A question for Jack Hershey
MIG
any definable information to discern (obviously he wants you to sign up for
his class), so could you elaborate on your comments below.
Thanks
MIG
Jack Hershey wrote:
>Get over to Ryan Jone's stuff at momentumtrader.com. See that >what you
>have is adjustable. Jones's stuff isn't adjustable too much but we did >it
>manually and doggedly doubled its intraday performance by syncing >it to
>making money and actually being less elegant than we could have. >Jone's
is
>good iteratively, that is where we are going refinement wise.
Jack Hershey
Ryan has gone through a lot of resoning to get to where he is. He worked
on the charts for a long time trying to discern their predictability in
which he is interested. The momentum thing which comes up for most TA's is
his primary interest. I referenced him because, if you can get him or his
staff or read some of his stuff, he is an prime example of how a persistent
person can come up with a significant refinement. The one I like best of
his is the way he switched from bars of a particular duration (1 min for
example) to bars of a duration related to a fixed volume. He let the
volume accumulate to a particular value (he chose) and then graphed the
bar representing it. Thus his horizontal axis is not linear or logarithmic
or anything but it has a periodicity that is related to volume
accumulations. That makes the chart that results, interpretable from a
constant volume bar viewpoint. Set yourself up to do ths. TS2000i using
e-signal is a good combo.
What the thread in which my comment appeared in is about is going through
the process of relating three variables to anticipate the market's
characteristic movements from trend to trend and nontrends. Because the
three variables need to be appraised regarding the "momentum" or pace (as I
call it) of the market, there is a need to be able to keep your
measurements and observations in sync with the pace. Ryan is an example of
a person who is thinking and refining step by step his thinking ( an
iterative process). Ryan is stuck in a couple of ways that he can deal
with soon . On the other hand, neatly, James adds a flexibility to his
excellent equations, by using numeric coefficients. These numeric
coefficients can actually be substitutued for to produce a number which is
inserted as the market is continually defined. Ryan will do the same soon,
I believe. Then his analysis will revert to a more generic one whereby a
more comprehensive set of evaluations may be made.
Elsewhere, I commented on the quality approach Ryan Jones has towards his
clients. He insists they know what they are doing with his method.
Because locally here I have several collegues who are sort of like me, we
do have most of the contemporary methods in vogue under scrutiny by doing
what is required to understand them regardless of what it takes. If
possible, with permission, we "fix" them to see the effects of
modification. Our lending library is large so to speak and we swap
floppies a lot.
Ryan, as you would expect, publishes his results, While we did not go to
Atlanta nor were we able to get him to sell us a manual because he requires
three days with him to get you properly equipped to use it. We made the
effort to simulate his posted results and cordially communicated with his
staff. All of which is a fun effort. By adjusting some of the elements in
what he does we squeesed about twice as much cash out of his system as he
posted. We did this by "adjusting coefficients" so to speak. One of our
exercises is to look at a given approach and systemmatically try to learn
what the most significant change is that can be made to improve it. This
way we stay sharp in our thinking as older people need to do.
At this point, we conclude our temperments are the most significant aspect
of our nature which affects our trading and thinking. Compared to a lot of
vocations, making money is not difficult in the markets. Unfortunately
there are many many distractions out there and equally disturbing, there is
the issue of becoming aware of what it is you have learned improperly.
All of these things pass in time. As ASM pointed out he is able to see
where a person is in the continuum of learning. There are branch points,
of course, and who is to say which is the main branch. Personnally I like
to climb around the tree and prune off the dead stuff to promote vigorous
growth everywhere.
Check in with Ryan's staff sometime.
MIG <mi...@earthlink.net> wrote in article
<7un38h$7ml$1...@birch.prod.itd.earthlink.net>...
MIG
I appreciate your response, however I still am not clear on a few issues.
What in your opinion is the best way to measure momentum and if it will
continue. Could you elaborate on where Ryan is stuck so that I can evaluate
such. One thing I do not understand is your reference to "numeric
coefficients" and Adjusting coefficients". Also your statement that,
"compared to a lot of vocations, making money is not difficult in the
markets" is contrary to the norm. And would like to hear the reason for
your contrarian opinion. I am finding the task frustrating lately, though I
have absolutely no plans on giving up.
