The Stochastic Indicator

I certainly do, and it greatly improved my trading. Nothing of real value is free. If you want to understand it, you just gotta try harder - think of it as the price you have to pay. Compared to what commercial gurus are charging and the cliche crap you get in return, this is gold.

As if to disprove what I just said, today I completely f#&*ed up.

#1 rocket -> entry on 9:50 break
Long 931.75 9:54
Sell 930.50 9:56
-1.25
Reversed on falling volume on up bar, rocket failing, MACD convg.

#2 Reverse short
Short 930.50 9:56
Cover 932.50 10:02
-2.00
Reversed AGAIN on what looked like new point 3 on rising volume, rocket reentry

#3 Reverse long
Long 932.50 10:02
Sell 930.50 10:14
-2.00
Reversed YET AGAIN, on down volume picking up after unsustainable vol bar at 10:00, rocket failed, MACD x

#4 Reverse short
Short 930.50 10:14
Cover 930.25 10:40
+0.25
Washed as I finally realized that this was CCC.
Day -5.00

Gruesome day. It all stems from one "minor" detail that I overlooked: the big picture. Mkt was in a lateral trend since Fri at noon - see 15m chart in next post. Coupled with a sick compulsion to reverse and lousy execution.
The losing streak is here...

 

On and I forgot: Jack, thanks for a very clear and helpful post

 

Jack, could you please be more precise about the A/D stuff (name(s) of indicator(s), settings, how to read it .... ) ?

Thank you.

 

Jack,

You mentioned in an earlier post to use RSI, MAV 5, and MAV 30 to help determine "change". What settings does one use for RSI?
I googled RSI and found that the common settings are 11, 14, and 24. Thanks.

jc

 

The settings I recommend are 5,3,3. For a short going to a long, you will see a spike down as the signal prior to the trend (long) commencing. the MAV5 does a dip, then RSI, then MAV30. The Xover of MAV5 on MAV30 was what we used to show the D to A shift. The RSI falling between the two relative minimums of the MAV's extablishes a nice sequence to take the emotion out of things.

 

One trade today:

Long 931.00 10:45 short channel BO -> rocket signal
Sell 932.75 11:23
channel BO -> rocket failure -> MACD cross. No reversal
+1.75

Week -3.25

 

I thought that I would share in hope of sparking interest in this thread again. In terms of optimization, i find that we enter our normal rockets which should be long when 5Mav is above 30Mav and short when 5Mav is below the 30. Before when we had a rocket we would build our channels on the 5 Min using points 1,2, and 3. The predicament i saw was that i was losing money made before during the point 3 pull back. I find that in terms of optimization that i should be getting out before the pullback of point 3. What i should be doing to optimize is get out when the 1 Min trend breaks or the fast line of the stochastics breaks 80. Whichever one is first. THe next point in optimizing the up trend is to get relong on the next 1min xover of the MACD and anticipate it turning into a rocket again. OF course, if our rezoom does not materialize, we get out for a wash. If it does rezoom, we either have trend continuation or consolidation. If price fails to break the previous high or the price doesn't reach the other side of the channel, we would have hopefully reversed and am ready for consolidation or the reversal.
This is only what i think Jack means by optimization of the trend. I am sure there are other things i am missing so feel free to critique.

jc

 

Tough morning, definitely a "change".

#1 slow uptrend -> rocket
Long 929.00 10:31 (HOD, didn't look at 1m to see it peaking)
Sell 926.75 10:37 failed rocket
-2.25

#2 point 3 bounce, up volume rising
Long 926.50 10:51
Sell 926.25 11:03 washed on failure to traverse (slippage due to lousy execution). This was in fact CCC.
-0.25

Day -2.50
Week -5.25

Can't get a good grip lately, always in-out too late or too early. Will stick to the basics for a while.

 

Reverse-reentry sounds very easy and the sensible thing to do but it's a bitch to pull off. It's subject to considerable second-guessing and will eat away the profits locked in through the early exit. It takes NO HESITATION and fast execution to stay on the right side.
From my limited experience, you're better off staying in if the trend is strong - Jack posted on this a while ago. The retrace will be limited in a strong trend thus not offering much reward.
As I got burned a number of times, I'd attempt a reverse only if there were a convergence of flaws (MACD x, rocket failure, vol rising against the trend).
It would be interesting to see if your 1m MACD x works - please keep us posted.

I will try to add the MAV-RSI to my chart - not sure if I can plot it in WatchPro .

vorzo