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zoopy's trading journal

  • #1,281
  • Jun 20, 2008 10:31am Jun 20, 2008 10:31am
Quoting rnl16616
I have been lurking on this thread for a little while now and enjoy your journal entries. I have a question for you. You have touched on this briefly before: what timeframe do you prefer to identify your wave breaks [and why] and how do you assess whether a break is confirmed?
Hi rnl

I use the 4 hour timeframe because it suits me but I could really use any timeframe if I wanted to. Works on all timeframes and on all markets. As long as there are waves, it will work.

A break is confirmed on the close of whatever period you're using. The "confirmed" break doesn't necessarily mean you're guaranteed to be right 100% either. Nothing is 100% in trading but it does guarantee you a high probability of getting the direction right. After all, that's the hardest part in trading, knowing which direction to trade in.
Hope this helps.
  • #1,282
  • Jun 20, 2008 12:38pm Jun 20, 2008 12:38pm
Quoting rnl16616
I have been lurking on this thread for a little while now and enjoy your journal entries. I have a question for you. You have touched on this briefly before: what timeframe do you prefer to identify your wave breaks [and why] and how do you assess whether a break is confirmed?
If you look at zoopys first post and read all the pages in the Index it will help you learn his method and probably answer alot of your questions, i also have been enjoying this journal and Jacko's.
I have an AH trade that triggered last night on the EU, i'm currently still in long @ 5600, not sure how much momentum it has left in it.
  • #1,283
  • Jun 20, 2008 9:32pm Jun 20, 2008 9:32pm
Hello Zoopy,

Any take on DJ analysis???

Rebound on sight??

sonic
  • #1,284
  • Jun 20, 2008 10:20pm Jun 20, 2008 10:20pm
Quoting sonicdeejay
Hello Zoopy,

Any take on DJ analysis???

Rebound on sight??

sonic
Hi Sonic

I'll just do my analysis on all three indexes. Waves are collapsing and that means down. I wouldn't even think about going long on any until we get waves breaking up.

Will there be a rebound? Eventually... but I have no idea where though. See charts attached.
Attached Image(s) (click to enlarge)
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  • #1,285
  • Jun 21, 2008 6:02pm Jun 21, 2008 6:02pm
Quoting zoopy
I'm sure you remember this chart because a while back you questioned me about missing the "big move". Now... lets say I couldn't use hindsight but based my trading on what I have just outlined in the previous post. Buy all breaks and on pullbacks until a wave collapses.

I have included a chart of that period only showing the wave breaks. The market always pauses or ranges for a short period, whenever it "pauses/consolidates/ranges" whatever you want to call it, it will create waves. It has to.
Zoopy,

I was following this exchange where you appear to be advocating taking profits at 100 pips? Is that right?

If it is the case perhaps you should consider this alternative. And I am advocating this because in my experience catching the really big moves is extremely important to the bottom line. Looking at the chart you attached to the above post and I re-attached below; let's say you bought the first wave. Once you were in profit you moved your stop-loss to breakeven. Leave it here and don't trail it.

Now the the second wave forms and you add another position with an independent stop-loss which is moved to breakeven when you are in the black. And so on, so on...

When do you close all the positions you have accumulated? When the first wave breaks-down, you close all positions and start building in the other direction. Yes, there will be times when you get whipped back and forth but you have developed a nice method to indicate when you are wrong and get yourself out. So you probably tread water or perhaps make a little for a time and cash in big a couple of times a year when the big moves come.

Just something to think about.

-Sean
Attached Image
  • #1,286
  • Jun 21, 2008 6:38pm Jun 21, 2008 6:38pm
Hi Sean. Some good questions, see below.
Quoting seanchicago
Zoopy,

I was following this exchange where you appear to be advocating taking profits at 100 pips? Is that right?
Yes, I was moving more towards 100 pip TP but am however exploring this further. The reason why I mentioned 100 pip TP was because in the past, I had developed a few systems which I had backtested over a 5 year period and more often than not... actually I'd say in about 90% of the cases if not higher, taking 100 odd pips yielded far greater returns than letting profit run. This part actually surprised me most because quite often my results would have a difference of 1000+ pips, sometimes even higher. I think the reason for this is because the market makes many smaller moves compared to 1000 pip runs. So if it does, my thinking behind this was... "why am I targeting the large runs when I should be targeting the smaller ones instead?" If you get smaller moves of around 200 pips, would it not make more sense to target those instead?

Another way of looking at this. Compare the size of the moves within each year. How many smaller/ranging moves are there in comparison to larger moves?
Quoting seanchicago
If it is the case perhaps you should consider this alternative. And I am advocating this because in my experience catching the really big moves is extremely important to the bottom line. Looking at the chart you attached to the above post and I re-attached below; let's say you bought the first wave. Once you were in profit you moved your stop-loss to breakeven. Leave it here and don't trail it.

Now the the second wave forms and you add another position with an independent stop-loss which is moved to breakeven when you are in the black. And so on, so on...

