Enthios Trade Blog

ER2 2006 Archive
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Because markets are reaching new highs, watch long opportunities
using the short term stochastic turns.

Prices opening right on the 738.50 VPC will nullify that as a trade pivot.

Note the slow stochastic (red line) is oversold, so we will not get a sell
signal at this time if prices touch the 734.8 VPC

Note very narrow range; also watch ES in concert.

Note the Keltner can be a reasonable stop loss if you trade without stops.

Market closed on POC so this will be neutral unless prices move away
during the overnight session. We will comment further in the morning.

Note this is only intended to illustrate how stopless trading can work.
We do not recommend stopless trading because it is so difficult psychologically.

We are still optimizing stops for the ER2, however in the meantime if you were trading stopless you would have exited at nearly break-even. This is typically the case with Universal, even on a losing trade. Stops do not provide a significant improvement in profitability; rather, they remove the stress of a losing trade with a pre-defined stop based on optimizing.

Note the lower VPC already triggered a buy signal, albeit just before 8:30, therefore that VPC is invalidated. Because there is no VPC below 82.60, we are only looking at shorts from the 691.80 VPC (shown on this chart and the next one down).

Here is an example of how even optimized stops can fail. In this case, if we had a specific stop in place based on optimization over 100 or more trades, that stop would most likely have been hit. However, for a method such as the Universal which uses oscillators to signal both entry and exit in most cases, after a stop is hit, prices will eventually return (oscillate) to give us a reasonable exit price, even if that exit is at a loss or break-even. Statistically, stops do not improve the profitability of oscillator-based trades. However, they do provide two key advantages: (1) they reduce the psychological stress of trading, and (2) they reduce the individual amount (drawdown) of any one trade. Of course, if you are continuously building up your profits by taking trades with no stop, then you can afford those "larger" draw downs when the trade moves significantly against you.

Exit 1/2 at Keltner band

Approaching long signal @ vpc

Very narrow range or today. Watch for a touch on one side and a break to the other.

ER2 opened right at the VPC so no Universal trade is possible. However one could take short or long trades away from the VPC with increased risk.

This shows the Fibonacci targets. You can see that the 1.618 target was hit, leading to a Wave 4 retracement. If prices move on up, look for the Wave 5 target (shown here with the 3rd blue arrow) at or above Fib 2.236.

Note here we have two long signals generated by the Universal. The first one is likely stopped out depending upon your stops. We do not yet have an optimized stop for recommendation. If you are still long, then you would simply add to your position at the second long signal, which occurs at the next lower Virgin Point of Control (VPC), as shown here.

Long approaching

Short approaching (as long as it occurs within the Value Range).

NTR for Monday. Note narrow NTR with stronger support at 774.60

Market gapped above the previous high point of control, so the Natural Trading Range for Friday will be upside only.

NTR for Wednesday

cover 1/2 @ keltner

short @ vpc

Short signal approaching at yesterday's VPC

Natural Trading Range for Tuesday, May 2

short @ vpc

Short signal approaching: note ES and ER are back in synch.

Note the ES and ER are in opposition this morning; that is, ES is near a VPC high looking for a short, and ER is near a VPC low, looking for a long.

NTR for Friday. Note we will not be in the trading room today.

short signal approaching (missed first time by 0.4)

Short signal approaching

Long signal approaching at previous VPC

Natural Trading Range for Thursday

exit 1/2 @ keltner

Long @ vpc

Long signal approaching at VPC

Natural Trading Range for Monday

The market closed just above the poc but look to see which side of 766.70 it opens Friday morning.

Note we have not yet optimized stops for ER2 so this assumes no stop in place.

The market closed just above the poc but look to see which side of 766.70 it opens Friday morning.

Note we have not yet optimized stops for ER2 so this assumes no stop in place.

Prices are opening above the highest virgin POC, so there is no up-side limit. However, this chart shows the Fibonacci W3 target zone of 1299~1301 so look for a reversal in this area, as the upward trend will naturally exhaust itself here. Note also this matches with the upward limits of the regression channel.

Note that 727 is not an individual VPC; rather, it is the general area where the market saw considerable amount of trading during four of the past five days. This also coincides with R1 from yesterday.