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phantom
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Everything posted by phantom
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I usually use a stop order 1 tick outside the signal bar, hammer or doji, with a risk stop on the other side of the signal bar. In the event that the market moves too quickly to get the stop placed prior to the breakout, I'll enter at the market with the same risk stop placement.
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Charts work with indicators if one knows how to apply the indicators MACD: Moving Average Convergence-Divergence: Use this indicator to pinpoint reversals on failed tests of previous swing points. Also use this indicator on 20 sma tests to see if the test is "normal" for the current trend-the fast line on the MACD should not penetrate the slow line during the test. RSI: Relative Strength Index" Set this at a value of 6. When overbought (touching the 75% line) or oversold (touching the 25% line) look for reversals in the market when the RSI crosses over to head for the other side (OB or OS line) Bollinger Band: The underlying premise is this: a 20 sma of price action channeled by a 2 SD band. 2 SDs are supposed to contain price action around 96% of the time? So, how does this band give any advantage to the novice trader? Look for PINCHES in the band; places where volatility has subsided to historically low values. Then look for breakouts of the pinch zones with large range bars, especially following narrow, tightly ranged bars. These volatility breakout bars should be 2 to 3 times the average range of the range-bound bars. And the breakouts should be congruent with the overall trend (i.e. the 240 minute chart 20 sma determines the immediate trend?) Reminder: the smallest time frames I look at are 10 & 15 minutes. Smaller time frames produce all kinds of problems. Practice makes perfect! Luv, Phantom
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Trading the Storm - Methods for the Struggling Trader
phantom replied to Maelstrom's topic in Technical Analysis
Thought I'd add some light to your statement... Charts will work with indicators if one knows how to read the indicators MACD: Moving Average Convergence-Divergence: Use this indicator to pinpoint reversals on failed tests of previous swing points. Also use this indicator on 20 sma tests to see if the test is "normal" for the current trend-the fast line on the MACD should not penetrate the slow line during the test. RSI: Relative Strength Index" Set this at a value of 6. When overbought (touching the 75% line) or oversold (touching the 25% line) look for reversals in the market when the RSI crosses over to head for the other side (OB or OS line) ADX: Average Directional Index: A value of 30 or greater is supposed to indicate strength of trend. I never touch the stuff...I prefer to see failed tests of the 20 sma on the current swing as my indicator of TREND STRENGTH. At a minimum, the BB should not be penetrated on the counter-trend side of the band. Bollinger Band: In the hands of a real trading pro, this band is quite deadly. The underlying premise is this: a 20 sma of price action channeled by a 2 SD band. 2 SDs are supposed to contain price action around 96% of the time? So, how does this band give any advantage to the novice trader? Look for PINCHES in the band; places where volatility has subsided to historically low values. Then look for breakouts of the pinch zones with large range bars, especially following narrow, tightly ranged bars. These volatility breakout bars should be 2 to 3 times the average range of the range-bound bars. And the breakouts should be congruent with the overall trend (i.e. the 240 minute chart 20 sma determines the immediate trend?) Practice makes perfect! Luv, Phantom -
Hi Ingot, PM me and I'll provide an adequate reply to your questions... Luv, Phantom
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Hi Pat, Been on holiday w/o internet access, then chased from my home due to the LAS CONCHAS fire, so pardon my delays in responding... I look for markets that provide opportunities for entries where I can get in with an initial risk of somewhere around $100-$150 per car, and markets that are not too prone to whiplash. Corn, beans, euro currency are my personal favorites, but there are others. I avoid stock indicies like the plague. I personally think that most traders spread themselves WAY too thin by monitoring multiple markets. If one cannot master a single method of trading in one market, how can one expect to trade multiple markets effectively? I will get deeper into price action in this thread when I can return to my home. Luv, Phantom
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Here we go..., Now I know that some of you rookies out there will not put up the money for this book. I've personally heard all the excuses out there why you'll wait just a little bit longer before you put out this kind of money for a book? You can do it the easy way or you can do it the hard way. It's up to you. Back in the mid 1990's I stumbled across a book cowritten by Raschke (one of Schwager's "new market wizards") along with Laurence Conners entitled Street Smarts. I "cook booked" a setup clearly explained in the book called "Turtle Soup Plus One" in the pork bellies market shortly after I bought the book. Long story short and after a couple of limit down days, I exited the trade with $9,930 profit on a 3 cars. I won't even go into how much MORE money I've made off the info in that gem. Now you can read Prechter or Murphy if you want, but if you want to stand a modicum of a chance of surviving as a rookie... Spend the $175 or whatever its come down to and get your hands on Street Smarts before its too late. Luv, Phantom p.s. I hand you this info on a silver platter only because you asked...
