"Trading Day by Day" by Chick Goslin

TGM said:
The only news letter I receive is Mr Chick's. It is the only one I have ever payed for. I was on trading desks with thousands of dollars in Subscriptions. I find Chick's to be the best. Why? Because it is a teaching newsletter and subscribers can call him directly.

Here is the part of the newsletter I just received. I think you guys might like to read it. Hope you all are doing well.

Cheers
TGM
Click to expand...

Hi TGM,
Thanks for this letter. I was actually thinking of subscribing but had few doubts. The example letters on his website are dated I'm afraid and could not utilize them to see how they relate to market.
After reading the letter you attached, I have couple of questions:
Q1. Does this mean that he only states in his first few lines which market to long and which to short, and he does not specifically state whether the current price level is particularly high in terms of SL value etc.? In other words does he give specific idea about price levels or how many days does he think the trend will stay on? Does he write a bit in detail about individual market?
Q2. Doesn't he cover all the markets that he says he covers in daily newsletter. For example, he hasn't mentioned anything in the newsletter you attached, about index futures such as Dow Jones, Nasdaq 100 or S&P 500 futures.

Cheers
Samir
Devon, UK

PS: A general question to all, whether SMR trend technique could be used for Spread Betting.
I think yes because essentially it is betting on a price move, isn't it?
 
Here is the stock analyses part of the letter from last night. It is pretty thorough. If you have questions about his analysis ---just pick up the phone.

"Stock comments - Decent up day today when were set up decently for
something on downside. dip in crude prices helped stocks rally today
as rally started about time Crude hit 60.00 area (down about 90
points); however, when crude rallied some off lows then stock rally
ran out of steam. Tough to trade stocks when they are just following
another market, crude in this case, but this has been case off and on
for quite and while past many months and following crude has not
lasted for more than few days so cannot let crude dictate actions in
stocks. Technical picture in crude complex still quite positive and
so this remains potential negative for stocks, but SL's are high in
Crude and so could pause or dip little more here also. Unfortunately
this makes trading stocks much tougher at moment, and especially
since patterns are currently so mixed.
Put/call ratios surprising today since for first time in very
long time got bearish numbers. CBOE/total came in at .66 which is
nominally neutral but based on numbers have been seeing past few
months have to consider this at least a somewhat bearish number. In
Index Options did 66K more CALLS than Puts and this a very bearish
number regardless of recent numbers since only rarely have more Calls
than Puts traded on any day. VIX dropped some to 12.26 and so this a
little bullish since shows less fear of big downside risk. So
put/call ratios and VIX switched sides today with put/call going from
long period of extremely bullish numbers to quite bearish numbers and
VIX going to less bullish number. This an expiration week and
put/call indicators much less reliable during these weeks and so
these numbers even tougher to read than normal.
Bottom line - Just so mixed and so many conflicting
indications here, especially when add in potential impact of crude
oil price movement, feel sidelines best until get something clearer.

Sep Dow, S & P and NDX 100- Status - Bullish/Neutral. Observations -
Trends marginally to slightly up but ML's still slightly down so
market in crosscurrent modes. Action fairly positive though both on
decent up day but even more on lack of any downside pressure after
weak close on Friday. So tough call here since may have had its
chance for downside today and fact could not do anything on downside
an upside warning sign. The way the lines are set up here the longer
go sideways the more positive picture will become and so see sideways
here next day or so as more positive than negative. Have been trying
short side here for past several days but tough to still do this
after today, although moderate down (size of today's up or more)
tomorrow would put market right back on edge for potential good
downside move. However, when go against trend, even very slight ones
like have here, have to be much quicker to give up on any against
trend trades and so feel better to be safe and go to sidelines again.
If can close unchanged or higher tomorrow then odds will favor upside
enough to justify longs. ON very strict line pattern basis can make
very minor case to go long any here now and this OK, but picture
still quite mixed and unless up sharply tomorrow ML's will go below
zero and turn patterns right back to neutral. So, tough call here and
when this tough prefer to be safe on sidelines. Bottom line - Lines
say sidelines in all three and agree for time being, but can make
very marginal case to go long now and longer holds higher tomorrow
the better the case for this."

