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When evaluating the markets, I look for Energy, Direction, and a Good Price. In the screenshot below, the thick line with the #1 is the 89-EMA...the other thick line #2 that sometimes goes flat is a 42-Donchian channel middle line (I call it the PowerLine). I use the 89-EMA and the PowerLine on the 15-minute, 5-minute and 1-minute chart to determine the "macro & micro trend" direction. When both lines on the 1-minute chart paint green, I mostly take bullish trades. In this example, I took 1 sell and 8 buy trades.
Hey Frosty
I started thinking a lot about Energy, Direction and Good Price after we talked about the zombie set ups. I do some testing on weekends, I'm working on strategy, and thought that you might find this interesting. Here is a trade from 6.21.21 on the ES.
1. This is FLAT. The bars are small- 2-4 ticks. At this time, the price RANGES around 12'ish ticks. There is no DIRECTION. The EMA's have no slope. There is no detectable MOMENTUM. The RSI ranges from 45-55 during this TIME. ENERGY=0, Do not Trade.
2. Things pick up a bit. The bars increase in size. We get slope to the upside as price opens and closes above the 20 EMA, price is now moving in one DIRECTION. The RSI now starts to range higher 55-65. For me its not necessarily a trade, but a sign to start paying attention. Now ENERGY=1, Bullish Energy, Look for trades in near Future.
3. Now things get interesting. When this bar closes, it will be 31 ticks large, 5x larger than the last bar, or the average of the last 20 bars. The RSI slopes sharply down from through the 55-45 zone. This clearly a pull back, probably to the 200 EMA, The more experienced trader's will take this trade knowing that there is 28ish ticks until the bounce, but the less experienced of us wrestle with the basic calculation's and doubt, regardless, price now is ENERGY=2, Big Bearish Energy. There are trades here, but watch the 200.
4. Aaannnd here's the bounce. We see it on the 200 and in the RSI We're still at ENERGY=2, but over the next 5 bars and 10 minutes we see price move bask into bullish territory, So something like ENERGY=2, No Clear Direction, or Bounce off the 200.
5. We waited for the bounce. We waited for price to move back above the EMA's, and we were rewarded with this nice, big, fat bullish heiken ashi bar- almost exactly at GOOD PRICE. Additionally the RSI has sloped up and when the bar closed, I entered with a market order, placed my stop under the swing low, and set a profit target of 2x that value. 3 bars into the trade price finally opens and closes above the EMA's, which have good slope to the upside. The range of the bars continue to be consistent or gain in the short term. Momentum is steady and bullish in the 55-70 range on the RSI. Now ENERGY=3 Full Bull Energy, you should be in a Trade already.
6. All that's left is to manage this trade and squeeze every last tick out it. with price so far above the 20, heiken ashi bars still big and bullish and a RSI just now approaching the 70, there's still some upside here. But like all things, this to shall pass.
Observations.
In this instance we can see "trade energy" as it moves in phases, from little to no energy, or 0, to very energetic- 3. At some point in the future we can assume it will do so in reverse, and is yet another pattern we observe when we seek to understand how price works and predict its movements. We can most likely quantify this with a formula that compares 20 period range, slope, momentum (over all energy), to 2 period range, slope, momentum (intermediate energy), to current bar range, slope, momentum (immediate energy) which could give us a value we could extrapolate trade energy from. We could in turn plot this and we would get a curve that would show you these energetic peaks and valleys and what you would end up is yet another oscillator. Some people who see patterns in certain ways would love it, chart it, and profit from it, while others would just see another oscillator.
But what if someone used this concept of "energy" and used it in some new and interesting way? Imagine an indicator that floated over the current bar like a dialogue box and commented on the nature of the price like a sportscaster would? No plotting, no buy or sell signals. Just a simple box with some dialogue giving you a play by play run down of price. Its an idea, I don't know if its a good one.
A big thank you to @icedfrosty for sharing the ZombiePack2 and TickHunter indicators with the nexusfi.com community - It is very much appreciated !!
I do have one question regarding the addition of the ZombiePack2 indicators as above - Curious as to why you have added Zombie21SetupAlerts twice - One for ShowEnergyStack and then one for ShowZombieSetups & ShowHalfLifeSetups ?
On 22nd June you have "Day 2, My Ending Balance: $17,448".
Are you saying you went back down to the $10k starting balance, or lost the lot in a couple of days? And is this both of your accounts or just the one of you? Not quite clear from the "Boom" post.
You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
Boom means the account balance drops below $3k. We both started back to Day 0 with $10k starting balance last week. From now on, if one of us flattens their account only one of us will start over. Currently, I am on Day 2 while my mom is on Day 0.
Question! You both apparently are professional traders so while trading SIM, you are losing out of live trading. If you think this will be successful, which you clearly do or you wouldn’t have started the thread, why not do this with a live account?
Well, there was the sound of boOOooom....and then a crater remained in both SIM accounts...ouch!
Wow, this is the second time that our SIM accounts have gone booOOOoom. The "extreme scalping" was going so well and showing great promise...but then...poof gone. So what is missing? Is it even possible to go 20 days trading this crazy hot and hitting these extreme percentages? I am sure many of you have had similar thoughts about your own trading strategies.
We have great charts and indicators...but...is it skill?...is it more experience?...is it more chart time? Often, when your strategy is able to "work" for several days, weeks, or months and then fails...there are two main reasons...your strategy is invalid for the current market cycle(not every day/week/month moves the same and for the same reasons and will work well with your strategy)...and lack of risk controls.
When developing a trading strategy, something to discover is "when" will the strategy break-down. When will the shark show up and eat up your hard earned gains. Sometimes you may learn that there are days/weeks/months that you simply have to filter out and avoid trading. Or you may learn that you simply have to trade through them and allow your Risk Controls to give you the "runway" you need to be successful.
So our next step in the Challenge is to add Risk Controls: 2 hard rules and 1 soft rule. Hard rule #1 is that if 20% drawdown (DD) occurs from the previous NY session amount balance, you must stop trading for the rest of the NY session. Hard rule #2 is if you lose more than 20% in a day due to lack of discipline, then you must reset your SIM account. The soft rule is when you reach 10% DD you should review your previous trades and consider whether to continue trading for the remaining session. Sometimes you are just not in sync with the market and you should just go feed the ducks and come back after a while.
