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gregid, Very good question! That's one of the reasons I added the other SMI2 indicators - to help control false reversals. The reason I would have stayed long & not have taken that short is because the fast SMI2 did not cross all the other SMI2 lines, and although the fast d9ParticleOscillator DID cross down on the slower d9PO & also its zeroline, the SMI2 was indicating it was only a retracement. Also, after the fake-out, it would have been a good place to move your stop-loss up to.
After all, it's what you learn AFTER you know it all, that counts!
Can you help answer these questions from other members on NexusFi?
I started studying the SMI2 indicator a bit more closely but I am still having problems with it - it gets a bit complicated with 6 lines drawn in one panel.
Could you please summarise what are the things you would look for in the SMI2.
If I understand it correctly you are looking for all SMI's to change colour and fastest SMI (white/gray) to cross its signal line (SMI Moving Average - thin gold line) and all other SMI's. What is the role of slowest SMI's Moving Average (thick gold line)?
Also in the example from 091109 only in one, last trade (14:50) fastest SMI crosses all other SMI's + MA.
In the first one (10:29) fastest SMI crossed only one SMI + MA.
In the second one (12:12) fastest SMI crossed only 2 SMI's + MA
In the one you avoided (12:56) fastest SMI crossed also 1SMI + MA (but by the time of cross one of the SMI's already turned blue)
1. The role of the SMIEMA (thick gold line) is the signal line for the thick BLUE/RED (slowest) SMI2. You definitely want to be long / short when the BLUE/RED thick line has crossed the GOLD thick line. It more or less gives an indication of direction of price and whether you should be long or short depending on whether or not the other SMI2 lines are above it or below it.
2. (10:29) Yes. You're correct. By 10:32, however, the crosses had occurred. The reason I would have gone short @ 10:20 is because price had reached Ultimate S/R, there was divergence on the SMI2 as well as d9PO and the fast d9PO had gone below its zero line & the slow d9PO was very, very close to its zero line. Also the SMI2 was at it's Extremely Overbought red signal line. I saw no where else for price to go except down.
3. (12:12) Again, Correct. However, there had just been d9PO divergence and SMI2 had been at its Extremely Oversold green signal line. By 12:14 price had reached the Top Of Trading Zone on the MurreyMath lines, d9PO fast was above its zero line and d9PO slow was very, very close to its zero line & by then the thick white (fast) SMI2 had crossed the thick blue (slow) SMI2. Definite long signal. No where else for price to go but up.
4. (12:56) This was a RISKY one ! Having gone long, I would have placed my stop at the bottom of the prior swing-low bar (around 587.30 - 587.50) & left it there. If I was willing at 12:14, when I went long, to take a potential 2 point loss, what's changed? I should have less fear now, because price is actually higher & all my indicators are higher. SMI2 (fast) never crossed or came close to the thick BLUE/RED SMI2 (slow) line. It didn't even cross the somewhat faster (13 period) SMI2.
I've attached a marked-up chart that explains in fairly good detail the why & why-nots. Hope this helps to clarify. Please feel free to contact me. I'm happy to help in any way I can. I've truly been enjoying my time in BigMikesForum. Wonderful people!
After all, it's what you learn AFTER you know it all, that counts!
Wiz,
Thank you for taking the time to go through your charts I'm sure it's appreciated by all who are watching and contributing to this thread. Hope your recuperating well.
I know it must have taken you a lot of time to answer my question to such a detail. I only wanted to tell you it is highly appreciated by all of us who are struggling with finding ourselves in this new world of trading.
Thanks again and I hope your recovery is going well!
Yes. For example, the SMI2's begin to cross down (or up) & there is some indication from the other indicators that a short (or long) might be beginning, but the jsats are still all GREEN (or RED) . I do not go short (or long) yet. I wait until ALL indicators have confirmed for at least one closed bar before entering the short or long. Jsats is just another confirming indicator of a different type. I learned long ago that you can get confirmation easily if you use all the same type of indicators (momentum, strength, convergence, etc.) the trick is in having different types of indicators then watching for the confirmation from an overbought or oversold condition, which is usually the best place to wait for an intermediate to long-term intra-day trade. Hope that answers the question.
After all, it's what you learn AFTER you know it all, that counts!