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So true... Why risk $150 to make $150 when you can risk $150 to make $600? $800? $3000??? Reward to risk, baby! Luv, Phantom
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I use the ninja trader platform with a Chicago-based brokerage. Luv, Phantom
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IMHO, trading is all about reward to risk. I generally risk around $150 per contract on my breakouts, and the reward varies, but it is not uncommon to achieve 6,7,8 times the $150 risked as a reward for my patience and risk taken. I found it extremely difficult to get anywhere near the RTR ratios when trading the ES and NQ contracts. There is plenty of liquidity in the currency and grain contracts, and I'm not too concerned with the depth of market. Usually, when its time for the market to break out from one of my setups, the market does not linger at my entry price zone long enough for the scalpers to come hunting my stops. That was never the case in the equities markets. Hope this helps. Luv, Phantom
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Here's a breakout in July Corn this week. The red arrow points to the test > hammer (price rejection away from the side ways channel) > breakout that led to a massive 60 cent move over the next couple of days. (That's $3,000 profit per contract traded) Here's my question: Why are you still trading the e-mini sp 500??? Remember, most of the stuff you read on this website will take you right to the poorhouse. Luv, Phantom
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I can only assume by indicators that you mean 20 period sma (part of the Bollinger band) and MACD? Although I've never used Tradestation, I'm sure the answer is yes, because these are basic to every charting package out there. Luv, Phantom
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Warning: this setup was not backtested on 300 years of data before I made money with it, so it may not be for you! Let's consider the following chart of Friday's euro currency price action: This is a 10 minute chart of the June Euro. Friday morning opened to a huge overnight move in the euro. This kind of overnight action is even better than the release of the employment numbers IMO because not only is there going to be a long-covering frenzy when the banks open at 8 am MDT, we don't have to guess which direction we are looking to trade this morning! The 20 period moving average is my best friend in the financial world. I use it to determine the current trend on my 10-15-20 minute charts (yes, I look at all three time frames continuously during the day, because sometimes I'll see price rejection on one when the other two are not clearly showing it (one of the "subtleties" of price action). The 0730 bar, indicated by the black arrow, is the first full bar underneath the 20 sma following the market's consolidation/price test of some previous price level. As we already discussed earlier, the doji bar at 07:30 is a secondary consolidation following the breakout of the primary a-b-c consolidation that occurred from just prior to 6 am until its culmination at around 07:20. Price action indicates that the market broke the ascending pennant (a-b-c consolidation), consolidated again (doji), broke down below the doji low, retested some point within the doji, and then plummeted. I think this was about a 90 point move. I sell one tic below the low of the doji with a protective stop one tic above the doji. I risked 13 tics on this trade to make 80-something tics. Not a bad reward for the risk I assumed. The afternoon trade is one that I did not trade (I was busy with this thread-see how easy it is to be distracted from a trading routine, especially when you've been doing it a long time; it becomes harder and harder to stay focused). The psychology behind the setup is the same. This breakout moved over 50 points. Anytime a big report is released that rocks the market or a big overnight breakout of a multiday trading range occurs that skyrockets volatility, I'm on alert status for this setup. Folks, I wrote this thread to help you understand price action. Once you truly understand price action, you won't have to rely on a computer simulation to tell you your trades are okay to take with real money. This advice is coming from a real trader, not some institutional bean-counter. Hope this helps. Luv, Phantom
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My friend, its not that I never backtested anything in the past. My brother is a high level government programmer and believe me when I say that we've run backtests on an array of system ideas, but when I traded these ideas I could never get the real trades to produce like the simulated results. Maybe coding errors, maybe poor execution, maybe whatever... There is a reason the CFTC proclaims "past performance is no guarantee of future results," because they know that system vendors abound with all kinds of optimized this and that, but when traded in real time with real money, these systems just don't work. My personal experience attests to that fact. So I've become more like yourself; I observe market dynamics, then do visual/eyeball-type analysis, and then place bets iaw my observations. Works for me. Luv, Phantom
