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The Genral Stretch Discussion Thread


Given that daily threads will be hard to look back on I thought it might be a good idea to have a general discussion thread on "The Stretch" and how to us it? why it works? and as per a post on the ES thread can it be improved on?

I'll not write an essay however a few thoughts to get things going, it does seem to identify ranges, so either its being traded by the market or it mimics moving averages or some other metric that the market uses? or its simply playing off and framing an average daily range?
It works in other markets, for instance Silver yesterday went to 261 then down to 300 and was very accurate at both points which was amazing given the volatitity and fast move.
I like it because it does 3 things for me, helps me not to get in early thus avoiding that last push that gets your stops, gives good targets to aim for, especially the fact that you have the settlement number, and you have clear stops so one should not suffer big drawdowns, so keeps the emotions in check.
Obviously one needs confirmation of the numbers so its worth having pivot points daily or weekly, Fib retracements off bigger ranges and whatever tool you like to measure momentum etc, MACD for example. plus moving averages and the rest.
Any flaws? it doesnt catch every high and low, yesterday for instance the low of the day on Dow exceeded the number by more then 5 points but given the clear double bottom I took the long anyway and used the +100% to close.
So over to you guys, and hopefully we can increase our understanding of this tool. Keep the daily threads going also and this one more for after hours discussion.
Silverharp,
can you (or someone else) please state the rules for using the stretch?
THX
I have also asked for someone to explain live what they are looking at. Which levels are important. So far I have only seen past posting. No one has shown a losing trade yet and what went wrong.
Here is Dow today , so far I have not traded it as it is not bouncing off any numbers , I have not checked any swing starting points. it could be an IH&S developing but I have not gotten used to trading from settlement

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dow
ok it hit the 100% , but it looks like it wants to go higher, so no interest in a short here , just because its at a number
here is a current chart of gold , will see what happens if it gets up to the next range, the red line is a weekly resistance pivot (R2 I think) , if DX holds its low. Just showing how I am looking at this. There will be many times wheree the high will not be at a number. Havnt traded gold today yet

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gold
but, Silverharp,

what are the rules of engagement that you employ to trade with the stretch?

example:
If price moves above Open plus stretch, target additional .618 of stretch expansion?


How do you use the stretch number?
Paul, personally I like trading highs and lows intraday, if a market looks like it wants to turn at a 161 or 261-300 I'll try catch the turn. If we get a retest at the same number it maybe more significant and I might aim for settlement. Its my own style for now that I only want to trade more then 2 or 3 times in a day so I tend not to go for continuation trades ie 100 to 161, but I would use them when in a trade to stay with the trade or exit.
trying a short here on Dow based on 161 and weekly pivot see chart above, normally I'd wait a bit longer, DX key , I&HS morped into double bottom , will close if any more dollar failure
knife edge suff lol , DX testing my patience here, any lower and it could be a rout

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goldgold
Hi,
RBuns,.... Trading takes an existential act of courage. You trade your own money. Noone trades for you.

Basis YM front month the 4.25% of the Stretch price extensions have recently projected intra-day exhaustion price levels. It's like support and resistance. Look for the level of your choice to fade, sometimes it is 1.618% of the Stretch, i.e., enter as a fade, with the anticipation of the continueing trend, ... recognize resistance / support basis a Stretch Fibonacci calculation.

Silverharp,.... Enter a few points early and take the trade. I'm the guy that is getting into the trade a few points ahead of the crowd who expects a perfect match. That is to say, the early bird gets the worm. I'm taking the trade early because I expect someone else to also trade the Fibonacci of the Stretch price reversal measurements.

Eat early. The hungry will eat lunch.

Glad I read this thread. I'll be salmon fishing this next week and a half.

RBurns,... Moving averages, Oscillators, histograms, etc., FOLLOW PRICE ACTION. THE FIBONACCI OF THE STRETCH (AND THE STRETCH) STRATEGIES PROJECT INTRA-DAY REVERSAL POINTS. MANY OTHER TRADERS ARE APPLYING THIS STRATEGY BY LEADING THE PRICE FOLLOWING TOOLS, Moving averages, Oscillators, histograms, ETC. Trade price not price following mechanisms. 90% of traders lose money. All of those traders trade price following mechanisms. Lead or get killed.
On the math, I would have to say.....use a stretch# that works.....

I don't trade manually and our stuff is built to run 24hours so humans would not be able to apply....too many rules.

But I'll try to translate.
In uptrends if the stretch has support....buy it and 1.61 and even 50% and 0% will work.

In downtrends is where you will see the deeper retracements 2.6, and 4.2...for longs. If the upper stretch is resistance sell it.....or the 1.6 level.....Not much diff...anyways.

Here is an example of the EU today.....which is in an uptrend.

1. Support at the lower stretch for a long time (1st green dashed)...that would be a buy.
2. Movement through the previous close (pink)...good
3. Initial resistance at the 1.61 level (red2)
4. Back for support at the upper stretch (red1)
5. Blast to the 2.618 (red3) level which is now resistance.....but not necessarily a good short because of the uptrend.

Notice the accuracy......even on a visual model.

Hopefully that helps.....It works on everything.


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2011 05 30 6e