Mechanical Day Trader - Dow Market Opens

Intraday trading of the market opens - I will endeavour to update this for each day for the first hour of trading - let's see how long I keep this up, maybe 5 trading days in a row??

All times will be Chicago - Rules are:
> first trade can be 1/2 hour or so before equity index opens
> 100% technical decisions
> use institutional stops created premarket & after 8:30 Dow Open use stops from previous day sessions
> short stops will be less than 10 points
> long stops will be 5 to 6 points
> trade 2 contracts - 1st contract is typically out at first technical objective; 2nd contract stays in the trend (if there is one);
> If trend, enter another contract with the trend

If I do this for about 5 days in a row, this will give readers a feel for the Dow (historically) - also, since I am an ex-journalism major, I get my typing fix out of me.

KEY:
Green = s1, s2, sx
TOP = 1st profit objective long; if R1 sold, stop is just above here
BOTTOM = 1st profit objective short; if s1 bought, stop is just below here
Orange = R1, R2, Rx
FORM = there are two legal chart formations for buys, two for shorts
REVERSE = there is one legal reversal rule for longs, one legal reversal rule for shorts
STOP = intraday or multiday stop will be mentioned
REVUP/REVDN = there are two types of reversals each direction, they are timed

ADDITIONAL KEY:
TIME = there is one time rule when exiting or entering a trade
POINTS = there are 2 rules regarding Dow Points

The first profit objective will be entered as close to realtime as possible, the "end of trend" reversal may or may not be posted; I seek points - once I hit my points I'm happy to be done for the morning. Those that are hungry can stay in longer.

let's see how it goes !

The Mechanical Day Trader

AUGUST 7, 2008 PREMARKET
short FORM - 8:17 11542 LIMIT
cover short - 8:37 11472 MARKET ------ net 70 points (might be some slippage)

long {EDIT -- reason for trade = FORM} GREEN S2 8:45 11485 LIMIT
exit TOP /ORANGE 11520 MARKET -------- net 35 points 1st profit obj
long GREEN S3 8:58 11503 LIMIT (uptrend rule, annc in 2 minutes)
long GREEN S4 9:13 11533 LIMIT (uptrend rule, after annc - this may not be filled if you're not quick)
exit (exit because of points & time & FORM) TOP/ORANGE 9:34 11570 MARKET
---------- net 1st -- 85
---------- net 2nd -- 67
---------- net 3rd -- 37 (may not have been filled)
TOTAL UPTREND PTS (3 contracts)= 189 (X$5 = $945)
TOTAL DOWNTREND PTS (1st trade, 2 contracts) = 140 Points (maybe 5 pts slippage on exit)

This post completed 9:42 am I'm done for the day - exited market at 9:35

The Mechanical Day Trader

August 8, 2008 Dow Jones First hour trading

August 8, 2008 premarket
exit short position from 11440ish one hour earlier @ 3 minutes past open (8:33) near 11380 (filled 11385) net profit approx 50 points
-----------------------[always figure the previous trade before entering a new one!]------

August 8, 2008 first trade after market open
long GREEN S3 8:43-8:48 11428 LIMIT (uptrend rule, MKT has already surpassed 1st profit objective, so hold all contracts for end of uptrend)
{9:25 update} the uptrend is nearing a mutli day STOP 11617 and 11672
9:25 exit at ORANGE 11633, filled 11630

profit per contract 206 points, time in market 40 minutes

as per earlier trades, I just take the points and leave..enjoy the rest of the day.

Good Trading!

The Mechanical Day Trader

a tame monday

August 11, 2008
No announcements today, trading a little tame; numbers come out the rest of the week, expect bigger ranges after today.

First trade was a reversal at a multiday institutional stop, that led to two long entries of 40 points and 60 points (total so far 100 pts) , respectively, a couple shorts after each long exit (about 70 points; the 2nd short was nice, about 50 points short , a reversal at today's institutional stop nets a long of 30 points for exiting at the first profit target, as of about 10 am Chicago you stay long for the Uptrend (as of 10:08, the long has yielded 60 pts so far; thus a quiet day yields about 440 points by 10 am Chicago if you trade 2 contracts, exiting the first at a profit objective (you don't know if there is a trend) and exiting the 2nd at the end of the Trend/reversal.

