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19 May 2005 188

Notes: The log that you see below you has been partially edited to remove as much chaff as possible. Most of the commentary has been left in to let you see the logic behind the trades and when and why trades were taken. The links to the charts should all be intact and will show you what we (I) were looking at when the trade was taken.

Trades have been highlighted in slightly different colors if you want to scan the log quickly and pick them out. The entries and stops are in blue and the losing and winning trades are in red and green.

If you want to watch this chat in real time you are welcome to join us in our trading channel. The trading channel is called #t1. We highly recommend that you use eSignal's chat feature as this will have the charts pop-up on your screen with no further intervention neccessary and keep you clued into the development of the day. Follow the instructions here:

Session Start: Thu May 19 08:22:06 2005
Session Ident: #t1

[09:22:12] <mashhad> G.M
[09:22:21] <guy> gm :)
[09:22:31] <guy> how is alpha looking mash?
[09:22:41] <guy> is yesterday's data looking goog atm?
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[09:23:07] <mashhad> yest. looks ok
[09:23:12] <guy> great
[09:23:27] <guy> your computer set back to west coast time right?
[09:23:40] <mashhad> no . eastcoast
[09:23:56] <guy> okay
[09:25:05] <mashhad> are we looking at fading the exteremes as a possible MP trade since we are opening within VA?
[09:25:32] <guy> not me
[09:25:32] <mashhad> at least in the ES?
[09:25:43] <guy> okay - not looking at ES
[09:25:47] <guy> just looking at ER2 now
[09:26:06] <guy> i have both ES and ER2 at VAH - don't you?
[09:26:32] <mashhad> I am showing 1189.00 for VAH... what do u show?
[09:26:42] <guy> same
[09:26:45] <guy> and ES is 88.5
[09:26:51] <guy> so only 2 ticks
[09:27:18] <guy> if K-line drops fast to under -3 then i'll think about shorting it
[09:27:23] <guy> but i'm only trading ER2 atm
[09:27:23] <mashhad> u r correct... it's too close
[09:28:45] <guy> leading indicators at 10 and philly fed at 12
[09:29:35] <guy> good luck everyone !!
[09:32:25] <guy7> [img]
[09:32:53] <guy> first chart is ER2 and next one is ES
[09:32:55] <guy7> [img]
[09:33:52] <guy> single at 604.9 in ER2
[09:38:20] <mashhad> also 85.00 in the ES i am showing
[09:38:46] <guy7> [img]
[09:39:25] <guy> Shorts AB @ 609.2
[09:40:08] <guy> exit stop set AB @ 610.2
[09:40:40] <guy7> [img]
[09:40:55] <guy> Reason for short in that chart = alpha + VAH
[09:41:42] <guy> Covered all Short AB at 609 --> + 0.2
[09:42:16] <guy> that last chart was incorrect
[09:42:16] <guy7> [img]
[09:42:26] <guy> i had my settings messed up
[09:42:31] <guy> alpha was not showing short
[09:43:58] <mashhad> what color should the bars be for alpha?
[09:44:08] <mashhad> i am still showing pink
[09:44:11] <guy> now on ER2 alpha is blue
[09:44:17] <guy> reload Alpha mash
[09:44:24] <guy> right click chart
[09:44:36] <guy> select reload and then select alpha
[09:44:48] <guy> gator: reload alpha after the start of the session
[09:44:58] <guy> right click chart and select reload -> alpha
[09:45:11] <guy> it's an esignal bug that i have to work out how to work around
[09:53:28] <guy> nothing happening here and figures in 7 minutes so standing aside
[09:53:29] <guy7> [img]
[09:53:38] <guy> alpha is neutral
[09:55:13] <mashhad> Guy, do u take weak buy(green) and weak sell (pink)? or rather wait for a med to strong signal?
[09:56:59] <guy> on ER2 I use the weak signals but on ES i wait for the strong signals
[09:57:30] <mashhad> oh ok... good to know
[10:03:22] <mashhad> so would this be a buy at ES?
[10:04:06] <mashhad> i mean if it went together with MP?
[10:05:32] <guy> yes with ES - but remember those are weak buys on ES
[10:05:42] <guy> but ES is showing postive
[10:05:59] <guy> so any longs would NOT be filtered out
[10:06:35] <guy> so for e.g. ES is at VAH but alpha says long so alpha filters out the short at VAH
[10:06:44] <guy> so this is how alpha keeps me out of some MP trades
[10:06:57] <guy> by saying that it's not a good place to short
[10:07:06] <guy> so ignore the short at the VAH on ES
[10:07:21] <guy> let's watch and see if that is good or bad advice...
[10:07:31] <mashhad> ok
[10:07:45] <mashhad> looks good
