PPS Trading System by Curtis Arnold

[MRC & Co]

I would be guessing Nick is referring to the micro triangle it broke out of yesterday. Not 100% sure though as I haven't read the book.

Yes, appears either the triangle or rectangle. Either way, very simple and easy pattern play. But like you, not sure if this is what he is referring too

 

[Nick Radge]

A symmetrical triangle it is.

Now take a look at OMH from about a week ago...

very simple and easy pattern play...

Most trading is simple and easy. People just make it difficult because they don't understand what makes the money. This pattern certainly has no edge as it runs at about a 40% win rate, has done for years, but it still makes good money.

 

[tech/a]

People just make it difficult because they don't understand what makes the money.

Ive highlighted this because most run off looking in books for patterns infact any analysis at all which has a high probability rate.

They want to see a statement saying that a FLAG for example has a 68% chance of running positively to its target price.
OR
An Elliott Wave 5 will be 100% of wave 1---73% of the time.
If something has a 40% or lower success rate its discarded.

Nothing needs to be discarded when you understand "What Makes The money"
Not only that but you can finally discard the search for the silver bullet and become an expert in your CHOSEN analysis.

Ala Motorway as an example.

 

[MRC & Co]

A symmetrical triangle it is.

Now take a look at OMH from about a week ago...


Most trading is simple and easy. People just make it difficult because they don't understand what makes the money. This pattern certainly has no edge as it runs at about a 40% win rate, has done for years, but it still makes good money.

Another symmetrical traingle breakout but this time to the long side. Nice work!

Yes 40% win rate is still good considering your R/R will be robust. Entry on shorter timeframes and stops back near the apex I would suspect......

I agree, keep it simple is my sig. Hence why I am looking into the probabilities of basic and traditional chart patterns. These, combined with support/resistance/floor pivots for stops/exits etc are what I am looking at. Along with an oscillator for a basic idea of overbrought/oversold and a moving average for the basic trend and especially shooting stars and hammers for trend reversals (and add some sentiment indicators, seasonality and F/A into the frey). Once I have this downpat whilst trading equities (except the floor pivots of course), I will look to move onto shorter timeframes into index futures. Either the SPI, e-minis or both. Oh and add gap theory to that, along with basic wave structure. HH, LL and strong/weak trends.

I will go through and read that thread to get a better idea of the set-ups on your site. Something like this would be of more interest to me than the EW set-ups (until I read my book on EW and get my head around more than just the basic rules and guidelines).

Cheers, this thread will be an excellent help once I read the books, website provided and thread on Nicks book/techniques.

 

[MRC & Co]

Nothing needs to be discarded when you understand "What Makes The money"
Not only that but you can finally discard the search for the silver bullet and become an expert in your CHOSEN analysis.

Ala Motorway as an example.

No doubt and I dont plan to discard anything until after my own use. I just want probabilities as something to think about.

I also agree, I have quiet a bit of what I use downpat now and am making pretty decent for someone so young and new to the game, I beleive anyways. Though I do want to try and smooth out my equity curve somewhat.

This is why I am trying to get a basic grip on most things, so I can pick and choose which I wish to use and master them. No doubt, there are plenty of effective styles out there, I just want the one which suits my personality and psychology best. Which I beleive I have pretty much found. Intra-day futures trading and position trading equities. Dont think scalping or longer term trend following are for me. Writing covered calls on my small portion of bottom drawer stocks and perhaps naked puts in a market with a bullish bias. In a market without a bias, just trending sideways, perhaps options credit spreads (once I get a firm grip on options, know the basics already). Start with reading Waynes blog/book development, its really a firm understanding of all 5 greeks that I need to get my head around. Only know two of them well at the moment.

Cheers, good rant, helps keep myself upto date with where I am upto. ha ha.

 

[Nick Radge]

ombined with support/resistance/floor pivots for stops/exits etc are what I am looking at. Along with an oscillator for a basic idea of overbrought/oversold and a moving average for the basic trend and especially shooting stars and hammers for trend reversals (and add some sentiment indicators, seasonality and F/A into the frey). Once I have this downpat whilst trading equities (except the floor pivots of course), I will look to move onto shorter timeframes into index futures. Either the SPI, e-minis or both. Oh and add gap theory to that, along with basic wave structure. HH, LL and strong/weak trends.

Take a look at PPX.

1. What do you see?
2. What is the trend?
3. How do you know that is the trend?

#3 is not a loaded question. Just tell me exactly what you see when you first look at the chart.

Now, think about the gumph you've written above and instead think about managing the trade so it creates a positive outcome.

 

[MRC & Co]

Take a look at PPX.

1. What do you see?
2. What is the trend?
3. How do you know that is the trend?

#3 is not a loaded question. Just tell me exactly what you see when you first look at the chart.

Now, think about the gumph you've written above and instead think about managing the trade so it creates a positive outcome.

1) I see price forming an ascending triangle, but looking to break downwards (or if using different points, you could say it has already broken downwards). Also a trend over the past month which has broken out of a trend channel, to the downside.
2) Trend is up in the short-term, but down in the longer term.
3) I would only trade this trend in the short-term once I see it either break one way. More likely down I beleive.

Perhaps this is a wave 1? Wave 2 forming now.

Gumph? I would of course not take all the above into account for each and every trade. However, I beleive all are useful to use at their given times.

