ES 1-28-09

vo-i am friends with jim kane. jim kane is a good friend with scott at harmonictrader where you will note a discussion of the .886 where jim is credited with discovering its importance..to scotts credit, what is not shown is jim's use of 5 other fib numbers that are not in the written work of any other fib writer. in showing them, jim asked that we not share them publicly.. based on those numbers , jim wrote a whole book about another five point pattern that i use frequently... thus scott does not show all 5 point patterns...be very cautious about trading well known 5 points..example.. at the first retrace after the may 2008 high, every public fib trader was posting a well known 5 point... sitting 15 handles above was a very tightcluster of 7 fib numbers, 5 of which jim has not shown publicly... price blew out the pattern, went the extra 15 handles and turned down exactly at the cluster... i posted the setup at jim's forum as ''kane perfection'' what is funny is that in subsequent days, the public traders were congratulaing themselves on how great the pattern worked.i believe everything that is in the market always has been and will be..the difference in jim kane's work is that he shows ALL the fib and pounds the table for the .886, a fib not even mentioned in the writings of the better known fib writers.from jim's work on the .886 i saw there was a repetitive pattern based on gaps and posted the setup at his private forum here at mypivots.. weeks later jim is getting email from an asian floor trader saying how the whole pit is sitting on the setup and could he please give more detail.. so much for closed private forums!

your butterfly was a good tipoff VO,thanks ,look forward to your posts

I'd like to see some of these IMPORTANT fib clusters and lines on charts ahead of time over time...I've asked before but it never comes........with lots of lines...fibs, median etc......some line or group of lines is bound to be hit....so lets get some longer term ones out here on the forum...you can easily delete the ratios so we can't see ...any takers? lets see some examples over time posted in advancve for the longer term

hey roofer...now that you mention that about Kane and the .886 I do recall reading something about Scott giving him credit for it. I had not connected the dots. And yes, I certainly noticed your posts with the gaps and .886 and find it very interesting. I plan on looking into Kanes work as more than 1 person I respect thinks highly of him.

Bruce I do post charts of patterns and setups ahead of time (the ones I catch). Some work out great and others either never materialize or fail. Im the first to admit that they dont always work. They are like any other pattern (h/s, triangles, double tops/bottoms ect) they can and do fail. I even have posted failed patterns...go to the 1-14-09 charts thread and I show an ABC with my favorite setup based on fibobands that failed and caused me to take a stop. If you look through the chart threads you find lots of longer term patterns that are under development, meaning they need more work to be valid. No holy grail here...just some midwestern schmuck trying to get right more times than not lol.

Vo, I should have been more specific in my last reply here. You do a great job posting your charts.

I'd like to see Roofer post some charts of the main levels ahead of time. We don't need to see the actual ratios if they are "secret". Roofer has posted tons of charts in the past showing lots of median lines and other cool things, so those inspired can take it to the next level if they choose to investigate the ideas or sign up for Kane training. I also have a lot of respect for Jim Kane, the content on his site and his postings here.

The challenge I have with some of this is that we never see it BEFORE......(I'm refering to Roofer here and PIPs)...I think if you consitently associate yourself with a vendor then you can be asked some harder quetions.

I like the charts from Roofer and this isn't meant to be negative.
We aren't looking for specific entires, I just tought it would be cool to see some that worked and some that don't as we go forward.

Now my toughts regarding PIPS shouldn't be lumped in with the great stuff from roofer....but PIPS is a poster who has constantly been asked to post some trades with targets and stops and exits......yet never does......so I ask the tough questions and hopefully get some answweers

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Originally posted by BruceM

I'd like to see some of these IMPORTANT fib clusters and lines on charts ahead of time over time...I've asked before but it never comes........with lots of lines...fibs, median etc......some line or group of lines is bound to be hit....so lets get some longer term ones out here on the forum...you can easily delete the ratios so we can't see ...any takers? lets see some examples over time posted in advancve for the longer term

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Bruce, don't take my little semi-joke here personally :-)

I'd prefer we don't post any of this supposed alternate/'new' Fib stuff in advance, and that we don't try to get anyone to think it has any value. How about we assume it's really not of much value, and that's why it never seems to get posted 'in advance' (well, except almost every month in my free commentaries, which are all archived for all to check out), and we look at other stuff in here. It wouldn't break my heart one bit if everyone thought it was all nonsense. I've been really kind of sorry I ever released it all. I haven't released anything new that I have discovered in the last three years.

