The 5,2,1 must have crossed the 85 for a signal to be valid, once the crossing occurs, what it does from there is of no concern, as the price is the signal. Yes the 5,2,1 will often be below the 85 when the signal comes. If a new high is made, but the stop is not taken out, I will still be short and I will be looking for some kind of divergence on the 5,2,1. If the stop is taken out I will still be looking for some kind of divergence on the 5,2,1 then reenter at the low of the high bar. Here is a picture of what Qcharts has for settings on the 5,2,1 and the 20,3,1 is the same, except for the 20 and the 3. I hope my explanation is not to confusing, but as I do not have this written out thourghly, my thoughts wander. Make 'em pretty, Chris P.S. When I first hit the internet I frequented www.stickbow.com. I Live bows and arrows and make custom arrows and can't stand to see people shoot plain old ugly arrow. Thus Make 'em pretty, refers to making a pretty arrow and has become a habit when typing. P.S.S. If you are running this on TS please let me know how it says it should work. Perhaps very the Target?
For me this is yes and no. If I am successfull 80% of the time, I believe any profit is a good trade for me. I have been all through the missed profits and widening stops and targets and what not. I no longer concern myself with what is left after I get out. I know I can walk away from this computer, come back in 48 minutes and probably find a trade for a quick in and out with no problems. Too many distractions (at home with 3 kids that are homeschooled, in the middle of a trade and "Daddy, Daddy, look what I did" they often left my room worse than the came in, and that is NOT good) and too many discipline problems has made this option workable for me. Make 'em pretty, Chris P.S. (edit) This for me is about scalping - taking .5 to 1 and looking for the next .5 - 1. I trade ZB similarly on a longer term frame for hanging on.
The settings look about what I thought... My initial impression of the results suggests that there will be many instances where you get FastK > 85 some bars ahead of H > BollBand(2.2) (the Stochastic "Pop" scenario), potentially leading to repeated whipsaws in strong "waking the bands"-type uptrends. You'll also get situations where the sell level isn't hit until a few bars after the initial conditions are met, leading to repeated whipsaws during range-bound trading. Opening half-hour and other high-volatility periods can also cause problems, with either the sell entry being too wide (due to length of entry bar) or the stop loss being too tight. I'm guessing you're expecting discretion to save you from some significant percentage of these theoretical losses. As a truly strict (i.e., mechanical) system, though, I think it would need some filters and finer delineations.
Kymar, thanks for your observations, I appreciate the oppurtunity to think over my ideas, with the desire that I am not "refusing to see reality". You are very correct, there are many times when the 5,2,1 is overbought before the Price gets to the BB. These are not signals, they are condititions that must be met to take the signal; which is downward price action, a lower low, without a higher high on the same bar. Sell conditions can be met with the entry signal coming 3, 4, even 7 minutes later in a strong push. I have found that when the price starts walking up the BB, that the one min bars will usually (not always) make higher highs and higher lows thus no signal is given. When this happens it is generally good for a point counter trend. A very good example of this is the chart I posted on page 4. Price is trending down, it stalls, conditions for a buy have occured but price only reaches the high of the previous bar, no penetration, thus no signal. (This is in fact a continuation the downside that I have been trying to trade.) 7 minutes after the slight stall is the entry signal. There is actually 15 minutes from when the BB is touched the first time to when the entry signal is given. Make 'em pretty, Chris
DBLARROW: GREAT THREAD! have you ever tried trading the system with a 1.5 point target and stoploss and/or a 2 point target and stoploss????
Mr. Chris, may I ask if you'd been doing well with this scalping methodology before you started the journal? If so what have the results been like?
Thanks larrybf, No I have not. (If you do or test it as such please let us know the results.) This is set up as a scalp only for the time being. My idea of a scalp is 1 point or less. I know some folks who consider 3 points a scalp (perhaps most folks do) I do not. I want to be in and out and on to the next set up. I do have a similar system, that I trade the bonds with that I use longer term and try to hang on there. But it is because of some of my experiences there that I am doing this in the ES. Make 'em pretty, Chris
Traderkay, I have been doing it for about 3 weeks and the results have been 60-80% based on how disciplined I stay. I have found that 60% is not enough to be profitable, but that 80% is enough to be profitable quite nicely. I have not been doing this for a full day yet - primarily in the morning for the first couple hours getting 6 - 10 trades. At the moment trading is strickly 1 contract and would like to go to 2 or 3 after the first of the year (Lord willing and the creek don't rise!) As my thoughts have turned to profitability and such this is a good place to add this.... Most folks would agree that 4 ES points is a decent day (with size it becomes nice.) If a guy can get 8 points on twenty trades that makes for a nice day, do 2 or 3 contracts and a guy can make a comforable living, no? I don't mind paying IB $96 to make $304!! Much better than my previous broker. Make 'em pretty, Chris
As this is December and I have other commitments for a portion of the day I am only trading the first couple hours. For this week perhaps, if the # of trades stays about what it has been (6-10) in the first 1 1/2 hours, I might go over individule trades for grins and giggles. 7 trades - 5 winners; 2 losers for a total of 2 points = a profit of (drum roll please) $66.40! It is consistent with what I have been doing. Below is todays chart with the trades. Today with the gap I used an all sessions chart - it solves the gap problem. Trade 1; +.75 - The 5,2,1 did not quite get to the 15, but I felt with the gap there would be a little more upside - at least enough for a scalp. Problem was I did not give it enough time to get me to my 1 point. Trade 2 +1 - again the 5,2,1 did not quite make it to the 85 but with the divergence I thought it would be good for a quick point. Trade 3; -1 - I often have problems when price takes this long after going side ways. I missed the first entry, which I figured was ok, took the second and it proceeded up. I have been think about a time limit on an entry but will probably watch the 5,2,1, if it gets below 50 (as this was) perhaps skip on the trade. I missed the trade there at the top as I was waiting for the report - then opted not to chase. Trade 4; -1 - Anticipation problems - because of the gap and the quick drop I anticipated a slight move up - price did not confirm and I paid the price of anticipation. Trade 5; +1.25 - Everything on this trade was just as it was supposed to be. Price touched my target of 1 but I didn't get filled - so I opted to move up the stop and move target up, managed to stick around for .25 extra. Trade 6; +.5 - This is one of my continuation trades - Trend is down, and there is good divergence on the 5,2,1 - when it didn't move down quick enough I took 1/2 and got out. Trade 7; +.5 Everything was set just as it was supposed to be - after the two bar top I opted out for 1/2. Those were the trades and their reasonings. Make 'em pretty, Chris P.S. I am jealous of the 15.25 points I heard another trader took on that nice drop down. But no regrets on missed potential.