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This is a new trading system, which I
call the "Enthios Universal" because it presents so many different
opportunities and can be adjusted to your own investing or trading style -
position, multi-day, day, swing,
even scalp. It is the 'next evolution' of the old
Enthios Handy
chart, which my good friend Citizen came up with in 1999.
The Universal Chart template is free to Ensign and
eSignal users. It has been free since April 2004. The
annualized return on trades since then is in the neighborhood of 150%.
The usual qualifiers and small print are
applicable. But let's get to the more interesting stuff:
The idea is simple:
- Take a stochastic or other oscillator
such as MACD, RSI or CCI, that can give us an idea of when
the market is oversold or overbought.
- Look at different time frames, preferably in
geometric multiples. I use 9.
- Combine all three into one chart
I use stochastic 9,3,3 and 81,27,27 for the fast (green) and
slow (red), respectively. That is the same as a 9,3,3 on a
50-Range chart and on a 450-Range chart (or, for example, same
as using the same 9,3,3 on a 5-min and a 45-min chart). I use 50-range chart, which has a range
of 0.50 points. This approximates the 360-tick chart that I used
to use, but smoothes out the indicators much better, while still taking
into account overnight price action.
- Apply filters such as market profile, Fib
targets and retracements, Gann, Murry, or floor pivots.
I use the Price Histogram on Ensign, which is similar to Market Profile.
It simly identifies where prices spent the most amount of time each day.
That point, called the Point of Control or POC, becomes an important pivot
or "gravitational pull" for prices on subsequent days. I not only
consider the previous day's POC, but all previous POC's that have not yet
been touched by price action (tip of the hat to Jim "Nqoos" for pointing
this out to me). I call these "Virgin" POC's, or VPC for short.
- Add a Keltner Channel to show the relative
channel that prices have been trading, in terms of Average True Range.
This is very handy as an exit target once you are in the trade.
How to us it:
- Set up the charts
- Trade the charts
Set up the Charts
- You will need to use two separate charts, using
two separate templates. These two charts are linked using Ensign's
"Design Your Own" study. If you do not have this capability, that is
okay; it serves the purpose of automatically placing the POC from from a
5-minute chart, into your Universal Chart. You can also do it
manually.
The recommended charts and templates to use are shown below.
Right-click, download, save in your Ensign Templates folder.
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MP_0223 |
5-min. Chart
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UNI_0223 |
ES: 50-Range |
| ER2: 40-Range |
| NQ: 100-Range |
| YM: 10-Range |
We will use the ES 50-Range chart for example.
- Open the 5-mn chart using the MP_0223 Template
and make sure you Design Your Own study looks like this:
- Next, open a 50-Range chart using your UNI
template. Make sure that your Daily Price Lines study looks like
this:
Note if you use more than one pair of MP and UNI charts - say, if you are
also following the ER2 and NQ in addition to the ES - you will want to
assign unique Global Variable numbers for each match-up. I use 86~89
for ER2, and 76~79 for NQ.
Note also each morning after the market opens, you will need to FIRST
refresh your 5-min chart (I click on Refresh -> Today then I double click
on the chart), THEN turn to your UNI chart and refresh it, to make sure
that the Daily Price Lines study is reading the correct numbers from the
5-mni chart.
- Turn back to your 5-minute chart. You will
still have to manually mark VPC's on this chart for future reference.
This shows how, using the Draw Line tool.
My Draw Line tool settings are shown here:
Mark the POC and VPC lines that are both above, and below, the opening
price each day. You will look for oscillator shorts from the line
that is above, and oscillator longs from the line that is below.
- Now go back to your UNI Chart (50-Range on
ES). OPen the Daily Price Lines property window. Manually
input the relevant VPC's here, that you marked in your 5-min chart, as
shown here:
Note that the previous day's POC and Value Areas, and teh current day's
POC, are all transmitted directly to the UNI chart through this window,
using the Global Variables that you set up in the DYO study in your
5-minute chart.
Note also that the times 9:30, 15:45 and 16:15 also are drawn as vertical
lines, from this study. This is a useful visual cue. Generally
I do not take trades after 3:45pm although recent statistics show that any
UNI short trade taken after 3:45pm has a high rate of success.
Trade the Charts
Suggestions:
- Paper trade this system with each individual
instrument that you intend to trade on, for at least 50 trades (this could
take up to two months).
- Keep a record of every paper trade: entry, exit,
max and min of each trade. This way you can begin to optmiize for
stops and exit targets.
- Once you have obtained objective information for
stops and targets, begin trading with only one contract.
- Bracket each trade with the optimized target and
stops, so that you do not have to worry about execution in case of an
internet disconnect. I use Ninja Trader with the IB platform.
- To study the methods, please refer to our
trade summary. Usual
disclaimers exist - these are only indications, etc.
- Read more about the
Market Profile and
Price Histogram, so you understand how they
work.
- Read more about
other pivots, which
you can also use with the Universal.
Templates are now available in both Ensign and
eSignal:
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