You can use the 3 lines for spreadbetting.
 
Looks like I will get a sell signal on my Dow chart if it closes below 10,566 tonight. It will probably close just above it, just to annoy me :)
 
Bigbusiness said:
Looks like I will get a sell signal on my Dow chart if it closes below 10,566 tonight. It will probably close just above it, just to annoy me :)
Click to expand...

Any lower close puts us concurrent to the downside. I am short as of this morning (anticipation shorts) and Chick was going back short when I got off the phone with him (he might have been waiting toward the close to see if a rally was coming). Tricky pattern. But with a lower close ---GET SHORT. The juice will come quickly if it is good to the downside.
 
Nice anticipation. I went short at the close. Might get a better price in the morning but I have been left on the platform watching the short train steam southbound a few times. Might as well get on it while I can.
 
TGM said:
Any lower close puts us concurrent to the downside. I am short as of this morning (anticipation shorts) .
Click to expand...

tgm, are you talking about dow cash index or dow future (dj05u)?
besides the possibility of anticipating the dow cash index closed 08/16 at 10513 and 50 days ago 06/06 at 10467.
so according to the rules we need to see a close below 10467 to speek from concurrent.
or is my math wrong?
 
smr lines and chick goslin

you can use a macd or any stochastic indicator 3,10,16- where 3 is sjort term , 10 is medium and 16 is the range which works very well and is close to the smr lines. hope this helps !
 
Thanks Liamfitz, for the help.; But is this for the intermediate?. What is used for short term momentum indicator. Thanks again greatly apprec. Theo. I really am trying to catch on.
 
goslin smrs and macd

it will work on all time frames but I do suggest eod as goslin does in his book . pay particular attention to the m/l line which is your principal guide for future direction. The m/l loine will of course be the slow one while the fast willl be the s/l . Just bring up a chart and input the 3,10, 16 parameters into the macd and you will see ! if i can help anymore send me an email
 
Hi All,

After reading this thread from start to finish, I decided to order the book last week. Currently I'm up to the chapter discussing Stop Loss positions and enjoying it so far. The actual trading method including the 3 point system seems very interesting :)

My question though to all those who are currently using Goslin's method to trade is do you think (in your opinion) this will work with UK stocks? I am fairly new to trading (having only begun about 15mths ago) and since that date have only traded UK stocks either via brokers or by spreadbetting.

Due to my unsuccessful trading during these months, I am trying to find some form of "method" on which I can build on, as currently I don't have any defined rules for which markets to trade and when I should enter & exit a trade. I want to become disciplined and have a trading plan but seem to be stuck at this first and obvious hurdle.

Goslin's method seems like a good starting point with which I could build on and "tailor" to suit my personality & trading style. However, I am concerned that as this relies 100% on trending, I'm not sure whether this is suited to UK stocks.

My dilemma is should I (i) try to "find" certain UK stocks which shown signs of trending and concentrate on those; (ii) change the markets I trade (even though I have no knowledge or experience with other markets) or finally (ii) try and find another "method" with which I can adapt & build on????

If it is felt that option (iii) would be the most appropriate, can anyone advise as to what kind of method may work or advise on any further reading material that may help. I'm keen to learn and would welcome any advice as to where I should concentrate my efforts.

Any help much appreciated................

PS. For the record, Goslins book is only the third book I have read on the subject of trading (both the others were TA related) and I have to say that as almost a newbie to trading (albeit 15mths experience), this book is extremely well written and easy to understand and would make a good starting point for anyone looking to get into trading........................
 
JonnyT said:
If only it worked!

JonnyT
Click to expand...


Hi JonnyT,

Can you expand on your comment. Does the idea in principle not work or does it not work with certain markets??

Just interested........

