Optiontimer's Project

[tamag 10]

Awesome!

 

Why don't you post a chart or two showing what you are doing with the fib's? You might end up helping someone else to achive better results![/QUO

 

 

Ok if you will explain to me how to do that I will gladly.

[kuokam 10]

If you mean how to post a chart, this is how I do it:

1- save it on the computer

2- go to manage attachments, below the the thread/post, on the "additional options" panel

3- go fetch the image where it is on the computer and

4- upload it

 

Btw, this is a weekly chart of Eur/Nzd I shorted last night, but trailed my SL too early this morning and got out at BE. Will look to re enter short ASAP.

If only I had "sit tight", I'd be 40 pips ahead !

 

 

 

 

 

Ok if you will explain to me how to do that I will gladly.

Edited November 5, 2012 by kuokam

[kuokam 10]

Just finished the reading. Thank OT, especially for advising to take written notes while reading. I did, and the same with Mr Kroll' book. Working now on my check list, after I re read Livermore.

Thank all the contributors, especially those still around:). It was pure joy reading thru so many pages by only serious and civilized participants.

I even found my first fellow countryman ever on this forum. Avarice, if you are reading, please make me an appointment and borrow me that annoted book on Jessie Livermore you recommended.

 

The reading changed the way I used to look at charts 180°. Attached are 2 charts for illustration purpose. I can't get StoRsi on my platform, so i defaulted to RSI, 8 periods. Please have a look and tell me what to improve.

As per the rules I so far followed, these markets are a sell, since they have broken "my" bullish trend line. I would've been looking for shorts and could probably have some success, as this is also consistent with weekly trend. But the resistance on the Eur/usd is a monthly one, so probable trouble zone ahead short the euro.

Now by OT/Kroll's rules, "we don't want to go short and might go long when 21ma is above 65 ma". That's quite a new pair of sleeves, if they say so in English. Therefore we now wait for a pivot low to be made on price and the oversold RSI to reverse.

I actually put a stop order to buy in Chesapeake yesterday but it gapped down without triggering.

My attaching these charts are just to get them examined by the more trained eyes to see if they strictly abide by the rules.

Thank you for taking time.

kuokam

[kuokam 10]

Bought oats yesterday. Hope it was not too soon

[optiontimer 10]

Bought oats yesterday. Hope it was not too soon

 

Dec would have been stopped out, but that close to expiration you could have traded March and you'd still be long with a 15 to 20 cent open profit.

[kuokam 10]

I didn't check the dates at all at entering. The setup just seemed so sexy and I jumped on it headlessly

Well, it was all okay thru the rollover until I moved my stop one day too early. You will see it on a chart, the most recent pin bar is where I got out.

Yet another chance to sit tight missed.

 

 

 

Dec would have been stopped out, but that close to expiration you could have traded March and you'd still be long with a 15 to 20 cent open profit.

[optiontimer 10]

I didn't check the dates at all at entering. The setup just seemed so sexy and I jumped on it headlessly

Well, it was all okay thru the rollover until I moved my stop one day too early. You will see it on a chart, the most recent pin bar is where I got out.

Yet another chance to sit tight missed.

 

Oats looks to have completed a three day pullback today, which makes for a decent long entry or an add-on point. 390-391 (March 2013), would be an ideal buy point, though I am not usuaully one to quibble for ticks when I am trading for points.

[kuokam 10]

Problem is it is not willing to go beyond 400 since months.

 

Oats looks to have completed a three day pullback today, which makes for a decent long entry or an add-on point. 390-391 (March 2013), would be an ideal buy point, though I am not usuaully one to quibble for ticks when I am trading for points.

[optiontimer 10]

Problem is it is not willing to go beyond 400 since months.

 

Not something I would consider a problem in the ocntext of the system.

[kuokam 10]

Okay but right now I am already with a sexier candidate that i'm sure will seduce you as well: lean hogs, long.

