Hi bmwhendrix, I've been a long-time lurker [of the other forums, may they RIP] and devout follower of DbPhoenix's teachings. SLA is indeed excellent for days like today (even on the ES, which is what I trade). What helped me to develop a well-rounded Plan was to consider why this is true. Specifically, what market environments are best suited to using the break of an SL/DL as an action trigger? What about 50% retracements, LSL/LSH, etc? Can these environments be anticipated?
Whether one trades the NQ, ES, Euro, Gold, ZN, Stocks, or even weather, managing your risk is important. No matter what I trade, my risk in dollar amount is the same. Understanding and being able to use appropriate risk was my first hurdle to overcome, not methodology; risk management. I normalize my risk among currency pairs as well. Some are more volatile than others. By understanding the differences, you can adjust your position size to keep your risk parameters. As for proving anything. Sorry to disappoint. I have nothing to prove or disprove. Our methods will surely be different, but it is good to just meet people on the same journey. Toby
Ok, no problem. Dont need to prove anything . Interesting what you said about risk normalization. Happy trading an good journey.
First chart to the left is what I posted this morning before the jobs report. Middle chart is the same chart after the NY close. As you can see, price reached the upper limit of the trend channel and, according to AMT, reversed. Price then fell to the lower limit of the trend channel and beyond. The chart on the right shows that we are now below the lower limit not only of the March downtrend channel but of the June uptrend channel. We can now assign the probabilities of reversing off these lower limits and returning to either the top of the March downtrend channel which is now at 3660, though this will change as time goes by since the line is on a downward pitch, or all the way to the top of the June uptrend channel which is now at or about 3850. The lower limit of the June channel jibes with the upper limit of the next-longer channel from October '12. If we cannot drive back into the June channel, the lower limit of the October channel is currently at or about 3300, though this will change as time goes by since the line is on an upward pitch.
What's next? Based on where it is sitting now, what is the trade? Could someone plot similar charts for ES or SPY?
According to AMT, enter reversals off the extremes, long off the lower, short off the upper, as was the case this morning. As to other charts, it's simply a matter of drawing the trend channels to determine the upper and lower limits. The SLA-AMT pdf explains it in detail, with charts. Since the SPX in all its forms is mean-reverting, this will not be difficult.