3 inside days
Perrush
just began trading a 3 inside day setup. Could still use some info (books,
sites, ...), anyone idea's, comments, ...
Stefan
* always prepared to exchange ideas *
Jack Hershey
"Perrush" <stefan....@PERRUSHpandora.be> wrote in message
news:8ewe9.107447$8o4....@afrodite.telenet-ops.be...
Perrush
news:4Y2f9.97308$Fb.39...@news1.west.cox.net...
> Save us a little effort. what are you using now?
>
on http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID162895
you can find at the bottom of page 2 (chart 4.001) the setup I search for.
There are also a bunch of charts with possible trades.
The idea was that when this small consolidation breaks you could expect a
short but significant move.
Questions :
1) how important is volume ? Does the inside days need to be on declining
volume to have a reliable outbreak.
2) Is there any idea to where the outbreak will be ?? Normally I would
categorize this as an continuation pattern. But is this really true ? has
anybody have any data about this.
3) Can we set a target ?? I used 100% to 75% a ATR14 as a target, seems to
work pretty good, but I've no hard data yet.
4) Is an outbreak AGAINST the market (SPY up -> outbreak down) more reliable
than when the stock goes WITH the market. It seems so, but again, I've no
hard data.
5) Does outbreak need to be before, lets say, noon to be reliable ??
6) Is a pattern where the last candle has a very narrow range more reliable
than a 3 inside day where the last candle has still a significant volatility
?
7) How much % false breaks are there ? (meaning taking out previous high AND
previous low)
8) ... forgot a bunch of questions, but I think you see what I mean. I
need INFO !
--
Stefan
View my chartlist at stockcharts :
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID162895
Want to learn Technical Analysis ?? Check this, it's free !!
http://stockcharts.com/education/What/index.html
Jack Hershey
I parsed this below where you see ******. This is a once over lightly since
I have commented before re the combo of Kagi, P&F, Renko, and TLB as they
relate to 3 inside days on candlesticks and what I call congestion,
convergence and centering on bar charts. For the later check out my comments
vis a vis Rick Ratchford in MIF. I trade his picks to demo money velocity
in MIF. I am running about 4 times Rick's money velocity as a consequence
of what I will post in detail.
Many will find what I say to be verbose, rambling and hard to read. The
ratio is about 4 out of 5 against how I do stuff. My comments, as Perrush
has said specifically, are like someone else's here and the implication is
that they are not to his liking for his reasons. This post is no different.
"Jack Hershey" <jhers...@cox.net> schreef in bericht
news:4Y2f9.97308$Fb.39...@news1.west.cox.net...
> Save us a little effort. what are you using now?
>
on http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID162895
you can find at the bottom of page 2 (chart 4.001) the setup I search for.
There are also a bunch of charts with possible trades.
The idea was that when this small consolidation breaks you could expect a
short but significant move.
****Lets assume Perrush has everything else covered with his investment and
trading algorithm and that he is just focused here on the use of this as an
entry. However, his questions do tell us that he does not have a
comprehensive algorithm for trading to build wealth. My general comment to
anyone in this place is that they should really get on setting up a
comprehensive algorithm.
I will use HOV as an example here. I bought it very late on the 28th
(31.18) and sold it yesterday late (38.85). Over 7 days that is a 24.6%
profit. I monitor and trade on the 30 min charts and I anticipate my
decisions by consulting the 5 min charts. You can use any display you want.
Perrush uses candlesticks. The key point here is that you must be on a char
t duration that lets you use the data you have appropriately to make money.
Daily barss will not work for most opportunities. This is a failing of most
people's algorithms. The key consideration is how fast can you make money.
You optimize the compromise between the exponent and the profit per cycle on
the compound interest formula. You cannot do this intuitively because it
exceeds your intellectual ability. You must do a graphical ananysis of
about 50 stocks from your sub universe to achieve this result. Most people
do not choose small universes to begin with and therefore they try to apply
an algorithm to a large universe and they fail due to poor signal to noise
ratios. Perrush is in this place at this time.
Perrush is using several indicators in his algorithm and is not using others
that he needs to use. Assume he is using what he talks about at some level
(newbie). His level is set by the quality of Q's he asks. These are (in
order of appearance): price, volume, ATR14, SPY, formations (false BO). I
will use (in order of importance): MACD, volume, price formations and time.
All of my comments below are oriented to making money as effectively as
possible. HOV is an example of making money effectively. Three other stocks
I currently own are ISIL, SIE and KMX. You can track them today to see how
things are going vis a vis money velocity.
Questions :
1) how important is volume ?
*****Volume is more important than price. The reason is that it is a
leading indicator of price. It is important alwys to have indicators that
happen before the price you are using to make money.
Does the inside days need to be on declining
volume to have a reliable outbreak.
**** Declining volume is always a MUST for considering entry on any strategy
for entry. The volme characteristic is one where three volume values will
always give you the picture. These are DU, FRV and peaking volume. DU is
Dry Up volume. Calculate it by looking at five prior DU volumes that
happened just before a tradable cycle. They must be within the last 6
months or you can throw out the stock from your list of stocks.
2) Is there any idea to where the outbreak will be ??
***** You are unable to see when this will happen presently because you have
not been able to develop a trading algorithm on the proper duration of data
segments. You are on daily charts and they do not work for making money
effectively. This is going to be tough for you and others since some people
have jobs they are tied to. People with jobs often think that days are how
the world works. You must make a transition to working in the evening or
early morning and using bar lengths that are related to making money and not
related to your life style. To make money find out where it is made the
fastest and go there. For this post go to 30 min bars if you are mentally
able to.
There is a precise idea of when the outbreak ( This is called Break Out (BO)
in the literature and you can learn the vocabulary as you get into making
money) will occur. The missing question here is one about the direction
that is more important and one other question about when (the key timing
question) to enter to eliminate risk. The question on the table is a newbie
question and the others are not newbie ones.
Volume tells you when the BO will occur. Price is driven by people. People
are volume as data and any approach that does not recognize this is not
satisfactory. Average volume is valueless data. It is easy to derive and
is very popular with the herd and can't be used for anything. The DU volume
is the key. It is the people volume that represents disagreement among the
trading public. Total disagreement on price leads to spreads and to low low
volume. When one side or the other changes their collective minds, then
trading occurs. The first thing to learn about is who are the two sides;
they are: old owners and potential owners. Old owners are looking for
reasons to leave. Potential owners are looking foir resons to join the
club. The group that is the smallest runs the show.
