Optiontimer's Project

[rebyte2 10]

Plus... i forgot to mention that gold leaped out of the blocks today supporting that fact that USD is being sold down.

 

Im happy to sit aside and see what transpires.

 

Besides, im a creature of habit in i like to scalp, so i have another means of keeping myself entertained.

[optiontimer 10]

...this is bigger than any charts im looking at.

 

My view is that the currencies will go in to choppy waters.... IMHO.

 

You're a lot smarter than I am. Whenever I try to use my noggin' to come up with a 'view' I find myself flying blind.

 

-OT

[rebyte2 10]

Me smarter OT?

 

Just looking at a bigger picture....and still IMHO.

 

cheers

[russellhq 10]

Hi optiontimer, would it be possible to annotate a couple of your charts to show the major and minor trends thus showing how the strategy mantra "Trade with the major trend and against the minor trend" is being followed?

 

 

As for trading, I'm waiting to get filled on 2 orders (demo account):

 

buy 1 contract @ 126-00 on the ZB

buy 1 contract @ 124-130 on the ZN (though I think this may have been filled by now)

 

Stop loss for both contracts is Friday's low minus 0.1ATR10

[optiontimer 10]

...Just looking at a bigger picture....

 

cheers

 

I know you are, and I was simply remarking that I have never done well trying to develop my own "big pictures."

 

-OT

[optiontimer 10]

...

buy 1 contract @ 124-130 on the ZN (though I think this may have been filled by now)

 

Stop loss for both contracts is Friday's low minus 0.1ATR10

 

If your broker allows, you may want to specify that for futures other than stock indixes and currencies that your trades be executed only during regular, i.e. pit hours.

 

Also, for bonds and notes, I usually simply add a tick or two to the stops, unless we go through another crisis.

 

As far as your question about major trend/minor trend, we are using a fairly mechanicl systme to do what you ask: The major trend is defined, for out purposes, as the relation of the 21 ema to the 65 ema. The minor trend is defined by the short term oscillator becoming over bought against a defined down trend, e.g. see the current GBP.CHF, or oversold against a defined down trend, e.g. you bonds and notes charts.

 

-optiontimer

[Avarice 10]

Okies I think I backtested what was to be backtested, it's time I went "sim-live" with this little strategy. I'm going to adhere to what OT outlined: trend analysis with 21- and 65-day EMAs, trade entry done at previous day's high/low +- .1ATR10. Since I only trust what I can calculate mentally I'm going to use the MOM8 oscillator to time my entries. My only addition to this strategy is going to be (1) a mechanical trailing stop based on Elder's SafeZone stops that's going to be both my stop loss and my profit taker as the trade progresses and (2) a few home-brewed money-management and risk-control rules. Trades that are compatible with my position sizing rules will be marked with a TAKEN stamp, trades that are too risky are indicated by, well, NOT TAKEN.

 

I'll try to make 10 minutes every day to post my trade updates here.

 

So for today we have :

 

September CORN (ZC), short entry signalled @ 669'4, stop @ 711'2, risk $2087 (not taken)

August FEEDER CATTLE (GF), long entry signalled @ 136.776, stop @ 132.97, risk $1903 (not taken)

August SOYBEAN MEAL (ZM), short entry signalled @ 353.4, stop @ 365.7, risk $1280 (taken)

September CRUDE OIL (CL), short entry signalled @ 98.26, stop @ 102.22, risk $3960 (not taken)

 

Alain

[livernik 10]

WELL WRITTEN .

I will try to check and follow and let you know

[Avarice 10]

Update :

 

The system did not enter the soybean meal trade, entry stop was not touched.

 

August SOYBEAN MEAL (ZM), short entry signalled @ 353.4, stop @ 365.7, risk $1280 (entry not triggered)

 

The following trades were signalled for tomorrow's session:

 

August FEEDER CATTLE (GF), long entry signalled @ 137.622, stop @ 133.496, risk $2063 (not taken)

August LIVE CATTLE (LE), long entry signalled @ 111.875, stop @ 108.675, risk $1282 (taken)

August SOYBEANS (ZS), long entry signalled @ 1386, stop @ 1340, risk $2300 (not taken)

 

Alain

[Ingot54 13]

As far as your question about major trend/minor trend, we are using a fairly mechanicl systme to do what you ask: The major trend is defined, for out purposes, as the relation of the 21 ema to the 65 ema. The minor trend is defined by the short term oscillator becoming over bought against a defined down trend, e.g. see the current GBP.CHF, or oversold against a defined down trend, e.g. you bonds and notes charts.

 

-optiontimer

I'm following along as best I can this week - will post when I have something to contribute. Enjoying the input from others ... thank you all.

 

Next week should be better. Keep up the good work

 

Ingot

[mrcsidney 10]

Hello all,

I entered my first trade on Sunday, 9:10PM with all three conditions met ( sort of ...)

