Big Mike's Trading Blog

Day trading futures, discussing money management and trade management techniques, and more

Fibonacci, Elliott Waves, Pivots, Murrey Math trading

I confess right from the start of this blog that math and I are sworn enemies.

A very large number of people are enfatic with their support of the fibonacci sequence (the golden ratio), Elliott Wave's, Pivot Points, Murrey Math, and value areas/points of control.

Did you know you can use the fibonacci sequence and golden spiral to predict or explain family tree relationships, petals on a flower, or seed heads in nature? Well I didn't, and as I began researching this topic I was amazed when I started reading Fibonacci Numbers in Nature.





This image of a coneflower has mathematical qualities that can be explained. The shapes and spacing of the seeds, as many things in nature, align with the Fibonacci sequence.





Elliott Wave theory says that the market has predictible waves (up or down) and that by counting them, you can predict their weight or significance, such as whether the next wave will be up or down, large or small. There are also A-B-C corrections, and in fact there are many specialized software packages designed specifically to trade these wave patterns (such as MTPredictor). I believe there might be some similiarities between Tom DeMark's approach and the Elliott Wave theory, although I confess to not have dug in and really examined that yet.





With Pivot Points, the idea is that you can use past market data/price to predict where major areas of support and resistance will exist in the future. There is the pivot point (High + Close + Low) / 3, and then multiple resistance (R1, R2, R3) and support (S1, S2, S3) areas. You can define these by adding the High's, Low's or Pivots together and doing some math. Once a previous support area fails, it becomes the new resistance, and vice versa. You can find many indicators that will plot pivot points for you, and I've also found that MyPivots is a great resource for the Pivot Points trader.





Murrey Math, created by T.H. Murrey, uses geometric shapes and fractals to predict important areas (price) in the market that may act as support or resistance. Murrey describes it by saying, "This is a perfect mathematical fractal trading system". The best resource I can suggest for adapting Murrey Math to your trading is this excellent and extremely popular thread on ForexFactory.

My take:
In general, I have avoided all of these mathematical analysis techniques like the plague. My primary reason is that some of them throw up so many different "important" numbers on your chart, that you can literally find a reason every 1 point on the ES that you should, or should not, be trading. This is not helpful to me. Yes, after a move I can throw up a Fib Extension or Retracement and see it was a 50% retracement. Or maybe it it was 61.8%. The thing is, on most charts there is such a small difference (in ticks) between the areas that you can find confluence with any number.

However, there is obviously a beneficial aspect to being able to identify key areas of support and resistance, whether they be based on pivots, fibs, etc. At best, you can trade with extra caution around these areas just like you might with the VAH/VAL/POC (value area high/low, point of control).

Lately I have been taking more interest in these numbers and math, particularly the Murrey Math ideas. You can find a Murrey Math indicator for NinjaTrader here. I seem to find this math the one I can relate to, and as such it is the one I am gravitating towards.

I also found a very interesting indicator called SwingTemp which counts the number of swing high/lows, and how many ticks was in each move. The indicator can also apply an automatic fib retracement chart at the end of each move, for NinjaTrader. I have yet to find a way to make this useful in my trading, however.

I would like to learn more about fibonacci's but am thinking that my toolset is lacking. I have not been able to find a really good NinjaTrader tool that can automatically apply retracements and extensions at the appropriate levels and project them to the future in a way that is useful.

So, I'd like to hear from all of you. What tools are you using? What indicators? How are you applying them? How does it impact your trading decisions? Please chime in.

Mike

Revision to ZeroLag MACD w/Colors

I've made some minor changes you might find useful.

  • Fixed ZeroLagEMA onbarclose = false problem.
  • Added ADXVMA filter
  • Added Threshold filter (price must cross zero + threshold to trigger)
  • Changed logic, will now plot "up" if MACD + Threshold > ADX
  • Added Acceleration logic, can now keep "ratio" of 12,26,9 but speed up proportionally if desired

There is a discussion here, and you can download here:
http://www.ninjatrader-support2.com/vb/showthread.php?p=97327#post97327



Mike

Poll results: Your broker/data feed

Below are the results of the last poll where I asked which broker and data feed you used. I hope I didn't forget to list any, because I did forget to list the "Other" option after the poll crashed the first time I set it up!