We are looking for one thing. The time people are in disagreement. That is
the purpose of the 3 inside days formation in price and it is why this
thread is underway.
There is no challenge to determine how to monitor and to make decisions at
this point. As readers, though, you are drawing a blank just as Perrush is.
You must learn to think as individuals and surmise what to be doing. Tha is
the difficulty peoiple face in learning to make money. You can see why I
hold HOV, SIE, ISIL, and KMX. I am trading ISIL twice a month and in
several accounts for several people.
You calculate as the day goes by (if you work it is okay; you do it a day
late and have a high money velocity as a consequence). You find the daily
volume on a prorata basis as the day unfolds. You can easily see that the
volume is going to exceed DU by a factor of 3 to 4 on the given day. As the
volume approaches actual DU, you will see that price has not moved as yet.
But it will begin to move as DU is exceeded. Thus you enter at this time
and then let the herd who is monitoring price see later that the price is
starting to move. You are always pushed along by the herd. You enter on
the volume signal and they enter later on the price signal.
As I said four out of five do not like my posts, they are too verbose.
Actually they do answer the real questions and show you how to make money.
They also show you how to begin to think. You should highlight each small
idea you learn here in this post. Compare it to others. Perrush is a
surface person as you see from his responses to me the last week or so. He
need info!!!! As he says. But he must step up to the bar sooner or later to
get an investment algorithm to begin to make money effectively by using a
minimum of flawless leading indicators. I am going to where he is to lead
him in the right direction.
One out of five people that adopt what I suggest are currently millionaires.
The other four are thinking about doing it still.
Normally I would
categorize this as an continuation pattern. But is this really true ?
******* No, it is not true.
has
anybody have any data about this.
**** lots of people have data. They will help you. It is a lot to ask of
people to give you data on things that are not true. Usually most people
move on and forget stuff that is not true. When you don't get answers on
something you are saying is so, then rethink it and ask it the opposite way
so you can get more answers. Switch from playing checkers to playing chaess
if you want to be in the game in the future.
3) Can we set a target ?? I used 100% to 75% a ATR14 as a target, seems to
work pretty good, but I've no hard data yet.
*** the targets are already set and proven. Do not pick ant stock to trade
that does not do what you want at least five times in the last six months.
Use a form to record the data and list the average of the past five
performances. ATR14 is like average volume. It is convenient to calculate
and has no use at all for making money rapidly. You are looking for info
and using convenience at every turn. You have to move to higher ground.
4) Is an outbreak AGAINST the market (SPY up -> outbreak down) more reliable
than when the stock goes WITH the market.
****We have two piles of stocks. Contrarians and trending. One is a big
pile and one is a little pile. Both are terrifically reliable; that is how
they get their names. Stocks that you can't put in either pile are the one
that are not reliable.
It seems so, but again, I've no
hard data.
**** Do not think of yourself as a person who will ever have any data on
stuff. It is not in the cards for you. A person has to know a lot of maths
etc and be a selfstarter to get to such a place. You are using other
peoples stuff to make money so don't count on changing your personality at
this point. Just begin to consider getting rich by doing what you learn is
the way to do it.
5) Does outbreak need to be before, lets say, noon to be reliable ??
*** this is a good question. The question is really: By what time of the
day will I know if a BO is coming? The answer is 11:15 eastern time. The
reliability of my answer is one where P < 0.05 that I am wrong. If there is
no BO in the morning to buy, then there will not be one during the day
usually. Same P. The other question that has to occur is the "selling"
question. We have a volume way to anticipate buying and now we know the
timing of the buy. So it must be true that thee is a similar set of stuff
for selling. Right? Right!
6) Is a pattern where the last candle has a very narrow range more reliable
than a 3 inside day where the last candle has still a significant volatility
?
****This is a kewl observation. Your people who help you at stock charts
blew the whole example as you may sometime see. Look there for the answer.
How can a person get to stockcharts to fix that example do you think?
Now to get to your thinking here. You have volatility wrong totally. You
must stop using "reliable" in your questions because you are killing most of
the possibility of getting to a learning orientation. What you need to do
is turn to using a few well chosen things that work flawlessly. Then if you
see a flaw you simple get out of that situation. Bingo. Start simply for a
year or so. You may be even repeating a first year of investing over and
over like a carpenter with 20 years experience who is repeating the first
year over and over.
7) How much % false breaks are there ? (meaning taking out previous high AND
previous low)
****** Most breaks can be seen as false easily if they are false BO's.
there is a simple test that is applied before the end of the false BO. Your
definition of a false BO is very poor as well. You biggest problem with
respect to this is that you are observing the wrong duration data. If you
overcome some of your basic problems, then a lot of places where you are
screwing up ( like being trapped in false BO's) will go away.
Your % of false BO's will be quite high.
8) ... forgot a bunch of questions, but I think you see what I mean. I
need INFO !
***** This is why I posted to you. You have not reached a level yet where
you can begin to do investing. We all can see where you are. Dump as much
stuff as you can to clean your slate. If by now you had been through
adopting and using anyone of a bunch of good investment algorithms, you
would have the basis for building your own. You might want to find one and
then get together with a buddy (someone who lives where you do) who uses it
to be able to advance through the process. A non-cohesive collection of
odds and ends isn't going to do it for anyone.
Think how strange it is to you to consider using a fractal that makes a lot
of money. Think about the strangeness of looking at the next faster fractal
to see what is coming. Think about only using leading indicators to
monitor. Think how strange it is to let the market tell you how much money
can be made in a given time. When you get to managing risk and dealing with
money management how will your monitoring and analysis be done in that
context?
Perrush
now I understand why some people don't like your posts. My English isn't
that bad, but this I can hardly understand <G>. Nevertheless I find your
post(s) very interesting because you're obviously someone who know what he's
talking about. And I really do appreciate that you take your time for
answering those 'newbie' questions. I also read about your 'hershey-style'
(buying pullbacks) on an MSN board of Don Cameron, so I know something about
your style.
