[Maelstrom]

Siuya,

Thanks for the reply! Any feedback you have is appreciated.

Pa18,

I think I may have one somewhere - I know there is a free version that is so-so, and then a paid version for MT4 that is supposed to be much more reliable. I will see if I still have the free version somewhere.


M

[Maelstrom]

Slow as can be in the overnight, as expected before the holiday, so I will post a few more things today.

Just another quick chart showing the intention formation break points. Pretty good trends over the last few days, so of course, it looks incredibly easy. But I will post a few examples of congestion or small move days - the type of days that can kill an account quickly.

M

[Maelstrom]

Ok, 3+ bar formations are easy to spot - should be no problems there. But do I take every signal based of of those. Nope. I will try to explain why.

One of the most important things I have found is the most reliable signal is your FIRST signal. Meaning, the market has been in a steady downtrend for a couple of days, and then a long formation comes up, price breaks, pulls back, and we have an entry. That first signal is USUALLY the absolute best one to take.

Important to note here - we are talking about the first opposite signal after there has been a confirmed trend in the opposite direction. A confirmed trend to me is one where there was not just a 3+ bar formation, but the completion of an entry signal.

It sounds like top and bottom picking a bit, doesn't it? But actually, there is a whole lot of confirmation:

- The reversal intention pattern consists of 3+ bars. On YM with 20 range bars, that may be 30-60+ pts, certainly not an extreme top or bottom.

- The wait for the reversal bar at the end of the pattern, then a break through the top or bottom of the pattern is solidifying the markets intention.

- Waiting on a pull back for entry is simply trying to get in at the best point possible.

Chart attached with notes to (hopefully) clarify. There are small range/congestion periods where you can take a second signal, as well as continuations. I will get to those soon.

M

[Maelstrom]

Congestion - small range - no trend

Call it what you like, but they happen all the time, more often than most of us would like. Here is how I deal with these times.

My previous post stated that the first signal/trigger after a confirmed opposite trend is the most reliable. But what happens when you get multiple, opposing signals - ie, chop. Two situations I would like to go over, and the first is inside formations.

Basically, if you have a signal, let's say for a short after a confirmed long trend, market chops around and doesn't complete the trigger/signal, and then forms another signal inside the first, that second signal is valid.

The key word is inside. For shorts, you have a formation, then another one forms above that one before the first triggered. For longs, the opposite - 2nd formation forms below the first.

Chart attached that will hopefully make things as clear as mud

M

[Maelstrom]

Quick chart showing a possible downward intention move forming after this great uptrend in YM.... will try to post the steps with charts as "live" as possible if it all materializes.

M

** Update ** Did not form, third bar turned green - will keep watching

[Maelstrom]

Or saving myself from the chop monster.......

An invalid signal is an intention formation that does not trigger a trade, and then another formation occurs that terminates outside the first, with neither actually signalling a trade. This invalidates both setups.

The next setup after these can be valid IF there is a bar that completely clears both formations.

As always, chart attached.....

M

[Maelstrom]

Let me start by saying, when it comes to re-entries in a trend, in the traditional sense, I don't like them.

Let me clarify - If I have a valid signal at the beginning of an uptrend, and there is another long setup, I don't like taking them at all. Not for adding to a position, not because I got shaken out too early - I would rather wait for a trend change, and go from there.

I am not saying they don't work, or that adding to a position is necessarily bad.... I guess it is just a prejudice from past experience. Too many times, I see a trend, looks strong as hell, get in at what looks like a good spot, and then of course, trend's over.

The chart I have attached is a great example. I took the trade at 12180 indicated on the chart, and got out for +38. Reasons for my exit I will get into later, but overall, could I have (and should have) held? Yes.

But I am a daytrader....how do I do that if I dont re-enter?

Disclaimer here - this is riskier than a lot of people will be comfortable with, and I DO NOT advocate this for everyone.

If you look at the chart, as far as intention formations, there is nothing but upward motion. So, here is how it is done very simply. My entry was at 12180. At the end of the day, as close to 3:15 CST as possible, close the position. There is a 15 min break in trading, and as soon as the market opens again, re-enter.

No analyzing chart formations, no bias, simply get back in. Now, if there was a clear reversal setting up, you probably would not want to re-enter. But otherwise, continue the trade.

Liquidity is verrrry thin afterhours, and trading large size, this would probably not work well, especially on the YM. A lot of people are nervous about trading overnight, and understandably so, but personally, I got tired a while back having a huge chunk of the days move occur while I was snoozing and be left with nothing but chop for the rest of the day.

Important - on a re-entry like this, your stop is where it was before the ended. And for those who may think I am a huge risk-taker, discussion on stops and exits will be coming soon.

Look at the chart....with after-close re-entries, 3 trades, totaling about 300 pts over the last few days, with virtually no sign of weakness.

M

[Maelstrom]

Ok,

Gone over a few things so far, so I thought I would recap to keep myself straight:

- Range bars vs. time bars - allow (me) to stay focused on price direction
- Market intention patterns - is the market serious about a direction, or not
- Entries - Intention pattern, bar close/break of pattern, pullback, entry bar in direction of move
- Confirmed trends - I consider a trend or direction confirmed only when there has been an entry signal in that direction (not just an intention pattern)
- Valid signals (reversal of trend) - first signal is the one to take
- Valid signals (inside formations) - used in congestion/chop areas, concurrent signals must occur inside the previous
- Invalid signal - a second signal that forms outside the first with no trigger for a trade. Subsequent signals must clear the previous formations by one complete bar to be valid.
- Continuation of big trends - for daytraders, re-entering at the resumption of trading at the end of the trading day ONLY if there was no valid reason to exit.

Additional things I will go over will be stop placement, several options for profit targets, risk:reward issues, and eventually defining valid support and resistance levels.

Not sure if anyone out there is finding any of my ramblings useful, but since I will be babysitting my sick great dane this weekend, no doubt I will ramble on.

M