Saturday, October 06, 2007

Setup

Albert left a comment:

Are those the charts you trade off of these days? No indicators at all? Very interesting. Is that a 25 LSMA line? What happened to the CCI? Sorry for all the questions but it's been a while since I've checked your blog.

First for all interested, these are the screens I'm looking at all day:

Globetrader_00

4 19" displays, with CNBC running from time to time in place of the dolphin and some background music, when CNBC is tuned out.

The charts are stacked, so I just need to scroll down to see the other contracts I trade. First setup (which is seen right now) are currencies, followed by commodities (Gold and Oil) and indexes (FTSE and CAC40).

I follow these markets, but once I'm committed to trading a category, I don't want to look at the others. It's distracting, it usually gives you the "Shit, I missed that run in Gold, while I'm sitting in a FTSE trade, which is doing nothing"  feeling. So now I decide what to trade and once I'm in the trade I no longer follow the other markets. I still want to see related markets, as that is an edge I have. Big moves happen in all related markets and some are more sensitive then others. I use that kind of information, so I like to have it on the screen, when in a trade.

The big trading charts are Rangebar charts, with each bar representing 5 ticks range in the contract displayed. They are not regular candles, but Heikin-Ashi bars, which keep you better in the trade, than regular candles. Added to that are a 34 ema and a 13 ema. And to the left a Volume histogram of the bars currently on screen. I like the dynamic that kind of histogram displays throughout the day, as it automatically adapts to high and low volume trading periods and displays the volume relative to the total traded volume currently seen on the screen.

To the left you see two 30 minute charts of the peers in a group (The Yen chart is replaced by the Euro at times) Then you see two 15 minute charts of the contracts seen on the trading screens. these are the currency pairs I actively follow. usually they are closely linked and show high correlation to one another. EG: The Euro and GBP or AUD and CAD as seen above.

On the trading charts I mark Pivot points, Market Structure Highs and Lows and important trading levels from yesterdays and todays trading. In addition I often add a Fib-ruler to my charts, to display retracement levels and target zones. You see them on my CAD charts, which I posted in the previous article.

I have no oscillator on the screen, as I found no information in them, which can't be found in pricebars itself.

Zeroline cross? I have a 50% marker on the screen, which displays the 50% range of the last 14 bars.
If price crosses from below to the upside of that marker, you usually have a cci zeroline cross and also a stochastic 50% cross.
It comes up to the level and turns down again, a Sling or zeroline rejection with the trend.

Divergence is seen as good on price itself as you see it on the oscillator. Steep downtrend is replaced by a shallower downtrend with prices making a new lower low = Divergence on the cci and on the Stochastic

Retracements in a trend to get you in on the second leg of a good trend. Nothing clear to be seen on the oscillator, but very clear on price itself. Its called the Floortrader setup and it's one of the best trades around. But using oscillators like the cci, unless you have it tuned to the correct barlength you see just a shallow dip, On stochastic it's a wiggle above the 75% or below the 25% level. Nothing to write home, nothing really clear...at least it never was clear for me.

On price bars you see it all. I'm using Heikin Ashi bars which usually contract on a valid Floortrader setup and change color right when the FT gives you a valid entry signal. Sure it is not 100% as my FTSE trade yesterday proved, but I don't expect 100%. It works often enough to give me an edge, to be confident in the signal.

This setup I have is nothing fancy, it uses nothing special. But it's simple, I have reduced the information on my charts to: Bars, 13 and 34 ema and Volume. The fifth information used on my charts comes from my Fib-tool, which gives me certain levels to look out for on the contract I watch.

Five bits of information per chart. Seven is the max you should have on your screen according to the books I have read on the psychology of trading or you start overwhelming your brain with information, which usually results in feeling stressed, being unable to pull the trigger, as you question your own setup or trading without a valid setup or chasing after a trade, which took off without you.

Btw.: CNBC is usually tuned out. I have it on at newstime and in the morning as preperation for the day to know what has happened overnight in Asia. But after that, the charts tell me all I need to know.

Friday was intense trading for me, but I did not feel stressed.

I can't remember a time, when I was really confident in saying:

I feel comfortable with the charts I have. They give me all the information I need to decide when and where to take a trade and when to exit the trade I took.

1 comment:

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