When do you close all the positions you have accumulated? When the first wave breaks-down, you close all positions and start building in the other direction. Yes, there will be times when you get whipped back and forth but you have developed a nice method to indicate when you are wrong and get yourself out. So you probably tread water or perhaps make a little for a time and cash in big a couple of times a year when the big moves come.

Just something to think about.

-Sean
That's a very good idea and I have thought about it but the problem with that approach is that it's based on hindsight.

What happens if we get 3 waves up where I added 3 times but the wave collapsed down soon after. What ends up happening is that I'll get compounding working against me. I will lose on the 3rd position yes, but as the market is falling, I will also be losing on the 1st and 2nd positions too. So... as the market collapses, I'll be taking a triple whammy whereas if I was trading it wave by wave, I'll only lose on the last position but would have capitalized on the 1st and 2nd. Not sure if that makes sense?

I have also included two charts showing what "could" happen. In the first chart I've highlighted, there is a very choppy move up. In the example you have waves breaking up and collapsing. This could pose as quite a problem when you're adding to a position. There are also times when the market makes one very big wave which I will admit is unusual but if it can happen, it's something I should be prepared for. There are so many opportunities to trade these waves, personally I prefer covering myself before taking the next wave. For me it's about protecting my account and growing slowly. If there was a big move and I knew it was coming then the scaling in is definitely far superior. The only problem though is that I don't know when it's going to come, nor do I know how far the move may go.
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  • #1,287
  • Jun 21, 2008 6:48pm Jun 21, 2008 6:48pm
Here's another example which is a follow up to the previous post. Adding to a winning position makes sense in theory, however... how would one handle these market conditions as shown on cable?

If I had added a position after the 1st wave collapsed, I would have given back 2/3 if not more of my profit. This didn't just happen once either, it happened again on the 3rd wave. My argument is... what happens if I was in 3 positions then and the 4th wave broke straight up? It's far more safer to enter just once, deal with one wave at a time and be happy to have taken advantage of that opportunity.

Perhaps a better alternative would be to let the trade run, but if the line slopes against you when the 4 hour period is up, you exit. This will allow you to take advantage of the larger moves but also be able to protect your capital and profits.
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  • #1,288
  • Jun 22, 2008 4:22am Jun 22, 2008 4:22am
Z-

It appears you have already thought out my suggestion very well. I am glad you have thought this through thoroughly.

I think the 4 hour charts you attached prove that in that time frame there is still substantial noise. Yet as long as your methods are profitable within that "noisy" environment, GREAT! I trade the very short term (the 5 - minute and sometimes shorter time frames) for my bread and butter. I am counting on the noise and false moves to make small quick profits. These methods would not work at the 4 hour level; where there is noise but not enough.

For the longer term I do keep an eye on Jacko's methods, but have allocated a larger portion of funds to trade Point & Figure charts with 25 unit boxes to get me in the bigger Euro plays. I look for certain break-out patterns to put positions on and leave them on until I get a pattern in the opposite direction.

Do I take losses? Yes. In fact 57% of these P&F trades are losses. And those losses average -51 pips. But by letting my winners run, 43% of my trades average a 227 pips gain. This gives me an expected gain of around 68 pips per trade.

Maybe we are talking apples and oranges. And so perhaps the reason trading for the longer and bigger moves works for me is that I am not using the 4-hour charts for my longer term set-ups. I am only focused on the bigger price movements (and with P&F charting time frames are meaningless).

And as they say, "if something ain't broke don't fix it". So please ignore my post and continue taking profits with the 4 hour charts and controlling your losses. Your hard work looks to be paying nice dividends.

One last point to make. You may have already considered this, but it is good food for thought for everyone enjoying your journal:

Which is better?
System A which provides about 150 trades per year with an expected return of 20 pips per trade.
or
System B which provides about 50 trade per year with an expected return of 60 pips per trade.


I'm thinking you trading from 4-hour charts is more a System A. While trading from daily charts is more System B.


Which is better? System A, because although both systems expect to give you 3000 pips, "A" increases your rate of compounding.


-Sean

  • #1,289
  • Jun 22, 2008 7:46am Jun 22, 2008 7:46am
Quoting seanchicago
I think the 4 hour charts you attached prove that in that time frame there is still substantial noise. Yet as long as your methods are profitable within that "noisy" environment, GREAT!

And as they say, "if something ain't broke don't fix it".

One last point to make. You may have already considered this, but it is good food for thought for everyone enjoying your journal:

Which is better?
System A which provides about 150 trades per year with an expected return of 20 pips per trade.
or
System B which provides about 50 trade per year with an expected return of 60 pips per trade.


I'm thinking you trading from 4-hour charts is more a System A. While trading from daily charts is more System B.


Which is better? System A, because although both systems expect to give you 3000 pips, "A" increases your rate of compounding.


-Sean

Sean

I'm actually glad you asked those questions because a few other traders have been asking me the same thing. At least now it's out in the open with an explanation as to why I'm doing the things I'm doing.