It looks like the overwhelming majority depend on Zen Fire for their data feed, with most people using Mirus as their broker, followed by IB then Amp. I've used IB in the past, and use Amp now, so have a little experience with them. IB is pretty much the only option in my opinion if you need to trade stocks. If you are futures only, then Zen Fire is the only option, and Mirus and Amp are both great from what I've read and experienced personally.

Did I miss any major broker or feed? Let me know.



Mike

Friday = terrible volume

Well another Friday, and another day to not trade. The volume has been terrible and we've been stuck trading around this pivotal point all day.

I've just been an observer and haven't traded today.

Do you guys normally trade Friday's? Let me know.

Mike

Great moves today

Today we had some really excellent moves.  I did very well today.  :)

Last night I re-arranged my workspace (my physical desk) and rotated all my monitors to portrait mode, so my screen shots are going to be a lot taller and less wide than usual.  Let me know if it causes problems.  So far, I am really loving this new setup.



Also I've been looking into EOT's indicators, forum, their videos on their website, etc.  I was wondering if anyone else that has any experience with them could comment.  Some of their indicators seem quite interesting to me.   Once you get past their website which is in serious need of an overhaul, they have a lot of valuable information (screen shots, videos) and a nice user community (forum).  The prices seem reasonable, let me know what you guys think.

Mike

And we're off to the races...

Tuesday's price action was pretty exciting.  For about an hour.  After that first huge run up the market gave up and went home, everyone took an early afternoon.

Maybe they all went home and had a nice juicy steak like Stewie from The Impatient Trader!  Man I sure wish I did!


You know you've got a powerful move when the 4 range barely even taps a very tight stop reversal marker, as shown here on this 4 range chart.  The reversal marker is part of TrendBars, my adaptation of Roonius' SuperTrend:



The 6 range chart showed one fake out at about 9:30am my time (10:30am EST) but we didn't fall for it because we didn't get a clear short signal.  Then that short failed, and immediately we were long again:


The 3 minute chart shows the huge run up and then a very slow grind up the rest of the day.  I stopped even paying attention around noon, there was just no need, it was obvious it was all just going to be chop and grind from here, the opportunity was at the early hours of the cash open, and if you missed it then just pack up and wait for another day.


Remember, the #1 goal is not to lose money.  Making money is down the list somewhere.  So if you see a day with a huge move and then chop/grind, don't force it.  Just wait it out.  If it doesn't break out of its chop and grind, then don't trade until the next day.  There is always another day, and the trick is to be around with cash in your pockets for the right opportunity once it presents itself.

Mike

Download MACD ZeroLag w/Colors, update on Mike Trend

Happy Memorial Day weekend to all!

I've been working hard -- what's new -- and am pleased to put up for download a new indicator called MACD ZeroLag w/Colors.  This is just an updated MACD with some visual changes that puts some dots on the zero line depending on whether the MACD line is above the average line, and if the overall trend is higher or lower.

You can download it here:
http://www.ninjatrader-support2.com/vb/local_links.php?action=jump&id=198&catid=1

There is a discussion on it here:
http://www.ninjatrader-support2.com/vb/showthread.php?p=96173#post96173

Now, the second order of business.  I've made some more changes to Mike Trend -- shocker, I know -- and I think they are definitely for the better.  I'm really liking it now.  I added the MACD to my chart because it helps identify overall trend in some cases, I think it supplements Mike Trend whereas before not so much.

Below are some screen shots of both, let me know what you think.  And yes... I will make Mike Trend available for download, but as you can see, I am changing it all the time trying to get it where I want it.  Once I do, you can have it, promise.

 
  
  
 


Mike

Automated Trading vs. Discretionary Trading

Today my Symmetry system has called 23 out of 23 trades (100%, 23 points - 0 losers), each was 4 tick target 8 tick stop.

On. Fire.

