Jimmer’s Class on 2X Saturday, August 10th, 2002
You will need to set up two tick charts for ES - 210 and 55. The following
indicators will be needed (all exponential) on both.
Fast stochastic - 7,3,3 lines only
Slow Stochastic - 21,10,4 lines only
Macd - 7,28,7 both lines and spread
EMA’s - 34,50
Bollinger bands - 8 period, 1.8 std dev
Basic entry
points are:
1. Slingshot
2. Band touch with entry in direction of EMA’s, MACD or slow stoch
3. Band touch when overbought/oversold with EMA’s flat
4. Buy/sell zone with RD (regular divergence or HL, LH) - usually the only counter-trend
trade entry
5. Band touch after slow stoch or MACD cross with cross still intact ( as in
MACD cross down followed by touch of upper bb).
6. Buy/sell zone with entry in direction of EMA’s
8. Continuation - which often will also be one of the above
Buy/sell zone defined as below 30 or above 70 on fast stoch
I suggest having both charts, the 210T and the 55T, set up side by side on the screen or on two separate monitors if you have two. This way while I am talking about the 210T, because that is what I have marked up, I would like to simultaneously refer to the 55T as we go along if you can manage that. As most of you know I am on the west coast and on Pacific time, the charts I posted are on Pacific time and the ones on my monitor are on Pacific time and I am going to refer to Pacific time. If I if I try to convert to EST, I will slip back and forth and confuse everybody.
What I am going to talk about is a method I use and have used for some time. Occasionally you might hear a reference to 2X because Buffy asked me one day “Well, what do you call this if you don’t call it SMAX because I have a lot of people trying to call it SMAX?” I have moved forward from SMAX (also on www.dacharts.com). This method I call 2X and the reason I call it 2X is because my general expectation is that with very good execution is on average – not everyday but on average two times the daily range and profit if you take all the trades. This is my approach and I am not selling anything. As we go through, ask questions, look for flaws, and just ask why if you think I didn’t follow my rules.
The marked up 210T has 31 trades marked on there and I have calculated the gain from those 31 trades but didn’t count one cause I thought it was unexecutable for most people because of the speed - 72.75 pts. One loser out of the 30 and average of 2.4 pts a trade. It is almost exactly the same as when I did this for the class two weeks ago.
Range was 25 yesterday on these trades 72.75 with perfect execution. Did I get them all? No. Would you get them all? No. But how about half of them.
We won’t get through all of these trades, but by the time the class is over you should have the concept down at least.
I trade multiple times frames. Typically what I am trading in normal volatility is the 210T for the higher time frame and the 55T to actually take most of the entries. My general rule is that if I don’t like it on the 210T I don’t take it on the 55T. I try to keep my focus on the 210T, which has an average bar of 1.5M. I don’t like to focus on the 55T because it is so active and I just think it is not the best place to pick trades from. It is a good place to get entries from once you see a tradable situation on the higher time frame. Also, during actual trading will have a 550T up so I can see a little bit of that and I use it for further guidance.
I haven’t invented a thing. Essentially it is a system of following the trend and trading counter trend only with a divergence. So if I were to describe it in a nutshell - in terms of a long - take every oversold situation in an uptrend, oversold situation when no trend is the trend, trade countertrend only with a divergence and the longer the trend the more significant and clear the divergence has to be.
I determine the trend with the EMAs. My primary one is the 34EMA. Most of the time the trend is determined by the slow stochastic and the MACD on the 210T not on the 55T. Of the EMAs and the slow stochastic and the MACD, the EMAs will be slower generally to change directions. Primarily I am following - if I had to pick one - would be the slow stochastic but as we will see those EMAs become meaningful at certain times also.
So the first trade I show as a long entry at 6:46 PST based on a divergence. Most of my divergences by the way will be based on the fast stoch. It isn't the only place they occur but it is the place where they occur the most often. I have in bold the green line on my chart the %D line of the fast stoch because that is most probably the one thing I look at the most.
There was a small divergence there - rather a peaceful open not too much activity. I entered 893 and it didn’t go far before it turned around. The EMAs are down so I am not expecting much out of that trade. Of course at the open you can always have the gigantic swings but we didn’t have a very big swing down so the likely hood of a swing up is questionable.
