Trading The SPI - NON-Gann Techniques

[MRC & Co]

Tech,


You need to plan the day and ‘predict the day’ before it happens and
then use whatever you are using to confirm the set-ups.

That's one side of the coin and works for you Frank. Plenty trade what they see intraday in a complete discretionary manner and do well also. Though, you are definately always trying to anticipate, I agree.

 

[Frank D]

John,

When trading the SPI focus on exiting around 40-44 points around
the previous swing high or swing low.

If you notice a lot of the movements extend outward and reverse
inward based on this range.

Even though the SPI has an ATR around 80points and can travel up to
200 points in 1 day, around 70% of the time the SPI moves around 50%
level of the ATR each day.

The only reason why it has an 80 point ATR or more, is because there
is usually 1 large trending day within the week that keeps the True
range around its average.

Therefore as a day-trader you want to be exiting or getting out of
the market once price moves towards completing the range.

If you want to trade against the trend the best trades always occur at
those extremes or those 44 point range highs or lows, and you can
make money trading against the trend at those points (spiral points), but
if it’s not matched with a 5-day level :- support or resistance then
profits are smaller:- focus on 10-20 points.


The point of a day-trader is taking chunks out of the ranges so that
you obtain an income, so we need to trade with and use the
statistical patterns that continually occur in the market:- it makes it
easier than just working with descrestionary setu-ups using VSA and
2 & 5 min bar charts.

Work with the patterns that continually appear in a systematic
way and understand how the market actually functions


When is the best time to hold for those large trend days?

It’s always around the Monthly midpoints or Monthly extremes, and
today that’s not the case so we take the money and run.

To answer your question :- short @ 3622 and exit @ 3587 and took the
day off and went out to lunch.

If I wanted to go long today then I didn’t have any 5-day support,
but would have traded above 3606 to trade the R44 completion
upwards.

Above 3618 and there is a bias for further gains into the close
simply based on the ‘HOOK' pattern above 3618.

A 'HOOK' pattern verifies any reversal or Breakout by the closing bar
either side of support or resistance.

On most occassions the bar will restest the same level and as a trader
you want to enter at those levels and trade with the movement of the
bar away from the 5-day level.

There is no resistance until price is around 3685. It doesn't mean it will
travel that far today, but the probability of a HOOK pattern above 3618 has
to potential to complete another 40-44 points upwards:- 3660

 

[acouch]

hello fd,

nice to see you , hope life is treating you well

ac

 

[Rob Cole]

Tech,

Can you post a 3 min VSA chart for today when you have time.

Thanks

 

[MRC & Co]

Nice post above Mr D.

Your book is the next (and only I have any interest reading) book on my list!

Is your 2nd book out yet (I'm sure you were writing a 2nd) and what are the differences between the two?

I just hope reading systematic trading material such as yours doesn't impact on my 'feel', but I hope to combine it to help add to my conviction at certain times when the bias of your system shows confluence with my 'feel', at least that is how I plan to integrate it into my own style.

I just hope I can understand it

A true 'thinking outside the box' methodology!

 

[tech/a]

Sorry Rob I'm at home havent got it here but will do tommorow.

Frank
Without the print of the next bar how did you know to exit at 3587?
How did you know to short at 3622 while that is above a level I have seen your levels broken so why be so confident?
I can understand after after the next bar is printed.---????

 

[acouch]

good morning all
today's road map
have a great day, and good trades
ac

 

[Frank D]

Tech,

Left chart (Below) Daily of the SPI, and right chart is the 5-day pattern:- each bar is 43 points.

Why did I exit at 3587?

Because if price is moving down from the previous intra-day swing high
@ 3627 then my exit is based on taking the money out before the range of
44 points completes, because the risk continuing lower diminishes greatly.

Why did I enter @ 3622?

Entry is also based on where price opens in relation to certain levels
within the 5-day pattern.

The closer to support and resistance price moves away on open.

Not so near, and often price moves in the opposite direction of 22-27
points and then reverses the trend.