However, in this video I talk about why I am not making this system fully automated and I show you what it did yesterday in the chop zone vs. what it has done today.

I created this blog about 30 days ago. Prior to that, I spent over a year, 12 hours a day, living and breathing automated strategies. I wrote more code than I've ever written in my life, I created more new ideas and tried to solve more problems than ever before.

I got so caught up in automated strategies that I lost focus on what was previously working for me -- discretionary trading.

It clearly took me a long time to realize this, to realize I had drifted off course. But once I did, it was like a ton of bricks all at once came crashing down. So, I immediately decided I need to change.

This blog was born, and my new focus was to build better tools to help me discretionarily trade instead of trying to automate everything. All the new stuff I've written in the last 30 days has been to that end.

This video illustrates just a small portion of why the human brain can still be trusted more than automated algorithms most of the time. I recommend downloading the full HD version (link below video) to make it easier to see.



Download HD full-screen MP4 video


If you had trouble with the mental aspect of trading, instead of spending time automating to get around that, I encourage you to do what I'm doing -- find other ways to deal with the emotional part and mental shortcomings of your trading.

Mike

Add buttons to your NinjaTrader toolbar

Roonius over at TradingStudies has this awesome piece of work that allows you to add discretionary buttons to your Ninja chart toolbar.  You can just wrap your code or logic around them, and then instantly have your indicator or stratetgy do something with the click of a button.


Some things that came to mind off the top of my head:
  • Toggle an indicator on/off
  • Tell strategy to turn on/off, or only take longs or shorts
  • Toggle between different settings within your strategy or indicator
What other ideas can you think of for this?

Mike

Recap 05/18/2009

Here is a short video to recap today's action. Everything went very well today, I took several points cash and about 10 points on sim.

The DoubleMA, used as support/resistance, really did its job today and kept us from falling for those short fake outs, and on alert for the short failures so we could jump back on the longs. And we did, and it worked, and it feels good!

On day's like today always look for the short failures and then jump back in long. Your indicators should help you do this, telling you when it's just a short failure, or if it is a true reversal. Good indicators will also help you measure the strength of the pullback.

I only took one short today and it was a risk (it worked, mentioned in video), the rest of my trades were long which is where the smart money was.




Download HD full-screen MP4 video

Mike

Download new DoubleMA and ChannelThis

OK, I spent the last hour getting these two ready for public release.

Here they are...

The updated DoubleMA includes more moving averages, and also a new Signal dataseries for strategies, as well as a new DMV dataseries which correctly lists the last close of the bar (a failing of the original design).

The new ChannelThis indicator allows you to plot any two moving averages into a channel with various display options to identify breakouts or kill zones.

Enjoy!


Download ChannelThis and the new DoubleMA here:
http://www.ninjatrader-support2.com/vb/local_links.php?action=jump&id=196&catid=1

Mike

More new stuff

So much for rest and relaxation this weekend. I've been working non-stop on indicators and setups.

A lot of work I decided to abandon, if it ends up not being any better than what's already out there, then I just move on.

I had intended to post my new ChannelThis indicator but I need to clean it up some and haven't had a chance to get back to it. I'll get to it shortly, promise... I'm just real tired right now and need to log of so I can be ready for the cash session tomorrow.

I changed my ECO2 settings slightly, now they are 7(fast), 9(signal), 21(slow. I also removed the histogram from my chart, and modified the code slightly to draw up/down colors based on which side the line Main is compared to Signal (signal is the white dotted line in my panel). I'm all about making things as simple as possible, and this works for me.

I am still working things out on Mike Trend. The biggest thing I am wrestling with is the damned CCI. I just can't get it to do what I want. I really am not a fan of CCI, maybe that is part of the problem. As for the rest of Mike Trend, I changed the histogram bars to Dots that plot blue for rising and red for falling, regardless of what side of the zero line they are on. However, it is best to only take trades on the right side of the zero line, but where's the fun in that?

More to come... tomorrow.



Mike

New poll: Your broker/data feed

I created a new poll yesterday about brokers and data feeds, but it got corrupted so I had to re-do it just now.