The other issue, and this could wind up being a ten page post if I don't stop myself here, is the overemphasis on the setup. In my own 'Trading Plan' the potential trade area (the PTA, the 'setup') is only about 10%-20% of the plan. This is especially important for how I apply the methodology, which is as a trend trader. Intraday trend trading as well as multiple day (and longer) trend trading, but trend trading nonetheless. So, as we all know, a 'good' trend trader may only have a 30% winning percentage, and still be wildly profitable, because the reward/risk is much higher for trend trades.

As everyone surely knows, winning percentage is a useless statistic. All that matters is the 'expected value', which takes into account both the possible outcomes, and the likelihood of those outcomes happening. Let me give an example. Would you (you doesn't mean Bruce here, I am addressing the entire readership) be willing to play a game with a 99% chance of winning? I'll take the other side. If winning percentages are what you look for, you'd say yes. If you understand expected value, you'd say you can't answer until you know the reward/risk. Here's the rest of the game. You win $1 when you pick the white chip out of a bag of a hundred chips with 99 white ones and one black one. You pay me $1,000 when you pull the single black one. It's a net negative outcome game for you, yet with a 99% chance of winning.

So, with a reward/risk of 5 to 1, the breakeven point (not factoring in slippage or commissions) is 16.67%. A trader trading 17% 'winners' and 83% 'losers' is making money. At 10 to 1 reward/risk, something not impossible to find here and there with trend trades, the breakeven is just a fraction over 9%. If I posted a slew of before the fact setups, and I was 'right' on 20% of them (assuming a 5 to 1 reward/risk, which is not uncommon, and if I am not incorrect the low end of what roofer will trade), would that be impressive? I'd get laughed out of the forum. Yet it may be highly profitable. That's one reason why posting the setups in advance is meaningless.

Next, I only consider a trade with very, very specific triggers off the area. It must behave in a very specific way, or I am not interested. So (and this is explained in detail in some of my free articles and other various free places on my website, and in a post in my free forum here), if I had a technique, let's say, that out of 100 setups 'works' only 10 times. It is only 10% 'right'. But let's say further that when a specific trigger for entry is used, it 'finds' those 10, or a high percentage of them. It 'filters' out the 90 that don't 'work', and leaves me with the 10. So, I have to watch 90 setups come and go as price sails right through them, but when I see the trigger, combined with the setup, it hits 100% of the time. Hmmm, the patience to sit through 90 times when no trigger is given, to take only 10% of the setups I am watching? Yes, but then you get those 10.

Now, I am in no way suggesting I have anything that hits 10 out of 10 like this. I am making the point that if this was how I saw my setups, who would want to see 100 of them in advance, to see 10 of them 'work' (or even 30% of the 10, which would be 3 out of the 100). And who would be 'impressed' with that, or find any value in it? So, maybe I can try to show everyone how I do my entry triggers. Okay, next there is price action, and how it acts going into the area. Many times it acts a certain way, and I am no longer interested in a setup. That will further filter out many more setups, some right at the last minute. I have spent over 30,000 hours figuring out what 'works' for me. There is no way I can show that to anyone 'in advance', in a few words or posts.

Now, am I some kind of a dumb a#% for spending this much time, when everyone else in here who I'm sure makes a lot more than I do with their trading has spent far, far less time (I've seen many say if you aren’t making good money in six months, give it up already)? Perhaps, but I tried all the methods people in here use, and every other one I could find, and they didn't get it done for me. I had to invent and discover my own way, and that way took me a long time. It is highly discretionary, but with a clear, detailed plan laying out all the steps.

