Notes from various books i've read and taken down
Also see Market Notes #1 File
· Choppy Day Procedures
* Friday is usually very choppy
Its more profitable to buy the pullbacks
Have tighter targets (5pts)
Stick to choppy day setups
Tape read and put lines on tick,trin ranges, eprem range
Fading pivots good on choppy days
Find out the days bias and take those signals (ie: if longs havent been working, take short squeeze indicators only)
· Misc Wisedom:
*Buying new highs is the dumbest thing you can do... Fade large moves in one direction. They correct 90% of time on YM
short new highs but dont buy dips. the market moves quicker down then up
*your goal is to actually be able to say "I don't know what the heck the mkt is gonna do in the next 3 minutes let alone next hour but I have 5 sell signals and 1 buy so im shorting". Stop saying "I think this may happen. Base your decision on the actual data.
* When checking internals do plus on right hand, minus on left hand and if its even--sit. Go with the more fingers.
* MT likes to use fib extensions for swing targets on the futures/stocks. Usually it will go to 1.272 ext
* It gives you an advantage to trade 3 lots over 2, your scratch trades are actually +$40
* Did some reviewing today for a few hours. Your best setups are 233/2m squeeze. You lose less money on shorts and you smell
* After you get your goal bring your contract size down
* Sometimes Bobbie buys when candles go from red to blue on 55t. He calls this 'rotation'
* Pay attention to ticks/tape! (LH makes goal doing this)
* Pay attention to 24 hour high/low
* {LH} Was watching ticks & noticed when the price hit 11390 it did not go past the previous tick high then I looked for a short price entry!
* Use smaller time frame on open. 55t/89t
* Bobbie uses 1pt leway on his stops. So when he says 10pt he really is using an 11pt.. ah stuff
* Bobbie says scalper is taking his profits too earily
* Your job is to figure out which market intrenal is not working on any given day! Together they are important but individual they arent that important.
* You want a plan before your in the trade. Not after. There should be no decisions while your in the trade on the fly
* Draw green red yellow lines (target stop entry) on the charts. Bobbie does this
08/12/06
* Generic Bobbie Trade Management: (requires min of 4 cars). 10 Pt Stop ~ Sell 1/2 @ +10 ~ Stop BE -3 ~ Sell 1/4 @ +20 ~ Stop BE +
3 ~ Sell 1/4th @ Exit Signal/TickExtreme/Fib
If only one car left and another target is hit, you can just move your stop up another 10pts instead of cashing in the last car
* MT likes stochastics overbought and macd creeping higher on dly for swings
* NQ has been leading indicator as of late, ES is a leading indicator for the DOW/YM
* Personal note: If you continue to get in at oppotiste of move, try fading indicators on choppy days
* Theres a general overall rule in trading: First test of level-fade, second test go with it for a bust through
* If the dow does not trade more then 30 pts in the first 30 mins then it will prob be a choppy day--leave it alone
08/14/06
* {prospero:(MOD)_Bobbie} im telling you man quit folling news in less you like losing money (brcm lawsuit then +$1.50 wtf)
08/11/06
* Common theme in notes: Stops too tight (scardy cat)
* Make sure your on the right side of stochastics/bbs bands (low band short=bad, high bands long=bad) you know this!!
* See normal stock trading file for market open times
* Dont go long on any setup right under a pivot **DDDUUHHHHH****
* Personality: If your a trend trader you would have to only think in buying pullbacks in uptrends or shorting small rallies in downtrends!!!!!!!!!!
* Keep in mind Bobbie can use a small 10 pt stop because his entry is more percision
* Any rally without the Banks BKX, Brokers XBD or Semis SOX will be short lived and not last
* Wait for pullbacks to 8EMA on swing longs/shorts
* Next time you feel like your going to chase, wait 2minutes and watch. It will probably run against your trade and then you can buy the dip
* Be careful for resistance near 10pt, 50pt and 100pt YM incriments. Ex: You longed at 11299 and it tanked at 11300
* EXECUTE YOUR SIGNALS WEATHER YOU THINK THEY ARE GOING TO WORK OR NOT!!
* Indicator back testing: Throw it on a market/chart. Check hindsight on it and see if it worked atleast 7 out of 10 times in the past. If it did not then dont use it.
* Denise uses journal icons for f'ups. may try that in the future
* Ask MT if he still does bond fades for .25 between noon and 2pm (p302 power point)
* Pay attention to full and half gap fill. They like to act as pivots on the day
* RSI Divergence, STOC cross & MACD cross. Wait for all 3 of these and you are green to go
* If KLAC/equity doesnt fill its gap in the first 30-60 minutes it probably wont
* Program trading signals are to be scaled out of quickly at 5 pt incriments
* Best moves occur when smaller charts roll back in the direction of the larger charts (trend)
* Futures trends change intra day. Consider counter trend when you go in (Fade feelings)
* Good target price if you got none: Target: 8% move in the price of the stock from entry price. Use calculator!
* {skyprince} I use the TICK hooks on ER2 and scalp...got to be quick, but it works. I use a 1M chart on ER2 cause I can sync it with a 1M TICK chart...then I can discern patterns easier.
