Jack Hershey's Drill number 1

Discussion in 'Strategy Development' started by Chicken Little, May 25, 2006.

Thread Status:
Not open for further replies.
  1. This thread is a good place to start for all the beginners looking to learn the Jack Hershey methods for index futures daytrading.
    He posted this exercise back in 2000 and recently he said it was still a very good beginning method. So lets get started.

    Quote from Grob109:


    I advocate that drills in markets using practice sessions where the person works at his pace and doing such with real time market data where a person is subject to sharing with the market is the way to rapidly gain, through experience, the knowledge and skills for optimizing making money in the market.

    Market knowledge and skills come from the market. Tapping this is done by drills.

    Then comes the payoffs. By staying in the market through the day, you open the opportunity to periodically take profits. Optimizing this comes from improvement which comes as a result of iterative refinement.

    Playing in your rock, scissors, paper play pen is something you are prone to do not me.

    I see you are planning to do something sometime. Go for it. You may even turn out to help someone sometime.

    Here is a specific drill which Grob109 recommends for trading any index contract. It stays in the market continuously throughout the day and switches sides periodically.

    from Jack Hershey Jun 2 2000, 3:00 am show options
    Newsgroups: misc.invest.technical
    From: "Jack Hershey"
    Date: 2000/06/02
    Subject: 30 minute warmup bar trading.

    Fundamental Money Making Concepts.

    I use simple mechanical systems to get people to understand the basic
    concept of making money steadily and with little or no risk.

    When you trade daily for 6 1/2 hours a key thing to consider is not doing
    too much to make some money.

    By choosing a futures index of any sort on any exchange in the world, you
    have put yourself, for 6 1/2 hours a day in a place that is truly dull and
    unexciting. Being there is fairly safe and not too demanding so you can
    relax and repeat a few tasks over and over to make some money.

    I work first with 30 minute bars to frankly eliminate any sense of urgency.
    I use the prior days last bar to get the ball rolling, or I suggest you wait
    until the second begins to eliminate the end effects of the market.

    Here is a progression of four mechanical methods to illustrate making money
    primarily and secondarily to illustrate that losses are neatly reduced more
    and more as a little sophistication enters the picture. I also introduce
    how in a trend you can switch to the most favorable side of the channel to
    exit. Because this is very simple and mechanical there is no need to
    clutter it with a stop system as yet mostly because it an index tied to the
    performance of and aggregation of stocks. We can tuck stops in easily
    though as a commitment to our ordinary discipline.

    The four items in the progression are:

    1. break out of prior bar.
    2. slope pairs of bars.
    3. overlapped pairs slopes
    4. retracement.

    Here is the progression:

    1. set up a 30 bar display for a futures index.
    2. enter on the breakout beyond (above or below) the prior days last bar
    3. hold until the current bar breaks out of the other end (from your long or
    short entry) of the prior bar.
    4. hold on inside bars.
    5. hold on successive bar break outs in the same trend.
    6. on breakout of 3., reverse so you can take on new trend trade.
    7. repeat 3. through 6. for remaining bars of the day.
    8. settle at end of day.
  2. dozu888


    where is the system test results... and for which markets?

    if you do this for the S&P, I guarantee you will blow out your account in no time.
  3. Jack says the backtesters results vary by an order of magnitude, so we don't really put alot of importance on their "results".

    How do you back up your guarantee ?
  4. Many people have back tested the first of the four approaches.

    It will give you a base line for comparison.

    The tests done will be referenced fairly soon by those who witnessed them, those who commented upon them each time the progression is introduced and maybe by those who ran the back tests.

    Once you have a base line, then you have a place to begin to do whatever you want to do.

    The range of backtesting results on this in the past is over an order of magnitude. Be sure to consider if the appropriate variables were used in the backtesting.

    Good luck to every one.
  5. For the first part of the approach getting a base line and examining where you are is the most important part of getting started.

    The first part of the progression deals with very few elements and a person can do a lot to check out the market's operation.

    Backing up guarantees is not difficult. Usually normal statisitical standards are used. The poster can simply post his results with his statictical qualifications of what he did.

    All of this work is then documented and qualitfied and can be used as a basis for additional objective efforts that handle any specific places where improvements can be made.

    This will be about the 5th pass on this topic over the last six years. Personally, I do not think it is a good idea to skip ahead on this kind of thing. It is best to work away at what I call iterative refinement and come to understand how improvements, if any, affect performance.

    At least here in this first series of three refinements, a person can stay on a wholistic path where the whole market is considered.

    As more variables get introduced and their realtionships are established, then it is possible to begin to program the trading applications into a mechanical system which is built upon the foundations that begin here.

    The market is an interesting mechanism that continually offers potential profits to anyone that partners with the market. Price is the variable that offers the rewards in trading accounts.

    Beginners uusally start with price and then they find out what they do from experience moreso than work to attain skills.

    The way it turns out is that it is hard to get past repeating the same mistakes over and over again as we will find out. each time this progression is attempted it is done mostly with people who have not participated before.

    Chicken has not made it past the first of the four topics so far. That is very normal for most people.

    Unfortunately, there are about six levels to consider and this four part progression is the first level.
  6. Thanks Grob/Jack. We'll be hard at work here and we welcome your frequent visits and insiteful commentary on the progress of this drill.
  7. Long Jun ES 1267.50
    Reverse to short 1269.00 +1.5
  8. Is that a 30 bar display, or a 30 min. bar display? If its a 30 bar display, then I assume its from 9:30-4:00. That's 390 min./30= 13 minute bars.
  9. cnms2


    Each bar covers 30 minutes. I.e. a 3 day / 30 minute bar chart.
  10. Grob states in the introduction to the drill that he recommends 30 minute bars at first to eliminate any urgent feelings.

    #10     May 25, 2006
Thread Status:
Not open for further replies.