Replies to post #977 on Advanced Trading Methods

[gloe]

What I still need to do:

Go back over the 120 days of data with a 60 min chart with the ADX, to see how well the ADX did in fact catch the "mini-trends" and the changes from trending to consolidating.

Something to consider: Alex Elder's "triple screen" idea (from "Trading for a Living"): Trade only "in the direction of" the longer time frame using signals off a the smaller times frame. He recommended using a smaller time frame that was about 1/5 the longer time frame. Eg. Trade the weekly trend taking signals off daily charts; trade the 50/60 min trend taking signals off 10 min charts (which is what I am using for GIPS); trade signals off the 5 min charts based on the trend on the 25 or 30 min chart.

The trend is your friend till it ends and it bends.

Something to think about: If you trade WITH the trend, you will only be wrong once, when the trend changes; if you trade against the trend trying to catch the top or bottom, you will only be RIGHT once, when the trend changes.

[gloe]

RE: My 120 day "look back": I can clearly see the changes from trending to trading range; one thing I cannot yet tell is how badly GIPS will falter (how large the draw downs) when the switch happens -- how quickly can I recognize it and how quickly can I get back in the direction of a new short term trend.

ADX 60 min flattening out and dipping down should signal the end of the mini trend; then watch that ADX to see if a new mini trend develops in the opposite direction.

How to determine the end of the trading range: some kind of TLB on the price coupled with what? a MACD cross on the 30 min a la Chan (I looked at this last night: not bad); a CCI HFE or big obvious divergence on a 30 min chart? 60 min chart? A woodie pattern on a 15/30 min chart? An RSI divergence on the 60 min? If the longer term trend is up, will an OS RSI 60 min be good enough to get back in long after a correction/consolidation?

Lots of work to do to go from a 5 min woodie scalper to a longer term trader.