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Old 02-19-2007, 09:37 AM   #1
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John Carter's Setups: Legit or Lame?

I wouldn't be trading index futures if I hadn't read John Carter's Mastering the Trade. It's one of the best books written about the fundamentals of day trading futures, trader psychology and developing a thorough and professional trading plan. Carter is a very successful and seasoned trader and he knows his stuff.

Every trader wonders if there is a better method or technique to trading out there than he or she is using, and Carter does provide several trading "setups" (as he calls them) to consider and study. After studying these setups and writing or obtaining the indicators necessary to apply them (Carter oddly doesn't provide the code for the indicators) it seems that these setups are not that reliable. In fact, none of them seem any more reliable than, say, a basic moving average crossover system. I reproduced the three-bar-reversal indicator for tick bar range trading and it was amazing how many three-bar signals appeared when the run was ending, not beginning. The squeeze indicator produces so many false signals it was laughable.

Now this realization can either be disconcerting or encouraging. If Carter can become successful using lame setups like these, then perhaps setups in general are less important than we might think. Or perhaps Carter is using more filtering for these signals than he let's on. Either way, he doesn't tell us.

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Old 02-19-2007, 10:00 AM   #2

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Re: John Carter's Setups: Legit or Lame?

I think it's difficult to teach someone all you learned and know. He may have simplified it into indicators as a start. I tested the Squeeze myself and not that great. Virtually all his indicators are in the TS forum (if they make them, TS has 'em, it's why I consider TS one of the best platforms around, not the company itself but the user group is very strong). If it were a winner, everyone in TS forum would rich by now (we're talking in thousands here). It's how I started with my mentor, using simple indicator while explaining to me the price action. It's like a baby-walking toy to aid walking upright. Little by little, I moved away from indicator and see the value in price itself. It might what he's doing to simplify market structure. I don't negate he's a great trader, just passing the torch is much more difficult in this game than any other (2 yrs with my mentor and I'm still learning). So a weekend or week with might not be sufficient.
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Old 02-19-2007, 10:00 AM   #3

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Re: John Carter's Setups: Legit or Lame?

First let me begin by saying I am a fan of Carter's and Hubert's work. They have done alot to educate the trading community. I have also read Carter's book which I found very useful. I have not purchased any of their indicators or participated in their trading room.

BUT... I wouldn't go out to say Carter's or Hubert's methodology or setups is lame. The indicators they use such as the TTM Trend, Bricks, Squeeze have all been replicated by the tradestation community and can be downloaded for free. They are also available in our indicator forum.

I have tested them in my trading and found them of no help. The squeeze sends out too many false signals and the bricks is something that does not fit my style of trading. Now, the TTM Trend is a indicator I use but I do not follow their directions for it. I use it in my own distinct way.

Although I prefer not to use their indicators, this does not mean their setups do not work. I have heard Carter and Hubert mention previously that what they want traders to do is to find/steal elements of their trading that will fit a traders style. In other words... find the good parts and apply it to your own. Carter and Hubert teach alot on market internals which in my opinion is the best part of their program.

In the end, I think it will hurt a trader to completely duplicate another traders methodology. It is similar to buying/selling a stock on a tip. When the trader finds new inisight to his methodology, when do you get to know about this? Perhaps they have applied new rules to using their tools or maybe they see new things that the markets are telling them. This will change the way they use their setups. I have only taken what I found useful to my trading from John Carter and Hubert and applied it to my mine. For example, the TTM Trend is a tool I use for visual purposes. I combine this with Volume Delta to mark turning points by gauging supply vs demand. Basically, find whatever fits your trading style. Carter may have his own entry/exit rules for pivot plays... while I have my own criteria for entries and exits on pivots.

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Old 02-19-2007, 10:20 AM   #4
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Re: John Carter's Setups: Legit or Lame?

The fact that these indicators Carter recommends give such random results leads me to believe that he has a filtering method he doesn't quite explain. I don't think he's consciously withholding information, it's just something that is hard to explain to others.
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Old 02-19-2007, 10:30 AM   #5

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Re: John Carter's Setups: Legit or Lame?