Thanks,

Chorlton
 
Goslin's SMR lines

Hi ,
Honestly every method will sometimes work and sometimes not. It is the probability that we need to look at. For the odds to be on our side you need a sound method and Goslin's SMR lines method is sound enough but not perfect as any other method. As you realized correctly that it requires trending market (liquid market) so Futures is the best market. If you have to trade UK stocks you have to pick the highly liquid stocks or high daily volume stocks.

As you are reading the book you would have realized that his method is about finding the main flow of energy and ignore small surface wind changes. This works best when the trend is set in the market but this does not work in Choppy markets. This is true for any method/system that depends on herd mentality that is either Trend following like Goslin or Human Psychology pattern following like Elliot wave (It's more to Elliot wave than just psychology).

Goslin's method is sound and works; but you have to undestand that his SMR lines are lagging indicators and sometime fail as they merely follow the price.

E.g. It is quite rare to find all ML, SL and Trend Line (50MA) to point in same direction at the same time. Since all of them are lagging indicators following the price, by the time they all are pointing in the same direction the trend (price rally or decline) is half way over or more. Hence he always preaches anticipation and that's where the trick is. If you can't anticipate then you will either be wrong or be too late to get on the board and by the time you get on it could be time for profit taking or reversal.

But if the stock/future is trending heavily then you could wait until all SL,ML,TL are in same direction. This is rare. In normal market condition the trend may survive for 2-3 days at the most in any one direction. The examples in the book are in very trendy times. If you see year 2005, since April until now Dow Jones has not gone anywhere it has chopped around between 10700 to 10300. Merely 400 points in last 6 months and everyday range of Dow is around 100 points. So you could guess how choppy it has benn in last 6 months. Whereas FTSE 100 in the same time has moved from 4800 to 5400 with a daily average range of 50. So FTSE has trended and if you see SMR lines it was easy to generate profits on FTSE than DOW.
Infact DOW will genrate losses. So Goslin would genrate signals dieing in 3 days on Dow where as on FTSE they lasted much longer.

I myslef use Elliot wave mainly as a supporting pattern confirmation for Goslin's signal alongwith 2 more (Chande Momentum Oscillator and sometime Elder Ray). Elliot wave sort of tell you whether any minor/major reversals support/resistances are in the way of your trade direction suggested by Goslin. The other 2 gives you more confirmation while anticipating.

But bottomline is Goslin's method is good only if you could learn to anticipate and for trendy markets especially Futures. If you are willing to move into trading futures then you could subscribe to his newsletter for a while to understand how he anticipates on day to day basis.

I haven't checked stocks because I do not have Stocks data to check it, but I would guess that if FTSE 100 trended since June to October upwards so would the 100 stocks making FTSE must have. So if you pick best stocks on FTSE and follow the trend of STOCK you wish to trade as well as the STOCK INDEX where the stock trades, then you should be fine.

Good luck
Samir

PS: Don't blame yourself for having loss trades in last few months. The market has been choppy and what you should focus on is when not to trade when the market is choppy. Take a look at weekly chart of stock indices and it will give you an idea whether the market is in general treny or not.
 
[
Samir,

Many Thanks for the time & effort in replying. You're covered all the points that were bothering me. :cheesy:

I did notice that you mentioned Elliot waves. Quite a few people I've chatted to seem to use this indicator. As I intend to trade stocks, would you say (in your opinion) that learning about this indicator would be beneficial to my trading?

Once again, thanks for your detailed reply & good luck to yourself as well,

Chorlton


QUOTE=samirkpatil]Hi ,
Honestly every method will sometimes work and sometimes not. It is the probability that we need to look at. For the odds to be on our side you need a sound method and Goslin's SMR lines method is sound enough but not perfect as any other method. As you realized correctly that it requires trending market (liquid market) so Futures is the best market. If you have to trade UK stocks you have to pick the highly liquid stocks or high daily volume stocks.

As you are reading the book you would have realized that his method is about finding the main flow of energy and ignore small surface wind changes. This works best when the trend is set in the market but this does not work in Choppy markets. This is true for any method/system that depends on herd mentality that is either Trend following like Goslin or Human Psychology pattern following like Elliot wave (It's more to Elliot wave than just psychology).

