smallstops raised the anti to about advanced beginner thinking. A trader comes out of college and three years in his salary is less than his weekly commissions. In two more years he finds out that he is free of any restraints of any kind. so he HAS to design a SET of trading systems. Why? The answer is market capacity. My first system had an upper limit of 100,000 shares and only made 10% in 6 to 8 days. It took seven trades to double capital. I could noly watch 12 stocks well and so on. I found that I could sector trade with unlimited capital but is took 4 and 1/2 weeks to do a 20% turn. I used a Universe of stocks doing 250% a year for a minimum of three years out. "durable" and volatile. So finally I picked a new venue called commodities. The DJX.X (there were no e minis invented then. So I just dialed my IB periodically a plotted two 30 minute charted overlapped by 15 minutes and used projections. This made a cyclic envelope in four colors and I found out what making money was all about. For any trader, you live through the cycle of economic times. The ticket to punch is the "immunity" ticket. this Depression ends in 2016 or 19. Seasonal homes with perenial food on site is the way. the OP came up with trite values as we all saw. smallstops didn't get the picture on building wealth either. Multiple systems in non overlapping markets is the ticket. the turns in a system dictate the doubling tame. When you are at capacity just sweep into larger markets. Commodities are traded in 100's of k's they are swept into position trading stocks where a stream is 2 to 5 mill and a turn is 4 to 6 days. sweep the overage into sector rotation and use unlimited capital to do a 20% turn every 4 to 5 weeks. You monitor ATS's. Go flat and repair if required. To keep it simple you have immunity and give away excesses to solve local problems. There is no goal. There is so much money avaialbe everyone who wants can have all the market throws at them. When my daughter decised to join a church, we went too. The rule was tithing. In a few months a committee scheduled to come to the house. They were having trouble planning they said. They did not like that my checks varied so greatly. I suggested that they use my money to do things they could envision. I suggested paving the parking lot first since there were potholes. We couldn't agree. I created a money problem by tithing for real. My rule is to just keep the money I need and give away the rest. A full time trader is a person who is still learning to trade well enough to meet his external demands (he is very meiocre). No one who knows how to trade has to trade all the time. It is so cool that markets do not follow the zero sum rule. markets are like the Universe, ever expanding. The invention of the PC was a real zinger. But it hasn't been around very long as yet.
This post may be confusing as it covers a lot of questions and different focuses. Lets say that I work full time and it took me 6 months to double my capital. Lets also assume that this is using SSR. My current trading skill only allows me to enter inverted head and shoulders/rounded saucers and cups. Entering on pt 3s of the intermediate term uptrend following the intermediate term downtrend. This typically runs 2 to 3 weeks ahead of the handle. I typically enter after the stock goes through volatility compression as it is transitioning into volatility expansion. Now, Some stocks that I watch do not go through rounded bottoms and instead break out of there short intermediate term down trend and immediately shoot up into a rocket long intermediate term up trend. Essentially, there is no pt3 or dunnigan continuation. It goes straight from dunnigan trap and doesnt stop. An example of this is CVI. Some more recent stocks that I am currently in is SFUN, BCEI, and CYOU. I am holding some remaining positions in SODA from a couple months ago along with MX. All of these show the rounded bottom as opposed to ones that shoot straight up. I would like to expand my skills and be able to catch stocks like CVI even though there is no pt 3 to get in on. Another question is, where in the world is the natural cycle? is that from short ITs transitioning to long ITs where volatility compression is followed by volatility expansion and where stocks are waking up from being asleep or is it the dunnigan trap? Given that we are in a depression, I am very concerned. Will SSR work during bear markets? Would I have to just loosen the EPS and RS filters.....or would I just trade the strongest sectors of the moment disregarding the EPS rank when the market is in a bear market. regards, jc
Thanks for your post. I also appreciate the context you presented for intermediate trem trading while following your employment passion I believe I can help you out. SSR does use the same Universe as PVT and I can see you have established a proper context trading fractal. Anyone trading any successful method (as determined deductively) will have the same behavioral advantage sets of feelings. By reognizing what you do, you demsytify the many patterns advocated by various purposeful contributors. Two or three threads come up when a person checks out(searches outside fo ET search engines) the Dunnigan Trap (or Dunnigan Continuation. All of these discount the presently circulating barb (Pekelo Pariah Proof). WJO'N's cup and handle, etc are late entries and they rarely occur. Entering at the bottom of the cup can be a real boon. So this messy milieu has been defined and in one fell swoop it can be dissected to alleviate all messiness. First. I have to make some confidential information public. I laid the grownd work by framing the cells which need to be filled to to define the "messy period" you have so aptly described. I'll post the two dimensional blank table so the statistically significant values can be put in the cells in brief groups according to the trend type one trend type at a time. As we go the various CW patterns can be grouped properly by trend type and all the inter type arguments can be dissolved. This will also disprove most academing papers since the PC was invented. We begin with a simple chart that has all the cells needed to operate in a fail safe manner. My orientation is to espouse a highly organized logical market map. This mapping has four types of trades in columns and the Horizontal zones deal with "failsafe" at the top and routine events across the bottom.