* MT uses 8/21 EMAs crossing on daily charts to get long or short
* If the daily is down and the 60 is up look to place both long and short sides
* Buy on CTC pullbacks on uptrending days
* World Cup Advisor = picks service
* Dump most of 3/4 of positon if your near open, half gap fill level or full gap fill level
* Offering out means to place sell order, bid means to place a buy order
* Dont ever long on high ticks or short on low ticks. Chasing!?
* Give
ading a try on simu for 4pt targets
* On sideways/choppy/channel days bracket with horiz lines and buy or sell on cross of them (like box play)
Ex: http://www.censordedlink.com/CTC-video-discussion-forum/showthread.php?t=42
07/24/06:
* MT usually uses pivot, tick fades, bracket/box on choppy days using the 89tick
* When price makes a new high but RSI does not then that is a bearish divergance. (vice versa for bullish) Use trend lines on RSI
* Wait for pullback then go long on a tick hook up,. (second tick hooks usually work better)
* Trin spends all morning below 1 then stick with longs only and vice versa
* If MT uses a setup and gets stopped out 2 times in a row he will use another setup for the rest of the day and stop that one
* When using shorter time frames or slower indicator (CTC scalper alert), set lower peel out targets.
* Trader taking small profits because of fear is not following his plan and will get beat
* Usually day after a rally is pretty choppy
* If a daily squeeze exists on the YM focus on long setups and pass on shorts. (ie: if by 12pm if ticks have spent over 80% of their time below 0 and ticks above 450)
07/21/06:
* Newbies should start out with gap, pivot and squeeze plays on the dow mini me YM
* Newbies should follow only one setup at a time
* After a nice runup and pullback the first tick hook rarely works-Bobbie note
* You should buy on pullbacks not on the top of a run! (pup)
* John likes to buy on pullbacks to the 8EMA (or short on a quick pop to 8ema) on daily and intra time frames
* MT uses the scalper alerts for an exit tool in the morning but not and entry tool.
* Indicators are worthless without factoring in market internals (trend of trin etc..)
* MT's standard chart time frames: YM 89 Ticks ES 233 Ticks NQ 89 Ticks AB 89 Ticks
* Bobbies favorite time frames are Daily, 60, 15m, 5m 2m, 50t, 89t, 233t. He uses 6 bars on the CTC Trend indicator avg. Likes to wait for 2 blues to buy, red red for sell
* Bobbie always puts lines on the low and high of the day $TICK/TRIN chart so he can quickly glance at it
* The ONLY times you should exit your trade before a target/stops hits is if you are close to an econ number release/system crash/dz. No setups should be taken before econ # out
* MT note: The first test of a pivot will usually fade, the second has a higher chance of going through
* FOMC: The 3rd move is usually the correct move for the rest of the day. So if you have spike up, then spike down, go long on second spike up /\/ (like an n)
This works!
* Use OCO's to set targets for niceness (one cancels other) or use BT!
* Parabolic = straight up or straight down. Ie on an indicator like rsi, stoactics, williams etc.
* Its ok to feel stress when in a swing trade, just dont act on it. Let your stops hit, even if you know they are about to!!! Although no stress is preferable.
* Never use just one indicator by itself (make sure atleast 3 allign)
* If the tick keeps hitting 800 but each time the stock is at a lower price then the previous 800 reading then the market is weak.
* On the opening momentum trade, make sure your indicators are going in the direction your planning on taking. (CTCs etc)
* If the $trin closes above 1.5 the market has an 80% chance of rallying the next day. Go long at close. Light contracts
* If you constantly find an excuse to enter or exit a trader earily or late and deviate from your setup rules, you will never, never ever never ever make it as a trader.
* STOPS: Bob uses a 10pt stop on almost every intra day trade he does in the dow mini. allows 3 strike outs in a row day before he stops trading. MT usually uses 20 or more (more risk but less chance of a wiggle getting you out)
* Gap fade on day after options expiration & first day of the month only has 50% chance . Dont take! This day produced negative PNL on all indicators last time! (monday)
* Lupita (loop-hay), Rosa, Bobbie, John - Main CTC site adminstrators
* Fibonacci Retracements are displayed by first drawing a trend line between two extreme points of the last trend (not current trend),
FIb 38.20% level is good place to short on a retracement
Use fib retracement tool on sharp down moves to catch 50% retracement on bounce up.
* Watch for tick hooks and use them to enter and exit trades at better spots
* Disreguard all signals in (except 5m squeeze) deadzone 12:00-2:00(the usual) . Also dont hold in to dz. If your in a trade at 12:00 just set your OCO target/exit parameters and go for a walk.
* NYSE member net buy/sell numbers can be obtained at www.decisionpoint.com. Shows weather NYSE members are net long or short.. Very helpful determining factor for daily siwngs!
* When the stock market is dead on the water look to the currencies
* If you are consistantly shorting at the lows and buying at the highs picture all the other newbie traders doing that against the pros and getting their nuts handed to them.
If you are overly excited about going long you should be looking at the short side. I'd like some turkey.
* Sometimes the russel will break down or up before the YM. Try it as a lead indicator (like using nqs over baskets)
* You can not measure the effectiveness of a system unless you stick to the parameters. Don't touch them.