Goslin's method is sound and works; but you have to undestand that his SMR lines are lagging indicators and sometime fail as they merely follow the price.

E.g. It is quite rare to find all ML, SL and Trend Line (50MA) to point in same direction at the same time. Since all of them are lagging indicators following the price, by the time they all are pointing in the same direction the trend (price rally or decline) is half way over or more. Hence he always preaches anticipation and that's where the trick is. If you can't anticipate then you will either be wrong or be too late to get on the board and by the time you get on it could be time for profit taking or reversal.

But if the stock/future is trending heavily then you could wait until all SL,ML,TL are in same direction. This is rare. In normal market condition the trend may survive for 2-3 days at the most in any one direction. The examples in the book are in very trendy times. If you see year 2005, since April until now Dow Jones has not gone anywhere it has chopped around between 10700 to 10300. Merely 400 points in last 6 months and everyday range of Dow is around 100 points. So you could guess how choppy it has benn in last 6 months. Whereas FTSE 100 in the same time has moved from 4800 to 5400 with a daily average range of 50. So FTSE has trended and if you see SMR lines it was easy to generate profits on FTSE than DOW.
Infact DOW will genrate losses. So Goslin would genrate signals dieing in 3 days on Dow where as on FTSE they lasted much longer.

I myslef use Elliot wave mainly as a supporting pattern confirmation for Goslin's signal alongwith 2 more (Chande Momentum Oscillator and sometime Elder Ray). Elliot wave sort of tell you whether any minor/major reversals support/resistances are in the way of your trade direction suggested by Goslin. The other 2 gives you more confirmation while anticipating.

But bottomline is Goslin's method is good only if you could learn to anticipate and for trendy markets especially Futures. If you are willing to move into trading futures then you could subscribe to his newsletter for a while to understand how he anticipates on day to day basis.

I haven't checked stocks because I do not have Stocks data to check it, but I would guess that if FTSE 100 trended since June to October upwards so would the 100 stocks making FTSE must have. So if you pick best stocks on FTSE and follow the trend of STOCK you wish to trade as well as the STOCK INDEX where the stock trades, then you should be fine.

Good luck
Samir

PS: Don't blame yourself for having loss trades in last few months. The market has been choppy and what you should focus on is when not to trade when the market is choppy. Take a look at weekly chart of stock indices and it will give you an idea whether the market is in general treny or not.[/QUOTE]
 
goslins smr lines and choppy markets

for the record I tend to agree with samirkpatels comments but there is a way around this . Instead of a 50 ma as chick suggests use a 20 or a 13 - this will get you into the trade a lot earlier and whereas the risk has increased somewhat in choppier markets you will also able to trade a lot more frequently .

the big question is of course anticpation as samirk pointed out - count back 16 days or period s if day trading and anticipate what will happen in the future .

thirdly , use a previous higher chart for reference i.e if trading intraday as reference for the tradestudy the goslin method on a higher timeframe - a week or a month- to see where the real trend is going and how the s/m/r linese work in that regard . This method of looking at a stronger chart should eradicate some of the choppiness expected in the market at the current time.


finally , youll always find better trends in general with indices or futures or indeed currencies rather than specific stocks .

i hope this helps in some way .
 
SMR has new software (Beta version)

I agree with that point about anticipation. Looking at price patterns while watching the indicators, and anticpating those times when there is about to be agreement between the MA line and the slower-moving indicator, is mostly what I do.

For those interested in applying Chick Goslin's methods, SMR has new software (still in Beta testing).

I've been Beta testing it myself for a few weeks. Very easy to use. Setup and dataloads are automatic -- I didn't have to figure anything out.

Best thing about it: You can pick any day on the chart, and step through the price bars one day at a time and study how the indicators change. This is just like Chick does in his book (Trading Day By Day).

Anyway, for now it's free. You can contact SMR if you want to beta test it.
 
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