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My 6E trading strategy
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My 6E trading strategy

  #881 (permalink)
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forrestang View Post
Today's pa wasn't all that conducive to big profits imo. But I think the chop areas and trend areas where clearly defined by the rules today.

Since I've been trading this method, I've come up with 2 mechanical ways to exit my trade. Both of these methods have in common the goal to get my stop to BE+1 ASAP using the SuperTrend. Once this happens, the management then changes for each of these.

Each method is different. Method 1 is faster, and is less likely to achieve the full target, but will also have more trades with profit somewhere between BE+1 and 21 tics. Method 2 is a bit slower, and is more likely to have more BE+1, but will achieve the full profit target more often.

I've been having some pretty good days, but I have been cheating myself by mixing the two at random. I went back and checked the last 2 weeks of trading, and I would have been better served by simply picking Method 1 or Method 2 (I have these in another sheet I am still putting together). What is happening is that I am more or less averaging in the worst results of the two exit methods into my trades.

Here is how yesterday and today would have played out. The column titled "Today" and "Yesterday" are the actual trades taken. And then Method 1 and Method 2.

Not that the last 2 weeks is a large enough sample size to definitively say one way or the other, but I intend to track both of the management strategies over the coming weeks. There were some other days that were more obvious than these as well.

Below is the comparison of today and yesterday, and a ss of today's trades for me.



very good work!, although it takes longer to mark up the chart and such

might you help the rest of us with suggestions in configuring the ATM so that we too can benefit from as much automation as possible?

often times what I have noticed is (irrespective of Chas's method or otherwise) a successful trade will jump up to say, +8, and then dally around and then force one's ATM to push up from the maximum stop loss to say -4 on the stop loss, and then the current price will retrace into that +8 to say, +3, and then retrace again, hit the premature stop (that was correctly moved up in anticipation of a logrithmic or logical progression of price higher), and then return to the upward direction and almost register a +11

hence the frustration with ATM's, and the seemingly very personal stop running that occurs when profits show up

ok, just a little verbiage to commizzerrate with

 
  #882 (permalink)
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kronie View Post

often times what I have noticed is (irrespective of Chas's method or otherwise) a successful trade will jump up to say, +8, and then dally around and then force one's ATM to push up from the maximum stop loss to say -4 on the stop loss, and then the current price will retrace into that +8 to say, +3, and then retrace again, hit the premature stop (that was correctly moved up in anticipation of a logrithmic or logical progression of price higher), and then return to the upward direction and almost register a +11

hence the frustration with ATM's, and the seemingly very personal stop running that occurs when profits show up..........

I'm not sure how specific you wanted to get? But here are my general thoughts on adjusting a stop mainly based on volatility. Please bear with me, this will eventually get to the point! Maybe this spurs some discussion on the matter?

The situation you describe above....... I think is more likely to happen to a trader (me included) that isn't basing a stop on the current volatility around the time of the trade. What I mean by that is imagine price moving in oscilations or waves. Given the nature of the market, you can imagine there being groups of waves, inside bigger waves..... and then these waves are inside bigger waves and so fourth.

To illustrate that point, see this picture below. Just for illustrative purposes, I've picked 3 zz indicators of arbitrary length. I am calling them small, medium and large for this chart.
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Now, with these zz swings on the chart, you can see how each one of them represents the volatility of that particular TimeFrame(TF). Say you wanted to trade the Blue TF swings. And lets say you didn't have any hard targets, and simply wanted to enter the trade, and trail until you are taken out by your trail. So what would be a logical way to do it just based on what we see here? I think a good way to do it would be based on the volatility of a smaller TF, particularly the red one.

So let's try and walk through how these 3 TFs could work together, along with how the volatility factors in, in a logical way imo. So I think the volatility could be used for entries and exits alike. This post is about exits, but I'll do the entry idea just for completeness.

OverView:
So the general idea is that trends are based on HH/HL and LL/LHs. Also.... there is the idea that 2-3 TFs is a good way to observe how the market is really moving. The idea is the big TF is your trend. The medium TF is used to gauge your PB, in this case a pb to a LH. And the small TF is used to time your entry. So for a short based on a "LL" printing on the Big TF, you would wait for a wave to complete on the Medium TF in the counter-trend direction, and then enter once the Small TF Fails back in the direction of your trade. So Big TF Down, Medium TF Up, then Small TF Failure back down.

This picture below shows this.
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The Actual Exit Idea:
Ok.... with all that out the way, about a logical way to trail. Since we are using zz indie to represent the different TFs (one could use anything to define a TF, to include MAs, or oscillators), notice how each TF has what appears to be an AVERAGE length to how far it moves. These moves consist of a "PUSH" and a "PULL." In a downtrend, the PUSH comes when price moves down, and the PULL on the retracements. That makes sense as it's easier for price to travel further faster on the pushes than the pulls most of the time. Just to illustrate, here is a pic of the push vs pull on the Small tf.
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So, the exit..... this would come upon a FAILURE of either the Small or Medium TFs. Each one will have different benefits and pitfalls obviously. But it is logical imo. Here is a picture of the same chart, just with the failures.
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OK, now onto the MAIN POINT:
So.... since each zz represents a TF in a way.... we can use this info. Notice how the pushes and pulls of EACH different tf appear to all "average out" to a simliar length. Particularly the PULLS. The PULLS are usually a more uniform length than the pushes are. See in the picture below. I just randomly grabbed the first PULL on the chart, measured it, and stuck it on some other PULLs on the chart. You can see that most of them are the same length as the red lines I put in there minus a tic or two. Obviously they won't all be the same, and sometimes the volatility will change in various places, but even still, it usually remains relatively constant for a time. See pic below:
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Ok, here is REALLY the main point:
So.... with that in mind, it seems instead of being as precise as looking for the exact failure of a lesser TF as I showed in the example above (green/red failures), we can use the same idea. By that I mean, you just have to find some way to measure the approximate volatility of price around our entry. To use the picture above, those red lines I drew on the PULLS are the representation of the smaller TF's volatility.... we know we are trading a downtrend, and we know the PULLS are usually relatively uniform. So if our goal was to trail outright, or trail until a set target is hit..... we know our STOP needs to always be GREATER THAN THE SMALLER TF's VOLATILITY! However we decide to measure that volatility.