[10:08:10] <guy> well we don't know yet - if you had taken the ES short at VAH of 1189.00 where would your stop be?
[10:08:11] <mashhad> especially that MP is showing dbl tpo's so it should go higher on the ES
[10:08:42] <guy> and when (if it was profitable) would your stop be moved to b/e?
[10:08:47] <guy> say a 1.5 point stop
[10:08:55] <mashhad> -1.5
[10:08:59] <guy> so if we touch 1190.5 then this was good advice
[10:09:16] <guy> if we touch 1187.5 then assume stop to b/e and it was bad advice
[10:09:34] <mashhad> ok
[10:10:30] <mashhad> btw, do u not take the lime green in the ES? only white?
[10:10:52] <guy7> [img]
[10:11:23] <guy> i think it goes blue -> green -> lime -> white
[10:11:28] <guy> on the + side
[10:11:44] <guy> and cyan -> pink -> red -> white on the - side
[10:11:52] <guy> .
[10:12:10] <guy> akay - so alpha worked in keeping us out of that short and saving us getting stopped out
[10:12:13] <mashhad> and so it never skips a color and jump 2 colors down if the move is too strong?
[10:12:36] <mashhad> yes
[10:12:43] <guy> that chart that i've just posted shows that alpha is positive on ER2 so i wouldn't try and short ER2 now
[10:12:51] <guy> yes it could skip a color
[10:13:04] <guy> because the colors change each "1"
[10:13:13] <guy> so it could go from .99 to 2.1
[10:13:15] <guy> and skip a color
[10:13:22] <mashhad> ok
[10:13:51] <guy> so i think that demonstrated the filter and MP combination nicely - and it worked
[10:13:58] <guy> obviously it doesn't always work
[10:14:21] <mashhad> yes
[10:14:40] <guy> this next chart shows the ES stuff we've just been talking about
[10:14:48] <guy7> [img]
[10:15:48] <mashhad> is that a lime green at 87.25 that i mentioned for taking a long?
[10:16:09] <guy> no - that's the DVAL
[10:16:23] <guy> are you talking about the horizontal lines?
[10:16:33] <mashhad> refering to the alpha bar at 10:02
[10:16:59] <guy> no - that's green
[10:17:13] <guy> lime is like the horizontal bar next to the 1187 price
[10:17:34] <mashhad> ok
[10:17:45] <guy> if you right click and select edit
[10:18:07] <guy> and lower the values for each level - you will see the different colors
[10:18:16] <guy> but don't forget to change the levels back again
[10:18:49] <mashhad> so lower level 1's to 0?
[10:19:02] <mashhad> to give them a neutral color?
[10:19:53] <guy> yes or .2 or something like that
[10:21:25] <guy> try these levels mash and see the different colors:
[10:21:31] <guy7> [img]
[10:21:46] <mashhad> we are at DVAL, although it's not 10:45 yet
[10:22:17] <guy> exactly - a bit early to use DVAL so look for other lines to form a cluster to get long
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[11:00:42] <mashhad> so right now, alpha is saying to pass on this short ES at DVAH right?
[11:03:42] <guy> yes
[11:04:19] <guy> rotation factors flat:
[11:04:28] <borisfen> anybody watching SVOl?
[11:04:28] <guy7> [img]
[11:04:52] <guy> what is SVO1?
[11:05:06] <mashhad> where do you get these rotational factor figs. from?
[11:07:20] <guy> the RFTool
[11:08:00] <guy> part of the ToolPack:
[11:08:40] <mashhad> ok
[11:14:50] <mashhad> DVAH expanded on ER
[11:17:48] <guy7> [img]
[11:17:53] <guy> agreed - and buy bars developing on alpha
[11:18:24] <guy> i might try a long off the DPOC
[11:19:49] <guy> IB width is 5.2
[11:20:08] <guy> and we're right in the middle of the IB
[11:20:25] <mashhad> y
[11:20:25] <guy> on second thought DVAL would be a better place if alpha confirms
[11:20:50] <mashhad> DPOC looks doable
[11:26:46] <mashhad> did u take it?
[11:29:10] <guy> no - sorry - stepped away
[11:30:04] <guy> i'm not convinced right now - market seems a bit dead
[11:30:26] <guy7> [img]
[11:30:39] <mashhad> if u had taken it, would u have exited since we had a color change in both bars and k-line?
[11:30:48] <guy> okay - here RF is giving us a clue that the market is hinting at up
[11:30:57] <guy> no - i wouldn't have
[11:31:06] <guy> i would have waited a while
[11:31:21] <guy> i don't like exiting unless it is a big signal shift
[11:31:43] <guy> so if i was long and alpha remains positive - as it's doing now - i would stay in and get stopped out
[11:31:51] <guy> or ride out a profit
[11:32:13] <guy> as i was typing that alpha dipped negative a couple of times
[11:32:31] <guy> so i would certainly start considering scratching the trade at that point