Exit on the first down bar had you waited through the first dip and waited when it failed to make a new high you would of ended up the same way – a 1pt trade. The stochastic was in oversold territory at the time of that entry and the fast line was in overbought territory prior to the exit but that fact alone would not make me exit just the fact that the price turned back downward.
Next entry the 6:53 PST bar it is a short at 894 that is on a divergence but we don’t really need a divergence there we are in overbought territory and we do have the down trending EMAs and that is basically all we need to see there. The exit was about 6-8 bars later for 4pts. Exits are always a judgement call. My exit was the takeout of the last down bar.
EMA on my charts 34EMA - not for printing - is the heavy blue line.
I haven’t said anything about the 55T. Regarding those first two entries, if you had of taken them on the 55T you would most likely have gotten slightly more out of them. Your entry would have been just a little bit soon and you exit a little sooner as well and you might expand your profit on these trades by a point or so. That is my main reason for using the 55T for entry.
Once you have entered on the 55T it is not a great idea to keep your eyes glued to the 55T because all those jiggles will scare you out if you are not too careful. What I try to do is go back and focus on the 210T and follow the same rule. If I like the entry on the 210T I look at the 55T. If I like the exit on the 210T then I look at the 55T to actually time my exit. As we are getting down into oversold territory on the 210T I am suspecting at some point we are going to reverse then I look at the 55T for an entry spot.
bogeybunky: jimmer are your exits SAR?
Yesterday a lot of them were. In fact yesterday was a hard day for that reason it seemed like there wasn’t a lot of time that I wasn’t in a trade yesterday. They are SAR if they happen to be that is all.
The third trade which is an entry at 6:59 PST and I show the entry of 891.25, which would be the same as the exit of the second trade which would the 6:59 bar on take out of the last down bar. Exit was at 7:15 and that was an SAR into the next trade.
You might say all right look you got overbought. That entry had the longer term stoch, which is rarer and the MACD as well both divergent there. Primarily because of that, if you are going to say gee you got overbought there very soon afterward and you don’t exit there, the reason is because I had the divergence there on the slower indicators the inclination is to stay with it a bit longer. When the MACD crosses up and crosses up with a good angle then I’m looking to pretty much to stay in a trade until I start to get the feeling that maybe it has run it course which will usually be seen first in the MACD histogram.
Again if you take your entry there on the 55T the action looks a lot more erratic once the trade is in and you have to sit through some stuff that wouldn’t scare you as much if you were looking at the 210T. But again, your entry point there on the 55T would be about 90.75 which is about ½ pt better and the exit would be not quite a full point better also. So you get more out of that trade using the 55T and it goes that way throughout the day.
The 4th trade was a divergence trade with fast stoch divergence with an SAR entry and we went into this little sidewinder thing shortly after that. For scoring purposes you could have anywhere from nothing or almost nothing to as much as 3 or 4 pts out of that trade. For my score keeping to come up with that 72 pts, I only counted it as a one point trade. I figured you could always find a place to at least get that out of that trade but based on all that action, I am not sure that I or anyone else would normally hold through all of that to get the best out of it.
cluetrain: what time?
That entry was at 7:15 short at 95.75
bogeybunky: Do you use market orders?
Typically, I do use market orders. I use limit orders a lot also. My exits are almost market orders. My entries could be either market or limit depending on the situation. I do not normally use stops for entry.
cluetrain: what about the 7:09?
Good question. You mean why didn’t I reverse there. The answer is based on what I saw in the slow stochastic. But in fact, you could have. If you had done so on the 55T you would have been all right but would have had to reenter long. Because as you got out on the 55T, the next thing you are in is a slingshot long again.
cluetrain: so the MACD and stoch help you to be patient
That is exactly right. I will peek at the 550T for those same two indicators too. Especially when the trend has some strength and has lasted a while, I will look at the slow stoch and MACD to keep me from getting shaken out too early and prevent me from failing to capture the most out of a good long trend.
