Yeah, you kinda missed the change in trend that I warned ya about a few days ago. Just for this post, I'm gonna fire up my system and stay up even later (my wife and I are going to a county fair tomorrow, and she'll have me head if I am too tired to go). There has been no significant pullback to support on NQ or ES, IMO that means we are building a base. Which suggests kinda sideways movements for the next couple days. However, there are devious influences about. Uncle Al insists on inflating the money supply, this allows a decent economy (for the time being) such that Bush gets re-elected and Uncle Al gets to keep his job. So, count on some more puffs of hot air to prop this thing up. But hang tight for the screwing of the average investor when the bubble gets it's second pop.
Do you happen to be a stoolie? You sure sound like one. Two questions for you when you come back from a good time at the country fair: 1. "The change in trend"? Do you mean that a few day ago you thought the trend was down but now up? If so, on what time frame? 2. Many of us (and all stoolies) agree on Al's motive. The question is why so early? Why not start the manupilaton of economy closer to the election? By election time next year the economy may be going down again.
My remarks only apply to the ES, since you have not been trading any of the other markets during the 3 weeks. The first thing that's wrong is that your "bias" is wrong. If you will look back to some of my original posts you will see that I commented that the "trend" was not down. At worst it was sideways, although there was enough evidence in other stock market averages that you could easily make the argument that the trend was up. Bottom line is that having a "bias" that was negative was hard to understand. And as it turns out, is responsible for the losses you have experienced. So far, had you simply bought at any time since you started and placed a 20 point stop, you would have been profitable. You evidently arrive at your "bias" through looking at the MACD and CCI if memory serves. One thing to understand: MACD starts to loose momentum when the market goes sideways. BUT, loss of momentum does not necessarily lead to a decline. CCI is an overbought/oversold oscillator. In other words, both indicators could be used to top-pick. Top-picking as a strategy is a strategy that few will end up mastering. Further, your indicators are derivatives of the market, not THE market. Just remember though, the market is what you're playing, not the indicators. Those squiggly lines don't tell the market what to do....the market tells the squiggly lines what to do. Worse though, you still don't have any experience with the idea of taking this 6-8 point profit versus the 18-20 point loss (whichever it is). I think what you will end up finding is that when you get your 'bias' right, you will selling out way too quickly, thus limiting your profits versus the losses you are taking now. Finally, coming back to this 'bias' idea, one point that should be obvious to you, is that a market that moves to new highs is not a market with a downward 'bias'. Further, even if the market you're trading is not moving to new highs, if other indexes are, it should at least serve as a warning to you. In the case of the stock market, small cap stock and their averages such as the Russell 2000, Value Line Arithmetic, the cumulative A/D have been consistently moving higher. These tend to drag the averages higher. So again, if you see these types of conditions, it should make you think hard when you're about ready to buck that trend. In summary, what wrong with your ES trading is that you're fighting the tape. I note that you did the same thing in the bond market, although so far this has given you a profit. Goes to show, it's possible to do...but what you make in the bond market will not offset what you have now lost in the stock market, because your entire strategy is one that minimizes gains. OldTrader
This is one of the best statements I've seen posted on ET. Indicators are NOT fortune tellers. They must be confirmed by further price action, because they themselves are only derivatives of PAST price and volume. Can't tell you how many times I've tried to get this through to new traders I counsel. The market creates indicators. Indicators don't create markets. Great post.
How strongly can I agree with you? I said "I think I know what the problem is", and this is the problem. Look at what happened to ZF, and what could have happened to QM and YG. The question is do I change the parameters now and second guess the decision later, or wait until the experiment is terminated as planned and I am more convinced, then change the parameters.
I have seen this statement many times in the past but I had a hard time with it. Let me argue with an analogy. When it's raining, people use umbrellas. People using umbrellas is a derivative of raining. People using umbrellas doesn't cause it to rain; raining cause people to use umbrellas. However, if I get up one morning, without looking up at the sky, I look out of the window and see all the people on the street are using their umbrellas, I will bet money on it's raining right now. Can you explain if and why this analogy is wrong? This is going to answer the question I had for some time.
MACD and CCI made money for me in the past. I am not saying I don't know or look at other indicators, but how do I know if XXX and YYY are better than MACD and CCI? Somewhere some time ago, someone said all the indicators are the same. Just pick the ones you are confortable with and stick with them. If they don't work, it's not you are using the wrong indicators, it's that you are using them in the wrong way.
When there's a buyer, there's also a seller. So the good news is at any time, there are 50% market participants who are as clueless as the market direction as I am. Seriously, I don't worry too much about the bias. I don't pretend I am or try to be right 100% of the time. For example, 3 of 4 (ES, ZF, YG, QM) is not bad. If I have put equal amount of money in all 4, I would have been in the positive now.
You are right, it does appear that way. This new approach may very well turn out to be a failure, but this experiment will not. If I am convinced the new approach is not worth pursuing, there's always the old approach. For the last three weeks, my accounts gained despite of the loss from 1 ES. So you see if I fall back to the old approach, it's not the end of the world.