This document was written by Goinglite.

It was written approximately in 2001/2 and

posted on the Talkstox forum with continual updates. That forum no longer exists.
This document is a summation and clarification of the trading techniques taught by
Woodie at that time as seem through the eyes of Goinglite, a student of CCI at the
time.

Goinglite still posts charts daily on http://charts.dacharts.com/ and is still using CCI
(as of March 2005)

When this document was written the concept of trading CCI without price was not
taught. Since this document was written the methodology has changed. Many
additional CCI methods have been added and dropped.

The strength of Woodie’s sharings of how he trades CCI, in my opinion, has always
been enhanced and expanded by the contributions of those that have studied his
methodology and added there own insight and additions to Woodies original CCI
methodology. Resulting in, the teacher teaching the student and the student
teaching the teacher.

CCI and Turbo CCI Tips and Nuances by GOINGLITE

I. The Main Stuff.

1. Woodie's Setup.

a. Very simple 3min and 5min Charts with just the CCI and No Premarket Data ( No
"All Sessions").
a1. Note: "All Sessions" charts also work well.
b. The CCI's Setting is: 14 period, HLC/3.
c. The Turbo CCI's Setting is: 6 period HLC/3
c. The 3 Min Chart Should only show 25 to 30 Price Bars.
d. The 5 Min Chart Should only show 25 to 30 Price Bars.

2. The CCI in General.

a. The CCI can be used as a trading system in and of itself.

b. The CCI works well with Other Indicators.
c. The CCI works well with Other Systems of Trading.
d. The CCI works well with Futures and Stocks.

3. The Main Charts.

a. 3 Min Chart used for Setups.

b. 5 Min Chart used for the "Bigger Picture".
b1. Sometimes the 5 Min Chart can provide confirmation for the setups on the 3 Min
Chart.
b2. Also, the 5 Min Chart can be used for Setups.

4. The Turbo CCI.

a. Shows Divergences that The CCI may miss.
b. When The Turbo CCI Crosses The CCI, it's often an early "Trend Change" warning.
c. When both The CCI and The Turbo CCI Diverge together, The Turbo CCI will often
signal 1 to 2 bars earlier.
d. Can draw a trendline from a Peak/Valley of The CCI to a Peak/Valley of The Turbo
CCI.
e. Can draw trendlines on The Turbo CCI, alone.
f. The Turbo CCI can often show an overbought/oversold condition not seen by The
CCI. (Such as The Turbo CCI Slingshot.)

5. To Determine the Trend on The CCI.

a. On The CCI, The Zero Line is the Dividing Point between the Uptrend and the
Downtrend.
b. When The CCI is Below The Zero Line for at least 5 or More price bars, look to go
Short. Exception would be Divergences.
c. When The CCI is Above The Zero Line for at least 5 or More price bars, look to go
Long. Exception would be Divergences.

6. A CCI Warning.

a. The CCI Indicator measures Momentum.

a1. The Greater the angle of the CCI line, the greater the momentum.
b. Be careful if the CCI line is "Flat". A Flatten CCI line means NO Momentum.
b1. Trying to enter a setup with a "flat" CCI Line will increase your chances of getting
stopped out.

7. The CCI Retracement Principle.

a. The CCI will often do an approx. 50% Retracement of it's last move.
b. CCI 50% Retracements can be important areas for Support and Resistance.
c. CCI 50% Retracements can confirm certain CCI Setups.
d. I look for Zero Line plays to be a part of a 50% Retracement of the last CCI move.

8. The 5 Strongest CCI Setups.

a. Regular and Reverse Divergences. (The Most Powerful Setups.)

b. Trendline Breaks With The Trend.
c. A Zero Line Cross & Trendline Break Combo. (Trend and/or Divergence Helps, but
not a factor)
d. Zero Line Bounce/Re-Cross & Trendline Break Combo With The Trend. (Very
Powerful)
e. Horizontal Trendline Breaks. (High Percentage Plays.)

9. Definitions of Divergences.

a. Regular Divergence is basically for Counter Trend Trades.

b. The basic rules for Regular Divergence are as follows:
b1. To go Long, The Price makes a Lower Low, The CCI makes a Higher Low.
b2. To go Short, The Price makes a Higher High, The CCI makes a Lower High.

c. Reverse Divergence is the opposite of Regular Divergence.

c1. Regular Divergence is usually for counter-trend Plays. Reverse Divergence is
usually for Trend Continuation.
d. The basic rules for Reverse Divergence are as follows:
d1. To go Short, The Price makes a Lower High, but The CCI makes a Higher High.
d2. To go Long, The Price makes a Higher Low, but The CCI makes a Lower Low.

10. Reverse Divergence.

a. Reverse Divergences are for Trend Continuation Setups.

b. Reverse Divergences are more reliable than "Against The Trend" Regular
Divergences.
c. On Reverse Divergences, use Trendline Breaks for Entries.
d. On Reverse Divergences, the Zero Line can be a point of entry.

11. Regular Divergence.

a. Regular Divergences are for "Against The Trend" Setups.

b. Regular Divergences usually have the +/- 133 line Touch/Cross for entries.
(Woodie uses The +/- 120 Line for Divergence Entries.)
c. On Regular Divergence, you can use Trendline Breaks.
d. On Regular Divergence, you can use the Zero Line as a point of entry.
e. Trading against the Trend can be risky. Lock in Profits. Use good money
management.

12. Divergences.

a. To find reliable Regular Divergences, you should look for 3 to 10

Price Bars.
b. To find reliable Reverse Divergences, you should look for 3 to 15
Price Bars.
c. During The Opening Range ("Day Session Charts"), You can use
data from The Previous day to Spot Reverse and Regular Divergences.
13. The CCI Zero line.

a. The CCI Zero Line is the strongest point of Support/Resistance. ( I

use a "Zero Line Zone" between The +/-33 Lines.)
b. The CCI Zero Line is also The Trickiest Area to Trade from. It can be
a rich source of "Fakeouts".

c. I like Zero Line Setups that SHOW DIVERGENCE, Trendline Break,

and are part of a 50% Retracement of The last CCI Move.

d. Trendline Breaks with The Trend, that are close to The Zero Line,
are The Most Important Trendline Plays.
e. An entry can be made off of a Zero Line bounce, cross or re-cross
With The Trend.
f. An entry can be made off of a Zero Line bounce, cross or re-cross
with Reverse Divergence.
g. The Zero Line can sometimes be a point of entry for Regular
Divergence.
h. You can also "add" to your position on a Zero Line Cross.
14. The +/- 100 Lines.

a. When The CCI gets Above +100, The Market is becoming

Overbought.
b. When The CCI gets Below -100, The Market is becoming Oversold.
c. The +/- 100 Lines are often entry points for Regular Divergence.
(The +/- 133 Lines are a Better Entry Point.)

