http://www.enthios.com/2fib.gif
This article applies to Ensign Charts only. For more information on Ensign, go here.
Do you have an indicator in one chart that you would like to have drawn in another chart?In this example:
[*]We have a Price Histogram in a 5-minute chart, TRH (Regular Trading Hours).[*]We want to draw those line in a 50-range chart, 24-hours.[*]We want to include the indicator lines from the previous day, as well as the current day as it unfolds.First turn to your 5-minute chart.It should look like this.The two illustrations below show how to set the Price Histogram study to look like this.http://www.enthios.com/Lessons/Images/E335.png
This is the "main" Price Histogram Properties Window.
http://www.enthios.com/Lessons/Images/E331.png
I also like to include a second study, which shows a 25% confidence band around the POC.This gives me a visual idea as to whether the "point" of the POC is really a point, or if it is blunt.http://www.enthios.com/Lessons/Images/E332.png
Now open the DYO Window in the 5-minute chart, and apply these settings:
Be sure to assign "Write GV" values as shown.
http://www.enthios.com/Lessons/Images/E334.png
Now move to your other chart - in this example, a 50-Range chart that shows 24-hour activity.
Open the DPL study as shown.
http://www.enthios.com/Lessons/Images/E338.png
Voila! Your 50-Range chart should look like this, every day, with no need to update lines manually. Note here also that we have vertical time lines that show 30mins before closing, closing, and market open.This makes it easy to see when to stop trading, and to see overnight activity at a glance,
Note that we also use the Support & Resistance Tool to automatically draw Floor Pivots.Settings for that tool are shown below this chart.
http://www.enthios.com/Lessons/Images/E336.png
http://www.enthios.com/Lessons/Images/E339.png
This is a volume alert that works on a 3-minute chart of the S&P Emini.You can download it directly from within Ensign (via "Internet Services"), from here:
3k Alert
3k Alert Instructions
Stop Morning Trading alert
http://www.enthios.com/fpdb/images/StopMorningTrading.png
Stop Afdternoon Trading alert
http://www.enthios.com/fpdb/images/StartAfternoonTrading.png
[*]The little squares are blue for each 3-minue period where the volume is greater than 3,000.[*]The little squares are red for each 3-minute period where the volume is less than 3,000.I keep this chart small, because that is all I'm interested.There are no prices or other indicators.
There are also some alerts, however.
[*]Zone turns red, and Pop-up Alerts is seen, when volume is below 3,000 between 11am and 1pm.[*]Zone turns green, and Pop-up Alert is seen, when volume is above 3,000 between 2pm and 3pm.The way I use this is as follows:
[*]In the morning, I trade my regular signals until 11:00am.[*]I will continue trading after 11:00am as long as the volume remains above 3,000.[*]As soon as volume drops below 3,000 after 11:00am, I will stop trading.[*]In the afternoon, I start trading after BOTH 2:00pm AND volume is back above 3,000.[*]During the morning, if prices drop below 3,000 in any one 3-min bar, I will continue trading as long as it is before 11:00.[*]Likewise, in the afternoon, once I start trading (after 2pm and < 3k), I will continue trading even if volume drops off, as it often does.Note that the times in the alerts are set to Pacific time, i.e. the 11:00am cut-off is set for 8:00am, etc. You will need to change the alert times manually i fyou are in a different time zone. The alerts to change are highlighted in the next below:
Template: Enthios3kVolume Chart: ES#F.3
14 Alert: Low Volume ------------------
Bar Value: Volume
Conditions: (A below B)
Number: 3000.00
Close Only: Checked
Location: Chart
Position: Top Row 2
True Marker: Square
FalseMarker: Square
14 Alert: > 8:00 Pacific Time ---------
Bar Value: OpenInt or Time
Conditions: (A above B)
Number: 800.00
Close Only: Checked
Location: Chart
Position: Top Row 2
14 Alert: < 10:00 Pacific -------------
Bar Value: OpenInt or Time
Conditions: (A below B)
Number: 1000.00
Close Only: Checked
Location: Chart
Position: Top Row 2
13 Alert: A.M. VOL Check Zone ---------
Study Flag: Alert: > 8:00 Pacific Time Alert Flag
Conditions: (A AND B)
Study Flag: Alert: < 10:00 Pacific Alert Flag
Close Only: Checked
Location: Chart
Position: Bottom Row 4
14 Alert: Vol < 3k --------------------
Bar Value: Volume
Conditions: (A below B)
Number: 3000.00
Close Only: Checked
Location: Chart
Position: Top Row 2
14 Alert: Vol > 3k --------------------
Bar Value: Volume
Conditions: (A above B)
Number: 3000.00
Close Only: Checked
Location: Chart
Position: Top Row 2
14 Alert: Stop Morning Trading --------
Study Flag: Alert: A.M. VOL Check Zone Alert Flag
Conditions: (A AND B)
Study Flag: Alert: Vol < 3k Alert Flag
Close Only: Checked
Location: Chart
Position: Top Row 2
True Marker: Zone color
Message: Stop Morning Trading
Auto Remove: Checked
14 Alert: > 11:00 Pacific -------------
Bar Value: OpenInt or Time
Conditions: (A above B)
Number: 1100.00
Close Only: Checked
Location: Chart
Position: Top Row 2
14 Alert: < 12:00 Pacific -------------
Bar Value: OpenInt or Time
Conditions: (A below B)
Number: 1200.00
Close Only: Checked
Location: Chart
Position: Top Row 2
13 Alert: P.M. VOL Check Zone ---------
Study Flag: Alert: > 11:00 Pacific Alert Flag
Conditions: (A AND B)
Study Flag: Alert: < 12:00 Pacific Alert Flag
Close Only: Checked
Location: Chart
Position: Bottom Row 1
Alert: Begin Afternoon Trading --------
Study Flag: Alert: P.M. VOL Check Zone Alert Flag
Conditions: (A AND B)
Study Flag: Alert: Vol > 3k Alert Flag
Close Only: Checked
Location: Chart
Position: Top Row 2
True Marker: Zone color
Message: Begin Afternoon Trading
Auto Remove: Checked
Objective: Create an alerts that tell you to go long when prices touch the green line and stochastic is long, and go short when prices touch the white line and stochastic is short.
