Seamless Continuous Trading

Discussion in 'Strategy Development' started by Scientist, Jan 17, 2004.

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  1. Dear Fellow Traders,

    This is a thread dedicated entirely to the SCT theories and their discussion, as have been researched and compiled in-depth by Jack Hershey, better known on this forum as 'Grob109', after his glider plane of the same name.

    SCT is a complete method of its own. In the optimum stage it involves trading in every timeframe, effectively encapsulating one trade within another. Effectively, trades will often cancel each other out, but the essence is to cover as many market paces as possible. This is a very special approach, but once this is mastered, it results in a seamless and continuous positioning in the market, with lesser relative exposure and higher gains expectations.

    Jack Hershey is well known and respected by many locals including moderators for his stock swing trading method, which can be very lucrative indeed. SCT is something rather different, and here he focuses mainly on index futures. While most people can grasp his swing trading approach, the SCT theory is a lot more complex, and not always easy to understand.

    However, this thread shall be a place where people can ask the questions they need to know in order to gain value and maybe even actively apply SCT.

    Many of Jack's posts as originally posted in the "DAX Scalping Thread" will also be transferred to this thread, in order to achieve a better congruency in the method, and to start things off with a little more perspective. There are sure many interesting posts there - given you're prepared to put the work in.

    I wish you all best of luck in your trading endeavours!

  2. ig0r


    I guess I'll throw something out there. I've been reading the DAX scalping thread and the posts by Grob109 about SCT and I feel that I understand the general idea behind it. I don't think this was discussed anywhere here, but regarding index futures, does SCT tell you how to trade? When to enter, when to add, when to exit, when to hold, etc. Does it necessarily involve DOM or can it only involve PV relationships?
  3. Hi Igor,

    I like your question as a starter.

  4. Great I wanted to start a new thread awhile back so I wouldnt interfere with your thread with my questions but I didnt do it because I also value your input and did not want to stop the flow. Trading the dax is (kewl) but sct and dom are applicable to all markets and I for one am eager to learn. SCT would be great but all I want to do now is up my weekly ration. I would be extremely grateful if you guys would explain this idea of trading the traverses within the different time frames.
  5. I guess I'll throw something out there. I've been reading the DAX scalping thread and the posts by Grob109 about SCT and I feel that I understand the general idea behind it. I don't think this was discussed anywhere here, but regarding index futures, does SCT tell you how to trade? When to enter, when to add, when to exit, when to hold, etc. Does it necessarily involve DOM or can it only involve PV relationships?

    What is DOM?

  6. ig0r


    Depth of market, shows you bid and ask sizes of active orders at various prices away from current B/A
  7. The DAX thread has been, from the start a very good repository on how DAX works and, in particular, how much better the leverage is there compared to other markets. It really is important to strive for the greatest possible rewards for the effort made.

    The focus on scalping is a neat thing too. Scalping represents to me one of the extremes of utilizing market efficiency.

    Thanks for moving the comments I have made recently to this forum. I don't trade the DAX as you point out, but I recognize it's potential for getting thejob done. I feel that almost all of the various trading techniques can be transferred from market to market. THe DAX thread is the best one running in ET at present.

    I will try to follow through on some of the Q's that have come up.
  8. SCT is comprehensive and as such it includes the items you have listed above.

    Going from general to specific, it is based upon the P, V relationship defined shortly after DOW originated his market monitoring concepts. It was a natural outgrowth of the Market variables DOW monitored and reported to the public.

    The P,V relationship, conveniently, is a Boolean expression. Some recent historical P, V relation handoffs were mentioned in the DAX thread.

    The Boolean relationships demonstrate that the cycle frequency of price and volume are in a 1:2 relationship. All price formations confirm the P, V relationship and vice versa.

    SCT stems from the premise that the market offers a potential for making money continually based upon the single requirement for making money, i. e., change. You continually operate in the context of the NOW type change the market is generating.

    Half of the relationship deals with continuation of change in price. The other half deals with when end effects of trends are occuring.