[11:33:27] <mashhad> ok
[11:35:08] <guy> if i was long now i would work an order to get out at a tick profit to cover commissions
[11:46:54] <guy> there doesn't appear to be anything much happening now...
[11:48:55] <mashhad> DVAL ER
[11:50:38] <guy> correct BUT...
[11:50:47] <guy> don't we have philly fed in 10 minutes ?
[11:51:22] <mashhad> yes
[12:06:40] <borisfen> SVOL?
[12:23:10] <guy> here is the ES chart so far for today:
[12:23:16] <guy7> [img]
[12:23:48] <guy> you can see the green buy bars and the persistant + value of alpha which is keeping me out of the short trades
[12:25:24] <guy> here is the ER chart so far:
[12:25:32] <guy7> [img]
[12:25:44] <guy> i have too many lines on that chart but I'm going to be getting rid of a lot of them soon
[12:30:46] <guy7> [img]
[12:40:09] <guy> this is starting to look like a long to me:
[12:40:13] <guy7> [img]
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[13:00:45] <mashhad> how does a short for ER look?
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[13:48:26] <guy> mash - that would have been a good short
[13:48:31] <guy> not sure if you took it
[13:48:37] <mashhad> no
[13:48:47] <guy> it was DVAH but no alpha confirm
[13:48:57] <guy> i'm working 608.5 to go long atm
[13:49:11] <mashhad> why 608.50?
[13:49:40] <guy> Buys AB @ 608.5
[13:50:06] <guy> i'm was hoping for a spike to it which will be rejected
[13:50:10] <guy> but no...
[13:50:13] <guy> it goes lower
[13:50:41] <mashhad> so it's not an MP trade then?
[13:51:42] <mashhad> i hate it when news comes out and i am in a trade!
[13:52:18] <guy7> [img]
[13:52:19] <guy> yes it is
[13:52:20] <guy> DVAL
[13:52:38] <guy> what news came out?
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[13:52:59] <mashhad> i heard some state of emergency in Isreal
[13:53:07] <mashhad> it looks ok now
[13:53:40] <guy> this is pure MP that I'm trying to trade now
[13:53:45] <mashhad> btw, i am showing DVAL at 608.90
[13:53:53] <guy> i'm trying to trade the VA rotations
[13:53:57] <guy> so am i
[13:54:07] <guy> i was just trying to get an entry price outside the VA
[13:54:16] <guy> basically a better price
[13:54:17] <mashhad> ES stopped right at DVAL
[13:54:20] <guy> which i got
[13:54:25] <guy> and alpha confirms
[13:54:29] <guy> but let's see if it works
[13:54:33] <guy> target is DVAH
[13:54:38] <guy> so currently 611.1
[13:56:20] <mashhad> is ur mechanical stop at 607?
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[13:57:28] <guy> yes
[14:05:57] <mashhad> L 87 ES
[14:06:52] <guy> GL mash
[14:07:17] <guy> exit stop set AB @ 607
[14:07:47] <mashhad> i got out b/e
[14:08:44] <mashhad> should have not listened to JP!:)
[14:09:09] <guy> i was out of JP's room for a while - what happened?
[14:09:39] <mashhad> he said there is dbl tpos on cash dow and that's gonna make it tough
[14:09:42] <mashhad> so i got out
[14:09:55] <guy> okay - were you short?
[14:10:19] <mashhad> no. i am talking about this long i just got out of at b/e
[14:10:34] <guy> are you flat now?
[14:10:38] <mashhad> y
[14:12:50] <mashhad> anyways, let's see if the trade works
[14:13:09] <mashhad> it needs to hit 89.00
[14:13:36] <guy> why 89?
[14:13:44] <guy> why not the DVAH at 90?
[14:13:58] <mashhad> true..
[14:14:23] <mashhad> but at this time, i am just tring to get +2 on 1st contract
[14:14:31] <guy> okay - let's paper trade this for you now using alpha and MP
[14:14:41] <mashhad> cool
[14:14:45] <guy> stop at 86 now right?
[14:14:51] <guy> and entry is L at 87
[14:14:53] <mashhad> 85.50
[14:15:00] <guy> okay stop at 85.5
[14:15:08] <mashhad> stop is -1.5
[14:15:17] <mashhad> profit +2
[14:15:23] <guy> DVAL is 87 and alpha is +1
[14:15:37] <mashhad> y
[14:15:45] <guy> so we hang in there until either (1) alpha gives up (2) stop is hit (3) target is hit
[14:16:00] <mashhad> ok
[14:16:19] <mashhad> what do u mean alpha gives up?
[14:16:22] <guy> here's a chart
[14:16:28] <guy7> [img]
[14:16:47] <guy> if we stay at the same price and alpha deteriorates down to 0
[14:16:57] <guy> then alpha is no longer undervaluing ES
[14:17:10] <guy> you see at the moment, alpha says that ES is undervalued by 1 point
[14:17:22] <guy> and what we want to see is the ES moving up
[14:17:27] <guy> and alpha remaining at +1
[14:17:37] <guy> saying that ES is still undervalued even though it's moving up
