Triggering stop runs

Naked shorts · 23 December 2008

lindsayf said:
can someone spell out what "fading a sharp move" is

Its when you take the opposite position of the move.

i.e. if it shoots up, you short it.
if it tanks, you buy it

google investopedia, it will give you definitions for all things trading

lindsayf · 23 December 2008

thought so
appreciated...thanks!

Cartman · 28 December 2008

For anyone whos interested -- about a week or so of forward testing on what i call Spike Plays -- mainly EUR/USD

results are on a live account (not demo)--- mini contracts only atm --- early days but the %% certainly have my interest 29 trades --- 25 positive 4 negative

equity curve etc attached

MRC & Co · 28 December 2008

Interesting Cartman.

Good win %! What is your average win and average loss?

Also, how do you define your 'spike plays'? After a certain pip move in one direction within a certain amount of time? Where do you place initial stops and how do you trail them or exit? Or is it simply more feel than anything?

Cartman · 28 December 2008

MRC & Co said:
Interesting Cartman.

Good win %! What is your average win and average loss?

Also, how do you define your 'spike plays'? After a certain pip move in one direction within a certain amount of time? Where do you place initial stops and how do you trail them or exit? Or is it simply more feel than anything?

hi Mirc, hope u had a good Xmas ---- pretty much as you indicate --- time relative to depth/height of spike --- position of cycle v important --- (1 minute charts for trend/1 second charts for entries

very early in testing so not getting too worked up over the results ---
more interested in % than actual figures atm due to testing with mini lots--

---average net loss relative to average net win as a percentage is 61% --- so even a 50/50 win loss ratio would be very profitable ---

the current 86% win strike rate is wonder what that might be after another cupla hundred trades --- interesting exercise though

MRC & Co · 28 December 2008

Yeh xmas was good, hope the same for you Cartman.

Those are some good stats, your win% will probably not remain so high, but still that is excellent with an average winner larger than an average looser.

Just don't let losses run offside too far, as one big loss outlier is a killer for the equity curve. But your equity curve looks very good, so looks like you cut losses reasonably quick already.

Using 1 second charts for entry, is perfect for the EUR/USD, same as using the order book, but I'm not sure for currency pairs that you can get exact depth.

Excellent stuff. Keep us updated.

tech/a · 28 December 2008

Cartman.

Very small D/D do you run without stops?
Whats the average win/average loss in pips?
Is it both long and short?
Whats your average hold time?
How long did it take to trade your 29 trades.

Cartman · 28 December 2008

MRC & Co said:
Yeh xmas was good, hope the same for you Cartman.

too much food --too much alcohol -- yeah pretty good Xmas

MRC & Co said:
Those are some good stats, your win% will probably not remain so high,

totally agree --- no false illusions on the small amount of trades so far --- and as a follow up on that my software showed the % average loser to be only 60 ish% of the average winner --- but in fact the actual pips per trade were similar as mentioned below to Tech --- i think the software included the B/even trade two cancelled trades as part of the loss % which made it appear better than it was so the average pips lost/won per trade were similar --- the high win % was the difference --- hope that makes sense

MRC & Co said:
Just don't let losses run offside too far, as one big loss outlier is a killer for the equity curve.

yeah - probably my main reservation at this stage -- my third trade was a real crapper --- 18 pip loss in quick fashion -- but to be expected due to the nature of the system i spose --- position sizing and staking plan need to be adjusted to suit

tech/a said:
Cartman.

