Slow RSI entries

[stoploss please]

Slow RSI entry

Hi all

I have been having some success trading the Dow recently. I find using a slow RSI on a five minute chart is good at finding market turning points. It is a very simple method but is very useful when use with other TA techniques, especially Fib and S&R.

Here are todays entries.

 

[stoploss please]

Slow RSI 2nd entry

Attached is the short entry. I was going to attach them all on the same thread but sure how to.

 

[stoploss please]

Slow RSI 2nd short entry

Hi

Could one of the moderates do me a big favor and merge these threads.

Cheers
Andy

 

[ChartMan]

Just hit "post reply" and post the next one.

 

[Bill]

Thanks for the charts Stoploss.

I am desparately trying to learn Chartman's Dow strategy at the moment [see the thread].

Assuming you are familiar with the techniques I wonder if you can help. The long entry you have looks similar to the RS switch yet you seem to be combining it with a 'double bottom' in RSI. Is it possible you could give more detail on how you do this and how it differs, if at all, from the Dow strategy?

Similarly for the short entry the RSI seems to have short-term ND [i.e. < 25 mins] and SR switch which has signalled the fall.

Thank you for the charts and your help is most welcome.

Perhaps if CM reads this he could also comment.....?

Regards

Bill

 

[neil]

I cannot read these XLS files ??

 

[ChartMan]

Wje200- take care here. The reading/interpretation of a 1 min chart is NOT the same as a 5 min chart. You must decide on a trading timeframe, whatever that may be, and stick with it. If you chop and change as you see new ideas from other posters, don't trade. Make up in your own mind what you THINK you understand and then try applying it for yourself to see if you can do it AND understand why.
It is not for me to say which is better, or worse. Everyone has to find their own system that they are comfortable with and, most importantly, that they understand. It took me a long time and a lot of money to find out that EOD was not for me. The principles over all timeframes are the same. It's the little details that are different. For example, divergences that show up on a 1 min chart, may not show in a 5 min chart.
Hope this helps.

 

[stoploss please]

Hi Bill

I have not studied ChartMans tactics but I do read his analysis and find it very useful. I like to find levels of congestion after a solid move. Within this congestion area a recognisable chart pattern should form. What I am trying to is trying to transpose the levels of congestion within the price onto the RSI and then trade the break. I have found this method is useful for both trending and ranging markets. This tactic should be not used as a trigger without further confirmation. I was infact convinced that the market need to retrace in the afternoon session because the distance between the the price and the 200EMA on my S&P chart was at one stage 19 points. I am not confortable and hitting longs when the gap is so wide so I waited for a shorting oppurtunity and found it on my second entry.

I am sorry I cannot be more thorough but this method is new to me and I am still trying to fine tune it. Once I have a firm strategy I will post it. However, please feel free to try out these settings and see how you get on.

5min Candle stick
20 SMA
200 SMA
RSI 84, look for trend line breaks and support and resistance.
Double tops and bottoms look like good bets. Wait for the RSI to hit your trend line at least three times before entering a trade. Trade the third or fourth break or better after a double top or bottom.

Price and volumue histogram is useful as it is a good indicator were the main battle of the day is being fought.

S&P 5 min chart is useful to have up as important levels on the Spoos will effect the Dow. Watch for the distance between the price and 200EMA. Anything above 14 and the dow may rest for a while or even better retrace.

60min chart useful for important trendlines and fib levels.

3min line chart. I have this on a small setting and use this as my main tool for pattern recognition and identifying S&R.

There is more but I cannot think of it know.

Hope this helps
Andy

 

[Bill]

Good answer CM.

I am keen to learn the Dow technique but it is interesting to see how other traders approach the problem and in this case whether there are any similariities. I take your point about the difference in the 5 min chart though, and start to wonder about the 10min chart you use for daily analysis. Although it has to be said that the only real impact on my daily trades come from the channel supp/res derived from these 10min charts. Direction is taken mainly from the 1 min chart as and when the signals occur.

On a more general note there seems to be a variety of trading styles on this and other sites ranging from the people who trade 'blind' based on other people's analysis to people like yourself who need to know the TA inside out before they commit money; with all shades in between. This is not a criticsm of one or the other. For exampe IndexKing posts on this site and clearly has many followers, indeed I have a subscription for his recommendations [does not mean I trade them though]. I just can't feel comfortable depending on someone elses analysis [probably something to do with my scientific training] which means I have to take the more difficult route of doing it myself.

The Dow strategy is the only technique I have found so far that clearly defines the exit and entry signals in a fairly unambiguous way. It is a system I can feel comfortable with but as yet cannot trade sucessfully. The signals look obvious during the post mortem but real-time is quite another matter.

Today was good though, found a triangle and target, met after 3 point ND. [There is still hope!]


With apologies to Stoploss for highjacking his thread for a slightly off-subject response.

Bill

 

[Bill]

Thanks for the detailed reply Andy. That's given me something to think about.

Bill

 

[stoploss please]

Bill

Another method that I found useful is this one.

http://212.38.89.86/spreads/tradingthedow2a.htm

Cheers
Andy

 

[Grey1]

WJE,

You should always enter a trade using the lowest time frame u have access to . Preferably a tick data.. How ever you should get the direction of your trade from higher time frame..

I suggest you to look into Multi time frame analysis on net..

