Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

carltonp

Please Comment On My New Strategy

Recommended Posts

Hello Traders,

 

I have been working on trading strategy that I have been paper trading for a while. I will attempt to explain it in as much detail as I can - if I forget to add some crucial information let me know.

 

Let me start by saying the overall trading style is based on comparative relative analysis.

 

I'm going to first provide some of the detail in bullet point then elaborate.

 

  • I'm trading YM.
  • I am using the components of the Nasdaq 100 for comparative analysis.
  • I use On Balance Volume and Advance / Decline of the 100 stocks mentioned above.
  • I trade on 2 minute interval.
  • I have programmed the stocks into Excel.

 

Now I will explain how I use the information and Excel.

 

As I'm sure you're aware at this stage that I use the 100 stocks to assess the likely direction of YM.

 

The data from the stocks are fed into Excel.

 

I have programmed Excel to compare the OBV values over two intervals - in this case two minutes. So, lets say the value of the OBV for a particular stock was 100 and the price was 20 at the end of one minute. Now, during the following minute Excel would compare the OBV and Price of the stock and if both OBV and Price were increasing for that particular stock Excel would add it to a table. Excel would do that for all 100 stocks individually and if say 85 of the 100 were increasing in both OBV and Price I would use that as indication as to where I think the YM might be going.

 

I have used the same calculation that is used for the NYSE Tick for the 100 stocks. So at any time I can see how many stocks are trading on an uptick vs how many are trading on a down tick over a two minute period. Again, this is achieved by programming Excel to compare stocks trading on an uptick and downtick over a two minute interval.

 

What is a little more tricky is programming Excel to alert me when the price of YM has remained stagnant for 3 seconds. I have no reason why I chose three seconds - it just seemed like a good number to make a decision if the stock has remained at a certain price level for three seconds or more.

 

 

So that is what is set up, now for my style.

 

If say 85 or more of the stocks are increasing in both OBV and Price there will be a pullback. Sometimes the pullback will turn into full reversal, but 8 - 10 times no matter how strong the move there will be some form of pullback/reversal. I won't actually place a trade on YM when I pullback is identified on the chart but I will only trade a pullback when the pullback is accompanied with an increase in OBV and Price on the stocks in my spreadsheet (to be honest I only use a chart for visual affect, not for actual trading)

 

Now once I've decided that the pullback is in full affect as described above I wait to see at what price YM has remained stagnant and how many times it has remained stagnant at a certain price. Let me give you an example:

 

  1. Pullback is in full effect.
  2. OBV and Price on stocks are going in the direction of the pullback.
  3. YM has remained stagnant at say 11000 for three seconds.
  4. After three seconds, the price has moved in the direction of the pullback or the direction of the OBV on stocks and is now 11002 and stays a further three seconds at 11002.
  5. The price then moves to 11004.
  6. I will then place a trade at 11004.

 

While all this is happening the direction of OBV and Price for the stocks are either moving in the direction of the pullback or the price of YM.

 

My exits are far simpler, but we can get into that another time.

 

I'm really sorry for the very long explanation but I think if I want decent feedback then I should provide as much information as possible.

 

It has been suggested that I forget about charts completely I use T&S. I've never used T&S but will learn if more people suggest its the way to go.

 

I'm sure there are aspects that I have missed, but just ask me any questions you like. I just need good honest feedback and suggestions.

 

I look forward to hearing from you all.

 

Cheers

Share this post


Link to post
Share on other sites

Traders,

 

Still no comments.

 

Do you find any benefit in knowing when a price has remained stagnant for a period of time, say 5 seconds? Is there a message in a price that has remained stationary for seconds that you guys use for your trading?

 

Give me something :-)

Share this post


Link to post
Share on other sites
Traders,

 

Still no comments.

 

Do you find any benefit in knowing when a price has remained stagnant for a period of time, say 5 seconds? Is there a message in a price that has remained stationary for seconds that you guys use for your trading?

 

Give me something :-)

 

Didn't we just discuss this in your other thread?

Share this post


Link to post
Share on other sites
Didn't we just discuss this in your other thread?

 

Hi yes we did, and I am looking into T&S as a means of adapting my trading from using OBV or Trade Volume Index.

