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Notes on JRW’s Pivot Point Strategy (Members Only)

We are hopefully going to have the Wiki project up and running soon (call me Kwan!) and then we can make a more interactive version of this as well as other strategy stuff.  

For now, here's some notes on JRW's strategy taken by Augrusot, who has been kind enough to share.   I'm sure JRW can add some comments (or maybe edit the post) to make it more useful over time.  I'll be linking it into the Education Section as well – Phil

My lines, 14,3,3 Stoch, RSI at 14, volume, Momentum also at 14, and pivots, with an overview from DeMark analysis. 

 

[click on chart to enlarge]

Sep 20, 2010

You must plug my lines into your chart; Pivot points are also significant as is the 200 SMA, but I play off my lines (usually).  When between lines the safest thing to do is WAIT until we reach a line and see which way we’re going from there to take a position.  You can use the 3 min chart and a cross of the 8EMA for conformation (if your wrong, get OUT) !!  Reverse above for exit strategy.

Also I usually post entries and exits, or intentions, so you can just follow me but my posts are about 2 minutes delayed from the trade.

And remember, do NOT get sidetracked while in a position (like eating lunch, you can go broke quickly)  

Confluence

(Jun 23rd, 2010)Confluence occurs when you take Fibonacci projections off of multiple trends and get the same number and strengthens when it corresponds with other technical advents such as gaps, swing high/lows, chart indicators crossovers (MACD, RSI, Stochastics, etc.), trading congestion, etc. The more confluence, the more significant the level. I really take notice when I get two or more fib #s (say a 38.2% and 61.8%) to correspond with a gap in the chart or a swing high. Confluence is very powerful as it combines multiple technical analysis techniques to arrive at the same conclusion, and should be relied on accordingly. I post the levels every morning. (Sig Rune links in the June 23rd post) 

 

 

Charting

(Jun 16th, 2010) JRW: "I watch everything you watch on the 1 minute chart; conformation comes from the 8ema on my 3 minute chart. (An engulfing candle over the 8ema in the opposite direction.)"

 (Jun 19th, 2010) exec: I had a question related to some of the information you provided last week.  I’ve been playing around with the chart settings this morning, trying some of your settings.  You said you use a 3 day 8EMA to determine reversal.  (I assume that’s a 8 period exponential with  a study shift of 0).  It looks like these setting do a good job of tracking reversals.  Are these the settings you are using.

Also, someone said while trading last week, "to watch the Stoch".  Man, I played around with the Stoch all morning using the Soch RSI set at Stoch period 14, RSI period 3, Slowing 3, on a 1 min chart and it’s all over the place.  When I plot it against what went on the last few days, it doesn’t show me anything.  It goes up when the market goes up, it goes up when the market goes down and vice versa?  Am I doing something wrong or am I missing something here?  The same thing holds true for the momentum indicator.

The books I’ve been reading are outdated and talk about computer programs like there some kind of future event.  Do you know of any current book or website that explains the use of these studies in detail?

JRW: My conformation chart is SS Pro 2 day, 3 minute, using candles against the 8EMA. I show the 40 and 200 SMA, pivots, MOM Stoch 14, volume, Bollinger Bands and my own trend lines.

My primary trading screen is a 1 minute OHLS with most of the same but being quicker, I watch the Stoch for an upward Z formation near or above 50 with RSI support and momentum pointing up. All of this primarily at my lines of course but I am only following Mr Market’s lead regardless of my lines. If I go in 1/2 on the surge ( Stoch Z ) and then get conformation from the 3 minute, I usually go all in.

This can be done with any stock or ETF; I use the Russell because of diversification yet greater volatility and therefore greater potential for profit !!

Exec: Ok…now I’m getting frustrated.  I assume you’re referring to the Stoch RSI when you say MOM Stoch 14.  I have SS-Pro and there are 4 different Stoch options, non being a MOM stoch option.  Currently I’m using the Stoch RSI and there is only on oscillating line so I don’t understand the Z pattern that you are referring to.   Does Phil allow screenshots on this forum?  I’d love to see a screen of your primary chart for reference.

