Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

Recommended Posts

If you've taken a look at the ES Journal at ET, you may have seen the 'rule of 10' mentioned. Someone decided to start a journal about it. This idea has always interested me, but I've never done any research into it. Hopefully the journal will keep up and not die down.

 

It's an interesting premise for anyone wanting to look into it.

 

The premise is rather simple - from a reaction high/low when price goes 10 pts from that level, look for a reversal.

 

Here's how I saw today using the OP's chart:

 

attachment.php?attachmentid=7462&stc=1&d=1218083253

 

 

circles = possible reaction zones

arrows = actual trades

 

The OP is making the assumption of a 3 pt stop and 10 pt profit target. So the risk/reward is rather handsome. Of course, now the winning % will be the next issue at hand.

 

For today, 8/6/08, I personally saw 2 possible short trades = one failure and one winner. Depending on entries and exits, the day could be a scratch if out at MOC or better if held overnight.

 

This idea has always interested me, so it will be neat to see the OP carry the journal through.

5aa70e7a34bff_es8-7ruleof10.png.e00eb34412d373eec4a1e3a3ef97e69e.png

Edited by brownsfan019

Share this post


Link to post
Share on other sites

Many years ago I bought a rather expensive course that had this as one of its premises. That was based on 1 point stops and 10 point targets. A partial was taken at a point/point and a half if memory serves. ES was a little less volaitile at the time.

 

I cant help feeling that using market structure is a better approach. For example when the ES is averaging 30 points a day, swing size is different to when its averaging 10. Taking account of what swing sizes actually are is likely to help.

 

Are you going to sit through 5 6 7 8 and even 9 point retraces to get your 10 points? If you are why limit yourself to 10 points? I always see risk as a dynamic thing (un booked profits is money at risk). Getting stopped after being up 9 must be a bitch. Especially if say 8 points into the trade you notice you are at major S/R.

 

Alternatively (imo) measuring previous swings to get rough targets is likely to yield better results (AB = CD type of stuff). Or simply using next higher time frame S/R for exits. I guess you could 'optimise' (curve fit!) the 10 point target with some sort of back testing.

 

I guess the appeal is simplicity. You might be interested in Eddie Toppel's stuff too. Even simpler, trade a fixed portion of the day (when trends are likely to develop) enter in a random direction with a fixed number of points stop and reverse, its an always in approach. You could probably improve things with a simple directional bias (e.g. enter long if above the open short below). Essentially a trend following system so lots of smaller losses to get the big win. Benefits from adding contracts to winners.

 

I never understood why people do all the 'clever stuff' on entries only, personally I would rather trade a random entry with a good market structure based exit than a market structure based set up with fixed target exit. (I think). Obviously things tend to improve with both.

Share this post


Link to post
Share on other sites

Quite a few years ago I used to trade the ES using a simple breakout strategy that did rather well. Once a week I would get a 'home run' or 10 points, this is when I would close the position. Had a look at fading the run but I recall not really seeing much into it and it seemed like trying to catch a top or bottom which is a mugs game in my opinion.

Share this post


Link to post
Share on other sites
My view is that any 'system' requires an experienced trader to use a certain amount of discretion.This is why teaching a system to a new trader is merely a step in the right direction (hopefully) on a journey that has many steps.Another problem is that so many of the trading 'truths' - trend is your friend etc, are right but also often wrong.Personally, i think the most vital thing to know at any given point is,are the smart money buying or selling? and to trade in the same direction as them.Not an easy question to answer a lot of the time,so another question you could ask at any given point is,who stands to get hurt the most,bulls or bears? The market is designed to take out your stop and then reverse- wider stops and a lot more patience before entering a trade would serve most struggling traders well (imo)

As to the rule of 10 i am new to this but was reading about it on a journal on another forum and decided to apply it mostly on ohlc rather than attempting to decipher every wiggle.A check on recent ohlc historical data (sp500 cash) looked promising for an add on to my usual strategies.Ohlc are mostly fib ratios so the 2 systems can fit well together (except when they dont!)

 

Good point, It all sounds quite easy really... whats the smart money doing are they buying or selling? accumulating or distributing, who's fueling the rally? know this and you;ve cracked it.. We all know it is'nt easy tho..

Share this post


Link to post
Share on other sites

...yesterday i had only one signal....

 

... the long at 921.75 from 930.75 during AH

 

...couple of other signals... but they were all short of 9 points....

