"Trading Day by Day" by Chick Goslin

[TGM]

Hi TGM,
I’m working on the main 3 US markets for EOD at present in the evening & GBPUSD in the morning as I still have a day job (that gets in the way sometimes, but not for long).
Are you talking US crude Oil? I've keep an eye on oil & gold since reading Chick's book, but don't have time to back test it yet.

Crude minis and Nat Gas minis can return big dollars. Any method will work best in secular bull markets and the energies are in secular bull markets. Look at the 60 min signals and the daily signals.

Currencies are paying well right now. The method works on anything that moves but if you get in a market sector that is moving really well you end up with more money and less work.

 

[TGM]

Thanks. Do you find that you - in order to have better-odds entries - miss big chunks of beginning (i.e. after reversals) trends?

I am on eSignal myself and I did some custom indicators, based on a moving 49-days SMA, with MACD 3, 10, 16 (again using Simple MA as basis for it). I just added a few dots and differentials to show the 'beginning' of the trend and the SL - makes it easier on the eyes.
As long as you remember to use Simple for both MA and MACD, they are identical to the SMR indicators as far as I can see.

You are right Jyde. SMR's indicators are normalised and show different readings but they look about the same. They are smoothed a little more. However, the signals will deliver about the same results. Ensign's simple Macd is faster ---much faster. You can virtually trade the ML cycles in Ensign's.

I have traded with this methodology for over decade. There will be times when you come in late in trends. But once you know some tricks of the trade. You can make a case usually to get in a bit early. U need to learn how to take off high and low numbers so you can see when the indicators are MOST likely to reverse. The key is the ML cycle. It is the end all be all. You will find all your big money will be made in the direction of the ML cycle and the sooner you get in the better.

Newbies may want to take a 50 dollar a month subscription service and bug Chick (that is what I did). Call him and pick his mind until you understand all the tricks. Tell him I sent you. He has decades of knowledge about these things. If anyone on this site is a book owner and has a question ---do NOT hesitate to call him.

 

[Christrader]

Do the charts that Chick uses ( http://www.smr.com ) already have the SMA's on them? I downloaded one of them and they have indicator lines there. Again, I appreciate your patience as I'm sure this is an obvious answer - I'm learning.

Thanks,
Chris

 

[pb]

I am totally with TGM here. I have asked quite a few questions to Chick over the last 2-3 months and he has answered every single mail with detailed answer. A genuinely good guy. Obviously I have taken care not to ask trivial questions and not to waste his time (I hope).

I also agree with TGM on the merits of the ML. I have chosen a subsystem of CG's methods for testing.
My setup is as follows:
I look for established trends (i.e., 50-MA up, price 50 days back was much lower etc), wait for a pullback, and enter when a pullback ends, i.e., when the ML has just finished a down-cycle and SL has turned up. I tighten the stops when the ML up-cycle is over and it's flattening out again. I can place tight entry stops (just below the low of the pullback). Admittedly I am still learning to anticipate the ML. This will come with practice.

I also have just received my shiny new copy of Metastock, so off I go to program the lines...

 

[TGM]

Do the charts that Chick uses ( http://www.smr.com ) already have the SMA's on them? I downloaded one of them and they have indicator lines there. Again, I appreciate your patience as I'm sure this is an obvious answer - I'm learning.

Thanks,
Chris

Chris,

Chick updates SMR charts by hand. He only uses paper charts. They mail him the charts every week. I update SMR charts by hand as well. I credit this with giving me a great deal of "market feel". He gets his quotes from CNBC and the Internet. He does NOT use computer charts. Which is funny because he makes more than the VAST majority of traders who use computer charts.

On the other hand, I sit behind a bank of monitors!

 

[TGM]

I am totally with TGM here. I have asked quite a few questions to Chick over the last 2-3 months and he has answered every single mail with detailed answer. A genuinely good guy. Obviously I have taken care not to ask trivial questions and not to waste his time (I hope).

I also agree with TGM on the merits of the ML. I have chosen a subsystem of CG's methods for testing.
My setup is as follows:
I look for established trends (i.e., 50-MA up, price 50 days back was much lower etc), wait for a pullback, and enter when a pullback ends, i.e., when the ML has just finished a down-cycle and SL has turned up. I tighten the stops when the ML up-cycle is over and it's flattening out again. I can place tight entry stops (just below the low of the pullback). Admittedly I am still learning to anticipate the ML. This will come with practice.