These 3 days should give readers a good view of the intraday methodology. There are only 3 causes of a intraday reversal, the daytrader knows the lowest risk trades and is expecting the reversal and technical confirmation on the chart before entering the trade.

Low stress for all concerned because the stops are tight and you are filled via limit order entering, and exit at market very near the limit resistance/support number.

You expect the reversal 5 to 10 minutes before it occurs. If it blasts thru it, then you continue riding the trend; if it generates one of the 3 reversal critiera, you exit your current position and reverse.

You do not trade by having the market behave to your expectations, you let the market decide what it is doing and take low percentage trades (there are 4 legal trade setups only) that the market gives you. The market is boss, we are mere slaves taking what the market gives us, with no bias or opinion ourselves. This lowers the stress level immensely, along with the tight stop losses.

Good Trading!

The Mechanical Day Trader

To see charts accompanying these trade journals, navigate to my profile

The Mechanical Day Trader

August 8, 2008 Dow Jones First hour trading - Updated @ Noon ET

August 12, 2008

short about 100 points from 8 am Chicago
quick long about 50 ups during the downtrend (optional counter trend trade)
long about 70 points from the AM Low
2 shorts in a row after the uptrend - first short nets about 30 2nd short nets 20

total so far 1 min methodology: 100 + 50 + 70 + 30 + 20 = 270 pts total (1 counter trend trade included)

As of 12:15 ET market is in a trading range with a bias to stay short for a lower low.

The Mechanical Day Trader

mechanicaldaytrader said:

August 12, 2008

short about 100 points from 8 am Chicago
quick long about 50 ups during the downtrend (optional counter trend trade)
long about 70 points from the AM Low
2 shorts in a row after the uptrend - first short nets about 30 2nd short nets 20

total so far 1 min methodology: 100 + 50 + 70 + 30 + 20 = 270 pts total (1 counter trend trade included)

As of 12:15 ET market is in a trading range with a bias to stay short for a lower low.

The Mechanical Day Trader

Click to expand...

These are my program Trade for to day ,, All automated.

I will post all trades for next few days,,, The attached result is up to NOW trades > The program Trade stops trading 1 hour before market closes,, It only scalps the consolidation .( this is the most difficult time to intra day trade if you are not automated and the best time to day trade if AUTOMATED.

Grey1

Congrats!

Grey1 said:

These are my program Trade for to day ,, All automated.

I will post all trades for next few days,,, The attached result is up to NOW trades > The program Trade stops trading 1 hour before market closes,, It only scalps the consolidation .( this is the most difficult time to intra day trade if you are not automated and the best time to day trade if AUTOMATED.

Grey1

Click to expand...

So far today your winners are about double your losers. Scalping gives you lots of trades, the downside is you don't let your winners run, and your losing trades are about equal your winning trades dollar value wise. But these are all trade offs, if this works every day like this, you've got a nice program and your broker is buying a bigger yacht! LOL

My kudos to you Grey1 !! :clap:

My goal for my program is to use discretion for entering trades [but have simple graphical rules] and make 200% of intraday margin ($500) per contract within the first two hours. The Dow trading range is now around 250 points from high to low the past few months so trading all day the numbers get pretty staggering profit wise.

Again, my compliments on your scalping automation!

Regards,

The Mechanical Day Trader

mechanicaldaytrader said:

So far today your winners are about double your losers. Scalping gives you lots of trades, the downside is you don't let your winners run, and your losing trades are about equal your winning trades dollar value wise. But these are all trade offs, if this works every day like this, you've got a nice program and your broker is buying a bigger yacht! LOL

My kudos to you Grey1 !! :clap:

My goal for my program is to use discretion for entering trades [but have simple graphical rules] and make 200% of intraday margin ($500) per contract within the first two hours. The Dow trading range is now around 250 points from high to low the past few months so trading all day the numbers get pretty staggering profit wise.

Again, my compliments on your scalping automation!

Regards,

The Mechanical Day Trader

Click to expand...