 

Don't get me wrong I really appreciate the suggestion and as I just mentioned it is something I'm seriously looking into, however, I was just wondering if there were others that agree with you.

 

Cheers

Share this post


Link to post
Share on other sites

you should draw some diagrams to illustrate your thinking/logic.

a picture is worth a thousand words.

on a discussion forum, most people cannot read past the 100th word.

Share this post


Link to post
Share on other sites

What is statistically significant about 3 second pauses? Or pauses at all? Have you measured the significance? Is there a significant probability increase only if you have OBV/Priced in trend? Or in counter trend?

 

Are you trading in line with OBV/Price or against?

 

It sounds like you're using OBV/Price composite (NDX) as your primary indicator. But something to do with YM pauses as a trigger. That doesn't seem very deterministic.

 

I like your OBV/Price composite concept, but would want a couple of price action confirmations on the YM (not just pauses and toggles) to trigger trades.

Share this post


Link to post
Share on other sites

 

Are you trading in line with OBV/Price or against?

 

It sounds like you're using OBV/Price composite (NDX) as your primary indicator. But something to do with YM pauses as a trigger. That doesn't seem very deterministic.

 

.

 

You have made me soooo happy. Apart from a member called 'brownsfan' who kinda got I'm trying do, you are the only person that appears to truly understand what I'm trying to ahieve. I posted this exact thread word-for-word on other forums and no one gets it.

So at last I can have a conversation with someone without having to go through every detail again and again.

 

First, I appreciate your commnets, and at this stage there isn't any significance in a three second pause. The reason I introduced it into my trading because it stopped from going crazy watching price move up/down before I entered - I scalp. So initially I used the pause to give me a focus on when to watch the price. So, if the price paused for 3 or 4 seconds at 11000 I will be notifed with an alert. If after the pause the price moved to 11005 and then sat there for another four seconds I would be notified. After the second pause I would watch to see if the price moved in the direction of the OBV / Price of the majority of the stocks (remember by this time I already know which way the OBV/Price is going) I would enter.

 

I going to continue, I just want to send this thread now, so that you know that I'm here. I've lots more I would like to talk with you about - please stick with me on this.....

Share this post


Link to post
Share on other sites

 

It sounds like you're using OBV/Price composite (NDX) as your primary indicator. But something to do with YM pauses as a trigger. That doesn't seem very deterministic.

 

 

You're 100% correct here. I think the only way to know if the pause has any significance is to do what 'brownsfan' suggested and watch the Tape.....

Share this post


Link to post
Share on other sites

MarketMole / Brownsfan019, are you guys around.

 

I have posted a snapshot of the Time and Sales for YM at the time that YM paused for over 4 seconds. The pause took place 09/08/11 at 11:12:14 to 11:12:20

 

Its this kind of thing that I need a strategy for my stagnation system, but I don't have the knowledge or experience to understand what is going on in T & S to make a judgement.

 

If there is anybody out there that can assist with this one I'll provide more examples - and if you're able to share with me some good strategies I'll happily share with you my Excel spreadsheet with all the formulas (that's if you're interested in it).

 

Cheers

5aa710a2c5aee_09-09-201112-00-52PM.thumb.jpg.2a686100f57b04c1d27b6ce2bee1b8a8.jpg

Share this post


Link to post
Share on other sites

I think I would try to embody the concept of a "pause" into something that could be modeled. For instance, imagine creating 5 second bars. A long pause in price change would be represented by a doji like bar. If a doji was followed by specific sequence of bars, say up and then a down with the close below the doji low, and your OBV/Price confirmed a short trade, then sell short the YM.

 

By packaging the trades as 5 second bars you could also perform statistical analysis on the pattern.

 

As far as watching the actual trade executions during a pause, you could capture that in the volume of the bar. Perhaps on a high volume doji like bar the probability of follow through is higher than on a low volume bar.

Share this post


Link to post
Share on other sites
I think I would try to embody the concept of a "pause" into something that could be modeled. For instance, imagine creating 5 second bars. A long pause in price change would be represented by a doji like bar. If a doji was followed by specific sequence of bars, say up and then a down with the close below the doji low, and your OBV/Price confirmed a short trade, then sell short the YM.