As for me, Yes I see myself as a newbie, but one which doesn't give his
money away. I'm trading for two years (250 round trips a year) now (so
definitely a newbie) with what I call good result (fat double digit yearly
returns with almost no weekly drawdowns). I've done almost everything :
daytrading, short term swinging, long term, ... made money on every front.
So what's the problem you'll think ... I have NO strategy (I think you call
it an algorithm) !! I just traded on 'feeling'. That's why I started to
TRY to deform my 'feeling' into a strategy.
So far the intro, back to your post.
< For the later check out my comments vis a vis Rick Ratchford in MIF>
**
I certainly will
<My comments, as Perrush has said specifically, are like someone else's here
>
**
but that 'someone else' did learn me a lot about fundamentals, so I'm not
that easily scared.
<Lets assume Perrush has everything else covered with his investment and
trading algorithm and that he is just focused here on the use of this as an
entry. However, his questions do tell us that he does not have a
comprehensive algorithm for trading to build wealth>
**
You're right. Perrush (me) doesn't have a proper strategy. I was just
experimenting with a setup I like. The list on stockcharts is for my own
educational purposes. Besides, I'm not really trading for wealth, I just
enjoy what I do, and the money I make does cover my expenses. I'm not at
that level that I go for the kill so I can retire.
<You can use any display you wantPerrush uses candlesticks. The key point
here is that you must be on a chart duration that lets you use the data you
have appropriately to make money. Daily bars will not work for most
opportunities. This is a failing of most people's algorithms >
**
The daily charts are just for the greater picture, no real decissions are
made on them (beside ATR)
Entry's and exits are made on the 5 min chart. As I said, time horizon is 1
to 5 day's.
<Most people do not choose small universes to begin with and therefore they
try to apply an algorithm to a large universe and they fail due to poor
signal to noise ratios. Perrush is in this place at this time >
**
True, but not sure that a universe can be to large. That's why you have to
alter the scan, it's the scan who brings your great universe down to your
daily universe. Or did I miss something ??
<His level is set by the quality of Q's he asks>
**
hmmm ??? imho a traders level is set in the ability to decrease his
drawdowns (eg risk control).
never mind ... next
<These are (in order of appearance): price, volume, ATR14, SPY, formations
(false BO). I will use (in order of importance): MACD, volume, price
formations and time>
**
and you forgot : stochastics (price), CMF (price/volume), PPO (= MACD)
but again it's on the daily chart which doesn't influence me alot. I mainly
make my decision on the chartpattern and pricemovement of the 5 min chart.
And time IS a factor of mine. (see comments on charts when I say 'to
early' - 'to late')
<Volume is more important than price. The reason is that it is a leading
indicator of price>
**
now we are making progression.
<Declining volume is always a MUST for considering entry on any strategy for
entry. The volme characteristic is one where three volume values will
always give you the picture. These are DU, FRV and peaking volume. DU is
Dry Up volume. Calculate it by looking at five prior DU volumes that
happened just before a tradable cycle. They must be within the last 6
months or you can throw out the stock from your list of stocks.>
**
Here I see the 'hersey'-style. You assume that the stock is trending.
Making several cycles.
Do you tell me that if a stock doesn't have such any history, it isn't
suitable to play ?? It wasn't my intention to play a complete cycle. I
only want to catch the BO, taking 3 to 4% in preferable in 1 or 2 days.
Your style is a little longer orientated, so why should a stock have such a
history (of at least 5 waves) if I only want to catch a short move. You
definitely have a point with the DU and FRV. And I already observed that my
3 inside days often occur at the bottoms/tops of the swings. That's when I
made the link with 'hershey'-style and therefore I posted a question on the
board of Don.
< perrush said : 2) Is there any idea to where the outbreak will be ??
Jack answered : You are unable to see when this will happen presently ... >
**
I understand already that DU can 'predict' an BO. So my queston was not
'when' but 'in which direction'
never mind, just skip this.
<The missing question here is one about the direction that is more important
and one other question about when (the key timing question) to enter to
eliminate risk. The question on the table is a newbie question and the
others are not newbie ones>
**
not sure what you ment by this.
<You can easily see that the volume is going to exceed DU by a factor of 3
to 4 on the given day. As the volume approaches actual DU, you will see
that price has not moved as yet. But it will begin to move as DU is
exceeded. Thus you enter at this time and then let the herd who is
monitoring price see later that the price is starting to move. You are
always pushed along by the herd. You enter on the volume signal and they
enter later on the price signal.>
**
Ok, nice definition and purpose of your DU. This is ofcours for your style
of trading, with yout holding length of one to two weeks ??
I think it's harder to implement on a shorter time frame (one to two days),
which who be my style.
<As I said four out of five do not like my posts, they are too verbose>
**
Never mind Jack, just be who you are.
<Perrush is a surface person as you see from his responses to me the last
week or so. He need info!!!! As he says.>
**
A surface person ?? you mean a newbie, a novice ?? Just because one
needs/wants info ?? come on Jack, don't be that hard. What do you mean by
last week ? Or did you mean the first post in this thread or on MIS ?
<But he must step up to the bar sooner or later to get an investment
algorithm to begin to make money effectively by using a minimum of flawless
leading indicators>
**
true, that was the initial goal of my post. Getting idea's from other to
see where I can improve, where I make faults.
<ATR14 is like average volume. It is convenient to calculate and has no use
at all for making money rapidly>
**
hmmm. As I said I use ATR (experimental) to set a target. You must know
what you're aiming for if you want to hit it. ISIL for example is a $20
stock with an ATR of $1.5 to $2. So if I traded ISIL it would aim for a $2
gain which is well within the possiblities of ISIL (as you can see on the
charts). An other $20 stock maybe has an ATR of only $1. It isn't right to
aim for the same $-gain on that stock as you did by ISIL.
So I'm pretty sure ATR has some purpose, only not sure how to use it
properly.
<We have two piles of stocks. Contrarians and trending. One is a big pile
and one is a little pile. Both are terrifically reliable; that is how they
get their names. Stocks that you can't put in either pile are the one that
are not reliable.>
**
do you tell me only trending stock are reliable ?? Don't forget my
timeframe is different than yours. I would have thought that on this narrow
timeframe, past trends doens't matter that much. Just catching the first
and relatively short move.
