steve46

Just reporting what is written by the original author. Sorry if it doesn't serve you well. Clearly you were wrong. The post is there for anyone to read. Finally just to give the concept a fair trial, I suggest that the person who tests the system also incorporate the 9 period simple moving average option so we can all see what effect it has on the results. Good luck Steve

Now as regards the concept of a "signal line"....here is the first post from the orignal thread ------------------ "2 min MACD on any of the emini contracts, watch for it to cross it's Moving Average Line with a Zero Line Cross, exceptionally high percentage trade, you can feel everyone jumping on. Thing is just about every trader I know either only uses the MA cross, or the Zero Line cross... one is trend, the other is momentum... I cant believe how many good traders dont see that almost all the trades that really move have the combination of the two. They'll go long on a MA cross to the upside when it is well below the Zero Line and wonder why it fails and has no momentum There has been 3 nice shorts in the last hour on the ER2 using that methodology, just nice little $200 scalps Note: You can use a 9 period Simple Moving Average on the price chart to get you in a little earlier when you see it setting up" -------------------------------------- As can be seen, the "setup" is the standard MACD with the option to get in "a little earlier" using the 9 period simple MA. Clearly in the original thread, the 9 period simple moving average was NOT the signal, but rather an option that the trader could elect to use to get in earlier.

I think its wonderful that you folks are having such success. I have asked a third party if they would do a backtest using the rules found in the original thread. Surely that will confirm all the success stories we are hearing from you.

We know that markets trend and consolidate. Most folks would agree that markets consolidate & chop around more than they trend. If that is true, trading a system that performs well during trend but loses money in choppy conditions is still a net loser at the end of the year. One way to prove it once and for all would be to do a backtest spanning several different market conditions. This would prove alot more than a few daily blotters. Any programmers out there willing to do it? Thanks Steve

I think its wonderful that you have some talent for this type of trading. Unfortunately you will probably find that your expenses overcome your profits. I have explained this in another thread. Your short term result is a good one but probably does not reflect what you will encounter in the longer term. Professionals who do this for a living, without exception (as far as I know), do so with benefit of a very low commission rate. Paying above $4 per round turn you will you will eventually find that profits will diminish to the point that you can't maintain this approach. One possible solution might be to lease a IOM seat temporarily and see if you can continue to make it work. You would have to check with the CME exchange for current rates. Then do the math to verify that your volume and profit level will support the investment. Best of luck to you Steve

Over the years I have seen a few traders who have tried to use inverted Risk/Reward in their systematic trading. None of them have been able to make it work consistently over the long run. Using an inverted R/R it tells me that the trader doesn't (yet) have the skills necessary to obtain favorable entry on a consistent basis, and that is a significant problem. Professionals look for entries with specific characteristics. Retail traders simply look for the setup and enter thinking that the odds are in their favor. Problem is that each trade is a random event. That is why even systems with positive expectancy can have extended strings of winners and losers. I hope it is clear how this works. Perhaps your "friend" can learn from this comment before the market teaches it to him the "hard way".... Good luck Steve

Since I have some time left today, I want to post this last time showing the open trade setup The attached chart shows the open at 9:30am EST (on the left), then price shows a "double top" (haven't talked about this yet). In my opinion the double top is one of the best signals to trade if you have a way to confirm it. In this case the confirmation is the retest of the 200 ema. Also if you put up a one minute chart with volume right next to it, you can see how volume "tells you" that price is going to fail the second time up. Profit targets are based on the previous low (to the left) and I always look for price to test "singles" from previous sessions (shown on the right at 915). Going back to the open, you can see the 80 period ema drop under the 200 just before the market opens. You also see two (2) higher lows right before the "double top" which challenges the open....when that fails...odds favor price moving lower for x number of bars. Okay then I am done for the day...Good luck everyone Steve

Hey Blowfish, thanks for the comment. I like working with professionals. It is much easier than trying to help newbies. I can't imagine being a vendor or a chatroom guy, it would just eat me up...lol. I have enough trouble trying to type and trade (as my recent posts show).... Good luck in the markets Steve

On an unrelated note folks, I am going to be away from this forum for about a month (perhaps two). I have taken a job training a group of fund traders ( I think of it as "continuing education for professionals") and they require that I don't post. I wish everyone the best of luck during this important time of the New Year. Take Care Steve

Yeah I understand and agree. Most newbies (not talking about you here) don't have the bandwidth to monitor the squawk and pay attention to their signals at the same time. The result is they just get confused. I think one has to develop their skills in an incremental fashion and it takes time, no question. As to how to use it, that is another story. I think one has to learn the language first (what the terminology means) and then get some idea of how the pits really work (how they open the market, how locals act on the open, what happens when paper comes into the market, all that). Finally one has to know when to take note of important info (for instance when locals are "short in the hole") and when to simply wait for something to develop. As you can tell some of this is based on experience and that is difficult to transmit to new players. People have to be patient and observant, and of course this is easy to say, difficult to practice. Best Regards Steve

Hello Ben Thanks for stopping by. I have been thinking about this subject (how to help new traders get more value out of tools like TradersAudio) and it occurs to me that there are a couple of things you can do that might help everyone. Clearly the purpose of the squawk is to give traders a heads up as to what is happening in the pit. The problem new traders encounter is that early on, they cannot keep up with the commentary, probably because they don't understand the terminology used, and because of the speed at which the market moves. There are a lot of distractions and I think newbies tend to get frustrated and quit because they don't see a way to get where they need to go. One nice thing you have done on your site is the FAQ's. Also I notice that you have additional commentary that shows newbies how to decode the language you use during the day. In addition to this I think new folks need some general context (some further explanation of how the pit really works). For example, I read in this forum that newbies think that noise levels are important in terms of trade entry. You could help them to understand why that happens (paper coming into the pit, news, etc) and give them a more accurate understanding of how it all works. Newbies might also be interested in the info that is posted on the boards above the pits and how some of the logistics happen on the floor. I don't know if this is part of your game or not, but it could be of interest to people looking to improve their understanding. Also I have tried to explain how the different participants act for their own interest during the day. Perhaps you could talk a bit about how the market opens, the rotations (if you have that info), the way that paper comes into the pit, and the ways that the locals (and others) try to move markets as volume fluctuates. Hey I may be putting more on you than you want, but reading the comments about the squawk I notice that newbies make a lot of assumptions about the pit that are clearly wrong. If they can find a way to learn more about the pit through your service, I am sure everyone will benefit. Best Regards Steve

Hello Tasuki Thank you for your kind comments. I believe the post you are looking for is number #134 on this thread "Ideas for Struggling Traders".. In that post Minoo asked me to comment on a recording of TradersAudio Squawk for a limitdown day. So I offered some comments and tried to "translate" the language that Ben Lichtenstein uses when calling the open. I hope this is of some help to you Best of luck in the markets Steve

Hello I just read your question. I just used the IV offered by IVolatility on their free home page. Frankly a more rigorous way to do it is to take both ATM put and ATM call IV, sum them and take the average. Once again for the record, there are a lot of holes in this idea....for one, price is clearly not distributed normally, and the numbers you generate with this method are really just an approximation. At the very least I would want to take trades that occur when at least one other supporting signal is nearby (the principle of "confluence" from my thread "Ideas for Struggling Traders"). Finally, I have no idea now Mr. Haggerty is using this concept. He may have some novel way of using it that I am unaware of. Hope this helps Steve Edit Thinking about this, if one wanted to get a more accurate set of numbers (and they had some math background) the way to do it would probably be to obtain a weighted average IV or estimator as is used in GARCH 1,1.

Hello Since you don't mention a specific platform (Tradestation for instance) I assume what you really want is a mathematical formula for intraday vol? I am not familiar with Haggerty's method but can offer my own as follows; 1. Go to IVolatility.com and get the most recent IV (Implied Vol) for the instrument you trade. If for example it is the ES contract, then it is approximately 37%....convert to .37 2. To compute a one (1) standard deviation trading range (annualized) 1 x .37 x previous day's closing price (900 for the ES contract) = 333 pts above and below that close To obtain the intraday figure simply multiply by the square root of the number of days per year (365) shown below square root of 1 day/365 = .0523421 333 pts x .0523421 = 17.43 pts Indicates that the intraday 1 sd range for the ES contract should be 900 plus or minus 17.43 pts. or 882.50 - 917.50 Rinse & repeat to obtain 1.28, 1.5 and 2.0 standard deviations and you have "approximate" intraday ranges for the ES today (Jan 02, 2009) Here they are out to 1.5 +1.5 sd = 926.25 +1.28 sd = 922.50 +1 sd = 917.50 900 (previous day's close) -1.5 sd = 882.42 -1.28 sd = 877.60 -1.5 sd = 873.75 Remember that its an approximation and that it "suggests" that the price series is normally distributed (it isn't)..so there are quite a few limitations to it. I wouldn't use it but there it is.... Hope it helps Steve