For you Woodie guys I followed Woodie and almost all of his entries coincided with what I had but because of the way his entries are sent up and on a 3M, they were later than mine and probably not quite as early as mine most of the time. I thought his calls were right on and I don't recall any I didn't think that. The main difference is I have 30-31 trades and he probably had 8 or 9.
dennis_k: 7:09 would be a short I would take and typically get stopped out
cluetrain: similar to the 7:09 point
cluetrain: stoch in same position
You know guys I might of taken a short there too that is a 50-50 situation there absolutely. But then, because of what the slow stoch and the MACD are doing, knowing darn well it might go no where and I might have to SAR out of that in a hurry. You can’t mess with a slow stoch that looks like that normally. The longer you watch these things, the more they begin to mean. It is just like Buffy and here bline she knows it like the back of her hand and some of the other stuff she does. You can’t sit down with somebody in here and expect to go out tomorrow and do it. It has evolved over quite a long time, I thoroughly believe in it. I have not gone wrong with it with proper execution the win/loss ratio is just absolutely unbeatable and I am not looking for anything else. I don’t think there is a need for anything else and until the sun goes dark., this is going to be the method that I trade.
strategyman: How many of the 31 trades might you take on average?
How many would I take on average? Every one that I am sitting here for. I am not sitting here for every on because I do take breaks.
The divergence on the fast stoch on the 6:52 trade. I do not have one on the 7:09 bar it is a match up issue here between TS and EW.
7:33 long entry 92.75, divergence is on both stochastics. It is a good situation, fast stoch down in the buy zone, slow just barely into the buy zone. When you get those two saying the same thing that is a good deal. Long entry on takeout of the last down bar. Show the exit at 97 at time 7:43. Now, you could argue stick with it. Don’t exit there and let it keep going. 50-50 situation to me. I would take the out probably because I would see the 55T being overbought. And get ready to do anything from there.
bogeybunky: Why was that your exit?
Exit was because it stalled and again it was a profit protecting effort - stalled out overbought on the stoch like I say 50-50.
Trading it that way on the 55T wouldn’t of hurt you. You wouldn’t of lost anything on the turn around if you exited there and went back in for a long. That is the way I worked it but could be worked either way.
cluetrain: What besides oversold fast and slow stoch indicated a long?
EMAs are flat there. You are oversold and price started to go up. That is an edge. I take those trades. The odds are in your favor. Wait for price to start to turn up from oversold situation, you not going countertrend, there basically isn’t a trend at that point. If I don’t take that what do I take?
Stops.
I don’t use hard stops but do have crash stops 5-7 pts away from where price is. I try to keep stops at 2 pts. Sometimes 210T that is a little too tight. For the 550T it is way too tight. But since taking entries on the 55T it is comfortable for me and I don’t get hit very much.
dennis_k: and the difference between 10:22 and this trade is the slow stoch?
dennis_k: bb touch?
That 7:22 bar on mine.
Bar is oversold on fast stoch. Not on the slow and the slow is still going down and the MACD is still going down. It would be a scalp trade if you were just looking at the 55T. Would be a workable scalp trade.
All of that vacillation between the relatively flat Bollinger bands on the 210T is tradable if you want to be a real mini scalper you can trade those on a 28T or even a 55T just taking the hits off the BB.
The entry following the exit we were discussing there at 7:48 bar on the 210 which I call the slingshot because it is a very good slingshot pattern. If you look at it the difference between the stoch is not that great on the 210T. However since the slow stoch is pointed firmly upward and hasn’t wavered even a little towards the downside, you don’t need a lot of separation there. That is a dog gone good slingshot. So that is the sole reason for that entry there - just a continuation - that is all a slingshot is. It indicates a retracement on a trend.
It would be the takeout of the top of those 3 bars that have the same high which would be 898.50 a long entry there. I know that is simply for score keeping purposes that I am saying that because the entry for me would be off the 55T. I don’t like entering off of long bars. I don’t like it at all.
So at this point you have a couple of pauses from the slingshot entry . Note here that the EMAs are increasing in slope and increasing in separation between the 3. That tells you not to buy these little hesitations as an exit. Hang in there until you see a really solid divergence. This one is going to go a while so that is the way I showed it there. I am sure on the 55T you saw divergences there both times. But my argument is based on those the EMAs - on their configuration - plus the fact that the MACD and slow stoch continue to stay in the up mode ok cross to the upside stay with it until you see meaningful divergence which we do where I have marked the short trade as a divergence trade which is 8:00 time.
First hour and half are done. That exit by the way is at 8:02 where that divergence short is marked . An hour and a half and about
18 pts so far.
Polytimi: do you have ADX on another chart?