<Just begin to consider getting rich by doing what you learn is the way to
do it.>
**
Although I'm prepared to learn from anyone, anything (eyes & ears wide
open), I'm not really a follower. I like to do things my way. Maybe thats
the 'secret' of my non-failure. I trade how I feel comfortable and don't
try to squeeze my personality in a form somebody told me.
Don't get me wrong Jack, I'm open for very suggestion, but I never take
anything for sure from anybody without having looked into it closely.
Getting rich is't my primary goal at this point. Learning to understand the
mechanics of trading (emotions of the herd) IS.
<perrush aksed : 5) Does outbreak need to be before, lets say, noon to be
reliable ??
reply of Jack : this is a good question. >
**
At last a question of intermediate level :-)
< The question is really: By what time of the day will I know if a BO is
coming? >
**
not sure. You are still thinking in your time frame.
<The answer is 11:15 eastern time. The reliability of my answer is one
where P < 0.05 that I am wrong. If there is no BO in the morning to buy,
then there will not be one during the day usually. Same P.>
**
Do you say that a BO should occur before 11:15. If it happens later on the
day, do you take it or not.
< perrush : 6) Is a pattern where the last candle has a very narrow range
more reliable than a 3 inside day where the last candle has still a
significant volatility ?
Jack : This is a kewl observation. Your people who help you at stock charts
blew the whole example as you may sometime see. Look there for the answer.
How can a person get to stockcharts to fix that example do you think?>
**
I'm totally missing the point here. The list on stockcharts in mine. What
is blown, why ?
<Now to get to your thinking here. You have volatility wrong totally>
**
maybe a language problem. I thought a last bar with a narrow range (and
very low volume) would be a much better setup than a stock who had still a
last bar range of 50% ATR14. The idea behind this was that the disagreement
between buyers / sellers isn't large enough in the last example to have a
decent BO.
<You must stop using "reliable" in your questions because you are killing
most of the possibility of getting to a learning orientation>
**
Language problem.
reliable, decent, fierce, common, ... it's all the same to me :-((
maybe we can try in Dutch next time, I guess I will find my words much
easier :-))
< perrush : forgot a bunch of questions
Jack :
This is why I posted to you.
You have not reached a level yet where you can begin to do investing.
We all can see where you are.
Think how strange it is to you ...
Think about the strangeness of looking ...>
**
And here it all explodes.
I don't get it Jack, it sounds that you think I'm a sort of moron.
Why the effort of the long post ??
Why is it that when someone asks something one thinks he doesn't know
anything ??
I don't find myself a bad trader (not with the record I have).
I'm still learning because I always ask these dumb question and listen to
what people have to say, but I NEVER take anything for granted.
It's late here in Belgium Jack, I'm quitting for today.
I really appreciate the time you took and my eyes where wide open ;-)
Stefan
Jack Hershey
farmed on an island called NewAmsterdam and, to date have continued to lease
the land which is no longer used for farming. So there is some dtutch in my
heritage as well but I do not speak or read it nor do I understand the
Zurich area language where I resided for a while in Europe.
I understand that you are in transition from just making money trading to
some sort of systematic manner and, also, you are not moving towards
optimising what you do either.
I trade for 10% every six to eight days and you are currently trading for 3
to 4 % every few days. My efforts vary mostly by when I exit. I did HOV from
the 28th (31.18) to the 9th (38.85) a seven day effort for 24.6%. The
cycles of ISIL just roll along two a month at this point.
From your post and your reference I could not see that you were using 5 min
charts at all. To develop a way of trading (I do call a complete method an
algorithm or paradigm) you will probably want to use enough stuff to have a
way to cover all situations. I try to use as few things as possible to
cover: selecting a small universe, having rules for monitoring in an
anticipatory manner, entry , exits, protection, and having limits on how
much capital can be used in one place.
I let the market dictate to me the parts that the market is in charge of.
These include: the duration of trading cycles; how to set protection values;
and when to be in or out of the market.
We are different in how we deal with making money. For you the "doing" of
the trading is what you like. On the other hand, I like to optimize how much
money that I can make.
As we both expected I was unable to explain my views to you on many matters.
But I did make an attempt to deal with things from my vantage point.
In any market, and I trade equities and futures indexes, there is a lot of
money to be made. We limit ourselves by our approaches. I personally
recommend that people spend three years getting to a place where they can
earn as much investing as they can with their profession. Then I recommend
that they take out many times their original investment so that they have an
appropriate orientation to making money in investing. By then they seem to
recognize that they do have an avocation that deserves their attention and
their resources. My avocation became writing first books on pervasive
national and international problems for 30 to 40 years. By giving the
royalties and copyrights to not for profits I was able to enlarge the effect
of my writing to solve these problems. I started with water quality years
before the EPA was set up. This gives you a picture.
I believe making money is transferable to others and others can invent their
way to make money too.
You know that exiting a trade is unrelated to how you use protection because
you make money in any market that you do. A lot of people do not see exiting
as something that is very far removed from protection that is set up in case
something goes wrong.
It is possible to design an approach that works quite well by either putting
small things together to make up the whole thing or you can start with the
whole market and carve out what you need to focus on to operate. Either
synthesis or analysis works. Iterative refinement of either makes for
rather elegant ways of building wealth.
I feel that the key to making it all come together is anticipation. That is
where DU came from. I looked for what came before BO's. So now when I see
DU I know BO is coming. you asked me how to tell which way BO would go.
Well who cares. There are market tools for that. You put in both and one
takes you into the market and avoids the fialure to BO at the same time.
I do not want to make clones of me. Who would want that anyway. I think
though that it would be nice to enable a whole lot of people who would be
able to help solve problems that exist. Thats basically why I post here.
You cannot imagine how many people there are out there doing stuff to help
out because they can afford to.
I''ll read your stuff and criticize it a little later.
"Perrush" <stefan....@PERRUSHpandora.be> wrote in message
news:BTuf9.111732$8o4....@afrodite.telenet-ops.be...
Jack Hershey
I looked over your response and I am going to just run through my views on
how you might want to do what you prefer to use as a strategy. I'll enter
your comments in quotes occasionally, perhaps.
You are doing 250 trades a year and making fat two digits ROI. Lets assume
that it is 75% a year or better. Two trades is a turn so you make money on
many trades and prevent drawdowns and losses on all the others.