    The market and the trader share responsibilities. Neither can assume the other's role nor can any responsibilites be neglected. A lot of quotations by wizards past and present square away these responsibilites and the relationship and partnership of the trader and the market.

    From the top the P, V relationship prevails. Charts most effectively depict Price and volume for monitoring purposes, especially on the faster and faster fractals.

    Stepping out from this basic permise. I consider that people cannot jump into investing and trading without foresight. It is fairly clear that any undertaking is a time based process. It is an aquisition process in four areas of knowledge and skill development. One repeated task is done over and over on ever more comprehensive levels of expertise. This preserves capital and, more importantly defines risk.

    In terms of the "Starlight Express" SCT is the light at the end of the tunnel. It is how the race is won by each individual.

    Here is the end result. A person maintains a market position at all times. It is modified by increasing participation under lowest risk conditions and vice versa. Additionally, the pace of the market determines the decision making basis.

    Lewis Carrol in his literature apprises us that things often are not what they seem. Until a peson "processes" sufficiently, he cannot see things as they are for decision making purposes. I am suggesting that there are a lot of Ah Ha's out there but moreso there are some religious experiences that people go through.

    Just as all teachers from the milleniums have known, every person seeking has the same sequence of experiences as they follow their respective paths.

    Making money is a new thing for the broadest population and the contemporary tools afford anyone who wishes vast and elegant alternatives.

    People process by stages, therefore, they must constrain themselves at the onset to low risk stuff. SCT people are not limited.

    As Scientist points out the strategy and goal is to extract as much capital as is available on each of the levels it is available. People segment accounts to do this.

    The best thing to do when limited by learning constraints is to focus on one and only one location for making money. The market performance curve peaks at the fast fractal end or very near the end. The trader performance curve peaks much further towards the middle because of human limits. Elegant enhancements serve to better connect people to the market. You see many blamers here who focus on data quality , etc. At this point in the electronic world, machines have eclipsed people. So the limiting element is people and how far they can progress through the realms available.

    I am a mediocre example because of my age and drive. But I have had the experience of connecting and performing over the last 50 years.

    SCT utilizes price primarily for making money. A primary fractal is utilized to connect the trader and the market. For beginning SCT use the 5 min fractal Trading is a NOW and KISS operation. By adding volume to price, trend analysis is specifically and comprehensively carried out dynamically. The P, V relation prevails. You know where you are; what is next and how fast things are changing.

    Visualize a tic tac toe board; the market is operating at the center cell. This is a nine cell template with the operating point always at the center. If any thing changes, there is a shift to an adjacent cell. Four cells require a one dimensional change; the other four require two dimensions to change. Recognize this. Also recognize that the market cycle is orderly and repeats over and over.
  9. Because trading only involves one repeat sequence of four tasks, anyone can learn how to perform the four tasks under any market conditions. Data gathering, analysis, decision making and action is the sequence of these four tasks.

    Going from step two to step three is the hang up most people have. Analysis is a simple intellectual process. The results must be placed in a decision framework to get a match. The match obtained from a quality framework allows the last step (action) to be taken. This is an example of going from beliefs (3) to behavior (4). The decision framework is simply a trading belief system.

    Books do not give belief systems as we all know. Books give stuff on data gathering and analysis, market theory and past experiences.

    Wizards are the best example of comprehensive belief systems. They have them and they are able to behave based upon their sound beliefs. SCT is the same.

    You hear people talk about those who know everything but cannot trade. You will find all attachments in ET Deal with steps 1 and 2 and also historical records of what happened.

    I use "processing" to allow people to obtain decision frameworks. They obtain belief systems that are congruent with the market and making money.

    On Friday, I met the first time witha local who has gotten the datagathering set up on his monitoring system. He has read books and listened to my broadcasts where I do analysis continually daily. He is aware of what I believe. We watched the market for an hour. I am set up for SCT. We especially watched smart money move ahead of the market and connected with the fact that I trade ahead of smart money.

    He had a religious experience. The conclusion he drew was that, up to sitting together for a while, he did not get very much of anything that that I had discussed and written. What he meant was this. He sat and for the first time he "processed" pictures into his belief system. He does not need to sit with me anymore but he will for sure. Catching on to processing pictures into your system is usually astumbling block for people.