Yes, I do Poly. You saw my reference to that Poly. I have it on the 550T. It is another way of gauging these long trends that get some strength to them. When I see the ADX over 40, I will not take anything as a counter trend trade until I see a LH or HL depending on which way the trend is as a general rule of course.
Divergence short is in the face of a strong up trending EMAs so when you take a short like that you have to be leery Turned out that didn’t give you much of anything - only ½ pt – before you were right back into a long trade again. Not surprisingly because those EMAs are pretty powerful looking. I take that trade because if you have a strong reversal and could go down 5-6 pts. It a safe trade and a safe entry with that kind of divergence to me. So that is the kind of trade I would accept. But I also know the very next thing that could happen is what actually does happen. You go into what looks like a nice slingshot going back in the original direction.
bogeybunky: your exit there triggered by fast stoch turning down?
Based on divergence on fast stoch and also on the MACD.
That long entry that occurs at 8:22 time. 904.25 is what I show as an entry point and the exit can be anywhere up in that mess up there but for score keeping purposes I showed it at 908.00 price for 3 ¾ on the trade. That is where I have the note ADX 40. By the way that is a very good slingshot in that the slow stoch is very flat. The fast stoch comes down and makes that slingshot looking formation. That to me is an absolute no brainer entry. I will never not take that entry.
So that ADX 40 entry was in reference to what I saw on the 550T. So I said to myself OK we need a really really meaningful divergence to go anywhere south from here. So we are not taking any overbought situations and turning it into a short just because it is overbought.
hanksterr: pls repeat no brainer entry rules
I take every slingshot . But remember a slingshot is defined as must be with trend to be a no brainer. It is never countertrend but can be taken with no trend but you don’t see them then typically.
The decision to finally go short here was probably not one of the easier ones during the day to make because of the sidewinder action there. I’m thinking here as I am watching this yesterday, ok it is probably time to gone down some. This is not one of these situations where you feel totally certain, well guess you are never totally certain, but one you are not quite as sure of. We had a divergence there at that point with the fast stoch and with the MACD and so I simple took it because that is what I do. I take those. But I waited for it before I went for it. I had to wait for that, to see that, to take the short entry. The short entry was then recorded at 8:40 and entry level was at 908.75.
cluetrain: jimmer you always have an ADX minimized?
No I have ADX on the 550T or whatever TF I have higher than the 210T time frame I am carrying. The ADX is on there. It is either minimized or I have a sliver of a chart showing so I can just see those things. I have all my charts are on one monitor that I trade with. It is a personal preference. My computer would handle as many monitors as I want but I use just one for that. I have my 210T or whatever I am using as my main higher TF sometimes it will be the 343T. A couple of weeks ago it was the 550T. So I will have that and I will have the 55T, with the 28T hiding behind the 55T that I can see when I want to, and then I have a 550T slivered, and a bunch of other stuff like the tick and the Dow minimized and also the 3M chart that I look at occasionally too, but it is minimized also.
The next bunch of trades were pretty much frustration trades. We entered a fairly choppy zone. I wanted to put some trades there like I say “at the band” of one of those at the band 9:02 as a short entry. I put that there just so I could talk about it because you can take those.
Why, because the slow stoch is going down has already crossed down at the time you go up and touch that band or we almost touch it. It hasn’t had any impact whatsoever on the slow stoch. MACD turns down, EMAs have basically rolled over or in the processes of rolling over. To me that is a very safe entry. You do not wait for confirmation on an entry like that. You take it as close to the band as you can get it. That is what I do. It is hard for most people to do. It is hard for them because they haven’t observed the price action in relation to the BBs as much as I have. I have been doing this two years and it is one of my favorite things.
9:02 is the time on that one
I skipped one because it was the same as a bunch of others. It didn’t do much. But, I skipped talking about it. That long at the buy zone I skipped. At the band it says 9:02 short and I show the entry at 7 and the exit at 5. The 5 exit is pretty much a standard exit based on reversal at the buy zone. But the entry is purely based on the band. I stand corrected on the exit – the exit again is another band type of exit because I just wanted to illustrate that. I just realized my notation there. Again entering near the bands because the bands even though you can see just before that were sloping downward, they were basically in flat mode here. If you look at the EMAs and the bands all together, we’re in flat mode. You can take an entry just based on the 55T where you can see it better and time it better. You can take a long entry there with relative ease. And that is at 9:07 roughly.
