Intro to Momentum

Drafting drafting drafting…. After a lot of contemplation, reading, organizing, reflection, etc, I decided the main theme I want to start the new year with is the idea of momentum. I’d like to explain the reasoning and logic behind the direction as I think it will be helpful to a lot of “stuck” traders (me frequently being one of them!) The previous post “Zoom in Zoom out” is also helpful to get a better understanding of what my head is telling me.

1. I’m overall quite happy with how my work in transient waves turned out. I ended up with a “statistic of the market”; something that occurs in one time frame that seems to be true in all of them and has the benefit of actually saying something about the state of price and where it is likely to go and not go. The main focus of waves is to predict where price will go, aka, TP levels and future resistance levels. This leads me to try to do more of the other kind of analysis. That is, where price will not go.

2. My “interview” with Relativity made a lot of sense to me and I want to be able to build on it. I won’t end up doing the same thing, but if something works, I want to find a way to either incorporate it or understand it’s use and use that knowledge in future design

3. I believe that due to the market having some sort of chaotic variable, using a fixed h value or fixed anything value is difficult. To overcome this, everything must be made as dynamic and flexible as possible. For h waves this means completing them on multiple time frames and multiple (or minimum/maximum) h values. For support and resistance I think it must mean to use varying or “zone” levels. (that is, one that continuously changes or one that contains multiple price points, not just the current high/low) .

4. I have been and would like to explore the concept of point of no return more in detail. Is there a certain point where a trade is doomed? This is a very tall order, but I’d like to try to find out more about it if I can. Previously I most of the work was simply done with the level of retracement. In light of “Evaluation” I want to try to build another, better pivot indicator(compared to the traditional one and compared to the one I worked on previously).

5. I’d like to try to take advantage of the fact that went you enter on the correct side of the trend, you kind of win no matter what. My momentum work will try to focus on SL points to allow me to just go for it, but know where I’m dead. I’d rather manage winning positions than losing positions. Correctly implementing this will also allow me to “tsunami trade”.

The goal is simple, but can be easily forgotten when rummaging through research and numbers:

  • Establish baseline(s) for momentum
  • improve!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s