Tradewinds

Here is the Wikipedia article: Risk-free interest rate - Wikipedia, the free encyclopedia It states that: "Though a truly risk-free asset exists only in theory, in practice most professionals and academics use short-dated government bonds of the currency in question." So I would look at the rate on the short term government bond as the starting point for the risk-free rate.

A risk free rate will be a very small rate of return. The "market" is a Risk/Reward relationship. If you are willing to take more risk, you might get a bigger return, no guarantees. Currently Greece is paying 18% on their Bonds. Greece is considered high risk. I don't want to loan money to Greece, because I might never get my money back. What is going to motivate me to loan money to Greece? A higher rate of return. Here is a link with some info about the risk-free rate: Risk-Free Rate Of Return Definition Investopedia states that, in practice, a risk-free rate does not exist. A risk-free rate would probably be comparable to what the banks are paying on a Certificate of Deposit. But I don't really know. I know nothing about this calculation or derivatives. But I was imagining how you would use this calculation. Depending upon the output you need, and how you are going to use the information, that might determine the software that you should be using. For example, you might not need a programing language, a formula in a spreadsheet might work. Are you going to use the forward pricing calculation to scan through a list? Would it be used in a database? Is this for trading, or long term investing? How fast do you need the information? Do you have access to downloading the data you need? I'm not helping you with the calculation, but getting the right calculation is probably just a technicality. Here is an interesting link: Valuation of a Forward contract

Thank you for that info. I actually do use the NYSE Advancers and Decliners as a better and more directly correlated indicator of the emini SP 500 (ES). In the future, I may try to get data feeds that give me the raw data, and I would create my own Advancers and Decliners list. Right now I'm working with something very basic, but good enough to make very good trade decisions. Currently I process the NYSE AD data in a couple of different ways. I think of it as a couple of layers of processing, or a couple of steps, or refined down into more and more minute details. Even with all that processing, there is still the issue of interpreting what the information really means, and determining correlation between behavior and price moves. I've actually created a program that combines NYSE TICK, NYSE Up and Down Volume, and NYSE AD, that creates a very closely related correlation to the ES. The irony is, that I haven't found a particularly good use for it. Analyzing the parts separately instead of together seems to actually give better indications of what is happening. I think of it as the same concept as trying to predict price from price. Which I have found no value in, and no use for. So even if I have a conglomerate indicator that matches the ES very closely, it's the same as what I see on the screen for price. It's not something that I intuitively understood. It seemed to "make sense" that creating an indicator that matched the ES would be the perfect trading tool. But if it matches the ES, then what's the difference between that and the price on the screen? Nothing. And if you can't predict price from price, then how can you predict price from a very close match of price? I can't. Maybe I'm missing something. But I seem to have found a few things that I think are going to work very well.

Thank you for that information. Is there a way I can verify the difference between cumulative net, and the net on each bar? Is there a website that gives the total Up and Down NYSE volume for the day?

This thread is on the subject of the NYSE Up Volume minus the NYSE Down Volume compared to the SP 500 emini. I will call the NYSE Up Volume minus the NYSE Down Volume, NYSE net volume. Here is a chart of the NYSE Net Vol compared to the SP emini. The es does not follow the NYSE Net Volume on this particular day. I do however watch the NYSE Net Vol as an indication of the "pressures" being put on the price of the es. It is important to point out that the Net NYSE Volume and the ratio of NYSE Up Volume to NYSE Down Volume are two very different things. Calculating the ratio is not "straight forward". The reason has to do with situations where the net volume oscillates back and forth between negative and positive values. In those situations, special math is required to create a ratio that displays an accurate and meaningful chart line. Displayed is a graphic comparing the Net NYSE volume to the /ES. They are quite different. The Net NYSE volume is very steady and up-trending all day long, but the /ES is not. I only point this out as an observation, not to imply anything. Because there is often no direct and consistent relationship between the Net NYSE Volume and the /ES, I put most of my attention to other indicators. But, I still consider it very important to "keep an eye on". The Net NYSE Volume will often move very hard in a direction before the price of the /ES moves substantially. It's not a lot of forewarning, but I look for all the good information I can get.

The research that you have done is almost immaterial if the recent drop in price is a concern to you. If you are making a long term value investment, and are going to hold the stock for years, then price moves like these are meaningless. If you don't plan on holding the stock for years as a long term value investor, then it seems to make sense to base your decisions on what moves the price short term. It's difficult to predict how news will move the price short term, so many people just avoid being in the market during news releases, and wait to see what is going to happen. You need to stay informed about what the general economic outlook is. If you are pursuing a "Long Only" strategy in a retirement account, and the economic news continues to be bad, it may be difficult to trade.

