optiontimer

The only set up I have come up with for the open is long 6E/EURUSD. If anyone else has anything to share, let's do it before the fact rather than after... -optiontimer

First, PB, may I suggest that you not use "risk on/risk off" as an organizing principle. It truly is nothing more than the financial media catch phrase of the day (or the last 3650 days). Risk is always on. Bull markets change, bear markets change. What works during the 2000-201x period did not work 1987-2000 and will not work 201x- 203x or whatever. We will no doubt see a period of time where the AUD and CAD trend opposite of various commodities. We will see, eventually, a commodity bull run with a USD bull. We will eventually see new all time highs on the S&P 500 while energy stocks are underperforming badly. I have seen US stocks trned higher with a higher USD and trend higher with a falling USD. Risk, brother, is always on. Don't allow yourself to think otherwise, and do not allow yourself to think that it will always look the same (unless you are interested in a position as a CNBC anchor or a FED official). For stocks, I have found that it is best to use price and volume action on a daily & weekly basis to track the accumulation and distribution by institutions within price action. You can apply this to both individual stocks as well as the general market. Stay long biased so long as price and volume action indicate accumulation and higher prices ahead. When you start to see a number of down closes on higher volume than the prior session, then suspect institutional distribution of stocks, and refrain from taking long siganls until the general market again signals it is being accumulated by institutions by a collection of days with rising closes on higher volume. I think you will find this concept covered in WIlliam O'Neil's book on CANSLIM under the chapter heading "M" for Market, i.e. general market. As for futures and foreign exchange, I have not addressed this issue here, which I raised in the post you quoted concerning the AUDUSD. I first wanted to prevent adding any more complexity to the thread and the system than we already have until I see that most participants are properly using the indicators in the limited and strict manner outlined in post #8. However, my suggestion for preventing successive whipsaws in the same market would be to take two entries. If both are stopped out, then no futher entry until price tests a clearly significant prior resistance level as support, and price then rallies to a high abopve the last reaction high, and then pulls back. Here is a daily continuation chart of the "Ozzie"dollar futures on which I try to explain how one would approach this "screening" process. As always, I have tried to keep it simple. Our system now reads as thus (I have coloredred the appended section addressing the issue of multiple stop outs in the same market): Thanks for listening, -optiontimer "...the issue here, and IMHO the mistake was in the premature exit based on trying to eliminate anxiety after the worst part of the anxiety had passed..." - SIUYA

The stop is for now one tick below the 7/21 low. If the trend becomes our friend and the bull move continues, then exit will be on a settlement below the 65 ema. Should this position still be open in five weeks, then there will be a need to roll the position into the September contract. -OT

Hi Ingot, Between traveling, for both business and pleasure, and my technical issues, I have not paid as much attention to my own trading during July as I would have liked, and the same applies to this thread as well. So I am spending some time going back to see what I missed. I found this surprising post from you, Ingot. You say here that you were fortunate to be watching in time to close your EURAUD (presumably short) position before it ran to a loss. Well, I looked at both CSIData and Interactivebrokers, and in each case, a properly placed stop loss would not have been triggered. Perhaps, if you are with a real scoundrel of a bucket shop, your stop loss would have been tripped, but if that is the case, you need either to adjust for your bucket shop's spreads, or go with a Interactivebrokers. Now, there was nothing "fortunate" about your watching. Your problem is not with entres, Ingot. Your problem is with exits. You are cutting out entirely too soon. You are afraid of any and all losses. You want only to win. It cannot be done, my friend. You must discipline yourself to stay away from the "submit order" button but for once each day. You must trade at a size where one loss will matter not at all, and where a series of fourteen or fifteen losses in a row will leave with still sufficient margin to stay in the game and recover. Yes, a string of losses can and will take its toll, pschologically and emotionally. But as long as its financial toll is minimized, you will eventually be able to see yourself clear to trade out of the drawdown by maintainiing your discipline. But that string of losses will be far less harmful to your long-term success than a never ending string of stunted profits. Here are three different charts for the EURUSD - OANDA demo account, CSIData, and Interactivebrokers. None of them show that an EURAUD short initiated when you did so would have been stopped out on 7/22 with a properly placed stop loss. Even if you would have been stopped for a loss, there was nothing "fortunate" in your early exit, because it will have done nothing but reinforce your bad habit of watching intraday action to decide on early exits. You are doing nothing more than mixing time frames. We are trading from daily charts. Base your decisions on a day's worth of price action, not a snippet from within it. Lots for you to think about this weekend, Ingot! Best to your trading, -OT