* If buy programs are driving markets to new highs then the occasional sell program is a buying opportunity. If sell programs are driving markets to new lows then the occasional buy program is a shorting opportunity.
* Should be trading 10 YM, 5 ES contracts per $100k in account MAX!!
* You want to own the stock before it breaks out then sell in to the momentum (box play)
* Most imporant step: learning how to accept a loss. Pros do it all the time
* Most reverals take place after 3 consecutive higher closes or 3 consecutive lower closes (rule of 3) This is valid for all time frames..three (law of 3.. ninja style)
* Market makers can mess with a position in the short term but over a long term swing trade they have no power! (maybe a reason to play longer time frames 7 ma?)
* You should never let one position go against you by more than 2% of your account equity. Ask yourself how much money can I lose on this trade before entering?
* Professional traders always think, “How much money can I lose on this trade?” its called limiting risk
* Seat lease: YM trades *1.30 for RT if you pay *1500 one time fee and *75 a month. Lowers comissions!
More specific info in Accounts file
Savings based on 200/trades a month (10 a day)
Wiithout seat: $960 comissions/month
With seat $335 com/mo ($460 factor in lease fee 1st yr)
http://www.censordedlink.com/video/esinxandlease/esinxandlease.html
* Fade CNBC & your personality! (if your consistantly losing moey or chasing)
* Futures & indexes make better canidate to fill gaps then stocks
* If the markets going higher and there is no noise in the pit be weary
* Screen capture tools: Snagit or Camtasia
* Its proven. When you focus on the setups and not the results, you do fine!
* Use the indicators to look for clues to the path of least resistance
* Be a machine and execute the setups WITHOUT emotion. After 3 winners, stop for the day. 3 losers, stop for the day.
* Newbies should stick to YM to improve their odds of success (better movement, smaller point moves, less slippage)
* Markets will usually take out huge open gaps bigger then 10 YMs within 5-10 trading days. Note gap levels
* Use hard stops and stick to them, losing IS winning when your proper stops
* The holy grail: having a trading plan. Stick to your targets and stops or your losses will smother the tiny winners you clipped before your target.
* Try jumpin up and down and clapping your hands when you get stops out. When your target hits, do nothing. This is the opposite of most traders
* Do not rush in to a trade unless the predefined parameters say to. There will be another signal soon!
* Premarket charts potential scan: (indicators MACD with histrogram, stochastics, squeeze ex: p341)
On monthly charts buy an overbought stochastics if the MACD is crossing up. (vice versa on shorts)
Weekly chart check the same items. Note where 200MA is and strong support/resistance. 52 Week highs etc
Daily & 60m chart - preform same scans
* Have something to read, listen to or DVD in the background while waiting for setups to unfold. So you dont overtrade!
* With scalping futures you don't have to worry about picking a stock that doesnt break out when the futures move. Trade the actual market!
* When wallstreet decides to put a bow on it and sell it to the public, the move is over (ie: relastate)
* Take advantage of fib clusters one day for swings, via http://www.syncmt.com
* The only thing your going to do by watching your position is try to outsmart it.. stop watching and put your orders in
* For options puts/calls always go in the money with the premium making up no more then 30% of the price.
* The further options are in the money the more they will move dollar for dollar with the underlying security.
* Market Profile or MP uses a series of columns and letters to display market statistics. Research this more.
TPO is time price opportunity.
* TAX TIP: With futures you dont have to list each individual trade on your 1040 like you do with stocks!
* Look for premareket volume at 9:25 for the first hour on AAPL/KLAC/BRCM/MXIM/NVLS/AMAT (or other high vol stock) to clue you in on weather or not gaps will be filled or if the day will chop
See if any are gapping up.
Light = < 40,000 shares = good gap fill chance, choppy day (full pos on gap fade)
Moderate = 40,000 to 90,000 shares, decent fill chance, target 50% (half pos)
Heavy = 90,001+ shares, dont take gap fill trades, trend day may be starting (no position on gap fade)
* Chill the emotions:
This is how you feel now: chill, calm, relaxed, productive, energey flow through body areas
make sure you got stop rules defined
* Stop Considerations:
Note: On a choppy day 5 pt target is good, on trending day 10 target is good
METHOD 1 - BAD (5 PT SCALE OUT)
Using 3 contracts and paring out 1 at 5 pt target creates a loss at first stop:
1070 entry on 3 contracts
1075 pared out 1 @ +5 pts (+$25)
1067 would be down (-$14) dollars with 3 contracts
= Pretty much a loss every time on chop days
***If you change your first traget scale out to +10 you can widen your stop after the target to doulbe these suggestions
METHOD 2 - DECENT (can use 4 contracts or whatever whole number multiplier) (5 PT SCALE OUT)
Now consider paring 50% with 2 contracts:
1070 entry on 2 contracts
1075 pared out 2 at +5 pts (+$25)
10767 -3 stop hit & comissions -3 (-24.60)
= -3 Stop .40 Cents gain/scratch trade or plain stop out
= -5 Stop $9.60 Loss on trade (testing this now)
= -7 Stop $19.60
= -10 Stop $34.60
***If you change your first traget scale out to +10 you can widen your stop after the target to doulbe these suggestions
METHOD 3 - 3 CONTRACTS (5 PT SCALE OUT)
1070 entry 3 contracts
1075 pared out 2 at 5pts (+$50)
1060 stop out (-64.40) Total loss 14.40 (due to comissions). This allows to keep a 10 pt stop
1063 stop out (49.4) About even using a 7 pt stop with 3 contracts
= Using 7 point from entry stop will allow breaking even
= Using 10 point will result in about -15.00
***If you change your first traget scale out to +10 you can widen your stop after the target to doulbe these suggestions
· AGS Seminiar:
"If you cant make money trading, then trade corn" - known axim
-ags=agracultures (wheats, corn etc) (may need to pay esig more..yea)
electric symbols: ZS ZW ZC
-quotes varry. ex:
2.38 1/2 is quoted as 2384 (thats 238 4/8)
2.38 3/4 is quoted as 2386 (238 6/8)
-best time to trade 9:30am - 1:15pm
-maint margin on con/wheat/soybean ags is only $200 as opposed to $2000 to contract on YM.