15. Trading CCI Trendline Breaks.

a. Because CCI Trendlines show Support and Resistance, they can be a

rich source of Fakeouts.
b. I like to draw CCI Trendlines starting from at least the +/- 100 Line.
c. Can draw a trendline from a Peak/Valley of The CCI to a Peak/Valley
of The Turbo CCI.
d. Can draw trendlines on The Turbo CCI, alone.

e. I like trendlines that are part of a CCI divergence and/or a 50%

Retracement of the Last CCI Move.

f. The longer The Trendline, The Better.

g. I look for Trendline Breaks With The Trend.

h. Trendline Breaks with The Trend, that are close to The Zero Line,
are The Most Important Trendline Plays.
i. Trendline Breaks can be done, with The Trend, without Divergence.
j. Trendline Breaks can be done, with the Trend, with Reverse
Divergence. (Very Powerful)
k. Trendline Breaks can be done, against The Trend, with Regular
Divergence.
l. Trendline Breaks can be part of a Zero Line Cross, Zero Line Re-
Cross, or Zero Line Bounce Combo.
m. On the CCI, during the opening range ("Day Session" Charts), you
can draw trendlines using the CCI "peaks" or "valleys" from the
previous day.
16. Horizontal Trendline Breaks.

a. To go Long, you look for Horizontal Peaks to draw your Trendlines.

a1. The Horizontal Peaks can be anywhere.
a2. Can draw a Horizontal Trendline off of 2 Peaks, but 3 peaks are
better.
a3. The Horizontal Peaks can be at a slight angle. However, the more
Horizontal, the Better.
a4. Your entry is on The Break of the Horizontal Trendline.
a5. Can be done with or without Divergence.
a6. I like to see Horizontal Trendlines close to The Zero Line.
a7. High percentage play.

b. To go Short, you look for Horizontal Valleys to draw your trendlines.

b1. The Horizontal Valleys can be anywhere.
b2. Can draw a Horizontal Trendline off of 2 Valleys, but 3 Valleys are
better.
b3. The Horizontal Valleys can be at a slight angle. However, the more
Horizontal, the Better.
b4. Your entry is on The Break of the Horizontal Trendline.
b5. Can be done with or without Divergence.
b6. I like to see Horizontal Trendlines close to The Zero Line.
b7. High percentage play.

17. The CCI Extreme +/- 200 or higher Hook.

a. On CCI Extreme Hooks, watch out for the Regular Divergence Trap.
a1. On Regular Divergence, an Extreme Hook may only indicate that
the market is slowing down, but has not Reversed yet.
a2. In other words, just because the CCI Hooked, doesn't mean that
the Price has to Hook.
b. Will have to use other indicators to filter Extreme Trades.
c. I also like CCI Extreme Hooks off of Reverse Divergence.
d. An Extreme CCI hook, off of a strong Regular Divergence, doesn't
need a Filter.

18. Turbo CCI Slingshot.

a. The Basic Setup is when The CCI goes to The Zero Line or "Zero
Line Zone" while The Turbo CCI runs to The +/- 100 Line.
b. The Trigger is when The Turbo CCI and The CCI "hooks".
c. On this Setup I like to see Divergence, 50% Retracement of The
Last CCI Move, and if possible, a Trendline Break.

19. My Favorite CCI Setups.

a. The Touch or Cross of The +/- 133 Line with Reverse or Regular
Divergence.

b. The Turbo CCI Slingshot with at least Divergence, and a 50%

Retracement of The Last CCI Move.

I was asked to post an example of how volume can AT TIMES provide an edge over
trading without volume.

(By "at times" I mean you must learn when a quality signal is presenting itself. Like all
trading you learn to distinguish the good from the weak signals)
As B1S2 is swing trading I have taken an example of the daily chart for this bottom.
There are a number of approaches that gave an expectation of a major reversal and a bull
move but I am going to look specifically at volume to see how it reads.

The move that is enclosed within the "bubble" moves down from a minor reversal to the
red bar low with the "X".

The question is, could we anticipate a STRONG reversal and buy the double bottom low?
Or buy the break above the red 'X' bar expecting a run? Or is the market more likely to
make new lows?

Moving within the "bubble" to the low the last 4 green bars all have increasing buying
interest while the the red bars all have decreasing range but increasing volume.

You would expect increasing volume to increase the range of some of the bars under
normal circumstances, but at the low the red with the highest volume is the smallest range
of the last 3 red bars, it has big volume and all the red bars showed progressive range
contraction with increasing volume.

However the smallest green has the biggest volume of the last 4 green bars and buying
has consistently increased.

So we have a pressure point where the selling is increasing and the buying is increasing
and range decreasing. This tends to be where Smart Money sell out to Dumb Money and
buys at the lowest cost. It's called a Change of Hands.

The red "X" bar is the test. It didn't take out the low and selling is lower that the prior 4
selling days. If sellers were interested they would be likely to move the market down.

Volume is warning the whole emotion of the market is changing and it looked like buyers
were going to run the market. It's a heads up on strong move before PA has signaled
allowing aggressive trading at the lows with a tight stop.

Without volume of course you could still buy the lows, but without the same confidence
or expectation of what probably lay ahead.

If you work back through all of these bars on this chart you will see the signals are
consistent with this approach just as the next will be. There is nothing rigged - it's a
classic signal.

Volume can AT TIMES add to the picture and provides quality information but you can
trade without it and it takes time to learn all the moves.

There are absolutely times when volume does not add anything to the decision making
process.
One of the best ever posts on ET was by Rabbitone and I suppose because of its wealth it
was seemingly completely ignored on ET, except for my own comment that when the
wheel is invented, this is what keeps the rubber on the road. I copied it into my journal
and here it is as I think it is very appropriate for your present state of reflection...

"Nod many on ET don’t understand that these funny little sayings you and I use play a
crucial role in using our trading methods as part of ‘What’s my Trading System?”. These
techniques are cross training our brains to use our trading systems effectively. You are
using some excellent techniques to train yourself. Hearing your own voice say something
is an excellent leaning tool._

I learned how to cross train my brain in the early 1990s. I was working for a steel mill
owned by the Japanese. We all were required to learn KAIZEN as our quality control
method. I was chosen to be a team leader for quality control for IT databases and security
and sent through two weeks of training with instructors from Japan.

One Japanese KAIZEN instructor in particular challenged our western way of thinking in
those classes. With statements like “…Why do always take “Yes” for an answer when it
is not true….”, “…Will you be true to yourself when you are the source of the
problem…”, “…Why do fixate on innovation while allowing standard processes to
steadily deteriorate and decay…” and “…the truth about learning lessons is they are
never learned; they must be relearned every day…”_

What KAIZEN taught me is I not only have to stick to my trading plan but
- I have to reinforce every day what I must do right.
- Teach my trading brain each day not to make the mistakes of the past.
- Continuously provide myself feedback whether my plan and advice (reinforcement) is
working.
- Keep change and improvement to small steps so not to disrupt trading.
- Maintain and relearn what works with my trading
- Pay attention to details about each trade as to how it happened, why it happened and did
it go according to plan.
- And to expect and measure gradual improvement over the long term.

