FuturesTalk

Training

The Hard Right Edge

March 22, 2004

Morris tells it like it is... a trader who has read 50 trading books and has thrown away over 90% of those read... Morris blew our socks off with this one.  Listen and learn:

Diary of DAX Trading

Look for lessons in these notes:

October 23, 2003

I lost a boatload of money today... my first day of trading the DAX in earnest.  Look at the two attached charts indicating what I am looking at these days:

Note the red crosshairs and how the MacD of the tick, Euro, currencies, DAX on ES all work together. 

October 24, 2003

I have been doing the DAX bracket #1 trade all this week. Have drawn some conclusions that I want to share with you.  I have lost money on almost every one of the trades.Isn't it nasty that learning anything new always means losing money.

It seems that the very wide stop is really necessary on this trade. This is mainly because the first or 2nd attempt to breakout beyond the 30-minute high/low will almost always fail.  Watching the tape shows a lot of size coming to sell/buy new highs/lows.

On the attached chart, the lower right chart is a 5min DAX.  It shows the 30min hi/low as orange dots.The blue dots is the 1st hour high (something I am playing around with).  Notice some things on these charts:

Upper left chart shows euro fx.I have inverted the up/down bar colors to show movement good for the US Dollar.The DAX follows what is good for the dollar.  If the Euro gets weaker (down) then the DAX goes up.

I used various stop strategies ranging from 5 to 10 points.  Everyone got tagged.  Suspect that most first breakout attempts fail.

My conclusion is that you either suffer an enormous stop & risk to allow time for the eventual trend to develop... or change strategies.

One would be to avoid the first two breakout attempts (might even fade them) and take the 3rd.

Another would be to play some bounces from oversold levels just like playing a normal ES pattern. That would have been going long @ 3475 off the first bottom with a target of the 30 min high.

October 27, 2003

I did some work over the weekend to develop a lower risk DAX Bracket #1 Trade.  Remember that this trade fits my risk profile, perhaps not yours.  The idea is to fade the first attempt to break the 30 minute high / low.  For example, today the 30 minute high was 3505.  I shorted 3510 with a 5 point target and 6 point stop.  I'm thinking high + 6 might also work.  This wins or loses 125 Euos per contract.  Obviously you could work the trade if you didn't want to bracket the stop / exit like I do. It turned out an easy winner.  I think my first DAX Bracket #1 winner.  The DTI trade also worked today.  My research shows this trade setup would have generated about 12 winners in the last 15 trade setups.  Good enough for me.  See chart for clarification.

This is 12:30 AM Pacific, I have an computer alarm go off @ 1:30 AM & I execute the trade if I'm up.

I'm pretty sure you could program this trade into various products.  Actually, I can put the long/short trades with target & stops into IB and go back to bed.

Not exactly straight DTI method, but I cannot possibly live with a 30-40 point stop per contract. Unfortunately, this kind of investigation requires study of price movement and the tape to observe and internalize the patterns and it takes a lot of time. I may move on to the 4:00am DAX #2 trade in several weeks. Assuming that I haven't gone insane from lack of sleep.

I did some work over the weekend to create a lower risk DAX bracket #1 trade. Please remember that this trade fits my risk profile, maybe not yours.  This is what I came up with:

The idea is to fade the first attempt to break the 30 min high/low. For example, today the 30 min high was 3505.  I shorted 3510 with a 5 point target & a 5 point stop. (I'm thinking high + 6 might also work). This wins or loses 125 euros per contract. Obviously you could work the trade if you didn't want to bracket the stop/exit like I do.

It turned out an easy winner.  I think my first DAX bracket #1 winner.

The DTI trade also worked this am. My research shows this trade setup would have generated about 12 winners in the last 15 trade setups. Good enough for me.

October 28, 2003

I got stopped out on last night's DAX trade.  Foolish me was unaware that a German econ report was due to be released at 1:00 Pacific.

Won't get burned again on not knowing Euro News:  This website http://www.forexnews.com/ has worldwide econ reports based on Eastern time.  Need to check it every night now. Might be a while before I can experience all the various reports to see how DAX reacts. Looking at the DAX chart, you can see how price was held up and run higher just prior to the report release.  This is exactly what happens in the us equities markets. So the new trading rules are:

1.  Fade the 1st 30 minute high/low by 5 points with a 5 point stop & target.

March 30, 2004

Add into to links below about four rules of bifurcation
Listen to his audio presentation
View Power Point Presentation