What Speed Should I Use?

A while ago I wrote something in which I pointed out the first question you will always hear from a newbie.

"What Timeframe should I use?"

You should give them credit for spotting the unanswered question in most educational materials for trading, no matter what the market.

No one will give a straight answer because it gets way too complicated. The real truth of the matter is that there is no clear answer because the question is wrong.

Most will already know the following basics, that timeframes are methods of grouping data into containers for display. These bars or candles have their features of open, high, low and closing values. Those are then used for basing indicator settings.

OK so how does that relate to the 'question' being wrong?


Very simple... the candle is a man-made vessel for displaying arbitrary amounts of data. This actually has nothing to do with markets. The market does NOT recognize a 15 minute bar, or ANY other size. There is NO rule, NO system, NO common denominator for the relationship of the close of one bar to the low of another (or any other combo), no matter what the size of container. Nothing that will hold up anyways, even though you may occasionally be able to get 'things that "work"'.

So while collecting our data into bars is a convenience and even a necessity, it leaves out an obvious feature of markets.

This feature and also the fibonacci relationships inherent in all tick data have been lost in the translation of what the market "says". So what is this "feature", so obvious, yet which we've been unable to see?

Very simple... SPEED CHANGES.

This stares us in the face every time we look at a chart and yet there is no mention of it. A momentum indicator or any other similar device, or a system which incorporates one into a 'method' will still suffer from the weakness of not taking the speed changes into account first, and instead, relying on the blind arbitrary candle to render the reading.


Allow me to demonstrate how simple and obvious this is.

The following chart has a 100 period Simple Moving Average on it, a fairly slow setting, especially in volatile forex.





The area in the tan elipse has the MA wobbling through it, getting turned easily. The area in the gray is quite obviously running at a different SPEED! It's faster. What accounts for the speed change, what speed IS it, and where or when or how is it determined?

In other words, "What SPEED should I use"?


The market set the speed for the faster area inside the tan area. This was the setup for a 5000 pip run (it all couldn't fit in that pic and show what I needed to demonstrate and the 100 SMA had nothing to do with the trade).


However the measurement of speed produces great results. This actually gets done to prepare for exhaustion analysis, then pullback analysis, then again after the trade is put on to check for slowing or growth which indicates a continuing run. Even the terminology gets to be a problem since the feature so obviously present has no language because it previously had no recognition. Language aside, however there are mechanical steps to locate the "tells".

Resulting signals come out of them such as this:



Not the red check but the trigger on that purple indicator.


Now I can imagine that when someone sees the pictures I have which show these indicators catching the supertrend's reversal on the retracement, they may think that this is ONE standard indicator like they are used to using.


It is not. Each one is different and the market has told us which one to use. It has also told us on which timeframe to use it.

The combination of settings and timeframe is "SPEED" of analysis.


So therefore the appearance may be that these are just some cherrypicked location where the indicator has coincidentally wrapped around favorably and the picture is snapped. But the reality is that these are cherry picked by the market. The settings are handed to us.



What is the first question you hear from a newbie?

"What Timeframe should I use?"

Answer: If that is all you do is choose timeframe, it won't matter. The results will be statistically similar to the results of traders as a group in any market. It isn't pretty.

Do You Know When To Get In?

Someone said this is THE SYSTEM. I agree. It is.

But not because of what it does or how it does it.

It's just that THIS is what the market is doing.

So while all the dust flies about I post another pic
which is a result of the work of the Supertraders
using the live collaborative watchlist:



The mechanical steps to reach that signal trigger
has an entry timestamp when it was put on the list.

6/11/2009 10:39:39

It has a trigger price and bar entry:

160.12 6/30Trig 8:00


But all we do is watch that retracement from 6/23
and get a signal generated by the market.

It might say no-trade. It said, "go short and do it here!"

Somewhere in the ensuing 1300 pips you might
make some money.

Here is a quote from one of the Supertraders on
the chat yesterday:

"23:11 Touizi: I am fulltime trader thanks to STAR"

He knows when AND where to get IN!

( get the system! )

Update 26,018 Pips

Update

The recent Supertradersclub watch list tally has a pip count of more than 26,018 pips. These were mostly since May 1st

More people are invited take advantage of this because the more people that participate then the load can be lightened and spread around - and - so can the pips!

We monitor around 30 instruments on 15 speed settings on a 24 hr basis.

Nice thing is that even though you monitor a few you share them all!


This was sent to my email last night:

Andre writes,

"I would like to thank you for making your system available and at a more than reasonable price. I think your system's very good if not the best system out there."

333 Pips In First 3 Bars

Then another 111 pips if ya wanted to hang in a little longer.

Fast Serve

One to go please...

I'd like mine on a 1 minute, Thank You.

Yeah, I'm in a hurry.

Thank you, keep the change!