If you already voted, please re-vote on the new poll.

Mike

NinjaTrader 7 (NT7) beta announcement

Are you excited?  I'm excited!

Hundreds of messages have been written by anxious NinjaTrader users and responded to by the NT support/dev team over the last many months regarding the development of NinjaTrader 7.

The beta release has slipped multiple times, but as of this blog (Saturday, May 16th, 2009) they are still quoting a Q2 2009 release date (which means by June 30th, 2009).  I've added a countdown timer to help express the excitement and anticipation for this day to get here, now!

What feature are you most looking forward to in NT7? Let me know.



Mike

Poll results: Risk vs Reward (stop vs target)

Here are the poll results where I asked what risk to reward ratio you trade with.  It's expressed like risk:reward (ie:  stop:target).

This one was pretty evenly split, looks like the majority trade with at least a 1:1 ratio or better.  I will admit that I am still trading with a 2:1 ratio, but I am working on my runners which will make that more like a 1:2 ratio.  I have a problem with getting out of winning trades too quickly, even for no reason.

What's your strategy?  How do you manage your trades?  I'd like to hear from you, please leave your comments.

My motto is that I better be able to email my trades to a friend and SHOW him why I got out.  If I can't show him why I got out... well, then.. why did I get out???  Probably because I was scared to lose money or give back the profits I already had in the trade.

I like to trade 2 or 3 contracts, with the first target usually 4 ticks, 2nd target can vary around 8 ticks, and the runner to around 12 to 16 ticks on the ES (4 ticks = $50 USD).  My initial stop is usually 8 ticks, and I move it to -4 once the first target hits, then to break even once 2nd target hits and let the runner try to go all the way.

Mike

NinjaTrader Optimizing, ChannelThis (new!) and more

I both love and hate NinjaTrader Optimizing.

Mostly hate. So. Freaking. Slow.

Hours of my life waste away as Ninja musters up enough strength to use nearly 25% of my CPU resources... leaving 75% available for me to play MP3's and browse the internet. So inefficient. Please, please, let NT7 fix this.

I do enjoy backtesting/optimizing from the perspective of making breakthroughs on theories or speculations ("strategies") and seeing them work. But, I am trying to not get hung up in over-optimizing or devoting all my time and resources on automated trading systems right now, instead I want to do some discretionary trading for a while and beef up my arsenal of indicators that will help me do that.



I have spent most of Friday working on tweaking all the new stuff I've been working on (DoubleMA, TrendBars, Mike Trend). I just want to be armed with the best numbers possible for my discretionary trading alerts and charts.

The good news is, with the .NET /LARGEADDRESSAWARE fix/hack, Ninja has only crashed on me once instead of a thousand times like normal. I'm able to get it up to about 3GB of memory instead of the usual 1.3GB before it takes a crap. So, that has really helped! Hurray!

I have made some visual changes to the way Mike Trend charts. I like the new style better, I had inspiration from some other indicators and decided to adapt it to my own style and flavor. This new method makes it easier (at least for me) to see what's going on at a glance. I think. :)

Last, I've created a new indicator called "ChannelThis" which lets you put any two moving averages into a band/channel, and draw a region around them if you want. I will be releasing this soon to the public, be sure to subscribe -- free!

Sneak peak:



Also stay tuned, I will be posting an updated version of the DoubleMA indicator soon. I'll have to remove the MA's that aren't public ($$) first, but otherwise it has some new additions. The best way to get notified of such things is to 'subscribe', click the link to get started.

Have a good weekend!

Mike

Wednesday 5/13/09, +10 ES

+10, woohoo!

Today took patience.  The amount of consolidation/chop was insane.  But I stuck with my signals and my rules, and took four trades.  One small loser, one small winner, and two nice winners for a total of 10 points, all before lunch.  Too bad it was on sim!  But I am testing a lot of new stuff lately, and rules and wisdom say stick to sim when doing so.



The DoubleMA helped provide some re-entries today with great result.  Look for price to penetrate the MA, but your other indicators (including the DoubleMA itself) all still say the trend has not reversed.  As soon as you get the indication it was a fake out, jump on it with a re-entry.