    There is a way for anyone to get a belief system. You have to "process" stuff into the existing system that you already have. Notice that you only have one thought or one emotion at a time. If you are emoting, usually you are not thinking intellectually.

    Notice that what I type most of the time are beliefs. To do SCT, you need to have beliefs.

    Scientist is continually dealing in beliefs. Fortunately he uses himself as an example of someone "processing" beliefs about the methods he uses.

    I try to blast a belief into the space. I want it to displace an existing belief at least provisionally.

    Here I am getting into SCT by beginning in the middle. SCT believes that money can be made continually and that the P, V relation dictates that with increasing volume trends will continue and if volume is decreasing the existing trend will change. All the rest is a more detailed methodology to fill in the depth of this picture.

    I have honed data gathering and decision making to a degree that it is KISS and you just glide along sensing the situation. As you "process" your increasing consciousness, you add daily to your decision framework until everything is deja vu all over again. That is, you are complete in your beliefs.

    you will notice occasionally people improve their performance as a consequence of something stated here. You will find that the most frequent happening is an increase in the qlality of beliefs and/or an additional belief that fills/replaces a void not formerly known to exist..

    IN SCT what you notice is that you focus like a preditor. You do not regard the expected more than liminally. You know the paths the market follows from your beliefs. What garners your attention, as it does for preditors, is anything that is unexpected. All unexpected occurances block the flow of the market's normal operation according to the P, V relation. Thus the market moves from the center of the tic tac toe board when "blockers" unexpectedly disturb the flow. The market follows the path of least resistance as it avoids what blocks it's flow. Your decision framework "believes" how the market works as you pray upon it. You notice the movement deviating from the expected.

    People here talk about "reaction". We, as traders do not have to react. The market's job is to be the reactor. As in the energy field, markets are reactors too. We do the NOW thing only. Seamless means you move with the market operating point in data gathering, analysis, checking in with the pertinent belief in your framework, and then behaving in the appropriate manner. The most common behavior is to Hold. Continous means you are making money all the time.

    As long as things are flowing, you have to repeat the four step process repeatedly and act by holding. You monitor as minimally as possible. Gross data gathering occurs on the chart. If everything is copacetic you go no further. If there are needs for more data you go to the smart money activity and assess it. For long trends you see smart money squeesing; for short trends you see smart money stretching (Look at values in the squ/net/stret columns of the market log posted (MPT234)). If a neutral appears you go to DOM to check out everything. This puts you in slow motion because you have so much data available. Skimming is normal when you see the P&L on your account trading set up moving to higher ground.

    You will be very focussed during smart money shifts from squ to neutral to stret. (or vice versa) The chart indicators time rate of change will be increasing and the volume trend will be down.

    You will see volume minimums arriving at this time.

    Your belief framework is available at all times. Take your picture of relative volume minimums. You are going to check in and see "reversal" as an action for SCT (There aren't many "exit" pictures). In analysis, you do see a dichotomous key as well when DU or VDU comes up on the chart. It leads you to do some data gathering to get through the key. The bottom line is reached and your belief picture will flash clearly.

    If you saw R, failure to traverse STC (short term channel), you would do your first slalom carving left sides of traverse and STC channels. This would have come about as the end of a fast paced channel driving on high volume into R and volume colapsing. The primary activity on DOM was contracts just dissappearing from the scene with a few oddball fake out orders arriving and vanishing in the fourth and thrid digit columns.

    All I did here was try to capture the essence of SCT in responce to the questions you scoped out.
  10. Thanks for the intro. I am looking forward to learning some more. I have been looking for "taping" now since you introduced that concept to me and found it very helpful. I also moved up to the 5 min. timeframe and hid my 1 min charts for a few days and that has been an eyeopener. What I cant seem to get straight is this idea of trading the traverses in the higher timeframe. I am assuming that you are talking about trading from the right side of Keltner or bb's. Are you looking for coincidence between the one minute and five minute turns? As one old codger to another I appreciate the input.
    #10     Jan 18, 2004
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