As of now, I'm trading the 4 hour only but am hoping to move to the daily charts for longer term trades. I've also managed to decrease my stops down to 50 pips but am still testing this to see how far I can push it.

The "system A vs B" example you gave is a good one. I had a similar post a while back although that had to do with letting trades run. Yours makes a comparison between the number of trades within a year. Thanks for sharing.


zoopy
  • #1,290
  • Jun 22, 2008 10:01am Jun 22, 2008 10:01am
Dear zoopy,


What is ur take on EUR/USD next week (23-28 June 08)? My analysis as below...wanna hear ur view..

thx

sonic

http://i25.tinypic.com/351ffo5.jpg
  • #1,291
  • Jun 22, 2008 10:18am Jun 22, 2008 10:18am
Quoting sonicdeejay
Dear zoopy,


What is ur take on EUR/USD next week (23-28 June 08)? My analysis as below...wanna hear ur view..

thx

sonic
Sonic

I'm bias to the upside since we broke a wave up last week. My plan is to wait for price to enter into the red target box. In this area, I'll be looking for price to turn up and when it does, that's when I'll be pulling the trigger. If price doesn't turn around and we get a wave collapse, I'll be looking to sell.

Attached Image (click to enlarge)
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  • #1,292
  • Jun 22, 2008 4:45pm Jun 22, 2008 4:45pm
Wanted to add this to my journal since I haven't really touched on this much. Once I know the direction based on the wave break, I go into a complete buy/sell mode.

For example...
If the wave breaks up, I'm only thinking "buy". This allows me to streamline my trading + thought process and to stay more focused. I know exactly what I need to do and what to look for (read the hunter vs trader analogy that I have posted in post#1 if you haven't already). Psychologically I think this is very important whether you trade waves or any other system/method.

In the chart below, I have highlighted a small wave. The reason for this is because I look at these too but only once I know the direction. Since the market has only just opened, I wouldn't advise trading it yet... might be best to wait for euro/london session first. What I watch for are strong moves that break the smaller waves and then enter. I keep doing this no matter how high the market is as long as we don't get a wave collapse.
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  • #1,293
  • Jun 22, 2008 7:44pm Jun 22, 2008 7:44pm
Quoting zoopy
Wanted to add this to my journal since I haven't really touched on this much. Once I know the direction based on the wave break, I go into a complete buy/sell mode.

For example...
If the wave breaks up, I'm only thinking "buy". This allows me to streamline my trading + thought process and to stay more focused. I know exactly what I need to do and what to look for (read the hunter vs trader analogy that I have posted in post#1 if you haven't already). Psychologically I think this is very important whether you trade waves or any other system/method.

In the chart below, I have highlighted a small wave. The reason for this is because I look at these too but only once I know the direction. Since the market has only just opened, I wouldn't advise trading it yet... might be best to wait for euro/london session first. What I watch for are strong moves that break the smaller waves and then enter. I keep doing this no matter how high the market is as long as we don't get a wave collapse.
will wait for ur update,,,thx'

sonic
  • #1,294
  • Jun 23, 2008 6:35am Jun 23, 2008 6:35am
Eurusd has dropped and entered into my red target zone. Now... I wait for it to turn up and gather momentum before pulling trigger.

OR...

If eurusd drops and wave collapses, I turn bias to the short side and look for opportunities to short.
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  • #1,295
  • Jun 23, 2008 7:51am Jun 23, 2008 7:51am
Eurusd is showing signs of a possible wave collapse. If we close below the horizontal line highlighted on my chart, it's a confirmed collapse and my bias will then be to short on all pullbacks and wave collapses.
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  • #1,296
  • Jun 23, 2008 8:17am Jun 23, 2008 8:17am
Quoting zoopy
Eurusd is showing signs of a possible wave collapse. If we close below the horizontal line highlighted on my chart, it's a confirmed collapse and my bias will then be to short on all pullbacks and wave collapses.


thx for t insight!!
  • #1,297
  • Jun 23, 2008 8:38am Jun 23, 2008 8:38am
Quoting sonicdeejay
thx for t insight!!
Keep in mind the 4 hour period hasn't closed yet. We could very well shoot up too lol. I'll be re-evaluating at 12:00pm NY when my 4 hour period closes.
  • #1,298
  • Jun 23, 2008 9:41am Jun 23, 2008 9:41am
Something to keep into perspective on the daily charts. We had a wave collapse so what's happening on the 4 hour may be the follow through.
Attached Image (click to enlarge)
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  • #1,299
  • Jun 23, 2008 10:14am Jun 23, 2008 10:14am
Here's a H4 chart of E/G long term overall trend is up, let's see if it breaks a wave up.
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  • #1,300
  • Jun 23, 2008 10:19am Jun 23, 2008 10:19am
Quoting greywolf238
Here's a H4 chart of E/G long term overall trend is up, let's see if it breaks a wave up.
That's not what I see. I see a wave collapse on the 4 hour and now would be a good time to short it. Follow the big wave, the smaller waves you're pointing out is noise.
Attached Image (click to enlarge)
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