For example this means I must stop my primitive brains urges each day from destroying
my trading. The list is actually much longer than I have shown you._

Here is an example of what I’m talking about. In the past I discovered that after one or
two good profitable swing trades I would be full of myself and deviate from the plan with
“new untested trading actions” These have in the past destroyed my trading. If I find
myself doing this today I penalize myself with long log entries for doing something that
stupid – which I hate writing. This threat is a major one for me. I almost happened to me
again a few days ago. I had just closed out my profitable Apple long the other day. A low
and behold I found myself thinking about shorting Apple where there was no short set up.
But I caught it and started my cross brain training with “For every new trading action….”
So Nod keep on chanting out loud and cross training yourself. But I would take on
innovation slow and easy while maintaining what works."
Rabbitone

http://www.elitetrader.com/vb/showt...ZEN#post2799615

Thank you, Athlon.

I use multiple timeframes, intraday starting from 1h and down to 15/5/3 and 1 minute
(occasionally in a very fast market even sub. 1 minute).

And I agree no reason to risk losing much, a few ticks is most of the time enough to see if
you are right or wrong in your intraday market read.

Starting with multiple contracts and peeling them off as the trade goes your way does not
give you "versatility". It forces you to have higher winning pcts to compensate for the full
all-out losses you take on the immediate stop-outs. You are putting yourself under a lot of
pressure to perform well a majority of the time.

You are far better off to either go all-in / all-out or add as the trade goes you way. You
want the market to catch you at your worst when you're holding your lowest level of risk,
not your greatest.

If you add as the trade goes your way in a strong trend, you can be profitable with as little
as 30% long-term winners. If you go all-in / all-out within either trend segments or range-
bound price action then 45-50% long-term winners can produce consistent profits.

On the contrary, if you go below around a 60% long-term winning pct with a contract
peeling approach, you will not make it. The desire of a trader to win a majority of the
time is rooted in emotion/ego, not the math.

Fantasy Land: high winning pct combined with a 2:1+ avg win/loss ratio. Why? Because
the two have an inverse relationship.

What you never emotionally want to do in the markets works best: ADD in strong trends.
On the CL, on a DAY TRADE with a 5 min chart, using only 1 contract positions where
your highest initial capital risk of loss is $150-$200, you can accumulate a 4-10 contract
position spanning from 1 to 2.5 pts which can yield $2500 - $10,000 (within 30 mins to 3
hours exposure). You get 1-3 opportunities per day for these kinds of rewards. They're
obvious moves with no more than a 20 ema to give you a point of reference.

Good luck.
After reading Brooks the first time I embarked on a months-long research and
development journey to create a well-defined trading plan. As a 1-lot trader, I too had to
work through the strategies to fit them to my comfort level.

Moving stops to BE too soon is a habit that can ruin you.

Consider accepting your initial stop loss and locking in a minimum target on each trade,
or consider taking 2nd entries only.

Second entries are when you "bookmark" the entry price in your head but wait for price
to react and come back to the entry zone. If the reaction to initial price trigger set no
traps, use a limit order to get in at the initial entry price (where your BE stop would be
taken out). If price doesn't come back all the way to let you in, then you may have to use
a smaller time frame (1-min) for a micro-setup entry at a slightly worst price. I'd only
chase deep in a strong trend that's breaking out; otherwise watch patiently for the next
setup.

If the reaction to the initial price trigger appears to have set a trap, watch for a reversal
setup. If no reversal setup appears, look to enter in the same direction as the initial setup
at the initial price trigger or a better price if possible. I often wait for reaction, see if the
integrity of the setup holds, and enter with a limit order at a better price.

ES is especially notorious for coming back to take out stops moved to BE after 5-6 ticks,
then running nicely in your favor.

Keep detailed spreadsheet logs of how many valid ES setups do this and also note the
max adverse excursion on setups that remain valid and eventually reach your minimum
target. This will help you sit comfortably through normal price wiggles and retraces
without moving your stop too early.

Hope that helps!

Don't want to enter anything this late in the day, so I'm going to post 2 patterns(trade
ideas) that look for to help clarify to all those who ask.

1. Pull up 5 min AAPL and 5 min QQQQ charts from 9:30am.

2. QQQQ gaps up and AAPL gaps down(rel weakness).
3. As AAPL moves lower from 9:30 to 9:50 QQQQ bases.
4. AAPL moves up and sets up a lower high at 10:10, right when the QQQQ 5 min base
shows signs of breaking down.
5. AAPL is a good short(per my plan) at92.64/ stop 92.94/ tgt 92.04
.......................................................
Next:
1. Pull up a 5 min chart of SRS. The 5 min chart overall was in an uptrend.

From 1:00pm to 1:20pm SRS pulls back, then rallies back up to the 1:00 high(basically a
"V" shape from 1:00 to 1:55pm).

2. SRS pulls back 3 bars and puts in a higher low at 1:10(the exact time a took the DXD
trade).
3. SRS sets up a pattern I look for at 14:10 w/ the higher low. It's a buy at 77.72/ stop
76.82/ tgt 79.82 .
The indicator being it did a 100% retracement of the 1:00-1:20 selloff, it's still in the
uptrend(on the 5 min chart), then puts in a higher low following that. You will notice I
look for this pattern often.

Hope this helps...........

Quote from geez:

Ok, this was a question about WLP short:

9:56 1000 WLP SHORT 49.10
STOP 49.30
TGT 48.70
* The chart above is not the WLP chart.
But I will give an explanation of what I was looking at and you can pull up the chart on
your own (5 min chart).
First, look at the daily chart of WLP. Going into today it is extended up on four straight
days of buying. Then it gaps up this morning and makes an extended run up on the 5 min
chart.
Also, the indexes are doing the same thing. They gapped up and ran up on the 5 min
chart. This is a clear to sign to me to put this on short watch.
This will be the most aggressive entry style you will see from me.
I watch the run up on the 5 min chart (the key being the indexes doing the same) and as
soon as I see a red bar I short the very next bar if it breaks the low of the red bar.
The 9:50 bar on WLP is red, the low being 48.96. As soon as the 9:55 bar breaks
BELOW 48.96 I look to short, looking for the reversal move because of the these major
factors:
* extended daily
*gap up and run up on 5 min chart
*indexes doing the same thing
As soon as I get the entry bar up to hit it, it's at 49.01/49.11(I was watching UNH, PRU
and COF at the same time for shorts). I was looking for an entry of 48.95, but after a long
while of sitting there, a much better fill (plus a clear sign this is a spready stock)
I put my stop over the pivot high(also the HOD) of 49.29.
My target of 48.70 looks attainable...it's right above the 9:40 bars high, so the trade looks
good, per my trading plan.
As the indexes turn and selloff WLP gets to 48.80 then reverses to the upside. Even as the
indexes move lower and take out the lows of the day, WLP moves up. Add to this the
spreadiness it has on the bid/ask and that's enough for me to move my stop to b/e (it got
within .10 of tgt). As my last shares were covered this thing jumped up another .12...just
to prove to me how spready it could be.
.......................................................................................................

