Trading the Storm - Methods for the Struggling Trader

[JEHs 10]

JEH,

 

Yup, that chart looks like crap :rofl: but, it is a good one to show congestion - looks like a really fast chart though.

 

I am looking for a graphic editing program better than MS Paint to make some notes on your attachment, and will make some comments on it shortly.

 

Going to take a guess on the chart though..... NQ, something around a 10 tick range? Actually, don't answer that lol..... but if you would, double whatever range that is and repost a chart of the same area - I would like to see what that looks like.

 

In a trade at the moment, but will post my comments on your chart soon, as well as award the winner(s) in the "where is the entry" contest

 

M

 

It was a ten tick YM. But I have certainly seen similar action on the 20 as well...

At one point in an earlier post you said you would go with a 5 tick on the NQ. Maybe I read that wrong, I will have to go back and look...

[Maelstrom 10]

It was a ten tick YM. But I have certainly seen similar action on the 20 as well...

At one point in an earlier post you said you would go with a 5 tick on the NQ. Maybe I read that wrong, I will have to go back and look...

 

Dammit!! Used my own market against me! lol

 

And god, hope I didn't say 5 tick on NQ - 5 full points sounds about right though, but would have to look.

 

Regarding the chart you posted, and sticking to "the rules" I have gone over, the first short would be valid, and prob good for a small profit, then would have been followed by a long where you asked if there was an entry, and that would have been a loss. Then a short coming out of the congestion area, also a loss, and the long at the end you asked about would have also been a trade, and a loss. 3 losses in a row, according to my basic rules.

 

Just too fast of a chart for me and would not be workable with this method. Trends reverse too quickly on a chart like that - maybe a break of two consecutive patterns might be the way to go instead. I will look closer and see if there is something I can find on a shorter chart, since I have had several questions on whether this works on a faster chart - for now, my answer to that is no.

 

M

[arndude 10]

Hello Maelstrom,

 

Thanks much for such a comprehensive response (07-19-2011, 10:49 PM ) to my post and questions.

 

Your had observed in that post that range bars on my chart appeared to open at the same tick as closing of the previous bar, whereas your bars have a 1 tick difference between close of a bar and open of the next bar... and requested verification.

 

Your observation is correct. This is my first experience with range bars, but from your description, I am guessing that my running a 20 point bar might be effectively equivalent to your running a 19 point bar, though it's not clear if we would end up with the same signals? .... does that make sense?

 

Also in your 07-19-2011, 04:49 PM post you had suggested:

“Back on point, there are several nuances I use that help keep me out of chop or whipsawing trades. If anyone out there is looking to actively trade this method, or something similar, I will be happy to post details - it would have certainly helped last week.“

 

I am interested in actively trading the method and would welcome the opportunity to learn of any nuance that helps to keep you out of chop trades.

 

From your post today (Today, 12:16 PM )... I would like to take a learning guess, as to why you took the previous day's trade at C instead of B... (marked chart attached). Gonna' guess you saw congestion to the left of the B signal (circled in red) and overhead “resistance” to the upside at C???

 

Regarding today's entry long. I think the 1st signal was at point “A” (see attached chart). If that is correct, it is also going into the open... about 30 minutes away (I assume you are in CST zone?) and always somewhat volatile for a few minutes at least. I did take a 1 lot trade... OOPS!

 

You also remarked in previous post... “I am looking for a graphic editing program better than MS Paint to make some notes on your attachment, and will make some comments on it shortly. “. You might consider “SnagIt”, (used to be free... I think it's around $40 now) a pretty flexible screen-capture program with some (limited) markup capability. For more extensive graphics program at the right price (free) you might try the OpenOffice Suite... it contains a graphics module.

 

Thank you again for your continued support of this terrific thread.

arndude

[Maelstrom 10]

Hi M

 

Great thread! Can this system be traded withn a 10 point range bar (instead of 20) and only trading the YM during the New York night session? (I live in Australia)

 

 

Thanks

 

Adam

 

Thanks Adam..... as I noted in my previous post above, I really don't think this method is effective on a smaller range. I do believe there is still a lot of value in looking for the markets intention/direction in the formations, but entry triggers, targets, stops, etc would have to be much different due to the increased noise. I am going to look at these smaller ranges closely to determine if I can see a workable method to the madness.

 

As for the night session, I don't know about ONLY trading the overnight session, but I do trade it actively. Often times, overnight entries continue on into RTH, so not sure how effective trading would be to limited hours.

 

M

Edited July 21, 2011 by Maelstrom

[JEHs 10]

Dammit!! Used my own market against me! lol

 

And god, hope I didn't say 5 tick on NQ - 5 full points sounds about right though, but would have to look.

 

Regarding the chart you posted, and sticking to "the rules" I have gone over, the first short would be valid, and prob good for a small profit, then would have been followed by a long where you asked if there was an entry, and that would have been a loss. Then a short coming out of the congestion area, also a loss, and the long at the end you asked about would have also been a trade, and a loss. 3 losses in a row, according to my basic rules.