E-mail me direct if you choose or post - Thanks again
MIG
Jack Hershey wrote in message <01bf1bd7$3189db60$7fad30d0@default>...
>Hi MIG,
>
>The momentum thing which comes up for most TA's is
>his primary interest.
>
>What the thread in which my comment appeared in is about is going through
>the process of relating three variables to anticipate the market's
>characteristic movements from trend to trend and nontrends. Because the
>three variables need to be appraised regarding the "momentum" or pace (as I
>call it) of the market, there is a need to be able to keep your
>measurements and observations in sync with the pace
>Ryan is stuck in a couple of ways that he can deal
>with soon .
>On the other hand, neatly, James adds a flexibility to his
>excellent equations, by using numeric coefficients. These numeric
>coefficients can actually be substitutued for to produce a number >which is
inserted as the market is continually defined. Ryan will do >the same soon,
>I believe. Then his analysis will revert to a more generic one whereby a
>more comprehensive set of evaluations may be made.
>
> By adjusting some of the elements in
>what he does we squeesed about twice as much cash out of his system as he
>posted. We did this by "adjusting coefficients" so to speak. One of our
>exercises is to look at a given approach and systemmatically try to learn
>what the most significant change is that can be made to improve it. This
>way we stay sharp in our thinking as older people need to do.
>
Jack Hershey
I parsed your comments below. And I am glad to clarify what I post because
I learn a lot about this stuff on here from both questions people ask and
the different answers that apprear for specific facets of the market.
MIG <mi...@earthlink.net> wrote in article
<7unh2s$446$1...@ash.prod.itd.earthlink.net>...
> Hi Jack,
>
> I appreciate your response, however I still am not clear on a few issues.
> What in your opinion is the best way to measure momentum and if it will
> continue.
Momentum is often discussed as a market phenonmena that is tradable because
of its characteristics. the traditional physics definition is an equation
tied to mass and velocity squared. The best way to picture this is to
think of the market entity as having a size defined by its float or the
available equities for trading. The turn over of the equities I tie to the
velocity. Say the normal turn over is 1 unit. This implies liquidity of
some sort. There is some stuff written on this.
The various levels of trend trading focus on diffent momentum techniques.
I'll do one with stocks that is fairly rapid for accumukating capital
below. But first look at a couple of other common aproaches. the slowest
longest trends are Bull and Bear these are hard to perceive from a momentum
basis but it is there. Rising volume is a common indicator for continuing
momentum in these. IBD is now ( for a year or so) plotting av vol on its
key market charts. The WSJ will pick it up in the next tens years I'm
sure.
If you drop down a fractal level to secondary trends the volume factor
shows nicely. As an equity or index comes out of a nontrend (lateral
congestion), its base volume picks up considerably and this turnover
velocity and the increased % of the float that is active causes a trend
that has "momentum" Detecting the increase in volume before the trend
begins allows entry. The trend can, of course be either way, so entering
is done with stop orders as the trend is established to the extent that the
trader requires.
If you slip down another fractal level, you may then see where the best
capital appreciation level resides.
I look at this as the "natural cycle" of market fluctuation where most
traders operate.
Let me play it out how I see it for the purposes of making a lot of
money.Okay here we go. To play momentum best, participate while monitoring
the following: look for an equity or futures index that is trading below
its normal turn over. Name this volume as Dry Up. Think of it as a time
when the buyers and sellers are more disagreable than normal. Ordinarily
they disagree on many things but they agree to trade with each other. At
this point of Dry Up (DU they can't agree to any extent on price even.
Monitor the volume. Ryan Jones is doing this; he sees that there is a lot
of time taken to form his constant volume bars. He also notices that they
are not as volatile as price bars slowly form. He doesn't change gears
here. I think this is a stuck point that you wanted to know about. We are
just looking at bars of a long time duration and noticing the volume is in
dry up. We stay with a long duration (30 min). Once there is more
agreement by sellers and buyers on price there is more volume. DU always
in its own good time ends with and increase in volume. I call this First
Rising Volume. To make money you determine when this occurs and enter the
market.
from above where turn over = 1 2 3 4 ( velocity)
here is the chart of momentum = 1 4 9 16 (velocity squared)
The price lifts off at some point above 1 for the normal turn over of daily
volume. I track it simply as follows. I prorate DU volume through the
period I am trading (use a day for a now but think of the fractal nature of
markets where you can operate on any shorter duration if you want as long
as you know how to monitor it.) Until a few months ago I used to send out
four emails to a group of coattailers in the first two hours of stock
trading everyday to illustrate this phenomena. If the equity at hand was
gaining momentum, they knew it long before the price began to change. Say
an hour or so before price moves for mostly any stock. This beginning is
called First Rising Volume as I said. The usual first day of rising volume
is 3 to 4 times DU you can see the price push is 9 to 16 times normal and,
as expected, there is a 5% or so change in price. Think of 9 as 9 eighths
or something. You will see the normal price volatility is extended by a
great deal. In fact, it is easy to calibrate using the square of the
volume. This is not quite rocket science.
All that is left is, is to see what is required to maintain the momentum.
Well volume is and the same amount is the answer. So look for the
"peaking" volume as your next major milestone. When the volume no longer
increases on a prorata daily basis using the prior day as a basis the peak
(or trough limit for as short) has occurred at that moment. This is the
moment-um as Latin would have it. The peak is in price as well and as
usually you have some time to push your stops in really tight (close to
trading price) and get taken out right at the proper time.
All of this is bilateral so long or short it works the same way. Were you
using the scoring I recommend you would see DU at 1 to 0, the FRV at 0 to 7
and the hold from 7 to 6 to 5 to 4 and out for longs. the corresponding
short scores are DU at 5 to 4, FRV at 4 to 3, the short hold through 2, 1,
0 and out for shorts.
Could you elaborate on where Ryan is stuck so that I can evaluate
> such.
Right. I kept the example above to daily sorts of things where the cycle
of trading was several days (6 to 8 nominally) and where you perceived the
FRV in the first two hours of the first day and bought before the price
started to move and left at the peak volume and trailing peak price.
Ryan's charts squash together at the point where you want to be alert. If
his volume bundles are fixed and big enough, then he doesn't see what goes
on inbetween. That was one of our "fixes", we weren't wedded to a volume
bumdle size so we diminished it when we wanted to trade on a given fractal
level. Actually we resynced it right off to get it to work with the market
we were in . Notice we use a value unique to each stock for DU and notice
that the stock tells us what it is. As you get to be bored to death with
what I post you will see over and over again I let the market tell me what
the values are. The market knows so I read them as I am told. I am only
interested in making money. I am very neutral about what I am being told.
I never even think about being right because I "know" something. To
translate the above to the futures game, i use three paces for the index:
5 to 30 seconds as fast pace, 5 to 30 minutes as medium pace, and 30
minutes to an hour as slow pace. The respective names of the paces for me
are legs, drifts, and trends. the volume is my indicator that precedes the
price. and it takes an increase in volume which is then sustained to
create moves at any of the paces. The intensitiy of the volume determines
the pace. Scratch trades are created when volume spikes and doesn't
sustain itself. It is not an emotional thing. as you observe volume not
changing it rate ovr time on the sidelines, you will also se the price move
laterally in a normal range of noise (scalping etc) as the congestion
continues
the volume will usually slacken and the congestion moves to a stage of
convergence and the phenomena shinks further to a centering of price about
a pivot price on very little volume. Determine brackets on this centering
and outside the the scalping noise range. Move to shorter bars for
observation purposes. Keep filling in your log with observations and make
adjustments if necessary. As the volume stops declining be prepared to
place your stops since they are adjusted and refined by now. as you see
the bars begin to show less centering and the volume move up aftr it
stopped declining it is about the time to consider using the phone and
going through the paces. The later you get the orders in, the less time
you are in suspended animation. What you are going to do is see the
breakout look for brief formations, note each one and list a C&R
possibility for the trailing stop that wasn't filled as the trend went the
other way. if the BO is fast stay a formation behind with the trailing
stop, if the BO is a drift (medium pace) stay two formations behind for the
trailing stop, if the BO is slow (trend) then stay three formations behind.
The volume will continue to stay up and the formations (hitch, stall or
retracement) will be repeated. As time passes hitches are replaced by
stalls, stalls are replaced by retracements. Finally retracements and
advances are equal and congestion again prevails. as you see the move
forming a "knee or rolling over from its pace you begin the take each of
the noted potential stops you have written down for C&R's getting closer
together in value. Its time to tighen up on the stops if you see that going
to the sidelines is appropriate. hat is going on is that the momentum has
come to an end.