As to the question about anyone taking my trades:

Feel free to join along, that's fine with me. But ,be very careful about these type of stocks.
Try to have an understanding of how the spread can be very dangerous. Don't just jump
in blind. Most plays I take are on very high volume stocks (or ETF's), and this is on
purpose. I don't like spready stocks. I don't mind .01-.03 slippage on an exit....but some of
these stocks (like WLP) you have to really watch.
Hope that helps explain WLP...any questions please ask...
Remember, there are no stupid questions...only stupid blondes.
Have a great weekend!-G

First off......Yes I will continue to watch a stock to reenter even if I am in on a different

setup. On nice gap plays or stocks that have been trending very nicely on the daily charts
I will look to continue playing it most of the day w/ multiple entries.

About the monkeys........

I told someone a long time ago that I honestly believe a classroom a 8 year olds would be
better traders than a group of MBA students if they did just 2 to 1 ratio.....add into that
learning one pattern or possibly 2, and they would blow away the MBA students.
One of the major reasons for this (I think anyway)...
An 8 year old would trade with no emotion/no fear. Just see it and do it...done. They
wouldn't know any better. Just what they were shown..that's it.
An MBA student would want to analize each and every trade.....and would NEVER want
to be wrong. They are "way too smart" to be wrong. This is one of the biggest hangups
for alot of traders, I believe....the fear of being wrong.
Most people who get into trading came from a prior profession that they excelled at
(doctors, lawyers, bankers). Now you tell that person they have to except losses and they
are not used to that. Lawyers hate to lose...doctors hate to lose...bankers hate to lose...they
all want to be right all the time. As a trader you have to train yourself absorb the loss as
part of the plan.
There is a great quote in the movie ' Million Dollar Baby"-the boxing movie w/ the
girl.....It talks about how to be a great boxer. I don't know the exact quote, but to
paraphrase it says to be a great boxer you must train your body to do the exact opposite of
what your mind wants to do. If you want to dodge a punch, step INTO it instead of what
your mind wants to do..step away from it. If you want to go to your left, step with your
right....and so on, and so on......but it relates well to trading. Try to take the mind out of
trading, just trade the plan.
Stepping off soap box now....-G
05-08-09 09:21 PM
5/8/09:

10:46 1200 UNH SHORT 29.20

STOP 29.35
TGT 28.90
Quote from geez:

5/8/:09

2:21 1800 FITB SHORT 8.54

STOP 8.65
TGT 8.32
Ok. I am in the office and have to run back home to prepare for the open....
Here is RIMM short from yesterday..a pictue perfect short per my pattern setups. I will
go into detail about it more later, but I wanted to get the chart posted first.

Geez, nice chart. It shows the high at 13:40, then a lower high, and then the ultimate short
entry signal - an even lower high that leaves a red shooting star (or F/U candle as my
friend likes to say).

The other short signal you can see is that the series of lower highs keeps bouncing off a
stable support level, forming a bear flag.

At this point SPY also left a shooting star and was overbought.

Finally, on most days there's profit-taking that starts around 2:30 p.m.

I call these the "Moon in the Seventh House, Jupiter Aligned With Mars" trades.
Basically, you have confluence from all sides and the probability of a successful trade is
very high.
OK...I am only posting the SKF chart here, but will discuss both the FAS long at 10:47
and the SKF long at 11:40 using this chart.
These 2 trades came up alot in questions today because, in essence I was both long and
short the financials at the same time.
First, look at the insert I put in on the 10:45 bar of SKF. Looks alot like a lower high right
there. It rallied hard into 10:10, the 10:15 and 10:20 bars move back down, and then the
10:25 and 10:30 bars move back up, only to stall out with a red bar at 10:35, setting up a
lower high if SKF breaks below this bar. On the 10:45 bar it does break the low, setting
up a lower high. Since I can not short SKF, the best thing to do is go long FAS (FAS has
this same setup, just in reverse, but I thought it would be best to see this all on 1 chart).
SKF short (my FAS long actually) works in my favor and starts moving lower.......Itsets
up a small basefrom 10:50 to 11:00 and breaks below this, a sign of more weakness (and
a good sign for FAS long). But it reverses in one bar (1st sign of some strength). Then the
11:20 bar makes a strong move up and takes out a prior pivot high from 10:55 (second
sign of strength). From here it sets up a small higher low with the small rectracement
lower of the 11:25, 11:30, 11:35 bars (third sign of strength). Factor in that the overall
trend of the day on SKF to this point, a strong move upand holding (4th sign of strength)
and I could find no reason at all not to take this trade. This is picture perfect per my
trading plan...even though I was in FAS long, I couldn't let this go. I felt if this setup
failed, FAS would have went to tgt. I was more than willing to take a loss on both trades
if it happened because both were very clean setups ..setups I look for over and over.
OK..now it's open for retorts (retorts..not retards, no more blonde jokes jegnyr, nodoji
always seems to be lurking)-G

05-14-09 06:35 PM

Quote from snake:

Geez,

Can you talk a little bit about how you think about the trades at the start of the day.

Say you have your longs and your shorts in order and the market opens and does its
thing for the first half hour. You're watching and looking for setups. What are you
looking for in terms of an opening?

Say you have some long candidates...a few names that have been trending up but
have sold off the last couple of days. Then, they gap up 3% or so at the open, or they
just open strong and move straight up. Are you still looking for a pullback to set
that stock up for a trade? Clearly, you won't be buying that at the low of the day.
So, are you just looking for a decent size pullback or any pullback? Or, would a
strong open make you shy away from that name?

Or, say the stock opens down so as to continue the trend of the last couple days. Do
you look for a little rally and then re-test or do you move away thinking that maybe
today isn't the day for the reversal to start?

Basically, what are you looking for at the start of the day for your longs and/or
shorts? I'm not talking about the specific setup, just more the action that you'd like
to see at/near the open (1st half hour) to keep you interested?

Thanks.

Snake,
You hit upon a very good point here.....it's one thing to have a good watchlist, it's another
thing to trade that list.
If I am looking at certain stocks long and they gap down and/or the market gaps down I
like to be aggressive and look to get in early. I have a few entry styles for this:
1. Like BBT yesterday, I buy over the 1 or 2 minute high it makes and put a stop at the
low.
2. If the stock moves lower I will buy over the FIRST green 5 min bar it makes (1st
reversal). I did this on the short side withWLP on friday...it was extended to the updise on
the daily chart, gapped up and moved up from the open. I shorted under the FIRST red
bar.
3. Wait for the first higher low and buy.

If the stocks I want to go long on gap up, that is a different story.

You have to be patient and wait, sometimes missing the whole move all together. This
happened to me the other day on PRU:
I liked PRU short (was #1 on my list), but in the morning it gapped down and just kept
moving down..finished down $5.00. This will happen...it's part of trading.
But, to get back to how I would enter:
If a stock I like long gaps up, I wait for any higher low it may make. I disregard all short
setups on it and just focus on long setupson it. I stick to my bias long all day on it. Like
yesterday, my bias was long on alot of banks. Even though the banks sector moved lower,
I played the higher lows on FITB FAS and BBT.
Another favorite play of mine is this:
let's say the market opens weak and moves lower, but the stock I am watching long is
staying rel. strong. If the stock is basing, or pulling back just a little, I will buy it as soon
as the market starts to reverse to the upside (usually 20-30 min after the open).
I know it's hard to visualize these, but there were some good examples in the past week
of my trading.
My best advice is, be patient when the stock does not give an entry early, but continue to
watch it throughout the day...you will probably get an entry at some point. But, when
things are lined up in you favor (like BBT yesterday) jump early....
Hope this helps-G
Quote from gotta_trade:

Hi Geez,

Can you please describe your thought process for entering the 2 trades listed above?

