"Trading Day by Day" by Chick Goslin

[chitowntrader]

trading stocks intraday

i am in my second reading of the book, and have subscribed to chick's newsletter (it is very good, in my opinion). just wanted to say that i am trading stocks (US, large cap, hi volume stocks) on an intraday basis, pretty much the way chick describes the method in the book and newsletter. i use my old mechanical tools to take profits and place stops, but everything else is pretty much right from the book, and it's working very well so far. i wait for a chart to go concurrent, use my tools to get in, manage the trade, and when it goes crosscurrent, tighten up my stops. i understand the argument about 'noise', but from what i see, if you don't get crazy and try to trade a 3 minute chart, the concepts seem to work well.

 

[chindl]

Hi there Chitown - what is the timescale that you are trading this method intraday?
Chris

 

[chitowntrader]

trading us stocks i am using 30 min charts

 

[dod]

Chi,

Using 30 minute bars, do you ever hold any positions overnight?

 

[chitowntrader]

yes i will hold overnight. i have a fairly rudimentary mechanical approach for taking profits and stopping out of positions. but once in a position, if all ok, then will carry overnight

 

[TGM]

happy new year

 

[chitowntrader]

although this is a method and not a system, i am a systematic trader, and have come up with some basic rules about entry and stops; if anyone wants to pm me, i'd be happy to share, for whatever they are worth

 

[kitelab]

Hi, is Chicks book aimed at all markets? I am concentrating on Forex trading and wanting to know if this book has been beneficial to the FX traders.

Thanks

 

[Squall]

Kite,
yes, in theory his book is aimed at all markets, although he trades futures, he also states this approach should work in all markets (although stocks have more factors to consider). His book is excellent and I am very glad to have found it. If you talk to him, tell him Nate from FL says hi.

 

[Jack o'Clubs]

Kite,

Squall's right and in fact currencies provide some of the best trends which his method will take advantage of. The only thing to be aware of is that if you stick to his methodology it's based on EOD trading, so you don't get many set-ups. He trades across about 20 or 30 futures markets which means there's nearly always something going on, but if you were just trading say the three or four major currency pairs, you'd have quite long periods when you were inactve or out of the market. You'd also need to careful with the crosses that you used, so you weren't over-exposed to the $ once it starts trending (eg getting a signal to take a position in cable, EURUSD, JPYUSD and CHFUSD when it's really just the dollar part of the pair that's moving). But it's certainly a solid methodology if you're prepared to be patient with it.

 

[kitelab]

Thanks Squall and Jack for the advice, as soon as i see some spare time coming up i'l definately give it a read. Yes, i would have to pay attention to 'like' currencies as there are quite a few that follow each...so limiting the true signals. Might be a good system to implement as one of two.

Much appreciated.

 

[Squall]

If only it worked!

JonnyT

Of course! If anyone were to learn to be profitable from Chick's teachings, then they wouldn't need your educational services, now would they?

Chick is an outstanding individual and trust me, his methods work. Look at a chart for yourself. It's not rocket science.

 

[rjc]

Hi,

I've been persevering with this in forex since first reading the book a year or so ago and as long as I keep myself disciplined it has provided many good trades. However I'm having problems thinking about the method of taking profits using percentage of margin.

I've never traded futures so I don't really know how the margin is calculated for these, but in my Oanda account you can set the leverage to a range of values. So for instance, mine is set to 20:1 which means a 5% margin. So (I think I'm right here...) if I open a 10000 unit long position on gbpusd, then I need £500 margin, and each pip is worth approx 48 pence (I'm a small trader ). In order to make 100% of margin profit I'd need a 1000 pip run to do it. That seems a bit over the top really.

So basically is my analysis here flawed, does the futures market allow much higher leverage which would enable you to get 100% margin covered? It seems using Goslin's method on currencies you can often pick up runs of several hundred pips off the daily charts but I'm certainly not maximising my profits. At least with Oanda I can reduce the trade by any amounts. The bottom line for me is that I really like this for getting into a trade but it's getting out of it where i don't seem to be able to keep a consistent strategy.