The first and last hour is shark infested and very difficult to model using current state of mathematics unless one uses FUZZY maths to code the uncertainty.
Most program Trades that I know including the one we used to run in the bank are cycle based and ignore the first and the last hour. In fact the reason for traders losing most during this period is because of the activity of program trades.. ,, ( just like playing a computer Chess )

The trade off between Trend code or a cycle code is well documented and i have had much more success with the cycle code than a trend code.



Grey1

The Marina was a mile away...

Agreed..I don't know how any automated program could figure out the opening and closing hours; however, using discretion one can capture the big trades in those hours because they are always retracements of known institutional stops within 'x' hours or 'x' days ....... crossovers and moving averages are useless on intraday during these two hours [that's my experience] so using some grey matter between the ears and some good cycle analysis + technical stuff, it can be done.

I've been around this trading business a while, I can't sit there all day....when I was a boat owner, I would be on the water by noon most days, cuz I made a killing in the morning hours -- then trade the reversals before the market close after returning from boating in the Gulf of Mexico...

Regards,

The Mechanical Day Trader

mechanicaldaytrader,

Firstly wow I'm impressed certainly gives me cause to think more about how important market time is as a factor for the system. As I've been looking at Forex it may not be such an issue though.

I was hoping to pick your brains a little if you don't mind. I'm interested in how you interact with your system. Clearly you set it up in some way so I was wondering what kind of information you are feeding it. As you have taken longs and shorts in one period clearly you don't just set a direction you want it to trade or do you? Do you feed it the S&R areas or do you just turn it on when it is in those areas manually? Do you set the initial profit target, or does it do that automatically?

Hope it's not too much trouble - but I'm interested in how people set up their systems as I think this is how mechanical systems can be made to work.

Emini Dow Methodology

Thanks North5 for the comments, I'll outline how I do my due diligence in the market that I trade - I do not have knowledge of other markets, so I will confine it to the Mini Dow futures contract at the CBOT.

First, this is not a system; it is a methodology. There is not any automation; HOWEVER, there is a great deal of graphical feedback that gives the trader a likely answer that is clear, concise with a limit order entry that routinely gets filled within a minute.

A couple important guidelines:
> limit the information the trader receives so decisions can be quickly arrived at
> I use two charts, one that very accurately gives trade setups on the Dow Cash and a second that graphically gives the answer on the futures. Stops are tight, limit orders are routinely filled, then zoom, the reversal should occur or the trend should continue. Anything else (like congestion) infers you will likely be stopped out within moments.
> I studied this market to measure "money flow" -- major reversals are caused by one of the three players in the market entering, exiting or reversing. That's it. I only trade with one of the two players day in and day out - they control the liquidity anyhow.

> technical analysis is of limited use imo if you don't know the cycles that "money flow" rotates in and out from each of the 3 players. You also should know when the major players are reversing position or exiting positions and sitting on the sidelines. There are a variety of mechanical trading systems that control the bid (imo) of the e-mini index markets. I trade intraday and can generally discern with the major mechanicals are reversing. These always (at least 90%+) lead to significant trends in the market - that may last for many hours or multiple days.

> I have no point of view of the market when I turn the monitor on; I do have some TIME and PRICE critiera that I judge cycles by, but I am totally dependent on what the market has done in the past 2 hours (including premarket). Once I evaluate the past two hours, the Dow Cash chart rules everything I do as far as stategy aong with the futures chart.

> a note about my futures chart. What it measures (and nothing else that I've seen does) is give a 100% objective critieria for MAXIMUM OVERSOLD and MAXIMUM OVERBOUGHT conditions in the market. Since I trade cycles, the reaction of the market to these two conditions when they occur determines whether a trend is beginning, ending or a trading range is in play. Unless you can discern this fact, I have no business trading.

So, when entering the market, I have a 90% chance of knowing what I am entering. If I think I am entering a trading range and it will stay a trading range, then I will exit at my profit objectives and likely reverse. This methodology can be proven via backtesting the relationship of technicals to past prices or by watching charts realtime and measuring current market action in relation to my types of legal trade entries. If a legal trade entry criteria is not met, I do not trade. Keep it simple and clear. There are about 12 - 15 reversals every single trading day, no exceptions that occur with these four legal trade entries I've designed.