 

Sig Rune

(Jun 19th, 2010) JRW: Z pattern

Yes on Stoch RSI

When black pierces red in an angled Z; think Nazi SS kind of Z. Just look for it; after a few days, you will recognize it.

 JRW/Stoch RSI – For Stoch RSI you have to pick a %K and %D period. My defaults are 10 and 14 respectively. Which are you using? Regarding the Nazi "Z" take a look at this http://en.wikipedia.org/wiki/Nazi_symbolism

Which Z do you mean? The horizontal Z from the swastika, the vertical Z from the Sig runes, or the horizontally aligned Wolfsangle? 

Sig rune, indeed. Stoch at 14,3,3. RSI at 14, separate graphs on the 1 minute chart.

Stoch RSI on the 3 minute chart at 14, 14, 1

(Jun 22nd, 2010) JRW III: what is sig rune ?

It’s that lightening strike formation on the Stoch right before a move; you can google it to see.

Remember, the Sig rune is only on the 1 minute chart, and I use Bollinger on the 3 minute.

 

RSI

(Jun 22nd, 2010) JRW – remember to the upside RSI must be near or above 50 and Momentum must be indicating up regardless of where it is, and of course the inverse for the opposite move.

Relative Strength Index buy and sell signals

 

Setup

(Jun 30th, 2010) JRW: I have 5 screens; if you are using Street Smart on line, set it to 1 minute, 2 day, add fast stoch, RSI, Momentum and volume. You will be trading primarily off the stoch. You should ask about getting SS Pro for free, it’s not bad. My primary trade screen is proprietary.

I said YOU would be using the Stoch primarily with Street Smart; my system is different than anything I’ve seen for the public. I use the Stock, check RSI, and ensure the momentum is pointing up; (for an up move); when those 3 fields are green and we are at a line I’ll buy.

 

8 EMA

(July 7th,2010)

gmarts: 8EMA means (in this case) 8 minute exponential moving average. I believe JRW is using a candlestick chart with a 3 minute (candle width) period

JRW: You can set the period; I use 8. SS DIRK came up with it and it works really well as conformation of the 1 min indicators

Phil: 8EMA/Gmarts – You guys crack me up.  I use the 4-hour moving average, 4-hour/Exec – It’s a standard view in TOS Active Trader charts when you’re looking a pivot study.  Anything longer than that loses the bars though, which I find annoying so I’ve settled into watching the 4hr charts when I want to look at those things

moving average exponential ribbon buy and sell signals

 

Stops

(July 8th, 2010) JRW: No stops, and don’t own the position, if you’re going negative, and all your indicators would be putting you in the opposite ETF, you’re wrong, so dump it.

 

SS Dirk

(July 9th, 2010)

JRW: The easiest system is SS DIRK’s  a 3 min chart, candles, and an 8 period ema. Set in the S/R lines and when the index bounces off a line get in; get out when you see an engulfing candle on the opposite side of the 8ema. Further, I would suggest you PRACTICE with any system until you’re confident, not just comfortable.

 

Rules

My #1 Rule has always been NEVER LOSE MONEY.

Remember my Rule #2, it’s better to be rich than right!!

 

Day By Day highlights – March through May 

Mar 1st

I buy the etf for day trading, I buy options to participate in trends. DeMark is definately one of the indicators I watch, it’s worth the time to study IMO. 

Mar 2nd

JRW, I’ve been meaning to ask you.  Every morning TOS lists the DeMark pivot points.  Like, this morning, IWM was 64.82 and 63.76.  I know you draw your own lines and that you look at DeMark.  Do you find the ones TOS lists of value?  IWM has at least been hanging around 64.82 today on its way up, and, maybe, on its way down again.

Yes, one can never have too much GOOD information

Mar 5th

TNA / TZA are triples of IWM; IWM is the chart I watch as it is less volatile and gives clearer parameters for trading. I use five minute to two year charts, mostly ten and thirty minute within six month parameters.

Yes, I have a rule about overnight much more over weekend, but, on a 3 day weekend when the market is up or down on Friday, I always hold a follow through possition till the following Tuesday. That has made a bundle for me.

