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My 6E trading strategy
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My 6E trading strategy

  #51 (permalink)
Trading for Profit
aurora,il
 
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make a plan - trade the plan

Hi traders,

Over the past few days with the market closed for a long holiday I took advatange of that extended period to educate you on the rules I follow when I am trading. I have been trading for a little over 3 years most of which was a non profitable adventure. My trading did not start to turn the corner until I stopped buying every new indicator and a lot of those make you rich quick trading schemes.

For you to be successful you must come up with a strategy that fits your personality, one that makes sense to you and one that makes money in back testing it and SIM trading it to prove it does work most of the time. If you are able to take my methodology and trade it that's great I am very happy that I was able to help your trading. Perhaps something I have taught you will help your personal style of trading take the next step.

The important thing is your trading approach must be in a written document like I have done so you can review it constantly, make changes if needed, and set goals. After each trade you place win or lose keep a journal of the trade and why you took it. You should be able to tell a perfect stranger why you entered every trade with logical reasons why you did. If I was to ask you why you took this trade and your response was "It looked like the market was going up" then I would tell you that you need a plan to trade before you trade anymore.

I took on this adventure of teaching you my methodology because I knew that I had finally found a system that works for me most of the time and I wanted to share it. I wish there was someone that did this for me and maybe there was and I didn't know where to find it 3 years ago. Starting tomorrow I will continue to post on this forum at least 1 trade a day that I take with my live account to reinforce this strategy and help you see the signals.

Additional help for those that decide to follow this strategy is available by asking questions here on the forum, sending an email to boothcj@comcast.net , or you can find me on Skype at "lazytrader53". A note on Skype - I do not talk on it while trading my live account as I must stay focused and disciplined to follow my rules, although by email request I will talk with you during the slow or off trading hours if you need or want some 1 on 1 free coaching with me.

I encourage that your question be asked here on the forum so other traders can learn from it as well

Have a great Memorial Day and I will resume trading post on Tuesday


Last edited by cjbooth; May 30th, 2011 at 10:13 AM. Reason: text
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  #52 (permalink)
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cjbooth View Post
Hi Traders

my next lesson will be on identifying a very strong trend continuation signal that is well known but often over looked by traders because they think the trend is reversing and they don't take the signal.

When combined with the Ichimoku Cloud and you recognize the pattern you will have more confidence in taking the trade

this signal is called the ABCD retrace and it is validated by AB=CD meaning the 1st swing A-B is the same lenght as the last swing C=D

You only want to take this trade if the pattern sets up on the 1508 chart. the pattern does occaisonally appear on the 377 but is not as reliable. remember my last post on the cloud - when patterns appear on the higher time frame they are more valid than a short time frame

Allow me to post a chart 1st and show you the pattern then I will explain it

Attachment 39556

1. Notice point A it is a new lower low, had this been an uptrend point A must be a new higher high
2. Point B does not reach the MA or Cloud and price turns back down
3. Point C is a higher low - but what is important in ALL these patterns is that point C - CANNOT make a lower low or if this was an uptrend it CANNOT make a higher high
4. Price turns up again and what do you know price moves to the 13 MA, What is important here though is that the 1st swing up and the 2nd swing up is the same lenght, look at the ZigZag swings.

This is a pattern that almost always results in a lower low or higher high and can be the easiest money you will ever make.

But wait you say Zig Zag made a higher high and that is not a trade. Anytime you see a failure swing meaning the trend does not make a new low or a new high on a swing check that next swing to see if it stops at an equal to the 1st swing most of the time it won't which voids the signal.

these signals do not occur often but when they do they are quite powerful

open the picture again if you need to and look over to the left around the 11:03 area reference the time scale at the bottom of the chart, look up is that an ABCD retrace in the uptrend - see those tight ZigZag swings that conclude just above the cloud and slightly below the 13 MA

The answer is no, the last swing down is longer than the 1st the pattern is void

this pattern occurs for more than the reason we call stop running. the big money needs traders on the wrong side of the market for their orders to get filled at the price they want. thus they get in a few of their contracts and make the inexperienced traders think this is a higher low and they go "OH a higher low its a reversal signal go long", then the big money has the inexperienced traders on the wrong side and they hit the market hard with their orders. Next thing you know the inexperienced traders stops are being hit which is throwing fuel on the fire for the big money trade.