This was a very instructive post Ingot. Anyone follwoing along would do well to post as Ingot has done, because it might be the only way you will catch yourself misapplying some apsoect of the system we are using. 1) Read page one, post #8 of this thread where I lay out the system. I never place any restriction upon price in realtion to the EMA's. The EMA's determine our trade direction based upon their relationshipto one another. There will be times where a short entry is signalled with price above the 65 ema becasue the 21 ema is below the 65 ema, and vice versa for longs. 2) Again, read page one post #8. Use the indicators as they are intended. I make no mention of "W" patterns, or any other pattern. Those few lines are all you need to understand and apply. You should write them out by hand, and you should read them daily. Several times each day. You think too much. You see so much that is not there. And, when you "see" something that bothers you, such as various manifestations of the alphabet, say to yourself, "Hmmm, I wonder what OT has to say about this indicator pattern?" Then you will read your own hand written copy of the system, and you'll say to yourself, "OT doesn't mention "W" patterns. Therefore, it is not a part of this system. Therefore it is meaningless and nothing upon which to base a decision." Great post, Ingot. Please keep them coming. It will help you and I keep you to the straight and narrow. -OT

"After an hour or two?" After an hour or two? Cheese & crackers, Ingot! An hour or two? My friend, please follow PWP's example. Set your orders and go to your day job. Trust me, you are not going to outsmart the market. I've tried myself and she dealt me nothing but endless heartache and heartbreak. I have been much happier since I accepted the fact that she, like my wife, is always right. Always. And if you do not believe me, just ask your wife. Ingot, please do yourself a favor ... better yet, do me a favor: 1) Take the little quote from SIUYA that I have used as a sort of signature quote today, and write it on two post-it notes" "...the issue here, and IMHO the mistake was in the premature exit based on trying to eliminate anxiety after the worst part of the anxiety had passed..." - SIUYA 2) Stick one of those post-it notes to your trading terminal, to remind you that prematurely ejecting yourself from a trade can be as ruinous to your success as over trading or over leveraging yourself. 3) Stick the other to your forehead, so that everyone you meet will ask you about it, and you will therefore drill this lesson into your very being due to the sheer repetition of having to explain to everyone you meet why you are walking around with a post-it stuck to your forehead. I know. It sounds extreme. But this is important. I have no problem with a breakeven stop on a 200-300 pip open profit. But what you are doing is going to prevent you from achieving what I think you'd like to achieve. So remember: two post-it notes, one for your computer, one for your noggin. If you disagree, explain this to your wife. She'll agree with me, I'm sure. And we'd all appreciate it if you'd post us a picture of yourself modeling your new head gear;) You can do this, Ingot. But, as a friend of mine likes to say, "You must first humble yourself to the market." This means that you can only decide what it is you want to get out of the market. Butshe gets to decide when you'll get it. Use the system, set your stop loss, and give it 24 hours, not an hour or two. Then, adjust your stop loss if necessary, and wait another 24 hours. Let her decide on a trade by trade basis what she is willing to give you. Because just when you second guess her and get ou early, that will be the moment before she decides to give you a windfall like she gave to mrcsidney. Stick with us, Ingot, and we'll stick with you! -optiontimer