=====================================================

 

...one note about the last signal.... from .. 925.75

... the short signal was 935.75

 

...just like the day before.... it blew thru it ... only to turn around and go below it....

... i took the short... and reversed long on the first retest of this level...

... however ... i did not take half off at plus 5 level... and ended up getting stopped out...

 

.... the lesson is... take half off... and make sure you have a tight stop at break even on the remainder....

Edited by elovemer

Share this post


Link to post
Share on other sites

today... from 940.75 ... the long was at 931.75

 

...currently... put in a pivot at 934.5

========================================

... this signal may not seem important now....

 

... but yesterday... the signal which came around this same time....

... was the only valid signal....

.... and was the only way to have been able to catch that huge up move... without any risk.... by trading the system....

Share this post


Link to post
Share on other sites

....was waiting for you to start the journal ... but you never did....

 

... so i started posting here....

 

---------------------------------

you know what? It's funny you should say that,i have been mullin' over the idea for a while now.Might get it started this week-some foundation work,but am going away for 10 days from sat,so would probably begin trading it after that.

 

Using OHLC with R-10,todays low-940.9 close 951.1 so i am short 951.0 looking to close in early trading tues.The position went into a small loss at the high today (951.6) but futures are dropping overnight,so let's see..

Share this post


Link to post
Share on other sites

you talking about ES on monday ?

must not be talking about ES ..... are you ?

 

those prices sound non-existent

 

Using OHLC with R-10,todays low-940.9 close 951.1 so i am short 951.0 looking to close in early trading tues.

The position went into a small loss at the high today (951.6) but futures are dropping overnight,so let's see..

Share this post


Link to post
Share on other sites

....i was thinking more along the lines of a trade journal to record entries and exits using the rule of ten

 

....that way we could learn from each other and see how others are using it as well....

 

....at least for me .....i am prepared to offer up my entries and exits and the reasoning behind them....

 

00000000000000000000000000000000000000

With this technique you have 2 great enemies.A range breakout.The expiry of one contract.Sorry if this is a bit long winded,but a journal would probably be hard to follow in my case!

Share this post


Link to post
Share on other sites

Do you still have no interest in a journal of entries and exits... based on rule of ten ?

 

thanks

elo

 

---------------------------------------

mitsubishi mitsubishi is offline

mitsubishi is in search of hidden gems

oin Date: Oct 2006

Location: ipswich

Posts: 141

Thanks: 3

Thanked 3 Times in 3 Posts

iTrader: (0)

Re: Rule of 10

Share this post


Link to post
Share on other sites

---------------------------------------

mitsubishi mitsubishi is offline

mitsubishi is in search of hidden gems

oin Date: Oct 2006

Location: ipswich

Posts: 141

Thanks: 3

Thanked 3 Times in 3 Posts

iTrader: (0)

Re: Rule of 10

Share this post


Link to post
Share on other sites

....i mean ACTUAL entries/exits.... not possible ones...

 

.... with stops as well....

 

any interest ?

 

thanks

elo

 

Sorry,didn't see your post.With futures up tonight we may get a repeat of fri..or we could get a high made first and a pullback.So a possible trade might be short 1036/7 (cash) since fri close and high was 1026.1 and 1027.5 respectively.Though shorting is against the current trend but might be worth a rection/gap play. Near term resistance is 1044. I am expecting a turn around the 31st,,if we are higher then,it could be a decent pullback or if we are lower,then a push from there to 1060 and towards 1100.

Share this post


Link to post
Share on other sites

...ES high was 1027

... for RTH signals only .... i don't take it unless there is no gap from the previous session....

 

.... if there is no gap on monday .... then the long would be at 1017 long ...stop 1015 .... or 1018 long .. stop 1015

---------------------------

 

...if there is a gap ... then would take a long ten points below the high after the gapped down opening....

.... in the same manner as above....

 

... i consider AH signals as separate from RTH signals....

 

short 1036/7 (cash) since fri high was 1027.5 ..

Share this post


Link to post
Share on other sites

.... how about this idea ?

 

...everyone contributes their own entries, exits, and stops...

 

....i mean ACTUAL entries/exits.... not possible ones...

.... with stops as well....

 

any interest ?

thanks

elo

Share this post


Link to post
Share on other sites

.... every time i talk about posting actual trades.... i get no response....

 

... why is this a bad idea ?

 

...the rule of ten is simple enough..... what's wrong with this ?

 

.... how about this idea ?

...everyone contributes their own entries, exits, and stops...