Not an easy answer, I day trade 20% of my virtual portfolio, primarily in the Russell index up or down within predetermined parameters. I usually post before I trade, but sometimes time does not allow. I have had some success over the last couple of years. I don’t know what they let you see with your membership, but if making 20 % on a portion of your virtual portfolio would pay for premium, you might want to think about it. I post my ideas for free so all you need is access.

Mar 9th

Do you ever hold TNA and TZA at the same time waiting for the market to move so each can be taken out as they become profitable?

I tried that about a year or so ago, and found it to be a distraction; you have your parameters and within those you choose a direction, if you’re wrong, you adjust but holding both tempts indecision is net neutral, and just costs you another $ 16.00

Mar 10th

After I put in support and resistance and draw the trend lines, I watch IWM on a 1 minite time frame with VOL, RSI, Momentum, and fast Soch 

Mar 11th

Pivot analysis is part of it, I take a very long look and then mid and short term for support and resistance and then play between the trend lines buying and selling at support and resistance

I thick they are trying to break 1140-50 on SPY, but I’m not predisposed to a direction; I just want to be in the same one as Mr Market !!   You are right, you have to watch RSI and VOL to know the answer

JRW — Which RS line do you look at?

14

Amounts don’t matter, % matters; just win, a little here, a little there, pretty soon you have a tax problem !!

Mar 12th

Yesterday was a DeMark 9 day,. We are VERY overbought and it’s a Friday, so I’m looking to go short at some time today; but that doesn’t mean that we ignore Mr Market

Mar 16th

Pivot analysis, DeMark analysis, and multiple time frame TA; that’s about all I can say during trading. BTW I hope you caught that leg up I mentioned in my last post.

Mar 18th

I use DeMark on daily and weekly charts

Mar 19th

Sorry I’m late, next week should be better. Lines at 68.08 67.70 and     67.18, plus a lesser formed line at 67.48.
In TNA at $52.96

Mar 22nd

Fridays quad witching played hell with the charts, but today is a Monday so I’m in TNA, at least to start.
Lines at IWM 67.37 and 67.51 and 67.83

Mar 23rd

JRW likes to limit his losses to .5% on loosers while he lets his winners run to the max

Mar 26th

IWM 68.05, 68.58, 68.87, and 69.33

There is weak support at 67.73 and 67.49, but the next real support would be 67.19.
Not on any trains today; yesterday afternoon I bought 40 more puts at $0.78, bringing my basis to $1.09, and sold my long TNA possition ( non-daytrade ), then bought TZA, sold the puts and cashed out the TZA daytrade at the close

I’m almost totally cash; that TNA I bought back on Feb 11th had a nice gain and we could fall hard, but if we start to fail I can always buy TZA, and plan to, on the other hand, GS has TA people too and this feels a bit like a Bear trap. Bottom line, I’m comfortable, set up for a TZA buy, but waiting for Mr Market to show me the way.

In TZA at $7.02

Out of TZA at $7.10 for 1%

in TNA at $55.20

And out of TNA at $55.01 for a 1/2% loss

in TZA at $7.12 ( 1/2 possition ) doubling at a break of IWM 67.73

And out at $7.22

Yes, but I would rather be rich than right,so I cut losses when it doesn’t perform according to plan

Mar 31st

If you look at last Wed – Fri on IWM and overlay this week so far, it’s a match

Apr 1st

Lines today for IWM: 67.22, 68.00, 68.37, and 68.51

Apr 6th

IWM lines today 69.34, 69.82, and 70.44. Good luck to all; I’m in cash

Apr 13th

Sorry I’m late, jet lag. IWM lines at 69.97, 70.27, 70.50, and 70.70; I’m in cash

Apr 14th

IWM next resistace 72.63, not all gaps get filled

Sold 1/2 the April IWN 71 C’s that I bought this morning for $1.04 ; a $0.56 gain or 115%

Yesterday I invested $130,000 in TNA and made $2K; today I invested $20k in IWM C’s  and made $24K, I love this market