If I am entering a "pause that refreshes" in a trend, then I will closely monitor how future cycles deal with current objectives and use the futures software to take profits at a "second profit objective" (I assume the first objective will be passed) and hold the rest of contracts for future cycles in the direction of the trend. Staying in a trend used to be a major weakness of my trading for years; Now, I can exit a trend knowing I've got 95% of profit out of it; If the trend subsequently continues after my exit, I simply re-enter the trend at the appropriate time.

The Mini Dow has some known (to me) price, time behaviors that are easily discerned that the Mini Russell does not - imo. Therefore, trading the Mini Dow is MUCH easier using known Dow Behaviors with my cycle analysis.

Stop losses are no more than $50 on the short side and abou $30 on the long side. Announcements do move the market, however your entry to capture this move is always technically correct, particularly the 8:30, 10:00 and 10:30 preannouncement positions. Sometimes you have to move your stop to the maximum allowable (maybe $100 per contract) but then you will net 100 mini-dow points in about 90 seconds after the news hits. Trades MUST be in the market at the technically correct support/resistance level before the announcement occurs. During equity hours, traders have to be in several minutes ahead of the announcement, as the reaction to the news is already happening.

News does NOT move the mini dow; mechanical trading systems do. I trade with them as much as possible.

Hope this helps.

Regards,

The Mechanical Day Trader
{remember, this is not a system, it is a concise - discretionary methodology that can be proven historically or currently}

with results as good as you suggest, personaly i wouldnt have bothered with the website, this journal and the pms to members who have visited your profile, but hey what do i know maybe you give the subscription fees to your kids as pocket money or maybe you give the money to charity. You certainly dont need it with our min 500 mini dow points in the bag every week.

As for me, I would need to either see some LIVE calls made and the corresponding statement showing the trades timestamped before i parted with $1100. And thats if i'm quick and get in before september when the subscription fee doubles.

Hmmm

$500 for access to a pdf which teaches me to trade an indicator which i then have to pay $600 for every 6 months.

You say this is not a system it is a methodoligy. So why do we have to pay a subscription fee?

All you had to do was ask.....

Elefteros said:

As for me, I would need to either see some LIVE calls made and the corresponding statement showing the trades timestamped before i parted with $1100. And thats if i'm quick and get in before september when the subscription fee doubles.

Click to expand...

All you had to do was ask, instead of copping an attitude. There's a thing called GoToMeeting. My desktop becomes your desktop and the technical trading is all graphical, the book knowledge for the trading rules is very minimal.

I thoroughly enjoy training more than trading. It is a blast to teach my methodology - I don't take experienced traders that cling to their useless belief systems - only past traders (or computer literate souls) that forget everything they know and are willing to start over with an optimistic attitude.

The Fundamentals course teaches HOW to look at a technical chart for futures. Most trading mistakes come from misinterpreting - or OVER-analyzing - what they see in the chart. There are ironclad clues to future reversals that work over and over and are simple truths. People are invited to prove me wrong and get their money back if they're right. No one has even tried, cuz the principles are simple, complete and work every day.

I teach HOW to think and HOW the mechanical systems in the Mini Dow cause reversals. Not only does the methodology KNOW the time of the reversal but the methodology teaches how FAR the reversal will go - according to time and price principles.

As with the price of oil, the price goes up because demand is HIGH. Considering my past platform cost (using Tradestation) was 4x this price ($750 per month), quibbling over $200 or $400 monthly is pocket change in the daytrading business [sniff]. Heck, bottles of champagne at Costco are $100 !

Life is good; the message is fun to preach and it's proven every day. If you have further comments please keep them between you and the mirror or send me a respectful email. "My Door Is Always Open".

I will reply to any respectful query with specifics that are easily proven by others... be constructive and make money daily in the futures market. ...Or do me one better, create a better methodology and charge more money than I do!

I like this Forum and have met some nice people.

Also note that when I pm'd you I said the PM would be the LAST PM, right? Let's put all our cards on the table and not try to mislead anyone, ok Elefteros? Quite the contrary to your inference, response to my PM's has been overwhelming and lots of folks have me on their RSS reader. My blog statistics document all this.

Thanks everyone for your interest! I enjoy building relationships with everyone I meet.

The Mechanical Day Trader

...can't accurately read a blog!

