Rule of 10 Journal

jagmot · Sep 12, 2008

Quote from smilingsynic:

The Rule of 10, as this journal has demonstrated, is too subjective and open to interpretation.

Nevertheless, I do not doubt that market moves are often measured by the power of 10, esp. the Nasdaq.

On the ES, summer high off of bottom (Sept contract) was 1313.50; the morning low today was 1211.25, a little over 100 points down.
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I think part of r10 being subjective because of the learning curve. Its not as simple as it was made out to be. I've made a lot of changes, and this is coming from someone who never traded r10 before.

One thing that I think makes it clearer as far as reaction high/lows is using a tick chart vs a standard time chart. This way we can see a reaction better.

Also, someone who is a more aggressive trader can take more setups (ie not looking for new reaction highs/lows), while a more conservative trader can take less setups, moving up/down with more reactions.

You would of course need to define what qualifies as a new reaction high or low and the need to move your long or short.

yip1997 · Sep 12, 2008

Quote from jagmot:

Yip,

Great thank you for contributing to the board. I agree with you that this is a positive setup. If the 1 day old new trading system continues to go well, I will plan on upping the size to 3 contracts at some point.

Before I realized this stat, I was thinking I would use a second target at 6. After realizing this, I will plan on using 3, 10, and open ended.

I would definitely be curious if someone traded this setup...you might be able to play around with the stop of 5 vs 3. If 3 works at the same consistency then we are looking at 2.6 v 2.0 A big difference over time.
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I have been reading ES journal for some time, but haven't applied what I learned in future trading. I am an option trader. It seems to me daytrading ES is fun and quite profitable if the setup is right.

I might try daytrading ES after option expires next week.

jagmot · Sep 12, 2008

Quote from yip1997:

I have been reading ES journal for some time, but haven't applied what I learned in future trading. I am an option trader. It seems to me daytrading ES is fun and quite profitable if the setup is right.

I might try daytrading ES after option expires next week.
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Try sim trading first and always use a stop...these markets can get away from you fast. Or if you are not interested in sim trading at all...use only 1 contract. (I personally don't like sim trading, i d rather get profits or losses from 1 contract even if it doesn't mean much overall) I got my start trading options, still do it for a significant portion of my account. I should change my handle to PremiumDecay

jagmot · Sep 12, 2008

I neglected to post that I was stopped out on the runner at 50.00. +17.50

Profits for the day were somewhere around $900 after commission. I haven't received my statement yet...I'll post tomorrow with the numbers.

Overnight, no trade as the markets have been too volatile and possible pending news with Lehman.

Good night all.

Decel · Sep 12, 2008

Quote from jagmot:

Sure I would be happy to.

Let's use the last trade as an example. This is how the trade is setup on the InfinityAT platform. There are 4 different ways to setup the trade on the platform. In this case I use 'Multi Trailing'. This setup has 3 settings, trailing, stop loss, and distance.

Trailing - set for 12 ticks (trailer gets activated when the trade hits 12 ticks)
Stop loss - set for 12 ticks (stop for both contracts)
Distance - set for 20 ticks (actual trailing stop amount)

We get filled 2 cars (long) at 1232.50. Lets say now the trade has moved to 1233.00. Since the move has been only 2 ticks, the stop is still set for 12 ticks at 1229.50. Same if the trade moved to 1232.00.

Now in our example the first target sell gets hit at 1235.50. Since we have set the distance at 20 ticks, our trailing stop is now at 1230.50 and now just 1 contract since we sold our first target. The reason for this is because the trailer was set to activate at 12 ticks. We could change this to another number, 16 ticks, for example. If that was the case the stop would stay at 1229.50 until the trade reached 1236.50 and then the trailing stop would move to 1231.50 (20 ticks).

The only downside that I see is that the software does requires a target for the second contract. What I did was put that target at 20pts away (in this case 1252.50). When we got close today I started dragging it up so it would not get hit.

I see this as a downside because I might not be in front of the computer. At worst though, we would get 20pts and then the computer would cancel the trailing stop. If I happen to get the first target filled but then need to go away, I can use the 'Trailing Stop' vs. the 'Multi Stop' after canceling the target and stop momentarily.

Hope that helps.
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Wait, so you have a 3pts (sorry I'm not used to the tick convention) trailing stop that activates once you go green 3pts and a hard stop at 3pts profit?

IE if you went long ES1200, you'd have a hard stop @ 1203 (1 contract) and a 3pts trailing stop also active from 1203 (1 contract)?

volente_00 · Sep 12, 2008

Quote from smilingsynic:

The Rule of 10, as this journal has demonstrated, is too subjective and open to interpretation.

Nevertheless, I do not doubt that market moves are often measured by the power of 10, esp. the Nasdaq.

On the ES, summer high off of bottom (Sept contract) was 1313.50; the morning low today was 1211.25, a little over 100 points down.
More...

It is only subjective if one has a closed mind.
The math is not, the reactions are what get misinterpreted.

Now is Now · Sep 12, 2008

BGHT 4475 s/l 4175 SELL 4775 2/3 adjust stop (1255-10)

Now is Now · Sep 12, 2008

Quote from Now is Now:

BGHT 4475 s/l 4175 SELL 4775 2/3 adjust stop (1255-10)
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Knocked ...This has not been a good week of trading "10" for me.

volente_00 · Sep 12, 2008

Quote from Now is Now:

Knocked ...This has not been a good week of trading "10" for me.
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You should not even be in that trade if you took the previous short and are trailing.

There was another reaction high made at 51.5 so 41 area if you are bullish.

I think we could see 31-33 today but would not chase a short here.

Now is Now · Sep 12, 2008

Quote from volente_00:

You should not even be in that trade if you took the previous short and are trailing.

There was another reaction high made at 51.5 so 41 area if you are bullish.

I think we could see 31-33 today but would not chase a short here.
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I simply took the hard "10" 5500-10... was not in the 5150 trade...had already taken profits from 4900 to 4500 earlier (after5150 had triggered) ...31/33 is a possibility...