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Some good discussion being generated regarding the use of the EMA and entry method. Thanks for all who contribute.

 

Looks like were in for a Monday morning rebound. Two nice entry opportunities long in CL this morning. Depending on your entry method, tough to get into the first entry as it turned 2 ticks ahead of the EMA.

 

2011-09-12_cl.png

 

Also, ES providing a nice entry around 9:22am EST. Took a little heat depending on entry method.

 

2011-09-12_1000.png

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Nice charts JMC.

 

One thing I've noticed when you post charts is that the morning appears to provide some very nice, risk/reward setups. And that does not surprise me seeing that the morning usually provides some great moves.

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Nice charts JMC.

 

One thing I've noticed when you post charts is that the morning appears to provide some very nice, risk/reward setups. And that does not surprise me seeing that the morning usually provides some great moves.

 

Thanks. I definitely prefer the morning session in CL (appx. 8:30am - 11:00am EST) as that is when the volume comes in and you can almost always expect some larger moves. I also sometimes watch as we go into the last hour of the pit session and start looking for a possible entry if it presents itself around the 1:30pm EST mark.

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Three good entry opportunities in CL this morning, two long, one short. First one was an early bird special at 6:57am EST. Next two occurred at 7:54am and 9:25am. Last three sessions have been quite favorable. Getting a little choppy now.

 

2011-09-13_cl.png

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Thanks JMC for the charts ...I will watch again this setup ...one need to be careful I was watching ES on this setup ..and took some heat ...Is there any nuance or something else you look for the entry? I currently looking at ES but will start looking at TF too...and see what else I can use for the entry ..What stop do you usde on TF if any?

 

Thank you

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Thanks JMC for the charts ...I will watch again this setup ...one need to be careful I was watching ES on this setup ..and took some heat ...Is there any nuance or something else you look for the entry? I currently looking at ES but will start looking at TF too...and see what else I can use for the entry ..What stop do you usde on TF if any?

 

Thank you

 

Thanks Pat. ES can be tough sometimes. I'd encourage you to check out CL as there is a much better risk/reward profile. Some nuances I've discussed earlier. I pay attention to the time of day and prefer to trade a market that is moving with volume. Other nuances are tougher to explain. I prefer taking the first pullback after a trend change and am a little hesitant to put on a "with trend" trade towards the end of move.

 

I'd recommend watching the 1 minute charts with the 100 EMA and watching how price reacts to this area. After some screen time, I feel like I've gotten better at being more selective on the trades I take. It may help to read up on some of the roots of this setup including:

 

The Floor Trader Method:

The Floor Trader Method

 

Linda Raschke Holy Grail Trade:

http://www.lbrgroup.com/images///raschke_pt2_0304.pdf

 

As far as a stop loss on TF, depending on volatility, I usually use a .10 to .15 stop. However, most of my trading these days is in CL.

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am a little hesitant to put on a "with trend" trade towards the end of move.

 

Pat, a quick tip.

 

There was a time when I needed hard rules to determine if the current move is coming to an end. What helped me is this: if the last leg of the move is shorter than the previous one, momentum is slowing down.

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Oil has been tough today. Should have been trading the Russell. Three good entry opportunities so far. Have to see how the long entry plays out as we go into the lunch time chop.

 

2011-09-14_TF.png

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Its slightly off topic but what do most traders here do when there waiting for a setup. Especially those who trade 5 minute and upwards. I find it extremely difficult to maintain concentration when the first setup on a 15/30 minute may not be for hours into the day.

 

I've also found that because i have waited so long for that touch of the ema, it is difficult to say no to a candlestick that is weak, a market that is losing its momentum, etc. The trade you just look at after and know that was a crap setup.

 

Any advice or is this something i'll learn the hard way

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Its slightly off topic but what do most traders here do when there waiting for a setup. Especially those who trade 5 minute and upwards. I find it extremely difficult to maintain concentration when the first setup on a 15/30 minute may not be for hours into the day.

 

I've also found that because i have waited so long for that touch of the ema, it is difficult to say no to a candlestick that is weak, a market that is losing its momentum, etc. The trade you just look at after and know that was a crap setup.

 

Any advice or is this something i'll learn the hard way

 

If you ask your platform to alert you when price touches the moving average you might be able to trade multiple instruments in 5m or higher.