 

[Jack o'Clubs]

rjc,

Margin on a currency futures contract is about $2,000 for EURUSD (obviously it varies by broker and pair, but that's ballpark). That will buy a contract worth $12.50/pip. So to cover the $2k margin, about 160 pips. You should be able to tweak it for spot currency from there.

 

[Squall]

Hi,

I've been persevering with this in forex since first reading the book a year or so ago and as long as I keep myself disciplined it has provided many good trades. However I'm having problems thinking about the method of taking profits using percentage of margin.

I've never traded futures so I don't really know how the margin is calculated for these, but in my Oanda account you can set the leverage to a range of values. So for instance, mine is set to 20:1 which means a 5% margin. So (I think I'm right here...) if I open a 10000 unit long position on gbpusd, then I need £500 margin, and each pip is worth approx 48 pence (I'm a small trader ). In order to make 100% of margin profit I'd need a 1000 pip run to do it. That seems a bit over the top really.

So basically is my analysis here flawed, does the futures market allow much higher leverage which would enable you to get 100% margin covered? It seems using Goslin's method on currencies you can often pick up runs of several hundred pips off the daily charts but I'm certainly not maximising my profits. At least with Oanda I can reduce the trade by any amounts. The bottom line for me is that I really like this for getting into a trade but it's getting out of it where i don't seem to be able to keep a consistent strategy.

rjc,

take the number of units and divide it by the leverage to find your margin...

ie 10,000 units at 50:1 leverage would be $200 margin.

Oanda's order box will tell you how much margin is required when you're initiating a position.

Hope that helped

 

[Squall]

rjc,

take the number of units and divide it by the leverage as a % to find your margin...

ie 10,000 units at 50:1 leverage would be $200 margin.

Oanda's order box will tell you how much margin is required when you're initiating a position.

Hope that helped

you seem to already have that part down according to your post though...

 

[rjc]

Squall, thanks for your input there but the problem i had was not so much calculating the margin, rather the number of pips needed on spot fx to make 100% margin profit seems to be significantly different to the number needed on a futures contract (which is what the book seems geared towards).

I think Jack o'Clubs nailed it - by that calculation if a trade on the daily chart moves 160 pips or more (on EURUSD) then best start thinking about taking at least part profits even if the move is solid concurrent. Does that seem like a good idea?

I have been taking half off on a stop at the end of the previous days bar, and the other off when the ML turns crosscurrent. I had at one point last night a 300 point profit on a long GBPCHF position and ended up with just 150 points today when the daily low was taken out, and the daily chart has just turned crosscurrent today but waiting till now has eradicated the second half entirely. It's this when to take profit business that always seems to give me problems, lol.

Thanks for the comments guys.

 

[Squall]

Squall, thanks for your input there but the problem i had was not so much calculating the margin, rather the number of pips needed on spot fx to make 100% margin profit seems to be significantly different to the number needed on a futures contract (which is what the book seems geared towards).

Yeah I like that idea......I am going to look into that myself. More than likely though, I am going to stick with the standard margin %, as money is money, and it may affect the risk/reward to profit% in any other way than the margin you actually put up for a trade...but I am going to at least look into it for myself as well. Thanks for the info.

 

[xoxma]

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;

Pratbh - are you sure this formula is right? Denominator for SL does not make any sense. It is basically a bunch of numbers all multiplying the same Mov(CLOSE,ip,S):

((1+factor)*0.333 - 1)/100 = 1/704 approximately

So, is this simple rescaling, or is one of the terms using different moving average?

 

[rjc]

Does anyone know if there is something available for metatrader along the lines of the earlier charts in tradestation, that colors bars as the ma and ml line up? I've tried searching all the metatrader forums but can't find anything for this.