As the table shows the "failesafe" blocks are the "hot" colors and the routine blocks are the "cool "colors. Lets review some of the "messiness". A major cause of unease in the slower fractal trading is the "late entry" when just doing biased trading. This is typical of all kinds of funds. "long buy and hold" is the topic. Formations that are determined "after the fact" also fit into this type of problem creation. A recent thread didn't deal with HH's and LL's, etc.. for this reason. All of Lo's (MIT) papers suffer from not understanding sentiment change in formations. The cup and handle is notorious for the same reasons. To gain advantage of the conditions, circumstances and situations, the best intellectual move is to "get ahead" of the mess and not use the above techniques to create messiness. NORMAL is the place to lay the foundation. So. We can agree the market has two variables and the leading one is the independent variable and the lagging variable is the dependent variable. Volume leads price. So compare a head and shoulders with a double top. Six moves compared to five moves. The table will look at the ends of moves. 5 for the head and shoulders and four for the double top. I will go through the sequences of things mentioned above in a manner that will let you see the place where sentiment changes in these formations. We will end long trends. Later I will discuss the beginnings of long trends where sentiment changes from short to long. The table handles both but we have to clean up behavior finance first principles first. A reminder: A lot of insurmountable mental problems can be handled in 6 months. You simply wait 6 months and reread what was previously insurmountable.
attached is the first portion of the table. It is the failsafe portion of Set A trends (a yellow box). Notice the left sub column are price constructs that are already known from geometric types of trading. BO, T1 stands for the BO of the rtl with a Trough 1 (T1). All of this comes from "The Pattern". This oom in occurs on the thrird move of any of the two trends that make up the cycle in "The Pattern". So the yellow zone of the table is just typical in substantive content of the 8 boxes that make up the table. All of failsafe in trading deals with protections that prevent a person from being on the wrong side of the market. This is where "wash" trading in markets comes from to eliminate having to have losses while trading. Messiness comes from several voids in a trader's spectrum of trading knowledge and skills. Betting and taking risk and using formulae designed for other purposes is the usual substitute used by the uniformed. CW performance best describes the results.
In SSR trading any of the four types of trends can occur. Set C is the normal. "The Pattern" depicts two normal trends that make up the cycle of the market. You see three moves: dominant to non-dominant to dominant. D to ND to D) the trend begins with a turn, two turns foolw and the trens ends with a final turn. c to a to b to c. A c turn is D to D. An a turn is D to ND. A b turn is ND to D. All types of trends begin and end with c turns. Above the normal trend is decribed. Variations from normal are expected. These variations are all included in the other three types of trends. the yellow box shows how to handle all the conditions, situations and circumstances. By having a complete table, you always "know that you know" and, further you know ahead of time before the sentiment changes. So, at this point I have covered all the principles and next I will cover the details. All of trading knowledge and skills culminate when the risk and money management substitues may be dropped.
My comments are related to a captial growth method that doubles every 6 months. so between 12 and 16 months the trading gains are increased by an order of magnitude. Thus adding a zero to trading account happens every year plus a couple of months. By taking out the messiness their is a signifcant time compression. Two steps make this possible: 1. determine the ype of trend, and 2. Knowing the name of the possible c turn that ends the trend by doing a lookup allows the person to carve the trend ending effectively and efficiently. Doing 2 involves having the n-1 turn type specifically classified and then going to that item in the table and seeing it's associated c turn coming next. The absence of an entry is even more informative. It means you will be continuing to make money.
I'll repeat my prior post in different words to make it more clear. also I want readers to keep in mind the types of messiness first put on the table and the additions I cited. Four types of trends occur. the briefest are FBO's and everyone see them as a prior cominant trend ending followed by a brief reversal on an incomplete trend, then a new complete trend like before the FBO. A sandwich of two complete trends as bread and the cheese and ham in between is an FBO type trend. This has a lightening rod type look and you can visualize going up or down the lightening rod. The table depicts the cheese and ham as yellow and mustard for the failsafe pairs panels and the green and blue for the routine pairs panels. The n-1 turn is just prior to the channel ending c turn. For the Set A type channel both n-1 and n are c turns. For the SetB type channel the N-1 is an a turn and the n turn is a c turn. Tradingbug described this situation as the Dunnigan trap and the "incomplete" cup and handle and the non forming of head and shoulders and not having double tops (also include all the same situations for the inverses.) Set A and B type incomplete trends are these circumstances. So you used the four panels contents beginning with the n- 1 turn and anticipating the n move in the panel table. The subject is Technical Analysis of the independent variable. SSR is used to trade swept capital from PVT and SCT trading which is at capacity. As tradingbug explains SSR also works for fully employed who spend a brief time in the evning keeping current on SSR trading. Daily charts work just fine. Each bar advances the trend segments to reach a b or c turns each in the context of the type of trend set at play. For complete trends and drift trends, the four other panels are used. Orange and red handle the failsafe and dark blue and purple handle the routine forwarding.
the more lengthy named formations were discovered by people who happen to be in contexts of normal trands and drift trends. Gaining the skills and knowledge to carve the turns of these did elude their inventors, however. AFTER a beginning move, a normal trend has 3 turns to complete. Use the orange and dark blue to "know that you know" the clean trend ending to carve a reversal. The drift type formation5 have 5, 7, 9 or more turns to reach a clean trend ending to carve a reverse. A normal trend turns into a drift trend when the listed n turn is absent. This is the WWT event. For a trader it is not messy to be told by the market to go from a normal trend to a drift trend. The undertone is simply: KEEP MAKING MORE MONEY IN THIS TREND.