"Trading Day by Day" by Chick Goslin

[expensif]

Hi, I received the book a few days ago, and even though i haven't had much spare-time, i'm already about halfway through... I think it is really great! I would now like to apply what i have learned with a demo account or on paper.

I have a few questions i hope someone could answer, I am newbie to trading, mind you..

To begin with, establishing the trend. Is it just as simple as if the 50-MA is pointing up the trend is up? And down, vice versa. And the more the price is above this MA, the better? And the steeper the MA, the stronger the trend?

Mr. Goslin says that the more volume in the trading leads to better trends, and that for instance forex have enormous volume, and therefore is very suitable for this method. Is this something you can confirm? In other words the more volume, the stronger the trends. So forex have strong trends?

Anyone using prorealtime.com, with this method? I'm off to try and construct the lines in prorealtime.com now...

Hope you can answer these simple questions! Take care guys!

 

[Jyde]

To begin with, establishing the trend. Is it just as simple as if the 50-MA is pointing up the trend is up? And down, vice versa. And the more the price is above this MA, the better? And the steeper the MA, the stronger the trend?

Mr. Goslin says that the more volume in the trading leads to better trends, and that for instance forex have enormous volume, and therefore is very suitable for this method. Is this something you can confirm? In other words the more volume, the stronger the trends. So forex have strong trends?

Hi there, been a while since I went through the book, but I will try to answer to the best of my knowledge.

Yes, it is that simple, insofar as there is a simple method to measure a trend. In the 'Goslin system' he has chosen to keep it simple, hence just using a 49-day simple MA. He also expresses the simple tautology that an upwards 49-MA is really just saying thatt hte current price is higher than the price 49 days ago. Thus, the steeper, you can say the better established the trend.
Bear in mind that there is an inherent lag in an MA, though!

As for volume and trending markets, I think he mainly states that the method will probably not work well in small markets with little liquidity, as he is trying to take advantage of the law of the averages, thus a high volume is better.

Finding trending markets, it really is as simple as looking at them: Does the market you want to trade, trend often, i.e. have fairly long and reasonably uninterupted bull or bear runs, or does it zig-zag a lot, sideways.

Hope this helps...
CJ

 

[expensif]

Hope this helps...
CJ

Thanks very much Jyde, it helped me a lot!

 

[chindl]

Anyone using prorealtime.com, with this method? I'm off to try and construct the lines in prorealtime.com now...

See post 473 - Samir's formula works a treat.
Or log onto SMR, they have the charts free o BETA test at the moment, you just have to register..
Good luck
Chris

 

[expensif]

See post 473 - Samir's formula works a treat.
Or log onto SMR, they have the charts free o BETA test at the moment, you just have to register..
Good luck
Chris

Ah thanks Chindl!

edit: Yeah, it worked very well. I'll just compare them to the SMR lines to verify, but I'm sure they're alright!

Thanks again and thanks samir! I wouldn't have had time right now for learning to create indicators myself. Take care all!

 

[trendie]

I the chapter "The SMR Trend/Momentum Indicators" ( page 25 ), Goslin describes his momentum oscillator as the difference between a slow MA and a fast MA shown as oscillating between a base-line ( zero-line ).

Is this just a long-winded way of describing a MACD ?
If not, how is the oscillator different from a MACD ?

thanks

 

[Jyde]

I the chapter "The SMR Trend/Momentum Indicators" ( page 25 ), Goslin describes his momentum oscillator as the difference between a slow MA and a fast MA shown as oscillating between a base-line ( zero-line ).

Is this just a long-winded way of describing a MACD ?
If not, how is the oscillator different from a MACD ?

thanks

As far as I have been able to establish, as long as you use simple MAs for it, it is the same (whereas most MACD uses exponential MAs).

 

[expensif]

What are your opinions on Goslins views on money management.
For instance, many times he don't use stoploss in the trades.

And I have always read that one should let profits run, but Goslin says that once you get 100 procent on the trade you should condsider getting out of the trade.

I would think some kind of trailing stop or something would be much better, but I don't have that much experience in trading so I guess that's the next topic i should learn.

Any opinions on this matter?

 

[nine]

It depends.

The real key to trading is to get a win/lose ratio and a money won per winner/money lost per loser that gives you a good positive expectancy (like maybe a return of 1.5 -3 times your risk).

Trailing stops give you a lot more losing trades (but bigger winners). Here your regret is the amount you give back when you move back from the peak to the stop.

Targets give you a lot more winning trades (but smaller). Here your regret is watching a winner that you've exited from become a bigger potential winner.

You can: choose 1 or other, or halve your positions and profit for half and trail for the second. It depends in part on your own psychology and in part on whats best for the thing you trade. Trend following can be very depressing if the market decides not to trend much for 10 or 20 trades in a row.

 

[chindl]

Kiwi

How's your Feb been? Has it been as difficult for you as it has for me. The patterns have been "bobbins" since the end of the year and really finding it difficult to get anything from the markets I'm following at the moment using the line patterns!

Chris

 

[Bigbusiness]

After reading the book, I spent a long time working on my own indicators for the DJIA in excel and eventually came up with the attached chart. I have been observing this for a while and it does seem to highlight the larger trends without being too choppy. Doesn't have a lot to do with the book any more but I have never been able to use another persons exact methods without working on them.

 

[expensif]

Is it possible to use Goslins approch on a longer timeframe, say on weekly charts instead of daily charts as in the book and on smr.com.

I view weekly charts in amibroker and prorealtime, and using the indicators posted in this thread, and it looks like it would be possible..