[*]Start with this chart.
http://www.enthios.com/fpdb/images/alertbuilding/JN013.png[*]Create an alert that places a green line in the Stochastics window when the %K is above 50%:
http://www.enthios.com/fpdb/images/alertbuilding/JN014.png[*]Your chart should now look like this:
http://www.enthios.com/fpdb/images/alertbuilding/JN015.png[*]Create an alert that places a red line in the Stochastics window when the %K is below 50%:
http://www.enthios.com/fpdb/images/alertbuilding/JN016.png[*]You chart should now look like this:
http://www.enthios.com/fpdb/images/alertbuilding/JN017.png[*]Create an alert that places a green bar in the chart window when prices are below the lower Keltner line:
http://www.enthios.com/fpdb/images/alertbuilding/JN018.png[*]Your chart should look similar to this:
http://www.enthios.com/fpdb/images/alertbuilding/JN019.png[*]Create an alert that places a red bar in the chart window when prices are above the upper Keltner line:
http://www.enthios.com/fpdb/images/alertbuilding/JN020.png[*]Your Chart should now look similar to this:
http://www.enthios.com/fpdb/images/alertbuilding/JN021.png[*]Now you want to create an alert that draws green up arrows under those price bars where both (a) the Stoch is >50, and (b) Prices are below the Lower Keltner.Note that we also created a pop-up message (see "Message" window, below) and can also add a Sound alert if we wish.
http://www.enthios.com/fpdb/images/alertbuilding/JN023.png[*]Your chart shouldnow look similar to this:
http://www.enthios.com/fpdb/images/alertbuilding/JN024.png[*]Finally, you want to create an alert that draws reddownarrows above those price bars where both (a) the Stoch is <50, and (b) Prices are above the Upper Keltner.Note that we also created a pop-up message (see "Message" window, below) and can also add a Sound alert if we wish.
http://www.enthios.com/fpdb/images/alertbuilding/JN025.png[*]Your chart should look similar to this:
http://www.enthios.com/fpdb/images/alertbuilding/JN026.png[*]Now that you have confirmed that the arrows in the last two studies are correctly positioned based upon agreement of the first four sets of alerts, you can remove the color bars that you placed earlier simply by unchecking "show" next to each of the Markers in those studies, as shown here:
http://www.enthios.com/fpdb/images/alertbuilding/JN027.png[*]This makes the chart look more clean.Those color bands were just to confirm to you that the first four alerts, upon which the last two are built, are correct.Now your chart should look something like this:
http://www.enthios.com/fpdb/images/alertbuilding/JN028.png[*]And your Chart Objects window should look like this:
http://www.enthios.com/fpdb/images/alertbuilding/JN029.png[*]BE sure NOT to change the order of these chart objects, as the last two alerts are built on the previous four and so those need to appear first.
This chart from Howard shows how you can paint the colors from one study on top of another.
[*]Here, the dotted line is a moving average.[*]The color of the dotted line is based on whether the Stochastic (lower window) is rising or falling.[*]The cross of a MA when the Stochastic is falling, was a nice trade entry.http://www.enthios.com/fpdb/images/Ensign-2.gif
Here are two interesting uses for the Daily Price Lines tool in Ensign.Both have the tool set to "Time" as shown below:
http://www.enthios.com/Lessons/Ensign/Sep655.png
[*]Fixed time in Tick Charts
By applying the "Daily Price Lines - Time" setting to a tick chart, you can keep track of fixed time increments on a tick chart, as shown below. This also illustrates how the tick chart accounts for changes in volume during the day. In this 600-tick chart, the first half hour from 9:30~10:00 (shown as 6:30~7:00, Pacific time) is made up of 15 candles, or about two minutes per candle. Conversely, during the lowest volume period of 13:30~14:00 (10:30~11:00 Pacific), the half hour period has only four candles, or 7.5 minutes per candle.Likewise, the entire overnight session - 16 hours - can be summarized in only 10 candles.This is a much more representative way of seeing the entire 24-hour trading day.
http://www.enthios.com/Lessons/Ensign/Sep654.png
[*]Observing Time CyclesHere, half hour increments are applied to the same time period as above, but in a 3-minute chart.The (R) notations show where prices reversed at one of the half hour increments - an interesting observation which is aided by the Daily Price Lines tool.http://www.enthios.com/Lessons/Ensign/Sep657.png
It is possible to use the Playback function to import data that you have downloaded for Playback, into your charts.In this way, you can import data far beyond the six days of tick data your chart is able to refresh.This is useful if you have not been "accumulating" data day by day, or if you have lost data.
The following explanation has only been tested with the Esignal data feed.It refers to a 360-tick chart that is set for 24-hours ("Day Session Only" is unchecked in the Chart Properties window).Please note:
[*]24-hour tick data is saved in the \ENSIGN\TICK2 folder[*]"Day Session Only" data is saved in the \ENSIGN\TICK folderThe following instructions may appear somewhat complicated at first, but once you have imported a few "days" then it is really quite easy and repetitive.
This example is for a 360-tick chart set for 24 hours. It will work for other tick charts as well, but the process may be slightly different for "Day Session Only" charts.
[*]Back up all of your tick data files.
I do this on a daily basis as a matter of course. I created a subdirectory under the \TICK2 folder as shown:
http://www.enthios.com/fpdb/images/importingdata/backup2.png
[*]Make sure that the Max Bars in ALL the tick charts for which you will be using this data, is set to 65530.This is the maximum number that Ensign allows for tick charts.
http://www.enthios.com/fpdb/images/importingdata/maxbars.png
[*]Close your current workspace and start with a blank workspace.
Name the blank workspace "Blank"for future reference.
Open an ES-360 chart.