Good for smaller accounts
-20 cents on the ag = 20 points in es or 200 points dow
-dont trade mini ags. just reagular ags
-grains trade more months then futures. go to www.cbot.com at look on right for front month. much better leverage. good moves. corn. wheat etc.. C W S soybeans
-when grains break out soybeans tend to move 3 to 4 times more. Look to trade them at this point.
-grain markets dont crash. people always need to eat
-grains fill gaps but usually NOT on the same day. They do it almost 90% of the time but never on same day
-RSI Swing method on AGS: http://www.censordedlink.com/video/ags2/ags2.html
· Bobbies Tape Reading Lesson Notes:
* Watch for tick hooks & take trades in the direction of the market internals
ie: Ie you got a 50 Tick short squeeze firing off but ticks are trending up and trin is trending down then PASS on that!
* Decide if your going to buy a pullback or breakout (counter trend or trend trader)
* If your buying, do so at the LOW bracket price, if shorting do so at HIGH bracket price.
* If your bottom price of tos and top price are too close then its not worht it. Ie: your bracket is 11659 and 11658. Check short video:
http://www.censordedlink.com/video/tapereadinglesson101/tapereadinglesson101.html
* Look for the amnt of red vs green on the TOS both sides
* Usuall you want a wider bracket then 4 pts. Start bracket fresh when you first look at tape. Check daily bias
* Bobbie likes atleast a 5pt bracket. Anything less is tight
* Not very prudent to buy moves at +800 ticks unless it hooks there (your probably chasing)
* On the 2 minute taping reading scalp Bobbie set a 10 pt stop, then he scaled out half at +5 then moved his stop up 5 pts
(nomrally on longer time frame hell wait for a 10 pt target then move his stop up 10 pts)
Got his target from a fib level.
* Be able to look at TOS columns and get support/resistance numbers
* Gauge amount of red and blue trades on both TOS tickers
* Blanket=wall of prices
* Trin and tick need to oppose each other, not agree.
* Listen to pit noise
* Profit taking:
3-8 pt stop on tape
5 pt target sell half, stop entry -3
5 pt next sell 1/4th, leave stop at entry -3 (Bobbie may change this based on volitility)
? remaining 1/4th share ride til noise, extreme indicators etc..
· PIT NOISE NOTES
Noisy = When noise is associated with an up/down move it will be stronger. Its its extremely loud, fade it.
6 20 by 1/2 = 1136.20 x 1136.50 bid/ask spread of the big SP contract
Locals pushing = locals trying to push price down
Thin Top = There is not a lot of bid up here, look for top to fail
Below or above market = Someone is in this position with size, go with him
Listen = To the noise not the guy calling off the numbers so much
Boards are late = boards in the floor that are quoting the bid/ask are behind/screwed up
Cars = Contracts
Paper sellers found = If your short, cover
Exit = When noise is the loudest or when they find sellers/buyers
Choppy = Duah / All locals / local to local
10 Times / 50 Times = Ten contracts / 50 Contracts
· SETUP GRADE SCALE FOR ALL TRADES
1. Target hit (sunk the battleship)
2. Out at different price from target, still profitable (i can live with that)
3. Out at break even (wtf!)
4. Out at differnet price from stop, looser
5. Stop hit (ceist la vie)
· TRADE EXECUTION GRADE SCALE
1. Followed trade rules as indicated in my most excellent plan
2. Followed entry rule but closed position before percise target was hit (taking profits friggin earily)
3. Followed entry but removed stop & let position run past original target (greedy bastard scenario)
4. Entered setup late and didn't set target (chasing AME)
5. Impulse or donkey trade
· DEFAULT STOPS FOR CTC SQUEEZE TRADES
(Intra Day Stop / Swing Play Stop)
Stocks: .50 / 2.50 - Also see below if stock price is a huge/tiny
YM: 20 points / 150
ES: 2 points / 15
AB/ER: 1.50 points / 8
NQ: 4 points / 25
EC: 20 ticks / 100
EURUSD: 20 pips / 100
US: 7 ticks / 35
Gold: 1.50 / 10.00
Other forex: Estimate this out based on the price/past volatility of the currency pair.