Well, mrcsidney, if you managed to sit on your hands and stay in it, you are up better than marginally, given the 18% drop in this stock's share price on Friday! Nice trade, especially if you were still short into that gap down. (I inadvertently put a 20 ema on instead of a 21 ema on this chart, though I doubt it would make any difference over time). -optiontimer "...the issue here, and IMHO the mistake was in the premature exit based on trying to eliminate anxiety after the worst part of the anxiety had passed..." - SIUYA

Someone earlier in the thread asked why this thread was in the Psycholgy section, and not in the technical analysis section. SIUYA has shown beautifully why I chose this section of the traderslaboratory forums. Ingot exits early. I would bet this is not a new problem for him. He needs to work on this. I know from my own experience that this is a very common problem. It is called "cutting your profits short," and it will cause failure if not put in check. PWP tells us that he likes this system because it takes the emotion out of trading since he only needs to look at his charts and make his decisions once each day. I would argue that this system helps you to control your emotions with respect to trading. It does not eliminate them. PWP is doing what Ingot has to do: Control your anxiety by trusting in the system and disciplioning yourself to make your decisions once each day based upon the systemand then letting the market do its thing. I had a PM thursday from a reader who asked me about a "time stop" on my 10 Yr Note trade, since it wasn't going anywhere. That would be me decising, rather than the market. The title I gave to this thread is Optiontimer’s Project: Using Trend, Momentum, & Timing with Strategy, Patience, & Discipline to Trade Well Coming up with a technical system, whether indicator based on price action based, is the easy part. The hard part is self control and self-discipline. Most never accept this, however, and instead blame the system, the indicator, the market, the FED, the politicians, the economy, etc & so on. Thank you SIUYA for yet another invaluable contribution to the welfare of our project. -optiontimer "...the issue here, and IMHO the mistake was in the premature exit based on trying to eliminate anxiety after the worst part of the anxiety had passed..." - SIUYA

Yes, it finally came unstuck today, and sitting on an open profit of about $1400. It could be gone before the pit opens on MOnday, but without patience to endure its waffling about, I wouldn't have had the chance to be along for the ride. Wheat triggered short today, but I did not take it in this account. I'll check the charts and post potential trades, if any, over the weekend. -optiontimer

Nice trading, PWP. The EURJPY short has cooperated, while the EURCAD was as whipsaw as it gets. As I said from the beginning, losses will happen. All we can do is control their size, barring unusual slippage and gaps. That is key - sitting on your hands and letting price follow the path of least resistance. I have a friend I taught this to a while back. He and I were talking tonight, and he said that he has could have all the profits he cut short by caving in to his curiosity, that they would likely be greater than his total actual stop outs. I know I still fight myself at times to stay the course. Sometimes nice profits evaporate, but that is the risk you need to take to get those Kroll-like returns. However, and though I do not want unduly to influence anyone here with respect to the stop loss ... but I will remind you all that even Kroll advised against allowing a substantial profit to turn into a loss. Allow the trade to breathe, but do not allow it so much wild life that it comes back to slit your throat. Thank you for updating us on your progress. I find reading these posts and PMs telling of success and progress very gratifying indeed. So thank you, PWP. -optiontimer

What MA's are you using? I have two different data sources, and neither show what you are showing using the 21 ema and 65 ema. -OT

Wheat is a short for tomorrow ... -optiontimer

I dropped the ball following up on Coffee, partly due to the timng during what for me was a holiday week, coupled with nearly two weeks wandering in the technological wasteland that my former computer had become. Coffee set up a sell signal noted above, which was not triggered, as it rallied to a new high. However, that new high was followed immediatley by a new sell signal. Coffee would now be short two units - first unit from approximatley 263-265, and the second unit from 240-242, though, strictly speaking, price failed to retrace back to the 21 ema. Coffee is a tough one to trade responsibly with a small account. Every penny is $375, and its 10 day ATR is a hair above 6 pennies. The narrowing range the last few days implies a big move soon. Based on our system, that move should be to the downside. But, nothing is certain, and an upside reversal cannot be ruled out. That is why we trade this system with a stop loss. Here is the back adjusted coffee chart: -optiontimer