Confirm that "Max Bars" is set to 65530 and that "Day Session Only" is unchecked, as shown above.
Also confirm that the Drive path is \TICK2, which confirms that the 24-hour data will be saved in that folder.
Note that the name of this file will be ES #F.-360(if you are using the continuous ES contract, which most of us do).
[*]Download Playback data from Ensign's Internet Services window.
Note that date format is YYMMDD
http://www.enthios.com/fpdb/images/importingdata/R060.png
[*]Use Set-up Charts -> Playback to open the Playback file for the SAME DATE as the earliest date for which you have data.In this example, April 19 4:48 am was our earliest data.Therefore you want to import the ES040419 file in order to get the 24 hour data from the beginning of that day, which actually starts after the market closed on April 18.
http://www.enthios.com/fpdb/images/importingdata/import.png
[*]Press "Open Demo Chart" as shown above.Make sure that"Play Back Enabled" is not checked.Also make sure 24:00 is the Start time, although I believe this should not matter.A Demo chart should automatically open.You should now have two charts in your workspace:
ES #F 360-tick
DEMO 360-tick
Align these two charts so that the beginning of your ES #F chart aligns with the DEMO chart as shown below, so you can see where there is overlap.
http://www.enthios.com/fpdb/images/importingdata/R042.png
[*]You will notice there is overlapping data.Delete the overlapping data, otherwise when you import, you will get double data.
To do this, find the point of overlap on your DEMO chart, right click on the point, and use Delete Right, as shown below.
http://www.enthios.com/fpdb/images/importingdata/R043.png
[*]The result should look like this. You are now ready to import the contiguous data from the DEMO chart into your ES chart.
http://www.enthios.com/fpdb/images/importingdata/R044.png
[*]Go to File Manager and select Merge Chart Files.Your workspace will go blank.That is ok.
http://www.enthios.com/fpdb/images/importingdata/R045.png
[*]Look in your \ENSIGN\TICK2 folder.Select the DEMO.-360 chart, then click Open.That chart name and location should appear in the "Source" field in the "Merge Chart Files" window, as shown below.
http://www.enthios.com/fpdb/images/importingdata/R046.png
[*]Now insert the name of the ES file as your Target.I simply copy and past the Source file name into the Target file name, then change "DEMO" to read "ES #F", as shown below:
http://www.enthios.com/fpdb/images/importingdata/R047.png
[*]Click Merge ONCE.Then click OK.Your screen should still be blank. Open the workspace entitled "Blank".You should see the two files, ES and DEMO, as shown below.The ES file should now have the imported data from the DEMO file.
http://www.enthios.com/fpdb/images/importingdata/R048.png
[*]Repeat these steps to merge previous successive days of data.
The Linear Regression tool not only draws a trend line for you, it also draws a channel for that trend.
The tool is made up of three components:
[*]Regression Line - drawn by user based on first two waves of a trend reversal[*]Standard Deviation channel - drawn by LR tool; default set to two standard deviations[*]% Channel - adjusted by user after drawing the Regression LineMy settings are shown here:
http://www.enthios.com/Lessons/Ensign/Sep664.png
First select the tool, then trace a line from the start of a trend reversal to the end of the next wave.The following example shows a long reversal. The line is drawn from the lower low to the next higher low.In Elliot Wave terminology, that is from the beginning of Wave 1 to the end of Wave 2.Don't worry about placing the line vertically on the chart; the LR tool will do that for you. It is important only that you START the line at the bar where the reversal occurred, and END the line at the bar where the next higher low occurred.
The portion of the line that is drawn is represented by the solid line; the dotted line represents the "prediction" of the trend based on that first Wave.
The solid blue lines represent two standard deviations from the Regression Line, and form the Regression Channel.Statistically, 96% of prices in the trend will be contained within the Regression Channel.That means that prices can venture outside of the channel, yet still remain in the trend. How then to capture those "extra" prices that deviate beyond the Regression Channel?
Regression Line and Channel
http://www.enthios.com/fpdb/images/regchannel.png
The % Channel is used to capture prices that deviate outside of the 2 STD Regression channel.This is adjusted manually by the trader. After first drawing the Regression Line and Regression Channel, openthe Linear Regression Properties Window (shown above), check the box next to "Percent Channel"then change the % of the Percent Channel until thedotted line matches the first major swing high and/or low of the new trend, as shown below.
Regression Line and Channel with % Channel
http://www.enthios.com/fpdb/images/pctchannel.png
Note how the % Channel manages to hold the prices at point (a); although they exceeded the two standard deviations channel, they are still "in the trend" because they are held within the % channel and they follow the slope of the original Regression Line.Note also how prices follow the original Standard Deviations Channel at (b).Even after breaking out of the % Channel at (c), prices follow the outer % Channel up as resistance before continuing sideways - a lateral or "congestion" breakout.
In many cases, the Regression Channel has obvious advantages over the Parallel Lines tool, which is another means of drawing trend lines.The same price action is shown below, using the Parallel Lines tool:
http://www.enthios.com/Lessons/Ensign/Sep665.png
Go to the Internet Services tab and download the appropriate Playback Files.
[*]Click on "Connect"[*]Select the "Playback File" radio button on the lower left[*]Scroll down to select the Playback File.Names are YYMMDD[*]Click on the Download button[*]Repeat to download additional Playback Files[*]Finally, click on "Playback" to go to the Playback window, or select it from the main menu as shown below.http://www.enthios.com/Lessons/Ensign/Sep796.png
Click on Setup-Playback
http://www.enthios.com/Lessons/Ensign/Sep794.png
Set up your Playback session as shown here.Be sure:
[*]You have the correct Playback File loaded[*]You have the correct Chart time frame set to -360[*]You have 8:30 entered as the Start Time[*]WAIT for us to post the Sync time[*]THEN input that Synch time into the second window (see arrow below)http://www.enthios.com/Lessons/Ensign/Sep798.png
THEN, click on Open DEMO Chart
THEN, load the EN script to run the EN chart setup on the DEMO chart.