I also have just received my shiny new copy of Metastock, so off I go to program the lines...

Contact Chick. One of his subscribers is a Metastock programmer. Ask for the guys email address. I have talked with the guy before and he has had a total obsession programming the 3 lines.

 

[Christrader]

Hi again,

I hate to add confusion to the mix but I just got off the phone with a local successful commodity trader. He's made about five million in the last ten years. He told me that he trades mostly soybeans, mini dow, grains, corn, etc. He says he looks at everything before he makes a move - The exports for the prior week, weather for the "weather market commodities", growing crops reports, political situation, API on Wednesday mornings, and more. He also said that he looks for channel breakout - the longer the channel the bigger the move in most cases. He calls these the fundamentals and that the technical reflects it... I was just interested in everyones opinion on this.

Thanks,
Chris

 

[TGM]

Hi again,

I hate to add confusion to the mix but I just got off the phone with a local successful commodity trader. He's made about five million in the last ten years. He told me that he trades mostly soybeans, mini dow, grains, corn, etc. He says he looks at everything before he makes a move - The exports for the prior week, weather for the "weather market commodities", growing crops reports, political situation, API on Wednesday mornings, and more. He also said that he looks for channel breakout - the longer the channel the bigger the move in most cases. He calls these the fundamentals and that the technical reflects it... I was just interested in everyones opinion on this.

Thanks,
Chris

Channels work fine. It is simple. This thread is about Chick Goslins method. With that said. How a market reacts to the fundamentals can be important.

In general, markets move fundamentals follow. It takes some skill to read funnymentals. I know many wealthy traders and they all do different things. Your first priority should be to learn to act intelligently and TRADE IN THE DIRECTION OF THE DOMINATE PRICE ENERGY FLOWS.

Stick to the basics and keep it simple. Learn to master the basics. Or you will face information overload.

 

[Christrader]

Stick to the basics and keep it simple. Learn to master the basics. Or you will face information overload. TGM

You are right! Thanks.

 

[chump]

Yes, I decided to construct charts by hand for the instruments I wanted to test this on..mainly because I could see the 'art' and an essential part of this systematic approach was in the anticipation, particularly of the ML.....to develop that I felt I would do it better by hand constructing the charts..I've enjoyed that actually...although it's taken me awhile to get up to speed with this approach
My next statement is a bit tentative given the experience of the author with this approach compared to my very recent interest ..but I think this approach may benefit from consideration of volume has an additional filter ...I made a mask to cover the examples in the book so I could only see a live right edge ..I then basically started trying to do a day by day analysis with a trade recommend similar to the one the author provided..however in addition I also used volume in my analysis and on probably the majority of those occasions where the author subsequently reviewed his original recommendation and found it 'negative' i found I had made a different recommend because of the volume filter..I should also say that I don't yet have what I would call a large enough and broad enough sample hence why I say this is still "tentative" ..I should also say that I am ambivalent about adding anything to this approach ,because I see the appeal of it's simplicity and there's always the risk when you start tinkering and adding complexity that you undermine it's performance..so jury is still out ..as time goes by I might come back with more on this..

 

[pb]

Chris,

Chick updates SMR charts by hand. He only uses paper charts. They mail him the charts every week. I update SMR charts by hand as well. I credit this with giving me a great deal of "market feel". He gets his quotes from CNBC and the Internet. He does NOT use computer charts. Which is funny because he makes more than the VAST majority of traders who use computer charts.

On the other hand, I sit behind a bank of monitors!

Tim,
If I remember correctly the exact formula of the SMR lines are proprietary. Can you/Chick actually update the chart by hand without knowing that formula, or do you use your own version of the formula?

Thanks.

 

[TGM]

Tim,
If I remember correctly the exact formula of the SMR lines are proprietary. Can you/Chick actually update the chart by hand without knowing that formula, or do you use your own version of the formula?

Thanks.

http://www.smr.com/cpfspf.htm

here is the numbers I use go to the current day. I only look at the 'prices and plotting figures'.

No, the only lines I fool with by hand are SMR's. I use their numbers.