Apr 15th

IWM Pivot 72.20; then 72.63 and 74.50, support at 71.88, 70.70, and 69.97

If anyone would like to play the Russell today, I would suggest the IWM April 72 Puts or Calls. Also be aware that market orders over 100 can be tricky, but 50 contracts or less seems to move at the stated bid. And there is always TNA / TZA

Apr 19th

IWM lines are 71.26, 70.70, 70.47, 69.97, and 69.24

Sorry for the delay, I’d use IWM 70.70 as a stop, trend line at 70.30 seems to be holding. I bought  50,000 TZA at $6.10, just sold for $6.30 or 3%

Two market buys of 25,000 each and two market sales of 25,000 each; I bought and sold the ETF

Apr 20th

IWM lines are 72.14, 71.76, and 71.12; not playing yet today

I’ve got Pivot at 71.12, support at 70.44 and resistance at 71.76 and 72.14

I think TOS just uses the previous days range, while I use 5 day; so the compresion of either the upper or lowet range is not uniform to me.

JRW, how do you trigger an action event on your pivot lines.  When it touches the line, trades past your line, or what?

Barring unusual circumstances, when the market settles into one of the ranges, given the trend, I will go with that to the next S or R line and barring unusual strength of trend, I’ll sell there and wait for the next opportunity.
As an example, today we opened UP at a line then fell to test support, when we got it, we should have gone long from IWM 71.18 up to 71.76 or better. On a calm day you can use IWM options, but on a volatile day, I like TNA / TZA for liquidity

Apr21st

JRW’s lines change a bit each day when he re-calculates

Russell is in an ascending wedge between IWM 72.18 and 72.40; it should break down in an hour or so, but in this market it could go the other way. Either way be aware and profit when Mr Market gives the direction

Router went down in the middle of my last post; sorry. Made $0.09 on TZA and average 5 cents on the 68 Puts when IWM hit the support trend line from April 14. Switched to TNA at $64.80 ( 1/2 possition

Out of TNA at $66.70 for $1.90 or 3%

Apr 28th

Russell S/R: IWM 71.60, 72.06, 72.49, 73.72, and 74.14

I’m inclined to go TZA if we break 72.06

If you have the opportunity later today, if we break north of 72.49 on IWM, you might just go to cash on that one until things quiet down. Cash is better than neutral

SPX is much better for stangles; I play for volitility, thats why I play the Russell

Apr 29th

Cash is great, especially over night, but you miss the gain of the "clack clack clack" ,  that’s why I’m in TNA today; and if the UK defaults during market hours, I’ll just switch to TZA !!

73.77 then 74.14; 73.77 is yesterdays 73.72. That 2/25 trend line worked pretty well this morning. Your candle system gave a nice buy signal too !!

Also watch 73.89; if we start to look weak,I may just close out with a nice gain for the day

Yesterday established that as a floor and set up today’s move; I still think this all comes apart, but in the meantime, I’d rather make a daily profit than hold to my Bearish bias !! I’m up 5% on the day so far. (TNA at $65.75) 

Apr 30th

Good morning
IWM is in a channel of rising trend lines now at 73.21 and 74.00 but rising. Pivot 73.35; R 73.84,74.32, 74.80; S 73.11, 72.86, and 72.38

JRW: I watch IWM 1 min plus RSI, momentum,volume, and 14,3,3 stoch; then there are my trend lines at 73.21 and 72.65

May 6th

In TNA at $54.72,
Major trend line at IWM 68.35,
Support at IWM 67.90, Resistance at 69.33, 70.40, and 71.65.
Trading in the lodge using CNBC and a phone

IWM 66.87 and 66.20; buy the direction above or below

Out of TNA at $53.67 for $2.12
I think this is my first 6 figure day since the spring of 2009

I can’t believe what Schwab says my account change is; and I missed the first 4 hours

May 7th

Good morning,
IWM 64.73, 65.31, 66.10, 66.78, 67.86

Out of TZA for a $ 0.16 loss; in TNA at $ 49.31. Trend lines are now at IWM 65.57 and 67.18

May 10th

Good morning,
IWM 66.85, 67.99, 68.34, 69.44, 70.17; I’m in cash, waiting for direction