To Re-SYNC for any reason (wrong speed, wrong playback file, etc), follow these instructions:
[*]Close ALL "Demo" charts[*]Uncheck the "Play Back Enabled" check box[*]Clear the Sync Time from the window[*]Make the necessary changes (correct whatever it was that you needed to correct)[*]Click on "Reset current Play Back"
BMP
Bozu Midpoint - the midpoint of any large candle or series of continuation candles. The word "bozu" is Japanese for "large Buddha."The midpoint is usually drawn between the open and close (body), excluding the high and low (wick or shadow).
http://www.enthios.com/fpdb/images/bmp.gif
See also:Continuation Candle
Continuation Candle
Continuation candles are any contiguous combination of large candles, in the same direction, which on a larger time frame wouldmake up one bozu candle.
For example, the continuation candles in the 30-min chart below make up one Bozu candle on a 240-min chart.
http://www.enthios.com/fpdb/images/30mContinuation.gif http://www.enthios.com/fpdb/images/240mBozu.gif
See also: BMP
Brach Zone, or "BZ", is the Fibonacci retracement area of 61.8% ~ 78.6%, which is a common level of retracement in trending markets.As such, it is useful as an exit target for a trade, or for a place to look for price reversals. It is named after a well-known trader in Echat, who also pointed out that the BZ tends to coincide with the Price Histogram (Market Profile) Point of Control.
http://www.enthios.com/Information/Lexicon/bz.htm
This chart shows a series of BZ retracements in an up-wave pattern:
http://www.enthios.com/fpdb/images/JN400.png
This came from RAL, as so many interesting things do.(For more info on Ral's trading methods, check out his Online Manual.)EBB stands for "Extreme Bollinger Band" and uses Fibonacci numbers or 13 for the moving average and 2.618 for standard deviations.Using these settings, the majority of process should be captured within the Bollinger bands. (For more information on Bollinger Bands, check out http://www.bollingerbands.com/services/bb/intro.asp )
The settings are:
http://www.enthios.com/images-old/bbsettings.gif
When you view moving averages on a chart, you will note that they move either upORdownOR sideways.
If a moving average is trending (nice trend up or down), when it stops trending (to consolidate or change direction) the moving average line will ALWAYS move to right(i.e., line is going up or down - then starts shifting to the right)
SO, if you set the moving average up so it prints on the chart 3 minutes sooner (i.e., shift it to the left 3 periods) - then you will see the moving average line move to the right and cross the Bollinger band line whenever the price starts to consolidate or pullback.
This will serve as an early signal to exit with maximum profit.
NOTE: This seems to work best on 1min chart, at least for futures trading.
http://www.enthios.com/fpdb/images/3pma-3.gif
%R is a momentum indicator that measures overbought/oversold levels. %R is very similar to the Stochastic oscillator...and since we don't have a %R setting in Qcharts or Erlangerquote (formerly Ravenquote)...we are using settings that simulate it.
NOTE: As with all overbought/oversold indicators, it is best to wait for the price to change before placing your trades - in other words, you can get an overbought condition before prices turn down...and, you can get an oversold condition before prices turn up.The %R just serves as an early warning of prices in a condition that would warrant a change in direction.
http://www.enthios.com/stochastic.gif
And looks like this:
http://www.enthios.com/images-old/EBBChart.gif
Notes about the above chart:
[*]You can use whatever entry method you choose - 1min ma crossover, 3min msl, 1m 3pb, etc.[*]Before I enter a trade on 1min chart, I use the color study called "Cash-NQ MACD"Note how it is a lead indicator; that is because it indicates short-term buy and sell programs in the Nasdaq emini.[*]The trade is confirmed by the "Go Long/Short (Trend Strong) indicator; this measures the directional movement and the strength of the adx signal.It is not as "early" as the Cash-NQ MACD, but it is a good indicator that there is strength behind the trend.[*]When the 3pma, shifted back 3 periods, hits the EBB, that is an alertto exit the trade.[*]When the %R is above 90, that's another alert.[*]When the two alerts are both going off, that's an Action signal.Exit.
http://www.enthios.com/Information/aboutus2.jpg
Established in 1998, Enthios.com is a free web site and discussion group for like-minded investors who use technical analysis as the basis for their trades.Between our two online discussion groups there are currently over 4,000 active members.Our site is divided into seven areas of interest:
http://www.enthios.com/fpdb/images/IMG_2227j.jpg
Front Pagecontains all of the news, both new and archived, including new ideas, technical indicators, lessons, links, and other potpourri.Carta Diemare the daily charts, posted each morning before the market opens.the Chartworksis a collection of chart setups and examples, everything from Candlestick patterns to Gann, Market Profile, Andrews Pitchfork, plus a number of new methods and indicators developed by myself and other fellow traders.Lessonsis where you learn the basics.If you are new, start here with the Trading Primer and the Patterns Primer.Informationis where we keep any and all miscellaneous information about technical analysis. If you can't find it here here or in any of the sections above, it probably does not exist.Bookstoreis where you will find our book, DVD, and a host of other published resources from our publisher, Marketplace Books.Purchase here for the best prices.Discussionis where you can ask us questions online,real time, any time. Michael Jardinespent 18 years in the Far East, first as a Director of Jardine Matheson, the British trading and finance conglomerate, and then with Walt Disney as the Managing Director of Disney Interactive Asia-Pacific.Healso held executive positions at Chanel and Patagonia.In 1998 he founded enthios.com.enthios [en'tj?s]Greek, "to be inspired from the spirit within"
There is no better description for what it is that makes people climb mountains or, for that matter, pluck any goal out of the sky and then set about to achieve it. other enthios siteswww.Qamera.com
Other Sources:
The Price Histogram chart (shown below) is a graph that plots time on one axis and price on the other to give a visual impression of market activity. This representation takes the form of a statistical bell curve, just like your high school teacher used. Most students scored in the middle of the bell curve with C's, while fewer received A's and F's. Similarly, the majority of a day's transactional volume takes place in a common range of prices with less trading on the day's extremes. A few definitions:
The areas of the Price Histogram's bell curve showing the greatest depth (the point of the pennant) indicate prices where trading spent the most TIME, thus establishing VALUE for the day (price x time = value). This 'longest line' is called the Point of Control.
