Whisky My posts were made to accomodate that the child was female. This will make her reading easier. Previously, I posted on the 2 out of 3 trades and someone else finally posted the 8 combinations three things [consecutive days in this case]. The subject was logic as it relates to trading; this is the deductive side of trading. The example could have just as easily dealt with volume delta instead of price delta. Several others have pointed out how market bias aids in making money. I did a transition for gaining the bias by flipping when the price movement was beginning a dominant move. Your daughter will not get hung up on hindsight as you did. As you help her, she will be seeing the market operate as each successive bar forms. I should have posted 19 pics so you could see the time pass as illustrated by my shortcut to give you the gift I gave to Covel. I spoke of nested fractals and the 3:1 ratio. An obvious bias introducer. My illustration is four fractals up from an OTR type illustration of the exact same nature but where volatility leaves the picture. There are many fractals going upward as well and they do come to an upper limit when the economic cycle becomes observable. Your daughter can do what is required to trade to take the market's offer on five minute bars by beginning with this drill. Uncover the illustration bar by bar. Before bar 1 is revealed, tell her to look at the pink lines and to ENTER a trade as you help her to see ONLY the open of bar one. There is a rule she will use: Trade to make money by EJNTERING to assure money is made as price crosses the right pink line. Now, uncover bar one for her. Keep uncovering. When the second bar is revealed have her label points 1, 2, and 3. The bars have two ends each and she will label 3 of the four ends. Label the right sides of the bars 1 and 3, where 1 is to the left of 3. She will gain a left/right orientation from this. Imagine Covel helping you out. All three of you, at this point have a different orientation to the market than left/right. This is factor in Covel's self inflicted (on himself) gibberish judgment problem. Put point 2 on the left side of the two bars by annotating the greatest, if there is one, volatility bar. We have one of 7 possible cases for two bars in a relationship. Explain to her when she tells you she cannot do what you just asked, that this is not a problem. Tell her that when she got into the trade it was more about taking prior profits (she will be reversing ordinarily than just doing an entry) than making money on the next trade. Have your daughter write them down and send an email to Covel. He fails to list any of these possibilities in his books or film. Say them aloud to her and help her spell them out. For the picture you are using with two bars showing, Tell your daughter how she entered the trade on bar 1. Don't worry about screwing up the entry explanation, she is going to have profits no matter how you describe the entry on bar 1. With bar 1 and 2 showing, give her a ruler and a a choice of two pencils. Draw some lines using points 1, 2, and 3. Draw the RTL and the LTL formed by the two bars. Use the black pencil for a long RTL and use a red pencil for a short RTL. Be sure to use the definition of parallel lines. Extend the lines to the right on the sheet covering the rest of the pic. By now your daughter is upset with you because she can't draw the lines. Explain to her how the computer is helping her and show her the definition that she emailed to Covel. She will feel better when she considers the 7 possibilities and that in two bars she knows which one of the 7 is happening. She also knows none of the other six are not happening. Look at the close of bar 2. Slowly slide the cover to the right to reveal only the flag of the open of bar 3. Note it's color as determined by the computer. Tell your daughter to reverse at the price when any bar does not extend any further to the LTL she hasn't been able to draw. Have her fill in the definition of a short translation and mail it to Covel; it is missing in his book. Have her e mail Covel the definition of LTL it is missing in his book. Just when is it possible to draw in the sub fractal price lines of the illustrated fractal? A leading indicator of price tells you this. About 12 seconds into bar 3 you draw the RTL and LTL in red pencil. The 2nd and 3 bars are in a yellow box from the bar 3 beginning. Send Covel an email defining this two bar yellow case; it is not in his book. When the bar 3 gets longer than bar 2, send TN an e mail to fix the two bar yellow code. Bar 4 begins and your daughter smiles and says: "Hey Daddy, this is the same as bar 1 and 2!!!" You smile back and say: "Lets do what we did for bar 1 and 2." She smiles back already knowing that in trading a person has to be consistent and follow the rules. What is nice about bar 4 is its low volatility. At the end of it your daughter has been short for a whike (a bout 5% of a day. As bar 5 demonstrates it cannot get further towards the LTL after exceeding the bottom of bar 4. The short comes to an end on an FTT of the subfractal. The FTT is a reversal by definition (have your daughter e mail Covel the definition; it is missing in his book (this phrase sounds like you,even)). Follow the sub fractal annotating rukes and fill in the black RTL and LTL for the second trade. Note on the illustrated fractal we have pt 1 and pt 2 so far and are looking for pt 3. Lets note on bar 5, we got the b2 of b2b before the close and, then, quickly on bar 6 we hit the 2r and then the 2b to complete the b2b 2r 2b sub fractal. Here we bring YM into the picture and do the observable annotating on a sub sub fractal and see ALL of those moves as observable AND annotatable. PT 3 is carved using the YM signal and we are short and headed into the last profit taking on FTT of the illustrated pattern. R2R was five bars (1-5); 2B was two bars(5-6) and 2B was four bars (6-9). No coins. Just 7 cases for adjacent bars. 8 year old annotations on three fractals (illustrated, sub , and sub sub). 45 minutes of trading doing three trades and on the FTT reversing LONG into the next pattern. All the while the volume is "telegraphing" the price annotations. Lets say you get over your "hindsight" hang up. Lets say Covel recognizes his book is incomplete by a long shot. Further, lets say he goes back to the 71 countries and and say he read some gibberish that was a gift to him. None of this is going to happen. What hapens is I go to the Expo and give two speeches to 40 guys who understand every word I say since they do the above every day. There are many many winning paradigms. little girls and little boys can learn them whenever their parents are NOT in the room. People decide the forks in the road. If everyone decides to take the market's offer, it will still be offered as the bias swings from one side to the other, all controlled by the minority. Maybe now you can see why I had the 8 year old only flip (50-50) when the bias was going into the dominant of the next slower fractal. You and Covel have so much to learn and it is not going to be possible because of your mind set and attitudes. Those of us who use these methods are not just laughing at you; most of the time we empathize with the respective plights you have brought upon yourselves and which has been explained to each of you. The market is making the offer; it is there and the minority control the markets. See if your daughter can post the above annotations.
