Thursday, 6 May 2010

The Marks on the Charts

The marks on the charts are the bars where the criteria is met for one of the setups NOT TAKING INTO ACCOUNT THE CONTEXT. MarketDelta will mark EVERY bar where a pre-programmed condition is met. I am a discretionary trader. I exercise my discretion when I look at all the information, including the context. I also evaluate the trade at the close of every bar.

The marks are really useful, especially when you are a new trader or are looking at multiple markets as it draws my attention with a ding (next version of MD will allow better voice alerts). I can then decide whether there is a trade and whether to keep a better eye on that market.

How can you use this information on the chart? When the marker first appears, decide whether that is a trade or not. You can reverse engineer the things YOU would want to see for the setup to become a trade.

The attendees will get these as part of the training and I will show how to create them. This is not possible in the blog as it would take pages to try to explain. At the moment I am creating a training manual for this, which is where this information can be explained clearly. 

The chart below has these markers. Let's look at the setup marker "1". Here the 33EMA support was broken with the momentum of the 2 CCIs confirming the trade. VB and CVD had turned RED too. I'm not even mentioning the 45CCI divergence This was a trade. You can also see that there was in fact 2 setups signaled here. The next bar said one of the setups was still there and as a late entry I would have taken that. Now let's move to "2". Here, two setups were signaled at the same bar again. The signal was after a higher low, momentum had turned up according to the CCIs. Market action for Longs and Shorts tends to be different and this trade was one of those. We have had a good down move and buyers are nervous. That's reflected in the pullback after the entry. I could have waited until after the 45CCI crossed zero but would have given up a lot of my profit. The previous lows that held in the same area also gave me more confidence in the trade.

Now looking at the next chart below, there is a signal at "1". This trade would be rejected as it is very clear from the CCIs that there would be a probable pullback. This in fact happened at "2". The good thing about the methodology is that had I made an error and taken the trade at "1", I would have reversed at "2" without much of a loss.

Finally, today was more selling in the ES. I have marked all the major selling points. There was really no reason to cover until the price broke back up through 1151.75. There will probably be another selling opportunity. Support is at around 1146.00 and change.

 Done for the day, off to vote.


  1. El... Will it be possible to show backtested results of the methodologies being taught in the training program or would you show us how to backtest to verify the methods taught have worked well in the past?

    Thanks... Tino

  2. Tino, I posted P&L on lots of days. Go back to the earlier posts. Doing your own backtesting is a fundamental requirement to becoming profitable as it is the only way you believe. Without this self verified belief, you will find it difficult to trade reactively. During the training we will go through all of this. I will show some of my computer generated backtests to demonstrate the process but it should not be a substitute for doing your own backtesting.

  3. El,
    How many setups will you be teaching in total?

  4. Martha, we'll go through all I have over the weeks of live trading and create some more together. Setups vary according to context. The number 18 I mentioned is just an approximation as there more with all the variations. What we will learn is how to read the picture and when the snapshot is right and meets our setup requirements, we pull the trigger and then manage the trade.

  5. Hi Tom,

    "it is very clear from the CCIs that there would be a probable pullback"

    - is this due to the fact that the short CCi was "parked" at the +100 level?

  6. EL
    Question on the 45CCI divergence on Trade 1. Are you referring to the divergence between the 6 and the 45? Or the 45 being positive while price is going down?