The Value Area (VR) - shown in blue in the chart below - is simply the price range where 70% of the days business was conducted.
[*]Note that many of these daily Structures resemble pennants.[*]Note that the widest point of the pennant- the tip - is the price range at which the stock or index spent the "most amount of time" during that day.This is the Point of Control (POC) and is indicated each day with a solid white line.[*]Note how on each day, at some point during the day, the price tends to reach the Point of Control of the previous day. [*]What these charts are telling us is that at some point during the trading day, prices will almost always return to the Point of Control of the previous day.[*]Notice how in these examples, although the price usually reaches the previous day's Point of Control, it rarely exceeds that. This is particularly the case in a trending market.[*]On the otherhand, while the structure is forming during the day, if you notice that prices move more than 16 points above (or below)the Point of Control of the previous day - you will usually be looking at a consolidation day.What this says is that in a daily trending stock or index, chances are that once prices have retraced back to the Point of Control of the previous day, chances are they will continue back in the direction of the overall trend.
http://www.enthios.com/charts/images/E_68.png
The concept of the Universal system is simple:[*]Look for areas of strong support/resistance, [*]Trade the bounces from those points, and [*]Maximize your exit.That's it.The rest is just putting together a set of indicators that allow you to use that concept in an objective manner - one that takes all of the "fear" and "uncertainty" out of trading.So let's build that.Here is a brief explanation.We'll get to the specifics of settings up your charts, further down.
Chart templates are available for Ensign, Investor/RT, and eSignal charting programs.
Join us as we trade the Universal.We have a discussion group, a live chat room, and a Yahoo instant alert service. All free.[*]Look for areas of strong support/resistance.
The best support/resistance I've found is the Market Profile, which some charting programs call the Price Histogram. Most MP charts are time based (not volume).The most common chart is a 5-minute or 30-minute chart that builds a histogram for each day. The bell-curve histogram that shows how much time was spent at each price point.The price point at which the market spent the most amount of time during the day is called the Point of Control (POC).It is illustrated here:
http://www.enthios.com/images/EE%202008-02-05-0905.png
The POC formed one one day, becomes strong support or resistance on the next day.The logic is simple: it represents the price point where the market was "most comfortable" or "most in balance" on a previous day.So if, on the next day, the market opens below that POC, and traders are long, they many will exit their trades at this point. They will sell.We will buy from them, as selling pressure exhausts.
It is also helpful to look back in time to the other POC's that occured.It is even more helpful to look at those POC's that are still "virgin," i.e. they have not yet been touched by prices. This next chart shows a series of Virgin POC's, which we call VPC's:
http://www.enthios.com/images/EE%202008-02-05-0914.png
Each of these is a key support/resistance point. This may seem obvious, but each day, the market opens with a VPC above, and a VPC below (there are some exceptions, for example when the market is breaking out to new historical highs. This range range we call the Natural Trading Range ("NTR").We mark this on our charts each morning.Here is an example:
http://www.enthios.com/images/EE%202008-01-31-1315.png
In the above chart, the market will open somewhere between the lower VPC (704.70) and the upper VPC (757.90).So that is our NTR.We sit and wait for the market to either come up to the 757.90 VPC, or down to the 704.70 VPC.When the market comes up to a VPC from below, we look for a short because we are expecting traders to be exiting their long trades.When the market comes down to a VPC from above, we look for a long because traders will be exiting their short trades.
That brings us to the second step of this simple method.
[*]Trade the bounces from the support/resistance points.
How to do this? Well, in the above example, you could simply enter a short limit trade at 757.9, and a long limit trade at 704.7. But oscillator indicators can help us "make sure" that we are getting into the trade at the right point in time. Common oscillator indicators include Moving Average, CCI, Stochastic, and MACD. You can use any of these.In the end, they are all the same because they oscillate.
I use a stochastic.But I combine two stochastics - a longer term one, and a shorter term one. Why? The longer term one tells me that the market, in the longer term, is overbought or oversold.The shorter term one gives the entry point.It's like being double-safe.Only take a short trade when both the long term stochastic, and the short term stochastic, are in alignment.
The next chart shows the entry point.Three things have to happen:
(1) The long term stochastic must be above 80.
-When this occurs, as a visual aid, I have colored the panel grey.
(2) The short term stochastic must be above 80, and must cross down.
-When this occurs, as a visual aid, I have colored the short term stochastic. So here, the entry point is when it switches from green to pink.
- Also, as a visual aid, I have small orange arrows. These are automatically painted whenever (1) and (2) are in alignment. Note, however, that you do not yet have a Universal trade until (3) is also true:
(3) Prices have crossed above the VPC, from below.(Shown here as a white line, 1344.75).
http://www.enthios.com/images/EntryPoint.png
And that leads us to the final part:
[*]Maximize your exit.
There are many methods one can use for maximizing an exit.Here I use the Keltner bands (shown in orange, above) because they take simple multiples of the average true range. That means, when prices move to the other end of the band, they have reached the other end of the average trading range.Good place to exit. At least, for half of your trade.
How you minimize losses and stops is a completely different matter.But one way to minimize a losing trade is to do exactly the same as above: just exit at the other end of the Keltner.Here are two examples, one is a winning trade and the other is a losing trade:
http://www.enthios.com/images/WinningTrade.png
http://www.enthios.com/images/LosingExample.png
The losing trade example above also illustrates another trade maximizing point:note how the trade became profitable, and almost touched the lower Keltner band at about 11:15.Then prices moved away.This is slightly subjective,but if I have a winning trade and I've just missed the Keltner exit by only a tick or two, then I will enter a break-even stop.Why?Because the "push" that gave us the trade will be over, if it retraces back to the entry point.Here, a break-even stop would have saved us a losing trade.However, the Keltner exit - even at a loss - saved us from potentially losing even more.