· DEFAULT STOPS FOR STOCKS
- If you have no immediate hard resistance (daily 200 etc), use these as a stop rule. Multiply by 5 for a daily swing.
$0-$10 .20
$10-$20 .30
$20-$30 .40
$30-$40 .50
$40+ Add an additional 10 cents for every addtional $10, so a $75 stock would havean 80 cent stop etc..
FOREX Estimate this out based on the price/past volatility of the currency pair. (no more risk then 2% of account equity)
Figure out by mutiplying loss pips by lots
Nostradamus: Directional forex compass from forex.com site. Check it out
· ENTRY / EXIT NOTES
* This area is your main problem. No chasing!
* For long enteries wait for low tick hook under +500 preferably. (ie: Dont enter longs at +800 to +1200 and reverse for shorts)
* MT uses the scalper alerts for an exit tool in the morning but not and entry tool.
* Consider the pit noise
* Use the 'check' or 'x' method on the internals, look for blues/reds on the recent tape prints
· SETUPS (Use Market Flow Indicators (trin) to Smooth your entry/exits)
For more information on these setups please see Mastering the Trade by john carter
* "Propulsion" Type: SWING
* "Opening Momentum Trade" Type: SCALP BT Stragety: Squeeze 2m/233t
* "Gap Fades" Type: SCALP/SWING/CHOPPY MARKET (use openin mo for now)
* "Bricks" Type: BEST FOR RANGE/SWINGS OR A TRENDING MKT
* "Gotcha Trade" Type: SCALP
* "Scalper Alert" Type: SCALP in TRENDING MARKETS ONLY
- Test Time Frame: 89T, 2 CONTRACTS - 5 PT PARE OUT, 10 PT STP, THEN STP ENTRY -5 THEN HOLD TIL REVERSAL SIGNAL RED DOT OR ARROW (p171)
* "MA Kriss Kross!" Type: SWING 13M (gpl)
* "Fake & Break" Type: SWING/RANGE
* "Short up Moves for 10 ticks or so" Type: SCALP
* "Ping Pong Play" (aka CHANNEL TIGHTENING) Type: SCALP
* "Crescendo Trade" Type: RANGE
* "HOPE & LOPE" Type: RANGE
* "Crescendo"
* "Ambush" Twing: Scalp (dont use yet)
· MARKET FLOW INDICATORS & CTCS
* Don't dwell on what the current reading is for these indicators. Focus on what the current reading is in relation to where it has been!
* ADX - Any time ADX is below 20 it means dont trade/chop. Wait for it to roll over on shorts and roll up on longs. Bobbie doesnt stare at ADX too much, just uses it for first part of the day in summer trading.
* BBS = Bollinger bands, standard 20 and 2 settings for use with this the squeeze trading method
* BRICKs = Use on 24 hour chart only. Bobbie uses black, black with white outline. Settings: 3 & Close
* ESINX/*$EPREM(esig) - A quick pop to upper extreme indiciates a program sell and a quick pop to lower extreme or higher indicates a large market program buy. Put lines on chart for these. A sell program signal perdicts short to long down trend and vice versa. Dont pay attention to the first 5 minutes or so. Values can be obtained at programtrading.com Mainly pay attention when these alerts hit. Set audio alerts each morning via www.indexarb.com. If your going to trade these, be FAST or dont trade them at all. Ex: Buy program hits alert, buy INSTANTLY with tight stop then scale out at +5 +10 and hold rest. Maybe use an alert entry. Set chart to 9:30 to 4:00
* CTC Squeeze 1.4 and 20 are correct settings to match Bobbies. On the momentum bars, light green is up trending, dark green means its slowing down. Red dot means the BBS is inside the keltner channels. Wait for next green dot to buy/sell.
* Keltner Channels = MO Indicator based on SMA offset. Settings should be 20 and 1.5
* LRC = Linear Regression Channels. Mason uses them. He uses on 150t chart, 150 candles, 2 standard devlations. LRC=The process of finding the equation of a straight line that best fits the data. The middle line is the mean/median, two outer lines are std deviations. More on LRC form MASON:
+ I want to see price moving through the chanel and trade in the direction of the 5min trend
and trying to trade with itprospero: or scalp against it. the 5min lrc helps me to define the trend
+ Mason on continuations: when the price starts crawling up the mean for longs (down for shorts)
+ I don tcare what direction your channel is pointing. Its all about price within the channel. Except on the longer time frames 5 min or higher.
Bear/Mason uses: You need to put a 50 period 2sd LRC study and also a 100 period 2 sd LRC on both the 50 and 89T and only a 100 pd LRC study with 2 sd on the 5 min chart.
+Generally, price turns around near the extremes. I'm hoping to take trades that exploit that
+ The median is your first target in LRC terms
Range idea: If the trend of the price in 5 min is down then u wait for the price in 55 and 89 to be in the top of the channel before initiating a short that conjoins with market internals?
* MACD = Looking for crosses in reference to histrogram for buy sells. Instruction: http://www.censordedlink.com/video/trips/trips.swf
* RSI = 7 Period is what MT uses to find bull/bear divergance. Over 60=Overbought, Under 30=Oversold
When price makes a new high but RSI does not then that is a bearish divergance. When price makes a new low and RSI did not is a bullish divergance. RSI is worthless by itself.
