Confusion Only For the Latecomers! July 8, 2011

[Pascal]

I am having a problem understanding why the GDX robot is willing to take so much risk and is basically disregarding the confluence support area in protecting the capital of the owner of this security. At closing of $56.25, the robot is willing to sell stop the shares at 6.58% below the close in the context that ATR% is 2.56% which is almost a 3 standard deviation event. This makes no sense to me and does not appear prudent at all. Again, the implicit Expected return appears to be around 18.4% but I, as a prudent trader would not be willing to wait for the stop to be hit on this trade. And it has nothing to do with emotions...!

Pierre

I understand very well Pierre.

What you are saying that you would not want to enter such a trade today. I understand. The signal is neutral and I would not be willing to do that either. Would you have been ready to enter a long trade with the same stop conditions on June 17, when the MF signal turned to a buy and when the robot started to look for a long entry (As I wrote it here, I entered at the open when this signal change occurred.)

I suppose that you would have not entered the trade then or you would have used much tighter stops.

So, is it ok to say that your question is basically why the use of wide stops on GDX?
The second question seems to be why disregard the close strong support levels and place a stop so far away and not just below these?

The answer to the first question is that the robot has been programmed to trade both extreme moves and trend reversals in GDX. You cannot trade extreme move on tight stops. It does not work that way, because intraday volatility is pretty high when the situation gets jumpy.

The second question is that pivots do not work well for GDX. Therefore, when the current trade closes, I will change the GDX settings and the GDX Robot will enter at the open of a signal change, disregarding the pivots completely. That has been announced some days ago.

If I may compare IWM to GDX, I would say that IWM is like watching the changing of the guard in front of Buckingham palace while GDX is watching a 15 years old kid riding a wild horse in the forest. It is just not the same.

I also prefer the prudent IWM Robot to the wild GDX Robot. Their combination gives excellent results though.


Pascal

[Pierre Brodeur]

I also prefer the prudent IWM Robot to the wild GDX Robot. Their combination gives excellent results though.
Pascal

Me too ...! I thank you for your reply Pascal. It is very clear to me now. Given that I prefer to identify new and surf trends, I did not realize (or perhaps forgot) that the robot switches from trend following to consolidation range trading.
It now becomes the user's choice to identify one or the other and to enter the trade on his preferred environnement.

What also threw me off was that Billy publishes confluence pivots every day on GDX and thus, in my mind, it reinforced the impression that these pivot levels had some influence of the robot behaviour (risk management, Expected return probabilities, and so on...) while the statistics tell a different story.

Pierre

[Billy]

What also threw me off was that Billy publishes confluence pivots every day on GDX and thus, in my mind, it reinforced the impression that these pivot levels had some influence of the robot behaviour (risk management, Expected return probabilities, and so on...) while the statistics tell a different story.

Pierre

Pierre & all,

Let me know if the GDX cluster chart and commentary are a distraction. Our common goal is to have the clearest appreciation of the robot trades. I am the first one to be aware of the limited use of the pivots for GDX and it was my conviction well before the robot research started.
I have no problem with dropping the daily cluster chart since it could often contradict the robot decisions.
Just give me some feedback on this.
Billy

[adam ali]

Remove pivots/clusters - keep commentary

[asomani]

Pierre & all,

Let me know if the GDX cluster chart and commentary are a distraction. Our common goal is to have the clearest appreciation of the robot trades. I am the first one to be aware of the limited use of the pivots for GDX and it was my conviction well before the robot research started.
I have no problem with dropping the daily cluster chart since it could often contradict the robot decisions.
Just give me some feedback on this.
Billy

I would be in favor of the removal of the GDX cluster chart but am not sure about the commentary.

As an aside, if you could give the SPY cluster chart regularly and mention a few words on it, on top of the cluster chart and commentary for IWM as you already do, that would be nice due to how many of us are used to watching the SPY closely.

Thank you for considering my suggestions.

[Pierre Brodeur]

Pierre & all,

Let me know if the GDX cluster chart and commentary are a distraction....
...
.. Just give me some feedback on this.
Billy

Billy,
I consider your daily commentary as a "market awareness" comment and therefore I would also see a lot of value if and when you added other markets from time to time when you feel there is something we must be aware of in terms of S/R clusters. The SPY and QQQQ come to mind as for me they illustrate another "quasi independant" section of the market of different interest to the main IWM sector or Large, Tech, Small Cap.

Pierre

P.S.: Our time is precious and something that keeps bugging me is these posts with long quotes at the end of the message which reappear every single time...! Would it be possible to stop that practice which I feel is a distraction. Now I feel better [lol]

[sesorensen]

just a quick note on S/R pivot points cluster strength, etc.

It would be great to have information that is obviously relevant to our trading. If the pivot point s/r is of limited relevance to trade the GDX then it would be an advantage not to have them presented...

as a newcomer, I consider all info coming from our "gurus" (Pascal, Billy, etc.) is of relevance for our trading... thus naturally put emphasis on fx. the s/r pp CS for GDX (in case i trade discretionary and not necessarily within the robot framework). Probably - as proposed by others - it would be more interesting to apply s/r pp, CS to major indices (SPY, QQQ, etc.) where close correlation exists between them, and we can use the s/r pp CS info for trading those indices.

Also agree to eliminate the long "quote" entry before a message.... the thread title should be sufficient to follow what is going on...

best, sorensen

[barbados11]

"Let me know if the GDX cluster chart and commentary are a distraction."

I'd prefer to keep them.

[grems8544]

Let me know if the GDX cluster chart and commentary are a distraction.

I prefer to keep both the cluster chart and commentary.

Regards,

pgd

[asomani]

If I may compare IWM to GDX, I would say that IWM is like watching the changing of the guard in front of Buckingham palace while GDX is watching a 15 years old kid riding a wild horse in the forest. It is just not the same.

Excellent description, Pascal.