Nothing works every time.  So always be prepared to get out if it is going against you.  Usually if it does go against you, it happens in the first bar or two so be vigilent and just get out if it doesn't look good.  Take a small loss, then get back in later or wait for the next setup.


If you've got huge balls and a big bank roll you can always try to short from the high of the bar, the ECO2 will usually turn at the top of the movement giving you an idea, or you can look at the CCI for extreme run ups.  You are taking a bigger risk so I would expect you to hang on for bigger rewards, or it isn't worth it.  Just keep a real tight stop incase the run up doesn't stop, and it turns into a true reversal.

Mike

Mike_Trend and DoubleMA

I've made some more changes to these two today.  This is why I don't want to release it just yet, I make changes all the time and it just gets to be too much to constantly update.   Things take time to come together, so patience please.  I'm sure you'll notice the changes on my charts, I think there is a nice improvement.

Remember, the Mike Trend histogram bars (blue or red bars) represent the TrendStrength of a moving average I am using.  I talked about this in my last video, but basically I am measuring dozens or hundreds of moving average lengths, and the resulting value on the histogram is represented like a percentage (100%).  So, 60 on the histogram means 6 out of 10 of the moving averages are showing that price will continue to rise.  A value of -100 would indicate that 10 out of 10 show price continuing to fall.

I am using DoubleMA as more of a support/resistance line.  I already have other indicators to tell me when more short-term trend is changing or has reversed.   The market provided some nice examples of this today and I will elaborate in my next post.

Mike

New version of ECO2 released

Zoltran has been kind enough to update ECO2 (Ergodic). This new version is nearly identical to the old one, but it does correct the bar-color/repaint issue I brought up on the Ninja forum. It's really a limitation of how Ninja handles multi-color plots, but zoltran has a work around.

If you have ever noticed the last bar of ECO2 changing color on you after the bar closes, this update will fix that.

As a result, on my screen shots going forward you'll notice a yellow line on the ECO2 (not just the normal green and purple). This doesn't change anything, "down is down" and "up is up".

There are also a few enhancements from eDanny in this version, which can paint the screen with triangle/arrow signals to indicate an entry, and/or show a text box for those times when ECO2 signal line is hard to read. I am leaving this off, but many will find it useful.

Due to the changes in this version it will break the parameters for strategies, be aware. That is why it has a new name, "ECO2New".

Download link:
http://www.ninjatrader-support2.com/vb/attachment.php?attachmentid=5743&d=1242240465

Forum discussion:
http://www.ninjatrader-support2.com/vb/showthread.php?t=3693



Mike

Recap video for Tue 5/12/09, bar-by-bar

In this video I go over my setups, explaining each of the indicators and what rules I have. It discussess the TrendBars (SuperTrend), Mike_Trend, Ergodic2, and DoubleMA.

I used Market Replay for Tuesday 5/12 and looked at each entry as it happened in real time and discussed it.



Download HD full-screen MP4 video

Mike

More about Symmetry and my system

I've received quite a few requests recently to share more about my setups, my system "Symmetry", and even my audio files that play the Long or Short alerts from my strategy. I will warn you this post is lengthy and very detailed, but you asked for it!

So let's take the easiest one first, here is a link to the audio files:
It's a simple message for Short's and Long's. I use the AT&T TTS engine so you can make your own easily if you wish.

Download the sounds "Possible long signal" and "Possible short signal" here:
http://www.mgbi.net/ninja/sounds.zip

Unzip to C:\Program Files\NinjaTrader 6.5\sounds

To play them with an indicator or strategy, use the PlaySound command:
PlaySound(@"C:\Program Files\NinjaTrader 6.5\sounds\long.wav");

Alright, now let's talk more about Symmetry:

Symmetry is a NinjaScript Indicator which I wrote to visualize the rules of my strategy. I use the word strategy here to communicate the ideas/theories of when I should be trading, not to imply an actual NinjaScript Strategy. I do not automate Symmetry, I just use it for discretionary trades to help me.

