Let me start by thanking you for taking the time to teach us your methodology. It seems like a good methodology and will dedicate the weekend to studying it and looking at charts in hindsight. I have read through all the posts in your thread and have come up with a couple of questions. Hopefully I wont take too much of your time with them and they can help other members as well. I have listed the post number and my question regarding that post.
post # 41
For 377 tick chart, at point 9 you state an entry has setup on the 377 tick chart due to the hidden divergence between points 1 and 3. However, at that time, the 1508 tick chart had not made neither a HH nor a HL. Price had broken through the LH you marked, but still that does not comply with your first rule, where the 1508 must be making HH and HL on the ZigZag. The first HL on the 1508 tick chart appears at what looks like a tripple bottom on the 377 tick chart (the Low after point 3). Could you please clarify this?
The agressive trade does not match the criteria specified in your rules, would you consider this a more advanced setup?
In your rules you state the 1508 chart needs to be making LL and LH and it has made a LH and a HH coming into the double top. You also state that for reversals, price has to make a swing H or L inside the cloud and the retracement bar has to close inside the cloud, which it does not do either. In the 377 tick chart everything lines up well, but how recommended is it to take trades when the 1508 tick chart does not line up?
A question on divergence. in post #41, you showed a chart where the blue stochastics line was used to determine a divergence; and in the short entry in post #79 you use the black line to show divergence, as the blue line is forming a double top. Would you consider a divergence to take place regardless of which of the two lines is the one with the divergence?
It seems the entry was when price was heading straight for the previous LL at #1 on your 1508 tick chart which is an area where the bottom of the cloud had been horizontal for 8 bars. Since you said in post #41 that when the cloud goes horizontal for a long time, it means strong support, would you consider this a riskier trade as you were shorting into support, or do you not consider this as the entry on the 377 tick chart was clean?
It seems price was not making HH in the 1508 Tick chart, only a HL, but you addressed that in another post. You mention that on #4 in the 377 chart, you enter long eventhough the candle did not close inside or above the trigger lines, had you waited for that condition, your entry would have been 10 ticks higher, which is a very significant difference, although the trade still would have worked. What is it about the move, that makes it a "strong signal"? So as to know when it is OK to enter at the the trigger lines and not have to wait for price to close inside or above them.
Where was your entry? I dont see price closing below the cloud.
In your 1508 tick chart, you mention pullback here after higher high. Price is coming from a lower low in relation to the previous low that formed the "M" shape. Wouldn't this go against the rule that states that the 1508 chart "must" be making HH and HL for a long entry?
This is a question I had as well. If we had to wait por price to be rejected at the MA or cloud when price was retracing in the 1508 tick chart. It seems, from your answer, that once price reaches that level, we don't wait for the price to close, we go to the 377 chart and start looking for entries. If an entry is setting up, then we go to the 1508 chart to check that the MA/Cloud support has indeed held. Is this correct?
What about the retracement for reversals? In your pdf file, you say that the 2nd requirement to trade a reversal is that the retracement candle has to close inside the cloud. So I would imagine that we would be looking at the 377 chart for entries and if an entry is about to setup, it has to be either when the retracement candle is closing in the 1508 tick chart or after the retracement candle has closed to confirm it closed inside the cloud. Is this correct? What happens if an entry sets up in the 377 chart and the retracement candle on the 1508 chart is not getting ready to close. I would imagine that for every 1508 candle, 4 377 candles form.
This is a delayed response, but I just wanted to chime in on your question. Just like CJ said, why would you go long when the trend is clearly down. Also, you say that you like trading PA, to me looking at that engulfing bearish bar that made the HH you referenced is good enough reason not to go long. That bar it engulfs 9 previous bars. If that's not a bearish strength, I don't know what is.
Thank you for the questions - I will address each by noting the post # you referenced for your review
Post #41 - the candle on the 1508 that has the 3 green arrows under closes above the high of the ZigZag swing to the left marked by the LH. When this occurs you are now looking for a long trade. 2 bars to the right is a down candle that holds support follwed by the 377 chart signal
Post #79 - The agressive trade that you are referencing I would not recommend new traders take. it is an advanced setup which I took as both charts confirmed the M top which in itself is a reversal signal that rarely appears on 2 charts at the same time. As far as the Stochastic divergence you are asking about either line can show the divergence but a divergence on %D the black line is stronger as it is slower to react to price
Post #88 absolutely this trade is higher risk because of the flat edge on the bottom of the cloud., I referenced this in the explanation of the trade when I pointed out that the trade could have quickly failed because of the cloud and the ABCD retrace. this does not mean you dont take the trade but be aware of support and price patterns that could cause the trade to immediately fail and to get out of it before your stop is hit, this is a discretionary trading system nothing is perfect and assures success on a trade. the idea is taking trades when the odds are in your favor of success
post #110 - Another trader pointed this out if you see my reply afterwards. When I am marking up these charts to post trades in the forum I am doing it in itself quickly while I also watch the market for another trade setup. When I went to apply text to the 1508 chart I accidently opened the indicator window and clicked OK to get rid of it. In Ninja trader this forces the chart to reload. Before I had done this there was a lower High ZigZag swing on my 1508 chart at 10:24 cst meaning a close above 1.4425 would revert the trend to the upside and then price retraced and stayed inside the cloud for the long. Learn my rules - trade your chart our charts will not always be alike
Post #125 - Your right this was a losing trade I miss read the chart as I noted. Sometimes in school the teacher makes a mistake, today I made one and it cost me 9 ticks
Post #126 - yes you have a lower low there where you are referencing the next swing up off of it makes a HH followed by the retace to the MA that creates the HL trade signal. Once you make a HH in an established uptrend which the market was in any retrace on the 1508 that test the MA or cloud is a valid signal
post 3138 - everything you are stating is correct. When price is retracing and about to reach the MA or cloud you start to look at the 377 for a valid trade if it sets up right on the 377 you enter the trade when the signal fires. Just look quickly at the 1508 before you push the trade button to make sure S&R have held at your entry point, you can never wait for the 1508 to close to make the decision. Its not the candle on the 1508 its where price is at that moment the trade signal occurs on the 377
I hope this answers your questions
Last edited by cjbooth; June 3rd, 2011 at 06:29 PM.
The following 2 users say Thank You to cjbooth for this post:
First of all this is not a good example of my method as if you have read my manual and the trade rules you will immediately notice that this chart is not set up right to trade my method. This chart is only showing you price action on 1 chart and that being a 1000 tick.
This is not a post I posted there is no way just looking at the 1 time frame would I go long where the trader noted. I mentioned in my reponse to him that the higher time frame which would be a 4000 tick chart in this case would never be in an uptrend by just looking at the 1000 tick. I also noted that what he read as a higher high - I read it as an ABCD retrace for further movement to the downside.
But again I can't make a sound judgement on this looking at just 1 time frame and it not be setup properly to trade my method
Doesn't this conflict with rule number 1 for longs, which says "1508 chart candles MUST be making HH/HL..." I assumed that meant the zigzag has to make a HH preceded by a HL. Are you saying that you only need to see a HH, and it does not matter if the previous zigzag pivot was a HL or LL?
The following user says Thank You to monpere for this post:
thks. I am going over the manual and setup my charts, but I get too many arrows on 05/20, unlike few arrows on CJBooth's chart in the manual - 6E - 377 tick on 0520.
I set anaSuperTrend to default and others per manual. a Template would help