Sprint is a NYSE stock: NYSE, New York Stock Exchange > Listings > Listings Directory > NYSE Sprint is part of the communications sector of stocks. Many stocks trade similarly to the market they are in. If you chart the SPY or the /ES, you'll see that the chart of those and the chart of Sprint is similar. The market reacts to general news, and economic trends. When there is a lack of news specific to Sprint, it may follow the market it is in, at least to some degree. So if the NYSE 500 is trending down in general, Sprint might be trending down. Look at a one month, daily chart of the SPY and a one month daily chart of Sprint.

Being prepared to take decisive and timely action is key to being a successful trader. The inputs to making a decision must be quickly recognized in order to formulate your action plan. Defining possible scenarios, and training yourself to recognize market conditions is the first step in making the decision. Without a correct and complete assessment of the current conditions, and the possible outcomes, a rational decision can not be made. I don't like being "caught by surprise". This article will attempt to define basic and generic trading situations and then list the questions that must be asked in order to make a good decision. I am calling this a "Decision Cycle", and it is similar to a decision making flow chart. I'm trying to create a guide that is precise and well defined. I can then memorize the "Decision Cycles" and train my mind to process market conditions in a very structured and unbiased way. The goal is to create a very mechanical and "robotic" decision making system, but hopefully not at the expense of common sense. For the decision system to avoid serious flaws, it must not have an incomplete list of possible trading situations. Included is a list of possible generic trading situations we might all find ourselves in. In the past, I've created decision making documents that focused too much on details specific to my indicators and market conditions. This created an overly complicated and lengthy document that I ended up never using. When I changed the focus to something more generic and basic, I started to realize that there are only a few possible trading scenarios that I can get myself into, like, . . . "Did I make a good entry or not?" It's a simple and straight forward question. Nothing complicated. The analysis specific to my indicators can be slightly more complicated, but if I start with a simple question, then the decision making is more straight forward. But before defining the possible trading situations, I'd like to just list what I'm calling the "Decision Cycle". 1. Establish current price direction and trend. 2. Establish the current status of your indicators. 3. Enter trade on signal 4. Determine which trading situation you are in, from the list of possible trading scenarios. 5. Follow the guidelines for that trading situation, and then branch and cycle through the decision making process. 6. Once critical and high priority decisions have been made, immediately re-evaluate the current trend and indicator status. Decide ahead of time what the possible next scenarios might be, and what possible combinations of different signals might mean. 7. Once a new trade signal happens and/or the trade is exited, re-establish what the current price direction, price trend, and indicator status is. Match the current market conditions and trade situation to your defined trading scenarios and follow the plan COMPONENTS OF DECISION CYCLES ENTRY EXIT RE-ENTRY - IMMEDIATE RE-ENTRY ON RETRACEMENT REVERSAL GOOD ENTRY or GOOD RE-ENTRY BAD ENTRY or BAD RE-ENTRY GOOD EXIT VIABLE, BUT LESS THAN OPTIMAL ENTRY PROFITABLE, BUT LESS THAN OPTIMAL EXIT BAD EXIT TWO BAD EXITS IN A ROW THREE BAD EXITS IN A ROW STATE OF MIND CHECK RESET I don't think that the above entries and exit's need to be defined. They are self-explanatory. But I do want to note something about the "BAD EXIT" BAD EXIT - I'm not defining a "Bad Exit" as a loss. You can't have 100% winning trades. So not every loss is a "Bad Exit", . . . it depends. A loss on a trade could have been an excellent trading decision. A "Bad Exit" is when you let the loss run more than you should have. And letting the loss run more than you should have is about making a poor decision. And making a decision in a bad situation is based upon how negative results affect you emotionally, and then how you deal with the discomfort. So a Bad Exit is defined as much by how well or poorly you dealt with negative results and discomfort, as it has to do with the amount of the loss. In fact, the amount of the loss is almost immaterial if it is within an allowable range of your strategy, and your strategy makes money. Definitions: Confirmation - An indication that the price is moving in the direction of your trade. Reversal - exit one trade and immediately re-enter another trade in the opposite direction. DECISION CYCLES ENTRY Enter on Signal Watch for Confirmation Confirmation happens Manage trade - Switch to "GOOD ENTRY" cycle [*]Confirmation does NOT happens Exit or reverse immediately Switch to "BAD ENTRY" cycle [*]EXIT Before the exit happens, determine whether the next exit could be a reversal point. Exit or Reverse on signal After exit or reversal determine what the trend status is If the exit was a reversal, then switch to REVERSAL cycle [*]RE-ENTRY Weakness in trend and/or Retracement possible Determine how big the retracement could possibly be, and wait for entry signal [*]Watch for Confirmation Manage trade - Switch to "EXIT" cycle [*]Confirmation does NOT happens Switch to "BAD ENTRY" cycle [*]REVERSAL Look for confirmation of trend reversal Trend reversal confirmed Switch to GOOD ENTRY cycle No reversal confirmation Immediately exit or reverse back in original direction Switch to BAD ENTRY cycle [*]GOOD ENTRY Take the time to re-evaluate all your indicators, and the long and short price trend Evaluate what the next phase of the trend could be, retracement, reversal, conflicted or consolidation. Switch over to the exit cycle [*]BAD ENTRY or BAD RE-ENTRY Look for signs of a conflicted market or price consolidation. Price consolidation will mean a choppy, and sideways price range that can be confusing and difficult to trade. Evaluate the longer trend. A conflicted market creates seemingly undefined trends, with no real direction and no discernible reason for price behavior. It may be a period of indecision. Check your state of mind, and ability to deal with the confusion. Evaluate long trend Long trend still the same Switch to VIABLE, BUT LESS THAN OPTIMAL ENTRY cycle [*]Long trend has failed or shown a reversal signal Reverse [*]GOOD EXIT Evaluate short and long trend status Trend still valid Switch to RE-ENTRY cycle [*]PROFITABLE, BUT LESS THAN OPTIMAL EXIT The assumption here is that you either made a mistake and mis-read market conditions, or the price overshot a normally legitimate exit signal. I often see situations where the price continues strongly, but then retraces. If you chase the price, you can get caught entering an order exactly at the wrong point. If you wait to long, you can miss the opportunity. But once you get into the mentality of chasing price and feeling bad that you missed an opportunity, you can start trading the wrong part of the price cycle. If price overshot the exit signal, it could mean that there will be a substantial retracement in the trend. [*]VIABLE, BUT LESS THAN OPTIMAL ENTRY Determine how big the retracement (drawdown) could possibly be, and whether exiting and re-entering would in the original trend direction would minimize loss and maximize profit. If you decide to stay in the trade and take the draw down before the potential change in the direction of your trade, make sure that support or resistance (depending upon a long or short trade) for the retracement is not broken. You must have criteria for how much retracement is valid before it becomes a trend reversal. Decide ahead of time what your action plan is for another, second price move against your trade. If you can not come up with an action plan based on signals, and the signals meeting a certain criteria, then exit the trade and switch to STATE OF MIND check decision cycle. Watch for confirmation of the trend moving in your favor, if that happens, switch to the EXIT cycle. Trade move against you to the point where it's obvious that it was a bad entry. Count this as two bad entries. Switch to TWO BAD EXITS. [*]BAD EXIT RESET [*]TWO or THREE BAD EXITS IN A ROW Are you in the wrong State of Mind to be making good trading decisions? Switch to the RESET decision cycle. [*]RESET Start from the very beginning of the process. Re-evaluate the short and long term status and trends of price and all indicators. Wait for a viable entry setup. [*]STATE OF MIND CHECK Can you recover quickly from the bad state of mind? If not, consider exiting existing trades, and take time to recover. Reset

