Discussion in 'Educational Resources' started by TriPack, Jul 10, 2002.
Note: All of the posts in this thread are directly quoted from super_ego.
I am a very profitable trader trading from Hawaii. I started out trading with Prudential Securities as a Market Maker and moved on to trade with the mammoth grand-daddy-looter of the securities markets, Goldman Sachs. I have a BS in Bio-Physics, an MBA, and a PhD in Economics. I am 42 years old. I have traded for 10+ years and I was around before all the loop-D-loops.
And yes, I do make gramatikkle errors now and then.
I will need to know where everyone stands on the market todempole. So take this rediculous little quiz.
If a stock is bid 5.38 by 6.22 at what price will you (try to) enter the market?
Do you know what forces drive the market? (don't say supply and demand, please!)
Do you know the difference between a mathematical indicator and a data-compiled indicator?
How many times per day do you get SCARED to take a position? (be truthful)
How many times per day do you fight the daily trend?
what was the last trade that you made (size of postion, name of stock, price of entry/exit) and WHY did you enter it?
Very important, since I will be showing you all that EVERYONE is making the same mistakes and that is what the market is counting on!
Help yourself and be truthful in answering these questions and I promise you that you will get more out of my knowlege than you have ever received from any money grubbing guru!
PEOPLE....I AM A FREE SERVICE AND I WANT TO SEE MORE TRADERS SUCCEED. I ASK NOTHING IN RETURN FOR MY SERVICES OTHER THAN YOUR WILL TO BE A SUCCESSFUL TRADER.
Without posting complex answers. How do you spot a trend?
Please don't make this complex. I will tell you how I spot a trend. With simple moving averages. That is it. Simple. To the point. Done.
To setup and identify a trend you HAVE TO HAVE a 2min, 5min, 15min, and Daily Charts.
On these charts you need a simple (not exponential) moving average of time frame= 5,20,40,222. This is a MUST.
Set up these charts in the manner I have mentioned and go and look at your favorite instrument that makes you money these days. I should hope for you to see them come to life.
We are only going over the BASIC strategies of identifying a trend. We will get much further into detail. For now I want you to see things the way that you should, NOT the way that you have. If you are already used to the setup that I have mentioned, that is fine. I just want to be on the same page as everyone else.
We are discussing how to deal with a trend WHILE WE ARE IN IT, we haven't disccussed how to identify a trend as it is developing.
Breakdown of charts:
2min- used for entry/exits
5min- intermediary chart (we will get to this one a bit later)
15min- this is the chart you use for PIVOTS.
Daily- Chart used for IMMEDIATE TREND
I don't use 10min charts cause they are worthless, the 15min does a much better job of nailing pivots/reversals.
Remember, don't make this harder than it should be. I just want you to become familiar with these moving averages. These are the only moving averages that work, based on stats.
The 222 I will be showing you how to OFFSET to predict trend reversals.
back to trends:
what your job is going to be is setting up charts/averages described before and :
In Uptrends--Buying ALL pullbacks into(and BELOW) these moving averages.
In Downtrends--Shorting ALL rallies into (and ABOVE) these Moving averages.
There is your entries. Exits will come later and exactly which moving average is the KING will come later also.
Now, since I can't show you pictures of charts, I will refer to the QQQ's and you can view them on your own computers. Just make sure you have the moving averages setup on your charts.
Here is what your screens should show, at the LEAST:
2min, 5min, 15min, Daily chart (of whatever instrument you trade)
5min chart of Nasdaq Composite
5min chart of QQQ's (you are going to be looking for divergences between the QQQ's and Nasdaq Composite intraday)
5min chart of the Dow
2min SP Premium chart (this is the difference between SP cash index and SP futures)
5min SP futures chart
15min SP futures chart
A word on the QQQ's:
People, the QQQ's trade well ahead of the market and the participants in the QQQ's know well in advance the overall trend. They have the order flow, so they are the immediate trend. It is imparitive that you learn to use your level 2 software to see ISLD participants in the QQQ's. With some practice and a trained eye you will learn this. I will go into detail regarding the QQQ's later.
A word on ISLD ECN:
This is the ONLY ECN that matters in trading. REDI, ARCA, BRUT, INCA (yes INCA), and all others are garbage. There is simply too much liquidity on ISLD to refute my argument. I know that INCA just bought ISLD, so don't come running with your posts on how they are one and the same. INCA is INCA on level 2 and ISLD is ISLD on level 2. Until they become one we will take it as it is.
We are going to start with intraday trends and work our way up to daily trends.
For intraday trends: Look at your 5 min chart of the Nasdaq Composite over a 10 day span with 5,20,40 period moving averages. You will see the "magic" that this market is hiding from you. More on this later.
get back to me with your thoughts.
what is an uptrend? what is a downtrend?
Trends are only identified by your 5 period moving average on a daily chart. That is your immediate trend. What you'll need to understand is that on a daily timeframe equities are trying to move away from and back into that 5 period moving average. THIS IS THE BASIS OF THE STYLE THAT I AM SHOWING YOU.
One more time.....Stocks/futures are, on a daily basis, trying to MOVE INTO and MOVE AWAY FROM the 5 period moving average ON A DAILY CHART.
It is massive movements away from the 5 period moving average that are going to make you lots of money. Because when your stock or futures contract diverges away from the 5 period moving average (5MA) it will have a tendency to "snap" back to the 5MA.
Can anyone tell me if there is a GURU out there that is teaching this concept?
Look at a chart of the QQQ's on a daily timeframe. Setup a 5 period MA and COUNT how many times the QQQ's touch the 5MA from the top of a trend to the bottom of the trend. ANY TREND , ANY MONTH, ANY YEAR.
Go and read a book on what a stochastic is. I am not going into detail on this subject.
All you need to know about stochastics is that you will need to setup the stochastics ON ALL CHARTS using parameters that follow: (15,5,3)
All other indicators are useless, except for volume (and don't color code volume cause I am going to teach you how volume is not what you see on your charts. It is exactly the opposite.
Here is an example of stochastics on a daily chart. The stochastics stay below the 20 level and move sideways as the stock sells of POWERFULLY.
Separate names with a comma.