QSuzy: you make it seem simple, jimmer
I expect people to say what you just said and I don’t know what to tell you. I do make it seem simple and I know that. It wasn’t simple to get here and so it is probably not simple. But to me it is clear and in a way it is simple. It is a matter to me of having trained myself to do this over time . That is what it is all about is practice. It is just like Woodie’s thing or anything anybody does. To me the best road to success at trading is self development of a system and continual massaging of that system to make it better and better and better which is exactly how I have gone through the whole thing about SMAX and on to this and just the relentless pursuit of the finer points obtained by a lot of chart gazing.
It works best for me. I am willing to take 30 trades a day . If I start losing 15 out of the 30, I will second guess that. Right now I am willing to do that.
Polytimi: how much trial & error to develop the system?
How much trial and error? You wouldn’t believe how much trial and error Poly. You absolutely wouldn’t believe it. My wife has to pry me out of here sometimes. It is a constant bone of contention and has been for a long time the amount of time I spend looking at charts. I spend a lot more time doing that than chatting as you all know, always have. I just reached the conclusion that no one is going to do it for me. I’ve got to do it for myself. I’ve learned my basics. I’ve learned stuff from Mike Bruns, from Buffy, from a lot of different people and just assimilate it and reassimilate it and experimented and it developed and that’s just taken I guess the bulk of that work took 6 months but it never stops.
Merlin_Turtle: jimmer, how long did your training take before it started to feel simple??
dennis_k: to me, its a matter of selecting the proper entries, because I find that I make up entries based on something I think I see
QSuzy: yeah, I think one needs to work it out in one's own trading .... get the executions down.
strategyman: Does this work on 343t or 550t and give us more time to react to the price action?
You can work this system with any combination of time frames. My preference is that the lower time frame be about ¼ the larger time frame.
Strategy’s problem is typical of almost everybody I think. He is certainly new at trading and mesmerized by the 55T . Yep, because it happens to me even now in spite of myself. I say one thing and do another. I say I am going to focus on the 210T and here I am taking a peek over at the 55T when I really don’t need to be. You can full screen the 55T and trade it all day if you want to. You can absolutely do that and do all right. I just think this approach with the multiple time frames is better.
Buffy_04364: start out with the setups you do see then add as you see the others clearer
dennis_k: in jimmer's email, he lists 8 entries - maybe just pick two and concentrate on those - then add one as you go along
The best trade is a retracement in a strong trend. You will get anywhere from half a dozen to ten of those a day…something like that. If you want to do nothing but take the highest percentage trades go for those. They are easiest of all to see. Most of them look like my slingshots but not all of them. But that is what most of them look like. That is why I like the slingshot makes it easy for people to see what they are looking at and just trade those. If you do some things like that, what happens is you develop a pattern of success and it gives you the freedom to go a little bit further or the freedom to up your trade size and get yourself moving toward a higher level.
Retracement in a strong trend Scorp. You can’t do that if you are sitting in a chat room where one guy just entered long and another guy just entered short and the guru is talking and he has a system you don’t totally understand and haven’t used very long like he has. It is all entertaining and it is great fun but it ain’t getting you the bucks. That is the way I see it. You have to simply get your act together. Get a process that you know has high odds. Look at the high odds of success with this thing. You can say all you want but find me a way this doesn’t work. That is what you have to do and you have to do it pretty much by yourself based on information and stuff that you assimulated from other people but in the end it is yours.
Scorp, good example of a slingshot? Did you print out the chart that I posted for class. They are marked there and I don’t think there are any there that are really bad.
I may have reached the point where I don’t feel the need unless you do to go over each one of these entries. The reasons are starting to repeat themselves.
9:30 sell zone, EMAs down, sort of a mini slingshot looking pattern, it is an obvious short. You have a slingshot after that with a long entry in between. Another slingshot 9:57 – 10:00 sort of thing. Very clear slingshot there as a short entry. At 10:29 I have one that is marked continuation. I didn’t mention that before but that is another valid entry. You get a change of trend you get your MACD and your slow stoch turned up and you get a little pull back. It is not strong enough to make a slingshot but it still retraces for a couple of bars and then goes on. If you didn’t stay in the long that you were already in that is a good entry. We used to do the same thing in SMAX, a continuation entry. It is a very good entry.
bogeybunky: seems like I keep trying new things without spending enough time to make current things work.
