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Al, may I add to the complements given to date. I have had a quick read of
your detailed trading plan provided, and it echoes many of my "ideas" that
I need to formulate into something concrete and repeatable. You hit on a
key point, the plan must suit your personality.
The entry, stop loss and profit exit points look to be sound methods. It's
when the emotional mind takes over from the plan (ie we sin) that we always
get into trouble <g>.......
I shall read it again (and a few more times) to absorb and adapt the
principles.
many thanks for the post,
Shane Johnson
altag@xxxxxxxxxxxx on 12/08/98 19:41:27
Please respond to metastock@xxxxxxxxxxxxx
To: metastock@xxxxxxxxxxxxx
cc: metastock@xxxxxxxxxxxxxxxxxxxx (bcc: Shane M Johnson/AU/ITS/ORICA)
Subject: Re: Profitable trades
John,
I use several methodologys, because there are different types of
markets. I reject the statements that a good system must work in all
markets and all time frames. I cannot trade bonds like I trade
currencies like I trade big cap stocks with robust volume like I trade
small cap stocks with thin floats. Perhaps the basic philosophy is the
same, but the parameters will be different. I am a semi-mechanical
trader. I would like to be more mechanical than I am, and perhaps in
time, this will come to past.
I have studied the bond and DMark market, have learned from Time/Sales
studies at the CME and CBOT web sites what times of day retracements can
be expected. Also, studying the Globex prices have led me to a "feel"
of when prices are artificially marked up/down, so that I can take the
opposite side of a trade. I have a chart window that shows me the 10
day and 3 day Average True Range of the Mark and Bond. My weekly charts
show me that the 4 week and 1 week ATR is very close. This allows me to
enter low risk trades on Fridays. That is, if the Mark has traded it's
four week ATR, then fading the move has been profitable. Often I can
take this trade at 12:40-1pm on a friday, be in the market for 1-1 1/2
hours and make a nice profit. Importantly, my risk is low. This works
with the TBond also.
I read my charts and do not rely on indicators. (I am currently working
with the RSI and MACD, but they do not enter into my trading decisions,
as of yet). I use moving average bands of 10 days sma of the high,
median price (very important to me) and low. I use a 20 day xma of the
median price as a support/resistence level. I try to keep everything
simple and in a context that I understand: I must know where today's
price is in relation to the bands. (If price moves up from the low
band, I want a buy stop just above the median price. If the median
price lines does not support price, I want out. Now! I have my trade
entry, profit target and exit price written before I execute the trade.
I believe when I place a trade that I do not know which way it will go.
I have a 50/50 chance of being correct. If I am wrong, it is not a
personal thing PROVIDED I EXIT IMMEDIATELY. I can calculate my loss
after the trade is closed. If I am wrong, and STAY wrong, that is a
major sin. As an example, I will buy 200 shares of CBE in the morning.
I know where I will try to buy it, and I know where I will try to exit
if the stock turns south. As long as I execute my program, I am
satisfied.
I cannot predict markets. I can only read my charts and hopefully, the
market. If I am wrong, the market tells me in no uncertain terms.
A Long Trade System that I use on the TBond is:
enter long: Cross(Mov(C,3,S), Mov(MP<>,3,S))
close long: Cross(Mov(MP<>3,S), Mov(C,1,S)
That is, when the 3 day sma of yesterday's close crosses the 3 day sma
of the median price, I will enter long at the high of the day I got the
signal plus 3/32.
I will close the position when the 3 day sma of the median price is
greater(higher) than the 1 day sma of the close.
I am saying that if the 3 day sma of the close crosses above the 3 day
sma of the median(average) price, then I must be in an uptrend, and I
want to be long. When yesterday's close falls below the 3 day avg of
the median price, I want to be out at the low of the signal day less
3/32.
The 3/32 is my filter. I arrived at this system by studying the price
movement on 100's of charts. If you will run this system in MS system
tester on the TR98U, you will find you would have made 18 trades, 11
winners and 7 losers. avg win/loss 2.08. In the real world, however,
you would not have been trading the Sep contract before May. From May
to date, there were 6 trades, 4 wins and 2 losses. The wins were 38/32,
the losses were 19/32. Profit: 19/32 {$593.75}. It is because the Bond
market has been stuck in a range and the good trades are slow, that I
have started trading some stocks. The method is simple and sound. The
parameters must be adjusted to whatever you are trading. Look at a
chart where there is a strong trend. Notice that the low does not go
below the low of the previous day. Then buy and hold on with a stop just
below the low of the previous day. If you are stopped out and the stock
turns back up, then buy again, commission is cheap. When I see a price
movement below the low of the previous day, I cannot tell how much lower
it will go. Remember, I cannot predict, I just read. If you see a
price of 52 2/16, do you know what the next tick will be? Me either. If
it is below yesterday's low, I want out.
You asked me questions, and I have tried to answer. I know that the
TBond trade outlined above works, I ran untold system tests. My tests
did give me a different parameter to exit, but it did not suit my
temperment, so I use what I have written. I scrifice some profit, but I
take smaller losses. Importantly, it suits my personality.
Thank you for giving me the opportunity to share with you and the others
on this list.
Al Taglavore
John Manasco wrote:
>
> Al
>
> You seem to have been on this list at least as long as I have and I was
> wondering if you would share some of your ideas. I know you trade
> futures which is a scary thing to me, now that I think of it stocks are
> pretty scary right now also <g>. What sort of systems do you use or are
> you working on, i.e. channel breakout, moving average, etc? Do you do
> strictly mechanical trading or are you also a discretionary trader? Are
> you a daytrader or longer term? Am I nosey or what? Not really trying to
> be nosey but I think you have a lot to contribute to the group.
>
> Thanks
>
> John Manasco
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