 

[IFocus]

Heres the chart for PPX

 

[Kauri]

Talking of triangles, one of the easiest mistakes to make is, when looking at past action, to draw the lines capturing the break-out. Not referring to Nicks patterns at all as he obviously posts them live as they unfold for his Chartist subscribers.. (am I allowed to say that without incurring the wrath of ... )
I spent a year in all going back through the ASX stocks identifying patterns, and found that the only way to do it was by advancing through the charts one bar at a time... also that of all the indicators I tried only one gave me a better than even chance of picking the breakout direction...
All sounds a bit confusing, but the attached chart of the $US shows what I mean, the dotted line shows a valid pattern and subsequent b/o which proved to be a false break, the triangle developed further and eventually broke downside. Most people looking back at the history would not even see the dotted triangle, only the solid successfulll one.. I thunk..

Cheers
..........Kauri

 

[MRC & Co]

I spent a year in all going back through the ASX stocks identifying patterns, and found that the only way to do it was by advancing through the charts one bar at a time...

also that of all the indicators I tried only one gave me a better than even chance of picking the breakout direction...

the dotted line shows a valid pattern and subsequent b/o which proved to be a false break, the triangle developed further and eventually broke downside. Most people looking back at the history would not even see the dotted triangle, only the solid successfulll one.. I thunk..

Cheers
..........Kauri

Great post Kauri! I agree, I think I would have only seen the successfull triangle if I went back through that chart! Never thought of it that way! Thanks!

Which indicator do you use to help you determine the breakout direction? I only add RSI (perhaps change to a stochastic to my chart) for some use (divergence) and to look for price action movements once in highly overbrought/oversold territory. Without trading on this alone ever, just using to help with picking the direction of the breakout.

As far as the false breakout, at least you only loose the small stop, whereas you pick up the much larger gain from the true breakout. I also read some traders use a certain % or # of bars, or at least wait until the breakout closes below the trendline to determine if the breakout is likely. However, realise this can reduce your profits as you dont catch as much of the breakout. Always one + for another -

 

[Nick Radge]

Which indicator do you use to help you determine the breakout direction?

But that is the great secret and is usually only available to those willing to pay over $5,000.

Kauri makes a valid point which I feel differentiates PPS to standard TA. PPS makes a very defined pattern, as do Elliottians with their triangles. Patterns can morph from one to another. A triangle can morph into a flag for example.

 

[Kauri]

But that is the great secret and is usually only available to those willing to pay over $5,000.

.

A packet of "Best Bird" bird seed would probably convince the proprietary owners ..
Cheers
...........Kauri


PS..

Which indicator do you use to help you determine the breakout direction

The trend leading into the pattern.. sorry it's not more complicated.. a real holy grail should be wrapped in mystery and a touch of alchemy doesn't do any harm..

 

[Kauri]

a couple of flag patterns on the skip 5min... I would and did trade the first, but have lost interest in the second.. as a flag that is... as it has climbed back up the pole too far., for mine.. but as Nick points out, it could quite easily do a KD Lang and morph from one pattern to another.. (triangle??)
Cheers
..........Kauri

 

[MRC & Co]

The trend leading into the pattern.. sorry it's not more complicated.. a real holy grail should be wrapped in mystery and a touch of alchemy doesn't do any harm..

LOL, true! How did that second flag turn out Kauri?

Cheers

 

[Kauri]

LOL, true! How did that second flag turn out Kauri?

Cheers

Pretty much as expected.. luckily for me..
Cheers
............Kauri

 

[MRC & Co]

ha ha, excellent call!

There is that experience coming into play!

I will be there one day

 

[Kauri]

ha ha, excellent call!

There is that experience coming into play!

I will be there one day

a flag is ... dependant on who you read... a pause for breath, a consolidation, an exchange from weak to strong,.. et al ad infinitum...
for mine I'm not too concerned about explaining it... (probably because I can't )... but visually when it climbs (or inversley drops ) too much it looks more like a wet sheet hung out to dry as opposed to a flag...
By the way Bulkowskis book in my opinion has little relevance as it is mainly of very long term patterns, and tends to make too much of a science out of trading them, complete with all sorts of tables and figures and shotgun charts. I was in Freo today and saw it in the Public Library.. might be the way to check it out before parting with what for me is an overpriced book.
Cheers
...........Kauri

 

[MRC & Co]

but visually when it climbs (or inversley drops ) too much it looks more like a wet sheet hung out to dry as opposed to a flag...

By the way Bulkowskis book in my opinion has little relevance as it is mainly of very long term patterns

I was in Freo today and saw it in the Public Library.. might be the way to check it out before parting with what for me is an overpriced book.
Cheers
...........Kauri

LOL, yeh, I can see where you are coming from in that analysis. Bit too long for a "pause" for breath.

Interesting on Bulkowskis book, I am more looking for short-term patterns, so sounds like Arnolds book may be the way to go.

I will try check out Bulkowskis book in a library here. Website may be of use in the meantime........

Cheers

 

[theasxgorilla]

Cool thread guys.

And now for the 64 gazillion dollar question...can this stuff be coded? Of not entirely, at least into a scan. We know that even the little old ASX can be a big universe of stocks to keep abreast of.

Disclaimer: I haven't read the book.

ASX.G

 

[Kauri]

Cool thread guys.

And now for the 64 gazillion dollar question...can this stuff be coded? Of not entirely, at least into a scan. We know that even the little old ASX can be a big universe of stocks to keep abreast of.

Disclaimer: I haven't read the book.

ASX.G

all sorts of people have made a lot of money selling pattern recognition software, mind you a lot of people have made money selling prime (under) waterfront land in Queensland... the only scam I have found usefull unfortunately depends a lot on the eyeball...
Cheers
...........Kauri