Tick chart orientation

June 9th, 2011, 07:50 PM

worldwary

Piecing together what we've covered so far:

1. During trends, price tends to channel between the SMA and the outer envelope.

2. During chop, price tends to slice right through the SMA and reverse direction near the envelope (or at least one of the inner envelopes).

It's taken a while to get there, but these observations form the foundation of the system I'm teaching in this thread. Based on these ground rules, here's the game plan:

During trends: enter near the SMA; take profits near the outer envelope; look for reentries on retrace back to SMA; watch for signs of trend exhaustion.
During chop: short near the upper envelope; go long near the lower envelope; watch for a bounce off the SMA, which could be a signal that chop is ending and a trend is ready to resume.
Countertrend trades (advanced): Short when price extends above upper envelope; go long when price falls below lower envelope; keep stops tight; take profits near SMA (unless accompanied by other signs of likely trend reversal, in which case hold for a larger move).

Sounds simple in theory, but there are a lot of moving parts. The trader's primary task is to determine, as early as possible, whether the market is in trend mode or chop mode. Get that right and the profits will flow. Get it wrong and you'll find yourself fighting the market. Proper money management (i.e., keeping losses small relative to wins) is the key to making profits stick.

I'll walk through aspects of the gameplan in more detail in later posts. Let me know if there's any angle of this that you want me to focus on specifically.

A chart that describe those condition would be nice.

June 9th, 2011, 09:27 PM

worldwary

Piecing together what we've covered so far:

1. During trends, price tends to channel between the SMA and the outer envelope.

2. During chop, price tends to slice right through the SMA and reverse direction near the envelope (or at least one of the inner envelopes).

It's taken a while to get there, but these observations form the foundation of the system I'm teaching in this thread. Based on these ground rules, here's the game plan:

During trends: enter near the SMA; take profits near the outer envelope; look for reentries on retrace back to SMA; watch for signs of trend exhaustion.
During chop: short near the upper envelope; go long near the lower envelope; watch for a bounce off the SMA, which could be a signal that chop is ending and a trend is ready to resume.
Countertrend trades (advanced): Short when price extends above upper envelope; go long when price falls below lower envelope; keep stops tight; take profits near SMA (unless accompanied by other signs of likely trend reversal, in which case hold for a larger move).

Sounds simple in theory, but there are a lot of moving parts. The trader's primary task is to determine, as early as possible, whether the market is in trend mode or chop mode. Get that right and the profits will flow. Get it wrong and you'll find yourself fighting the market. Proper money management (i.e., keeping losses small relative to wins) is the key to making profits stick.

I'll walk through aspects of the gameplan in more detail in later posts. Let me know if there's any angle of this that you want me to focus on specifically.

NICE! I think I have gotten more from this then I did with several "mentors", good job on making this something I can add to what I am doing now....Thanks

June 11th, 2011, 07:44 AM

Time for the weekly...

POP QUIZ!

Attached are three charts. As before, look at the far right-hand bar in each chart. I'm focused only on entries for the moment; don't worry about exits. The basic entry rules are outlined previously in this thread. For each chart, I've given three options:

(a) Enter short;

(b) Enter long;

(c) Do nothing.

June 11th, 2011, 11:41 AM

1 short if anything though I'm not real comfy trading off dojis. I'm guessing that's what your looking for but, looking at s/r there I would almost expect a retest of last swing high
2 nothing yet but long could be imminent
3 nothing yet but short could be imminent

I like the idea of your quizes, makes things more interesting even if I'm not giving the answers you maybe looking for

P.S. I guess i'm conflicted by giving the answers I think your looking for and what I might do

June 12th, 2011, 05:13 AM

Ok, I�ll try it:

Chart 1: I�m not quite sure. It doesn�t look like there there is already a down trend. It looks like chop to me. So I would do nothing at this point near the SMA.

Chart 2: Looks like chop, so I would enter long near the lower envelope, target: SMA.

Chart 3: There is clear uptrend. Perhaps a place for an advanced countertrend trade when price extends above upper envelope > go short with a tight stop.

Thanks for your input worldwary, much appreciated.

June 12th, 2011, 07:16 AM

1. Enter short position for the brave, I would do nothing
2. chop, do nothing
3. Defined uptrend, consider a short on retracement, or after retracement go long

June 12th, 2011, 11:11 PM

worldwary

Time for the weekly...

POP QUIZ!

Attached are three charts. As before, look at the far right-hand bar in each chart. I'm focused only on entries for the moment; don't worry about exits. The basic entry rules are outlined previously in this thread. For each chart, I've given three options:

(a) Enter short;

(b) Enter long;

(c) Do nothing.

Chart 1 - Pure congestion, go to the refrigerator and get a sandwich
Chart 2 - Exhausted Tripple bottom. I would have an oscillator on that chart, and if there is a divergence, I am all over it (long) like white on rice.
Chart 3 - Exhausted move pulling away from an MA that reeled the price back to it twice already, again if my oscillator shows divergence, I would be salivating waiting for my short trigger.

June 13th, 2011, 10:21 AM

monpere

Chart 1 - Pure congestion, go to the refrigerator and get a sandwich
Chart 2 - Exhausted Tripple bottom. I would have an oscillator on that chart, and if there is a divergence, I am all over it (long) like white on rice.
Chart 3 - Exhausted move pulling away from an MA that reeled the price back to it twice already, again if my oscillator shows divergence, I would be salivating waiting for my short trigger.

What do you use as a divergence indicator?

June 13th, 2011, 10:38 AM

worldwary

What do you use as a divergence indicator?

Any oscillator, stochastics, macd, rsi, tsi, and others, they all show divergence.

June 13th, 2011, 11:57 AM

worldwary

Time for the weekly...

POP QUIZ!

Attached are three charts.

Chart 1. Not sure. I would probably hold off and wait. It's possible that a short could develop, but it's only bounced off the MA once. Seems just as likely (to me) that we'll enter a period of chop as a period of trend.

Chart 2. This is chop. I would not try to trade this.

Chart 3. This one is interesting. I think this one illustrates the technique you mentioned earlier in the thread:

worldwary

Countertrend trades (advanced): Short when price extends above upper envelope; go long when price falls below lower envelope; keep stops tight; take profits near SMA (unless accompanied by other signs of likely trend reversal, in which case hold for a larger move).

In this pic, the price has surged beyond the MA by several ticks. This would seem to suggest that it may be possible to short for 10 ticks or so, collecting the winnings at the SMA. This assumes, of course, that the price is going to snap back to the SMA. Also assumes that you have the guts to take such a trade

Tick chart orientation

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Tick chart orientation