We on the other hand know that the market is an a downtrend by using the Ichimoku Cloud and we would not be interested in the least at trading that higher low we would be looking for the ABCD or waiting for the trend reversal trade which can't take place until higher highs are formed inside the cloud

Again this is a rather advanced trade in price action analysis. You possibly might want to avoid this trade if you are new to trading but at the same time notice it after the fact if need be and after time you will see it set up on the right edge.

Again I encourage questions if you need help

Charles

Charles I have really been enjoying the explanation of your method, nice work, not only in the method that you came up with, but in the easy way you have shown and explained it. I was wondering, if after using this method, have you found that the 1508/377 tick chart combo to be the best? Have you ever experimented with other combos? Minute bars or say range bars, volume bars etc. I did notice you made mention to someone else that the larger time frame needs to be 4 times greater than the smaller one, so have you tried other combos, i.e. say a 600/150 tick or would that be too small?
Thanks,

Jeff

 
  #53 (permalink)
Trading for Profit
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reply to comment


Jeff,

thanks for the comments/question. Actually yes a very big part of my learning curve was to determine the best times frames to trade this method. Which in turn was a hinderance to stabilizing my strategy, I think every trader has gone through the "Well crap this doesn't work either" mode and they start changing time frames and indicators until they finally decide that the Holy Grail really doesn't exist and they need to come up with something that will work more times than not

As far as the different time frames I don't like range bars because you never have any idea when the bar will close, you know where they will close but don't know when, as far as minute (time based) bars they work well say using a 3 &12 minute chart but you get fewer trades from a risk perspective - many times as you see the trade coming the bar you want to get in on runs 25 ticks and kills the entry from a risk stand point.

I stuck with tick charts and have always liked the 377 as it is a Fib #, I personally don't know if that has value or not but I do know a lot of traders look at it. Volume charts are good but when you start playing with them you will notice an 1100 volume chart looks almost identical to the 377 tick. To go down to a smaller tick chart say the 600/150 as you asked you will get in my opinion way too trades that result in false signals.

I am a strong believer in less is better, on a humurous note my trading goal is not to make my broker rich by trading too much and paying him/her commissions

Hope this helps - Charles


Last edited by cjbooth; May 30th, 2011 at 10:29 AM. Reason: spelling
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  #54 (permalink)
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cjbooth View Post
Hi traders,

Over the past few days with the market closed for a long holiday I took advatange of that extended period to educate you on the rules I follow when I am trading. I have been trading for a little over 3 years most of which was a non profitable adventure. My trading did not start to turn the corner until I stopped buying every new indicator and a lot of those make you rich quick trading schemes.

For you to be successful you must come up with a strategy that fits your personality, one that makes sense to you and one that makes money in back testing it and SIM trading it to prove it does work most of the time. If you are able to take my methodology and trade it that's great I am very happy that I was able to help your trading. Perhaps something I have taught you will help your personal style of trading take the next step.

The important thing is your trading approach must be in a written document like I have done so you can review it constantly, make changes if needed, and set goals. After each trade you place win or lose keep a journal of the trade and why you took it. You should be able to tell a perfect stranger why you entered every trade with logical reasons why you did. If I was to ask you why you took this trade and your response was "It looked like the market was going up" then I would tell you that you need a plan to trade before you trade anymore.

I took on this adventure of teaching you my methodology because I knew that I had finally found a system that works for me most of the time and I wanted to share it. I wish there was someone that did this for me and maybe there was and I didn't know where to find it 3 years ago. Starting tomorrow I will continue to post on this forum at least 1 trade a day that I take with my live account to reinforce this strategy and help you see the signals.