Never use RSI by itsself to buy or sell. Always conjoin with trend line or other indicator. Ex of this: http://www.censordedlink.com/video/ags2/ags2.html
ex: http://www.censordedlink.com/video/rsi.html
* TIKI = Dow version of TICKS. Anything in between -+20 can be ignored as noise. Pay attention to +26 or -26. When they get their check $PREM and other down indicators. Its an earily indicator but its choppy so couple it with $PREM. Use it the same way as you'd use the TICKS. Fade plays
* TICKS = Stocks Ticking Up or Down. Any tick reading that is below +400 or -400 is considered noise and should be ignored. Conversely if im short intra day and the ticks hit +800 I will exit my position. If im long and they hit -800 I will also close my positon. This is a specific rule not a gut feeling. Utiltilze tick hooks to confirm your enteries. Generally dont want to enter new shorts under -800 or longs +800. Readings of +1000 or -1000 can be used for fade plays, and exits on longs/shorts. When ticks spend 90% of the market time above 0, dont look to short. Conversely 90% below 0, focus on shorts. If the tick keeps hitting +800 but each time the stock is at a lower price then the previous 800 reading then the market is weak.
Method for gauging days range: Chart an -800 move and a +800 move and see what the YM range is between that. Anything less then 20pts is pathetic. Heres how: http://www.censordedlink.com/video/9points/
* TRIN = Advancing issues/declining issues to the up volume/down volume ratio. If trin is trending higher and making higher highs on the day I will ignore all long setups. If its trending lower all day, will ignore short setups. The key with the TRIN is to see if its making news highs on the day or new lows on the day. If the train closes above 1.5 the market has an 80% chance of rallying the next day. Use lgt contracts. If it closes below 0.60 there is an 80% chance of selling off. Dont hold too much emphasis on the open. If the trin is flat but slowly grinding lower then you want to look to only play longs for grind up.
* TRINQ = The STRONGEST moves in the market occur when the trin and trinq are moving moreless in allignment and not divergant!
* CTC Trend = Paints blue/red candle groups. Find out the major trend of the current move and bull on pullbacks (ie buy red on an uptrending slope). This is a modified version of the heikin-ashi technique
* $WPCVA/ = Put/Call Ratio (keys to the kingdom) Not avail in esignal yet. View on Bobbies screen or visit http://www.cboe.com/data/IntraDayVol.aspx If the PC ratio gets over 1.0 intraday I will ignore short setups and start looking for longs. Anything above .85 or so is more of a buy signal. This means there are a TON of bears in the market and a floor will be put in soon. This wont happen immediately, the PC ratio is a slower indicator. If its uptrending, so should the market. To reiterate , be looking for an extreme range in the PC ratio. Higher # is more puts being bought, lower # is more calls being bought.. If the market is rallying strong, i want to see the PC rallying. If its in .070 and 0.90 territory ignore it as a factor. This is a normal or neutral range. Only use this tool from 10am until 4pm
* Volume bars = Always important. If the first 6 5m bars in the ES do not mostly surpass 20k contracts, then its going to be a choppy day if they do surpass this, expect more followthrough on trends. After 10am if each ES bar isnt atleast 10k then the day will probably be choppy NQ 10k or so
* Williams %R - See main stock notes. Higher is good. Bobbie likes to see parabolic straight moves on the %R
· SSF Information & Notes (Single Stock Futures)
* Roll them over (sell and rebuy manually) Thursday before 3rd friday of the month!
* Dont use MKT orders with them, Place a lmt order near where the underlying issue is trading
* Use current month symbol for maximum volume
* Mainly good for swings
* List currently available: http://www.onechicago.com/030000_products/oc_030101.html
* Each contract is equivalent to 100 shares in stock
* They expire monthly
* Don't need 25k to trade them **UPDATE--NOW YOU DO-stuff**
* Leverage is 5 to 1 (20% of normal stock trade cost)
* You can establish a short position on a downtick!!
* No interest fees
* Great for hedging
TRADING PLAN
Why Am I Trading?
So I can one day run a theme park! jj.. I've had a few jobs, ran my own business for awhile and do not like the restriction they place on an individuals life. I'd like to make a modest living while being able to live, vacation and visit where I want. I'm generally a generous person and would like to be able to buy my friends nice things. The market is there to be pick pocketed and I intend to do so in a premeditated slick fashion. I'm very good at the jobs I've had and don't mind having a boss, but I'd definately rather not have to answer to someone or be worried about layoffs, wages and other various issues. Running my own retail business was ok but it was more work then you could ever imagine. I'm going to be doing a lot of work in my trading endvors but it will not have to deal with a partner or the general public yelling at me constantly.
What Markets/Securities Will I trade?
Futures: I will trade only the YM Dow E-Mini (ES or DIA will be used as hedgeing if CBT goes down or vice versa--see below)
Forex/Options: Not at this time, maybe in the future.
