Hi Arf

Thank you very very much for your weekly analysis very helpful. I have the following questions please help me :

1. Abt your comment on wicks and tails you mentioned that “the easiest way to quickly think about candle wicks and tails is.. if the price bar has a wick then price is pulling back from the direction it WAS going in and price could fall from there (how far you just don't know).” – I thought a wick indicated that buyers were in control most of the day hence price most likely to go up instead of down ?? and if there is tail its opposite meaning sellers were in control than buyers meaning price likely to go down and not up?


2. I would also kindly ask you (and anyone else in this forum) to help me with whether I was right for PFE. I thought on 29October 2009 PFE had the right indications of buying a call because candle had closed inside after BB hit, there was a bullish DMI crossover, double hit – was I right?

Anyway I went ahead and bought the call and trade went against me so much I just waited for the price to go in my direction and just breakeven, anyway I finally exited the trade on 18Nov 2009(at a profit of $6...lol) – please just help me on what I could have done right/wrong? That’s what I need for my PFE, I realise you guys are busy with your trades but if you could help me do a post-mortem of PFE for the period I mentioned above (enter trade on 29Oct and exit on 18Nov)


3. You also mentioned that “AAPL – ADX outside the DMI zone turned down on 4 Nov while the DMI zone was controlled by the –DI (Call trade time!!),” – would you buy a call even there haven’t been any double hits?


4. Other side news to share with is for the past 6weeks I have been trading live and out of the 7 trades I have done so far 4 have had profits and 3 losses , however the losses have been higher than profits making my overall portfolio at a loss. I think has been hugely my personal problem because of the fear you know when you start using real money!! But am getting there am sure I will recoup my profits if I keep on on it and learn more from this forum



5. And then for YHOO “YHOO – ADX outside the DMI zone
turned down on 4 and 5 Nov while the DMI zone was controlled by the –DI (Call trade time!!), then after the DMI Xover on 9 Nov, now controlled by the +DI, and the ADX continued in a DOWNward direction indicating it belonged to the lower DI.. a fine detail you need to watch for. You should have exited your Call trade when the ADX didn’t turn upward”– approx how long do you have to give ADX a chance to turn upward? – i know if probably depends with my risk level but just wondering how long you and others wait for ADX to turn over


Nessie

Bob,

I should have answered by saying by looking at all those time frames you will just be confused all the time because the same gyrations we are studying on the daily chart happen maybe three times inside the hourly chart and up to 20 times per day in the 1 min chart. If you have the time to sit and stare, then start with the 15 min chart and work that one, and then when you start to feel that one is taking too long move on to a faster chart period. Same principles apply.

Hi Allen,

Thanks for your timely response. I will focus more on quicker time frame while checking a little longer time frame adx strength. I will get back to you on my progress.

Enjoy your weekend.

Bob

Bob,

A trader will not be successful looking at all the time frames you mentioned unless s/he is available to react to them.

You need to pick one and trade it. And if necessary only look at the first quicker timeframe when you see your normal period appraoching a turnaround point.

And for me, I trade the 1 min bars, but use the 3 min ADX to tell me if the trend is still strong when the 1 min bar appears it is turning around, helping me to weather the retracement and be in for the next big move.

Updated by arf7 on 11/20/09 6:49 AM

Hi Allen,

Thanks for your great mentoring. I've read your postings several times and they're very helpful and educational. I used to only ready daily charts and now try to blend short time frames and find it confusing sometimes. For example, today spy on daily chart, -di xover with gap, which means retracement maybe on the way. On hourly chart, +di ready to xover which means retracement already on the way. On 30 minute chart, 20ma was hit and both adx and +di up. On 15 minute chart, upper bb was hit with dark candle inside it, adx up but exiting +di zone. On 5 minute chart, adx flat with -di ready to xover. On 1 minute chart, adx up but exiting -di zone. Which time frame should I focus on when they conflict against each other? When you trade 1 minute bar, do you only go the direction when it agrees with 3 minute bar or otherwise.

Thanks for your great help!

Bob

Ah, the success of being patient!

mind you, it is only 1135 Wall Street time, but our study charts are giving it up!

AAPL - yesterday the ADX tipped over, the two DI caved in toward each other and today we reaped the benefit of that knowledge - or warning!

YHOO - DMI Xover (+DI) on 9 Nov but the ADX was heading down so we go with the bottom DI and that was.. down. And today was a happy gain! Notice today was the double hit to the last BB hit on 2 Nov, but it also filled a gap from 15 Sep. Maybe it is headed for that other gap also! Place your bets folks. Gambling is the game.

MSFT - did a bit of tipping so far today, but those big investors will likely want to at least hit the BB one more time. Caution time!

RUT - yesterday's ADX warned us! And huge falls call out for a 50% retracement. Let's see when it comes. Usually, the sooner the better. But that doesn't mean it will stop falling.

Keep a watchful eye and set your targets on all of these.

Thanks for 3 Ahaas;-)

in my opinion, when the ADX is rising it has strength.
I believe there is no other way to measure its strength.

And if the ADX is flat but the two DI are separating, then that also shows strength in the DI in control.

Thinking about Mikey's comments on WMT... '+di rose again and adx flattened meaning next day could be anything'. Should we be relying simply on the strength of the ADX rather than whether it is flat or rising?

$1 for a single contract, but then the price drops into the 70 cents range when you add more contracts. And then they add in a few pennies for connection/routing fees and usually the amount adds up to about 88 cents per contract. So if you buy 10 then it is around 8.80 to enter and 8.80 to exit all those contracts.