Share this post


Link to post
Share on other sites

.... if it is paper trading.... it doesn't matter.... just treat it as real trading....

.... that's the only way to learn anything is by doing.....

 

... AH trade.... i prefer RTH trades.... so only half size

... from 20.5 ... order to short 29.5 ... stop at 32.5

 

approximate time of order entry .... 4 am

 

.... i will be using 3 point stops... 9-10 pnt signals....

.... prefer doing half at 9 and half at 10 pnts.....

 

... ... i am using ES only.....

.... although NQ, TF, YM will also work....

 

Ok what the hell..:)

Short 1028 (cash) today 2 contracts

1st target 1018 2nd target 990

stop 1046.

The rally ended yesterday at 1037.7:cool: So 1038 1028 1018... 990 support.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • NFLX Netflix stock watch, local support and resistance areas at 838.12 and 880.5 at https://stockconsultant.com/?NFLX
    • NFLX Netflix stock watch, local support and resistance areas at 838.12 and 880.5 at https://stockconsultant.com/?NFLX
    • Hello citizens of the U.S. The hundred year trade war has leaked over into a trading war. Your equity holdings are under attack by huge sovereign funds shorting relentlessly... running basically the opposite of  PPT operations.  As an American you are blessed to be totally responsible for your own assets - the govt won’t and can’t take care of you, your lame ass whuss ‘retail’ fund managers go catatonic  and can't / won’t help you, etc etc.... If you’re going to hold your positions, it’s on you to hedge your holdings.   Don’t blame Trump, don’t blame the system, don’t even blame the ‘enemies’ - ie don’t blame period.  Just occupy the freedom and responsibility you have and act.  The only mistake ‘Trump’ made so far was not to warn you more explicitly and remind you of your options to hedge weeks ago.   FWIW when Trump got elected... I also failed to explicitly remind you... just sayin’
    • Date: 7th April 2025.   Asian Markets Plunge as US-China Trade War Escalates; Wall Street Futures Signal Further Turmoil.   Global financial markets extended last week’s massive sell-off as tensions between the US and its major trading partners deepened, rattling investors and prompting sharp declines across equities, commodities, and currencies. The fallout from President Trump’s sweeping new tariff measures continued to spread, raising fears of a full-blown trade war and economic recession.   Asian stock markets plunged on Monday, extending a global market rout fueled by rising tensions between the US and China. The latest wave of aggressive tariffs and retaliatory measures has unnerved investors worldwide, triggering sharp sell-offs across the Asia-Pacific region.   Asian equities led the global rout on Monday, with dramatic losses seen across the region. Japan’s Nikkei 225 index tumbled more than 8% shortly after the open, while the broader Topix fell over 6.5%, recovering only slightly from steeper losses. In mainland China, the Shanghai Composite sank 6.7%, and the blue-chip CSI300 dropped 7.5% as markets reopened following a public holiday. Hong Kong’s Hang Seng Index opened more than 9% lower, reflecting deep concerns about escalating trade tensions.           South Korea’s Kospi dropped 4.8%, triggering a circuit breaker designed to curb panic selling. Taiwan’s Taiex index collapsed by nearly 10%, with major tech exporters like TSMC and Foxconn hitting circuit breaker limits after each fell close to 10%. Meanwhile, Australia’s ASX 200 shed as much as 6.3%, and New Zealand’s NZX 50 lost over 3.5%.   Despite the escalation, Beijing has adopted a measured tone. Chinese officials urged investors not to panic and assured markets that the country has the tools to mitigate economic shocks. At the same time, they left the door open for renewed trade talks, though no specific timeline has been set.   US Stock Futures Plunge Ahead of Monday Open   US stock futures pointed to another brutal day on Wall Street. Futures tied to the S&P 500 dropped over 3%, Nasdaq futures sank 4%, and Dow Jones futures lost 2.5%—equivalent to nearly 1,000 points. The Nasdaq Composite officially entered a bear market on Friday, down more than 20% from its recent highs, while the S&P 500 is nearing bear territory. The Dow closed last week in correction. Oil prices followed suit, with WTI crude dropping over 4% to $59.49 per barrel—its lowest since April 2021.   Wall Street closed last week in disarray, erasing more than $5 trillion in value amid fears of an all-out trade war. The Nasdaq Composite officially entered a bear market on Friday, sinking more than 20% from its recent peak. The S&P 500 is approaching bear territory, and the Dow Jones Industrial Average has slipped firmly into correction territory.   German Banks Hit Hard Amid Escalating Trade Tensions   German banking stocks were among the worst hit in Europe. Shares of Commerzbank and Deutsche Bank plunged between 9.5% and 10.3% during early Frankfurt trading, compounding Friday’s steep losses. Fears over a global trade war and looming recession are severely impacting the financial sector, particularly export-driven economies like Germany.   