Your style is to pick off BO's and then exit when your ATR14 "target" is
reached. Usually this is a 1 to 2 day sequence.
I think you can refine this and lets consider you to be a millionaire as a
consequence. You are compounding 125 times a year and there is a profit
level of some sort. I looked at all eight of the refinements I recommend to
people each of which doubles their performance as they are applied one after
another. All eight could apply here but I will skip a couple because they
run counter to your preferences.
I have found that about anyone can become wealthy by investing. It hinges on
the person's commitment to making money and not on intelligence and
intuition and starting with a lot of money. People go through a transition
from ignorance to competence. The conscious or unconscious aspect of it is
a myth in my opinion. Not knowing about investing is common among people
and this ignorance is not a negative thing with respect to their ways and
lives. There is a cure for ignorance called learning, formally and
informally. Most people learn to invest informally. The book "Rich Dad,
Poor Dad" describes these informal learning paths. Most people do carry
with them a heritage of some sort that they need to overcome as they grow
into adulthood.
So you are a millionaire simply because you are investing and refining what
you prefer to do.
Here are some thoughts for you from general to specific:
Universes.
Begin to chose a universe periodically that works. I choose one weekly as a
standard. Fridays are good days to do this after the close. A universe is
big enough to give you choice and small enough to make choosing simple. Its
key feature is that every stock in it does what you want it to do over and
over and it never varies in its sequence of happenings. This is a paragraph
that covers a lot of what you are not doing and will minimize a lot of what
you have done in the past. It is a bounding aspect of your method and by
choosing stocks that repeatedly do what you want; you wind up with a list
that will not fail you very often.
So you must garner your thoughts and figure out what you want to happen.
Here is what you say so far. Stock breaks out and hits an ATR14 target
within 2 days. This is your sorting criterion for obtaining your universe
from about 15,000 stocks. I shoot for about 150 to 200 stocks and I use
entirely different criteria since my primary goal is to make money rapidly.
Anyone else substitutes their key goal here and defines it by criteria to
sort out a small universe.
I insist that the stocks I will potentially trade do this 5 times in six
months. You can think of something to insist upon; right now you are not
insistent at all except that things need to be proven to you. Prove to
yourself that any potential stock you are going to trade is really doing
what you want it to do frequently.
Choosing timely stocks from your universe.
You want to buy before just BO and you have the 3 inside day's thing to deal
with. Use your 3 inside day's thing because you prefer it. It eliminates
almost all stocks forever. Too bad. This is because this phenomenon is
statistically rare. Spending three days is okay because you can overlap but
the failure to occur will be on day three and the failure will be either it
doesn't have a day three or that after day three there is no BO up. This is
really a difficult condition to interject into making money.
Monitoring
Here is my input. Now, you have determined that DU works quite well as a
precursor for BO. It is an old invention of mine and the simplest way to use
it is to know the DU for your universe. All of mine are listed publicly
always, as you know. So your monitoring strategy is to look for 3 inside
days and watch the DU occur. When DU ends you have a time window for buying
successfully. This buy window is in the am before 11:15 and it begins when
the stock reaches DU or close to DU if you want more breathing room. (Day
after day the volume has declined to DU and remained at DU; it is a little
messy re 3 inside days but assume they fit together.) The buying window ends
when the price has passed a failure to BO if a failure to BO occurs. If
there is no failure to BO then it ends that am when you feel that you are
"chasing a buy" and have missed the opportunity through procrastination.
Getting the beginning of the window is easy. And getting the end of the
window straight will eliminate all of your past drawdowns and loosing
trades. You are looking for a time to enter when there is no risk of a
failure to BO and when the price has not broken out too much. All I have to
do is inform you about how to do this. There are several ways.
Oat trader in MIF has a nifty one for entry. He uses 1-hour bars. Use my
bracket entry on ES or DJXX as another one. Or use my FRV equations as
applied to 30 min charts. In all these cases you are not entering but you
are using the entry method to see that you do not have a failure to BO.
You can use my three DU equations as well for getting the DU timing on the 3
inside days; the stock will show up on the 3rd day and disappear on the BO
day. These equations have a down side if you are trading several accounts
in the same brokerage and you have large accounts. You will be flagged and
cited for insider trading by the SEC on occasion. Historically the SEC
stops citing once you have enough retraction of the citings in your file;
they realize that they are making yet another mistake. It is a good method
to use to test your trading methods however. Being accused of insider
trading in the US is a sign that you are running ahead of the market herd,
which is what insiders apparently do. The DU equation, which has a moving
gate in it, is used to filter out mutual fund block trading that
occasionally interrupts the DU smoothness.
As an alternative for a person who just wants to simply monitor and be sure
that a BO is valid we can do as follows. Look at the volume and price
before BO. There is an axis of symmetry that can be drawn vertically to
demark the end of the downtrend and the beginning of the up trend. By
locating this as time passes you can easily see when the BO is going to be
valid. Use the P, V relation to see get the axis line. I will make it
simple. If volume is rising on the 5 min charts then list the price
movement as the trend. You will see time after time that the price falls.
BUT there comes a time when the price does not fall but rises somewhat and
then the volume poops out. You have just past the time when the axis
occurred. You need to verify this immediately by checking all the times
that the volume trended down and the price changed from doing one thing to
doing another. This must also be going on at the same time. If it is then
you are not going to have a failure to BO up after the axis has been drawn
in.
I keep thinking I should write all this stuff down in a big book that is
different than all the books out there that people believe. I guess if you
watch things for 40 years it looks quite clear after a while.
Failures to BO occur when there is not sufficient volume to sustain the BO.
If you see a failure to BO on insufficient volume you throw the stock in the
wastebasket. People will not do this; instead they watch harder and harder.
LOL. I am introducing the idea of a "flaw" in this dialogue here now. The
rule is this: For any system you use, when a flaw occurs you must not
continue with the trade. It is a hard concept to understand it appears.
Learn to operate only in the place: "when something isn't busted, don't fix
it". In investing there is a non-myth that says: "If there is a flaw
showing up, leave immediately"
None of these things are on my list for doubling your money eight different
ways by making iterative improvements. These are just small odds and ends
for where you are operating. They do help a little though.
Entry.