First of all, I'm not calling myself a full-time trader. I'm a "wanna-be" trader, who is working "full-time" trying to get to the point of being a real trader. Currently, I go to bed way to late, and get up to late. So I'm not really physically ready to trade in the short time between when I wake up and the market opens. When I get up late, my mind and body hasn't had enough time to "get up to speed" before the market opens. So I need to get up earlier. Maybe do some stair climbing exercise to get my circulation going and get some oxygen to the brain before I get on the computer. I need to prepare for trading like it was a 100 yard dash. Spend hours before hand making sure I am physically and mentally prepared before I get into the starting blocks. Trade hard for an hour or 2 at the most, and then eat lunch. Review my trades after lunch, and try to retrain my mind to deal with any mistakes I made. Do household, financial and property chores in the afternoon. In the evening, work on my trading programs, and analyze the viability of my programs and the signals they give. If I start making tons of money trading, then get a real life.

Do you have a way to account for scheduled news release times? There can be different mixtures of amounts and times of news releases, and their importance. How are you going to verify these cycle periods? If you can verify the cycle periods with data, then why not just use the data?

es June9 11 Mid Morning Peak cycle happens, but reversal down fails. Continue up. Price in in a longer cycle. Rule: Weak momentum without a peak signal, (E.g. no retracement, no lower low against the trend, no stronger momentum against the price) expect price retracement, but no reversal.

es June 9 011 open Rules: Watch for price and momentum at odds, moving in opposite directions. Normally I look for price retracement against the trend before a reversal. There was a higher high at 9:36am. That's not what I think of as a retracement, but it does show strength against the trend. The failure of price to go lower at 9:39 could have been a late indication of price reversing up.

