Improving Market Structure - December 12, 2011

[grems8544]

I added a bit to my robot positions in IWM and TNA; still waiting for UWM ...

Position size is small.

Formula that I use which risk-adjusts based on ATR is:

[ Account value * Pos'n Size ] / [ ATR(20) * Share Price ]

So as volatility goes up, the amount you buy is dropping.

Entry points are below the following:

IWM:<73.17
UWM: <33.75
TNA: <45.20

Regards,

pgd

[nickola.pazderic]

Paul,

How do you determine the ATR? On which time frame?

Thanks,

[nickola.pazderic]

We might go to 42.80 or so. Seems we've been there before:

[Billy]

We might go to 42.80 or so. Seems we've been there before:

Attachment 11846

Nickola, please calm down and focus on the robot process. By entering the initial trade, you allowed for volatility down to the stop.
Stop looking or nightmaring at your P&L is my most friendly advise at this point in time. Focus on the objective quality of the initial setup. The 20 dmf is still in buy mode and the settings are just neutral.
Billy

[nickola.pazderic]

An hysterical little kitty...

[grems8544]

Paul,

How do you determine the ATR? On which time frame?

Thanks,

I use a 20d ATR which is updated intrabar.

Regards,

pgd

[xr-3609]

Nickola,

Try converting your stop percentages - say -2.48% into dollars and imagine: minus that amount amount in RED on your computer screen before you make the trade - if you are not comfortable with that; lower the trade amount until you are.

Another trick (if you have a good system - which you do with the Robot) is calculate the loss in dollars and consider it gone ........ you can be pleasantly surprised if the 3:1 risk/reward ration works in your favor.

greg

[Billy]

Nickola,
The robot needs sustained up or down trends to make its largest returns. I don’t really care if we are heading into apocalypse or into a new 1982 secular bull market. I am confident that the 20 DMF and the robot will capture such trends early. I would even prefer the apocalypse and take a small loss in this choppy sideways mean-reverting environment before cashing big in a crash.
All I see in my analysis is that we are objectively closer to a rally of uncertain duration than a waterfall. All reward-risk measurements do favor the long side. I trade my plan accordingly until proven otherwise and shut off the billions of noises and emotions running on the planet.
Billy

[nickola.pazderic]

Billy,

Thanks for the note.

In fact, I have taken this course over the past week or so. I'm only tuned into this website and Charles Kirk. His notebook alerts me with a groan, and, as you know, he is saying the same things about Mr. Market as you.

Presently, the groan alerts:

Largest buy program of the day makes a final hour appearance to close us back within the range and above the 20 day support

Fears. What are these things that we cling to? Or do they cling to us? Our little ghosts. Electro-chemical impressions upon the recording apparatus called the brain. We can use them as the stuff of art and project them with our media devices, our voices, our computers, our photographic collections. and for a little while we're free.

I made my fears public to be laughed away (thanks Trev).

Be gone fear. Good riddance.

[Billy]

Billy,

Thanks for the note.

In fact, I have taken this course over the past week or so. I'm only tuned into this website and Charles Kirk. His notebook alerts me with a groan, and, as you know, he is saying the same things about Mr. Market as you.

Presently, the groan alerts:

Largest buy program of the day makes a final hour appearance to close us back within the range and above the 20 day support

Fears. What are these things that we cling to? Or do they cling to us? Our little ghosts. Electro-chemical impressions upon the recording apparatus called the brain. We can use them as the stuff of art and project them with our media devices, our voices, our computers, our photographic collections. and for a little while we're free.

I made my fears public to be laughed away (thanks Trev).

Be gone fear. Good riddance.

The big difference with Charles Kirk is that he is a reactive trader while we are trying to be proactive.
He knows the tricks of reactive trading well. The robot is mastering the nuances of proactive trading.
If you mix the two, you'll be confused more often than not.

About our inner fears, they must be part of our trading plan. Is the initial worst case stop loss too big for your stomach? Just bite a smaller chunk in the position and be ready for smaller thrills. That's proactive trading.
Billy