The market tells you what to do. ASM trades through everything perpetually
and glides through these shorter momentum periods in a way that resembles
trading secondary trends above sighted. Periods of short term momentum
don't necessarily alternate in direction one after another. It is possible
to see them as a series of steps where a series of short term momentums on
a given fractal level form a flight of stairs on a longer position trading
level of play (with an occassional short term reversal). These can go on
for days. There isn't a need to set stops but there is a great need to be
able to use momentum principles to key into for placing the flip series of
orders or to see a complete fill through a series of partials as the price
slips along into a secondary reversal.
If you are on the short intraday fractal level of legs, drifts and trends,
then you can do your C&R's as reversals as appropriate when there is a
signal to do so. Double down the C&R trailing stop.
One thing I do not understand is your reference to "numeric
> coefficients" and Adjusting coefficients".
I see. Look at James's stuff. See everywhere there is a number, it is not
alone; it is in front of something, a key variable like price. Not being
insulting here just smile. When I lecture at B schools I start slow then I
pick up the pace as I see the tweeds getting restless with their aloof
questions. My answers get aloofer and aloofer. then they settle down for
their money's worth. Here, you are right on with your salient questions
and I am spending whatever time is required to be clear to you and others.
You are on the brink of really pulling in the cash and I can simply tell
you it is going to be so simple (not overbearingly complex) as you get
tuned in. You are on the brink and the pieces will absolutely amaze you as
they fall in place.
If it is necessary to change James's coefficients as the mode of the market
changes, then we need to slip in those adjustments automatically by using a
math expression in their place that triggers appropriately. One can't
expect another to start right off with everything completely set up. I
spent four months setting up the equations that pick out the stocks as they
go into dry up and I have one set with a nuance that takes out
institutional trading. If I get a call during the day from Oracle corp
execs as a result of a buy signal I put out an hour and a quarter before
their stock took off I become more assured that I know how to read the
market. And, of course it is fun to know your emails are being forwarded to
strange places too.
Also your statement that,
> "compared to a lot of vocations, making money is not difficult in the
> markets" is contrary to the norm. And would like to hear the reason for
> your contrarian opinion.
Okay. I have tried this stuff out on as wide a selection of people as
possible for about 40 years. Anyone I have met, almost without exception,
has the ability to make money. Of the early people i knew at that time one
out of five determined to invest. i don't know any of them that aren't
presently in the 5% group below. Half of the people in this country own
stocks or mutuals who own stocks. More people have as their greatest single
asset stocks rather than anything else. Real esatate is second by one
percent less; 28 to 27 %. Five percent of the families of the US are
milliionaires.
Scoring stocks to know where they are in the cycle may be done easily at
fifth grade level. This includes understanding what is next in the cycle
and how fast the cycle is moving too. The eastern regional director of S&P
evaluated the performance of high school sixth formers (Seniors) and
determined they were using the supplied brokerage office set up he gave
them as a courtesy as well as any firm he had ever seen. They were
exceeding ten percent a month as well for over six months from a cold
start. No family from whom the children came were doing as well and there
was a continuing family conversation going on for 100% of the families.
The math knowledge required is on the level of arithmetic. Being able to
operate a computer is terrific for monitoring and analysis. As our society
changes, what was sort of novel and unique in the past becomes quite normal
for younger people. One of the drawbacks of getting older is not realizing
that how you think about possibilities is quite arbitray. Getting stuck is
a symptom of this. Those who feel something isn't possible are simple
stuck for the time being.
Glider flying upside down over a runway and doing an outside roll as a
landing approach is not ordinarily done. The single thing that helps to
make it possible is knowing what you are doing particularly from a lot of
experience.
The best maneuver I know is the scratch trade.
I am finding the task frustrating lately, though I
> have absolutely no plans on giving up.
Frustration is best cured by taking more notes. Later on you will see the
cause of your frustration as you write the same thing over and over. These
are the questions forming. If you can determine the question, then you can
find the answer.
Gary Smith
My contention is momentum is what trading is all about. But why complicate
it? You don't have to measure momentum by charts, volume, and other such
perceptual filters. *You just see it.* Did a trader have to complicate
matters Thursday when the Nasdaq went from down 64 to close up for the day?