 

Just too fast of a chart for me and would not be workable with this method. Trends reverse too quickly on a chart like that - maybe a break of two consecutive patterns might be the way to go instead. I will look closer and see if there is something I can find on a shorter chart, since I have had several questions on whether this works on a faster chart - for now, my answer to that is no.

 

M

 

I think on the shorter term charts, it becomes just trading the "Ross hooks", (for lack of a better term), which I had never really considered on a range chart before.

We are really just doing what any system does, trying to have an educated guess on the market intent and then figuring out a setup formation and a trigger. And then, of course, everything works and everything doesn't work depending on the user of the "system".

 

The faster charts, to me, are more what I am used to and I really only can trade right now for about an hour or two a day, (less these days lately because I am very busy), and I would like to have a setup that has a probability of happening in the short times I am watching.

 

But this isn't your problem. You don't have to take the time to look at faster charts and see if they work. You have done a great deed here in laying out a easy method that actually works and we are all just sitting here trying to tweak it, (which is why most systems don't work for others because we just can't leave it alone).

 

...and you are probably right, you probably said 5 points not 5 ticks...

 

thanks,

John

[Maelstrom 10]

This is concerning..... I have seen several charts from traders out there on various other platforms, such as tradestation, and I am seeing some really weird discrepancies. With TS specifically, it seems new bars open exactly where previous bars opened or closed, which is really weird to me as I have never seen that in a charting program before - almost seems more like Renko charts. The issue is it seems to throw everything off at some point....possibly creating a whole new bar after 20 bars that I am not getting. Is it tradeable like that? I don't know, but one TS chart I saw today would have been a loss on a long entry, where I had a great trade.

 

Not sure what this means, but anyone out there looking at this on a different platform than Ninjatrader, please be aware.

 

Thanks,

M

[Maelstrom 10]

4 trades so far..... liking my new money management strategy, even though it may leave some on the table at times.

 

4 contracts per trade, 2 off at +60, 2 at +100, still trailing stops/targets.

 

1st trade short - +120/+200

2nd trade long - +120/+200

3rd trade short - +120/BE

4th trade long - +120/ +138 (exited the last trade near the close, did not re-enter on market re-open - greed can kill)

 

+1018 for the week, avg 254 pts per trade, about 63 points per contract.

 

Lets see what tonight/tmrw brings.

 

M

[IamJon 10]

 

YMoca, JEH, and IamJon :applaud:

 

BUT.....I did not take that trade at B - I took it at C.

 

And then, a lot of conflicting signals, several possible trades and probable losses, but I did not take another trade until 9:00am CST this morning.

 

This is the point where anyone reading this thread is saying "WTF, you are full of shit!" Maybe so, but....let's extend the exercise. Any ideas why I took that short later? or why no other trades in that choppy mess until this morning?

 

M

 

From post #11 - Valid Signals Part 1

 

"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."

 

So... B was the first the first completion of a short entry signal thus confirming the trend. C was first valid short entry after the trend confirmation.

 

J.

[IamJon 10]

M,

 

Could you let us know what the missing text from Post #12 - Valid Signals Part 2 - Inside Formations is from step #3 in the image?

 

Thanks,

 

J

[Maelstrom 10]

M,

 

Could you let us know what the missing text from Post #12 - Valid Signals Part 2 - Inside Formations is from step #3 in the image?

 

Thanks,

 

J

 

Wow, that seems like ages ago lol. I think I was going to state that there was no signal down to validate a long or something along those lines.

 

Good chart for what I am going to get into next here shortly though.....

 

M

[Maelstrom 10]

From post #11 - Valid Signals Part 1

 

"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."

 

So... B was the first the first completion of a short entry signal thus confirming the trend. C was first valid short entry after the trend confirmation.

 

J.

 

Good one, but....the reason for me taking the trade at C is not anything I have gone over yet.

 

But having you bring this up is excellent, because I can see now that I was not clear on the point you quoted. A confirmed trend means there was a signal. I will try to explain again.

 

Assume there was a long signal - an upward formation, pullback, breach/ close above the formation, 2nd pullback, and finally a signal bar. THAT means there is a confirmed uptrend.

 

Once that has happened, the long trade is managed appropriately, but I am ONLY looking for a complete short setup at that point. Vice versa going from a short to a long.

 

In the example exercise I posted, B is the correct trade with the rules I have set out. Again, the reason I took C is not something I have posted yet (and a lot of people may think it's a very silly thing when I do, but it works). The reason I haven't disclosed some additional things is some people who have been trying to follow this have struggled with some steps.....probably my fault for not being clearer with my explanations, but, I will continue on and as always leave things open to questions.

 

Onward we go.....

 

M

[IamJon 10]

M,

 

Thanks for clearing that up. I was trying to read between the lines.

 

Carry on.

 

J

[Maelstrom 10]

Attached is a chart with the congestion area last night, with every trade that would have been taken using the basic rules I have laid out. I am posting to make sure anyone following this is truly "following" and understanding why each of these trades would have been taken.