The simple facts are that MOST retail traders (daytraders) don't have the skills or the account size necessary to adapt to a changing market. In Susana's thread "Looking to Enhance Current *working* Trading Methodology" (my post #30) I offer a couple of comments that might point you in the right direction (if thats what you are looking for). Good luck Steve

Okay I noticed this thread and I can offer a couple of comments First, the only service I would us is TradersAudio. Ben is main guy there, he has experience, and his comments are accurate. Second, the squawk is a tool and like any tool, what you get out of it depends on your skill level and your temperment. Its not for everyone. If you are a new, you may want to go to the website and look at the FAQs before you try it. As some folks have pointed out, it can be distracting and it takes a while to learn to decode the language. I have some comments about this on my thread "Ideas for Struggling Traders" where I "translate" part of a session so that new traders can see what is going on.... Hope that helps a little bit Good luck Steve

Hello Susana I noticed your thread and wanted to offer a comment. I think its clear that one can only put oneself in position to profit using the best possible tools and protocols. If you have done that, the rest is based on your individual skill and experience. I trade the ES contract intraday. That means my maximum profit is derived from whatever range that contract provides on an intraday basis. That is basic. In order to decide how to proceed, over a period of years I analyzed the way that the S&P market "moves" on an intraday basis. What I found was that (for me) the best way to go was to trade from the open until lunch time (NY lunch time) and then to stop (unless I was in a trade). At the end of lunch hour, I come back and look to get back on a trade holding until the end of session. While it is true that "the trend is your friend", I would suggest that an experienced trader should abandon cliches and look instead to what proves most profitable. In order to do this, I regard each trading signal as a "profit center". I keep records of how each signal performs on a weekly, monthly and yearly basis. At the end of each quarter I analyze how each "profit center" is performing as well as how my trading system is performing in general. When a particular signal entry fails to perform as expected, I stop trading it. When a particular signal fails to provide a minimum average profit over time (depends on the signal) I stop trading it. On the other side of this, I am always researching new signals to replace those that lose their edge. I paper trade those signals until I see that they have performed adequately over time, then I trade them live on a probational basis (90 days). If the new signal performs as expected I continue. If not, I stop. For me, this is a business, so I approach it in that fashion. So far over a period of many years this has worked to my advantage. I hope this gives you some new ideas to work with. Best Regards Steve

You know Atto you are right, there are many reasons why a broker would come into the pit. By long observation I have come to know when they are moving size for their own account. I have found that when that is happening they do so in a characteristic way. Frankly it is partly intuition and partly experience that I rely on in this instance. I agree that newbies would find it hard to do. But for those who ARE interested in beginning the learning process, well they have to start somewhere, so I am trying to show how one trader does it. As to the reports, I believe I disclosed my thinking pretty clearly. I am sometimes right and sometimes wrong and the difference I believe is in the way that I setup the trade. Today for instance my interpretation of events was wrong but I still made money because I found an early entry and got some breathing room before the announcement. This is pretty characteristic of how I plan a trade. I think it is difficult if not impossible to transmit "experience" to another person, that is why I always try to supply additional resources in this thread so that newbies who are interested can begin the learning process with the best possible tools at hand. I am hopeful that traders who watch what I am doing will learn just as much from my mistakes as from my successes. From my point of view periodic losses are inevitable, so it is important to know how to manage risk, and the losses that traders are surely going to take from time to time. Also I think it is important to "model" the kind of attitude that is necessary to stay alive in this business. On a final note, it seems to me that trading is a form of combat, and one has to be resilient, persistent and (when the odds are in their favor) aggressive if they want to win. I hope some of this helps Steve

Well first of all there are many market participants each with their own agenda. For instance I watch how Goldman acts and I know they were long from 885. I also watch a few others (like Merrill for instance), and I watch individual locals who I know on the floor. This helps me to know who is liable to act (to buy or sell) and from that I get an idea of whether the market is going to be moving (especially when we have low volume days). So in my opinion its not a question of "pros being wrong" at all. On a given day, some are going to be wrong. I think I have pointed this out before (lol). Oh yeah, earlier today for instance when I was wrong... Hope that puts it in perspective Steve

