"Trading Day by Day" by Chick Goslin

JFK said:
I’m glad you mention the Russell 2000, I’ve only started to follow it since reading Chick’s book.
Any idea why, that out of the 4 the Russell did not react/fall as much as the others last Thursday?
Is it not traded as much as the others out of hours?

The why means nothing. I have been sitting in front of quotes for years and have never made a dime off of WHY! The fact that it IS ----is all that counts. Don't waste your time with WHYS!

With that said, the Russell has been trading much better for a quite a while now. Good follow throughs.
 
TGM said:
The why means nothing. I have been sitting in front of quotes for years and have never made a dime off of WHY! The fact that it IS ----is all that counts. Don't waste your time with WHYS!

With that said, the Russell has been trading much better for a quite a while now. Good follow throughs.

Hi TGM,

This is my first post on this site and thread. I have read all the posts on this thread and have thought about purchasing the book. What has prevented me from purchasing the book is when I read that it is not "programmable" into a "trading system" as such.

My question then has to be WHY is it not programmable and then usable for "back testing"? The answer has to be that some of the method has to be subjective, that is more of an art than a discipline. There must be "nuances" which are learnt only from practice and experience.

Any help on your part or anyone else for this matter is welcome.

Take care,

Gene
 
Gene,

The method is somewhat subjective. The lines provide a clue as to the most likely direction of price, they don't give actual buy and sell signals like a moving average crossover etc.

The method isn't completely discretionary, there are certain "don'ts" such as do not trade agains the trend line etc, but for a programable system you also need "do's" such as "when this line moves up and this line is at this value then buy" etc, this method isn't that exact, so it can't be programmed.
 
danfreek said:
Gene,

The method is somewhat subjective. The lines provide a clue as to the most likely direction of price, they don't give actual buy and sell signals like a moving average crossover etc.

The method isn't completely discretionary, there are certain "don'ts" such as do not trade agains the trend line etc, but for a programable system you also need "do's" such as "when this line moves up and this line is at this value then buy" etc, this method isn't that exact, so it can't be programmed.

Hi Dan,
OK, just as I had surmised - there is subjectivity required. From what I know and have personnaly experienced, unless you have ALL your rules defined, you will continually 2nd guess yourself and allow Fear and Greed to take over - and you will lose money in the long run.

The question which I pose is: "How can a person trade what they cannot fully define" ? The answer is one of the following: 1) The person does not trade. 2) The person trades but something other/additional to what they state.

I appreciate your responding.

Take care,

Gene
 
Gene, I think that's a very sensible comment about fear and greed, but I think that once the probability mondset that Mark Douglas talks about in trading in the zone takes hold it is fully possible to trade with a subjective method. Of course it's only possible to be profitable trading a method that you are completely comfortable with.
 
One thing that I have been pondering on is the half a point alloted for the 'ML above zero' stipulation.
I do not see any significant correlation to the price action and am personally preferring to allot the full one point to the direction of the 'ML'.

Not looking for the ultimate 'right' answer; nor implying that the book is implying a rigid point system only; but rather wondering if anybody has made similar observations on this?

All the best...
CJ
 
I have thought the same before, but that was usually based on a single example where I have been annoyed to miss out on a move. I think it would be worth going over a years data to see if it really does apply, mind you, that's a lot of work!
 
danfreek said:
that's a lot of work!
LOL, who said it would be easy?
It's taken me over 4 years to start making a regular profit & I know I still have a lot to learn.
Perseverance is part of the course.
 
JFK said:
Perseverance is part of the course.

HOW TRUE!!!

I just meant that it's a lot of work to go through a years woth of data to work out whether the "above 0" rule for the ML makes the method more profitable.

But you're right, reward doen't come without hard work.
 
danfreek said:
But you're right, reward doen't come without hard work.

I thank each of you for your input. This has helped me decide to pass on the book for the time being and work on further developing my trading rules. This is not to say that I may not purchase the book at a later day.

Wishing all a good trading day,

Gene
 
TGM said:
Contact Chick. One of his subscribers is a Metastock programmer. Ask for the guys email address. I have talked with the guy before and he has had a total obsession programming the 3 lines.

Tim, I followed your advice and contacted Jon Sutton (via Chick). He has kindly given me the fomula he uses for Metastock. When I plotted it, I was amazed to see how similar the lines look to the SMR lines. I compared them for S&P cash and I struggled to find any difference.

Jon also has given me the permission to share his formula on this board:

factor:= 2.43;
sp:= 3;
ip:= 10;
lp:= 16;
sl:= (Mov(CLOSE,sp,S)-Mov(CLOSE,ip,S))/(((((Mov(CLOSE,ip,S)+factor*Mov(CLOSE,ip,S)
)*0.333)-Mov(CLOSE,ip,S))/100));
ml:= Mov(sl,lp,S);
ml;
sl;

PS1: I haven't fully worked out what's going on here, except that the SL is being smoothed. I can see a lot of thinking has gone into it.