 

Not something I would consider a problem in the ocntext of the system.

[LostTrader 10]

Hello everyone! I am relatively new to the world of trading, and brand new to this forum. This thread was one of the first I started reading, and I haven't looked at any others since. Love the simplicity of the system!

 

I am slowly getting myself setup to start trading using this system and will be trading FX for now. I am looking at my first potential position signal in EUR/CHF as a long I think. () The 8,1,1 stochastic RSI is at 0, the EMA 21 is above the EMA 65, and the candle-bar price falls within the two EMAs. So I think I'm waiting on a upturn in the RSI and an opening higher than the final signal day's close. Please correct me if I've mangled anything there.

 

I have attached a screenshot of the daily chart, three months out. I welcome any feedback or critiques. Looking forward to learning from all of you and hopefully contributing to this group!

[Gringo 10]

Hello LostTrader,

 

I don't see a divergence. Admittedly, my understanding of OptionTimer method is limited but I believe the short term price was to be at an extreme with some divergence in the indicator in the direction of the longer term trend.

 

The indicator is at an extreme but not showing a divergence yet. The price isn't at the extreme but could be considered close enough.

 

Were I to use only the price behaviour for a decision I would consider this position to be unclear at this time.

 

Gringo

[LostTrader 10]

Thanks for the reply Gingo. After looking at the current/past price action of pair, it seemed like it was a bit unstable and consolidating for the most part. I'll look to other pairs for now while I read through the old posts in this thread to catch up. Cheers!

[optiontimer 10]

I don't see a divergence. Admittedly, my understanding of OptionTimer method is limited but I believe the short term price was to be at an extreme with some divergence in the indicator in the direction of the longer term trend.

 

Divergence, as it is typically defined, has no part in what I described here in this thread.

 

Divergence is typically understood as a situation where price behavior and indicator behavior are going in different directions, hence, divergence, as in "at this point, our interest have diverged."

 

Positive divergence: Price is making lower lows, but the indicator is making a higher low. This is often interpreted as being positive for rice, i.e. indicating the decline is losing momentum and higher prices are ahead.

 

Negative divergence: Price is making higher highs, but the ndicator is making lower highs. This is often seen as negative for price as it indicates that the rally is losing momentum and lower prices may be ahead.

 

In this system, we want the indicator to turn with price. If price is in a downtrend, we want to see price rally. The indicator will move up with price (that is what indicators do, after all). We then wait for the indicator to hit an overbought level and then rurn down, with price, from over bought.

 

If you use this method long enough, eventually you will not need the MA's or the indicator. You will see what you need to see by watching price alone. You will ultimatley be able to determine without the ndicators what is significant price action that demands a decision. The system is designed to use the indicators to highlight those significant moments.

 

This does not mean you should be in a hurry to abandon the indicators. There is no reason to move away from them at all. You could use this system with these indicators until the end of western civilisation as we know it, and you will do quite well.

 

What this does mean is that in addition to watching the indicators, watch price as well. When the indicator is flasjing a set-up, look at the price action at that point. Be one with your chart!

 

Here is a recent short sale signal on Herbalife (HLF) that I mentioned in MadMarketScientist's HLF thread a few days ago. The area higlighted by the elipse shows price making a high with the indicator overbought on Tuesday, January 15th. The next day, Wednesday January 16th, price made a slightly higher high, but closed down, which caused the indicator to turn down from extreme overbought. This is the set up bar or signal bar, and the low is 44.05. The next day is the entry bar. For stocks I usually use a dime as the stop level, so a short position would have been entered at $43.95.

 

 

Do not bring anything into this other than trend, counter-trend, trend resumption. There is no need to bring the concept of divergence into this method.

 

As for the EUR/CHF chart above, there was really no trend/counter-trend. Price had rallied and then fell into a prolonged tight range. A breakout trade, not a pullback trae. This method is primarily a pullback method.