It's all relative. The only thing that matters, is that if you are trying to catch a portion of a wave, to stay in it long enough to get that portion of the wave, we have to be able to eat the volatility of a TF that is smaller. Otherwise you will ALWAYS likely be stopped prematurely, because that smaller TF just represents noise that occurs within the larger TF while we ride the wave of the larger TF.

Ok..... that was waaaay longer than it needed to be.


Last edited by forrestang; July 13th, 2011 at 05:11 AM.
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  #883 (permalink)
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Trading room for 7/14


hi traders,

If you have studied my thread and think this is a trading approach that you feel could help your trading, then I invite you to a free room where you can watch me trade live and see the trades setup in real time on the right edge.

I use this room for educational and training purposes only and do not give you trading advice or recommendations. Any trades you take are your own decision and you are solely responsible for the risk associated with that trade.

if you would like to join me on Thursday 7/14 click this link below to register

http://www.anymeeting.com/PIID=E954D7868647

Charles

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  #884 (permalink)
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cjbooth View Post
hi traders,

If you have studied my thread and think this is a trading approach that you feel could help your trading, then I invite you to a free room where you can watch me trade live and see the trades setup in real time on the right edge.

I use this room for educational and training purposes only and do not give you trading advice or recommendations. Any trades you take are your own decision and you are solely responsible for the risk associated with that trade.

if you would like to join me on Thursday 7/14 click this link below to register

http://www.anymeeting.com/PIID=E954D7868647

Charles

Maybe, instead of recording 1 video per day, it might be a better idea to record the trades in the trading room. Just turn on the camera, once a setup triggers or about to trigger on the 1508, and turn off the camera once the trade is completed. Then all can benefit, even if they cannot be in the trade room during trading hours.

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  #885 (permalink)
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monpere View Post
Maybe, instead of recording 1 video per day, it might be a better idea to record the trades in the trading room. Just turn on the camera, once a setup triggers or about to trigger on the 1508, and turn off the camera once the trade is completed. Then all can benefit, even if they cannot be in the trade room during trading hours.


for as long as the time in which I am active in the room it is not feasible to record the session as the drain on my computer resources could be too much which could have an adverse effect on my Ninja platform

I still intend to post a recorded video every week to discuss trades and the setups so those who cant attend can still keep the method fresh and up to date.

the room is just an added training tool as I have recieved many request for it. I will not neglect the traders who cant attend by continuing to offer recorded videos, I just cant do it and the room together at the same time


charles

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  #886 (permalink)
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cjbooth View Post
for as long as the time in which I am active in the room it is not feasible to record the session as the drain on my computer resources could be too much which could have an adverse effect on my Ninja platform

I still intend to post a recorded video every week to discuss trades and the setups so those who cant attend can still keep the method fresh and up to date.

the room is just an added training tool as I have recieved many request for it. I will not neglect the traders who cant attend by continuing to offer recorded videos, I just cant do it and the room together at the same time


charles

Maybe members of the room could use this free utility tool bbflash to record a trade that is developing and ask BigMike if he would allow the transfer of these files via FTP on this forum.

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  #887 (permalink)
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Did anyone find any good trades on the 6E today? It seems there may have been 2 trades (red arrows)? The first one you would have had to eat a lot of heat if you stayed in that one to profit target. The second was a double top, but the entry for that one didn't allow much room for profit.

I shorted the DT trade, but got in late, and scratched it for +1. Other than that.... I didn't see ANY trades today that I wanted to take while watching, and I was there since London Open, not even in Hindsight.

Unless you are into the reversals and then I guess there may have been quite a few?

I should have been trading CL today with the crap on 6E. Other thoughts about today's action?

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  #888 (permalink)
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forrestang View Post
Did anyone find any good trades on the 6E today? It seems there may have been 2 trades (red arrows)? The first one you would have had to eat a lot of heat if you stayed in that one to profit target. The second was a double top, but the entry for that one didn't allow much room for profit.

I shorted the DT trade, but got in late, and scratched it for +1. Other than that.... I didn't see ANY trades today that I wanted to take while watching, and I was there since London Open, not even in Hindsight.

Unless you are into the reversals and then I guess there may have been quite a few?

I should have been trading CL today with the crap on 6E. Other thoughts about today's action?

Why did you get in late?

 
  #889 (permalink)
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monpere View Post
Why did you get in late?

I don't remember exactly? Looking at the chart now, I would say it was because the LL proceeding my entry technically wasn't a LL based on where it closed.

So basically a mental fubar.

 
  #890 (permalink)
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forrestang View Post
Did anyone find any good trades on the 6E today?

You are right, this approach did not provide a single solid opportunity on the Euro but i always watch the ES as well as TF and NQ. The ES did provide some great trades for this approach. I am not used to see the ES show such nice directional moves with healthy pullbacks. I am always surprised when i see the ES moving like that. I am still in the 13 points range mode a day.

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