QSuzy: jimmer .... looks like you do not draw trendlines at all....
In my mind I draw trendlines Qsuzy but I just can’t get myself to really use them. I know that a lot of these entries coincide with trendline breaks and that sort of thing but I don’t wait for trendline breaks I am usually already in a trade before there is a true trendline break because 2X has allowed me to anticipate ahead of that a little bit. I think that is a system that is valid. I know Woodie uses it in a different way. I think a lot of good traders use it but I simply don’t and I don’t suffer any I don’t think from not doing that.
I am aggressive and frankly I think I am more profitable because I am aggressive. To me being aggressive is not taking more risk it just simply means being ahead of the crowd and I think that then the crowd just helps you along once they come in to the same trade you are already in. Given the win/loss ratio, I do not see any reason not to be that way. That is the way I do it.
QSuzy: do you ever have targets for your trades?
No I do not set targets. I use the Bollinger Bands a lot to give me clues as to where the possibilities are of where I might run into trouble just like other people use resistance points and so forth. To me both are valid. I take what it gives me and I try to be good at knowing what I can expect it to give me but I don’t set targets.
I don’t want to go through 15 more entries unless you have questions about certain ones. I think you have gotten the idea. If you want to discuss the idea the basic concept further that is great. I always end up doing the same thing emphasizing the need for structure in your trading and frankly effort and diligence and relentlessness in pursuit of a system that works for you and works for your personality. Seems like every time I get into a long thing about trading with anybody it always envolves into this kind of talk.
cluetrain: can you talk more about the bands?
bogeybunky: jimmer you have color bands on your charts. what are they and how are u using them?
Color bands are the smaller ones or the top and bottom are fast stoch fast line over under 70-30 and the thicker ones that are inside those are the slow stoch fast line over under 80-20.
Buffy_04364: ok both fast - different stoch
Merlin_Turtle: Jimmer, I'd like to hear more about how you use the band
I did a talk I gave followed up by some additional notes and comments that I made about the use of BBs.
Buffy_04364: http://www.dacharts.com/smax.php
Also available through the trading discussion link on the home page.
Merlin_Turtle: I have read it, I just think it's one of the most unique things you do and I’d love to hear more
It is pretty thorough and I like the way that ended up. And I ended it up to kind of draw it all together with some add on notes. But essentially, I will use the band as an indication of an opportunity to take a quick trade. For example, if we have an uptrend and if the price were to happen to fall enough to touch the lower band in an uptrend, I would take that as I buy opportunity. I take it as a buy opportunity right there. I do not wait for the magical confirmation. I take it as close to the band as I can get it. Conversely of course with a downtrend.
I think the best thing is to read the transcript on BBs at the link Buffy posted. I don’t think it can be made any clearer than what is in there and certainly not in two or three minutes in here.
Almost everything I do will coincide with something done by somebody else when you get right down to it. Isn’t that the way it usually is. If that weren’t true none of this stuff would really work. That means there isn’t any magical system. The magic is having one and knowing what it is and what you can expect from it and what you are suppose to do with it. And then developing the skills and the attitude to do what it takes to actually execute it.
Merlin_Turtle: ok, thanks
strategyman: When looking at the 550t for trend...what are you looking at? ie. EMA"S?... that was 550t. When there is a 2x or 3x divergence, how would you know which divergence to trade?
Leo that is a question I don’t think can really be answered. It is a price action thing as much as anything. You need two to have a divergence at all. The one to trade is if you get a second divergence and then a 3rd, then presumably you didn’t like something about the second because the trend was too strong and you didn’t trust it enough. So you get a third one and that certainly the one to go with. And some will tell you to wait even longer than that . But it all depends on how the thing really looks and that is an experience thing. Depends on how it looks, depends on what the price action is doing, it depends on so many other things – the totality of the picture that it is hard to come up with an answer for that.
When we get like that I am looking at that ADX and the DMI spread and I am saying forget divergence all together when those things are at extremes I know we are going to have a good reversal here somewhere. I don’t know where it is gong to be. And I am willing to give up getting in on it so I don’t have to stub my toe 3 or 4 times thinking I am in it but I am not. You don’t get many V bottoms or tops anymore. So if you miss one of those you miss it. You get all those divergences and the next thing you are going to get finally on an uptrend you are going to get a lower high finally and that is the point you can start thinking about short. So when you get your DMI spread up around 30 or whatever and your ADX over 40 you just wait for that . Other than that you just say I am staying long.
strategyman: thx
cluetrain: thx
Polytimi: what is DMI?