Eurozone Growth at Risk   Eurozone officials are bracing for economic fallout, with Greek central bank governor Yannis Stournaras warning that Trump’s tariff policy could reduce eurozone GDP by up to 1%. The EU is preparing retaliatory tariffs on $28 billion worth of American goods—ranging from steel and aluminium to consumer products like dental floss and luxury jewellery.   Starting Wednesday, the US is expected to impose 25% tariffs on key EU exports, with Brussels ready to respond with its own 20% levies on nearly all remaining American imports.   UK Faces £22 Billion Economic Blow   In the UK, fresh research from KPMG revealed that the British economy could shrink by £21.6 billion by 2027 due to US-imposed tariffs. The analysis points to a 0.8% dip in economic output over the next two years, undermining Chancellor Rachel Reeves’ growth agenda. The report also warned of additional fiscal pressure that may lead to future tax increases and public spending cuts.   Wall Street Braces for Recession   Goldman Sachs revised its US recession probability to 45% within the next year, citing tighter financial conditions and rising policy uncertainty. This marks a sharp jump from the 35% risk estimated just last month—and more than double January’s 20% projection. J.P. Morgan issued a bleaker outlook, now forecasting a 60% chance of recession both in the US and globally.   Global Leaders Respond as Trade Tensions Deepen   The dramatic market sell-off was triggered by China’s sweeping retaliation to a new round of US tariffs, which included a 34% levy on all American imports. Beijing’s state-run People’s Daily released a defiant statement, asserting that China has the tools and resilience to withstand economic pressure from Washington. ‘We’ve built up experience after years of trade conflict and are prepared with a full arsenal of countermeasures,’ it stated.   Around the world, policymakers are responding to the growing threat of a trade-led economic slowdown. Japanese Prime Minister Shigeru Ishiba announced plans to appeal directly to Washington and push for tariff relief, following the US administration’s decision to impose a blanket 24% tariff on Japanese imports. He aims to visit the US soon to present Japan’s case as a fair trade partner.   In Taiwan, President Lai Ching-te said his administration would work closely with Washington to remove trade barriers and increase purchases of American goods in an effort to reduce the bilateral trade deficit. The island's defence ministry has also submitted a new list of US military procurements to highlight its strategic partnership.   Economists and strategists are warning of deeper economic consequences. Ronald Temple, chief market strategist at Lazard, said the scale and speed of these tariffs could result in far more severe damage than previously anticipated. ‘This isn’t just a bilateral conflict anymore — more countries are likely to respond in the coming weeks,’ he noted.   Analysts at Barclays cautioned that smaller Asian economies, such as Singapore and South Korea, may face challenges in negotiating with Washington and are already adjusting their economic growth forecasts downward in response to the unfolding trade crisis.           Oil Prices Sink on Demand Concerns   Crude oil continued its sharp slide on Monday, driven by recession fears and weakened global demand. Brent fell 3.9% to $63.04 a barrel, while WTI plunged over 4% to $59.49—both benchmarks marking weekly losses exceeding 10%. Analysts say inflationary pressures and slowing economic activity may drag demand down, even though energy imports were excluded from the latest round of tariffs.   Vandana Hari of Vanda Insights noted, ‘The market is struggling to find a bottom. Until there’s a clear signal from Trump that calms recession fears, crude prices will remain under pressure.’   OPEC+ Adds Further Pressure with Output Hike   Bearish sentiment intensified after OPEC+ announced it would boost production by 411,000 barrels per day in May, far surpassing the expected 135,000 bpd. The alliance called on overproducing nations to submit compensation plans by April 15. Analysts fear this surprise move could undo years of supply discipline and weigh further on already fragile oil markets.   Global political risks also flared over the weekend. Iran rejected US proposals for direct nuclear negotiations and warned of potential military action. Meanwhile, Russia claimed fresh territorial gains in Ukraine’s Sumy region and ramped up attacks on surrounding areas—further darkening the outlook for markets.   Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Andria Pichidi HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • AMZN Amazon stock watch, good buying (+313%) toi hold onto the 173.32 support area at https://stockconsultant.com/?AMZN
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.