 

Any questions, please put them out there. Otherwise, my next post will be to explain the trade I actually took.

 

M

 

[Maelstrom 10]

Hopefully a picture is worth a 1000 words.....

 

Important to note.... this is what I would call, for lack of a better term, a little more advanced than the basics I have laid out thus far. The basic rules will still work without these additional nuances I am laying out, just not quite as profitable as there will be more losses in these congested / ranging times. But, several thread readers out there seem interested in this way of trading and seem to have gotten the basics down, so let's call this a refinement.

 

One other "rule" on how/when to trade after a loss that helps prevent additional losses in congestion, but I will hold off on that one for a bit in order to field any questions about this post.

 

M

Edited July 22, 2011 by Maelstrom

[Maelstrom 10]

This one is from last week. Saved a loss and turned out to be a decent trade.

 

M

 

[Maelstrom 10]

A fellow trader (names have been changed to protect the innocent ) sent me a message with a "fix" he found to make Tradestation range bars match the type I use. There are two types of range bars in TS.....Type 1 are called Momentum Bars, and these are the one that match mine.

 

Matched a few bars between NT and TS charts, and they are right on or damn close. Phew, I feel better now. And thanks for the info!

 

M

[adam777 10]

This one is from last week. Saved a loss and turned out to be a decent trade.

 

M

 

 

Hi M

 

Do you use the range in the blue box on the left as the extension for the target (ie placing the range of the blue box at the bottom of the entry candle) ?

 

Please see my comments on your chart for a better expaination of my question.

[Maelstrom 10]

......You don't have to take the time to look at faster charts and see if they work. You have done a great deed here in laying out a easy method that actually works and we are all just sitting here trying to tweak it, (which is why most systems don't work for others because we just can't leave it alone).

 

 

John,

 

It's not a problem at all. One of the things I have really enjoyed about starting this thread has been the opportunities I have been given to expand my thinking. Posts by you and other traders like PhilnTexas, Steveh, IamJon, and many others - asking questions, making comments, looking at other markets, timeframes - has challenged me (in a positive way) in my trading.

 

LOL you're point about tweaking a system is absolutely correct though. I have seen and done it a hundred times myself - taken a good, simple method , and "tuned" it so much, it just stops working. I believe it is hard for most people to really embrace someone else's style of trading - maybe trading truly is something that has to be learned, but can't really be taught.

 

But, I encourage the "tweaks"- as I said from day one, the way I trade may not be for everyone, due to a particular market, trading goals, personality, or as in your case, time restraints. I have received many positive messages from traders out there for the thread, and feel I may have achieved my goal some - helping with that "a-ha" moment that could turn things around.

 

So, keep it coming To those of you who have contributed to the thread, once again - thank you.

 

Thanks,

M

[Maelstrom 10]

Entry at 12652

Stop loss at 12674

First extension target at 12608

 

 

M

[JEHs 10]

Question on current YM chart

[Maelstrom 10]

Question on current YM chart

 

Good question. Quick answer is to take a look at post #14...... then look at the 3rd downward formation back ( starts around 11:45cst)

 

M

[Maelstrom 10]

May or may not make sense, but take a look.

 

Thanks

M

 

[Maelstrom 10]

Second extension target set at 12575

 

Bar close below 1st extension target - stop now set above this bar at 12624. This is a closing bar stop, meaning a bar will have to close above this for an exit, not just touch or breach the price.

 

M

 

[JEHs 10]

May or may not make sense, but take a look.

 

Thanks

M

 

 

Ahh... Now it gets complicated...

Reminds me of a card game I played with a 6 year old recently. She was teaching me a new game. Half way though I said, "wait a minute, are you just making this up as you go along?".

 

I'm just kidding. I can see you have thought this all out, but from the perspective of a guy sitting here trying to figure out what you are doing I can't help but occasionally think WTF?

 

Again, I'm just kidding:)

 

John

[Maelstrom 10]

May or may not make sense, but take a look.

 

Thanks

M

 

 

Ahh... Now it gets complicated...

Reminds me of a card game I played with a 6 year old recently. She was teaching me a new game. Half way though I said, "wait a minute, are you just making this up as you go along?".

 

I'm just kidding. I can see you have thought this all out, but from the perspective of a guy sitting here trying to figure out what you are doing I can't help but occasionally think WTF?

 

Again, I'm just kidding:)

 

John

 

LOL.... no offense taken. That perception is something I have been concerned about, because as careful as I have tried to be in laying things out, I think some things may have been skipped over, put in the wrong order, or frankly just been unclear.

 

I have given some thought to putting together a pdf or document with everything laid out as clearly as possible, but that would be a pretty significant effort, and I am really not sure how many people would find that useful.

 

Good news is, the thread is just about at it's end.... not much more to go over.I think I have gotten just about everything out that I wanted to, disjointed as it may be. Perhaps I will start a journal in that section to post my trades real time and results in case anyone is trying to follow.

 

Thanks

M AKA WTF :rofl: