Roger Felton

Kudos to Richard Cox for his informative post on trend lines. I used trend lines way back when and found them useful, albeit somewhat subjective. I'd like to add my 2 cents to the topic in hopes some find the information useful. I found using trend lines alone to be sort of like playing soccer on one leg. It was only when I began an extensive study of trend channels that things started coming together and subjectivity virtually vanished. There was one other missing piece of the puzzle that I'll cover in a minute. But first, let's look at Richard's two chart examples. In the downtrend chart (A), notice I have turned Richard's trend line into a trend channel by simply doing a parallel transport of the trend line to the intervening highs. As Richard aptly pointed out, don't look for "to the tick" perfection. If Price goes to, through (a few ticks), or close to a trend channel line, call it good. No matter how many "connections" you get on the highs or on the lows, the trend channel does not confirm unless you get at least two highs and two lows...and they don't have to be a consecutive low, high, low, high sequence. In Example (A), we see the two main things I look for...smooth volatility up and down with Price bouncing off the trend channel lines like a pin ball machine. Each bounce on an opposing color bar, can produce a new entry going counter-trend as well as with trend. The other thing I love to see is Price breaking a channel line...either top or bottom, it doesn't matter. In a down trend, if Price breaks the bottom (support) line, enter on the first bearish bar that forms completely outside the line. This means the trend is poised for a strong push to the downside and you'll often get a super entry price. In Example (B), the uptrend, I have taken the liberty of constructing Richard's trend line into a trend channel...two of them actually as this is an example of a trend channel that jumped a level and then settled back down into the older channel's support line. The larger trend channel confirmed since it produced at least two tops and two bottoms that "kissed" the supply and support channel lines. So, in addition to Richard's entry arrow examples, we now get a lot more trade entries when we use a channel instead of a single line to define our trend. Remember, you are looking for channel break outs in either direction and take the first correct color bar forming outside of the channel line. One of the things that bugged he holy Hades out of me was the inherent massive noise that my time-based, tick, range, volume, etc. charts would produce...often causing misjudgments as to actual Price swing highs and lows. I looked at Linebreak charts and found them to be an improvement but still not what I wanted. I wanted a bar type that would naturally filter the majority of market noise and give me clear, clean Price movement and enable me to identify good strong trend channel formations. About 3 years ago I began to study Renko bars. At that time they weren't all that I wanted but I could see the potential. After tweaking the code a bit, I got what I wanted and I had trend channels I could easily identify and trust. I had a dozen of my students independently draw the trend lines for an entire day on the same instrument and timeframe and they were all identical to each other and to mine. Subjectivity was toast. After doing hundreds of webinar presentations and free training sessions, I am now seeing more and more traders, platform providers, system and education providers making the switch to this amazing bar type. Don't buy it, they are now all over the Internet and free. With this in mind, now take a look at Example © which is the bar type I now use exclusively and a perfect choice for drawing trend channels. This bar is a 14,7 Renko which means the colored portion of the bar is 14 ticks in size and the "step" size is 7 ticks. That means that the price difference between the close of one bar to the close of the next of the same color is 7 ticks. Any set of number choices can be used from a 2,1 to a 80,40 or more (imagine making 40 ticks and only in for one bar!). When choosing, I look for the best, smoothest cycling volatility and these settings usually hold for several days, weeks or even months. Each time the market hits the support or supply lines of the channel, it presents a trade opportunity. It's beyond the scope of this post to try to teach how to filter trade opportunities, but it's a very worthwhile skill to learn especially when going counter trend. Notice there were two channel breakouts in this example and both worked quite well. Both occurred in the downtrend...one on the first down arrow and one on the final down arrow. Here in Crude Oil (CL), each tick is worth $10 and there are 10 ticks to the point. So, trading just 2 contracts and taking just two bars here, you could bag $280 before comm. and often in just a few minutes since bounces off of channel lines are known for launching brisk market moves. I personally trade futures exclusively since, for me, they offer the highest potential for profit, with the least amount of risk in the shortest period of time overall. However, if you find that you are meeting your goals consistently in other venues such as the Forex, then by all means stick with it. This technique works equally well. Hope this was of benefit to some of you.