DMI is directional movement indicator. It is on the same properties window as ADX. I use the DMI spread and not the DMI lines. When DMI on your higher TF like the 210T or 550T when the DMI is over 20 - either way plus or minus - and this is why I like DMI it does give you plus and minus unlike ADX. If it is over twenty the trend is looking strong and you have to start looking for some serious looking divergences before you go counter to that trend.
Today’s 30 trades is fairly typical. 25-30 trades most days. Never a losing day doing this if you take all the trades. You take them all even on days that look crappy because you don’t know if it is going to stay that way. You could end up with a dynamite trade just when you least expect it. So that is why the discipline of this system is to try and take all you can see. You will miss some. You won’t recognize them in time and so forth. That is true of almost any system. That is true with any human being. But that is what the goal is that is the model. The model is to take them. Take them for all for the reasons I have said. Try to stay with the trend. Outer band when you see the proper indication of a reversal which would be typically a divergence. But just relentlessly stick with that process. The Bollinger Band is a nuance on top of that which for people trying to really get their act in high gear, until they do could probably be left alone. I think it is a step beyond what most traders ever get to be able to do and that is fine. It adds something for me I don’t think it is the key by a long shot but I like it and it is helpful to me. It is helpful to me in chop. Helps me to find trades that I wouldn’t see otherwise but they are all small ones but then they add up too. If you are still at that stage of stumbling around Bollinger Bands is not the place to go first that is for sure.
strategyman: This has been a very good class. I realize the 2X system gives you good profits and I appreciate your guidance. It's good to get our questions answered and our fears and frustrations validated. This is simple in hindsight...but frustrating in practice. Thanks!!
Leo frustrating yeah, but you haven’t been at it that long man don’t worry. Just playing this stuff back and look at the chart at the EOD and look back over it and think OK what was I thinking here what really happened here and why. Why, why, why, why keep that going. You are going to change - you are just simply going to change. What was impossible to see before is going to be second nature soon.
cluetrain: jimmer, do take partials and let rest ride similar to woodie?
Clue, my nature is to be all in or all out.
bogeybunky: jimmer could you explain about how u use MACD histogram versus lines
It is a secondary thing to me. I know some people just have the histogram on. I like the lines because I know when they are above and below zero which is important to me. The histogram only shows whether they have crossed and in which direction. I will use the histogram as an early indication of a change of trend. But not necessarily as a definitive indication.
Buffy_04364: you can use a little recorded to tape what you are thinking also
strategyman: good idea Buffy...thx
Buffy_04364: you will laugh when you play it back sometimes... at least I did... like what the........was I thinking
strategyman: Send me yours Buffy. I could use the laugh
Buffy_04364: don't do it now but do remember the laughing when I did
cluetrain: lol
strategyman: good idea
I am usually in the NQ/ES Pals room after market closes for questions.
Polytimi: thanks jimmer, we know it is a lot of work
QSuzy: just looking at that DMI > 20 .... looks really good for trend definition ... I was more accustomed to ADX
bogeybunky: great class. think it is up to us now to study and implement for ourselves. thank you very much jimmer
strategyman: What is your thinking on SAR's. Is this similar to over bought/sold on Stoch?
SAR just means stop and reverse and has nothing to do with indicators per say.
Buffy_04364: excellent job here jimmer
Merlin_Turtle: there is an indicator called SAR, but I don't think that's what you're talking about at all.
strategyman: Is there something that tells you to take a SAR trade?
SAR just means stop and reverse. Nothing to do with indicators.
There are 20-30 studies/indicators in Ensign and I don’t think any improve on what I am using. Ergodic is identical to the %D line on my slow stochastics.
Buffy_04364: yes toy box is getting full LOL
Buffy_04364: more false signals with ergodic IMO
cluetrain: jimmer, what sort of goals do you have for your trading?
I guess the fun answer would be to do this with 20 contracts and make 70pts a day :-)
I just keep whacking away at it and it gets better as it goes and at some point – I am over 65 - I will probably stop within a couple of years anyway.
cluetrain: well, that's a good goal
QSuzy: My goal is to be part of that 10% of futures traders that make money at it!