Very small D/D do you run without stops?
Whats the average win/average loss in pips?
Is it both long and short?
Whats your average hold time?
How long did it take to trade your 29 trades.

howdy Tech, these types of trades usually happen really quick so its either in or out --- stop losses have so far been discretionary which is working well atm --- would not take a trade like this unless happy to sit glued to the screen though

average pip loss is 4 trades/33 pips = bit over 8 pips/trade

average pip win is 25 trades/174 pips = bit under 7 pips per trade

so pretty much B/Even on that score --- so far the advantage has been the % winners vs losers at over 85%

long vs short % pretty much the same--

average hold time ---- shortest trade was about 5 seconds (2 pip win) --- longest trade about about 18 minutes (break even trade )

28 of the 29 trades were made between the 19th and 24 th December

for the record what im trying to do here is find an advantage in the spike plays and marry it into my regular system which is a little more conservative --- so far these trades which on face value require heavier ballz are actually proving to be less risky --- very early days though --- forex can be a nasty beast --

tech/a · 28 December 2008

what im trying to do here is find an advantage in the spike plays

Fading or going with the spike.
Is the spike range of bar closing in the upper or lower quartile OR
Volume spike
OR Both?

Wysiwyg · 28 December 2008

Looks more like a sit and click method.No parameters met, just a discretionary trade on the spike.

MRC & Co · 28 December 2008

Wysiwyg said:
Looks more like a sit and click method.No parameters met, just a discretionary trade on the spike.

Yeh it does.

Looks like Cartman is aware of what he is trying to do though, so it's not blind trading, he has a plan, but exact entry and exits are taken on feel.

I find personally when fading spikes, better to cut loosers very quickly and just try again if it stops you out. Otherwise, these loosers can run offside, very very quickly (afterall, you are fading a rapid move). If it continues, better to be out with a quick little loss or two.

tech/a · 28 December 2008

No he has a parameter.--The spike.
The question is what is it saying.
Is it demand or supply?
Introduction of other confirming "parameters" should give a better indication.
IE
(1)Where is it in the chart--following strength or weakness.
(2)How does it react to a test.
(3)What do the next few bars tell you

This spike is in a timeframe higher than the entry timeframe so perhaps the timeframe is too low to give a reliable indication.
Perhaps a 15 min spike entered from a 2 min chart may give more information.

Just thoughts.

Wysiwyg · 28 December 2008

MRC & Co said:
I find personally when fading spikes, better to cut loosers very quickly and just try again if it stops you out. Otherwise, these loosers can run offside, very very quickly (afterall, you are fading a rapid move). If it continues, better to be out with a quick little loss or two.

Obviously spike fading and to have 25 out of 29 winners is good darts i reckon.

p.s. Loosers is spelt losers

MRC & Co · 29 December 2008

Wysiwyg said:
p.s. Loosers is spelt losers

Thx mate, should stop me having anymore loosers

chops_a_must · 29 December 2008

tech/a said:
This spike is in a timeframe higher than the entry timeframe so perhaps the timeframe is too low to give a reliable indication.
Perhaps a 15 min spike entered from a 2 min chart may give more information.

Just thoughts.

The lower the time frame, the better the entry for these type of moves.

Just an observation without trading it.

By the time it would have come up on the 15min, it most likely would already have been and gone once printed. And even if it was possiible, the DD becomes greater on the larger time frame, which seems to be the opposite of the goal in his trading method.

tech/a · 29 December 2008

Yes Chops I understand.
A spike in a 1 minute bar would more than likely not be seen in a 15 min bar or a 5 min bar for that matter.

However a spike in a 15 min bar is likely to have a reaction time longer than that of a 1 minute spike.

A 1 minute bar traded by the second would see 60 price prints in the next minute which is likely to have a move a consolidation and retracements with in it all happening at break neck speed.

From my observations choosing a higher timeframe with less bars in your trading timeframe give less "noise".
15min to 3 min gives 5 bar prints for the next 15 min.

One of the principles of VSA is that anyone bar has a life---with regard to impact on the following bars of 3 bars.
So a 15 min spike will play out in the next 45 mins or 15---3 min bars.

In the 1 min example thats the next 180---1 second bars.
3 x 1 min x 60 seconds each = 180

My personal view is the timeframes dont sync.
1 min is to wide for 1 sec trading.

I personally work in 5s.
1 week = 5 daily bars.
1 daily bar splits to 5---125 min bars (Rounded)
125 min bars split to 25 min bars
25 to 5 min
5 to 1 min.
1 min to 12 sec.