 

Alternatively, you can trade off a 3m or 1m chart (or charts). I found that trading off a 5m chart isn't suitable for my temperament. I need more action that it provides, so I started trading off a 1m chart. At first I found it challenging, but got used to it and, months later, I settled for 2 instruments in 1m (EUR and DAX). That helps me keep focus and not get bored.

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IMO this makes or breaks this (or any system).

 

Stop placements:

1) Classic candlestick analysis would say one tick above the high or below the low of the entry candle.

 

2) Use previous support/resistance.

 

3) Fixed number.

 

Entering long with a stop, I've been placing my initial stop a tick below the low of the signal (candlestick pattern) candle, then, upon the close of the entry candle (which drags me into the market), I tightened the stop to a tick below the entry candle.

 

So far my impression is that this is unnecessary and would be easier, faster and less error-prone in a one minute timeframe to put the stop directly a tick below the low of the entry bar.

 

What's your experience? Any advice on this? Thanks in advance!

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If you ask your platform to alert you when price touches the moving average you might be able to trade multiple instruments in 5m or higher.

 

Alternatively, you can trade off a 3m or 1m chart (or charts). I found that trading off a 5m chart isn't suitable for my temperament. I need more action that it provides, so I started trading off a 1m chart. At first I found it challenging, but got used to it and, months later, I settled for 2 instruments in 1m (EUR and DAX). That helps me keep focus and not get bored.

 

On the Dax do you use the 100ema like JMC?

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On the Dax do you use the 100ema like JMC?

 

No, I use a 34EMA, which I'm still testing. General impressions so far is that I would probably be better off going back to the 20EMA and the 50SMA. There's more opportunity, although the moves aren't as great as the moves off the 34EMA.

 

From a risk/reward perspective, the 34EMA is perhaps better but only if you do stick to your target. If you don't, --and I do have trouble with that--, you'd be (and I'd be) better off going for slightly smaller but more frequent moves off the 20EMA.

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No, I use a 34EMA, which I'm still testing. General impressions so far is that I would probably be better off going back to the 20EMA and the 50SMA. There's more opportunity, although the moves aren't as great as the moves off the 34EMA.

 

From a risk/reward perspective, the 34EMA is perhaps better but only if you do stick to your target. If you don't, --and I do have trouble with that--, you'd be (and I'd be) better off going for slightly smaller but more frequent moves off the 20EMA.

 

Currently iam trading the 15 minute charts and am just struggling to get a decent risk to reward ratio and more than 1-2 trades in a day. I don't really want to be stuck infront of a computer screen all day waiting either. However i find the 1 minute chart slightly daunting due the large amount setups off the ema.

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Currently iam trading the 15 minute charts and am just struggling to get a decent risk to reward ratio and more than 1-2 trades in a day. I don't really want to be stuck infront of a computer screen all day waiting either. However i find the 1 minute chart slightly daunting due the large amount setups off the ema.

 

Why not use the day trader's staple chart -- the 5 minute? Unfortunately even if you use a smaller time frame chart, much of trading is about being patient and waiting, and you may find that it helps your trading to be in front of the screen longer. Also, 1 or 2 trades in a day, well executed, with good profits and small losses, is nothing to be ashamed of!

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Its slightly off topic but what do most traders here do when there waiting for a setup. Especially those who trade 5 minute and upwards. I find it extremely difficult to maintain concentration when the first setup on a 15/30 minute may not be for hours into the day.

 

I've also found that because i have waited so long for that touch of the ema, it is difficult to say no to a candlestick that is weak, a market that is losing its momentum, etc. The trade you just look at after and know that was a crap setup.

 

Any advice or is this something i'll learn the hard way

 

When trading off 5 minute or longer charts, it can get a bit tedious especially if you are staring at one market. A good suggestion was to set an alert on your platform and then either do something else or watch multiple markets. If you watch 4+ markets that are not correlated, then that boring 5 minute chart can get more active.

 

Entering long with a stop, I've been placing my initial stop a tick below the low of the signal (candlestick pattern) candle, then, upon the close of the entry candle (which drags me into the market), I tightened the stop to a tick below the entry candle.

 

So far my impression is that this is unnecessary and would be easier, faster and less error-prone in a one minute timeframe to put the stop directly a tick below the low of the entry bar.

 

What's your experience? Any advice on this? Thanks in advance!