EUR/CHF short 10K (size), @ 1.16872

21 below the 65

pierced the 21 (just barely but I had a tiny (daily) candle at the time making a new low.

the StoRSI had struck the 100 line but weakly so I was wary but went for it anyway.

My risk is 234.00 and my reward is open-ended.

I haven't covered my risk yet but EUR/CHF continues down so all is good at the moment.

I have to admit I'm weak in that most important area of trailing stops. So, I'll reread all that has been said in this forum and then doubtless will have questions.

Anyway, have a great day, and I'm enjoying all the intelligent discourse.

Cheers,

mrcsidney

:missy:

[mrcsidney 10]

Yesterday I tried an equity trade using the same ideas we are working on here,

So, I shorted AMCC ( Applied Micro Circuits Corp ) after checking its compeditors and earnings history. AMCC was the largest loser among the group on the day in question.

That was good and it has beat its earnings est. the last three times. Interestingly enough is that the last time it beat (-.08 est. vs .04 or 12 cents ) it began to sell off.

21 below 65

StoRSI bounced off 100

next candle went below the low of the candle that pierced the 21

all present and accounted for.

I shorted 500 shares at 8.37 using the high of the decision candle as my stop.

After looking at that setup I decided to choose a 9.00 stop rather than the 8.70 that the high of that candle. So, risk is 9 - 8.37 or 0.63 x 500 shares or 315 plus transaction costs of 10.00 round turn. All told its 325.00 at risk.

Now for the good news, it fell this morning and I'm up marginally.

Well, I will sign off for now,

Best of the day to all,

mrcsidney

[un$ane 10]

A similar thread/method here:

 

http://www.traderslaboratory.com/forums/futures-trading-laboratory/9524-trading-daily-trend-60min-entry.html

 

OT, are you going to introduce options at some point?...As your handle suggests?

[Avarice 10]

Update :

 

The system did not enter the live cattle trade, entry stop was not touched.

 

August LIVE CATTLE (LE), long entry signalled @ 111.875, stop @ 108.675, risk $1282 (entry not triggered)

 

The following trades were signalled for tomorrow's session:

 

August FEEDER CATTLE (GF), long entry signalled @ 136.625, stop @ 133.2, risk $1716 (taken)

August LIGHT SWEET CRUDE (CL), short entry signalled @ 97.02, stop @ 101.79, risk $4770 (not taken)

 

You'll notice that this is the second time the system signals a long trade for GF. Yesterday's risk was too high for me (the stop was too far off). But GF has been pretty flat for the past few days and thus my volatility-based stop is getting closer to the entry point which results in a smaller risk. This time it fits my parameters so I'll put up the trade. There seems to be some resistance at the 142-144 level, once the trade reaches this zone stops should be tightened aggressively.

 

Alain

[phantom 16]

Why is this thread located in the psychology department as adversed to, say, the trading methods or technical department???

 

 

Phantom

[russellhq 10]

Reviewing the charts tonight (UK time), Live Cattle shows the EMA lines to be very close but still appears to be a signal: 21EMA < 61EMA, 7sRSI has turned down and the price is between the ema's.

 

Thoughts?

[optiontimer 10]

Hello All!

 

I am on the road this week, and my internet connectivity has been spotty at best when my time has beens free, and perfect and fast when I have no time for trading, charts, and posting. Thank you for keeping the thread active and updated.

 

The 10 year not long has been stuck in the mud, and the EURUSD is now short as price broke the 7/27 1.4339 low. There have been a number of nice forex entries this week.

 

-OT

[peterbee77 10]

I must say I've greatly appreciated this thread - many thanks OT!

 

I'll apologise at the outset for raising a side-branch to the main thread here. I'm interested in applying OT's method to stocks (even worse, Ozzie stocks) and I suspect they behave differently to commodities or forex.

 

I've come across a problem while ploughing through a series of backtests of Oz stocks, and I was prompted to raise it when I read the "exogenous" thread quoted by un$ane in post #141 (thanks un$ane):

 

A similar thread/method here:

 

http://www.traderslaboratory.com/forums/futures-trading-laboratory/9524-trading-daily-trend-60min-entry.html

 

 

I was struck by one of the rules in CeazaredeBeer's method:

 

 

RULES:(for long entry, reverse for short)

Signal Candles range must be less than $5.(50 pips if geared 1:10)

 

 

CeasaredeBeer restricts the range of the Signal candles he takes (ignore the $5 range size he mentioned in the quote - I'm taking it out of context - it's the principle that's interesting).

 

The problem I've come across with Oz stocks (maybe all stocks) is that sometimes the short-term correction against the main trend is reversed by a strong bar that reverses most of the countertrend move in one bar. When this large-range bar occurs during the overbought/oversold phase of the correction it becomes the Signal bar, by definition per OT's method. Going long for example, the stochRSI-7 may go from 0 to 70 on the first day. The price then has to rise above that tall Signal bar to trigger the Entry. But by the time it's risen that far it's fairly close to oversold and the trend might pull back soon after. Result = another entry followed by a whipsaw loss.

