 spinnaker jibes on Thursdays off Larchmont or 32A to get ready for the weekend Shields class racing.

    You can groove on all this. you see the trend emerge on three (count 'em) sequences. I can suggest to you that soon you will know what is coming as a trend sets up. If you are hot, you slalom a lot.

    A while back (years ago) it got so bad for me (meaning good) that my C&R's were like a clock. And if I didn't call, I got a call. All DJXX trading before the mini's. When you have people coattail trading your slaloming you know you are in the groove.

    You will be in the groove.
    The trades get into the groove. Longer and in the right trend direction:
    12 Mar 03

    3 trades

    14:05 L @ 793.25, exit 14:15 @ 793.50, +0.25
    14:55 L @ 796.75, exit 15:15 @ 799.50, +2.75
    15:55 L @ 803.25, exit 16:15 @ 805.50, +2.25

    total +5.25

    More
    Progress...I think

    09:46 Short @814.75
    10:05 xxxx @814.75

    This was an attempt to “fade” the open based on a MACD xo – with a heart full of fear I jumped in, but when the market retraced after being in my favor, I “washed”. In hindsight, I should have hung on, but I am new at this method, and need to “prove it” to my self.

    12:10 Long @816.50
    01:42 xxxx @820.75

    This was entered as an “Iceberg” – based on the 5-2-3 stochastic. The entry was “textbook”, but to be honest, after 4 ¼ points of profit I grabbed them. Outside of the fact that I lost 3 points yesterday, and was looking to get even, there is no logical explanation for the exit.

    02:20 Long @822.50
    02:42 xxxx @824.50

    I hope Jack would be proud of this one – entered as more or less a continuation of the Iceberg I chickened out on. With an uptrend in place, prices pulled back on low volume, the Histogram was putting in a low, and the MACD was poised for a positive xo. I exited when the volume drid up after putting in a new high for the day.

    Bottom line” Plus 6.25 points on the day.

    While far from a perfect day, I am beginning to understand more and more of the concepts Jack has presented. At this point, I still need a lot of work on just sitting back while the trades do their thing. For me, that’s the hardest part of this method. But to be sure, I am learning to look at the market in a whole new way.

    Summary update
    General stuff.
    We have been getting some really great times here for moving into the groove.

    A couple of weeks of really perfect sidelining stuff with flat markets. Here we learned two things:

    You only make money when there is a trend.

    You stay sidelined to minimize risk in flat markets.

    The major key in this start up was to "tape" the 20/80 band.
    We also checked out the compound interest formula to see that a minimum steady daily profit did make progress. We did not compound it seriously by adding contracts (the postage stamp curve thing up to this point)

    We also had so very good looks at "wash" trading as a way to:

    Exit when there is no money to be made. This is done by working at getting out of ice bergs as a beginner who only trades rockets.

    We also had a couple of people perceive the timing of a rocket going into congestion and they are doing the slalom trades (short, long, short long, etc) through congestion into the convergence then centering.

    Next I introduced how to eliminate the "hair rigger" exiting that was going on. Lots of people have NLP pictures of entering, making money and then holding as it fades and they get into loosing situations. They counter with premature "hair trigger" exits and give up a lot of profits.

    What I did was get you to move to slower fractals and use your indicator knowledge and signals to relax you away from the hair trigger. Then I kept you refferring to the 5 min as a standard place to start out.

    The second element of this was the points 1,2,3 channel start up lines for your price graph. Once we understood the "right side" and how you see formations end onlt to begin new channels within their endings, we were able to specifically focus on the "hair trigger" syndrome of "what is going on here, now that I m in a trade?" This is the pemature critical point of all critical points. We occupied ourselves with an alternative effort and avoided the premature exit. There weresome great results posted in terms of mental shifts.

    The "tape" we learned during this interval was moving to the slowest fractal that "fills" the points 1,2,3 channel with price bars like a child "coloring between the lines". You got to se the indicators and stuff working just like they do on the 5 min beginner stuff.

    I mentioned having to set point 3 again like an airplane takes off first steeply and second then at a climb rate to get to cruising altitude.

    Several times we have seen trends continue into the next day. Some have gone for three days.

    We also have it down on the open and close that there are "end" effects. We trade after the market synchs. We just wait 15 min and then go to work. Some, intermediate and advanced guys, are watching the synch because it is info laden (later posts will get that fixed).

    I spent some really valuable time calibrating people too. I think the MACD adjustments I made on Tampa will easily drive him to being a millionaire. The two parts were the "entwined" and the sequence: converge, xo, and diverge.

    If you are religious and want to compress getting to being a millionaire, you have to do a couple of things. Do the three ring binder several ways. Ugh. I know you will hate this. But if you do it and say everything out loud, you will see what I mean. Look at next post for this stuff.
     
    #50     Jul 31, 2003
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