 

[chump]

TG,
can you tell me how soon after eod these figures go up on the site ...damn this makes life a lot easier ..if only I'd had them before ..

 

[KarlaF]

hello TGM

could you a little bit illustrate what you mean by tricks.

e.g the nasdaq100, trend is up and ML is turning to an upcycle.
interesting could be the SL.
the SL is on recent highs combining with may 05 values.
but if you look at the SL values 16days ago you will start to take out values from 0 to -20.
how will this have effect on the actual SL line or ML line?

thanks
karla

 

[danfreek]

I would exdpect the ML to keep rising in the short term, however as you say the SL is relativly high. Personally I am waiting for the price to consolidate a bit and come out of its overbought condition. Also the ML is below the 0 line, I would also wait for it to rise above 0, this should happen in the next few days though especially given the SL numbers that it's about to drop off. I would have no problem with anticipation longs, but there is a high possibility of having to sit through a pullback or consolidation, so I won't be using them.

Overall though the picture is bullish.

 

[TGM]

hello TGM

could you a little bit illustrate what you mean by tricks.

e.g the nasdaq100, trend is up and ML is turning to an upcycle.
interesting could be the SL.
the SL is on recent highs combining with may 05 values.
but if you look at the SL values 16days ago you will start to take out values from 0 to -20.
how will this have effect on the actual SL line or ML line?

thanks
karla

To much of a question to answer here completely! But I will tell you one trick. The third lower high in the SL with the end of the ML upcycle will frequently note a top (vice-versa for a bottom). There are a handfull of tricks. The easiest way to learn them is to get the newsletter (it is a joke of a price). The newsletter is a 'teaching' newsletter. Then ask a lot of questions. I.E.---dont hesitate to call Chik. I am horrible teacher.

Well in regard to the nascrack. If you trade stock indexes. You should be looking at the daily charts of ALL FOUR MAJOR INDEXES==NAZ, SPOO, DOW, RUSSELL. When you do that (read the book). There will be one that presents a CLEAR PICTURE. That is the Russell. They are all concurrent to the upside. Russell is the strongest. ALLWAYS BUY THE STRONGEST. Nasdaq DOES not move much anymore. Very little return on margin. I have NOT traded the naz much since 2002 for that reason. With that said the ML cycle is in a clear uptrend and those do not end overnight in the stock market. Your problem is coming from the buying the weakest. You should not do that. It is always a pain with very little reward.

The ML is the 16 period moving average of the SL. So anything the SL does will change the ML.

 

[KarlaF]

thanks danfreek,

yes maybe a consolidation is ahead.
the actual nasdaq chart remembered me at the chart on page 175 in the book.
and the hint " our job as the trader in this trading business is to get positioned here"

karla

 

[KarlaF]

TGM,

i don't think you are a horrible teacher, at least your explanations are detailed.

since i don't trade one of the markets in chick's newsletter i still hesitate to subscribe.

sorry, maybe i got it wrong but the third lower high in a ML upcycle? or do you mean after the third higher high.
i have observed that you can take after the third higher high in an upcycle the crossover from the SL through the ML as an exit signal from your long position. but not as an entry trigger for a short position.

you are absolut correct with the strongest market. this was just a learning example for me how i should interpret the SL.
this is where i still have some probs. but market was chosed random.

karla

 

[danfreek]

It's very tempting to get positioned here, but the uptrend is not too strong yet (although it would take a fairly sizable move to break it), also it is very overbought. As we've just moved into a new high area this isn't very surprising, and by waiting I would miss out on some of the move at the start, if I could place a small starter position now with a low stake then I would, otherwise I'm going to have to be patient, even though that is not easy. I'll have to look up the chart on page 175 when I get home this evening.

 

[JFK]

Well in regard to the nascrack. If you trade stock indexes. You should be looking at the daily charts of ALL FOUR MAJOR INDEXES==NAZ, SPOO, DOW, RUSSELL. When you do that (read the book). There will be one that presents a CLEAR PICTURE. That is the Russell. They are all concurrent to the upside. Russell is the strongest. ALLWAYS BUY THE STRONGEST.

I’m glad you mention the Russell 2000, I’ve only started to follow it since reading Chick’s book.
Any idea why, that out of the 4 the Russell did not react/fall as much as the others last Thursday?
Is it not traded as much as the others out of hours?