May 11th

Busy morning,( 3 year old ) just finished reading all the posts.
Additionally to my late afternoon bullish post, lines at IWM 69.44 and 70.66
I bought 10K TNA at the open (a gift at $53.24 ) and another 10 at IWM 69.27 ( $54.64 )

IWM R2 at 69.96, looking a little like May 5th. 1/2 out of TNA at $57.04

Out of TNA ( other 1/2 ) at $57.80

I only day trade 25% of my virtual portfolio (all cash) on the Russell only, usually TNA/TZA as opposed to options.
1/2 , then if it’s working or I have conviction, I’m all in. No diversification on this account at all

OP: Do the ultras have more margin requirement for same dollar-value position than IWM itself if one is trading only ETFs and not options?

IWM 30%, 2X60%, 3X90%
I have better liquidity ( fewer shares ) with TNA than 3X IWM when it comes time to buy or sell

May 12th

pivots
R1 70.69
R2 71.87
R3 74.41

I believe JRW is using pivot points / support resistance lines
Others are using a 3 min chart with 8 ema
I am using a 3 min chart with 8 ema plus a macd with standard settings – and toggling back and forth between a 3min chart and one min chart
I am basically looking for the slope of the macd to change + incorportating the moving average – which is kind of redundant – i am probably the last one to get advice on this from

RMM
pivotpointcalculator.com if your trading software does not provide that feature

IWM 72.28 is a pivot mid-point; ascending trend at 71.12. Either breaks, I’m going in that direction

Ascending wedge on the 2 day chart; hitting resistance from 4/26. In the OLD MARKET this would break DOWN

May 13th

Brilliant lines and advice from JRW at the end of the day yesterday.  Jumped in at IWM 71.04 (or as close as I could get).  The put/call prices weren’t stable enough, so I went with TNA.  If we can get JRW’s lines the evening before, it makes a world of difference in the morning for me

JRW’s lines from yesterday were the standard Pivot Point and Resistance and Support lines.  Most of the time his lines are in addition to these

Pivot 71.04
R 72.28 and 72.95
S 70.37 and 69.13
Support trend ascending at 68.66;

May 14th

Good morning, IWM 69.43: we go Up or Down from here.
I beleve Phil has 2 Rules that apply when one has a Double; 1) Take the money, 2) Run.
Out of the May 70 puts at $1.65 for $8K

We just bounced off a trend line from last November; I’m buying above 69.43 or selling below 68.92

May 17th

IWM levels the same as Friday, 69.43, the trend line at 69.14, 68.92,then 68.61 and 68.05. (70.46 is R1)

Swiching to TNA at IWM 67.83;
($52.28)

Out of TNA at $53.89

Back in TNA ( 1/2 at $53.96 )

Doubling at $54.18

Out of TNA at $54.32

Thanks, but the plan was for more than $4400; still up on the day $70,550 !!

Where did the 70k in profit come from? What other trades?

TZA at $5.96, sold at $6.57; TNA at $52.28, sold at $53.89. I’ve only been trading the stock today, no IWM options.

Seems that for the Russell, todays battle is on the decending trend line from 4/26, now at 68.47 !

In TNA (1/2 possition ) at $54.33

Not for the faint of heart; but the support line is at 68.45, so bail below that, and with conviction, you might go TZA, but not over night !

Doubling TNA at $54.88

I’m 1/2 out at 69.43

1/2 out of TNA at $56.40

Out of TNA at $56.12

Last TNA gained an average $1.71 for $34,200; $104,740 on the day !!

For those still playing TNA, next resistance after 69.43 is 69.57, then 70.10

I can’t believe I missed that trend line descending , now at IWM 69.74; sorry !! the top of 5/13

May 18th

From pivot point analysis and support/resistance (IWM which is what the experts use) areas are 69.50 for neutral, and if it breaks up 70.39 area is OH R1 (from TOS). 

IWM support at 69.21, 68.83, and 68.01; not much after that.