Stocks: The DIA ym counterpart for gap and hedging
-Catastrophic Failure of Exchange going down / Panic / Hedge / Hedging
Plan: If ES (cme) goes down hedge with YM or DIA
If YM (cbot) goes down hedge with ES or SPY (Bobbie hedges 1 ES/500 SPY for every 2 YM)
* 1 NQ Contract = About 1 YM Contract (hedge auto system losses or other misc losses)
* 1 ES pt = 8.5 YM (for every point the ES moves the dow moves 8.5 pts)
* 1 ES pt = $50
* 8.5 pts YM = $50
* 500 DIA Shares = 1 YM Contract
* 500 SPY Shares = 1 ES Contract
* 800 QQQ Shares = 1 NQ Contract
URL video on this: http://www.censordedlink.com/video/CTC04272005hs.html
Why This Market?
Futures: I've been told my numerous professional traders that the YM is easier for newbies to trade (hey path of least resistance here). I want to tip the scale as far in my favor as I can when taking on trades. I've traded the NQ, AB and ES and have had less success with them. I like the point spread on the YM and the fact that it moves in $5/tick incriments instead.
Stocks: No day trades of stocks for now. I will pick swings every now and then and also use the DIA to hedge and play gap fills with small shares.
In addition to one market opening tape/momentum play I will look for the following specific setups on the symbols referenced above (consider cuttin this down to just 4):
{+ Gap Fade/Open Mo aka David Letterman (YM/Stocks) } These 2 trades are one shot only!
+Bricks
++ON HOLD FOR NOW: +DS Auto Scalper System (coded by me)
Account Size and Number of Contracts to Trade?
$15,200 for trading capital
Checking account, savings account and ING high yeild savings account will be kept seperately.
General Account Rules?
+ I will with draw 75% of my trading profits at the end of each month and place it in to my savings account.
+ I will never add money to the account. If it should fall below the pattern day trader rule, I will stick to futures only.
+ I will never spend more then 2% of my accounts value at the local strip club
Number of Contracts to Trade?
+ I will trade upto 3 YM contracts for every 25K in the account (starting with 2). After the account has reached 37K will add another contact on to make paring in and out easier.
+ Share size allocation of stocks will be depend on the price of the security, its volitality and spread. I will not spend more then 20% of entire 4x margin account on any single position.
Trading Strategies
Here is a brief but somewhat detailed summary of the setups I will be using (mentioned above). I will not execute any of these trades durning deadzone (12:00am to 2pm) or on options expiration Friday. I will try to follow two at a time if two happen to setup at once. I have the screen space and pretty quick hands. (if any ladies are reading this, feel free to email me). I will utiltlize market flow indicators (trin/tick) to smooth entry/exits. I will only play simulator the day after options expiration.
See "Gap Fades/Burning DOG with DIA or sept acct" (200 DIA Contracts max right now)
See "Bricks Play"
REM See "Auto Trading System Dragon Scalper"
Psychology
Since starting to trade 9 months ago (minus that brief period of crazy bliss in 1997) I've realized that psychology is the most important factor that should be addressed in this process. Of the 20 or so books I've read in the last few months, they all have one common connection.. and thats the fact that the author stresses the mental aspect of this game over and over and over again until your ready to go see a hypnotist and ask him if he can remove your emotions while you trade. (hmm not a bad idea..!). Yesterday when the opening bell sounded my heart rate nearly doubled. This is not very apathetic on my part. I realized this and waited out the first few minutes of the open. The point is that we can not allow greed, excitement and other life factors to persuade us to deviate from our predetermined setups. Taking profits too earily, moving stops, doubling up size to get back at the market (revengae trading) are all perfect examples of unrational emotions. If I find myself falling in to this trap for 2 days in a row I will take a week off. I will tell if I'm doing this by looking at the graded setups in my excel journal. (my pnl will surely reflect this as well :) Stops are a good thing, risk is required in this game, losses will be taken. Obey your stops, cut your losers and let your winners hit their target or ride. One could probably ramble on for an entire book on this subject but I'm no writer and have other things to do. The important thing to note here is that I am aware of it and am trying to better myself in reguards to this area.
Profit Goals
I'm a small fish right now so I'm setting my goals rather small starting out:
$50/day
$200/week+
$1,000,000/year (hmm may have to go back to school on that one)
Profit Rules
Once I've reached or exceeded my daily goal and all positons are closed I will stop trading and load my IB simulator account for the rest of the day. I will trade the simu as if it were cash as to not generate false confidence. If I 2x or more my daily goal I will take the next monday or friday after that day off. Monday and friday are my worst trading days.
Drawndown Rules
+ I will stop trading for the day if I hit -$300.
+ I will stop trading for the day if my account takes a hit of %2 o
+ I will cut position sizes in half and focus on less setups if I'm down 8% on the month
+ I will not throw things against the wall when taking losses. I do not enjoy doing drywall work
Grade Rules
Below are my execution and setup grading rules. I will place these in my excel journal after the particular trade is closed, then calculate the score at the end of evrey month. Setups that are consistantly losing but were executed flawlessly will be modified or replaced. I'm using lower numbers to represent better execution/setups because I feel that we're too bent on 'high' numeric values being more positive. If I was a school board chairman I'do make a report card where F is for Fantastic.