 

As of today (2/5), the EUR/CHF looks like it is putting in a possible buy signal, with a buy stop approx. 123.50, and a 100 pip stop loss.

[BlueHorseshoe 10]

Here is a recent short sale signal on Herbalife (HLF) that I mentioned in MadMarketScientist's HLF thread a few days ago.

 

Hi OT,

 

At the risk of asking a slightly off-topic question, how have you found using options to compare to using futures for this approach?

 

I asked a related question here in the summer, but I don't think I explained myself clearly enough for anyone to help. Do you find that once you've factored in premiums their are any real advantages to using options over futures?

 

BlueHorseshoe

[Gringo 10]

Divergence, as it is typically defined, has no part in what I described here in this thread.

 

Do not bring anything into this other than trend, counter-trend, trend resumption. There is no need to bring the concept of divergence into this method.

 

I stand corrected.

 

As for the EUR/CHF chart above, there was really no trend/counter-trend. Price had rallied and then fell into a prolonged tight range. A breakout trade, not a pullback trae. This method is primarily a pullback method.

 

Eye opener.

 

Gringo

[Niko 10]

Any suggestions how to deal with this?

 

[Ingot54 13]

Any suggestions how to deal with this?

 

Perhaps one could be more selective with the commodities one chooses to trade?

 

There are far easier charts to be found than this one - I can not make it out, but it does not look like one from the suggested stable of futures available.

[BlueHorseshoe 10]

There are far easier charts to be found than this one - I can not make it out, but it does not look like one from the suggested stable of futures available.

 

It's oil, isn't it?

 

And I agree with your suggestion - the OT method will perform well in markets that are prone to trend in the long term (that's the averages), and mean-revert in the short term (that's the RSI) - choosing a portfolio of appropriate markets to trade is important.

 

BlueHorseshoe

[Niko 10]

Great system, have been testing it on intraday with very good results, one has to define the exit strategy but that is just a byproduct of backtesting.

[metalhead 10]

I coded up a "red light/green light" version of the rules on the first page in SierraChart.

 

Works well during trends as you may expect since it has you buying the pullbacks.

 

Not all of these signals would be taken like the ones where price is way outside the 65EMA. I only coded it to check if the low was below the 21EMA if the 21EMA is above the 65EMA for long positions and vice versa. You'll see.

 

Green dot = long signal

 

Red dot = short signal

 

Grey background = regular trading hours.

 

It worked great on April 3rd.

 

Not so much on March 12.

 

Question (sorry if I missed it in the thread): do you only take long trades following HH/HL or do you take tall long trades given by the indicators regardless of where they occur in swing highs/lows?

Edited April 8, 2013 by metalhead

[Niko 10]

I coded up a "red light/green light" version of the rules on the first page in SierraChart.

 

Works well during trends as you may expect since it has you buying the pullbacks.

 

Not all of these signals would be taken like the ones where price is way outside the 65EMA. I only coded it to check if the low was below the 21EMA if the 21EMA is above the 65EMA for long positions and vice versa. You'll see.

 

Green dot = long signal

 

Red dot = short signal

 

Grey background = regular trading hours.

 

It worked great on April 3rd.

 

Not so much on March 12.

 

Question (sorry if I missed it in the thread): do you only take long trades following HH/HL or do you take tall long trades given by the indicators regardless of where they occur in swing highs/lows?

 

 

i guess you need to define a filter for the chop.

[metalhead 10]

i guess you need to define a filter for the chop.

 

Unfortunately there are no effective chop filters because they only tell you if price has been chopping, not if price will chop in the future.

 

That's why I asked about the HH/HL thing.

[TradeRunner 10]

if you look through the thread Optiontimer added some rules to help with chop...

[metalhead 10]

I buy dips in uptrends and sell rallies in downtrends. I assume the major trend will continue until it doesn't.

 

If this were day trading, my answer would have been different.

 

-OT

 

How would your answer by different if this were day trading?