If you trade larger quantities, you may want to divide your trade into two halves.In that case, you can exit half at the Keltner and hold the second half.At the point where you exit the first have, it makes sense to enter a break-even stop on teh second half.
A good place to exit the second half of the trade is when both the slow and fast stochastics have completed a full oscillation, as illustrated here:
http://www.enthios.com/images/SecondHalf.png
There are other ways to maximize the second half of the trade. Another way is to use Fibonacci to determine the ideal Wave 3 exit point. Refer to my book, or to the sections on this web site, about Fibonacci trading.
That's it!
Settings in Ensign
We use two charts for each instrument that we trade: a 5 or 30-minute Price Histogram chart, and a Range chart with the Stochastic and Keltner studies. You can download the chart templates here.For more detail on how the charts work, see our separate section below.
The recommended charts and templates to use are shown below.Right-click, download, save in your Ensign Templates folder.
Price Histogram Template
Latest: templates/MP-2008-0205.dat Older:templates/MP-2005-0223.dat
5-min. or
30 min. Chart
Universal Template Latest (2/22/2008)
See update information below.
ES (50-Range)templates/UNI-ES-080222.datER (50-Range)templates/UNI-ER-080222.datYM (10-Range)templates/UNI-YM-080222.datPrevious:templates/UNI-2008-0205.dat
Older:templates/UNI-2005-0223.dat
2/22/2008 Update: We have made several changes to the template. In summary:
[*]Moved the trade entry and exit prices next to the actual price bars.
Benefit: Easier to see entry and exit prices, and confirm them with your own results.
[*]Changed the colors of the price bars to reflect the fast stochastic.
Benefit: Easier to prepare for a trade, as the current price bar will flash a color change as the stochastic is preparing to cross
[*]Added range bar prices for current price bar.
Benefit: This shows the price that is one tick above and below the current bar.In conjunction with (2) above, this allows you to prepare for the trade by entering your Stop Limit price before-hand.Works great with IB's Book Trader, Bracket Trader, or Ninja Trader.
Ensign Sound Set
templates/sounds.zip
Unzip this file into your folder c:/ensign/sounds
If you don't have a Sounds folder, create one.
Manual Settings for Other Traders
Remember that this is a two-chart system:
[*]Market-Profile or Price Histogram (Preferably 5 min, or 30min if you need to "look back" farther
It is easy to set up the charts yourself, assuming your charting program has a Market Profile or Price Histogram indicator. If not, you can still mark your charts manually by checking our blogs each morning: http://www.enthios.com/blogs/esblog.htm
http://www.enthios.com/blogs/er2blog.htm
http://www.enthios.com/blogs/ymblog.htm
[*]Universal Chart with oscillators and exit targets.(Preferably 50-range for es and er2).[*]Fast Stochastic: 9,3,3with an adaptive average. In Ensign, we use Howard's special version.[*]Slow Stochastic: 81,27,27 with an adaptive average. Note this is 9x the faster stochastic.[*]Keltner: 3, 60 for es; 3.8, 60 for ER2; 3, 60 for ym;with an adaptive average.We have had many requests from users of other charting programs that do not useRange charts, for how to "port" the settings over.The most important chart for intraday trading is the Market Profile or Price Histogram.Of lesser importance is the Univeral.Instead it is important to understand what the Universal does: it simply uses oscillators (one short term, one longer term for confirmation) to help you get into the trade. It then uses a Keltner band, which is an average of the trading range, to target the exit.You can use any oscillator,including MACD, CCI, RSI, or even two moving averages.
As for time frames, if your charting program does not have Range bars then we would suggest you use tick charts (start with 100~300 tick), or a 1-minute chart.You can "map" the time frame to ours by observing the charts that we post to the blogs.
That's it!
How the Universal Template works in Ensign.
Price Histogram
You don't really need to download the Price Histogram template, just set your PH study as shown.Here are the settings in Ensign for the Price Histogram indicator that show only the Virgin POC's. This was created specifically for us by Howard!It is yet another reason why I prefer to use Ensign - Howard is very receptive to traders' needs.
http://www.enthios.com/images/EE%202008-02-05-0934.png
Universal Template
The first thing you must do is set the VPC's manually each morning, based on the lines from the Price Histogram study or whatever other source you may use.For this we use the DPL (Daily Price Lines) study.On your Universal Template, it is the second study from the top:
http://www.enthios.com/images/DPL1.png
This is what you should see:
http://www.enthios.com/images/DPL-2.png
Note that I have it set to sound an alert when prices hit any of the VPC lines. Quite helpful. Be sure to set your own alerts to your own sound files, as they may not match mine.You can turn it off by clicking "silent."
What Are All Those Arrows?
http://www.enthios.com/images/Key2.png
Key (number colorsmatch to color of arrow or indicator)
(1)These small orange arrows appears above the high, as a short indicator, each time BOTH (a) the slow stochastic is above 80, AND (b) the fast stochastic is above 80 and crosses down. It appears below the low, as a long indicator, for longs.(2)Unfiltered Universal Short Trade (Automatic): A larger Yellow down arrow appears if it is the beginning of a trade. That is, if the previous trade has exited and we are 'flat.'Note this has nothing to with trades based on the VPC's, it is just an 'open trade' system that trades the Universal every time there is an entry signal.(3)Unfiltered Universal Long Trade (Automatic): same as above, but for a long.Notice that these all have a (1) arrow with them. I hope you understand why.(4)Unfiltered Universal Trade Exit (Automatic): this large arrow indicates the exit from a long trade as prices hit the opposite Keltner band.(5)Unfiltered Universal Trade Exit (Automatic): this large arrow indicates the exit from a short trade as prices hit the opposite Keltner band.(6)Unfiltered Universal Trade "In Trade" color band. This simply indicates that you are in a trade - green (long) or pink (short).(7)Unfiltered Universal Trade: Entry Price. You can use this to confirm how close you got to the optimum entry price.(8)Unfiltered Universal Trade: Exit Price. This is the price at which the Keltner washit.Note you can actually look at the cumulative profit & loss of these unfiltered trades by clicking on Charts > Trade Detail.(9)Kelter band price. This is a DPL study that I created to paint the Keltner band prices. Thatmakes it easier for you to set your limit sell price to exit your trades.(10)VWAP Price. This is worth watching.It's similar to the intraday POC.(11)These little dots indicate each time the fast stochastic is above 80 (or below 20) and does a cross.(12)The 80 band turns light grey when the slow stochastic is above 80. This is means as a visual cue to tell you that a short trade is setting up. Same applies if it is below 20.You will notice a visual alert as well "Alert: Short Condition" or "Alert: Long Condition"(13)Slow stochastic(14)Fast StochasticHow Do I Match Your Sounds?
