TraderGav.com

Gav's trading blog - Perseverance, Consistency, Confidence

Gav

Trades that got away 14-December-2006

by Leave a Comment

Trend chart of ES turned up within the first hour, at the same time, a dummy long signal was formed. Long position was established above the high of 935am candle. First (minimum target, ~1.7R) was set at yesterday’s high at 1430.50.

Both minimum target and Fib extension 100% were achieved. Stop was moved to Fib extension 100% to protect profit and let the profit run. After ES made a lower high, position was closed at Fib extension 161.8%.

* Fib extension was calculated using yesterday’s low and today opening range high.

Here is the 5-min chart of ES (E-mini S&P futures)

[photopress:ES5min.jpg,full,pp_image]

Postmortem 13-December-2006 : Random rant

by Leave a Comment

It was a flat day to me. At least from my trend chart I couldn’t find any clear direction. That’s why I did not make any trade. There were great opportunities to be chopped around in 5-min charts. Looking at NQ, ES, YM and ER2, you know what I am saying.

Boy, I am so eager to trade. But, as major work in progress, I will stick to paper trading for this short while.

Another observation or experience of myself. I am better off not to read any blog, yup, not a single one before market open. Instead, spending the time writing for your own is a better idea. Any rubbish, random rant in your mind, write it down on a piece of paper (not blog). It will be even better if you have some time to meditate (suggested by Dave, but I have yet to have time to do so). Get your mind clear, then face the challenge.
Blogs are full of personal views and opinions. Again, don’t care what do Mike, Richard, J.C, or even Gav say before the market open. They are having different brains that work in different way than yours. Trade alone, think alone. Read their blogs (maybe my blog as well) in the evening, read their experience, but don’t let bloggers affect your trading mind in the morning. You have a great mind, don’t get ‘contaminated’ before start a trading day.
Ah..I just wrote too much. I shall stop here.

Reading: Trading with Candlesticks

by Leave a Comment

As usual, I have done some search work on the net. Here are some nice articles on candlesticks.

Books on Candlesticks Trading

Trades that got away 12-December-2006

by Leave a Comment

While I am still working on back testing program, I will start forward testing , but this time, I am paper trading. Dummy trading involves certain degree of pattern recognition, this forward testing will improve my skill in this area.

ES,trend chart turned down. I was looking for any opportunity to establish short position. Short position was taken below 11:50am (NY time) candle, after dummy system signaled.

I have two exit targets. Yesterday’s low served as minimum target (1.3R), and Fib extension (From yesterday’s high to today opening range’s low) 100% as second target (4.6R). Initial plan, I would let the profit run if it broke yesterday’s low. I would cover the position at yesterday’s low if market reversed.

Second target was hit.

Here is the 5-min chart:

[photopress:ES_short.jpg,full,pp_image]

Another trading opportunity was found in E-mini Nasdaq. position was established below 11:55am (NY time) candle. NQ position was closed at minimum target (4.2-R) at yesterday’s low. It failed to reach Fib extension 100%.

Here is the 5-min chart of NQ

[photopress:NQ_short.jpg,full,pp_image]

Readings: Market Profile

by Leave a Comment

I am always curious about Market Profile. After reading some traders are day trading with Market Profile, I decided to do some kinda research on this tool.

Here are some articles I have found:

Books:

Steidlmayer on Markets: Trading with Market Profile, 2nd Edition– Steidlmayer

Examing the MMA, Indicatorian approach

by 8 Comments

I was thinking if I am going to post this article which I wrote some time back. It makes me sound like a indicatorian (Gavipedia: Indicatorian refers to trader who can’t live without indicator). In fact, I hardly look at indicator. Oh well. This is a season of sharing. I am sharing something that I find to be useful. In case, you are interested in Multiple Moving averages ,as mentioned in my previous post ‘Defining a trend”

I take a deeper look at Multiple Moving averages. Though I don’t like the idea of manipulating price by using indicator, I gave it a try and I think it is useful. The basic idea of Multiple moving average(MMA) is to view the trend as two band of moving averages – short term band and long term band. MMA has provided a great visual of trend, but, how should I quantify it in case I need to integrate into my system?

I obtain an idea from Leon Wilson, Author of “The Next step to share trading success”. (I am not sure if the book is available in U.S, at least, I can’t find it in Amazon.) He is an truly “indicatorian”, and according to the description in the book, he trade stocks for living. He derives something called MMACD (MACD of Multiple Moving averages) Ok, here are the steps I quantify MMA by following his suggestion.

1. Take the combined value of moving averages for each short term band and long term bands. So, now we have two lines instead of two bands of moving averages.

2. We want to measure the distance between short term band and long term band. When the distance goes extreme, you know a bubble is forming and potentially we can expect a pull back. I display MMACD into percentage form.

MMACD=[(short term – Long term)/long term]/100

3. For a better view of the changes, we add in a trigger line. We do not want to establish a Long position when MMACD is below its trigger line. (reverse for short position)
trigger= 9-period Moving average of MMACD

So now we have a new indicator to analyzed Multiple Moving average. An Indicator for an indicator? OMG. Well, It is just some mathematics work to help me in reading Multiple moving average. And personally, I find it to be helpful to analyze trend.

MMACD

I have been using this in swing trading of stocks. And I am looking for the possibility of implementing it in day trading as well. Before you start mesmerizing this MMACD, you gotta understand the concept behind MMA. Check out the links in my previous post “Defining a trend“.

Ok, here is the indicator I have programmed for Tradestation, just in case, some of you are interested in trying out. Pull in GMMA into your chart and MMACD. Observe the behavior. Shoot me some comments if you have other view. Just another tool, dump it if it confused you.