Continues in your favor today, I see ... Good Luck! -OT

Long? Is that a typo? August? Live Cattle? Could you post your chart, because I am not seeing what you are seeing? Thank You, -OT

Would have been a short, but no fill today, and momentum positive - we now wait for the market's next move. -OT

So you are sitting on +200 pips open profit. Do you have any idea how many would-be forex traders have a collection of +200 pip losses without a single 200 pip profit to their name? Me neither, but I would bet its a lot! Nice trading, OT

The list you choose will be of paramount importance - you need to find something similar to the IBD 50, for example - think high momentum, strong trend. AAPL, NFLX, CMG have all given easy to spot entries. If you have a charting software that allows you to sort and scan, perhaps you could do a monthly scan, looking for stocks where the 21 ema > 65 ema +5%, or has an ADX >30. You want stocks that are in a strong trend, not stocks that have been going sideways where the 21 ema is only "accidentally" above the 65 ema. You might want to use the 50 SMA instead of the 65 ema. Institutional investors pay attention to where price is relative to the 50 day, and if you are trading stocks, why not look at what the investors who actually move a stock are looking at, right? You do not need a big list. Even the IBD 50 should be culled down to 10-20 of the strongest looking trends. Most of these stocks will set up on the same day, or within a few days of one another, as they will tend to move with the broad market. When the market as a whole pulls back against the trend, most of your list will as well. One last thing - I find that for stocks, it is far easier to make this work from the long side than the short side unless the general market is in a clearly establsihed bear trend, and not a mere period of sideways consolidation in an uptrend. -OT

You'll see it a lot more often now that you are looking for it. -OT

Hello All! I am on the road this week, and my internet connectivity has been spotty at best when my time has beens free, and perfect and fast when I have no time for trading, charts, and posting. Thank you for keeping the thread active and updated. The 10 year not long has been stuck in the mud, and the EURUSD is now short as price broke the 7/27 1.4339 low. There have been a number of nice forex entries this week. -OT

If your broker allows, you may want to specify that for futures other than stock indixes and currencies that your trades be executed only during regular, i.e. pit hours. Also, for bonds and notes, I usually simply add a tick or two to the stops, unless we go through another crisis. As far as your question about major trend/minor trend, we are using a fairly mechanicl systme to do what you ask: The major trend is defined, for out purposes, as the relation of the 21 ema to the 65 ema. The minor trend is defined by the short term oscillator becoming over bought against a defined down trend, e.g. see the current GBP.CHF, or oversold against a defined down trend, e.g. you bonds and notes charts. -optiontimer

I know you are, and I was simply remarking that I have never done well trying to develop my own "big pictures." -OT

You're a lot smarter than I am. Whenever I try to use my noggin' to come up with a 'view' I find myself flying blind. -OT

While my chart shows stochRSI rising higher than Barchart data, the key issue is that both catch the turn in momentum ... Using IB's data, I have a buy stop at 124'125 with a stop loss at 123'215, using a simple +/- one tick. Thanks to russell for the heads up - with restoring everything to the new computer and a weekend spent primarily in the water, I have just now sat down to finally get my "trading cap" on after my tech enforced hiatus. I cannot remember if I had mention this in a past post, so pardon me if it is redundant. I have decided to add a number of cash market forign exchange pairs to the trading mix. Since position size is easier to manage with these, and as the account I'm using is small, this should allow for more opportunities without having to assume unduly large risks. GBP.CHF looks to be a good short opportunity based upon our little strategy and its accompanying system - it was very good to me during the traderslaboratory OANDA forex trading contest. Perhaps it will remain nice to me with real cash as well - but no matter, "have stop loss, will trade," as I once read somewhere, probably here at traderslaboratory. Any updates from out there from anyone else following along? What are you trading? Doesn't matter whether it is demo dollars or real dollars - I'm just curious to see how people are doing with the information from this thread. Thank You, optiontimer

Good question, Ingot!