Merlin_Turtle: Here's a question - why are so many of the great traders over 60?
Buffy_04364: because life has taught us egos don't matter
Buffy_04364: easier to admit being wrong and keep losses small which is so important
Most people don’t find the time to trade until they have reached some kind of financial situation that allows them the time to try to learn to try to trade. I think that is the answer. Most of us in Buffy’s room have been over 50 and most of them made some money doing something else to give them at least an opportunity to try to make a living trading.
I think some of use are not that far from being not only in the top 10% but in the top 2-3%. Really stop and think about it. There is a lot of chicken pluckers out there. Just sit in any trading chat room and watch the entries. And those are probably the better traders in many cases. Most people simply don’t have the discipline to do it. That is what it comes down to. So if you want to be in that top 5% or 10%, you are not going to get that by coming up with another exotic indicator. You are going to get that by working and by studying and doing what we have said. That is how you are going to get to be there.
strategyman: The rest died young trying
bogeybunky: just turned 60. must mean I will soon be great trader. LOL
strategyman: I've done my part to contribute. LOL
Merlin_Turtle: that last one was one of the gems of the class
Buffy: Do you ever look at your total for the day and think wow someone had to lose all that? Also, do you find some of your band touches on the 210T are slingshots on the 55T?
I don’t think of it as a zero sum game somehow. And no I have never thought that.
Buffy: Do you find a lot of your band touches on the 210T are slingshots on the 55T?
Exactly, band touches on the 210 are a lot of interesting things on the 55T. In fact, when I see a band touch on the 210T, that is exactly where my eyes go. They go to the 55T to see what it looks like and it is usually a very tradable looking pattern.
I don’t want notoriety. I want to do my bit. I think I have the ability to develop trading systems and teach a little bit. I like the comradery of the people that I can do it with and that is why I like NQ/ES room, but I am absolutely not looking to be anybody’s anything.
QSuzy: jimmer....great contribution you have made here ... thanks!
Buffy_04364: ditto
strategyman: As the candles keep rising while hugging and poking through the BB's, when is it obvious to exit those trades? Is it a takeout of the last high bar?
Polytimi: also, when other people answer questions, it is an opportunity for the teacher to learn
Buffy_04364: divergence usually
strategyman: I often get out too early
Buffy_04364: most often
depends on the whole picture can't answer any other way
strategyman: Like 11:47PST on chart
When the candles rising or hugging or poking through the BBs when is it obvious to exit those trades? The answer will not be in the BBs for sure. And the answer will depend on a whole host of things. When you get yourself into overbought territory, but again it depends on how strong the trend is and whether you have to wait for a strong looking divergence or whether it was a fairly minor one where you can take an oversold. Depends on the whole picture. Can’t answer it any other way.
There is finally a divergence at 11:47PST It is not the usual one where you see the kind of little dipsy doodle in the stoch It just kind of gradually rounds off at the top and rolls over and it rolls over a little bit before price does and makes a divergence and that is clearer on the 55T.
Buffy: If I may jimmer if he looks at all the RD on the MACD histogram it shows the trend is getting tired. The sideways action can be continuation but with everything so overbought your not looking for much more.
Very good answer, better than my answer I think.
Well, time to button it up here I think. We are down to the small talk. I will be around in NQ/ES for questions usually around 7-8PM EST. Thanks everybody for coming and I hope you did get something out of it and I hope you didn’t get confused. Thanks
Buffy: I have been to both of jimmer’s classes now and am comfortable with answering basic questions on it if jimmer isn’t around. We can save the hard ones for him
Merlin_Turtle: Jimmer, thanks so much for the class. You've taught me a lot about what it takes to win in this game.
Thanks.
strategyman: maybe hard to see the div. I got it now.
Buffy_04364: thanks for your time jimmer
hanksterr: great appreciate you doing this. thx jimmer
bogeybunky: thank you very much jimmer
QSuzy: Thanks again, jimmer
cluetrain: THANK YOU JIMMER
cluetrain: good job!
bogeybunky: Buffy, thank you too
hanksterr: y thx buffy
cluetrain: ok, thx Buffy
Polytimi: thanks jimmer and Buffy from all of us here