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MACD and Stochastic sucks???
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Created: by Lord Sidious Attachments:11

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MACD and Stochastic sucks???

  #21 (permalink)
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NetTecture View Post
Yes, classical. After THAT move anything the stochastics fives you is total bullshit. Go some bars back it was NAILED to the top - totally overstretched. Basically I demand the stochastics to get back into reasonable area BEFORE (!) looking at it again. A drop under 80 does not mean "sell" here, it means "I am actually starting to measure something again".

THere is also this ruls of not trying to catch the extreme top of a strong trend day, and I am not sure what else than a strong trend day you would like this to be.

One filter that I very nicely use is EMA 5. Even with price action. Only enter when that has turned. You also want some non trivial price action confirmation after strong trents. Look at your short - it was pretty much still visually a strong uptrend, just a - ah - slowing one. Were you waiting for an inverse cup to form?

Basically this really was "ok, the stochastics got totally overstretched in a strong movement due to being unable to go over 100". And you were so nice to go in directly when basically there was no down movement but the push was fading out and the indicator started to show ANY value again


Which MA do you use, NetTecture?

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  #22 (permalink)
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I pretty much only use an EMA 5 as "final direction filter". I never enter a position against that one unless it is a very specific circumstance.

FOr the rest - price action (read brooks) followed by some Fishers. I play with ADC and ATR to define a "very low volatility" filter.

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  #23 (permalink)
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I don't trade YM, but here's what I see. You shorted into established MA support, as shown on your chart - not sure which MA that is, but it seems to be serving you well, showing price support. On a melt-up day like today, that's important, as is the ability to recognize the crazy rise that the big boys were casting upon the markets: before you short and step in front of a fast moving freight train, you want to see some sort of confirmation of a move down.

Looking at my chart (which is sort of my default template for new charts), one can see the stringent obeying that price did of resistance levels (especially R2 and then R3). Your chart MA is better than my lowest one (EMA 21, dashed yellow line), since the EMA 21 will not provide support to this type of fast moving market, which is rare momentum.

After that wide range 5m bar that took price to 13192, one needs to be suspect of what will come next; no move down in succesive bars is a hint at a melt-up day about to form or further continue; today was a quite fast moving one. The 10am EST news was much beyond expectations, so the big boys took advantage of it. With Europe closed and no precedent set, it makes it easier and more likely for price to explore higher. I have a peak value price indi that plots the close of the WRBs that have huge volume associated with them - you will find this at minimum is a decent price barrier. (13192 from that ~10am bar)

Uncannily great support is provided by the fibs of yesterday's PA (indi by Fat Tails) - I extended the lines to the left of the screen, showing 78.6%, yest-high (100%), 127.2% of yesterday's price range. Notice how price slices through and moves through each potential barrier with ease. Combined with the move north of R1, then R2, shorting is an iffy undertaking most of the time. Notice how after R2 and 161.8% of yesterday's price, it continues to move north. At that point, 200% becomes a natural magnet as does the next level of resistance, R3 in this case. At that point - after having sliced through 3 resistance levels and gone double yesterday's price movement, the average daily range is quite high (sorry I don't have it on here, but ES was 20.5 ADR) and potential shorts can be looked for, BUT too often, the big boys will leave the price here, and range things, as they distribute (or accumulate). If I have not ridden it up to that point, I am not in good psychological shape to look for shorts, on what usually end up being table scraps or stop-outs, and I am looking to other markets for moves that have not finished, or are not heavily correlated.

I also use some other techniques and tools, but since I don't trade YM, I won't go there.
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  #24 (permalink)
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My eyes! Doc can you fix them? I am seeing lines all over the place.
Dr: what do you do all day?
Me: look at futures charts.
Dr. Oh...
sounds like a personal problem.

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  #25 (permalink)
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ThatManFromTexas View Post
@Lord Sidious

Noooo ... the problem is ; You are treating the MACD and Stochastics as a mechanical trade system. They both crossed and you sold. Price was still above the "Fast" Moving average and the "fast" moving average was still above the "slow" moving average.

Indicators are not an absolute command. You have to take what you see in context with what they tell you.

Don't be like these guys....

Man Drowns Following GPS Instructions Into Lake

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Sure, indicators can be absolute command, that's how I trade, that's what a strict mechanical method is all about. But, you have to verify that these signals have proven themselves historically over a large sample of trades. But however you trade, you have to realize that no method is right 100% of the time. Sometimes the most picture perfect setups fail, and the most ugly ones win for no apparent reason. That's the nature of the markets, and you have to accept that. What counts is not how 1 of these signals perform, it is how 100 instances of these signals perform.

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  #26 (permalink)
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monpere View Post
Sure, indicators can be absolute command, that's how I trade, that's what a strict mechanical method is all about. But, you have to verify that these signals have proven themselves historically over a large sample of trades. But however you trade, you have to realize that no method is right 100% of the time. Sometimes the most picture perfect setups fail, and the most ugly ones win for no apparent reason. That's the nature of the markets, and you have to accept that. What counts is not how 1 of these signals perform, it is how 100 instances of these signals perform.

@monpere

Soooooo ........ what percentage of the time would you say GPS is correct....

Man Drowns Following GPS Instructions Into Lake

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What percentage of the time is GPS correct...

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #27 (permalink)
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ThatManFromTexas View Post
@monpere

Soooooo ........ what percentage of the time would you say GPS is correct....

Man Drowns Following GPS Instructions Into Lake

More Stories Of People Following GPS Blindly Into Dangerous Situations | Techdirt


What percentage of the time is GPS correct...

When I was in Germany, and couldn't switch the GPS to english, it was wrong pretty much 100% of the time


Last edited by monpere; May 1st, 2012 at 04:38 PM.
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  #28 (permalink)
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NetTecture View Post
I pretty much only use an EMA 5 as "final direction filter". I never enter a position against that one unless it is a very specific circumstance.

FOr the rest - price action (read brooks) followed by some Fishers. I play with ADC and ATR to define a "very low volatility" filter.

Have you been sucessful, so far?

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  #29 (permalink)
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With that yes. Sadly my main problem is that I have a decent career and work was eating me alive the last 18 months I only had a little side stuff going on. My main problem is that a "I earn 500 USD per day stable" scenario for means "Ouch, serious loss of income".

But the "snort EMA as final filter" has been a decent rule for a long time. Btw., here is the short in YM now finally realizing.

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  #30 (permalink)
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NetTecture View Post
With that yes. Sadly my main problem is that I have a decent career and work was eating me alive the last 18 months I only had a little side stuff going on. My main problem is that a "I earn 500 USD per day stable" scenario for means "Ouch, serious loss of income".

.

Maybe you'll be lucky and get laid off ....


(Joking!)

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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