 

I'm ploughing through backtests of OT's method in stocks, and I've come across the above pattern a few times amongst the failed trades. I've just started the backtesting, so I don't know yet if it's enough of a problem to worry about. But I was wondering whether I shouldn't formulate an additional rule, say, to reject OB/OS reversal Signals that swing from sRSI= 0/100 past 50 in one day.

 

I know one shouldn't complicate a good method with extra rules - and OTs method is certainly great in that respect. But it might be useful for stocks.

 

PS: I can sympathise with Ingot's earlier posts where his preferred entry was to enter early on in the day when sRSI made its move - rather than waiting for sRSI to close and wait for the next day to enter, thereby collecting himself a goodly number of extra pips more than the per-rules entry. A reflection of the same problem maybe?

[NeoTrader 10]

I have been following this thread closely since I have found it, and I believe it contains a wealth of information. Thank you OT for your efforts and knowledge sharing. It is truly an asset to this community.

 

In the spirit of this thread, going through some charts I found a perfect setup that Stanley Kroll mentions in his book. A breakout of a long term range into a new trend.

 

Attached is a Yearly chart of the EUR/JPY. Note the rangebound activity for months followed by the strong close outside of the range to the downside. It then makes a gorgeous pullback to the 21 EMA and resumes the new downtrend.

 

After going through this thread and reading Kroll's book setups like this are much more obvious to me and things are starting to click. I ground out my fair share of capital on the intra-day level and its like a breath of fresh air to step back to larger trend following time frames.

 

So hello to the thread and thank you all for your excellent contributions.

[Avarice 10]

Attached is a Yearly chart of the EUR/JPY. Note the rangebound activity for months followed by the strong close outside of the range to the downside. It then makes a gorgeous pullback to the 21 EMA and resumes the new downtrend.

 

Neo that's indeed a beautiful setup you found yourself there!

 

If this was my trade (which it isnt so take this with a grain of salt ) I'd see how it manages to pierce the 110.5ish support (start of July, Fukushima in mid-March) and if it clears that I'd set course for 107 with a wide enough stop (I'd allow for a rally of half of the decline).

 

Sorry for the :spam: but this setup is just gorgeous, couldnt help myself

 

A

Edited July 28, 2011 by Avarice

[NeoTrader 10]

Avarice,

 

Not spam at all. I am looking at the same levels of potential support and will be watching closely. Hoping that momentum and the clear cut price action will carry us through that 110.5 ish level.

 

I guess i more posted it because it was so pretty looking. Not often you see that.

[optiontimer 10]

Not often you see that.

 

You'll see it a lot more often now that you are looking for it.

 

-OT

[optiontimer 10]

...I'll apologise at the outset for raising a side-branch to the main thread here. I'm interested in applying OT's method to stocks (even worse, Ozzie stocks) and I suspect they behave differently to commodities or forex.

 

The list you choose will be of paramount importance - you need to find something similar to the IBD 50, for example - think high momentum, strong trend. AAPL, NFLX, CMG have all given easy to spot entries.

 

If you have a charting software that allows you to sort and scan, perhaps you could do a monthly scan, looking for stocks where the 21 ema > 65 ema +5%, or has an ADX >30. You want stocks that are in a strong trend, not stocks that have been going sideways where the 21 ema is only "accidentally" above the 65 ema.

 

You might want to use the 50 SMA instead of the 65 ema. Institutional investors pay attention to where price is relative to the 50 day, and if you are trading stocks, why not look at what the investors who actually move a stock are looking at, right?

 

You do not need a big list. Even the IBD 50 should be culled down to 10-20 of the strongest looking trends. Most of these stocks will set up on the same day, or within a few days of one another, as they will tend to move with the broad market. When the market as a whole pulls back against the trend, most of your list will as well.

 

One last thing - I find that for stocks, it is far easier to make this work from the long side than the short side unless the general market is in a clearly establsihed bear trend, and not a mere period of sideways consolidation in an uptrend.

 

-OT

[optiontimer 10]

Hello all,

I entered my first trade on Sunday, 9:10PM with all three conditions met ( sort of ...)

EUR/CHF short 10K (size), @ 1.16872 ...

 

So you are sitting on +200 pips open profit. Do you have any idea how many would-be forex traders have a collection of +200 pip losses without a single 200 pip profit to their name?

 

Me neither, but I would bet its a lot!

 

Nice trading,

 

OT

[optiontimer 10]

Reviewing the charts tonight (UK time), Live Cattle shows the EMA lines to be very close but still appears to be a signal: 21EMA < 61EMA, 7sRSI has turned down and the price is between the ema's.

 

Thoughts?

 

Would have been a short, but no fill today, and momentum positive - we now wait for the market's next move.

 

-OT