Unzip this file into your folder c:/ensign/sounds
templates/sounds.zip
Now Trade the Charts
Suggestions:
[*]Paper trade this system with each individual instrument that you intend to trade on, for at least 50 trades (this could take up to two months).[*]Keep a record of every paper trade: entry, exit, max and min of each trade.This way you can begin to optimize for stops and exit targets.[*]Once you have obtained objective information for stops and targets, begin trading with only one contract.[*]Bracket each trade with the optimized target and stops, so that you do not have to worry about execution in case of an internet disconnect.I use Ninja Trader with the IB platform.[*]To study the methods, please refer to our blog archives.Usual disclaimers exist - these are only indications, etc.[*]Read more about the Market Profile and Price Histogram, so you understand how they work.[*]Read more about other pivots, which you can also use with the Universal.
Templates are also available in Investor/RT and eSignal.I did not create these, so if you have any questions, please join our Yahoo Discussion Group and ask some of our members there.
Chart ProgramChart TemplateseSignalClick here to go to eSignal Central (These need to be updated)Investor/RT
(PC and Mac)Download these and import directly as chart definition files:
templates/Universal 050928.txt
templates/Market Profile 050928.txtWhere to Trade with us, Ask Questions, or just Chat
We havethree places you can trade the Universal, all free.
[*]Live Chat Room in IRC
- Type "/server irc.othernet.org"
- Then type "/join #enthios"
- For more information, click here.
[*]Enthios Group on Yahoo (2,000+ members)
- Here you can discuss the Universal, and othermethods, with thousands of other traders.
- The Group is private to keep spammers out, so just send an email to info@enthios.com with the words "Join Enthios Yahoo Group" in the subject heading. (If you click the link, it will already be entered!)
[*]Yahoo! Instant Messenger (limited to 300)
- Here we send out real-time alerts to the trades.
- Just send an email to info@enthios.com with the words "JOIN ENTHIOS ALERT SERVICE" in the headline.
- We will then send you a set of instructions.A trade with the Universal
2/29/2008
Winning trades are easy, in hindsight.I prefer to show how to do a losing trade. But the beginning is always the same.
First thing you do each morning is check your Price Histogram chart.If you don't have one, then you can just get the numbers manually from our web site. We post the NTR each morning on each of our blogs (ES, ER2, YM, NQ). The Price Histogram chart is 5 or 30-minute, day session only.
http://www.enthios.com/images/EE%202008-02-29-0626.png
Conditions for a Trade
Now, move to your UNI chart.Mark the VPC lines manually in your UNI chart. One you have done so, you don't need to look at the Price Histogram chart again.Make sure your UNI chart is set to "All Sessions" (not day session only).
A long trade is signaled when prices move down to the VPC from above, as shown here.
http://www.enthios.com/images/YM-00b.png
We have two indicators to alert you to a long trade setup.First, the 20 band panel will turn light grey when the slow stochastic is < 20.Also, a text alert will pop up in the upper right hand corner:
http://www.enthios.com/images/YM-00.png
Anticipating the trade entry
Trade entry is always difficult. I have set up the charts specifically to make trade entry as easy as possible. After all, isn't that what charts are for?
Once prices have touched or moved below the VPC line, and assuming (1) and (2) from the above chart are also true, you are then looking for the %K to cross above %D on the fast stochastic. The fast stochastic is the green and pink spread line in the stochastic window.When the color changes from red to green, that is a cross.
- Note you can anticipate the color change because the spread bars get shorter as they get closer to a cross.
- Note I have colored the price bars in the main chart window to be the exact same color as the stochastic spread bars. So you can see the impending color change in the main window.
- Note the color will start to change as the bar is in the process of being created (from one or two minutes, to a few seconds). During this time, you may see the color flash back and forth between pink and green. Or you may see it hold green for a while.
http://www.enthios.com/images/YM-00c.png
Entering the Trade
You are now waiting for the green price bar to complete. Once it is complete, you can enter the trade.
Here we haveset up two price arrows that show you the price that is one tick above, and below, the current price bar. So as the entry bar is about to complete, (in this example) you can look and see that 12416 is one tick above the high. So you can prepare your stop market long order using your broker, or an bracket trader.
Note that the initial exit target is also shown, here 12469.So if you use a bracket trader, you can input that information as well.
http://www.enthios.com/images/YM-01.png
As soon as the bar "prints" and a new price bar is started, you will see a Blue Arrow confirming the entry bar.It will also print a price, for reviewing later.
Why do you place a market stop order? Sometimes, prices might continue to fall.If so, you may want to trail your stop entry price downwards with each successive bar, to give you a more advantages entry price.
http://www.enthios.com/images/YM-02.png
So what do you do when the trade moves against you?Read on.
http://www.enthios.com/images/EE%202008-02-29-0712.png
Following our Alerts for a Trade:
If you are in our chat room or receiving our live alerts from Yahoo Messenger, as prices approach the VPC, you will get an alert to go to the blog page. It shows the trade signal is approaching.Note how you can also see the target, which is the other end of the Keltner band.