[14:17:47] <guy> so telling us to hang in on the long side
[14:18:21] <mashhad> ok
[14:19:01] <guy> i'm doing exactly the same thing as we're talking about on the ES but i'm doing it on the ER2
[14:19:54] <mashhad> yes, but this signal lookedmuch cleaner on the ES chart
[14:20:05] <guy> i agree :)
[14:20:10] <mashhad> and there is 89!
[14:20:38] <guy> do you trail a stop?
[14:20:59] <mashhad> no.. on single contract i just get out with +2
[14:21:17] <mashhad> if i am doing multiple, i adjust stop to b/e on the rest
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[14:22:18] <guy> okay
[14:22:48] <guy> so alpha is still positive - which is good
[14:22:55] <mashhad> yes
[14:23:06] <guy> and it's dropped back to about .5 to .75 which is expected and fine
[14:23:33] <guy> what we don't want to see is the price staying at the same level and alpha going down
[14:23:51] <mashhad> i see
[14:23:53] <guy> what we do want to see (if the price stays at the same level here) is alpha strengthening
[14:24:30] <guy> so sometimes the market trades sideways and you'll see alpha start rising or falling which is your warning that the market will rally or break
[14:27:55] <guy> so is your target hit now?
[14:28:04] <mashhad> y
[14:28:12] <mashhad> on paper! lol
[14:28:14] <guy> here is the chart at the end of your trade
[14:28:16] <guy7> [img]
[14:28:29] <guy> doesn't matter mash
[14:28:43] <guy> just watch and paper trade and see if alpha fits your style and helps you with MP
[14:29:09] <guy> this is your first day watching it isn't it?
[14:29:18] <guy> because of the technical problems you were having earlier
[14:29:44] <mashhad> correct
[14:29:58] <guy> here is an interesting comparison
[14:30:05] <guy> your trade now has alpha at zero
[14:30:05] <guy7> [img]
[14:30:10] <guy> look at that chart
[14:30:23] <guy> and you'll see that in my trade on ER2 alpha is at +1
[14:30:30] <guy> so alpha is still signalling buy
[14:30:44] <guy> even though we've rallied 2 points from the recent low
[14:30:51] <guy> so alpha will keep me in this trade
[14:31:10] <mashhad> looks good
[14:31:13] <guy> say for e.g. my target was 609.5 - i would have then ignored it because alpha was still saying buy
[14:31:25] <guy> my target is actually 611.1
[14:31:40] <guy> now when/if we get there i'll see what alpha is saying
[14:31:55] <guy> (of course it could all go pear shaped and we could break now)
[14:32:12] <guy> look at the rotation factors for alpha:
[14:32:19] <guy7> [img]
[14:32:29] <guy> they are negative which is not good for this trade
[14:32:35] <guy> but alpha is +ve
[14:35:13] <mashhad> do u exit a trade because of rotational factor changing?
[14:35:18] <guy> no
[14:35:30] <guy> i just keep an eye on it
[14:35:46] <mashhad> does it stop you from entering a trade?
[14:35:54] <guy> no
[14:35:57] <mashhad> ok
[14:38:29] <mashhad> looks like Dpoc was a tough area for ER where as ES made it all the was to DVAH
[14:38:46] <mashhad> was=way
[14:39:09] <guy7> yes - i've noticed that recently: ER2 responds to the DPOC more than ES
[14:46:25] <guy> stop hit AB @ 607 --> - 1.5
[14:46:59] <mashhad> approching single at 85 ES
[14:48:02] <guy> i see that
[14:48:19] <mashhad> sorry about that trade
[14:48:33] <mashhad> it would have been a good one at DPOC though
[14:48:45] <guy> doesn't matter
[14:49:00] <guy> my winners are bigger than the losers
[14:49:16] <mashhad> good
[14:55:37] <mashhad> we may have a short at DVAH ES
[14:56:51] <guy> i agree mash -
[14:57:01] <guy> personally i'd like to see a more negative alpha
[14:57:41] <mashhad> yes. for a second the alpha bar turned pink that why i typed that
[14:57:56] <guy> ah - okay
[14:58:01] <guy> that's a good thing to watch
[15:00:49] <guy> RF's turning further down
[15:00:53] <guy7> [img]
[15:12:01] <guy> have a look at this chart:
[15:12:05] <guy7> [img]
[15:12:16] <guy> it is clearer what i was trying to achive
[15:12:23] <guy> targetting the DVAH
[15:12:31] <guy> using the DVAL + alpha as entry
[15:12:46] <guy> alpha remained strong throughout trade so i didn't exit
[15:13:01] <guy> and i got stopped out by 2 ticks
[15:13:12] <guy> but so far the target still hasn't been hit
[15:14:30] <mashhad> yes
[15:15:01] <mashhad> that's the thing about the ER, it swings too wide sometimes because vol is thiner
[15:15:10] <guy> true