 

Actual examples would really help as I don't quite get where your stop is initially and then where it goes to. For me, if I enter on a hammer, the stop is tick(s) below the low of the hammer. And that's where it stays.

 

For those of you who want more scalping action, put a 34 ema on a volume-based chart. They're smoother for this kind of thing and you'll get more signals than minute-based charts.

 

I agree - tick charts or volume based charts will provide more setups for sure. I had mentioned to JMC previously that I put his design on a 800 tick ES chart and did not look bad at all. I admit, I have not been tracking it daily so please make sure you do before jumping in.

 

So the options to get more action during the day could be:

 

1) Watch more than 1 market

2) Watch 1-2 markets but use 'faster' chart settings - 1 minute, tick or volume charts. You could also use a combo of these as well. Say you really like the CL or ES moves, or for margin purposes you want to focus on 1 market, you could have a 1 minute chart up, a tick chart and/or a volume chart of that market.

 

Currently iam trading the 15 minute charts and am just struggling to get a decent risk to reward ratio and more than 1-2 trades in a day. I don't really want to be stuck infront of a computer screen all day waiting either. However i find the 1 minute chart slightly daunting due the large amount setups off the ema.

 

15 minute charts would be difficult to 'trade' from IMO. If you get 1-2 setups in a day, I would call that a victory. You are getting 4 bars per HOUR. If the 1 minute is too fast, try the 5 minute out as Josh suggested. That could be a happy medium to speed the charts up a bit and also find good risk-reward setups. If you focus only on risk-reward, the 1 minute will be hard to beat. Look at some of JMC's screenshots - he's risking maybe 20 ticks on the CL and seeing moves of 50 ticks+ on his trades. Risk $200 to make $500 or more is not bad at all IMO.

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i find the 1 minute chart slightly daunting due the large amount setups off the ema.

 

You may want to consider taking only trades where the candlestick pattern is a hammer that has pierced the EMA. That's going to limit the number of signals you'll get during the day to about 2 or 3 in the 1m DAX and another 2 or 3 (on average) in the 1m EUR.

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You may want to consider taking only trades where the candlestick pattern is a hammer that has pierced the EMA. That's going to limit the number of signals you'll get during the day to about 2 or 3 in the 1m DAX and another 2 or 3 (on average) in the 1m EUR.

 

Do you have an criteria the market or that pullback has to meet to buy/sell the the hammer?

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15 minute charts would be difficult to 'trade' from IMO. If you get 1-2 setups in a day, I would call that a victory. You are getting 4 bars per HOUR

 

See iam not sure if it is just the week and iam just freaking out. because normally i do quiet well and find many successful setups. Do any others experience a week in which it seem the market is just ignoring your ema? I feel that i have enough backtesting to support the 15minute chart.

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See iam not sure if it is just the week and iam just freaking out. because normally i do quiet well and find many successful setups. Do any others experience a week in which it seem the market is just ignoring your ema? I feel that i have enough backtesting to support the 15minute chart.

 

Not sure about the 15 minute chart, but I do experience days where the market seems to not respect the EMA (1 minute- 100 EMA) the way it typically does. However, more often than not, I do see a reaction at the EMA of some sort. Though it is not always a great trading opportunity.

 

Today for instance, you can see from about 9:20am to 10:20am EST CL consolidated above a ledge of support at the EMA before breaking hard on heavy volume.

 

2011-09-16_cl.png

 

Definitely a reaction to the EMA, but not much of a trading opportunity other than scalping. I suppose you could have traded the break of the consolidation but I always prefer selling a bounce back into the EMA. In this case, we didn't get it.

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Thanks for this. The picture below shows where I place the stop initially and how I tighten it up until it gets to break even.

 

Back testing appears to support the view that leaving the stop a tick below the low of the hammer, untouched, results is more profitable trades and less break even ones.

 

What's your view on this? Thanks!

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Thanks for this. The picture below shows where I place the stop initially and how I tighten it up until it gets to break even.

 

Back testing appears to support the view that leaving the stop a tick below the low of the hammer, untouched, results is more profitable trades and less break even ones.

 

What's your view on this? Thanks!

 

Apologies, here's the picture!

5aa710a5b06ae_2011_09.20-Charts18.thumb.jpg.2e48d8f7cfc1a493af6ff8e9915422b8.jpg

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