I enter at market because I decided to own the stock. Your broker can tell
you what the price was after you getting in. I request that blocks of stock
be purchased in blocks that are smaller than the largest blocks going
through on the T & S. I present the total number to be acquired and I use
multiples of 500 up to 100,000 shares. I have a rule of not holding more
than 100,000 shares of a given stock at one time as a sum in all of the
accounts the stock is held in. It is an exit issue.
Protection
Stops are used to protect you from losses that the market can hand you when
flaws occur. Protection is almost never exercised. You see a flaw long
before the value of the protection is reached.
Read my stuff on setting stops; there are abundant illustrations and several
transcripts of discussions. Stops are determined by how the given equity
performs. You might want someday to stay in a whole trend to maximize money
velocity. At this point you leave much too early because of your wants and
needs. Lets just stick with those for now.
Exits.
You are using ATR14 as a method. I think there is a very difficult issue
for you to deal with; it is: you set the ATR14 on one fractal and trade on
another fractal when you make exit decisions. My view is that the market
sets the pace and in turn the market reveals to exit to you. Thus there are
several issues to sort out. The pace is the money velocity. If you are not
on the fractal that sets the money velocity you cannot trade effectively.
Fortunately, for you at present, your slow fractal and your fast fractal
bracket the real trading fractal. For entry, I have isolated you from the
wrong fractals by suggesting the entry window opening and closing. At this
point you need to consider the same thing for exits. By isolating yourself
from the wrong fractals and also doing what you want you can improve your
cycle performance. You will notice fewer cycles and several magnitudes of
improvement in profit taking.
Optimizing making money is how you figure out how to exit. Making money is
not yet a goal for you. When you have the interest of making money you will
see that leaving a trade early is a good idea. "Just in time" is the time
to leave as a trend exhausts itself.
You are leaving trends at about 25% of their runs at this point. The
phenomenon that has attracted you is not often written about. For
sophisticated moneymakers it is the first adjustment they make in "staying
in trades" to keep money velocity high. You are usually sidelined as they
grind away making money. I will show you how to link trades in a while to
deal with this in your setting.
You use patterns. Set up the trend channel on each trade from now on. You
will see that the third point you use is set too "high". This causes the
ATR14 initially to give you a false trend reading sort of. Sophisticated
investors know that the point three you set (they set it too, temporarily)
will need to be replaced because the trend is going to settle into a
slightly slower pace and that pace will really pull down money for a
relatively long time. They make in two months what it takes you a year to
make just for the sake of comparison. The ATR14 takes you out at the time
the trend is being entered by the herd.
What is happening is like an airplane taking off. At low velocity it climbs
at a steep angle. As it reaches a good high air speed (cruising speed) it
settles back on the angle of assent so over time it goes to its destination
faster and climbs just as fast over time to its cruising altitude. You
parachute out at the time the plane gets to cruising speed. You do not have
a well-equipped cockpit to measure what is going on as yet.
Summary
If you review this you can see that I have read your posting. I have taken
the trouble to eliminate a lot of things you do not need to deal with.
Because you see clearly that the DU and volume work in the 3 inside bars.
You have spent 2 years getting to where you are and you like it. It is like
being on a plateau of some sort. There are about six more to climb up to
and benefit from. I track about 12 methods of investing just to see what I
would do to improve each one as an exercise for myself to become conscious
of the market. You know how to make money and cover your expenses. I
conclude that you will begin to sort out a universe and furthermore you will
now catch all the BO's and failure to BO's by using volume to anticipate the
BO's. Neither of these topics deals with trading; they deal with analysis
and monitoring. These precursors are what lead to trading effectively with
reliable performing stocks and "being prepared" as the Boy Scouts say.
Perrush
tnx for your comments, you really took your time.
Just a little correction on my trading record : 75% is a little too high,
but close. And I trade (more monitor) this 3 inside day BO just for a
month now, in the past I did all sort of things.
I will definitely come back at your post (if you like it or not), but I'm
running out of time for now (and yes you should write a book, make some xtra
money ;-)) )
Stefan
Perrush
>
> I will use HOV as an example here. I bought it very late on the 28th
> (31.18) and sold it yesterday late (38.85)
Short question Jack :
Do you buy/sell more towards the end of the session than towards the
beginning, or is this irrelavant.
Stefan
BrowserGuy
>news:TRof9.2982$Pf7....@news1.west.cox.net...
>>
>> I will use HOV as an example here. I bought it very late on the 28th
>> (31.18) and sold it yesterday late (38.85)
Another question for Jack: If you are timing the BOs so closely why not
substitute a deep ITM call for the shares ? You can get lots more leverage
and a delta approaching 1.0 and very little decay for a fraction of what the
shares would cost...
--
Scotch -- OptionBrowser V4: Covered Calls, Puts, Flys, Credit Spreads
-- Debit Spreads, Time Spreads, Collars & Straddles. Don't take
-- on Wall Street with your web browser. Have a look at the
-- OptionBrowser. Http://www.optionbrowser.com/
Jack Hershey
easily see your point about using equities information as a signal for
particular options plays.
The reason I do not do this is related to the relative size of the options
and equities markets. I am very volume oriented as a leading indicator of
what I own no matter whether it be equities or commodities futures indexes.
So I have not ventured into options in any way with capital. I certainly
have been exposed to this by colleagues repeatedly.
I would guess that a lot of people use TA to trade in options. Are their
any specific profit and loss limitations that you see with the leveraging
that you suggest?
"BrowserGuy" <Option...@OptionBrowser.com> wrote in message
news:9287BBE15Optio...@206.31.139.5...
Jack Hershey
formations (flat top pennants forming on 30 charts), I use lines and
construct envelope of formation. As the volatility hits a minimum value I
know price move is coming as volume pops out of mini DU at of pennant. I
shift to five minute chart to be able see the BO coming in detail. the
continuing build up of volume and sustained volume gives me the go ahead to
buy as then I know it is not a failure to BO up. I detailed this out with a
warm up drill for you as far as setting up the axis of symmetry for the
trend change. to further understand how the price will move in the near
term you can print the chart showing the axis and then snip it vertically
and finally turn it to have print face away from you and place it on the
axis of symmetry. Press it against one of your screens and you can see the
future beginning of the trend, approximately. Usually the upward pace is
greater by a factor that you will get used to.