Additional help for those that decide to follow this strategy is available by asking questions here on the forum, sending an email to boothcj@comcast.net , or you can find me on Skype at "lazytrader53". A note on Skype - I do not talk on it while trading my live account as I must stay focused and disciplined to follow my rules, although by email request I will talk with you during the slow or off trading hours if you need or want some 1 on 1 free coaching with me.

I encourage that your question be asked here on the forum so other traders can learn from it as well

Have a great Memorial Day and I will resume trading post on Tuesday

Very nice thread. I like how you lay out, and explain the methodology. On the subject of chart examples, in addition to the specific trades you show to explain the concepts, I think it would be beneficial for us to also see all your signals for the day, winners, losers, scratches, and trades skipped by discretion. That will give a clearer view of the performance of the method, and add a glimpse of the statistical aspect, and expectancy of the methodology.

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  #55 (permalink)
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reply


monpere View Post
Very nice thread. I like how you lay out, and explain the methodology. On the subject of chart examples, in addition to the specific trades you show to explain the concepts, I think it would be beneficial for us to also see all your signals for the day, winners, losers, scratches, and trades skipped by discretion. That will give a clearer view of the performance of the method, and add a glimpse of the statistical aspect, and expectancy of the methodology.

excellent point monpere, I will post all trades I take everyday - I may not post all of them with chart pictures but will post each trade with text and the results of each. trades I show with chart pictures is for further education purposes

Charles

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  #56 (permalink)
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What distinguish this system from the other various systems published here that use a set of moving averages on a higher time frame but uses a lower time frame to finetune the entry ? Also, why using a target of 21 ticks ? Why not use 20 ticks or 19 ticks ?

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  #57 (permalink)
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trendisyourfriend View Post
What distinguish this system from the other various systems published here that use a set of moving averages on a higher time frame but uses a lower time frame to finetune the entry ? Also, why using a target of 21 ticks ? Why not use 20 ticks or 19 ticks ?


I am not sure what distingush this sytem from others, but my methodology is not based on trading MA's it is based on trading buying dips and selling rallies at support and resistance levels. If the other strategies posted in the forum are based on this type of trading I have not seen them, not to imply that they don't exist

My profit target is in the sense actually 20 ticks - I add 1 more tick if I can get it to cover the commission

Charles


Last edited by cjbooth; May 30th, 2011 at 11:01 AM. Reason: text
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  #58 (permalink)
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cjbooth View Post
I am not sure what distingush this sytem from others, but my methodology is not based on trading MA's it is based on trading buying dips and selling rallies at support and resistance levels. If the other strategies posted in the forum are based on this type of trading I have not seen them, not to imply that they don't exist

My profit target is in the sense actually 20 ticks - I add 1 more tick if I can get it to cover the commission

Charles

I might have misjudged but you seem to rely heavily on the IchiCloud to determine your support and resistance levels. If this is the case then you are indeed using a form of moving average. You could just as well use the TriggerLines[80,20] and get almost the same type of approximation. You did not explain why 20 ticks as target, is it based on some stats or is it because it corresponds to about 2 times your risk on average ?

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  #59 (permalink)
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reply to comment


trendisyourfriend View Post
I might have misjudged but you seem to rely heavily on the IchiCloud to determine your support and resistance levels. If this is the case then you are indeed using a form of moving average. You could just as well use the TriggerLines[80,20] and get almost the same type of approximation. You did not explain why 20 ticks as target, is it based on some stats or is it because it corresponds to about 2 times your risk on average ?

you are correct I do rely heavily on the IchiCloud indicator for S&R levels, actually I have used the trigger lines at 80/20 and as a personal decision I did not like it - the 80/20 trigger lines did not provide a sound enough system for me - but again that is my personal decision not to say it would not work for somebody else.

Yes the 20 ticks is generally twice the risk, with that in mind you would have to be successful less than 40% of the time to lose money with this system

Charles

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