Here is part of the indicator that does the heavy lifting. I will then dissect it below:


Line 57: First, I only want the indicator to operate between 7am and 3:15pm my time. That is because I only want to discretionary trade within those hours.

Lines 59-75: This code just does some cleanup, resetting some stuff. Basically, if conditions are met I don't want a new arrow every single bar. Instead, I only want it to paint an arrow if something has reversed.

Lines 76-96: This is the "look for longs" section. It evaluates multiple variables from my indicator repertoire and decides whether they meet my rules, and if so, paints an up arrow, draws the closing price of the bar, and plays the "possible long" sound.

Line 86: Only paint a long if it isn't already long. See lines 59-75.

Rest should be self-explanatory.

In more detail...
Mike_Trend is the indicator in my second panel which charts my own adaption of CCI. I do plan to give this away, but am still working on it and changing it on a regular basis, so have not done so yet. CCI (yellow line on my chart 2nd panel) needs to be above zero for longs and below zero for shorts, unless the ECO2 has already crossed the zero line, in which case the CCI just needs to be going in the right direction. The customized CCI I use is basically a ZeroLagEMA version of it. Also in Mike_Trend is the histogram which is a my own customized flavor of TrendStrength (download here) using an EMA or LinReg setting (still playing) of about 100, 10. The numbers it outputs is a strength of the trend, for instance a value of 60 means that 6 out of 10 of the prediction models suggest an upward trend. It needs to be on the right side to enter the trade (above/below zero line).

ECO2 is a public indicator. You should have this already if you read my blog. Thanks to zoltran as always for his work. I've blogged about it many times, but basically you are looking for the main line to cross the signal line. An upwards cross is a long, a downward cross is a short. On my charts the signal line is the white dotted line. I use settings of 3,7,21 and have not customized this indicator. Download here. I really enjoy this indicator, before I discovered it I used Blue Wave Trading's BB's Osc but found the ECO2 to deliver better and easier to interpret signals.

TrendBars is my own adaptation of Roonius' SuperTrend. It is what paints the price bars blue or red, and what draws the hash marks for my stop/reversal marker. Roonius' recently released version 2 (download here) of SuperTrend, and in this new version he included most of what I had customized in my personal version. While I still have my own flavor, you can nearly duplicate it with his new release. The general principle involves an average true range and the closing price of the bar to determine if the trend is up or down. My customized version, and Roonius' new public version, takes that further allowing moving averages to be used as well. In my version I've also incorporated a maximum stop reversal limit which I usually have set to 16 ticks. The hash mark (reversal marker) in mine will never be beyond that mark.

DoubleMA is a public indicator I've recently added to my arsenal (remember, trading is war!). I like it so far, and the credit goes to Rollins for the original design. Again my version is slightly customized, but I've posted an early version of my modifications of it on my blog for download. I am using it as more of a support/resistance line with settings of 7 HMA, 45 VMA. I am trying out the rule of "only long above a rising 45", and "only short below a falling 45". So in other words, price needs to close above/below the line and the line needs to be blue (rising, long) or red (falling, short) to trade in that direction.

Recap:

As I've mentioned before, don't worry so much about trying to catch the top or bottom of every move. Instead, focus on the moves that will hit your target, regardless of where you enter or exit them. Remember, if you can consistently earn 2 points a day on the ES you could literally retire. You can throw a lot of contracts at the ES before worrying about liquidity problems, so that 2 points can easily become 20 a day ($1,000 a day) with 20 contracts, or even more.

Mike

Tuesday 5/12/09 - excellent day

Another fantastic trading day!

I have a few blogs to write today covering a few different topics, so be sure to check each of them out.  For this particular post, I am going to just show my charts and you can draw your own conclusions, so it will be a short post.

I do plan two more posts today, one will be a bar-by-bar evaluation of how to decide when to trade or not trade.  The second will be more information on my Symmetry indicator, my audio alert files, and more about my Scoring system (all as requested by readers).

Reminder - I am in Dallas, all times are Central (one hour behind NY time).