"Perrush" <stefan....@PERRUSHpandora.be> wrote in message
news:8O6g9.114723$8o4....@afrodite.telenet-ops.be...
BrowserGuy
<9png9.23244$Pf7.8...@news1.west.cox.net>:
>I would guess that a lot of people use TA to trade in options. Are their
>any specific profit and loss limitations that you see with the leveraging
>that you suggest?
P/L is even better than owning the stock short term. Maximum loss is the
price you paid so deep ITM options are "safer" than pure long stock if things
go south while you're not looking. Maximum gain is just as unlimited as
owning the stock upto expiration of the option. Since you seem to like
weekly turnovers it seems like deep ITM options would be ideal for you.
Personally I hate pure gamma plays but have been trying to think through a
way to apply pieces of your style to my own.
Perrush
promised I would come back (if you like it or not)
<Begin to chose a universe periodically that works. A universe is
big enough to give you choice and small enough to make choosing simple. Its
key feature is that every stock in it does what you want it to do over and
over and it never varies in its sequence of happenings.>
**
What's the difference between a well chosen scan and a universe ? A scan
brings the universe down also to just some stocks.
Maybe it's the " key feature is that every stock in it does what you want it
to do over and
over " which you'll find essential. Not sure if many stock have a behaviour
of breaking out of inside days many times in a few months ? Maybe I have to
widen my scan to just depleted volatility ? Than there is a chance stocks
do that more frequently.
<Use your 3 inside day's thing because you prefer it. It eliminates almost
all stocks forever. Too bad.>
**
First I began to scan for only 2 inside days, but I came up with to many
candidates. Therefore I swithced to 3 inside days. From 6 to 11 sep I had
34 candidates (60 EMA volume > 80 000 and price > 5). When I tightend my
criteria (60 EMA vol > 200 000 and price > 10) I still had 12 candidates, so
3 inside days aren't that rare.
My aim is to get only 3 to 5 candidates a day, more would only be a waste of
time because I can't monitor more at this time.
<So your monitoring strategy is to look for 3 inside days and watch the DU
occur>
**
To be honest, I haven't looked if 3 inside days with decent BO's also have a
DU volume. Should look into it.
But regarding to your DU , I've a question :
Do you calculate your DU in fixed shares or as a percentage of a certain
volume average ? I thought you did it in fixed share. So what do you do
with stocks which have a still increasing volume.
For example : when I pull down your HOV chart on 1 year, I see 4 definite
increases in avg volume. The first in Dec 01, than Feb 02, May 02 and
finally in Sep 02. Now how do you compare DU and PV across these different
periods ?
<You are leaving trends at about 25% of their runs at this point For
sophisticated moneymakers it is the first adjustment they make in "staying
in trades" to keep money velocity high. You are usually sidelined as they
grind away making money>
**
true that I leave the party soon, but hell I made approx. 3 to 5% in two
days, should be content with that.
I no there is a sying : "Let your winners run" but also "Greed will wipe you
out". ATR as a target was just an idea of mine to leave the trend when it
still is strong, when the herd is still buying. But I will certainly look at
other possibilities.
<What is happening is like an airplane taking off. At low velocity it
climbs at a steep angle. As it reaches a good high air speed (cruising
speed) it settles back on the angle of assent so over time it goes to its
destination faster and climbs just as fast over time to its cruising
altitude. You parachute out at the time the plane gets to cruising speed>
** exactly !! I like to be close to the ground and when I leave it, it must
be quick and high :-))
Bob :-)## once called me a "flight-by-night-thing" because I still have that
(day-)trading attitude. I don't like to keep positions overnight. In that
way quick in and out is a perfect setup for me. And as long as there are
enough planes to step in, there's no problem having a good return.
<If you review this you can see that I have read your posting.>
**
This count for both ways.
Do you have (or know) a site where you (or somebody else) list these things
(I already know of Don's site on MSN), or do I just have to use google
(you've got only posts in groups)
Tnx
Stefan
Jack Hershey
"Perrush" <stefan....@PERRUSHpandora.be> wrote in message
> Hi Jack,
> promised I would come back (if you like it or not)
>
> <Begin to chose a universe periodically that works. A universe is
> big enough to give you choice and small enough to make choosing simple.
Its
> key feature is that every stock in it does what you want it to do over and
> over and it never varies in its sequence of happenings.>
>
> **
> What's the difference between a well chosen scan and a universe ? A scan
> brings the universe down also to just some stocks.
~~~~~Scans are good rough outs. And they can lead you to an add/delete
periodic operation. Most scans are limited by those who design the software
to make it saleable. the connectionbetween making money and software design
is very tennuous. Most software folks do not know how to make money. The
sales people definitely do not know how to make money. This combination is
a tough one.
Once you know how to get a universe, then you do your own scanning of the
universe using your scan that probably can't be set up on a commercial
software package.
After you are able to do both of these tasks you can devote a little time to
sector analysis. the 197 sectors IBD usues are nifty and there is a neat
place where the secors are rising bith there has no been a significant shift
in price as yet. within sectors you also have leader and lagger stocks. by
picking off the sectors as they come into favor before the prices begin to
rise, you can track leader stocks to be able to pick off the first rises in
the lagger stocks in the rising sector. Excel can be used for all of this
quite nisely.
>
> Maybe it's the " key feature is that every stock in it does what you want
it
> to do over and over " which you'll find essential.
~~~~~There are lots of ways to get from one place to another. The Cray
types go for massive data processing. Worden Bros like to sell data and
constrain you to their software free tools. The guys in Greenwich Conn
thought that applying more and more capital could fix the surprises they
kept getting. Buffett is doing high interest loans to those who can't get
money easily.
As anyone focuses on making money effectively, they weed out everything that
can get in the way. To do ISIL twice a month for 10% or more; to do HOV for
25% in 7 days; or to do HOV for 400% in four months all represent having a
universe of stocks that perform.
Respectively, the annualized prospects are: 985%, 28,800%, and 6,400%. None
of this is possible because a person does not have the opportunity presented
to him over and over throughout the year. In reality, a person has to make
the opportunity present itself and that is what a universe is all about. My
first focus is on quality stocks; the highest quality for making money.
Then I want to be assured that they repeat over and over that making of
money. Because I have enough of them, I can sequence them in more and more
effective ways.