I’m in cash, got up late after celebrating last night. I think "they" will try to consolidate in here then pump into the close. That would give them a 3 day floor around IWM 69.00 for a leg up, barring some news 

Draw a line from the low on 11/30 to the low on 3/1

Just look at that last line now at 69.21, and the 5/13 line now at 69.48; I think we have a floor.

IWM resistance at 69.57, 69.89, and 70.11

Couldn’t get over that 5/13 line !! At least not that time. Finger on the TZA trigger.

Out of TNA at $54.02
A $5K day, sorry all, if I had gotten up at the usual time, I would have just bought TZA and all would be well.

I use 5, 10, 30, and 180 day charts to set trend lines, same for support and resistance levels, then I set 1 day and 5 day pivot levels and also use DeMark analysis. Then, at the open, I chose a direction, or wait 15 min to let Mr Market tell me which lines will be in play that day. I will take a position and hold it to the next line or level, if it bounces, I’ll sell, if not I will hold till the next level. I will make that determination by watching the stoch, RSI volume, and momentum. The real trick is to minimize losses.
I have posted more in depth info in the past, you can search the archives.

May 19th

I have been using a RUT 3 min chart with an 8 period moving average to gauge entry/exits in conjuction with JRW’s lines.  JRW, judah and myself have had many conversations over the last month on the methods we use.  JRW’s box is easy to find, but you might have to do a Ctrl F on ssdirk to find my entries over the last month.

#’s same as yesterday, plus 67.73 and 66.93
In TZA, finger on the trigger to sell if it bounces at 67.07; reload at 67.73

The RUT 10:39 and 10:54 didn’t actually cross like the IWM chart did (just set it up and looked at it).  On the RUT the 10:57 candle crossed, but I stayed in thinking it was not strong enough to shake me out.  It was also between JRW lines.  This may go to our initial premise playing this of "set it and forget it till close with the 1st move in the morning being wrong."

For those still short the Russell, next support is IWM 65.71 and 65.11

In TNA ( 1/2 ) possition at $50.56

Doubling TNA at $50.97

Buffett’s 1st rule is don’t lose money, I’m in at an average $50.76, so I have some room to wait, but I’ll swich horses if no one comes to the rescue

Out of TNA at $52.73; reloading for entry at IWM 67.73 on the way back

In TNA ( 1/2 ) at $52.12

doubling TNA at $52.28

IWM players,
If we can break North here, it’s clean to IWM 68.42

Take a look at the IWM and RUT 8 period EMA, using 3 min candles.  SS and I have been using those and watching when the candles reverse and cross the EMA, for entry and exit.  That, and JRW’s lines, of course.  You can use IWM and RUT charts to play both TZA and TNA

Exponential Moving average right?  Definitely 8 period,  I’ve added Tradestation’s pivots which don’t give me a number but give me a red or blue dot on the end of the candle when it sees a reversal and it’s UNCANNY.  I’d like to send a screen shot but I’m not sure if I can do that it but what I’m looking at is nuts in terms of it’s predictability for today

Out of TNA at $52.11 ( 9 cent loss )

In TNA at $51.38 ( 1/2 ) 

JRW has explained his methods, but they are beyond my feeble charting abilities, so we just rely on JRW to give us his trend lines, and he has been very generous with his work.  Exits — yes, just as important as entries, and we use the same method

Doubling TNA at $51.98

1/2 out of TNA at $52.11

Sold the last 1/2 at $51.69

Back in TNA at $51.12

Doubling TNA at $51.49

1/2 off at $51.81

The other 10K gone at $52.09

I trade TNA in increments of 10 blocks and TZA in increments of 25 or 30 blocks

JRW III

May 28th, 2010 at 11:07 am | Permalink  

yip,

The previous day’s data has more influence than earlier days; S/R levels don’t usually change that much but relevant trend lines can

JRW III

May 28th, 2010 at 11:13 am | Permalink  

RMM

As I have said before, these are relevant levels !! NOT pivots; they may occasionally line up with a pivot, or a pivot may be at an important S/R level. BTW, judah is right, pivots come in 3 basic flavors, you get to chose whatever works for you.

