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Trading The SPI - NON-Gann Techniques

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Frank D said:
Edwood,

Short term I’m looking for a 2-day stall/rotation, this lines up with an UP bias on Thursday following my systems. However, between now and Thursday the market can be anywhere, if it is still trading above the 3-month highs on Thursday then I favour a move to 6310, that won’t the case if by Thursday we are another 100 points lower and breaking the 3-day lows.

I never know how far any day will move. If I’m in a trade I ‘hope’ I don’t get stopped out and I ‘hope’ it reaches my exit zones. Everything in the market is random, there are no guarantees, other than following strict trading rules.

With all trends price has a natural flow that rotates between central zones and extends onward as Time moves forward. This relationship forms levels in the market that hinders Price from moving in straight lines, it moves between support and resistance. As Time moves forward support and resistance moves along with it. Knowing where support and resistance zones lie is a critical cog in the wheel of trading, because it’s these levels that become part of a trading plan.

Support and resistance isn’t some static level in the market that never moves. Support and resistance is dynamic, it constantly moves with the start of each new timeframe. Identifying and clearly defining support and resistance becomes part of my risk/reward strategy. Identifying good risk/reward trades does not guarantee success; however not identifying good risk/reward trades almost always guarantees failure.

Yesterday’s exits zones are an example and hopefully today’s exits zones (6193) are an example. But in reality I never know any outcome until after the event, so I don’t know if 6310 will reach, but by Thursday I should have a better idea.
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Hi again Frank - thanks for the background - I like the philosophy - I can think of loads of questions to ask but will spare them and keep an eye on your thread... one sticks out tho - do you really think its random?

thanks again for sharing your work!
 
Edwood,

For example, say you had your system that has performed over the past few years @60%, so every time you entered a trade you expected to win 60% of the time, however the sequence of wins and losses are random.

You don’t know over 20 trades if your trades end up being; win/loss win/loss win/win, or you have 12 wins in a row followed by 8 losses. It is a random occurrence.

The only thing you do know is that if you follow your stop loss rules you should know that every time you get stopped out your loss is XX amount.

However, you won’t know how much your wins are going to be, even though your system runs at 60% you never know how much money you are going to make every time you trade. Again profits are a random outcome because exit zones might or might not be reached

Everything we do in the market falls under ‘randomness’

You trade with ‘probability’ i.e systems; an expectation to which something is likely to happen, or in some cases drawing conclusions about the likelihood of potential events occuring, but it’s characterized by randomness or uncertainty. More precisely, probability is used for modelling patterns under the same circumstances producing different results.

Random variables or in this case ‘price patterns’ then become a random expectations, it does not describe the actual outcome of the pattern, but rather describes the possible, as-yet-undetermined outcomes in terms of real numbers.

Frank Dilernia
 
ahh I see - not what I was thinking when you said random. am reading market wizards (again!) at the moment and they all talk about knowing your maximum risk. I guess if you think about randomness in that way then you want to know your maximum risk in terms of the potential loss from stop outs across a large data set. have to be honest & say that altho I've tested my system I like to think (maybe I'm kidding myself?) that if I'm going into a trade the results won't be random. now you've got me thinking that I need to go back through my data again... prob not a bad thing so thanks for the indirect nudge Frank!
 
Frank D said:
Edwood,

Short term I’m looking for a 2-day stall/rotation, this lines up with an UP bias on Thursday following my systems. However, between now and Thursday the market can be anywhere, if it is still trading above the 3-month highs on Thursday then I favour a move to 6310, that won’t the case if by Thursday we are another 100 points lower and breaking the 3-day lows.

I never know how far any day will move. If I’m in a trade I ‘hope’ I don’t get stopped out and I ‘hope’ it reaches my exit zones. Everything in the market is random, there are no guarantees, other than following strict trading rules.

With all trends price has a natural flow that rotates between central zones and extends onward as Time moves forward. This relationship forms levels in the market that hinders Price from moving in straight lines, it moves between support and resistance. As Time moves forward support and resistance moves along with it. Knowing where support and resistance zones lie is a critical cog in the wheel of trading, because it’s these levels that become part of a trading plan.

Support and resistance isn’t some static level in the market that never moves. Support and resistance is dynamic, it constantly moves with the start of each new timeframe. Identifying and clearly defining support and resistance becomes part of my risk/reward strategy. Identifying good risk/reward trades does not guarantee success; however not identifying good risk/reward trades almost always guarantees failure.

Yesterday’s exits zones are an example and hopefully today’s exits zones (6193) are an example. But in reality I never know any outcome until after the event, so I don’t know if 6310 will reach, but by Thursday I should have a better idea.

Frank Dilernia

https://www.aussiestockforums.com/forums/showthread.php?t=5846&page=2
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Frank that was very beautifully put.

Now that is some thing I always see support and resistance are constantly changing and then there's the time frames!

I just hope it does pull back so I can place another entry on the aussie200xjo in case your rig'het.:D

Great post.
 
Edwood said:
no worries B - (added) thats the nice thing about ASX tho hey, lots of opening spikes, requiring little complicated analysis!
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Could be an opportunity to do the same on Wall St. tonite!
 

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nice one Can, hope you took the trade! US opens too late for me unfortunately, 1:30am here

I see Aus sold off into the close and gave up all gains for the day out of hours
 
first trend line gone, nothing to be too excited about - closed first short, will see where we go from here

asx190407wu9.gif
 
just as an update - bounced off the lower trend line so support intact. based on recent history we'll prob see another grind up, but worth keeping an eye on the trend line for shorts
 
Edwood said:
sheesh looked like a choppy sloppy day today! not much fun sitting through that mess
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Certainly was a tug of war between the bulls and the bears today, Wall St. will be interesting tonite, surely it can't continue this rate? Its overbought well and truley.

Cheers,
 
spiking up already pre-open tho Can, they're not even bothering with buying the dips anymore! it was flat there for a few hours so reckon that was enough cause for them to buy it :)

options expiry today in the US so might be some volatility, altho lately some have been dead affairs - they seem to do the work in the 2 days before then sit it there for expiry day

maybe we should set up an Index thread, not much SPI conversation going on here (mind you doesn't help that I'm trading a spreadbet instrument based on ASX200 & not the actual SPI ha ha! prob driving the old hands to despair)
 
Edwood said:
spiking up already pre-open tho Can, they're not even bothering with buying the dips anymore! it was flat there for a few hours so reckon that was enough cause for them to buy it :)

options expiry today in the US so might be some volatility, altho lately some have been dead affairs - they seem to do the work in the 2 days before then sit it there for expiry day

maybe we should set up an Index thread, not much SPI conversation going on here (mind you doesn't help that I'm trading a spreadbet instrument based on ASX200 & not the actual SPI ha ha! prob driving the old hands to despair)
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I think its a great idea to setup a thread for trading other indexes, i'm sure Prof and TI would be into it.

I won't have time tonite, but i will do it tomorrow.

Cheers,
 
CanOz said:
I think its a great idea to setup a thread for trading other indexes, i'm sure Prof and TI would be into it.

I won't have time tonite, but i will do it tomorrow.

Cheers,
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sounds good Can! a general tradering thread - with a bit of banter would be good

just trying to decide if its worth getting into the Dow pre-open... :confused: tempted to fade that spike
 
how about we start with a clean slate - no egos, no willy waving - just tradering, general chit chat

looking like a BIG gap up on Dow for the open - will be nice if that gets filled today :)
 
The SPI's looking pretty sick to me, been playing around with the CCI afrer acouch brought it up. The CCI's hasn't been this low since.....you know when.

Cheers,
 

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