Okay, moving on, the next thing is that my approach is far from 'discrete' (discrete, as in the math term, 'discrete' or 'continuous'). In my trading it is essentially never that I get a full stop out or I hit the 'profit target'. Those that know my work and read my endless free commentaries know I don't use 'profit targets', and the words aren't anywhere in my 'Trading Plan'. For me, there is no room for 'profit targets' in a trend trading plan. The market must tell me when it is done. So, what if I had one full stop out, 8 scratches, or close enough to be called a scratch, and one nice runner. Hence, to this point in a totally fictitious made up example, say I had 100 setups, 90 the price went right through but I didn't get a trigger so I stood aside, 10 triggered, and the 10 played out as I said, with one runner. The plan may be quite profitable (but hard on the nerves if one isn't extraordinarily patient), but only 1 setup of 100 actually 'worked'.

Oh, it gets worse. How did I 'scratch' those 8? By reading the price action bar by bar, tick by tick, and using those 30,000+ hours of experience looking for certain clues. Moving the stop (but essentially never to breakeven, as it is not only not technical in any way, it is commonly just a few ticks into where it usually pulls back to (as I explain in one of my books), and for good reason), making decisions based on how price acts at all the various points on the way to the areas I am most interested in as far as probable moves, and this is all highly discretionary. I can, and have, laid out the 'rules' I use, but it is a hard won skill. It isn't something one could do without extensive practice. If I don't do all this, then the net results would be a lot less favorable, in my opinion.

I can go on and on with additional factors, essentially the remaining 80%-90% of my 'Trading Plan'. Without this, and being able to fully implement this, what is the use of seeing my 'setups'? They would be of little use to anyone without the rest of the plan, and surely wouldn't look too impressive, based on the fictitious example I have laid out.

Here's the thing. I'm not trying to sell a methodology. I'm not saying what I do is anything. I'm not claiming it is 'profitable'. I'm not claiming it is great. I honestly could care less if anyone buys any of my books from now until they plant me. In fact, I am kind of sorry I released any of this (it's a long, long story that my students are forced to hear about if they spend any time with me), and some day I will fold the project when the time is right and it won't be an issue. Here's what I am saying, and what everyone seems to miss. It pains me that everyone does seem to miss it, but I have to accept that no matter what I say here or anywhere, it doesn't seem to change anything. Hoping that 'this time will be different', I'll keep trying.

What I am saying is 'Here's some things I have found that have helped me. Maybe you can use some of it to help your own trading plan. Maybe not. This type of approach is not for everyone. In fact, and I am quick to point this out, it isn't for almost everyone. If you like Fibs and really studying and digging into things, and want to take a deep, very technical discretionary approach, maybe some of this will be of some use.' That's all I've ever said. Roofer showed me things when we first 'met', and some of those things really helped me out, they gave me things to study and think about. I am grateful for that. The same holds with Scott at Harmonic Trader, and a slew of others. I used to say that if I got just one tip out of a book, it was worth the price to me.

Roofer is always showing things, things I consider just awesome, in my forum. And I am always writing to him saying I think he should keep that stuff to himself. He has something maybe he worked 500 or 1,000 hours on, and he discovers something really cool, and he shows it. But he doesn't show it all. He gives the gist of it, most of it, but he leaves a few key aspects out. He then says here is something that I have discovered that has really helped me. Study it, do thousands and thousands of charts and see if you can sort it all out and make it work for you. He did the work; he isn't going to give it away to those who won't do the work. He has never sold anything in his life to my knowledge (he is the most tireless free poster of quality material I know of on the entire Internet), but he isn't going to be a chump, either. His point is, and I have seen this in other areas before I was a trader, if you give something away, if the person doesn't have to work for it, they value it at about zero.