June 2nd
RMM I believe to some degree I do and maybe JRW will confirm.  The first problem for those trying to figure it out, it is NOT a science, another words there is not wrong level per say.  JRW looks back first like a week and he draws a horizontal lines at major area’s where the market has stopped moving in any direction.  Then he will look further back and establish more lines that have a long history of resistance at certain levels and draws them.  I’m unsure if he combines the older and the newer lines.  Like let’s say an new line of resistance is 65.10 and old line is 65.02…I’m not sure if he take the average say 65.06 and make that his line or whether he takes the older line or newer line that I’m not clear on. 
 
Today for instance I have 65.08 as a support level…WHY?  look back at the last time IWM was in this area… 3 days ago and what was the highest point where IWM had resistance before?  65.08.  Look at the candle on 5/26/10 the candle at @ 12pm eastern…  You see that level of 65.08 was prominent that day and once it broke through that level it was the resistance.  I think that’s most of it…. Really not that hard. 
 
Once he has the lines drawn he uses those lines as triggers to buy or sell AND if this lines up with a good 1 minute chart of IWM as Momentum, RSI, and Stoch match up he has a strong trade

yipcarl

June 2nd, 2010 at 12:38 pm | Permalink  

RMM.. I’ve been thinking as we’ve been talking about JRW’s method.

I think you are looking for more of an exact answer when there really isn’t one.  The truth it seems to me is that JRW is grossly familiar with a few simple things..it’s almost too simple that we want to look for something to make it more complicated.

JRW doesn’t have an exact stop loss, or an exact entry number, or really an exact anything.  Even the lines he draws he will tell you are open for interpretation.  He buys when resistance points are broken ‘into the move’ on the way up and goes short when support levels are broken ‘into the move’ on the way down.  He also uses trendlines that he draws to connect previous sloping lines, if I could attach a chart I could explain better..  These trendlines sometimes correlate with a pivot level or even a fib level at times.  I think ‘into the move’ is the hardest thing to grasp.  you’ve got to have a feel which way the market at that specific time is moving.  As an example look at the SP500.  It was ‘into the move’ between 8-9am, but between 9am and now…the ‘move’ has stopped.

I regress, he loosely connects all of that info to a 1 min chart on IWM with a Fast Stochastics, Momentum, and RSI indicator and tries to buy when all the indicators are at the extreme and starting to move back the other way.  I’ve noticed PRICE (support and resistance) is most important for JRW.  If the S&R looks strong he takes the trade and to hell with what the 1 minute chart says.

This is what I’ve learned.  I’ve made 3 trades on TNA today using this methodology and they were all profitable. I’m up about 1.5% so far today on those trades.  I got out to early on TNA and left 50 cents or another 1% on the table….

JRW III

June 3rd, 2010 at 9:52 am | Permalink  

Good morning, If the trade is going my way, I will hold until my next line, if the move is still strong, I’ll double and wait for the next. I usually sell because we are approaching a line and weakening.

JRW III

June 3rd, 2010 at 10:16 am | Permalink  

ravalos,

I buy direction at the open or 15 – 20 minutes in; other than that I wait for a bounce off a line or a floor forming at a line


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  1. Copied from JRW’s post on May 7th, I spent a while going back to find it:

    This may also be helpful; it’s not in the main post !!
    The setup that will probably be the most help to you is my 3 minute conformation chart, as my 1 minute has proprietary software. Basic settings are 2 day, 3 min, candlestick chart of IWM (I never watch TZA or TNA). Overlay TBT on the chart and add pivots, 40 and 200 SMA’s, Bollinger Bands, an 8 or 9 EMA and my daily confluence lines. In sub-screen 1: MACD,Stoch/RSI14momentum and Signal line. In sub-screen 2: Volume.
    This will give you good results by simply changing position based on a breaking engulfing candle followed by another engulfing candle on the new side of the EMA. You will be late on entry and exits as compared to the one minute chart, but you will have fewer false entries !!
    Also, understand that I have 6 screens and am  always watching dollar futures, Weiss Order Flow, and a myriad of other contributing factors as mentioned here.
    I would highly recommend paper trading until you are comfortable with the system !!