ES drill. Tried the log today. Very rough going and incomplete in many areas, but you have to start somewhere. Will post it once I get hold of a scanner. Anybody out there? Starting to feel like an intruder or something. Callmate, rein me in if the posting's excessive.
I have annotated this. Go from the beginning of the day and make a log. You will see from the written log what you would have been doing as trades during the day. first the day begins. You wait for synch. You use 5,2,3 to enter time passes and you use 14, 1, 3 to exit. You see that the next entry is 5, 2, 3 and it's exit is on 14, 1, 3. This is the way it works. When you are in, the 14,1,3 takes you out OR the 5, 2, 3 makes you REVERSE. Sometimes you have to stay sidelined since there is no 5, 2, 3 as yet to take you in. As you see mistakes are made until you have done about 50 of these consistently. I noted two things: mistakes and extensions of holds that result from several things acting in concert to prevent an action which is not certain. Here you can see the MACD giving you + or - values that represent long or short sentiment. Also begin to notice that the C and D aspects of MACD are beginning to talk to you along with the STOCH's. After you have done about 15 of these give yourself a treat. Block out the price chart and see that you can log to make money without looking at price. This level of trading only does so many trades a day; it operates in a moderate trading frequency. You can see two types of inefficiencies: you hold through some minor action and sometimes you are sidelined for a while. You also get to see the sequencing of signals and how the relationship of sentiment to holding works. You can see that anticipation of crossing the 50 is always there. Before the 50 cross the sentiment hasn't changed; this becomes clearer and clearer as charts are annotated. We are beginning to see the relationship of exits to entries. The exit signal comes first then the entry signal follows. gradually you can come to see that a reversal is being done in two parts: exit, then entry. As you can see, the time between the exit and the entry signals IS the MODE of Change. Exits converge with entry. Here we have a brief sidelining at this point. Later when skill increases the two individual events merge into one event as a reversal. As you can see a series of entries only do become a series of reversals at the end of this example.
Jack, what do you think about using 5,1,3 as this seems to provide the 50th percentile cross signal a bit sooner without providing too many false signals it seems. (based on loose observation)
You raise two points: 1. False signals, and 2. Enlarging the time distance between the exit signal and the prior entry signal. The "sooner" entry signal. Generally, I like to, as do you, make a little more money on each trade. And let us look at the bigger picture of going down the path while obtaining greater skills, knowledge and experience. There is great virtue in thoroughly examining the equations of the indicators. Hatching indicators is even more exacting. The issue of determining the signal of the indicator is also very significant. This year in this thread we will begin to turn to becoming very competent in using the relationship of the market variables to be able to extract all that the market offers. Several things support this effort. I hope to concentrate on the big blocks then the iterative refinement of the details that surround the big blocks. The major theme of this effort is how to transition in your mind building from one skill state to the next skill state. A lot of knowledge will be supplied in this process. Most important will be doing drills that continually challenge the boundaries of what you have built in your minds. I refer to the mental resourses of traders as their "first recourse". These are the things that automatically come up to inform the trader that he knows what is going on in the moment. Our platform informs us once it is in place. Annotating provides a contemporary context. MADA gives us a routine that allows for data sets to be handled and CLOSURE reached each cycle of MADA. There are no false signals. Mind building is a process that fills in the contents of what can happen in MADA. As an engineer and writer in 1957, I joined with a few others and the consequence was a system where, luckily, we chose the correct tools, in terms of mathematics, to build our minds. There are many profitable methods of trading, but most have limitations as a consequence of choices made. What is important here is to understand the choices and their basis. It is absolutely clear in field like science, that any system can be articulated and tested wholly and totally. Some systems are easier to operate and test than others. This stuff is in the "easy" category. The P, V relationship is the fundamental building block of the system. It has been from the beginning. We added a corrolary to make it comprehensive. This dictacts the mathematics required to operate the system and as a result the market MODE is established as the bedrock. the MODE is always there and available. Every tool used, in one way or another, corroborates the market MODE. The MODE dictates what we are doing in the market. Before our skills get to the level of always being able to operate in the markets, we just continue to work up to this level by a series of skills acquisitions. Indicators are very subordinant to the larger building blocks of the system. They are cool and tough learning tools that afford us a lot of input on the contemporary context of the operating market. All three work in concert to provide very positive information on what is going on by the selection of their defaults and by our selection of the signals they blast out. We get this sooner or later by doing drills. It is also fine to spend extra time tinkering with the defaults and even the signal selection. You can see this in NASCAR a lot of the time. That is where the penalty point system came from. The main task of NASCAR is to win races by putting all the talent together that is possible. Here we are proceeding to make use of our collectinve talents to help each other out to make money. Individually we drill. To the extent that we drill, we make progress to get to milestones. As a brief comment, mostly it works out that people