Therefore it is simply the experience of knowing when to trade the open
and when to wait until the market moves 22-27 before taking the
opposite trade:- invert.


It simply chart reading skills based on the higher timeframe patterns
within the Weekly range, as price ‘tries’ to move down from the Weekly
50% level towards the Weekly lows @ 3481.

Confidence:- is basically understanding how markets often function in a
non-liner way, and then reacting (trading) to the probability of price
either following the trend outward, or price rotating back towards
the midpoints using statistical ranges within the ATR:- 22 & 44 points.


Basically I’m a damn good chart reader, and that’s why there are people
who have been using my stuff for years but continually subscribe to the
daily reports, simply to verify their own view of the market or even
to optimize certain set-ups during the day as it unfolds.

Wednesday’s trading for Today

I have a view that the Market is moving down into the Weekly
lows @ 3481.

However I have a Daily HOOK bar above 3618 which is a carry over
from Tuesday which needs to complete.

This is called OPEN trading:- where Wednesday’s trading doesn’t begin
until the previous 44 point range completes.

If it follows the HOOK pattern then the SPI should rise up early towards
3662 to begin to verify Wednesday’s trading and Open

Now:- I’ve also factored in a Weekly trend downward towards 3481.

Around 3662 (R44 high) The risk increases of Wednesday moving
higher.

Therefore if price follows the statistical probability of this week’s trend,
then around 3662 I would begin to look for a moves down :- 87 points
over the course of the trading day.

That’s my view of Wednesday, so I’ll trade accordingly to that view.

I could be completely wrong, but I have other shorter filters that allow me
to take smaller chunks out of the ATR, when they meet during the
trading day 10-20 points.

But if Wednesday does move down from 3665, then we begin to Hold the ‘short’ trades longer.

Note:- below 3618 on open and the R44 completes down 3603 and
changes the entire view of the trading day, but it is still part of the Weekly trend.

Above 3665 and the probability of price moving down 87 points on Wednesday and following the Weekly trend lower diminshes greatly.

Let's see how Wednesday plays out.

 

[James Austin]

Basically I’m a damn good chart reader, . . .

Ahhh Frank,

I can see many rolling their eyes at this claim.

but granted, having followed your blog for 6 mths and used your system, you clearly know what you are doing and what the market is doing like none other i have encountered; in relation to SPI trading.

the deception of the system/ model and the blog is that it's easy. it isnt! but if a budding trader is prepared to work their butt off, the model has huge potential i think.

james

 

[tech/a]

Frank.

Following you OK.
But the hook what chart are you looking at.
Must be different to mine.
This is a daily of the current SPI.

Rob
Your 3 min chart is below.
Click to expand

 

[tech/a]

Frank.

Price did go to 3617 so hit your mark.

I loose it a bit here as are you expecting it to go to 3603?
Anyway Have a buy signal long at 3623 on VSA --yeh I know--Havent read your book yet! best I have. Trying to look at confluence.So are you now looking at 3665?
This is a 3 min chart click to xpand

 

[Frank D]

Tech,

you don't have the tools and you are trying to trade patterns that
aren't there yet....

As pointed out in the morning report:- 3618 is the trend guide

But as also pointed out the market moves against the trend 22-27
points and then continues.

Price moved down into support confirmed with an R27 lows from
the previous day, and now the Expectation is to complete the move
towards 3660 ;- 44 points from the previous swing low @ 3616.

However, I always use a partial exit strategy...

Long 3619 partial exit 3632 + 13 and hold...

stops 3617.

There is no guarantee that price will do anything I think it will do based
on my view of the market, hence why I bank profits an often run
breakeven stops.

Just like there is no Guarantee the market will top out at 3665 and follow a
87 point reversal down, price could just keep going higher from 3618.

 

[tech/a]

Thanks Frank I understand---well as best I can.

Frank what is the chart code your using it doesnt correlate to anything I have?

Will continue to read your publication.