Thanks for your permission. I would feel guilty if I didn't have it. If I ever need to buy or sell a rolex I will look out for your stops.
I think the coin toss strategy should work. The hard part is figure out the ATR and where to place the stop loss. In order for this to work, expected reward needs to exceed expected risk at all time, which is what make it tough, since most trader would force a good reward/risk ratio and made the stop loss too tight. There should also be a predefined place to exit half of your trade if it is losing, which should help with the reward/risk. From a statistical point of view, it should work. PA
To close on the previous prolonged debate in a graphical manner, I just wrote some (php) code to simulate the evolution of an Equity Curve over 100 trades on an ever increasing index futures when a coin toss gets in the picture to decide whether to Buy or Sell, and ran the simulation of 100 trades 10 times over, just to make sure lol: They say a picture is worth a thousand words. Especially when the picture is complimented with a few comments I suppose. P.S. Add commission, slippage and spread, and as you can imagine all of these Equity Curves go south quite rapidly... Hence the "LOSING" qualifier in half of Whisky posts.
(Whisky - apologies in advance for this off topic post, but this interesting thread is getting the eyeballs.) Covel is apparently in awe of Seykota et al, which is presumably how Ed likes it. He is clearly not in awe of Hershey, which happens to be how Jack likes it too. What I'd be interested to see Covel write about next, since he is getting to know both traders and has a pre-eminent intellectual curiosity regarding trading, is a compare-and-contrast of Seykota's approach with Hershey's. Seykota flat out refuses to countenance that money can be made consistently on short timeframes. Daytrading is an addiction according to him which only serves to fill a void in emotionally crippled traders' lives. Or something. Everyone gets what they want. Hershey on the other hand begs to differ and claims scientific, binary certainty. No coin toss necessary. He operates on the first row of Pascal's triangle whereas conventional wisdom starts on the second row. That's a major fork in the road. In some respects, as I've mentioned before, this apparent dichotomy is trading's version of the search for a grand unified theory in physics; the attempt to reconcile large and small scale phenomena. If Covel was really on it, he could bring Mandelbrot into the discussion too. Forget Taleb, he's too flip. === On topic: Using most recent 2 bar tape to enter, HOLD and fan the rtl unless the rtl is broken with increasing volume at which point reverse and repeat with the new rtl. There will be losing segments but it will have positive expectancy over a reasonable timeframe. Left as an exercise for the reader. Iterative refinement: reverse before the rtl breakout based on price-volume formation.
So what's the deal. We've got three calls so far, correct? Are you letting us know the starting account size? I don't see P&L posted anywhere, maybe I missed it. Without going back through 75 pages, you have a three trails in a row so far so you're still short from Monday?
This would also assume the same frequency of opportunity. If system 1 traded once per minute and system 2 traded once per year... one of the two would definitely make the most money. I'm not going to say which...because then I would have to prove it to others (especially to the DOUCHE), and I'm not in the mood. But perhaps Joe will prove it to himself and others, that by large, the frequency of compounding is the largest contributor to ultimate performance in a method with an edge.
Apparently MAESTRO has found a way to modify the EXITS. But of course: You will have to prove to yourself and others that your suggestions bring in at least 1 tic per day on average extra profit over the original method rules.
Only half?. Let's try to increase the frequency. Nice chart. You will have to prove to yourself and others that your suggestions bring in at least 1 tic per day on average extra profit over the original method rules.