PS2: I have decided that Chick's methods (or any trend following method originating in the futures markets) do not work well with individual stocks. That's not the fault of the method, just the market behaves differently. Most large cap UK stocks do not trend well, spend a long time in ranges, and you get too many whipsaws. Chick's method is best suited for good trending markets (commodities, bonds, forex and index futures) as he says in the book.
 
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Hi, i am using MetaTrade software is there any possibility to make a code in MetaQuodes Language 4 with Jon' s formula? Plse advise.
By the way i received my book and called Mr. Chick . He is able to help for any question.

Arrais
Dubai
 
Hi,

I am a new member on trade2win. I am currently reading Mr. Goslin's book and I read your thread about www.prorealtime.com which is a free EOD charting site and is really good.

The default MACD on this site uses exponential average. Did anyone who use this site figure out how to use simple MACD 3-10-16 to resemble the SMR Lines (SL & ML)?

I tried creating an indicator on their programmable version as below to match SMR lines using simple MACD 3-10-16

==================================================
REM This example computes the MACD indicator as SMR Lines

p = 3
q = 10
r = 16

fastMA = Average[p](close)
slowMA = Average[q](close)

sl = fastMA - slowMA
ml = Average[r](sl)

zero = 0

RETURN sl AS "SL", ml AS "ML", zero AS "Zero"

==================================================

Does this make sense?

Thanks

Samir.
 
Hi,
Follow up to my last post, I have attached DJI chart as of EOD 5th August 2005. Can someone who has proper SMR on their Sierra or tradestation chart check if this one looks exactly the same?
To me the range of SL seems a bit too wide above and below zero.
Thanks
Samir.
 

Attachments

  • SMR_Test.doc
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Samir - you have the honour of my first post.

if you go to the SMR site you will find that they are posting their charts free of charge for a period. This would be a good way to gauge whether you have the correct formula. I use the free EOD on Pro Real Time also and I have found that applying the simple MA to the MACD properties does the trick nicely, but that is for my strategy. For your info, on PRT the exponential MACD seems to mirror the SMR charts more closely than the simple MACD.

As an aside, in my experience, it's not by making the indicator mirror what is in place in the book, but is how you apply it within a strategy to your trading. I use the SL ML and TL etc, but also add a few other confirmations based on my education thus far. This seems to be working when I am disciplined, it's when I lose discipline I find my problems start.

Anyhows, hope the above helps and good luck in your endeavours.

Chris
 
Chris,
Thanks for the info about sample charts on smr.com
I compared and found to be same when I used the formula provided by pratbh.

I understand and agree with you that it's not about having exactly the same indicator but its about understanding the idea/concept behind it. Although I prefer to have the things in proper order when I am studying something, it just keeps my mind happy while reading.

Thanks again
Samir.
 
Hi, I'm a newbie and I'm thinking about buying this book. But i do have some questions i hope you guys could answer.

1. Is this book suitable for a beginner? Or is it intended for people who already are traders?

2. I would like to learn to trade, but I'm not going to rush into something and start losing money right away. I would prefer to position trade or swing trade, not daytrading or scalping. I would like to do some "research" after work, and decide wether or not i want to do a trade. And then hold that trade for as long as it is good, or until it hits the "take profit" level i have decided, or the stop-loss of course. Is this book suitable for this type of trading, or is it even intended for this type of trading?


I appreciate your answers very much!
 
You might be better with Stan Weinstein's book --- Secrets of Profiting in Bull and Bear Markets --- its more aligned with your stated aims and is a good solid grounding.

I say this because although I like the book I think its better suited to commodity trading than stock trading and you sound like thats the path you're planning to take.
 
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expensif said:
Hi, I'm a newbie and I'm thinking about buying this book. But i do have some questions i hope you guys could answer.

1. Is this book suitable for a beginner?

2. I would prefer to position trade or swing trade, not daytrading or scalping. I would like to do some "research" after work, and decide wether or not i want to do a trade.

In my oppinion, this book is well suited for beginners. It is an easy and pleasant read, and have some fundamentals. It is not difficult to understand.
Even though it is said that the methods work in any time frame, the book concentrate on swing trading with EOF (end of day) data.
The book is not, though - and only my oppinion again - going to make you an instantly rich, and whether it is enough on its own is another matter.

All the best...
CJ
 
The only news letter I receive is Mr Chick's. It is the only one I have ever payed for. I was on trading desks with thousands of dollars in Subscriptions. I find Chick's to be the best. Why? Because it is a teaching newsletter and subscribers can call him directly.

