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AbeSmith

8/16/07 General Trade Log / Idea Sharing

By AbeSmith, in Traders Log

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brownsfan019    17

brownsfan019
Posted
ym_execution___ym___5m__5_minutes__session_5-20070816-102852.jpg

 

Haven't been doing too much lately with my move back to Maine coming up, but here's a nice one I took this morning for 40 points.

 

Tin,

I am curious - where was your entry and stop on that one? That's something we'll have to discuss in the candlestick corner as the actual entry and stop are critical, yet can have very different variants.

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AbeSmith    10

AbeSmith
Posted
Abe,

Are you using Sierra charts for your VBC's? Reason I ask is that I have been testing Sierra this week and it appears there VBC's are NOT pure VBC's. I'll explain more if you are using Sierra.

 

Yes Brownsfan. I'm still using Sierra chart. Why do you say they are not pure VBC's?

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TinGull    10

TinGull
Posted

Abe,

 

Something that's a little more subtle as far as watching VBC's is paying close attention to the range of the bar. After a series of wide range bodied candles and you start to see the size of the candles contract, that's usually a tell tale sign that momentum is changing hands. One of trades you took you went short after a series of red WRB candles and then as the candles were getting smaller in range, you initiated your short and got out. This is when I'd be looking to get long.

 

It's a more subtle thing, but something to really pay attention to. In fact, this could be the start of designing a trading plan for you. In fact...I'm done for the day so I might design one based on this and see how it plays out.

 

btw, brown...before you get on me about being done...I'm taking only select trades because I've got a TON of stuff going on in my life right now with moving back to Maine and don't want to over do things.

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AbeSmith    10

AbeSmith
Posted
Abe,

 

Something that's a little more subtle as far as watching VBC's is paying close attention to the range of the bar. After a series of wide range bodied candles and you start to see the size of the candles contract, that's usually a tell tale sign that momentum is changing hands. One of trades you took you went short after a series of red WRB candles and then as the candles were getting smaller in range, you initiated your short and got out. This is when I'd be looking to get long.

 

It's a more subtle thing, but something to really pay attention to. In fact, this could be the start of designing a trading plan for you. In fact...I'm done for the day so I might design one based on this and see how it plays out.

 

btw, brown...before you get on me about being done...I'm taking only select trades because I've got a TON of stuff going on in my life right now with moving back to Maine and don't want to over do things.

 

Thanks Tin. You always have such good advice.

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TinGull    10

TinGull
Posted

Ok Abe,

 

Since I love designing systems I want you to check this one out. This is just the beginning, and I'm not going to take it any further, but I want you to check this and report back on what you've found.

 

What I would do based on your chart today is watch for small range BODY candles. With the same amount of volume flowing into a smaller range body, this is showing that people are wanting to keep price where it is in order to accumulate their positions. This equates to a change in momentum coming up.

 

The steps to take for the system I've come up with are as follows:

 

1: Watch for 2 small range body candles. This is VERY discretionary. I define them as being smaller than half of the body of the previous candle. If you get 2 of them in a row after an upmove,

 

2: Then watch for a larger body DOWN candle and

 

3: Enter at the CLOSE of that candle to go short.

 

place a protective stop above the swing high of that move (or swing low if you're going long) and do NOT exit until you get a reversal signal, which would be the opposite of what I just explained.

 

Here's a picture annotating what I see, and how it could be useful to you. Now, go back and look over days and days and weeks and weeks and see if this holds up. I've noticed it happening over the past few days on your charts, but would be interested to see if it happens often.

 

2401d1187276909-8-16-07-general-trade-log-8-16-07t11-20070816-113714.jpg

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AbeSmith    10

AbeSmith
Posted
Ok Abe,

 

Since I love designing systems I want you to check this one out. This is just the beginning, and I'm not going to take it any further, but I want you to check this and report back on what you've found.

 

What I would do based on your chart today is watch for small range BODY candles. With the same amount of volume flowing into a smaller range body, this is showing that people are wanting to keep price where it is in order to accumulate their positions. This equates to a change in momentum coming up.

 

The steps to take for the system I've come up with are as follows:

 

1: Watch for 2 small range body candles. This is VERY discretionary. I define them as being smaller than half of the body of the previous candle. If you get 2 of them in a row after an upmove,

 

2: Then watch for a larger body DOWN candle and

 

3: Enter at the CLOSE of that candle to go short.

 

place a protective stop above the swing high of that move (or swing low if you're going long) and do NOT exit until you get a reversal signal, which would be the opposite of what I just explained.

 

Here's a picture annotating what I see, and how it could be useful to you. Now, go back and look over days and days and weeks and weeks and see if this holds up. I've noticed it happening over the past few days on your charts, but would be interested to see if it happens often.

 

2401d1187276909-8-16-07-general-trade-log-8-16-07t11-20070816-113714.jpg

 

Looks like a solid plan Tin. Thanks.

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brownsfan019    17

brownsfan019
Posted
Yes Brownsfan. I'm still using Sierra chart. Why do you say they are not pure VBC's?

 

Abe,

From my look at them, the Sierra charts are what I call 'TradeStation' VBC's, which means that the volume threshold you set is more of an approximation. What I mean is that on your 1250 VBC, a couple things could be happening:

 

1) The actual amount of contracts traded in that candle are 1250 OR higher.

2) The amount of trades and contracts that is actually taking place is not what is being reported on the chart for some reason.

 

#1 occurs on some charting platforms, like TradeStation, where they do not break trades up to construct the candle. So if your setting is 1250 and when your candle is at 1249, if an order for 300 comes through, your candle is actually 1549 (1249 + 300). More info in this thread - http://www.traderslaboratory.com/forums/f32/volume-based-charts-request-for-help-1630.html

 

#2 is a little trickier, but in a nutshell, my 5000 VBC on Sierra isn't anywhere close to a 5000 VBC on Open ECry's charts. I tried to use an add-on that Kiwi in the Sierra chart forum designed, but it's not working in the sense of capping each candle at 5000 and then starting a new one. I have no idea what is going on behind the scenes, but when compared to the OEC chart, it's not even close.

 

I have now seen this at TradeStation and Sierra. I'm surprised that neither offers a workaround, but I guess constant volume charts are not significant enough for them to design the fix. As of now, MultiCharts still appears to offer one of the most comprehensive charting packages I have seen, which includes pure VBC's - whatever level you set your threshold at, that's where the candles start/end. No guessing.

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Guest cooter   

Guest cooter
Posted

 

I have now seen this at TradeStation and Sierra. I'm surprised that neither offers a workaround, but I guess constant volume charts are not significant enough for them to design the fix. As of now, MultiCharts still appears to offer one of the most comprehensive charting packages I have seen, which includes pure VBC's - whatever level you set your threshold at, that's where the candles start/end. No guessing.

 

It's because folks haven't complained enough about the inaccuracy in their platforms.

 

Another charting software which has addressed this problem correctly is Ensign software, as noted in that other thread which was referenced.

 

Curious though, aren't you still able to use Multicharts with OEC data? Or are you stuck waiting on MC to apply the OEC API upgrade?

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