I attached a chart.

Thank you for your journal.

gotta_trade

Since Geez is sleeping and it's still early here, I'll give you some solid reasons for these
trades. I shorted UHS at the exact same moment as Geez on the first trade; it was funny,
he announced the trade and I had just shorted at the same price. After a strong run on the
open, UHS quickly retraced over 60% of it's move, which is basically a failure to thrive,
and strong short signal at the top of a run.

The second short entry had two strong signals: the previous day's last support level
became resistance and quickly pulled back leaving a significantly lower high.

Ok, gotta_trade:
I have to make this alittle fast, because I am at my office and I don't want anyone to know
I am here (trying to get back home to trade!!)

First off I posted the UHS daily chart.

This is extended and the day before had huge buying AFTER a multi-day rally and closed
at the highs. I really like this for a day trade the next day. I expect people who have been
long in this stock to take profits after that kind of move so the next day I look be
aggressive in shorting it.

Second, I posted the 5 minute chart of UHS and SPY.

Both gapped down and I want to get short on the first reversal the market and/or UHS
makes. Meaning, let it rally and short.
UHS is weaker than the mearket. The first sign to look short. the market makes a reversal
at 9:55 (#1 on SPY chart).
At the same time UHS is breaking a weak base it set up (#1 on UHS chart). So I short
under the 9:50 UHS 5 min. bar and put my stop just over it.

The second UHS trade (#2 on UHS chart) is a lower high. The market tried to rally, while
UHS stayed weak. A good sign to watch short. As soon as I get the lower high on the 5
min chart I short the 10:10 bar low (56.09), put a stop over the bars high (56.39), and I
look to see if a 2 to1 target is attainable (there was a small base from the prior day at
55.25ish, so I think this is good).

#3 on the chart is for COLINPIP, who asked about a short at 10:55.

Colin, this is the next lower high I see on UHS and it was shortable here, for sure. #4 on
the chart is the 10:55 bar and I do not see a short here.
#3 is at 10:35: This is a very nice lower high that could have been shorted. If that's what
you meant,I agree 100%
Any questions..please ask.
Hope this helps-
I am attaching charts of what I was looking for to go short on GOLD at 11:36.

First is the GOLD daily chart, to see how extended to the upside it was and with the
morning gap up this was my top short watch.

Second chart is the 5 min GOLD chart.

#1 is the long red (selling) bar that perks my attention to start watching for a short set-up.
#2 is the bar that I entered on. (67.11 at 11:36). You can see that it broke below the 11:30
5 mintue bar low of 67.14 and this is my signal to short it. As you can see it turned back
to the upside right away, but once I am in a trade I leave it for stop or target almost 95%
of the time. The stop was set at 67.51.

Third chart is DIA (the dow index) 5 min chart.

#2 shows what the market was doing when I entered GOLD. I want to be on the same
side of the market when I take most trades.

The 2 charts on the bottom show what I was seeing at the moment of the trade so you
cannot see happened next, only what we see in the moment, not the future. The only ones
who can do that are Thanagar (dam you POT) and Jeg (the prophet).

I hope this helps explain things....now for alittle SLF time.

Have a good weekend!-G
Quote from gotta_trade:

Hi Geez,

I attached a chart of the FAZ trade that you took @ 11:41.

I have a few questions regarding your entry. Can you please see the attachment for
my questions?

Thank you,
gotta_trade

I'm going to take a shot at this even though I'm likely to be wrong, so keep that in mind.

first, if i'm reading your notes right, the green bar your pointing out(11:10) made a lower
low than the previous bar.
Notice the bar Geez used to trigger his entry never broke the low of the previous bar of
11:35. Then he used the bar your refering to as his stop point.
Another thing about that 11:10 bar is where would you stop? Looks to me like 11.06
would have been the spot, so about a .20 stop.

I believe the 11:40 bar breaking the hi of the 11:35 bar was the trigger to enter.(?) But,
this makes me wonder what if the price reversed before 11;45? In other words, Geez went
long before that bar was completed, so what if the lo from the 11:35 would have been
taken out? Does that any sense, lol!?

Hopefully Geez will chime in and help us.

Thank You gotta_trade,

I just got on to my computer at the office and wanted to post the FAS chart from today. I
felt there would be questions regarding this trade and it's also one of my favorite setups.
I'm going to use your chart to answer the questions and tell you what I saw:
First off, the daily chart of most stocks gave me a long bias this morning and the way the
indexes moved up early on, I was looking for some pullbacks to get long.
Second, Mike Morrison is right on why I did not buy the first pullback you asked about at
11:15. It broke the prior pivot low that was made at 10:30, so this voided any long for
me.
The rally from this tops out and puts a lower high in at 11:30. Alot of traders would short
this lower high, but because this is the first day of a strong rally after a few days of
pulling back and the market is in a short term uptrend, i want to be long on a day like this.
So I wait for ANY higher low that comes off of this.The reason I like this so much is you
also catch the traders who are short, causing a short squeeze when we move back up.
The 11:40 bar breaks above the 11:35 bar, that is my signal to buy, putting the stop below
the pivot that was just made at 11:35.
The smallest stop I take is a .10 stop, so my stop was 9.23 and my target 9.53.
Just to clarify it again...the #1 reason for this trade is the daily chart of the indexes. A few
days of pulling back in a short term uptrend, followed by a very strong opening move
today on the first day of a rally. So I want to be aggressive to the long side.
hope that helps.-G
Man, I hate counter trend trades. But I had only those signals for the 4 legs up. I need to
do more testing to relax the with trend signals a bit, so I don't miss these fast trends.

Trade #1: +0.14

May be it was a bit brave since the breakout just happened, but there was yesterdays high,
so breakout could've failed. The trade went 19 tick in favor and as it was coming back I
closed it at +0.14. That was the price where others (like Visaria) opened their longs for a
nice 200 tick run. Well, I will learn it too...

Trade #2: -0.15

Same signal . Stopped out. Did not feel much, which is good. I just hated taking the
counter trend signals.

Trade #3: +0.20

Same counter trend signal , R2 resistance above. I had to take it, if I took the previous 2 ,
so I did. Reached target. Actually, if I would have survived the initial shakeout the trade
reached its natural targets too. Well, could've, would've ....

Trade #4: +0.01

Well, I did it again. Finally, a with trend signal and I micromanage it. But on the positive
side, I held it much longer than usually. That 7 min. seemed like an eternity. I was
thinking it is usually done by this time, so no hope for another swing. And of course,
almost as I closed it, it broke up.

So 3 out of 4 executed flawlessly and all signals were taken in this time period. I finished
trading after #4.

I'm a price swing scalper, so I look to trade moves in pieces, staying with the prevailing
trend until a reversal signal/setup confirms in some way through the price action that
follows.

