Wow Nitro, I used to try and combine lots of different things and just ended up confused. Don't you ever get confused and wonder which of the 27 are telling you the truth and which are not? I went away from that approach, and simplfied out because all I want to know is general direction, up, down, sideways. Sure, I'm not always right, but generally I do OK with nothing but Bars, and Lines, and maybe an MA if I think I need something extra to find an exit point. I have lists of high probability bar patterns too from 3min and 5 min bars, (currently mapping 6 min bars with their probabilities), which get traded if they occur, and they only get on the list if they have at least a 75% success rate and an easily recognised break down for an escape route... Call me simple, but it really does work just fine... Natalie
Natalie, Honestly, 27 things IN THEMSELVES don't confuse me. They are like an onion to me - Once I peel off some of the layers, those layers are not likely to affect my trading for the rest of the day - they simply set the stage. As I mentioned, the actual trade is key'd off of two to three things [plus the squawk - that is ALWAYS involved in EVERY trade] IN THE CONTEXT OF THE STAGE SET. It is possible that all 27 things can be "firing" at once - those are the sweetest trades of all. It is also possible for some of those layers that were "peeled of and set the stage" to have to be reworked during the day as the character changes, usually dramatically for this to happen. I am not a computer and consider that my greatest asset. People that try to take themselves out of a trade by using canned "indicators" or "systems" in canned ways are just trading scared, or have some other "emotional issue" - some are just shitty traders. You are correct though, there are days where things are pointing in different directions and I don't know what to "believe." However, that is always judged to be "part of the story" that the markets are telling, and confusion is a perfectly healthy emotion in the markets as far as I am concerned... I do not doubt that there are "simple" methods out there that "work," I just have never found one. That is more a statement about me then the methods... However, if you have one, by all means let me know - I will test it rigorously and see if it stands the ole Wealth-lab or Tradestation test... nitro
Reading this post.... How did we get so complicated a set of answers in a thread about "simplicity"? Gee whiz
I seem to be up late again... Ok Guys. Something I've picked up on is the question of retracements being better entry points, so I've pulled up some charts and been looking back. It seems to me that there could be something in that, but rather as a sepparate strategy. the problems as I see it is that there is too much of a trade off between 1) A break following through and missing it completely because your waiting or having to join it at a higher level than you would otherwise have done. 2) It being a reversal and finding yourself taking the opposite position in the market (thus creating a loss) 3) It sticking and being more profitable than the original trade would have been. So what I'm asking is basically for some ideas that will help me to put a strategy together that will have a good probability of success, that can run independantly of any other strategy. (obviously this requires commiting more of the fund than I currently do, but there is nothing wrong with having several strategies on the go at the same time...) Natalie
Yes Cathy - agreed - all I've ever managed to do with more complicated approaches is lose heavily... Natalie
I'm impressed, Natalie. You've picked up on some problems with the retracement strategy that others have taken far longer to figure out. I wouldn't say, though, that buying retracements is necessarily "better". It's just different, and while it solves some problems, it creates others, as you pointed out. Two of the biggest problems are those that you mentioned, that there may not be a retracement unless you're using a 1m or 2m chart. There are plenty of ramps that present no entry opportunity at all, even on the 5m chart. And, if you are presented with an opportunity, you're going to have to be pretty damned good at reading the market in order to know whether you're buying a new upleg or a reversal (which, of course, you'll be late for because you're trying to go long). There are at least two issues here, one having to do with momentum and one having to do with trend. Remember the old days when we had momentum? The retracement strategy worked great then because its psychological basis is that traders are eager to jump onto a train that they think they've missed. This is what propels price past the top of that retracement cup (I'm using the long side here for convenience), and into the next leg. As far as trend is concerned, you have to be very sure of where you are in whatever trend you're playing in whatever timeframe you're playing it in. One way to do this is very simple: trendlines. Those trends are created by price advancing, pulling back, advancing again, pulling back no more than the highest point of the previous advance, advancing again in a "stairstep" fashion. When this begins rounding off and breaking the trendline, then you're potentially in trouble. Sometimes price simply rests and consolidates, gathering strength for another advance. But on other occasions, it's exhausted and ready to sink like a rock. Here it helps to know something of the average range for the index or contract you're trading, support and resistance levels, the demand/supply dynamic as revealed in the price/volume relationships. Or, if you're not trying to catch the very top, and there is a reasonably nearby reaction low, you can wait for price to violate the level of that low, which is Sperandeo's definition of a trend reversal. This will get you as close to the top as possible without risking a sudden re-reversal of price into another advance. Why? Because so many traders, when they see that price dropping below that last reaction low, will at the very least be unlikely to make any further buys even if they don't bail out entirely. Yes, there are occasions when somebody with the muscle can shake people out at these levels, then push the price higher, but this sort of activity generally takes place near the top anyway, so perhaps better safe than sorry. You will also find that most people who are into the retracement strategy lean heavily on ADX/DMI. They know that the strategy won't work unless there is a strong trend, and they use ADX to define the existence of a trend and its strength. Problem here, at least these days, is that by the time ADX confirms the trend, it's mostly over. If you want to use an indicator, you may find that a MACD is nearly as good a trend indicator as ADX, and much faster. If you don't want to use any indicators at all, you can try looking for extended compressed ranges, as these are more likely to result in explosive breakouts one way or the other. I've probably gone on too long, but perhaps what I've said will give you something to work with. --Db
By the way, about backtesting. Those of you who are backtesting various ways of keeping it simple may want to note whether there were any reports made on a particular day and the times those reports were made, if any. This will be important if you're considering having a varying entry window. Also, you may want to note whether or not there was an opening gap, and, if so, how big and in what direction. Keeping this stuff in mind, assuming that you think it might be important, will prevent you from having to go back and do it all over. --Db
That's a lot to swallow. I already have a strategy for entering existing trends, which is again based upon either 10, 15 or 30 min bars, where basically I draw a line underneath (again looking long for sakes of simplicity), and then I simply try to buy into it as bear to the support line as I can. If the trend holds, I make profit, it it fails I'm out very quickly with minimal loss. This is looking for a minor trend down then a reversal and new minor trend up to break through the previous high. I'm wondering if there might be some way of modifying that approach to something that could be used. Hmmmmm......... Natalie