[15:35:18] <guy> well that was a very unlucky trade of mine
[15:35:20] <guy7> [img]
[15:35:25] <guy> have a look at that image
[15:35:41] <guy> I was stopped out when it 1 ticked my stop
[15:36:04] <guy> and then the target was hit about 45 minutes later
[15:36:46] <guy> it happens - happened in the past and will happen again in the future
[15:37:14] <fspeculator> luck is always #1
[15:37:20] <guy> :)
[15:37:34] <fspeculator> i was stopped yesterday HOD in bonds
[15:37:41] <guy> however - it's comforting to see the strategy work and my money management and timing fail
[15:37:44] <fspeculator> on big position
[15:37:53] <guy> sorry to hear that FS
[15:38:25] <fspeculator> it was a swing trade
[15:38:44] <fspeculator> as i monitor lots of things, but ...
[15:39:07] <fspeculator> i mean funnymental things
[15:39:17] <fspeculator> TIC, dealer shorts etc
[15:40:00] <fspeculator> singles work great
[15:40:04] <fspeculator> look at YM today
[15:46:26] <guy> YM perfect singles trade
[15:46:45] <guy> i'm going to add in a singles marker into the DVATool
[15:56:59] <guy7> [img]
[15:57:00] <guy> okay - i'm outa here
[15:57:05] <guy> see you all tomorrow

Session Close: Thu May 19 15:57:21 2005

that was a very unlucky trade that last one of yours.

you just needed to enter 2 ticks lower or have a stop 2 ticks lower and it would have worked out to the T !!

nice trading - i like your style.
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