The "ABC" Trade

[Dogpile]

Nice thread Walter..

here is a different perspective on ABC patterns.

ABC is generally considered a corrective pattern. But on lower timeframes, a corrective pattern on a higher timeframe might be a good momentum pattern on a lower timeframe.

Look at this chart of the S&P midcap futures with a focus on Thursday (6/21 -- note the times below chart are California time).

Note that there is a larger scale ABC up which is corrective relative to the previous day 'trending profile' to the downside. Within that ABC up was actually a little ABC down during the larger B wave down.

http://bp1.blogger.com/_5h-SWVGx6Ms/...ne+21+2007.bmp

[walterw]

Hi Dog, I see that this are very diferent abc`s actually...

I start my A coming out of the outerbands, that makes it pretty clear and straight forward... I am looking for momentum as C wave is intended to travel in a centrifugal fashion outside the bands...

I am a very big fan of keltner, it makes my life so much easier... Dog, I still dont understand what criteria are you using to determine an A... thanks Walter.

[Dogpile]

<<I still dont understand what criteria are you using to determine an A>>

I am not trying to determine A... I am just trying to determine the end of C... it becomes tradeable if I see ABC and have reason to believe that the C wave will end (ie, pivot resistance). mine is not related to yours really -- I wouldn't have posted anything here except to point out that ABC is a common, completed pattern.

your set-up is well-expained. you are playing the momentum continuation, much like a bull flag type of set-up.

tell me this about the pattern you are talking about and forget mine... what 'defines' the end of 'B' in your mind? I mean, if you were to mechanically program it, you could easily set up the A leg --- say it moves 3 average true ranges outside the top of the keltner channel to qualify as 'momentum-A', then it needs to retrace a bit for the B leg... so what rule could you have to define the end of the B leg and the start of the C leg? do you just do this visually with a candle-reversal? you can definitely program that if so...

I am not saying you have to program it for it to be valid... I am just curious for the general criteria on what defines the end of 'B' and the start of 'C' and its most easily understood if you talk about it as if talking about a mechanical program -- even if its not executed that way -- which of course it often isn't...

[walterw]

	Quote:	Dogpile
	<<I still dont understand what criteria are you using to determine an A>> I am not trying to determine A... I am just trying to determine the end of C... it becomes tradeable if I see ABC and have reason to believe that the C wave will end (ie, pivot resistance). mine is not related to yours really -- I wouldn't have posted anything here except to point out that ABC is a common, completed pattern. your set-up is well-expained. you are playing the momentum continuation, much like a bull flag type of set-up. tell me this about the pattern you are talking about and forget mine... what 'defines' the end of 'B' in your mind? I mean, if you were to mechanically program it, you could easily set up the A leg --- say it moves 3 average true ranges outside the top of the keltner channel to qualify as 'momentum-A', then it needs to retrace a bit for the B leg... so what rule could you have to define the end of the B leg and the start of the C leg? do you just do this visually with a candle-reversal? you can definitely program that if so... I am not saying you have to program it for it to be valid... I am just curious for the general criteria on what defines the end of 'B' and the start of 'C' and its most easily understood if you talk about it as if talking about a mechanical program -- even if its not executed that way -- which of course it often isn't...

Nice question Dog... in my case its the timing entry of the C wave that puts an end to the B wave... so that way I dont have to double guess what would end the B wave... we know that the B wave its just a pullback previous to the continuation of the trend on the C wave, so having a clear entry to the C wave it puts an end to the B wave...

Visually we expect this B wave not to go so deep ( more than the 50% retracement of the A wave ) because in that case it would suggest momentum its not too healthy... cheers Walter.

[walterw]

Ok, now I will share some modifications I am doing lately to my trading...

I am having a very nice experience with ABC`s on 22 tick chart, using all indicators from 55 Tick...

as you all know, I do very short trades like scalping type... I am not a long term trader, I like to make $300 per week in a 60 buck daily fashion, some weeks I end making more (500)... but I dont bother taking much more...

I am using now a very exotic combination of indicators here on 22T to time my entries... with charts from Trademaven (my trading DOM soft charts)...

now I combined tomatos with bananas and I got an apple pie ... trading can be fun if you take your creativity to the next level...

Now listen to this waco idea ¡¡ : I did put on the same oscillator pane three oscillators wich happen to have a very interesting ploting between them... they are NOT related... but their plotting values are very similar and I got a very fancy signal line for my cci turbo.... watch the pictures, you then tell me how crazy I am... cheers Walter.

[walterw]

Ok here I post todays ABC`s trades so far... from my trilogy they are the most easy to find and trade... if I keep this level of success during one month with abc`s I will probably simplify my life and only trade abc`s.... they have intrinsic concepts derived from flip and what I most like its the momentum factor here... cheers Walter.

[Dogpile]

YM is just incredibly active right now --- 171 daily average true range (ATR[14]). It spent 6 months under 100 until that February 'non-linear break'....

just pointing out that this is unusual --- or else maybe the 6 months was unusual and we have a new Dow --- that would be sweet... but I tend to think that this kind movement is unsustainable...

[haub]

walter, are you using fixed stop loss points on the abc trades or purely a cci technical stop loss?

[walterw]

	Quote:	haub
	walter, are you using fixed stop loss points on the abc trades or purely a cci technical stop loss?

Hi Haub.. I normally place stops below/above previous pivot to entry... they normally give a good RRR...
hope helps .. cheers Walter.

[walterw]

This is one nice sweet ABC I did today... cheers Walter.