Another "footnote" Refer back to my previous posts where I suggest that during this last year, President Bush acted as my personal ATM (my poor attempt at a joke) as I shorted every time I knew he was speaking. Just now CNBC posted "breaking news" saying that President Bush was speaking and suggested that he "had not made up his mind (lol) whether to provide funds to the big three automakers"......and look at how the market dropped..... I missed it as (again) I was posting here...apparently I have still not learned my lesson about posting during market hours. Oh well, undoubtedly I would have spent the money poorly...... Good luck everyone. Steve

I have no idea what "people like you" will or won't do sir. What may surprise you is that I don't regard us as very different. I was trying to post while doing a number of other things, and frankly I am not good at that. I was trying to give people a glimpse at how a trader sets up a trade. Since I am not infallible I am sometimes wrong....that is the fact of life for all of us. I hope you will find a way to deal with that in this thread and in your own life. Good luck to you Sir Steve Edit By the way, and it is just an afterthought. I did manage to make a few dollars on that trade, in spite of the fact that my initial take on the release was wrong.

I am having some technical difficulties as can be seen in the chart. Esignal freezing up and other probs. Short as seen in the attachement looking for more breathing room until the 10:00am Philly Fed Edit at 10:07am ESt Took some scales out during the run down. Briefing.com shows shows the report came out a little worse than expected at -32.9 Market did not move significantly as of this edit. Will scratch the trade if it goes back up to 907 Edit at 10:17am EST Okay so the market is not moving south on this news. Also the seasonal bias is up, and as can be seen in the second chart volume popped at the release of the Phily then dropped. The squawk tells me that its locals and institutions kicking the can around today. As I type the market looks like it might be starting to roll over. My best scale-out thus far is 899 Edit at 10:31am EST Out at B/E on the remainder. Best Scale out 899. Also traders should be aware that the brokerages are coming in to buy. Goldy long from 883.50 so they are long from below and waiting for expiration tomorrow. Looks like it will be a rally later in the day.

On my MP chart I show the Value Area High to be 912.50. Currently 8:50am EST we are at 910. Looking for a setup I would like to have made entry in the overnight market some 10 pts above yesterday's settlement at 903. I didn't get it. Unless things change significantly before the open, my next option is to get short after the open.

Tomorrow we have three reports out and they are "Initial Claims" (unemployment report) at 8:30 EST, "Leading Indicators" and "Philly Fed" both released at 10:00am EST. Of these the Philly Fed has enough juice to move the market. I suggest interested folks go to Briefing.com and read the free information on that report. My guess is that the report will be on the negative side. Consensus based on the folks whose opinion I respect, is the same. Therefore I would be looking to get short before this report. What are my choices then? Well I could have got short today by selling premium (options). If I wanted to do that I should have done it early in the day when prem is usually more expensive. Also I could have gotten short the market at some point during regular trading hours using an outright position (selling contracts). Alternatively I could wait and get short in the overnight market. Also one could simply wait for the market to open tomorrow and if presented with a opportunity, get short at or after the open. Finally as mentioned previously, a trader could have established an option position today and traded around that during the regular session tomorrow. Based on the expected volatility of this report, I would not be doing that this time. The S&P settlement today was 903. If I have an opportunity in the overnight market tonight I will be looking to get short above that price. If possible I would like to be short 10 pts or more above settlement when markets open tomorrow. Good night folks Steve

Its seems to me that there are many ways to get information about the markets and trading in general. I would suggest the Exchanges first and then books (with caution) and finally when you have some experience to fall back on, look to internet sites (again with great caution). The majority of participants get involved (in actual trading) long before they should. Generally new traders overestimate their abilities, thus they lose money either quickly or slowly because they are groping the dark, or operating with information that is dated or ineffective. There is one approach that always works if you can pull it off. Do what works, and by that I mean....look carefully at the idea or concept you are learning about...Test it in the market by careful observation first, then see if you can execute the strategy or method in a way that gets you in place to profit while managing risk appropriately. Look at the result. If after a short learning process (a month or two at most) you see some promise (meaning you see a way to actually make a profit while limiting loss) then you have something. Apply this to any book, concept, method, any traders advice, and you will have a good "acid test". In my view the rest is people talking and as the old saying goes "talk is cheap". Hope this helps. Steve