Do you see any reason why it is not suitable for longer timeframes?
Would I have to modify the indicators if I would like to use this method in a different timeframe?

I appreciate any views on this, thanks!

 

[Jyde]

Is it possible to use Goslins approch on a longer timeframe, say on weekly charts instead of daily charts as in the book and on smr.com.

I view weekly charts in amibroker and prorealtime, and using the indicators posted in this thread, and it looks like it would be possible..

Do you see any reason why it is not suitable for longer timeframes?
Would I have to modify the indicators if I would like to use this method in a different timeframe?

I appreciate any views on this, thanks!

The first thought that springs to mind is one of exposure, as you would have to have a fairly large tolerance for the market moving against you (what Goslin terms 'letting the trend develop'), so it could prove costly in the cases where it does not go your way. Conversely, the opposite would naturally be true for the winners.

All the best...

 

[Chorlton]

Is it possible to use Goslins approch on a longer timeframe, say on weekly charts instead of daily charts as in the book and on smr.com.

I view weekly charts in amibroker and prorealtime, and using the indicators posted in this thread, and it looks like it would be possible..

Do you see any reason why it is not suitable for longer timeframes?
Would I have to modify the indicators if I would like to use this method in a different timeframe?

I appreciate any views on this, thanks!

I see no reason why Goslins approach wouldn't work in longer timeframes. Afterall, the indicators are basically only modified MA's. These in themselves have some lag so shouldn't be relied upon for very short-term trading but for longer time-frames I see no real problem IMO.

For the record, I use Goslin's indicators with daily charts but normally stay in a trade for any period between 1 week and 3 months depending on how the trend is developing.

I don't rely solely on these indicators for entry as IMO they are not that reliable but they do offer some additional confirmation when choosing an entry point. I currently use pull-backs in a trend to choose an entry point but will quickly look at the short-term indicator to see whether the trend is likely to continue.

However, when it comes to exiting a trade, I mainly use these indicators. Once the short-term indicator points downwards and crosses the medium indicator line then I prepare to exit (have tight stops in place). Once the indicator drops below 0, I close my position.

Hope this helps..........

PS. I would welcome and advice on better methods for entering trades


Chorlton

 

[KarlaF]

as chorlton said, there is no reason not to use the indicators/setups on weekly charts.
i trade on daily charts but i have always a look on the weekly. and if i can see a divergence in the weekly i try to avoid an entry.

especially in fast running markets you will have a lag with the entry on the weeklys. so you should work on your entry technique.
i like the anti pattern from linda raschke. all based on the same "stuff".
retracements are a good entry but as said in a fast market you will jump behind the train. so you should have several entry triggers on your chart.

you will find much more exit setups but this is something very individual.

i will certainly have a different opinion than most here but in my opinion the entry trigger is most important.
if you find a good purchase, you have half of the trip.
and in my opinion chick goslin is a little bit too vague in this.

reagrds karla

 

[expensif]

Do you think it would be effective to use the weekly charts to decide what to trade based on the Goslin indicators, and then look for entry points in the daily charts.

I would like to hold my positions longer than what Goslin advocates in his book, but I really like the system and his approach to trading.

Have a great day!

 

[Chorlton]

Do you think it would be effective to use the weekly charts to decide what to trade based on the Goslin indicators, and then look for entry points in the daily charts.

I would like to hold my positions longer than what Goslin advocates in his book, but I really like the system and his approach to trading.

Have a great day!

I'll do my best to answer your question

Firstly, it may depend on what instrument you are going to be trading. I will only talk about stocks as this is what I trade myself. btw: Not sure how much experience you have with trading so apologies in advance if my advice regarding this question sounds a little basic.

Goslin's approach IMO is basically a trend following system. This by its very nature should work in different timeframes.

You could probably achieve a similar result by using 3 simple MA's or maybe even a modified MACD. In the case of the 3 MA's approach, the long one would be used to indicate the underlying trend and the other 2 for choosing entry and exit points.

One of the most important things to bear in mind is what YOUR TIMEFRAME for trading will be. This will obviously affect the periods chosen for the MA's. Also, IMO never trade against the underlying trend as unless you are extremely skillful (or just lucky) you will probably lose more than if you traded with the trend. I think this is pointed out in Goslin's book anyway.

Another thing worth noting, is rather than just look at what is happening to the short & medium term indicator lines (ie. where they cross), also assess how high above or below the 0 (& the medium term indicator) the short-term line is positioned, together with where the current price is compared to where the price was 49 / 50 periods ago. This is again discussed in Goslins book and is something very useful to keep in mind.

Goslin's approach is nothing revolutionary but it can be effective in TRENDING markets. I want to emphasise this because unless the instrument you trade follows this characteristic, then his approach will probably not be that reliable.

Hope this helps.......

Chorlton

 

[KarlaF]

for sure you can do that. i see no problem. it depends on your risk management.

the only thing you should realize is that if you trade in the direction with the trend in the higher TF you should be aware that the trend in the lower daily is almost over because the trend starts in the lower TF.
so you should be looking for a retracement or any kind of correction in the lower TF before you enter.

karla

 

[expensif]

Thank you Chorlton and Karla for your replies! I appreciate it!

I'm learning something every day, it seems like!

 

[FlexMan]

hi,
just finished chick goslins first book. very interesting.

is chick goslin still active trading?
his web side seems not to be up to date!

is anyone here still using his newsletter? would like to ask him one-two questions.
but if he isn't active i won't bother him.

so anyone who has contact to him in this year?

thanks flex