So, as I have learned a lot from roofer, he has learned a lot from me. He wants to tell others that if you like Fibs and patterns and lines and such, this guy has a bunch of stuff that you can study, and do the work. You'll have to do lots and lots of work, but there is a lot here to start with, to try to make your own. He isn't saying ‘buy his books and be a super-trader’, or that my methodology 'works' just by buying the books and applying it. He's saying that he feels (I hope I am interpreting what he is saying correctly) if you like this type of material, this guy is one of the few you want to study. That's it.

Look, I'd prefer you all study the over 250 free archived commentaries, and the free articles. There is more there free than most people offer in all their paid material, in my opinion. Leave it at that. There is so much there you could study it for years, literally. If you go over that material and you don't think it helps you a lot, move on. Hence, no need to worry or wonder about my 'in advance' charts, or how much I net per year. If, after studying the material, let's say you studied it for 2-3 years, you did maybe 10,000 of your own charts, and your trading has improved tremendously, and you just want more details, more nuts and bolts, then pursue it. I mean, if you got a lot out of all those free articles, do you think I am trying to pull the wool over people's eyes when I say the 2,000 pages or so in the books is much more in depth than the free commentary? The worry is you'd lay out the money for the books, and it would just be a repeat of the free commentary?

My point here is not to try to sell books, so no one need reply that this is a sales pitch. Everyone here should know me by now and know I have never tried to sell anything here in any post. This is a logic argument. It is not about the 'in advance' charts. It's about if the material I have spent endless hours and hours and hours putting up free on my site (each commentary takes me about 6-8 hours to do) has helped you or not, and if it has shown you this is material you need to study. If you look that stuff over and you are even 1% not sure please move on. It's that simple. It’s not that I sell the books or not, it's is that type of material, the type of work and process I describe what you have been looking for. Like 'love at first sight', if you have looked it over and it doesn't hit you like a ton of bricks, stick with MP, and pivots, and indicators, and whatever is working for you now.

The point of this ridiculously long (I told you ten pages was coming...) post is that I ask that you take roofer's comments not as a sales hype, but as a guy pointing out things he likes, totally from an educational perspective, for those that want a starting point for further studies. Go to the medianline.com forum and look at his work there. Do an Internet study of this guy. Ask around. He is not trying to convince anyone of anything. He is just trying to show things that he finds useful. If you don't find them useful, that's fine. I can't use 99% of what is posted in this entire forum, it is just not my style. And I'm sure my work is not for 99% of the people here. But some may find some of it useful, and a lot of it is free on my site. I just wound up here because Guy offered me some forum space, and it evolved to a big private section for my students. You all know I spend little time in forums anywhere, and zero time hyping my books.

I hope this clears up some things, and doesn't get me blasted. I'm just calling 'em like I see 'em. If everyone thinks roofer is trying to hype me I will ask him not to mention anything cool he finds in here. I think that would be a total shame, but if that's what people want, I can live with that. I'm just trying to help people out when I can.

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Originally posted by BruceM

...I'd like to see Roofer post some charts of the main levels ahead of time. We don't need to see the actual ratios if they are "secret". Roofer has posted tons of charts in the past showing lots of median lines and other cool things, so those inspired can take it to the next level if they choose to investigate the ideas or sign up for Kane training. I also have a lot of respect for Jim Kane, the content on his site and his postings here.

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Bruce,

Thanks for the vote of confidence. I also have a great respect for the work you have posted in here. I hope you didn't take anything from my 'dilemma of the 'in advance' charts' post personally. I just thought it was important for all the readers to understand, with a trend trading methodology such as mine, just how difficult it is to show anything useful as far as setups. I try to do it every month in my free commentary, and to follow up on what happened, but it is very difficult.

Roofer may have a different view on this because he is more a 'line to line' trader, working with much higher winning percentages than I would have (that's my interpretation, anyway), but with the 5 to 1 reward/risk ratio he likes, you'd still expect way lower than scalper winning percentages, I would think. But, as I said in the other post, I think his desire is to point out things he finds worthy of study, and not post setups that some will try to trade off of, without having done any work.