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Evidently, this didn't make it on to RT when I first
posted it, so I'm trying again!
Walt
Message-ID: <33C0057D.6EA8@xxxxxxxxxxxx>
Date: Sun, 06 Jul 1997 16:52:13 -0400
From: Walt Downs <walt@xxxxxxxxxxxx>
Reply-To: walt@xxxxxxxxxxxx
Organization: Commodity Information Services
X-Mailer: Mozilla 3.0 (Win95; U)
MIME-Version: 1.0
To: realtraders@xxxxxxxxxxxxxx
Subject: FUTR GEN: FEAR !!! ELA
Content-Type: multipart/mixed; boundary="------------4D3864E1672A"
In response to several queries regarding Bio-Neural filters,
I thought I would respond with some concrete examples.
Essentially, Bio-Neural filters represent the only
relative constants in the market:
These constants key around the predispostion of
traders to trade in predictable ways, and the
exploitation of natural and everpresent
phenomena in all markets, such as fear.
"Oh yeah, RIGHT" you say, "Now I'm supposed to write
an indicator expressing fear!"
LADIES AND GENTLEMAN WELCOME TO.........
FEAR !!!
The following 3 indicators are mathematical expressions of
"fear". They consist of:
FEARfast : This is that short-term gut wrenching fear so often
experienced by the "Small Spec", when he is making TOO
MUCH money, or DEEP in the red. He trades with all the
preictability of a pinball.
FEAR: These lines are representative of more mature traders, who have
a little more capital at their diposal. These lines are also
representative
of "Large Specs", and maybe even a few funds and commercials.
When these babies spook, things get nasty quick!
FEAREnv : Finally, FEAREnv represents levels of fear at which EVERY
trader will be freaking .
Set-up:
Apply FEAR, then FEARfast, and finally, FEAREnv to your chart.
Use the following settings:
FEAR: Scaling = SCREEN, STYLE = "Hi" plot YELLOW/Line 2nd thinnest or
thinnest
"Lo" plot RED/LINE 2nd thinnest or thinnest.
FEAREnv : Scaling = SCREEN , STYLE = "Hi" plot and "Lo" plot either
GREEN or BLUE
LINE 3rd thinnest
FEARfast : Scaling = SCREEN , STYLE = "fast" CYAN / LINE thinnest
When you are done, your screen should look similar to the GIF example.
If your price bars look squashed, GO TO the "Chart Types" icon. Move
down to
"Scale to Data or Screen", and click. This should expand your price bars
back to
normal size.
TRADING FEAR!! :
Excellent opportunities can be had by looking for the market to trade
near
the extremes of the FEAREnv, and then buying or selling
breakouts through the YELLOW
line. Once the market has broken out, it is often profitable to"fade"
the first
"test" of the YELLOW line.
Prices act a little differently with the RED line. If the market breaks
through the
RED line, and you get 7 or 8 CLOSES UNDER the RED line, Look to fade
further
attempts of the market to trade up through it. Look also to fade the
first attempt
at the CYAN line after the market has closed 7 or 8 times consecutively
UNDER
the RED line.
The RED line can also be used as a divergence tool. For example:
The market drops below the Yellow line, TOUCHES the RED line, and trades
back
up. On the SECOND attempt, the market will often penetrate more deeply,
and
finally on the THIRD attempt, the market drops like a stone.
Now let's talk about our little CYAN buddies, the "small spec". ANYTIME
the
CYAN line starts RUSHING anywhere, and ESPECIALLY if the CYAN line
crosses over the RED line or YELLOW line, it's often wise to trade in
the
other direction.
Their are a few exceptions: If the market is trading in a fairly small
trading range,
with the CYAN line trotting along in the center of the price bars,
excellent trades
can often be had by BUYING when the market trades up through the CYAN
line,
, and SELLING when the maket trades down through the CYAN line.
If the market is trading in range and the CYAN line starts FLATLINING, a
breakout of the range is at hand.
ANYTIME ANY OF THESE LINES CROSS EACH OTHER, GO WITH THE LINE THAT
DID THE CROSSING. (of course, don't Buy into the top, or sell into the
bottom of
the FEAREnv !!!!)
ANYTIME ONE OR MORE LINES START FLATLINING, a breakout is coming soon.
The reason for this , is that the market participants have become
ambivalent. They
have taken so much fear for so long, that they are finding it hard to
FEEL anything!
Breakouts from these Zones often go to afterburners quickly.
Finally, there is the FEAREnv: This is the psychological point where 99%
of all traders
will break. The losers have had enough, and the winners are scared they
will lose
some of their gains. This is often a WONDERFULL place for option
strategies.
If you take the time to study this indicator, I think you will find it
quite
rewarding.
It will take some adjustment in thinking.
REMEMBER, you aren't looking at
moving averages, or normal crossover plots here! You are viewing the
RAW ESSENCE of "fear", as it moves in the markets.
The GIF I supplied was a study of the 94 TBond. BUT take the time to
apply
FEAR to Sept 97 TBonds, I think you will find it interesting!
While I HAVE locked out viewing of the mathematical algorythms, I did
make the "inputs" available so you could adjust FEAR for smaller time
frames if you wanted to.
HAVE FUN !!!!!!
Walt Downs
CIS Trading
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