es mid morning June 8, 2011 Price moving down strongly from 9:42 to 9:49, retraces at 9:53, then starting looking for the bottom. First sign of momentum slowing is at 9:58 The retracement at 9:53 was very sharp and quick. Often the retracement is longer and more drawn out.

es June 8, 2011 open es peaks at 9:42 The retracement, then subsequent newer high of the price, and the momentum slowing on my indicators give a high probability peak signal at 9:42

60 minutes ran a segment on robotic trading. How Speed Traders Are Changing Wall Street - 60 Minutes - CBS News

Here is a Wall Street Journal article about high frequency trading: High Frequency Trading: What You Missed on ’60 Minutes’ - Deal Journal - WSJ

es June 7, 2011 open The Net volume and the AD are out of sync after the open. There is a "fight" going on between volume and the AD. These opposing forces cause large price swings and make it difficult to discern a dominant trend. At 9:52 am the AD and Vol begin to sync up and trend up together. Price follows in a well defined trend until 10:18 am

The broker I use has a platform that allows a stop to be triggered at one price, and executed at another price. That's actually the reason I switched to this broker. I changed my trading style, and don't use that option, but if I were doing long term value investing I would probably use that option all the time. There are separate settings for the trigger price and the sell price. It's more complicated, and more difficult to implement, and more time consuming to configure, and if it is a limit order, it still doesn't guarantee you a fill.

I know what you are saying, but I don't know the answer to your question. It's not just the Dow and the Dow e-mini that are closely correlated. Many stocks track the index they are in very closely. So the question is, are the stocks tracking the index, or is the index tracking the market, or are they both tracking each other, and how is it that they are so close? I don't know. I have no idea. But it's something I have wondered about myself.

Depth of Market. Depth of Market Definition I believe that the Depth of Market and a Trading Ladder are two different things. But, the Depth of Market can be shown on a Trading Ladder. I make this point because I found the use the term "Trading DOM", and "Trading Ladder" confusing, and didn't really understand what the difference was. Most trading ladders probably have Depth of Market built into them, but Depth of Market isn't the Trading Ladder. And Depth of Market doesn't have to be shown on a trading ladder. It could be shown by itself in a table. That's my understanding, somebody please correct me if I'm wrong.

What time frame are you trading? If your price target was hit, and you only got a partial fill, I would immediately exit the other contracts at a lower profit. The issue is about whether you believe in the trade or not, and why. Believing in the trade is not about hope, or a feeling, . . . . is there a real reason? Can you explain in specific terms why you still believe in the trade? If the target was hit, and you still believe in the trade, then why not just exit, then re-enter at a better price? If you are not willing to do that, then I do not believe that you believe in the trade. If you really, really believe that your target will be hit, and price retraces against you, then you should lock in profit, then re-enter at a better price. Why would you not do that? That is what seems rational and logical to me. It doesn't seem logical to intentionally pass up an opportunity to lock in profit, and then get back in at a better price.

You are on the normal journey. If you were not going through this, something would be wrong. I would be amazed and absolutely stunned, if I heard of a trader who hadn't experienced what you are experiencing. Don't get me wrong, I'm not trying to encourage you to keep trading, . . . . and I'm not trying to discourage you. I really don't like it when people encourage other traders to just keep on going. Maybe you should, maybe you shouldn't. I really don't know. Do you have a very, very well defined exit signal? We all spend time trying to find good entries, but then we need to learn how to manage the trade. You must have an ABSOLUTE EXIT POINT. Where you WILL EXIT! Period. No thinking. You know what to do, and YOU DO IT. No worry, no fear, just execute, and know that it's the right decision. If you are not at that point, then there is no point in trading live. If a trade is entered, and then there is doubt about what to do after that, then you can not mange the trade well. You need very well defined profit signals. Note that I didn't state profit "target". I don't have profit targets. Whatever the market gives me, I take it. Period. You need profit taking signals, and signals that the trade is not doing what you thought it was going to do. (Note that I didn't state: Stop Losses. I don't have stop losses. If the trade isn't doing what I thought it would do, I exit. Period. Some people would call that a mental stop loss.) You must have signals and rules for those two situations. If you don't have signals and rules for those two situations, then you have no idea what to do after you have entered the trade. Hope, pray, sweat, swear, groan, fist pump when you make a profit, etc. If your reaction to a loss is anything more than just understanding that it's a cold, calculated decision, then there might not be real trust in the strategy.

Do a Google search on: thinkScript yahoo thinkScript yahoo - Google Search Check out the yahoo group for thinkScript

On another side note, here is an interesting show about fractals: NOVA | Hunting the Hidden Dimension | PBS or NOVA | Hunting the Hidden Dimension

Here is a link on that site that states that he developed the indicator. A New Technical Analysis Indicator | Price Action Lab Blog Have you contacted the author, and asked if he shares it openly?