Elefteros said:

$500 for access to a pdf

Click to expand...

-- WRONG
Client receives 5 hours of intensive training - multiple PDFs, the 6 reversal principles are all guaranteed -- read the course outline!

Elefteros said:

which teaches me to trade an indicator---

Click to expand...

WRONG
read the course outline! No software is included in the seminar, the client does receive a demo after course completion; since he knows the reversal techniques he can appreciate how accurate the available software is, however!

Elefteros said:

which i then have to pay $600 for every 6 months

Click to expand...

--- WRONG

it's more, I am a greedy capitalist....$200/month, $1,200 not $600... payable 12 months in advance if you are outside of Florida!

Elefteros said:

You say this is not a system it is a methodoligy. So why do we have to pay a subscription fee?

Click to expand...

-- (finally a question...:-0)

I teach HOW to trade, HOW to analyze the market..it takes some practice, maybe 2 to 3 weeks of paper trading -- once a trader catches their 100 points daily, further consultations can take them up to 200+ points per day if they trade all day - normally 100 points daily can be nailed by noon ET every day. (Yesterday was 200+ in 1 trade); the "services" post on the blog sez "unlimited support" -- now, what software company does that, and guarantees it??


Trading profitably requires you to read and process information accurately Elefteros -- you flunk the test so far, make up tests ARE available! :cheesy:

Good Trading Everyone!

The Mechanical Day Trader

i'm sorry if i have offended you, it was not my intention.

However you have posted several trades over the last few days that have all been winners netting 40+ all of which were traded with a 6 - 10 point stop according to you. This makes me sceptical of what you are offering, unless of course you are not sharing your losers with us or you are on a hot run.

Also i never suggested that you bombarded me with pms i merely stated that you sent one and that if i had a system that was this accurate i would not put the effort into trying to sell it.

Thats what makes the world a great place, we are all different i prefer to trade you prefer to teach.

I wish you and your students all the best.

everyone should be a skeptic...

Elefteros said:

i'm sorry if i have offended you, it was not my intention.

Thats what makes the world a great place, we are all different i prefer to trade you prefer to teach.

I wish you and your students all the best.

Click to expand...

Thanks Elefteros.........I am always skeptical of any claim by anyone -- I believe the blog shows a tremendous amount of 'due diligence' --------- did you watch the streaming videos that the PM's linked to? There is a lot there...Plus watching the market realtime via GoToMeeting solves a lot of the issues for the skeptics.

I trade to make money, and only trade the mornings...the 8:30 ET reversal just occurred; entry was about 5 minutes before hand and I am already out of the trade - net 40 points or 40% return on daytrading margin...

market has reversed and now I am short ...as of 8:56 ET the 1 Minute Methodology has netted 60 points..... these two trades a first day student would have nailed with real money. It's all (90%) graphical.

I commute from Costa Rica to Florida regularly, so teaching and peddling my methodology takes up the balance of my time when I am not busy enjoying my beautiful and loving Costa Rican familia.

It's still rainy season there, so me and my gal will be in Italy sometime in the Fall. With high speed internet, I can support all my clients anywhere in the World.

As they say across the Pond, "Cheers!"

The Mechanical Day Trader

wrapping up the 8/15 am trade & where "the Mechanicals" are

9:18 8/15/08 -- short entry has hit the major profit objective - about 40 points. So, 40 pts up, 40 pts down, 80 pts and the equity market hasn't even opened yet. The 100 pt goal is 80% attained already.

When there is no 8:30 announcement then the Methodology kicks in a little later; although you can trade the premarket (like Europe does) and typically net 100 points also (before the U.S. announcements start).

I would assume the market is going to continue sliding downward from the 11,700 level set yesterday but we'll see. Commodities are dropping substantially, so there will likely be some "buy" programs by the Mechanical Systems that can be taken advantage of.

If you have noticed, for each rally in the Mini Dow there has been a significant shorting opportunity....The truth of the market --- a trading range is occurring --- will be if the intraday lows are honored by subsequent trading days. That's how you perceive where the Mechanical Systems money is. I am Bearish in all US equity markets for the rest of the decade, I am afraid.

I always teach and trade WITH the Mechanical Systems that control the index futures.

The Mechanical Day Trader