I start trading near the pit open (9:00am ET). Prior to the open, the trend was a well-
defined uptrend with 2 solid legs, followed by consolidation from 8:00am to 8:45am ET.
When price consolidates in a well-defined trend, always think continuation until price
proves you wrong. Notice how the last big bull bar of the 2nd leg up (the 7:50am ET bar)
contains the price action during consolidation. I refer to this as a containment bar. If price
consolidates within the confines of this bar it's an indication that the trend is strong and
healthy and a measured move similar to the previous move is likely.

So I'm only looking for long entries. The question is where to enter. I have max risk
parameters and so I want some nice confirmation of renewed strength to get long with. I
immediately place a buy stop above the previous swing high because if the price action in
consolidation is too uncertain for me, I want to be sure I end up long if there's a breakout.
That's my final confirmation of strength and I don't want to miss an explosive move
because I was hemming and hawing over the "ugly" with-trend entry.

I always prefer to get positioned earlier though, so I watch price drifting down to test the
containment range low near the round number 87.00. An early anticipatory entry is to get
long anywhere near that round number, which is support. A more confirmed early entry is
to buy the break of a 5-min pullback bar as long as the range support holds. This would
trigger a long around @ 87.24 and that's the entry I choose. The fully confirmed entry is
the breakout of the previous swing high, but if you get in early and you like adding to
winners, that breakout level is a solid "add" point.
The first thing resembling a short signal occurs when the 9:20am ET swing high is taken
out by just a tick or two during the 9:44 1-min bar. This looks like where your trade #2
took place. I was long at that point and that "apparent" failed breakout shook me right out
of my long @ 88.20. But the first thing I do is place a brand new buy stop above that high
in case price tries again, which is very common. CL has a way of sucking in early
counter-trend traders who are trying to pick tops/bottoms and then give them a good
ass...uh...yeah, what Sp89 said

Well that failed breakout failed rather quickly, there was NO short entry triggered by
price action, and I was long again @ 88.28 with a profit target zone around 88.86 (a level
from the 60-min chart that I had noted before I began trading). I scalped .20 on the move
back down through .50, but got right back in long again on the move back up through .50
and attained profit target.

The trend is your friend until it ends. Al Brooks says, there is no bad entry in a strong
trending move. Just use the 1-min chart to get in on the small pullbacks. Sometimes I get
in anywhere and use the 1-min chart to place a tighter stop loss.

When you're trading a strong trending move there's comes a point where that last trade or
that last "add" to a winner is a scratch or a loser. It finally gets to a point where no one's
interested in paying that much and profit-taking sets in. This usually occurs after 3 or 4
pushes in a trend, or after a strong measured move, and a lower high (or higher low in a
downtrend) at that point gets you on watch for a reversal or at least a strong pullback.

I hope this all helps you enjoy the easy money during a trending move. If you think price
is to high to buy or too low to sell, there's probably a lot of upside or downside left, so
give it a go. Worst thing that can happen is you lose .15 and start watching for a reversal
setup.

CL can be a bit volatile. This is why it's attractive to day traders/scalpers. However,
volatile trading instruments have a tendency to bring out the worst in traders. We look at
the charts at the end of the day and see all this potential for easy profits. But, as I stated
earlier in this journal, "it has an uncanny way of getting you to violate your plan",
because in real time there is a lot of noise in the smaller time frames that reside within
your chosen trading time frame. If you trade a 5-min TF, you have to deal with 1-min
noise; if you trade a 60-min TF, you have to deal with 5- or 15-min noise; and so on.

clm has very recently acquired Skype buddies for the pit hours. He'd benefit from having
Skype buddies during the London session because that's his main trading time.

The best assistance he can get at this time is help taking a lot more trades, as he states
clearly in his opening post to this thread.

When we pick and choose (in other words, when we're the gambler instead of the casino),
we have an amazing tendency to choose the losers and skip the winners, because the
market (and life in general) rewards what is difficult, and as discretionary traders we are
often attracted to what "feels" easy.

A good example is from my days as a counter-trend fader. I'd form an opinion that price
had gone too high and I'd short and I'd hold without a stop until it either reverted to the
mean at some point or I cried uncle and bailed for a nasty loss (very rare, but nasty
nonetheless). Usually there'd be a point in a strong move up where I'd literally become
afraid to short and entertained thoughts of joining the crowd and just buying. That was
the ideal short signal every time.

(This led me to post here on ET that when you wanted to fade a trending move, place a
limit order at the price level where you planned to place your disaster stop and that's
where you'd get an ideal entry for the reversion to mean. It's quite a solid strategy to this
day.)

Completely agree about the 5m, that was the frustration with the 1m, common sense tells
us that focusing on the 1m would naturally distract from the 5m. I was under the false
impression that since the 5m was slower i could get as many handles in the 5 as i
normally would but enhance the day with more easy pickins by trading the 1m scalping
account in a separate account....... it required a boatload more work for less than expected
results. Mind you, i do not trade stocks.

Do a review of last weeks ES 5m trading only and ask yourself this question: "if i traded
just this one instrument in just this single time frame and used basic levels-support/resist
parameters laced with the 20 ema as your guardian angel to stay either Long or Short side
of the mkt, throw in silly stuff like milking the retraces as continuations when the retrace
forms a flag after you picked off some profit from the previous leg of a normal 3 legged
runner and showed a neato measured move...........etc. " Why would another time frame
be needed?

The second part of your post about a few futures with a multitude of time frames made
me reach for the bottle of extra strength MAALOX........... INFORMATION
OVERLOAD

You are seeking something that was overlooked long ago...........LESS IS MORE!!!

PS: Looking at all those time frames to quide you to an entry how in the world will all
that help to set the STOP LOSS? Will you enter into the 5m because you liked what you
saw in the hourly chart? That would mean your STOP would not be in tune with the
hourly.

PSS: speaking of age...........why the ... do i use the Q in place of G....senior moments, ha

Milk that certain time frame, get comfy with it, do not seek more, just increase size.
Heck, i even had trouble handling one women at a time in my life, trading is not much
different. Ok, i admit, if i met a chick at a bar and asked her name and she said........ES, i
would propose...

Quote from cunparis:

Can you explain more about it? I read the book but I don't get how to calculate the
ACD values.

Using 20% to 25% of either a 5 or 10 day ATR is a good start for both the A and C
values.

The A values are not proprietary. The ACD system is all about price action. There are no
secret numbers or secret values. The important thing is that you understand the ins and
outs of the system and why you are choosing the values you are. ACD is volatility based,
not price based. It's all about volatility and price action. That is why it's so effective.

Some general advice though. Regarding the opening range, you will want to set that time
based on your trading style. If you are more a counter trend trader, you will want to use a
wider opening range. If you are more a breakout trader or momentum trader, use a
narrower opening range. Good luck!