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Hey buddy, Which professional hasn't been in these shoes before? My advice to help you grow a pair is to keep trading your actual account without size, but start trading size on a $100,000 sim account. If your system has a real edge, you should be able to make the sim account grow. This activity should help you overcome your subconscious restrictions at some point... Only problem is your trade management discipline. This is what really separates the men from the boys in trading. My suggestion to you is that as soon as the market gets clear of your entry number by just a few tics, move your stops to breakeven, especially when trading size. YOU MUST LEARN THE FINE ART OF SCRATCHING TRADES TO BECOME A TRUE PRO. I leave the rest of the trailing strategy for some other time. Hope you make a ton of money, then buy me a beer! Luv, Phantom
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Agreed. Moreover, if everyone learned to trade the currencies (easily the best trending markets on the planet, and way easier to trade), the exchange could just retire the sacred cow altogether... Luv, Phantom
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Didn't Mark Twain have a real knack for hitting the nail square on the head? I believe Mr Twain also said something to the effect of "There's lies, damn lies and statistics." That's why I never had much faith in backtesting "systems." I test my research with real money, not computer simulations. Luv, Phantom
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The Phantom is back with reservations and restrictions...
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You're already popping off and I wasn't even talking to you.
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I hear ya BlowFish, just that I have issues with obstinance (in adults; I expect it from children). Like I said before, I'm not used to the open forum atmosphere; I didn't expect that generosity would be accepted with folded arms. Maybe I am better off publishing something and selling it because then these guys would be highlighting and hanging on every sentence in the book instead of criticizing the author. Usually, people appreciate freebies, especially when the info could be life changing. But I guess the trading community is replete with (dare I say sociopaths?) people with underdeveloped social skills. I've seen trading systems costing over $3000 that aren't nearly as financially productive as the stuff I've already given away. And I've barely scratched the surface. (My volatility work would blow you away. Pun intended). I'm not about being one of the trading intelligencia, but I would appreciate it if those that have that need at least keep it to themselves. Luv, Phantom
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Hasn't this entire method been based on price action? You guys are really unbelievable...Haven't heard a single thing I said... Don't bother with the BB studies, really has nothing to do with this "system." Anyway, wish y'all the best of luck in the future... Phantom out.
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MM, I've been served just fine the way things are described.
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Flex, I've never had any success with trying to codify this method because the variables are never fixed. This is really one of those setups that is better seen than automated... But if you come up with something tangible, I'd love to be the first to know! Luv, Phantom
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Yes, you are exactly right.
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BlowFish, you seem to have nailed it with just a few added notes: I'm not too concerned whether the 120 BB has in fact been penetrated; I'm looking for ballpark here. The BB on the 15 minute chart acts as my trend identifier, ie the 20 period sma. The 1 or 2 inside bars on the 120 chart tell me to look at the 15 minute chart. At this point, I no longer care about the 120 chart per se Once the market breaks down from the trading range on the 15 minute chart, I wait for any identifiable price rejection. On your 15 minute chart, a breakdown below the low of the 13:45 bar is a "false breakout-reversal" because the market broke above the previous 9 bars, closing near the high (false breakout phase), then proceeded to break down below the 13:45 bar 3 bars later (reversal phase). Since the breakdown occurs under the 15 minute chart's 20 period ma, we have trend filter okay on this setup. Once the market breaks out, I would place my stop above the false breakout bar (13:45 bar) My definition of an uptrend is 15 minute bars closing above the 20 period ma. (Downtrend is vice versa). There you have it. Hope this clarifies things a little bit. Luv, Phantom
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Look for a mini sideways channel on the 120 chart right near the upper band at point #2 (in this case its the 2 bars at the peak of point 2) then go to a 15 or 20 minute chart to see the "expanded version" of the consolidation pattern and subsequent breakout, again, with the downward bias. The volatility bar is a qualitative judgment call and no, it doesn't cross the envelope per se. I just look for the bar to be relatively larger than the consolidation bars, closing outside or very near the range extreme. Hope this helps. Luv, Phantom