[weed]

last post for a bit better cool off

i had to leave my computer so i moved my stop to b/e and now i regret it

[media]http://www.traderslaboratory.com/forums/attachment.php?attachment id=21083&stc=1&d=12743808 75[/media]

[malverd]

Jerry,

I know you mention that PVP is used as a stop loss point.

Let's assume a long position. Say your risk tolerance would allow you to place your exit point below the PVP.

If price closes below the PVP, but hasn't hit your risk tolerance stop AND the PVP point hasn't changed, should you stay in the trade?

[malverd]

Thanks this helped clear the shapiro effect up. One thing, shouldn't the signal at point 'c' have been the large candle to the left of the one you marked?

Thanks

Originally Posted by jperl »

I was going to wait until a later thread to discuss this, but since you brought it up here, dbntina, I will talk about it now. The question is, when price action retraces to the 1st SD or the VWAP which is a signal to pull the trigger, how would you know not to do it?
I use a simple technique due to Larry Pesavento which he calls the "Shapiro Effect". The Shapiro Effect states "If a trade is good now, it will be good in 5 minutes".
Don't take this statement literally, but use it interpretaively. I use it in the following way. Let say you are looking for a short entry on a retrace to the 1st SD or VWAP. The first UP BAR that touches the SD is your signal. Don't pull the trigger yet. Apply the Shapiro Effect. Wait for a down bar that confirms the signal. A confirmed signal would be one that drops below the low of the signal bar. Then pull the trigger.
Look at the attachment. This is the same 2 minute chart of NQ for Aug 10 that you posted dbntina.
At point "a" we get a signal to go short at the 1st SD. Apply the Shapiro
Effect. There is no confirmation of the low on the next bar. Don't pull the trigger. It took 7 bars later to confirm that low, which was below the 2nd SD. I usually don't trade there.
At point "b" (the VWAP) we get a signal to go short. Apply the Shapiro Effect. 2 bars later there is a confirmation of the low of the "b" bar. Pull the trigger short.
At point "c", we get a short signal at the 1st SD. Apply the Shapiro Effect. There is no confirmation of the low. Don't pull the trigger.
At point "d" we get a signal to go short. But there is no confirmation of the low. Don't pull the trigger.

You can see how this works. Applying the Shapiro Effect will keep you out of most bad trades. The downside of course is you might miss some good trades.

[BlowFish]

Originally Posted by malverd »

Jerry,

I know you mention that PVP is used as a stop loss point.

Let's assume a long position. Say your risk tolerance would allow you to place your exit point below the PVP.

If price closes below the PVP, but hasn't hit your risk tolerance stop AND the PVP point hasn't changed, should you stay in the trade?

I hope Jerry is still around to comment but could you link where Jerry talks about using the PvP as a stop? I may be completely wrong but I have a suspicion you might have got the wrong idea about that.

[malverd]

It's in the first sets of videos. It is even in the ones where he introduces standard deviation.

Originally Posted by BlowFish »

I hope Jerry is still around to comment but could you link where Jerry talks about using the PvP as a stop? I may be completely wrong but I have a suspicion you might have got the wrong idea about that.

[BlowFish]

Originally Posted by malverd »

It's in the first sets of videos. It is even in the ones where he introduces standard deviation.

Well it's been some years since I watched the videos or read the threads (though at the time I did many times), I am pretty sure that they do not advocate using the PVP as a stop. I may be mistaken, it would not be the first time. Perhaps re-read Jerrys first few posts in this thread, again my whole understanding from them is to get away from thinking of 'stops' (apart from emergency and account sized based ones) and start thinking about risk and scaling (adding to a position) or reversing.

If the PvP 'jumps' due to a new high volume point forming and the skew changes a newbie should exit, is that what you mean? That is a little different to a stop. My understanding is the modal point (pvp) is a low probability place to consider these actions.

Edit: Are you talking about http://www.traderslaboratory.com/for...longjuly23.swf ? How far in?

[Sandov]

Originally Posted by BlowFish »

Well it's been some years since I watched the videos or read the threads (though at the time I did many times), I am pretty sure that they do not advocate using the PVP as a stop. I may be mistaken, it would not be the first time. Perhaps re-read Jerrys first few posts in this thread, again my whole understanding from them is to get away from thinking of 'stops' (apart from emergency and account sized based ones) and start thinking about risk and scaling (adding to a position) or reversing.

If the PvP 'jumps' due to a new high volume point forming and the skew changes a newbie should exit, is that what you mean? That is a little different to a stop. My understanding is the modal point (pvp) is a low probability place to consider these actions.

Edit: Are you talking about http://www.traderslaboratory.com/for...longjuly23.swf ? How far in?

at the first videos... he will recommend a initial STOP loss below/above the PVP...

[Sandov]

Originally Posted by jperl »

Good show on the computation dbntina and your analysis of the outcomes for various trades.
As far as risk/reward, think of it as how much does it realy hurt if it only represents 2% of your entire account vs. how much you are hurting if you take multiple stoplosses. To get stopped out in the scenario that is described, the market would have to move 3 SD without a rotation against the skew. You can avoid a chunk of that by not taking trades at the 2nd SD, expecting a move to the 3rd SD, not a high probability trade.

since probability is decreasing over deviations..... does it make sense to scale out ????? for example... starting with 3 lots at the vwap and scaling out off untill price reached the last st. dev? (talking about directional skew trades only)