Quote from jsmooth:

You can really use any time period that has high volatility ( or a big order being
filled), then just use that as your "opening range" value, then create some a and c
values around that...just think about it, someone is aggressively going to the mkt to
fill a large order, if the mkt is going to trend in that direction and he's looking to
buy more, the mkt should not trade the other side of that "opening range" without
turning bias the other way. It's such a simple concept yet overlooked by 99% of the
ppl in the market. I know when I'm trading on cqg and bored, and just need my fix,
I'll just take the high low of any given period and create an A C D value around it to
trade a breakout...this is a terrible trade cause I'm just trading to trade, but the
method of understanding volatility and acd works to get you in and place your
stop...

His page on "good news bad action" is probably one of the best concepts in the book
as well...

Excellent point. So many guys get too stuck on the idea of what the opening range is. It's
not really an opening range. You could just just as well call it a volatility range. The
reason the "actual" opening was used for many years is because before we had 24 hours
markets, the actual open was very very volatile.

Thanks for posting the chart. I am glad to find a fellow trader who uses ACD system. I
trade primarily Crude oil intra day. When I trade /es, i use 9.30 to 9.50 ( Eastern time) as
an OR and then wait for 10 minutes for confirmation of an A up and A down.

Look forward to learning about various refinements traders use to improve MF system.

Actually I do not use this system, I have just coded the indicator for comparison. All lines
are plotted automatically, and the opening periods are adjusted to the opening period
times used by Mark Fisher.

I prefer to use the SessionNoiseBands, as I have found that the breakout points indicated
by them are more reliable as the ACD brekaout points. However, I do look at the pivot
range as a trendfilter.

You cannot read about them. The idea is rather simple. Over a lookback period of N
days, you just look how much price moves from the open to the high and from the open
to the low of the session.

For each day the smaller of (high - open) and (open-low) is considered as noise. Then
you calculate the N-day average of all noise values. This gives you an expectation for a
threshold, where a breakout from the open may either succeed or fail.

The noise bands use two lookback periods, for example 10 and 20 days to take into
account varying volatility. It is understood that the noise bands only represent the range
calculated from the average failed breakouts. I may add standard deviation bands at a
later stage to get a confidence interval.

Quote from smcmahon83:

Maverick,

I know you don't want to release your proprietary research about ACD, and
understand completely, but I was wondering if I could just ask you a few questions
and you can answer whatever you feel comfortable with:

Do you use the number line scoring method for the commodities you trade? Do you
think trading the markets with the highest scores actually does improve results? Do
you think using a filter such as a 14 day MA and only taking A or C's on the same
side of the moving average direction would improve results?

Do you use your own custom opening range times? Do you use your own A and C
values? Do you use the pivot range as described by fisher to filter trades? Has it
improved your results?

I've had a good deal of success with ACD, and am just looking to continually
improve my approach. I can also share some of my own additional research as well.

I use to use the number line on the index futures and I believed they worked very well. I
love the concept of the number line and when I get some time I'll probably create my own
version of it. But I absolutely found it effective.

BTW, at the current time I'm only trading options on stocks and indices except for a
handful of intra-day trades with futures on oil, FX, or indices.

Back to the number line, I noticed that once a number line got near that 9 to 11 level plus
or minus that was the outer band if you will. The market would tend to snap back. So I
was always really careful around that area. But if we broke through and held and went
higher on the number line, then a big move was coming.

Like I said, I have some ideas I want to play with and I'll update that later when I have
some data.

Do NOT using moving averages with this system. One of the biggest benefits of using
ACD is you are getting unique price levels that NOBODY else is looking at. Once you
bring in all the other garbage that people are trading off of then you are going to notice
that you are entering and exiting the market when they are. The idea is to have the market
all to yourself, not to be in a crowded room with a million other orders around you with
stops.

Having said that, yes, you will improve your results by taking A ups and A downs and
failed A ups and A downs with the trend. I just don't use moving averages to define trend,
I use ACD levels for that.

Yes, I use my own opening range times. But to be honest I don't think that is a major part
of the recipe. I think what is important is the symmetry you use. In other words, whatever
OR you use for whatever time frame, make sure it represents the same percent of the time
period you are using. This is important as a price action trader to have the same
consistency.

As far as pivot ranges go, I found the best value they have is for intra-day trading of
index futures. Using the pivots to determine relative strength of which index is weaker or
stronger works well. Also when the pivots are at the same levels of the A levels I find
they work phenomenally well on fades. Important note though, always fade in the
direction of STRENGTH. I'll thrown another bone out there. When pivots are located in
the middle of the opening range, they work as great entry levels once you get a confirmed
A up or A down to enter. You want to see price bounce off the pivot first before entering.
One more thing, the width of the pivots is helpful as well. Tight pivot ranges usually
indicate a volatility increase and very wide pivot ranges usually signal a range bound day.
In other words, be careful about taking A ups or A down on wide pivot range days unless
the pivot range is located above or below the entire days range, i.e we opened above it
and never traded into it and vice versa.

I posted a lot of stuff here because I want to keep the thread active and it seems we get a
lot of guys that stop by and don't come back. LOL. So I will make an effort here to keep
this thread alive.

Quote from smcmahon83:

Mav,

Thanks for the infor. When you say "longer time frame ACD values" do you mean
that you use something similar to the rolling 3 day pivot as described by Fisher, or
take opening range of first day of trading and use that as your breakout/stop
placement for the rest of the week? A little bit of both?

I can't believe there are like 4 people on ET that use ACD. Maybe that is why it's so
effective. Everyone else is too busy trying to pick a top in silver and the S&P instead of
actually learning how to trade.

Anyway, back to your question. No, I don't use the rolling pivots, or really any of the
"macro" stuff in Fisher's book. I created my own version of what I call the Macro ACD.
And yes, same principles, except on weekly, monthly, quarterly and yearly time frames. I
find they work much better then just using longer term pivots.

I honestly cannot stress enough what a great book "The Logical Trader" is for any of you
that have not read it. Just as a trading book, as a way of treating the markets as a business
and not a gamble. I think a lot of guys on here lose sight of the fact that this is a real
business just like running a restaurant. Too many guys focusing on picking tops and
bottoms and taking shots at the market. Trading is all about understanding probability and
odds and payoffs. It's about focusing your time efficiently. Read the book again, only this
time put a focus not so much on how does he determine the "A" values but rather how he
looks at trading as running a casino.

I've read the book several times with each time focusing on a different aspect of this
business while I read it. Too many guys get caught up in formulas and variables and
values of this and that when at the end of the day it's about the nuance and subtly of price
action that is so important.
You absolutely can use ACD for anything and I've done really well in markets like the
s&p 500. I should note that I use the system very differently then he does. I have a yet to
find a market that it does not work well on. The macro even works with mutual funds!

To answer your question, I use pivot levels, ATR and A values to exit. Let me say this
again because I believe it is of the utmost importance. You have to make ACD work with
your personality. What Fisher writes about in his book is untradeable. He told me this
much in person. The book was meant to be a context for which to build your trading
system.

Hi Fat Tails,

1) Daily pivot range is from MF sheet. See attached file. I think difference in values can
be due to different low, closing prices being used. Based on 10-21-2011 tight pivot
ranges, pivot tracker value was 31 and it was underscored, which means shrinking pivot.