· SETUP GRADE SCALE FOR ALL TRADES
1. Target hit (sunk the battleship)
2. Out at different price from target, still profitable (i can live with that)
3. Out at break even or scratch (wtf is this pool)
4. Out at differnet price from stop, looser
5. Stop hit (ceist la vie)
· TRADE EXECUTION GRADE SCALE
1. Followed trade rules as indicated in my most excellent plan
2. Followed entry rule but closed position before percise target was hit (taking profits friggin earily)
3. Followed entry but removed stop & let position run past original target (greedy bastard scenario)
4. Entered setup late and didn't set target (chasing AME)
5. Impulse or donkey trade
Office Setup
Due to space limitations my trading computer/desk is also located in my bedroom of my condo. This is extremely convinent for but I also have to be extra careful about not wanting to nap. Once my hot female room mate moves out I will move the setup in to the spare room and make it in to an office complete with mini-bar.
My trading setup/computer contains:
+ AMD 64 Bit 3000+ System, 2GB Ram, 3 17" LCDs Monitors, 1 TV Output
+ Backup/Failsafe: UPS Battery Backups, External Hard Drive, Extra Computer, Broker on speed dial in cell phone
+ Firefox/Mozilla will be used on this system instead of ie. AVG Anti Virus. Hijack this & Adaware run periodically
+ System Restore point will be made every time a new piece of software is installed
+ Printer, Fax, Scanner, Webcam is available for use should I need it.
Other General Day Trading Rules Gleaned from Various books
+ Stick to the rules outlined by your trading plan and your best friend should always be apathy, apathy, apathy!
+ Honestly there are too many to list here. I have a 100k page notes word file of these and periodically go through them when Im in a situation where I have a lot of waiting on my hands.
Keep An Eye Out/Morning & Night Track List:
+ CHECK ECON AND OTHER EVENTS/REPORTS NIGHT BEFORE
+ EARNINGS NEWS ON SWING POSITIONS AND BASKETS!
+ GAUGE YM POST 8:30 & WRITE DOWN IMPORANT LEVELS
Health Routine/Exercise
+ Drink atleast half a gallon of filtered water a day
+ Limit coffee intake to one cup in the morning
+ Limit intake of artificial sweatners, soda, sweets. Stick to natural items like veggies/fruits/nuts.
+ Calorie intake should be 1500 or less per day
+ At start of deadzone do 200 situps, mild weight lifting reps then leave for walk/jog
+ Exercise will be done a minimum of 5 days a week regaurdless if the market is open or not
+ Upon return from walk take quick shower and get back to the markets
+ No alcohol will be consumed durning the trading week. This rule ends at 17:00 Friday :)
+ You are allowed to 'splurge' and deviate from these rules one day a week. Saturday usually a good day.
Final Thoughts on Plan
A plan is unless unless its followed to the letter. There would be no point in grading, changing or reviewing any of my trades or setups if I was not following my own rules. I know this plan will help me keep my impulse trades to an absolute minimum. (0% would be nice) I will make my best effort to follow my plan and preserve my capital so I can continue to do so for many years to come. I will act on my signals and not try to over analyze each situation I get in to. If I have trouble executing my plan I will not burn it in the fireplace, but instead seek additonal guidance on the mental aspects of trading.
· BOOK: Trading in The Zone by Mark Douglas
-Manage but dont control the weater/Denise
-Traders fail because of dicipline. They have no plan. They dont keep stops or pare out profits
-Best traders aret afraird
-Stick to your rules always. Dont get cocky or euphoric after a few winning trades. Execute like a robot!
-Attitude overall produces better results then technique
-Losses are to trading as owning as resturant is to ordering food.
-The market produces unbiased data that is not threatening. Your responsible for your actions.
-Revenge trading is not in your vocab
-No matter how much technical stuff you learn about the markets. It will not replace dicipline (pain, fears)
-Patterns repeat but not every single time. Thus there is no way to trade without losses.
-Accepting risk=Accepting outcome of trade without discomfort or fear.. apathy really is god
-Fear of putting on the next trade is unfonded! Each setup is unique (some dogs bite)
-Dont let your mind link winners/stops to pain/euphoria.
-Associate stops and targets to the same thing.. like a banana
-Dont trade with over-confidence
-Remember, in every trade ANYTHING can happen. Your just making your best guess. Accept all possibilities with no internal conflict
-Its absolutely absurd to think you can be 100% accurate (remember the soy beans example)
-Be RIGID in your rules and flexable in your expectations
-You can never know what to expect from the market. Live in the now and dont associate past moves or trades with current or upcoming ones
-Dont expect anything and be pleasantly surprised if you get something
-Every losing trade brings you closer to a winner
-An EDGE is simply a higher probility that something may happen over another. But it only takes 1 trader to mess up a prime setup.
-Every moment is unique!
-Preexisting beliefs are a source of difficulities for traders. Suspend them and you'll be thinking creatively.
-Creative a positive belif for your trading rules
-Mistakes are not negative, they simply point out what areas of your plan/execution need improving. Get your learn on!
-Do: Use a system with no subjective enteries or stops, do 20 trades in this system. All enteries/exit signals must be based in the same time frame but you can use the longer/shorter time frames for confirmation/filtering.
-The market is just a bunch of probabilities. This is how casinos make money consistantly
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