One of the things I learned many years ago is, if a trader is very successful trading one way and another trader is successful trading a totally different technique, then what's to disagree on? I stated that trading Divergences using volume to be "useless for me". Every trader must find their own path to a universal destination called Success. I gave volume a good 3 year try. Divergence would work in extremely low volume but not high, Then it would mostly work in high volume and not in low the next day. Volume exhaustion yielded nothing I could use. Volume Profile gave nothing better than a 50/50 win/loss ratio...no better than flipping a quarter. Volume Spread Analysis would say price CANNOT go higher...and it would stay bullish all day long. I could never get any consistent dependable profitable info from anything associated with volume beyond 50/50. So, for me it didn't help. and I studied from the teachings of the top volume "experts" in the industry. So, I took another route and the results were far beyond my expectations. You found your exceptional results using volume to enhance divergence signals and I couldn't be more pleased for you. If they meet or exceed their goals consistently day after day, which one is wrong? Perhaps Enigmatics can provide the answer that has eluded me for so many years.

Now that's a very good basic explanation of Divergences as I've seen. Good stuff, Richard. Divergence is a topic dear to my heart as I recognized it's potential power nearly 20 years ago. When a trend, up or down, reversed into an extended trend in the opposite direction, I could almost always trace the reversal to have "launched" on the trigger bar of a Basic or Extended Divergence signal. But why did so many of the others that occurred prior to the reversal not work? Why did the trend ignore them like they were nerf balls? I studied Divergences for many years searching for the answer. In a nutshell, it comes down to Form and Market Condition. This will filter out about 85% of the divergence duds. The final element is found in filters. Filtering divergences with Volume, Momentum, Market Profile, Elliott Wave, etc. I found to be useless. Hidden Divergence was fairly simple and straightfroward. But counter-trend divergences were a lot trickier and took several years of trial and error study to nail. In the end, I had to create two important filters that also work well with several of my other signals that are not divergence based. One, for instance, monitors several key elements occurring on other bar types and timeframes and instantly places the "crunched" data on the chart I'm trading on so my eyes never have to leave my trading chart and I don't get brain strain trying to keep track of dozens of things are once. So the point I make is that Divergences can be extremely powerful (and profitable) events. When a market takes off, by golly there it is! But, like everything else in trading, it has it's drawbacks and those divergence head fakes can kill ya. Richard clearly showed the What and the Why of Divergence. Master the When and How and you have a powerful weapon in your trading arsenal that will serve you well.:missy:

Hello slick! The CL is one of my favorite markets to trade in addition to Gold and the Russell. You can see some of my CL signals from last Friday on my thread called, "What Works For You?" You picked a great market discuss.

I think it all depends on what you were raised on. Personally, I think the trader that begins their career on Futures will ultimately do better quicker but that's dependent on a number of factors. In other words, if they are trading by the phases of the moon and when Voyager 1 aligns with Pluto, they might find success a bit more elusive. Let's consider some other "vehicles": Options - Learning how to trade is always more difficult when you have to learn a new language first. Puts and Calls and Naked Leaps and Covered Dishes and Vertical Spreads and Iron Condors and Cardboard Butterflies...geez. It goes on and on. Plus you have this ticking bomb in your hand the whole time. No thanks, too complicated and the deck is stacked against me. Forex - If you had your choice of trading a regulated market where you could enter within one tick of where you wanted (on avg.) and be making money from the very first tick towards profit and you could move your stop and target(s) at will anywhere anytime OR start out deep in the hole (best I ever got in Forex was -8 pips to BE) and when you tried to move a stop or target you usually got an error message plus your broker could legally run a bucket shop on your trades if he chose to do so, which market would you choose? Equities - Hey, is anybody making any money in stocks these days? This is a market that ties up a lot of capital (1 to 1 leverage), is basically one directional and so slow a snail could beat it to goal line and still have time to catch a movie. Companies cook their books and the big boys get the reports long before you do. Terrific game if you've got about 20+ years of experience, are already rich and have access to insider trading info (which is illegal, you know), but that's how they got rich. You might also appreciate the excitement of waiting years to get ahead on your portfolio and then have everything come crashing down on your head taking you under water for the next decade. What a rush. Futures - You Buy and You Sell. That's about it. Small account required, no extensive special lingo to learn, great leverage, liquidity and smooth volatility in many markets to choose from. Is trading Futures easy? Heck no...but it's simple and that really helps. It's also offers the fairest, most level playing field. Learn a good system, stick to your rules, practice like a madman and never never give up.