2) I use opening range from 8.30 am till 9.15 am US eastern time. I think, you are using
pit open @ 9 am. I use A value= 8 ticks and C=13

Today's OR was 88.42 to 87.72. Thus A up= 88.50 and A down= 87.64.

On the attached daily pivot sheet, besides noting down daily pivot ranges, i look at $ risk
for each instrument.

Here is a PDF of some of the spreadsheets i use each day to get my levels for the ACD to
trade...when it comes to the ES and SPY i have a few of them that i'll look at, and for
currencys and energies its basically the same but with some added values showing the
Asia/London OR and those PP (but that gives you a good idea)..stocks i keep it
simple...ATR(30) x .25 = Aup value; C is around ATR(30)x.05; Also with SPY and ES i
like to note the 7:30am price OR (if a number comes out)....In my opion the OR for spooz
should be 7:30ct.

Commodities....basically the same thing, but i'll again use two OR's, Pit/Options Open
7:15 open and 8:30 open...

the MAIN thing i watch is the days OR in relation to the Week and Month OR....i'll be a
buyer right out the open if the days OR is above the Week, Month, YR....i just buy it with
a stop under the day OR with a hope of a trend day in that direction....and i'lll use the
WK, MN, YR OR as price targets for other moves)....As for Cup/downs....i'll just use the
opening print price with buy/sell stop limit orders...if the trade doesnt work right away on
those, your seeing one of those mkt profiles that sees a few ticks of range expansion then
back to a normal dist...GREAT trade to flip your position.

Mav, If you use ACD to trade stocks, IMO, Liquidity plays a HUGE facture if you trade
size....ACD got me short at the absolute high on TZOO 1-2 weeks ago, i SS 2k shares,
but the huge BxA spread on just random noise got me out before the single day 10pt drop
(within a few mintues)...IMO ACD works best in mkts that are purely supply and demand
driven, commodity/FX futures...(you can really capitilize on the ppl that are on the wrong
side of the mkt)...

Quote from MrFuture:

My advice of the day...

...if you are using ACD to daytrade, avoid getting into positions in which the OR (or
any other range you may use as reference) is too wide....always check what is the
ATR of that particular stock/commodity/currency you want to trade...and if the OR
is too wide, leaving no upside or downside room left...don't bother trading...'cause
chances are, the trade won't go anywhere and will get you out at a loss.....

I created a ratio that I use to put on my charts that simply shows the opening range
divided by the ATR. That was very helpful. But wide opening ranges give you great fade
trades especially into long term trends.

Quote from drm7:

What opening ranges do you use for weekly and monthly levels? I would think that,
since there are about 24 15 minute bars in a day, then the week's opening range
would be about 5 hours and the month's the first day's range? I assume that the
"A" levels are derived off of the monthly and weekly ATRs as well.

Dont worry about specific levels/times....you need to just understand about the whole
concept of ACD....any level can be an A level (but it must be a point in time that
someone, buyer or seller, is pushing the market (and getting fills aggresively - they dont
care that they are paying up to buy, buying the offer and placing new bids...) , and you
combine that info with the "avg volitility"/ATR to see if they are keep coming back to
buy or are done buying and the market makes a failed A level...your not trying to identify
A ups and downs....your trying to understand what is going on with the T&S - someone
comes in and buys (Aup), or he just buys, then stops (failed Aup), or hes buying the first
few hours (Aup), then stops and sellers come in (C down - now all those buyers are stuck
short)....

@rw1717: The volatility during the US session is still higher compared to the volatility
during the European session. If you look at CL for the last 20 weeks, you get the
following values for the average hourly ranges (see chart below):

Asian session: 20-45 ticks

European session : 50 - 70 ticks
US session: 80-125 ticks

For the IPE traded Brent Crude (chart not shown) the values are:

Asian session: 20-45 ticks

European session : 50 - 90 ticks
US session: 65-115 ticks

Quote from Samsara:

But you are making specific calls to the pip/tick and noting how price has reacted to
those levels. Certainly you can adjust the time frame in question and get different
levels, but that's not a novel observation.

How is what you're saying different from "a cup & handle can be measured on
different time frames"?

In other words, how are the principles of ACD any different from those of TA?

Sure. The levels I use in particular will work very well when volatility is pretty constant
as it's a volatility based system. But they don't have to be to the tick. There are many
unique factors that distinguish ACD from standard TA. The opening range cycles are
"significant" and can be quantified. The system adjusts to current volatility. The time
confirmation confirms volatility and price. And the volatility allows one to have price
targets. At the end of the day, it either helps you read price action or it doesn't. Like I
said, the levels are not magic. I taught the system to many guys in my office and the
levels didn't do shit for them.

Because of the simplicity of the system it's very easy to compare different products
against each other. That's very hard to do with standard TA. So AAPL has a cup and
handle but GOOG doesn't. So what do you do? NFLX broke it's 50 day moving average
but so have 50 other stocks. So now what?

As an option trader, I see the market through the lens of volatility. That is probably why
ACD is so intuitive to me. If one is enamored with fundamentals or oscillators, this will
be hard to pick up.

on Inside Day Roll Call 3 months ago

Slightly lower in terms of percentages, but a different distribution of winners, ie more
>2R wins. There are other peculiarities with commodities as well, topping action looks
radically different than on indexes (exhaustion type moves) because of the greater
leverage involved for all parties.

Necessitates a different profit taking strategy.

If you spend a weekend with a calculator, pencil and paper, just backtesting, you will
know EVERYTHING and never ask me a question again.

Its very simple. Take a bit of paper, mark 3 columns.

WIN, LOSE, BREAKEVEN (or small win or loss)

Don't write anything down, it takes too long, just go through the chart marking if you
would have hit 1R win (guesstimate) before your stop was hit. Thats a win.

If you win, imagine trailing a stop at the previous day

s high/low (for short or long) and guesstimate where you would have been stopped out at.

Write this number in the win column.

If you get stopped out before then, thats a loss. Write -ve 1 in the loss column.

If you have 3 periods without hitting either your stop or the 1R target exit and if its a
significant win (.4 or better for me) write it in the win column.

If its a tiny win or tiny loss, don't take the time to work it out. Just enter it in the
breakeven column as a tick and move on.

At the end of a statistically valid number of trades total the wins and losses, divide by the
number of trades, that is your expectancy.

You can do backtesting of any new concept this way VERY QUICKLY

Without using computers.

And the beauty is, once you have done five years of backtesting on a method, you don't
doubt it when you have a drawdown. You just *know* it works in the long run.

Elements are
1) Spike high (high with a lower high either side of it)
2) Fluid movement (one move) down to a spike low
3) Count the number of bars in the move NOT INCLUDING the spike high and low
4) Fluid movement (one move) back up FOR AT LEAST THE NUMBER OF BARS in
(3) PLUS ONE

Setup is complete. For entry you need a TT (timing tool). Timing tools are a complicated
topic, but the most common is a shooting star candle.

Entry on break of the low, stop at the high.

See AUDJPY today for a very clear example.

The rationale is that its a quick move down, slower move up, therefore the tape is
vulnerable to a little push.