They're trying to sell stuff like pivot point studies for hundreds of dollars that you can download for free elsewhere. I'm not sure what to make of that.
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Old 02-20-2007, 02:28 AM   #6

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Re: John Carter's Setups: Legit or Lame?

First off, let me have my say, they both clearly say, especially Hubert that their indicators are useless if you don't understand market internals.

Which is very true.

Their "squeeze" indicator is a simplified way or a mechanical way to give a trader the heads up that prices may explode in one direction or the other. For the new trader with the untrained eye, that is great, but once you recognize when markets are in a "quiet" period and due for an explosive move, you really dont need the squeeze. It's just a way/method of keeping your trading consistant because using your judgement may be eratic at times and provide inconsistant results to analyize what is wrong.

Understand price action and market internals is more important than any indicator or system out there. Hubert even says using a chart and indicators are like crutches. The dude can trade, he's a tape reader, I've seen him do it first hand and you don't even realize he's trading because its so fast, but he is still human and mistakes are bound to happen. If anyone trader says they don't make mistakes, like Hubert says "run the other way" and get far away as possible from that trader, he's full of crap.

Ever wonder how Jesse Livermore or Humphrey Neill trade back in the days with no computers or technology that we all have today? They understood price action and the psychology behind what was occuring and about to occur.
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Old 02-26-2007, 03:08 PM   #7

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Re: John Carter's Setups: Legit or Lame?

I find it deeply ironic that Carter berates the use of indicators early in the book because of their inherent time lag and then later on touts his own TTMSqueeze indicator. Additional favorites like Stochastics, MACD, and RSI make appearances in Ch. 18 as well. If you closely examine the charts in Ch. 18 you will also see a surprising number of losing ttmsqueeze signals present. So what are we to conclude?
I spoke with Hubert Senters and found his candor refreshing. He told me his TTMSqueeze, Bricks, etc. had a 50-50 win/loss percentage which is coin toss country. However, he implied that everything is filtered by market internals. Senters also truthfully said that they are no holy grail and that you must completely master market internals first before seeing any kind of success with any strategy.
This book has plenty of valuable information that you can cherry pick but I recommend caution in using most of his setups. Both Carter and Senters are very honest and straightforward which is a rarity in this business. They have alot to teach us.
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Old 02-27-2007, 11:03 AM   #8

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Re: John Carter's Setups: Legit or Lame?

Minetoo, I agree with your perspective. In 'Mastering the Trade', pages 141-142, John is discussing the merits of trading off pivot levels versus following indicators. Traders that follow indicators "are getting in and out of their positions far too late." "By the way, all market indicators are the wrong indicators, because they are all lagging. Price action is pure."
I did enjoy the book very much, especially the early discussions about market internals, and the late discussions about the importance of having a trader's business plan. I recently took the two week trial, in which Hubert did most of the instruction as John was travelling. Hubert is the more active day trader, while John tends to focus on swing trading. Hubert was refreshingly honest in many of his comments. Among some of the more memorable: He said he didn't care exactly how John was identifying his setups and trading, and he was sure John felt the same. Though they do have a business together and share ideas, they each have their own style of trading. He also got on to people for "quoting the book (MTT) like it was the Bible." He emphasized screen time and becoming familiar with price action and market internals. As far as TTM idicators, he only uses three: TTM Trend, TTM Squeeze and Bricks. Even at that, I rarely saw/heard him reference them, except in hindsight to show how they might have been useful as a heads up. He focuses on tape reading coupled with pit noise and TICK readings. He also glances at other market internals for confirmation, including TRIN, Put/Call and Premium. Hubert seems very capable and consistent with his method of trading. He is interesting to follow, and his Kentucky accent and 'down home' manner are both enjoyable and entertaining. He doesn't mince words, and will speak his mind, so come with your thick skin and remove any rose-tinted glasses at the door.
GCB - Why don't you swing by and give John a shout out? Your home city is a favored spot of mine. I'm a Longhorn and my son's name is Austin, if that lends any insight. Good trading to you both, minetoo and GCB.
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