Lets say you are thinking of going Long DOW on 1 minute and your 1 minutes RSI shows OVER SOLD, you wont take a position until you have checked your tick data for razer sharp entry ( your RSI on the tick data should be Over sold too .. This way you have multiple time frame confirmation ) .. This way you will reduce your risk hugely ..

I am not a fan of RSI or MA but if you are then this is your best choice......

 

[Bill]

That's interesting Grey1. Whilst for the next few months I intend to persevere with the Dow Strategy, I do have a question for you.

I use RSI14 1 minute chart and I think the tick intervals are about 2 seconds. Are you suggesting the additinal use of another RSI14 based on the tick intervals, meaning approx. 28 secs [2sec ticks x the 14]?

The other problem I have is that the SB price always seems to be 4 or 5 seconds ahead. By the time I see an entry the price has already moved. Is it just me or does everyone have that problem?

Also, final question, if you do not use RSI or MA which other analysis chart do you find most useful?


Thanks
Bill

 

[Grey1]

WJE,

RSI measures the OBand OS relative to N period before.. So when your RSI ( 14) signals an over sold situation then all you are gtting is .. DOW IS CHEAPER THAN 14 PERIODS AGO.. THAT IS ALL. SO on 1 minute chart your OVER SOLD signal means DOW IS CHEAPER THAN 14 MINUTES AGO.. WHAT IT DOES NOT TELL YOU IS THAT THIS IS THE REVERSAL POINT.. ( you can not conclude if DOW is cheaer than 14 days ago then it MUST BE OVERSOLD and bet your farm on it...)

Now, In advanced techncial analysis we have a concept called Multiple time frame analysis which says, a true and reliable signal comes from situations if and when we have a confirming signals in multiple time frames..

In above example I mentioned tick data as the lower time frame helps for finer entry and hence much less risk ..

TECHNICIANS often look at weekly and daily chart to forcast new moves.. For example if DOW weekly and Daily were OS then we can sort of assume that both Cycles are at their bottom and a next move would be up..

What do I use myself you asked ?

long story mate..

 

[kent]

"long storey mate"

Grey 1


Some of us like long stories!! ( got all weekend to read it---- and a lifetime to understand it!)

Go on, be a good sport!


Ken. T

 

[jonnyy40]

I think scalping in the sense I understand it is impossible with spreadbets/futures.In Spreadbets you're never on the price.With futures the fills are NOT instant.So concentrating on a tick chart will only give you a tick.I think Grey1 is referring to shares(L2)?Maybe you can try it with one of these dow tracker funds?Chartman's idea of using a MA is to keep you(me) safe.The best thing to do is download T-Sim,Auto/Bracket trader and practice with a 'safe' system until you're consistently in profit?Or book a day with Mr.Charts/Naz if you want the Nasdaq route?

 

[stoploss please]

Maybe, we make things more difficult then they really are. The price action can hurt in two ways, by going against you or through time. I would say you would receive the most damage to your wealth and health during periods of time/price congestion. If you can eliminate those, you are then left with a move than will go either up or down. As we or odds player, you then rely on your analysis to point the direction. As for the spreads. There are ways of putting this spread bias in your favor but this takes practice and cannot be taught.

The key is, find out where the main battle in the price is being fought and only step up to the table after the beaten side are exhausted. You then grab onto the coat tails of the winners and hope you get a nice move out of it.

 

[Bill]

Dear all

This is superb response guys. I'll print the posts and use it as bedtime reading.

Bill

 

[al-motor]

stoploss pls-

you mention about congestions and keeping away fromm them- I think everyone wants to do that- But u would normally feel a congestion after a few bars have elapsed-

During that time, u could be whipsawed a few times- up and down.........

Any easy solution ?!

 

[stoploss please]

al-motor

Good question. I wish I had all the answers but this is how I see it.

What is an area of congestion. Well it can be one of two things imho. An area of consolidation after consistent trend. The break out of this consolidation should resolve itself by resuming the prior trend. Or an area of congestion could be a top or bottom at the end of a trend. Within a trending market, you expect to see a succession of higher lows and highs in an up trend and the mirror of this in a down trend. Trend lines can also be applied onto both the price action and the indicator you are using. A break of the trend line is an indicator that the price action is experiencing a change. Also, if you use chart tools like layered MAs or Bollinger Bands, any convergence of the averages or bands indicates congestion.

What I tried to do is look for possible areas were the price is either going to rest or reverse.

Fibonacci targets are important to me. I apply fib on hourly charts get an idea of what could happen to the over all trend and I also apply fib on a much more micro scale right down to individual waves found on my 3 and 5min minute charts.

I look for important areas of support and resistance in the Spoos, Nasdaq and Dow as there is a powerful inter relationship between the various markets. If say the Spoos are approaching a large round figure for instance 1000, I will try and asses what effect it will have on the Dow.

Double top and bottoms, found both in price and the indicator is one thing that sets the alarm bells ringing. Especially if in an up trend, we have a lower right peak and in a down trend a higher right trough.

Timing. I try and avoid trading the doldrums as that is were low volume and whipsaws are usually found.

I always had a problem of thinking in one dimension. ie I assumed that the price action is either up or down but never sideways. To get round this I constantly apply horizontal lines to the peak an trough's found in the price and the indicator. Breaks in these are just as important as typical trend line breaks.

Look for divergences in price and indicator an be prepared to stand aside until the battle has finished and the price can move smoothly again.

I hope I have answered your question. I am no expert and to be honest, I am still learning but this is what I have found of use thus far.

Kind regards
Andy