Trade Setup
This confirms the VPC line and number, and shows roughly what the trade should look like after it signals.It uses a curved dotted arrow.
http://www.enthios.com/images/EE%202008-02-29-0636.png
Signal Confirmation
The next chart confirms the trade entry.It uses a straight dashed arrow, and also shows the initial Keltner exit target.
http://www.enthios.com/images/EE%202008-02-29-0649.png
Trade Exit and "Natural Stops"
We then use a solid arrow to confirm the trade.The charts automatically paint a yellow highlight around the exit bar as it touches the Keltner.
Here the trade moved against us.You can use stops or not; that is totally up to you. However if you do not use stops, then the Keltner exit provides an excellent Natural Stop.It is the same target you would exit at on a winning trade.Note how it minimizes the loss on this trade, which went as much as 63 points against us before exiting at -22.
Warning: Trading without stops is dangerous.You should always do your homework first, and be aware of 'worst case' situations where the market makes sudden moves.A "9/11 failsafe stop" is a good idea. Another good idea is a stop based on your own liquidity, which of course your broker will do for you if you are not careful.That's also known as an 'electronic margin call.'
http://www.enthios.com/images/EE%202008-02-29-0819.png
Other Applications for the Universal
You can use the UNI chart on other time frames as well. For instance, you can use it filtered, or unfiltered, on a 30-minute chart as a swing trading system.Be sure to use Ensign's built-in back test function to give you a quick look at how the trade would look on the instrument and time frame that you are considering.Simply click Charts -> Trade Detail. Very handy, when used in conjunction with the UNI chart!
- Note this gives you 'unfiltered' trades only, i.e. it assumes that you take all trades that have the UNI setup, regardless of whether it occurs at a VPC line.
- Note if you use the method on a 5 or 30-minute chart, you might want to consider 'upping' the time-frame of the Natural Trading Range accordingly, to give you a nice filter.Try a Weekly VPC, for example.
Chart ExamplesBelow are chart examples of Patterns that we use daily. You will see these same patterns being utilized over and over. They are found in any market and in any time-frame.
The Patterns are Geometric and use Fibonacci Ratios to determine:
• The pattern completion
• The stop placement
• The profit exits
Charts below are examples of those patterns. There are 12 Patterns that we follow in the market.
All of the Patterns we use form in all markets and in all time frames. Of course not all of the Patterns we use work 100% of the time and our members are taught to place stop orders with all trades. Understand that these Patterns are the market's way of speaking to us and if the market changes it's mind and a pattern fails then we best heed what the market has to say.
NEVER place a trade without a defined risk area!
"Trade What You See Not What You Believe"
Click on an image to view full-sized
http://www.tradingtutor.com/images/09_09_2007_ensign_esf5.png http://www.tradingtutor.com/images/09_09_2007_ensign_catw.pnghttp://www.tradingtutor.com/images/09_11_2007_ensign_windows.pnghttp://www.tradingtutor.com/images/09_12_2007_jpy_usd.png
http://www.tradingtutor.com/images/09_09_2007_ensign_esf5.png
http://www.tradingtutor.com/images/09_09_2007_ensign_catw.png
http://www.tradingtutor.com/images/09_11_2007_ensign_windows.png
http://www.tradingtutor.com/images/09_12_2007_jpy_usd.png
[ 本帖最后由 hefeiddd 于 2008-4-21 12:25 编辑 ]
Trading Tutor Market Letter Sampleby Larry Pesavento
Week of October 8th, 2007
As you know, we put a great deal of emphasis on the astro harmonic cycle dates that occurred in the stock market between August 13th and August 23rd. These events only happen every decade or so in such close harmony. The next one doesn't happen until 2017. Using the Bradley model as a benchmark of economic activity, I shifted it to the left so that the low on August 16th would be at the bottom of the Bradley model. The reason for doing this is that the Bradley model can be calculated many decades in advance. It does not consider the price action of the stock market so if we assume that the actual bottom came on August 16th, we find if we shift the model to the left, you can see that we are very near a major top in the stock market. Whether this is true or not we will not know for certain until later this week.
I feel quite strongly that we are near at least a minor correction and potentially a major correction. Here are the following reasons for this assumption.
[*]The Bradley model may be calling a top, if not now, then within the next 8 days.[*]The NASDAQ has completed a major Butterfly pattern.[*]The S&P cash index had a large gap up on Friday and these gaps will usually be filled within a few days.[*]The cash S&P also exceeded the highs on July 19th and could also be forming a double top which is also occurring in the Dow Jones Industrial Average. Double tops are not uncommon in the Dow Jones, as you can see one occurred at the top on July 19th before the sub prime debacle.[*]The VIX Index of Volatility has come back to the . 618 retracement and volatility should start to increase shortly.[*]There are many AB=CD patterns completing in many of the index's.[*]The Dow Jones Transportation Index and the Dow Jones Utility Index are both completing a Bearish Gartley showing a major divergence in the Dow Jones Industrials Vs the Dow Jones Utilities and Transports.Classical Dow Theory suggests that this is a major warning sign as all indices should be making new highs within a relatively short time of one another.
Finally, the subprime debacle disappeared to quickly in my opinion. Something was there that scared the Fed to drop interest rates not just once, but twice. I can remember the famous words from the great investor Bernard Baruch from the 1930s, "the stock market exists to fool the most amount of people for the longest period of time."
Here are some ideas that you should consider from my years of following these markets and historically looking at 100s of years of market actions.
Caveat Emptor
If the stock market is strong this week most of these assumptions will be wrong.
Click The Image To See Full Sizehttp://www.tradingtutor.com/1.png http://www.tradingtutor.com/2.png http://www.tradingtutor.com/3.png http://www.tradingtutor.com/4.png http://www.tradingtutor.com/6.png http://www.tradingtutor.com/7.png http://www.tradingtutor.com/8.png http://www.tradingtutor.com/9.png http://www.tradingtutor.com/10.png
http://www.fibnodes.com/webimages/D-LevelsSmll.gif
Click here for a previous D-Levels Financial Forecast
http://www.tradingtutor.com/1.png
http://www.tradingtutor.com/2.png