A pair like LU and POSO would appeal to a person who likes low valued
stocks. POSO is a contrarian of and LU is a trender so you rotate from one
to the other every week doing a 20% cycle with each in the week. This is a
40% a week compounding as the weeks of the year go by. You can do GE or
DELL monthly for 10% a cycle.
I focus on a quality universe, total repeatability over and over, and
rotating my money streams very effectively through the syocks that are
coming out of DU and going into FRV. I sell them when they reach their
peaking volume.
Not sure if many stock have a behaviour
> of breaking out of inside days many times in a few months ? Maybe I have
to
> widen my scan to just depleted volatility ? Than there is a chance stocks
> do that more frequently.
~~~~You are choosing to let a formation that occurs to drive your whole
stock selection process in order to always have stocks available. I notice
that you are choosing the 3 inside days as the precursor to a price BO that
is going some distance where the ATR14 is where you exit.
> <Use your 3 inside day's thing because you prefer it. It eliminates
almost
> all stocks forever. Too bad.>
>
> **
> First I began to scan for only 2 inside days, but I came up with to many
> candidates. Therefore I swithced to 3 inside days. From 6 to 11 sep I
had
> 34 candidates (60 EMA volume > 80 000 and price > 5). When I tightend my
> criteria (60 EMA vol > 200 000 and price > 10) I still had 12 candidates,
so
> 3 inside days aren't that rare.
>
> My aim is to get only 3 to 5 candidates a day, more would only be a waste
of
> time because I can't monitor more at this time.
Limit you shortlist to additional criteria. Quality and repeatability our
my suggestions.
>
> <So your monitoring strategy is to look for 3 inside days and watch the DU
> occur>
>
> **
> To be honest, I haven't looked if 3 inside days with decent BO's also have
a
> DU volume. Should look into it.
~~~~~I believe it is very important to use leading indicators for making
money. there is no substitute for knowing when something is coming and
further determining that it is going to be sustained.
>
> But regarding to your DU , I've a question :
> Do you calculate your DU in fixed shares or as a percentage of a certain
> volume average ? I thought you did it in fixed share. So what do you do
> with stocks which have a still increasing volume.
> For example : when I pull down your HOV chart on 1 year, I see 4 definite
> increases in avg volume. The first in Dec 01, than Feb 02, May 02 and
> finally in Sep 02. Now how do you compare DU and PV across these
different
> periods ?
~~~~~ I use the current fixed shares value for DU. As you say the stock is
going through stages and in those stages there is, in this case, more
participation. Because i chart i just draw rays for the values I have
chosen. At any time all the stocks in the universe have these values
posted.
>
> <You are leaving trends at about 25% of their runs at this point For
> sophisticated moneymakers it is the first adjustment they make in "staying
> in trades" to keep money velocity high. You are usually sidelined as they
> grind away making money>
>
> **
> true that I leave the party soon, but hell I made approx. 3 to 5% in two
> days, should be content with that.
> I no there is a sying : "Let your winners run" but also "Greed will wipe
you
> out". ATR as a target was just an idea of mine to leave the trend when it
> still is strong, when the herd is still buying. But I will certainly look
at
> other possibilities.
~~~~~~ When you calculate out the percentage and the number of possible
cycles per year your ROI is about 13,460% for 4% per turn where there are
125 turns a year. You actually are showing about 75% give or take. I know
that you aren't in the market all the time and sometimes the trend doesn't
happen and sometimes it goes against you. The effort I make to have a
universe that works over and over is a good analysis tool to use with regard
to this need to improve effectiveness.
>
> <What is happening is like an airplane taking off. At low velocity it
> climbs at a steep angle. As it reaches a good high air speed (cruising
> speed) it settles back on the angle of assent so over time it goes to its
> destination faster and climbs just as fast over time to its cruising
> altitude. You parachute out at the time the plane gets to cruising speed>
>
> ** exactly !! I like to be close to the ground and when I leave it, it
must
> be quick and high :-))
> Bob :-)## once called me a "flight-by-night-thing" because I still have
that
> (day-)trading attitude. I don't like to keep positions overnight. In
that
> way quick in and out is a perfect setup for me. And as long as there are
> enough planes to step in, there's no problem having a good return.
~~~~Bob and I are makng the same point. You make four points just above. I
think we are suggesting to you that for your four considerations each could
be changed in your favor. You have these views as a consequence of your
experience. One of the initial things that you did was to chose a rather
arbitrary basic starting point. Starting points are often the least
reliable aspects of one's efforts. Your views and limitations stem largely
from not being able to consider things rationally.
>
> <If you review this you can see that I have read your posting.>
>
> **
> This count for both ways.
> Do you have (or know) a site where you (or somebody else) list these
things
> (I already know of Don's site on MSN), or do I just have to use google
> (you've got only posts in groups)
~~~~~A group decision has been made to get everything together including
performance data. Four universities have cateloged this stuff at one time
or another and some statistic stuff has come from another university. I
will try to determine if anything is still going on.
The google will drive you nuts because my posts are largely responses
related to going to where the person is and dealing with their issues. I
have an outline of 42 chapters and file cabinets for 40 some years to back
it up as a beginning point. This will not be completed because it is easier
with modern computers to scan and/or dictate into them, all of which I can
do. For the equities I have the software in C programmer language along
with it's performance as compiled and done by a user of the approach. The
average hold time is 6.6 days and the average profit per cycle is 11.1% over
a 6 month start up trial. That is a 6 month ROI of 726%. For using the
method on commodities I have completed all the detailed annotated work for a
programmer to create the software and associated display screen which, with
live data feed, tells you when and what to do to trade futures indexes. I
plan to scan it all and ship it to some folks to see how they get the
package done. As it stands now I just do the commodities stuff manually
following what the software would yield.
I know you prefer to not make an effort to optimize or to appreciate money
at effective rates because your primary goal is to just trade and
participate. On the otherhand you do solicit proof of this or that before
you are willing to give it consideration. I often recommend to people to
start and keep a log on the most common mistakes that people make. In
chapter 20 of "How to make Money in Stocks" by W. J. O'Neil he list 18
common mistakes people make. I keep this list as a landscape set of pages
in Word and I add a column of comments every once in a while. I also went
back to 1957 when I started investing to determine my progress in getting
rid of these types of mistakes.