But as the only tools I have a re currently VSA some interesting things have occured note the test and a great time to add to position Long green bar with diamond.
Then contracting volume to a very tight range very low volume reversal bar--great time to get out.
Short at 3640 low of the next bar and add to short with the very low volume squat bar 3 red bars in.
3618 support again found so out again
Seems support testing has held so long again.
Since posting a high volume test to the upside has failed so out at small loss.
Good strong high volume bar broke 3618 decisively so weak.

 

[motorway]

Tech Frank says each Bar is 43 pts

So I take it these are range bars ?

motorway

 

[julius]

This might help Tech.

If you have a market that moves from 1 to 9, then 9 to 1, then 1 to 9 during 2 days, if you create a range bar chart of $10 you will only have a bar that goes from 1 to 9 during these 2 days and this bars is not closed. If the market moves to 10 then the bar closes and a new bar opens with open price at 10. This new bar now must have $10 range to close. Let’s say the market goes back to 6 and then up to 17, the last range bar closes at 16 (making a range bar from 6 to 16) a new bar opens with open price at 16 and this bars price is now 17. This new bar has now a range of $1 (16 to 17) and will wait until a complete $10 range to close.

 

[tech/a]

M/W thanks
But The bars are at levels I cant see on a chart??

Short 3621 on Test at 3627 on volume (Stop 3628)

 

[James Austin]

M/W thanks
But The bars are at levels I cant see on a chart??

not sure what u mean tech,

but you need software that can do range bars as opposed to standard time-price bars.

 

[tech/a]

Stopped.

Back to work.
2+
2 small losses.

OK thanks JA.
I though I was seeing prints out of the trading range.

 

[Frank D]

Tech,

Those charts are range bars, after each movement in price:- 22 or 43
points a new bar is drawn.

What you notice it that most of the patterns whether using VSA or
3 mins bars correlate to movements based on 22-27 points and then into
43 points and so on…..

For example the bounce off 3618 moved up 22-27 points.

When did price move down? after it completed the R27 high.

So if you are looking to move into ‘scalping;’ short-term moves of 10-20 points, as I mentioned earlier, you want to be trading in the direction of
the completed bar :- ie inverting or rotating in the opposite direction
from the open if trading against the trend.

You could use VSA or 3min bars to verify the trade, but the important part is using statistical price patterns that always occur in the market as an edge.

Either price has follow through or it fails and reverses, as in this case this morning towards 3660.

Today:- My view was for price to play out the HOOK pattern
and continue up towards 3660.

Now for price to continue up towards 3660 and follow my view of the
market price should have remained above 3632 and not drop below after
the initial 27 point range movement upwards @ 3648

Once price dropped began to move down, I moved my trailing stops into
3629 +10, because the probability of no follow through often sees price continue down 22-27 points from the previous swing high.


But you don’t want to trade the break of 3618 because you are trading the low of the of the bar which often reverses back upwards.


For me to short trade the market I would either want to see the SPI move up towards 3665, or move down into 3605, and wait, and then watch for price swing upwards into 3618 and then short trade from a 22-27 point high bar downwards, as it follows the trend.

Basically you need to apply these strategies in context with the overall market.

For example, if price opened near to 3665 then I’d be shorting down and holding down because it fits with the price action and my overall view of the market

BTW long 3619 stopped 3614 –5

Long again 3619 partial exit 3629 +10 and holding with breakeven stops.

As you can see I’ve dropped my levels down into 10-20 point moves now, but I still have the view of price completing 3660.


Your last trade using VSA has high risk simply because you haven’t
confirmed the pattern using either support or resistance and you are
trading against statistical movements that occur in the SPI.

There are high probability patterns in the market and there high
probability set-ups to trade those patterns, and you need to combine
what you already know with those certain patterns.

As i've always said, there are maybe 1 or 2 good trading set-ups per
week, when everything aligns perfectly and goes according to plan, and the rest of the time you need to protect yourself from losses and stop over trading.

 

[tech/a]

Thanks for the explaination Frank.
Will absorb when I have more time.

Have a look at this Volume spike.

Must be Trembling Hand making one of his "Ballsy" trades!