The 5m chart:
I will discuss rules of Symmetry in another post later today.  Symmetry called a short @ 908.50 at 8:40am. I like to use a 5 point target, which would have been met.  If you had a runner using stop/reversal marker, was good until 12:45pm when you exited @ 898.75.

Symmetry then called a long @ 899.50 at 1:20pm (the one at 902.50 is ignored, as I am already in a trade in same direction).  5 point target easily met, and if you used stop reversal marker for a runner, your exit was 3:00pm @ 904.25.  This is an example of having a realistic hard target (5 points) can come in handy, as the reversal system often gives too much back.


The 6 range chart:
Symmetry called a short @ 904.25 at 9:04am.  I will review my system on this trade, I believe it was supposed to call it a few bars earlier as soon as the DoubleMA 45 started falling.  The trade would have tapped a 5 point hard target and may or may not have been filled, before it reversed and took out the stop reversal marker at 903.75 at 10:06am.

The second trade on the 6r Symmetry called @ 901.75 at 1:41pm.  This long was good for an easy 5 points.  If you used the reversal system, it came back at 2:45pm and your exit would have been 907.00 for the runner.



Stay tuned for another couple posts tonight describing in more detail my setups.


Mike

Monday 5/11/09

Chop city.

I placed three sim trades in the first two hours of the cash session, testing out some new theories. They were on sim, I did not place any cash trades today.

After the third trade I decided to call it, and looking back I am glad I did not decide to press on further.  The entire day was one of the choppiest I've seen in a while.


If you were using VMA Zones, it did a pretty nice job of keeping you in the clear and you might have been lucky enough to get several points just sticking with my original advice when I wrote it, go long once a full bar closes above, or short once a full bar closes below.  Do not trade the middle.



Still, a brutal day.

Mike

Friday Night Special

Hard at work. No rest for the weary. But, I do have something to show for it...

I have made some leaps forward in my visual multi-time frame scoring system. You can throw this baby up on any chart, and it will show you my scoring system graph on 5 different time frames, plus an average. It operates on bar close, so each time a period has a new bar, it will refresh.

I plan to continue enhancing this, it took a lot of work to get it this far in an efficient manner!

Check out the video... no talking, just visual illustration of the system during a Market Replay session. (It does not work on historical data).

It shows a 5 minute, 1 minute, 6 range, 4 range, and 233 tick summary, plus the average. Each section is controlled independently and will be blue for long, red for short. Mixed signals mean wise not to trade, but all blue's or all red's mean "time to make some money!"



Download HD full-screen MP4 video


Mike

Friday's chart

I didn't take any trades today, deciding ahead of time this week has been great and Friday is likely to be a slow day where I would lose money.

Of course, the market decided otherwise.

So I didn't trade, but here is my 4 range chart showing some nice movements and two clear signals from my Symmetry indicator (which is looking at ECO2 and Mike Trend).


If you used the ECO2 exit I described in my video, you would have got 3 points on the short and broke even on the long.  However, my old rules were to use the stop/reversal marker (the hash mark under price bars).  If price closed below that marker, trend reverses, and that would be my stop.  I think I might re-examine and go back to that method, it worked fine for me for a long time.  ECO2 is a great entry signal still.

So if you used the stop reversal, the short would have netted 1.75, and the long 2.00.   Some days it pays to have runners, and some days it pays to have fixed targets of say 4 or 5 points.  In both of these trades, a fixed target of 5 points would have worked, leaving 10 points net for the day.

That is where multiple contracts really help.  One contract to 1st base, then a 2nd contract for say +4 or +5 points, and a third for a runner "until it ends".


Have a great weekend!

Mike

Adding a score graph to your chart

As you know, I like to score trades.  Say you measure 10 different things, and maybe some have more weight than others, then you arrive at a total score to help you decide how to trade.