icrease their trading by about 8 doublings of performance. In my annotation I put in some beneficial considerations as a first pass on the posted WORK of a participant. He did a good job by making a post of his PURPOSEFUL efforts. It has been an aid to many many people. The log for that day had he traded the annotations would allow him to double his capital in a matter of a few days and that would continue dya after day. Lets say he made a good % of his capital. My annotations would be helpful to him in two ways: he could learn to just be consistent and he could learn to make connections among all of the parts he is doing successfully. He will be in the market a lot of the time. Each day he will be making money at a level that is a healthy percentage of his compounded capital. What is more important, he will be engendering comfort, confidence and support for what he is doing. What is more important, he will have built a solid foundation for stepping ahead to new and higher levels ofunderstanding and skills acquisition. Many days are required to have the opportunity to experience the twists and turns of the market and all are within the purvue of the P, V relationship. Here is the plan. We drill on using the two signals. They provide exits before entries and sometimes the entry provides for reversals when there is no intervening exit signal. One thing is learned from this: HOW TO ALWAYS STAY ON THE RIGHT SIDE OF THE MARKET. This skill is important. We also need to very strongly and exactingly relate this skill to reading price and volume in concert. There is never a time when price and volume combined are not the strongest indication of the market operating point. We have many many other tools to consider as well. By blending each thing we learn together we will have something that is truly greater than just he sum of it's parts. The parts must be understood as we all see. there is no sluffing off and skipping steps or facets of the whole.
after you make the log of the trades of my annotated chart, use a different colored ball point to remark about the relationship of the entries to the MACD pair of lines. Note C and D conditions especially. Then choose another color and remark in notes about the relationship of the exits to the MACD pair of lines. Now you are ready to go to work in order to make the MADA begin to come alive. There is more to remark about BETWEEN these entries than the entries that you just did. Make a matrix of how MACD vs the STOCHS behaves. To the extent that you SEE the various conditions of each, begin to make columns and rows of the order in which these conditions occur. The objective will be to fill in the cells with pertinent remarks about each valid cell operating point. What will emerge for you is a pathway on the matrix that has direction and significance. Later we will relate this to the P and V of the main annotated chart of ES. The indicators are derived from Price and Volume leads the Price. All of these small tasks are mind building and by doing the dailies 50 times or so you et familiar with the indicators, their relationships and the path of the market operating points. All of this is falling into the category of finite math as we all see. that is because of the equations involved and their time rate of change. Time is inherent in the equations since the terms of the mathematics are time dependent. As familiarity grows you will begin to see the graphs "flapping" as a consequence of the level of the programmer skills in developing the platforms. We can take advantage of their "looseness" in interpreting the algebra as shortcuts in programming. There will be many people who read these work assignments and do not do them. They are just observers of life passing them by. On the other hand some of you will do the work this time around after having watched the last three years pass in a state of passivity. DOW, et al, began a long time ago and others followed in a quest to gain information from and about the markets. From the early 80's to about June 2006 there was another mathematical effort that had the consequences we see today (rendering many created instruments illiquid). Here we work toward one goal: pool extraction where we have a system that is simply designed to extract what the market offers in huge pools to individual accounts as each day unfolds. Price change is the basis of the extraction so a routine is used to complete MADA cycles during RTH's. The effectiveness and efficiency is measured against what is offered. At this point, we are in the markets a lot of the time and, notably, we do take a lot ot the price change segments out of the market. Compounding allows us to earn the right to extract more and more of the flow as our knowledge, skills and experience improves through purposeful work. As work proceeds, we will close the gap between exits and re-entries until we just do reversals while being in the market all of the time. It will become a natural consequence to do more segments of profit taking to access all of the price change opportunities. As may be seen by zooming through all of the seven fractals, the faster the fractal, the more money there is to be made. Two limitations emerge: the rate at which the human mind operates and the limits of the signal to noise ratio. Our compromise in the iterative refinement tasks will be to extract capital at rates that are very close to what is being offered. MADA cycle rates using finite math afford us this opportunity. At this point we can look at the summed profit segments in relation to the market H-L under the considerations of leveraging. Daily initial capital compared to final capital is the pool extraction standard. It is my view that the signals are dictating the trades and the signals accurately portray the market action. Very significant improvements will be made from this starting point.
Thank you so much, Jack. I went back and did a new log, focusing primarily on the fast and slow stoch for signals and analysis. It's in acrobat format and for those who have reader, it's a lot easier to view things by going to "View","Rotate View", "Counterclockwise". That should set things straight. Also, minimizing the size to 100% or so should help. More to come. If anyone knows how to save acrobat files so that the page is turned upright upon first view, please let me know.