In these timeframes you will know how the 1st bar has impacted on the price action going forward as seen by the lower timeframe.
You will see how tests both of the high and lows of the bar in question react.
How patterns play our in the lower timeframe relative to the next bar print in the higher timeframe.

You'll get spikes in all timeframes.

This is certainly a topic within itself.

MRC & Co · 29 December 2008

tech/a said:
From my observations choosing a higher timeframe with less bars in your trading timeframe give less "noise".

Definately. But Cartman is scalping, so he is trading the noise. An institution buys up without care, you will see this begin to pick up momentum on a 1 second chart and more than likely once he is done (within a minute or two or even less), that spike will fade back. You won't even know exactly what was happening within a 5 minute bar.

Most scalpers use DOM for this, but I can see why a FOREX trader would use 1 second charts instead (lack of proper depth, and I am not just talking about what is sitting in the book, but also a continuous flow of everyone who is in the market and what they are doing, including crossing spreads etc).

chops_a_must · 29 December 2008

tech/a said:
Yes Chops I understand.
A spike in a 1 minute bar would more than likely not be seen in a 15 min bar or a 5 min bar for that matter.

However a spike in a 15 min bar is likely to have a reaction time longer than that of a 1 minute spike.

A 1 minute bar traded by the second would see 60 price prints in the next minute which is likely to have a move a consolidation and retracements with in it all happening at break neck speed.

From my observations choosing a higher timeframe with less bars in your trading timeframe give less "noise".
15min to 3 min gives 5 bar prints for the next 15 min.

One of the principles of VSA is that anyone bar has a life---with regard to impact on the following bars of 3 bars.
So a 15 min spike will play out in the next 45 mins or 15---3 min bars.

I think you are on the wrong track, and missing the point.

I'm not sure anyone trading like this would give two hoots about VSA, nor want to extend time frames.

MRC & Co · 29 December 2008

Yes I would agree, I think you are missing the point a bit tech.

Cartman is watching a 1 second chart to try and feel the flow of the market.

Whilst the 1 minute chart or perhaps even 5 minute chart, can give him a basic depiction of where price is moving and patterns which are developing, he will also use the 1/5 minute chart to draw on important levels to be careful and take notice of next time price flows towards these.

I think motorway talks about it in Wyckoff, the ripples and the currents start somewhere. No better place to see them early than on a 1 second chart or through live DOM IMVHO.

Scalping portions of this flow is a way to minimise risk. One can also try and ride out the trends longer if they want, of course, knowing the difference of when to scalp and when to ride out larger flows, is the key but a very hard art to master.

cuttlefish · 29 December 2008

chops_a_must said:
I think you are on the wrong track, and missing the point.

I'm not sure anyone trading like this would give two hoots about VSA, nor want to extend time frames.

I've been doing a bit of intraday chart observing lately as part of my options trading - including observing volume and attempting to apply some VSA.

I think that its worth considering VSA as a tool to help assess the likelihood of getting a fade vs a continuation - it can be a useful indicator of strength for a spike imo. I wouldn't necessarily be going out to 15 mins but out to 5 mins from the 1 min and tic charts can provide some useful insight. A general understanding of where current price sits in the intraday price/volume (vwap) histogram is also useful - as TH recently pointed out in another thread.

For example a down spike towards median price points (based on volume) is likely to hit congestion as it approaches the medians - but also possibly getting a free run on its way back there. Spikes away may be more likely to run - but the 5 min volume charts can be useful in seeing where supply is starting to come in - could be helpful in picking an entry point for a fade opportunity if one exists - I've seen the 5 min charts reveal quite a different picture on supply to what the 1 min charts appear to be showing.

Its also worth keeping an eye on the support/resistance/congestion from the longer time cycles because although not always relevent there are often times when a strong intraday move will hit resistance that aligns with a longer term support or resistance on the daily or weekly charts (and of course the broader intraday top/bottoms and trends as well).

Its easy sometimes when observing only the 1 min and tic charts to miss some of the more glaringly obvious broader structures that may influence the overall price action, so while using the shorter charts as the primary tool its still worth having an occasional glance at the broader picture.

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