I usually just output the score in text form, but I wrote a quick way to graphically illustrate it.


             if (score > 0)
            {
                //infotext = " LONG: ";
                int x = 0;
                while (x < score)
                {
                    infotext += "▓";  // alt-178
                    x++;
                }
               
                infocolor = Color.CornflowerBlue;
            }
           
            if (score < 0)
            {
                //infotext = " SHORT: ";
                score = score-score-score;  // turns a negative score to a positive one
                int x = 0;
                while (x < score)
                {
                    infotext += "▓"; // alt-178
                    x++;
                }
                infocolor = Color.Maroon;
            }
           
            //if (score == 0)
            //    infotext = " FLAT:";
           
            int y = 9; // maximum score
            while (y > score)
                {
                    infotext += "░"; // alt-176
                    y--;
                }
           
            DrawTextFixed("Info", infotext, TextPosition.BottomRight, Color.White, new Font("Arial", 8, FontStyle.Bold), infocolor, infocolor, 8);

           
So in practice this is what it looks like:

(flat)
(long, mid-score like 5 out of 10)
(short, high score 9 out of 10)

You might be seeing this on my future charts.  As with most everything, I am still tweaking it!

Mike

Thursday's Charts

Here are my 5 minute, 6 range and 4 range charts for today:

I hope you went short at the open and stayed short the entire day! The ECO2 was very informative today, telling you in advance those longs were just fake outs.

The 6 range and 4 range did a great job of bouncing off the DoubleMA setting I am using, which I've now instructed Symmetry to only fire signals in agreement with the DoubleMA (only short below it, only long above it). Sure it's less signals, but also helps avoid chop/conslidation and fake outs.



Mike

Customized DoubleMA with additional moving average types

OK, OK!  My bad for not sharing it the first time around.

Here is my version with the additional moving average types. I've added Wilder, VMA, ZeroLagEMA, ADXVMA, VWMA, TMA, and EhlersFilter.



I also updated the original blog post with the new link.

http://www.mgbi.net/ninja/DoubleMAmod.zip

Mike

Recommended books

Here is a short list of books I've read and recommend.  I am not a big reader of books in print, I tend to prefer on-line methods... but nonetheless, these are great reads and contain a lot of information that helped me.


My favorite to read, and the one where I tended to relate the most, was Martin Schwartz's "Pit Bull".  The other books are on every trader's "must have" list, so if you haven't read them already, then do yourself a favor and pick them up.  The last one is a compilation of chart patterns and how to trade them by Suri Duddella, it is a fantastic reference to understand what is going on behind your favorite indicators.

Mike

Video illustrating how to use ECO2

In my second video, I tried to improve the video quality (the limitation appears to be on Viddler's side) and I also tried to be less of a wind bag. Let me know how I did! :)

This video shows what I am trading discretionarily. It combines my Trend Bars (modification from Roonius' SuperTrend indicator), the Mike Trend CCI (yellow line in second panel), and the ECO2.

The signals are produced from a strategy I wrote called Symmetry. It throws up an entry signal arrow and price once the ECO2 and CCI conditions are met. It is important to note, it does not produce exit signals, those are left up to me.

In the video I talk about how I trade the ECO2 signals and how to use them for exit signals to capture most of the movement.



Download HD full-screen MP4 video


Mike

Busy day: ECO2 & DoubleMA settings, new video

Ok guys, I've got a lot to share with you today. There will be a new video up shortly as well, please check it out.

In this post I am sharing the ECO2 indicator file for download (credit goes to zoltran on the NinjaTrader forums), as well as the DoubleMA indicator (credit goes to Rollins on the NinjaTrader forums).

Here are my ECO2 settings:

I am trying out settings of 3, 7, 21 (fast, signal, slow). You can also see the colors I've chosen for my chart so you can follow along.

Next, here are my DoubleMA settings:


I've customized my version to allow for additional moving average types. You can download my customized version below.

Now some charts of today's action. First, a 5 minute chart. In the video I talk more about what you are seeing, so be sure to check it out.


Here is the 5 range chart for today:



Download the ECO2 indicator here:
http://www.ninjatrader-support2.com/vb/local_links.php?action=jump&id=91&catid=1

Download my version (with more moving averages) of the DoubleMA indicator here:
http://www.mgbi.net/ninja/DoubleMAmod.zip

Mike

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