Here is the part of the newsletter I just received. I think you guys might like to read it. Hope you all are doing well.

Cheers
TGM


"INTELLIGENT FUTURES TRADING (as of close Mon, 8/15)
© 2005 Chick Goslin, (619) 294-3879, [email protected]
www.intelligentfuturestrading.com

Concurrent markets - Long Euro (but weakening some now). Long all in
Crude complex. Long Gold. Short Silver. Short Bean Oil. Short Cotton.
Short Cocoa.

Markets close to becoming concurrent - Long Copper. Short Corn. Short
Beans and Meal. Long or short Wheat (either possible on just moderate
move up or down).

General comments - A number of years ago it was tax return season and
was headed to my accountant's office. Since his office was in same
building as a broker friend of mine I stopped in afterward to visit.
Mentioned had had a very good year and broker friend wanted to know
where had made most of the money. Could not really remember any
trades in particular, not unusual since I have hard time remembering
what did more than week or so ago, and so took out my stack of
monthly statements and started looking through them. Was surprised to
find that hardly had any trades that produced much more than $1,000
to $1,500 per contract profits, and many less. Overwhelming majority
of trades were around $1K profits (multiple contracts though), yet
ended up with seven figure profits for year.
Point is have always ended up doing much better when focus on
taking profits when they reach the $1,000 to $1,500 per contract
levels then when try to maximize profits. Now in some markets where
price moves consistently big and contract size big, like crude
complex these days, have to adjust this number up, but find using
area of 100 to 150 percent of margin profit works out very well. Many
times when do this price will keep moving after get out at this
profit level, but when hold onto a token number of contract to try to
maximize profits on those, am surprised by how many times will end up
getting out at same or worse profit than those where took profits in
area where lines and chart indicated was clearly "too soon" to do so
(yet were good, 100/150 %.
Have always felt that the so called market wisdom of "letting
your profits" run is not really very wise. Some traders can do this
and do it well, but I cannot, and invariably end up doing much better
on ultimate bottom line when force myself to take bulk of contracts
off when profits reach area of 100 to 150 percent of margin
regardless of how solid line patterns and charts happen to still be
at that time. As mention in book, find it a very big psychological
boost if take majority of positions off when profits hit this
100/150% of margin level since just really a help to book those
profits, and find it very big psychological blow when hold all
contracts for maximum profits (i.e., until line patterns clearly turn
in other direction) and market turns sharply and give back all or
almost all of formerly big profits. This such a tough game find it
really helps to take profits when good since pain of losing them so
much greater than pain of getting out too soon (leaving some profits
on table).
This method of using lines to tell you when odds clearly in your
favor (solid concurrent mode patterns) is so good at finding good
trading opportunities, that just do not have to worry that will miss
"the" big move as will have almost constant stream of good trading
opportunities can miss some really big moves and still do extremely
well for year, but feel have to take those profits when good or will
find psychological damage to confidence too much to do these good
trades in a decisive way (put them on when picture still little
fuzzy easier to do when have booked good profits on other trades).
Again as mention in books, only way to make money trading is to take
profits.

Stock comments - Decent up day today when were set up decently for
something on downside. dip in crude prices helped stocks rally today
as rally started about time Crude hit 60.00 area (down about 90
points); however, when crude rallied some off lows then stock rally
ran out of steam. Tough to trade stocks when they are just following
another market, crude in this case, but this has been case off and on
for quite and while past many months and following crude has not
lasted for more than few days so cannot let crude dictate actions in
stocks. Technical picture in crude complex still quite positive and
so this remains potential negative for stocks, but SL's are high in
Crude and so could pause or dip little more here also. Unfortunately
this makes trading stocks much tougher at moment, and especially
since patterns are currently so mixed.
Put/call ratios surprising today since for first time in very
long time got bearish numbers. CBOE/total came in at .66 which is
nominally neutral but based on numbers have been seeing past few
months have to consider this at least a somewhat bearish number. In
Index Options did 66K more CALLS than Puts and this a very bearish
number regardless of recent numbers since only rarely have more Calls
than Puts traded on any day. VIX dropped some to 12.26 and so this a
little bullish since shows less fear of big downside risk. So
put/call ratios and VIX switched sides today with put/call going from
long period of extremely bullish numbers to quite bearish numbers and
VIX going to less bullish number. This an expiration week and
put/call indicators much less reliable during these weeks and so
these numbers even tougher to read than normal.
Bottom line - Just so mixed and so many conflicting
indications here, especially when add in potential impact of crude
oil price movement, feel sidelines best until get something clearer."
 
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