CBA 1.40% $69.39 commonwealth bank of australia.

spi re: spi trading

  1. 1,356 Posts.
    What do you mean when you say " as long as past data allows it"?'

    Old Dog,

    There is a high correlation of movements based on fibonacci and the exteneded ratios hence the theory of Elliot waves. If most computer generated systems are based on mathematical equations then the movements of future probability will be based on 'past' price action or price range. So if there is a high statistical probability set-up of a late squeeze at 3.40pm then the movement will have a probable move based on the past data of say .382% of the range, or 50% of the range.

    Each set-up will have it own action. Market profile is a perfect example of statistical analysis, but sadly it is flawed.

    Market Profile theory is based on common prinicples to all organsied markets. When Peter Steidlmayer introducted the concept, many traders believed that it was a breakthrough in market analysis and trading, since it offers a logical and organsied set of price and volume data from which traders can base decisions. He had produced an analytical methodology based on the statistical accumlation of price and time.
    He's goal was to determine the 'day type' through data of whether the probable outcome would determine 'trend or rotation'. But sadly "one days data isn't a great predicator for tomorrows action".
    Steidlmayer never mentioned 'higher timeframes', probable outcome of a series of days of accumulated data or anything regarding cycles or extended ratios

    'What happens when you take the 'Probability' of the move and combine it with a statistical outcome, then the 'EDGE' has doubled!!!!'

    The idea of statistical analysis especailly for a day trader is too maxmised the potential gain and minimise risk. With each of the 5 day balance points and using higher timeframes you can determine with high probability whether it going to be a trending day, rotation day or tight trading day. Knowing when to enter and when to exit using the optimum times, say for example trading the open, fading the open, waiting for 30 or 50 minutes before making a decision, how long to hold the trade for. It also gives me an idea of whether to take the rest of the day off or come back at 13.10pm and make another decision. If my ratios fail then i wont enter the trade or i'll be stopped out. I don't use any lagging momentmum indicators because each would be different depending on the timeframe you use.

    I basically have a method (discretionary) based statistcal probability of price doing the same thing everyday as long as the past data allows it to. So there is no point on taking shorts on the SPI at 3.30pm if the market statistcally tells me there is a 3.40pm reversal going to take place on this set-up or go long at 2.00pm if statisitically there will be sellers entering the market after lunch. I've been doing it long enough and have been around long enough to say this is the method I need to take if they want to maximise their trading. I want to know when are those trending days of 30-40pts going to happen and sit in tight without jumping out after 10 ticks.

    And the same for the monthly timeframes/quarterly timeframes etc.

    My methods aren't for everybody, traders just need to do some leg work and 'believe that they can figure out the market and sadly TA alone wont do it, especially short term trading in derivative markets.

    Cheers

 
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