Vince, I empathize with ya, my friend. You spoke your piece and you did it very well. This guy will never stop with the intimidation and bullying as long as you respond back to his vile posts. They just get worse and worse. I can tell you're understandably a bit frustrated and perhaps angry but that's what he wants. It's just what he does...attack people he doesn't know and pick a fight. Be prepared. He will respond back to your post telling you what a whiner you are. DO NOT RESPOND BACK. Just move on and your life will be infinitely better off. Do as I say, not how I stupidly did...LOL

Perhaps he was intelligent enough to faithfully follow the TT system but not smart enough to figure out what to do when it bombed.

That, my friends, is one of the best, clearest, most well thought out responses I've seen in a while. Learned some things about SIUYA I didn't know as well. Very good job and spot on.

I think the thong might be for you if it doesn't bind or chafe. I usually wear jeans this chilly time of the year...:haha: As for the DOM, piece of cake. If you can pull the lever on a slot machine and count the cherries, oranges, 7's and JACKPOT symbols and the number of times each spins around before finally stopping, you'll do well with the DOM...except it never stops. Seeing the figures change takes about a second. Learning what they mean might take you a couple of years, maybe. Applying that to trying to figure out what's going on in the brains of several "professionals" simultaneously will take longer...a lot longer. Some people like to make trading into a complicated psychological "chess game" while others just look for strong and weak times to enter the market. There are hundreds of ways to trade...and a thousand ways to lose.

Thanks Gekko. You're a good knowledgable trader and friend and I appreciate you taking the time to explain the DOM and how it works for you. Every trader has to find their own path to success and I am very pleased at your accomplishment. No trader should ever change what's working well for them.

You should not get upset just because what you do doesn't appeal to someone else. How I trade works better for me than I ever thought possible when I first began trading. I don't have to watch a bunch of constantly changing numbers on the ladder and try to figure out what the big boys are up to...all that subjective analysis stuff. I just find strong market entry points, get in, take my profit and go on to to the next trade. Why would I want to change that? What you do works terrific for you and you'd be nuts to go do something else. So let's just congratulate each other, keep making money and stay friends, ok.

That sounds great but just too complicated for me. This is assuming that there are a bunch of ignorant traders trying to make a buck and there is this one nasty demon dude out to snooker them. It just doesn't happen that way...at least not in the markets I trade. I can trade 5 to 10 contracts and take 10 to 30 ticks (avg) per trade and, even with the occasional loser, I can make all the profit I want and my exposure in the market is minimal. I'm done trading usually before breakfast. You have a terrific system for you just as I do for me. Keep up the great trading my friend.

Thanks Gekko but that didn't help any. I don't trade tick or time based charts but even if I did, I could still tell exactly where any markets current price was at any moment in time...and where it was in the past, as well. How do you backtest on a DOM? How do you see how volatile a market has been for the last two hours or last two years for that matter on a DOM? How many contracts have traded from any point in my trade doesn't help me one bit. I might be 8 ticks into profit and 150 contracts are traded and I go to 10 ticks above BE. Another 150 contracts are traded and price goes to 3 ticks below BE. To me, monitoring that is just a silly exercise that does nothing to help me stay in a trade or know to get out. Yes, I am a teacher but I wanted to give you the benefit of a doubt as to whether a DOM would help me. Maybe I missed something. I have studied them in great depth and, to me, they are just a distraction. But, for you they help you make the big bucks and reach your goals ( I assume). That's great. Volume, T&S, DOM's, etc. just do nothing for me but I appreciate the info.

Well I've sure been known to miss the point from time to time. I probably did again upon reading your take on charts producing data that is older than that on a DOM. Really? I've watched them side by side for years and never noticed any difference whatsoever. What causes the chart data to be "in the past" versus DOM data? This is not to argue the point, but to understand it. Much of what I learned about trading was from asking questions. Thanks

Anyone who can profitably trade by watching the order flow on a DOM is a better trader than I'll ever be. All those flashing numbers changing 15 times a nanosecond would give me the DT's by the end of the day.