Did a trader have to complicate matters Monday when the market had a
Friday-to-Monday momentum break by not following through on Friday's
debacle, but instead surging during the last hour? These and other simple
momentum patterns are evident throughout the trading month. But most
traders can't *see* them because they are too busy *measuring* them.
Gary Smith
Jack Hershey <jher...@primenet.com> wrote in article
<01bf1cb4$d4be5e40$29ac30d0@default>...
MIG
I have a question. First let me say that my original question was in
reference to intraday (though I did not specifically state it) and being
able to measure (or see?) momentum start to pick up, continue, then subside
and then repeat the process. In essence, I am trying to better understand
how to see it as referenced in order to better trade the market and see the
market "tip its hand" so to speak.
So now my question. Could you elaborate more on how you see momentum as I
described on an intraday basis? Thanks
Regards MIG
Gary Smith wrote in message <01bf1d78$918d49a0$221813d0@oemcomputer>...
Gary Smith
Hi MIG,
Sorry, can't help you intraday. Best you listen to Jack on the intraday
stuff. Intraday, I can only *anticipate* price action by watching
divergences on the tape. As such my profits trading intraday are minuscule
compared to trading based on a longer term time frame of one to two days
and more. My momentum patterns work best using a complete day's trading
action. The momentum trends going forward from that point seem to be less
random than intraday as they allow me to react to instead of anticipate
price action. Goodness, now I'm beginning to sound as confusing as Jack.
Don't get me wrong though, I enjoy reading Jack's posts.
Gary Smith
MIG <mi...@earthlink.net> wrote in article
<7uvn6n$cgt$1...@fir.prod.itd.earthlink.net>...
> Gary,
>
> I have a question. First let me say that my original question was in
> reference to intraday (though I did not specifically state it) and being
> able to measure (or see?) momentum start to pick up, continue, then
subside
> and then repeat the process. In essence, I am trying to better
understand
> how to see it as referenced in order to better trade the market and see
the
> market "tip its hand" so to speak.
>
> So now my question. Could you elaborate more on how you see momentum as
I
> described on an intraday basis? Thanks
>
> Regards MIG
>
> Gary Smith wrote in message <01bf1d78$918d49a0$221813d0@oemcomputer>...
> >
> >
dhe...@my-deja.com
Gary's post. After several years of watching the market over and over,
tick by tick, it hs become clear, and now I can "feel" and see a
change, not with 100% accuracy, but accurate enough to make money
consistantly. I still use some "indicators" which only serve to give
me a base from which to see changes more easily. I took me years to
get here, maybe I'm slow, but after looking over every concevable
indicator, MA, squzzy this and priority that, hype here and big guru
there, watching the market and seeing price action thousands of times,
especially concentrating on market turns, has done it for me, where
nothing else did.
heeb
In article <7uvn6n$cgt$1...@fir.prod.itd.earthlink.net>,
"MIG" <mi...@earthlink.net> wrote:
> Gary,
>
> I have a question. First let me say that my original question was in
> reference to intraday (though I did not specifically state it) and
being
> able to measure (or see?) momentum start to pick up, continue, then
subside
> and then repeat the process. In essence, I am trying to better
understand
> how to see it as referenced in order to better trade the market and
see the
> market "tip its hand" so to speak.
>
> So now my question. Could you elaborate more on how you see momentum
as I
> described on an intraday basis? Thanks
>
> Regards MIG
>
> Gary Smith wrote in message <01bf1d78$918d49a0
$221813d0@oemcomputer>...
> >
> >
> >My contention is momentum is what trading is all about. But why
complicate
> >it? You don't have to measure momentum by charts, volume, and other
such
> >perceptual filters. *You just see it.* Did a trader have to
complicate
> >matters Thursday when the Nasdaq went from down 64 to close up for
the day?
> > Did a trader have to complicate matters Monday when the market had a
> >Friday-to-Monday momentum break by not following through on Friday's
> >debacle, but instead surging during the last hour? These and other
simple
> >momentum patterns are evident throughout the trading month. But most
> >traders can't *see* them because they are too busy *measuring* them.
> >
> >Gary Smith
> >
>
>
Sent via Deja.com http://www.deja.com/
Before you buy.
