|
PureBytes Links
Trading Reference Links
|
VonHef wrote:
> .....So I have been going over ways to define (logically) what a "Trading
> Range" is and just as important.....to define when the market has broken out
> of this "Range". That is where I first came with the idea of
> adding/subtracting ATR to the previous high/low of the trading range as to not
> signal a false breakout of the range. I suppose a 2 day rule could just as
> easily be implemented (into this mechanical method).......but I have also seen
> large moves happen in two days. Perhaps a combination of both?
>
I didn't realize you were looking for an entry trigger. Yes, a two day close
beyond your resistance point could certainly kill a timely entry. And as you've
noted, the key issue of trading a trend following system is knowing when you are
in congestion and when you are trending again. The only study I've yet seen
that can help determine this is an understanding of Elliott Wave. By nature,
the ABC wave corrections are the non-trending segments, and therefore do not
lend themselves well to trend following triggers. Knowing when such an ABC
correction is due to start/end and knowing when the new 5 wave impulse move is
ready to begin can mean all the difference in taking or ignoring your mechanical
trend entry triggers.
I suggest reading Robert Miner's Dynamic Trader for one of the best explanations
and methodologies for learning the Elliott wave. www.dynamictrader.com
Mark Scheier
>
> Best wishes,
> Adam Hefner.
> VonHef@xxxxxxxxxxxxx
>
> ---------------------------------------
> ----- Original Message -----
> From: Valhalla <scheier@xxxxxxxxx>
> To: <metastock@xxxxxxxxxxxxx>
> Sent: Monday, May 03, 1999 7:20 AM
> Subject: Re: Support or Resistance Penatration question
>
> > Murphy is talking about support and resistance zones as determined often
> by
> > former lows and highs, so the following technique may not apply here, but
> some
> > traders when refering to fibonacci resistance penetration require the
> close of
> > two business days beyond the point, not an intraday penetration of any
> amount.
> > With this technique, any two closes beyond the point, regardless even if
> it's a
> > tick, counts towards penetration.
> >
> > Elliott wavers, on the other hand, refer to % penetration when the fourth
> wave
> > penetrates the top of the 1st wave. With this, intraday penetration
> counts but
> > the % before an alternative wave picture is forecast can vary up to about
> > 10%--or more.
> >
> > But neither of these examples probably apply to what you're trying to
> > accomplish.
> >
> > Mark Scheier
> >
> > VonHef wrote:
> >
> > > I have been reviewing my old John Murphy book "Technical Analysis Of
> > > Futures Market".....
> > > and he was teaching about using a 3 to 5 percent penetration of support
> or
> > > resistance values
> > > before they are confirmed to have broken. Do any of you make such
> > > calculations? I am
> > > considering using a multiple of the "Average True Range" and then
> > > adding/subtracting
> > > this value to the S/R value. For example: if resistance was at 1300 and
> I am
> > > using half of
> > > ATR of 20......then my confirmation would be at 1310. I like the Idea of
> > > using ATR to help
> > > compensate for volatility. What do you guys think? How do you Traders do
> it?
> > >
> > > Best wishes,
> > > Adam Hefner.
> > > VonHef@xxxxxxxxxxxxx
> > >
> > > ---------------------------------------
> >
|