 

By packaging the trades as 5 second bars you could also perform statistical analysis on the pattern.

 

As far as watching the actual trade executions during a pause, you could capture that in the volume of the bar. Perhaps on a high volume doji like bar the probability of follow through is higher than on a low volume bar.

 

Brilliant, absolutely brilliant. That might sound dramatic but that strategy is great not just because its an excellent strategy but it more importantly it opens up so many other ideas in my head.

 

Thanks man.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • $EWBC East West Bancorp stock, solid breakout from Stocks To Watch , https://stockconsultant.com/?EWBC
    • $AZEK stock, tight bull flag breakout watch above 50.73 , see https://stockconsultant.com/?AZEK
    • $AMZN Amazon stock holding firm with a breakout watch , see https://stockconsultant.com/?AMZN
    • $AIZ Assurant stock nice breakout, from Stocks To Watch , see https://stockconsultant.com/?AIZ  
    • Date: 28th March 2024. The US Dollar Strengthens As Economists Believe The ECB Will Struggle To “Hold”. Early this morning, the Fed Governor advised “there is no rush to cut rates” and “the data within the upcoming months” will be vital. The US Dollar Index rises to a 1-month high. The value of the USD will largely be based on today’s data on economic growth, consumer sentiment and pending home sales. Dollar and index traders are closely monitoring tomorrow’s Core PCE Price Index which analysts expect will read 0.3%. A higher inflation reading can potentially pressure stocks and support the Dollar. Strong declines in NVIDIA and Netflix stocks pressured the NASDAQ on Wednesday. Though, buyers entered late in the session to boost the overall price. EURUSD The latest comments from members of the Federal Reserve are supporting the US Dollar. The forward guidance between members of the Federal Reserve is mainly not aligned. The Chairman advises the Fed does not need much more proof for the regulator to feel comfortable reducing rates. Whereas the Fed Governor, Mr Waller, advises there is no rush, and he wants to see a few months of data before determining the next move. Therefore, the upcoming inflation and employment data will remain vital and could even push back rate hikes further. According to economists, the Federal Reserve will cut the interest rate on 3 occasions this year, but the timing of the first cut is less certain and may change depending on upcoming data. A positive factor for traders is that EURUSD exchange is not witnessing conflicting currencies. The US Dollar is trading 0.12% higher while the Euro is declining against most currencies. The Euro is trading 0.06% lower against the Pound and the Canadian Dollar and 0.16% lower against the Japanese Yen. Yesterday, the head of the Bank of Italy, Mr Cipollone, said that the authorities were confident that inflation would return to the target of 2.0% by mid–2025. He also supports the lower of interest rate and will use this as a basis for adjusting monetary policy. The Euro is generally under pressure as investors believe the European Central Bank will struggle to avoid cuts if the Fed decide to delay their adjustments. The US Dollar will be influenced by four major economic data releases. The US Final GDP, Weekly Unemployment Claims, Pending Home Sales and Consumer Sentiment Index. If these read higher than expectations with the weekly unemployment claims dropping, the US Dollar is likely to witness further support. However, investors should note the main release will be tomorrow’s Core PCE Price Index. Traders are expecting no major news for Europe and volatility levels may fall tomorrow as European markets are closed for Easter. Technical analysis currently points towards a continued downward trend. The price is trading below the neutral on the RSI and below the 75-Bar EMA. However, investors should note this will also be dependent on upcoming US data. USA100 The price of the USA100 was under pressure throughout the whole US session but was saved by an increased volume of buyers late in the session. However, a positive point is the components held onto their value. Even though the index fell in value, only 28% of the components declined. Investors will now turn their attention towards tomorrow’s PCE Price Index and the upcoming earnings season which will start in mid-April. The price is now trading slightly above the Moving Averages but slightly below the 50.00 on the RSI. Therefore, technical analysis remains at the “neutral” level and continues to indicate a larger price range. If today’s economic data is positive the stock market can witness confidence and support as this continues to indicate a soft landing. Though, if the data is too strong, it could also trigger a hawkish Fed which is known to be negative for the USA100. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Michalis Efthymiou Market Analyst HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.