MIG
to intraday I would like for you to elaborate more on how you see momentum
on a longer term timeframe. I agree that it is easier to see on a longer
term timeframe, that is why my original question was in reference to that
timeframe. I am always trying to learn, hone my skills and become a better
trader. I look at different timeframes regardless as to in which time I
operate.
Thanks MIG
Gary Smith wrote in message <01bf1e7f$68faa5c0$351813d0@oemcomputer>...
Lawrence...@bankamerica.com
dhe...@my-deja.com wrote:
Nice to come across people with your experience Heeb, I know a number
of others who have that 'feel' and it's a precious skill to have, but
as you say, it takes time to build.
Experience can also come from building trading systems. I have to agree
with your lack of interest in any particular indicator - I think that's
very healthy. However, if you trade using systems for a while you can
also develop a 'feel' for how to use them. My own experience doesn't
tell me when a move is about to happen, rather it helps me be rational
about which models I use and how to put them together. Most important
of all, it helps to tell me how to interpret 'system' results, because
we all know that there is nothing easier than fooling yourself with a
miracle system.
I don't think new traders should be discouraged from looking at new
indicators and systems, they should just take everything with a pinch
of salt and try to understand that there is no final 'solution' to
trading, no wonder model, it's just about hard work and managing risk.
Time is better spent choosing a well diverscified set of simple models,
than focusing too deeply on any one indicator.
Lawrence
> In my years as a full time s&p day trader, I will absolutely agree
with
> Gary's post. After several years of watching the market over and
over,
> tick by tick, it hs become clear, and now I can "feel" and see a
> change, not with 100% accuracy, but accurate enough to make money
> consistantly. I still use some "indicators" which only serve to give
> me a base from which to see changes more easily. I took me years to
> get here, maybe I'm slow, but after looking over every concevable
> indicator, MA, squzzy this and priority that, hype here and big guru
> there, watching the market and seeing price action thousands of times,
> especially concentrating on market turns, has done it for me, where
> nothing else did.
>
> heeb
>
> In article <7uvn6n$cgt$1...@fir.prod.itd.earthlink.net>,
> "MIG" <mi...@earthlink.net> wrote:
> > Gary,
> >
> > I have a question. First let me say that my original question was
in
> > reference to intraday (though I did not specifically state it) and
> being
> > able to measure (or see?) momentum start to pick up, continue, then
> subside
> > and then repeat the process. In essence, I am trying to better
> understand
> > how to see it as referenced in order to better trade the market and
> see the
> > market "tip its hand" so to speak.
> >
> > So now my question. Could you elaborate more on how you see
momentum
> as I
> > described on an intraday basis? Thanks
> >
> > Regards MIG
> >
> > Gary Smith wrote in message <01bf1d78$918d49a0
> $221813d0@oemcomputer>...
> > >
> > >
> > >My contention is momentum is what trading is all about. But why
> complicate
> > >it? You don't have to measure momentum by charts, volume, and
other
> such
> > >perceptual filters. *You just see it.* Did a trader have to
> complicate
> > >matters Thursday when the Nasdaq went from down 64 to close up for
> the day?
> > > Did a trader have to complicate matters Monday when the market
had a
> > >Friday-to-Monday momentum break by not following through on
Friday's
> > >debacle, but instead surging during the last hour? These and other
> simple
> > >momentum patterns are evident throughout the trading month. But
most
> > >traders can't *see* them because they are too busy *measuring*
them.
> > >
> > >Gary Smith
> > >
> >
> >
>
Lawrence...@bankamerica.com
Lawrence
> > >My contention is momentum is what trading is all about. But why
> complicate
> > >it? You don't have to measure momentum by charts, volume, and
other
> such
> > >perceptual filters. *You just see it.* Did a trader have to
> complicate
> > >matters Thursday when the Nasdaq went from down 64 to close up for
> the day?
> > > Did a trader have to complicate matters Monday when the market
had a
> > >Friday-to-Monday momentum break by not following through on
Friday's
> > >debacle, but instead surging during the last hour? These and other
> simple
> > >momentum patterns are evident throughout the trading month. But
most
> > >traders can't *see* them because they are too busy *measuring*
them.
> > >
> > >Gary Smith
> > >
> >
> >
>