Trend Architect - Latest Comments

Re: Introducing Signals for GLD and AUD/USD

John Palatine — Wed, 29 Jun 2011 15:52:51 -0000

The problem with EOD stops is that it can cause a much more severe loss if prices fall through the trigger (and end at the day's low). We are basically unprotected throughout that day. There is this trade-off between fake stopouts or lack of risk management. If this keeps happening I need to find a solution, though. The triggers as such are extremely accurate, so it's just the initial stop that needs optimisation.

Re: Introducing Signals for GLD and AUD/USD

Noisy Tent — Mon, 27 Jun 2011 22:44:20 -0000

So hypothetically, we should still be in that long trade from a few days ago? This hasn't been the first time the stop was pretty close from the low so I think we all share the frustration of seeing it literally bounce at our stop. What do you think of making it a mental stop and only closing out a position if it gets violated at end of the day or end of the week? Let me know what you think.

Re: Introducing Signals for GLD and AUD/USD

John Palatine — Mon, 27 Jun 2011 15:35:29 -0000

The perception of urgency comes from the additional trigger perhaps. The SPY often crosses and bounces off those levels and can cause a few stopouts due to individual circumstances before prices finally take off. For example the most recent stopout was due to a dividend payout which decreased the SPY's price by roughly .50 whereas the futures or cash index never made a new low.

I would not expect more frequent signals to come in future as Dynamic System merely enters at the predefined levels.

Re: Introducing Signals for GLD and AUD/USD

Sweeler — Sun, 26 Jun 2011 21:15:20 -0000

Thanks for adding these. Would you explain why your system takes more trades in the SPY than the EUR/USD and presumably the AUD/USD, Gold? There appears to be more of an urgency to be involved in the SPY whereas you have been more careful to pick and choose your spots in the EUR/USD. Why is this and can we expect more in the future? Thanks.

Re: Introducing Signals for GLD and AUD/USD

John Palatine — Sun, 26 Jun 2011 18:19:13 -0000

AUD tends to trend stronger whereas the EUR has been in an enormous range long term. They do offer similar buying and selling points which is most likely because everything against the USD moves in tandem.

Compared with SPY, the direction could be similar, but they do not necessarily have the same timing.

Re: Introducing Signals for GLD and AUD/USD

Noisy Tent — Sun, 26 Jun 2011 15:56:06 -0000

I'm curious about aud and eur since they both offer a somewhat high positive correlation to SPY, at least in recent memory. In my mind, if SPY points to a buy, so will EUR and AUD, at least in a longer term trend trading. What do you think?

Re: The Cat and Mouse Game

John Palatine — Wed, 01 Jun 2011 20:02:07 -0000

Hello Alan, thank you!

It has been my observation for many years training traders, and still notice the very same behavior in chat rooms or Twitter. Many go for scalping because they have been burned during ranges (where no breakout works). When a trend finally appears, they jump off prematurely out of fear of yet another turnaround. It is okay, however we cannot have it both ways. Either one really scalps successfully, or trades the huge moves.

My assessment is that we are currently in such a range which also explains the relative underperformance of our system. Today proves again that the market cannot decide for a direction, but markets won't stay in a range forever. Once a side gains firm control, we will be riding the market successfully again.

Re: The Cat and Mouse Game

Alan — Wed, 01 Jun 2011 10:12:31 -0000

Excellent post. It really sums up the way many of us have wrongly viewed trading. Having been burned in the past I am very fearful of being caught in the market before a big fall and out of the market when it surges upward. So, just like you say, we tend to want to jump in and out quickly trying to avoid getting burned. Your approach has worked well in the past. But so far this year, it is in the negative territory. Is there something you can do to your technique that can avoid these losses? I know we can't make winning calls all the time.
Thanks.
Alan

Re: Current State of the Trend (Week 21)

John Palatine — Tue, 31 May 2011 13:03:30 -0000

Hello Sweeler, very good point which deserves more clarification in a dedicated post.

First of all, the focus in my tweets is on the shorter term trend. What I'm trying to emphasize is that people are expending a lot of energy buying downtrends or shorting uptrends, while totally neglecting the underlying theme of the market.

Now they obviously want the market to go down again, even though we are in a pattern of higher highers/higher lows (30min, 1h, 4h etc.). Since one cannot predict markets, or turnarounds for that matter, my only conclusion is: they missed out on the easy and big moves, and are now trying to catch up. They play cat and mouse all day long until they go home scratched, licking their wounds.

1375 is the consequence of an uptrend because resistance areas are likely to give way to the buyers eventually.

Re: Current State of the Trend (Week 21)

Sweeler — Tue, 31 May 2011 11:46:47 -0000

John,

Thanks for posting the weekly updates. I also follow your Twitter stream, and wonder what you saw that made you turn bullish so quickly. One moment you were talking about "Newbie Traders" trying to catch knives and play every bounce. Next thing I know you are predicting SPX 1375. I like how you switch gears from bearish to bullish so quickly, but am left wondering the exact catalyst. Cheers.

Re: Going Through a Crisis

John Palatine — Mon, 09 May 2011 17:58:24 -0000

"Dramatic gains" is a good expression :-) I agree that the difficulties are easily overlooked when considering the big picture. Perhaps I can come up with a more intuitive solution for the triggering levels, but so far they serve the purpose.

Despite critical feedback from time to time, I greatly enjoy offering and enhancing this service. It grows with its users and compared to one year ago, we have come a long way. Many thanks at this point to all who stay true to TA.

Re: Going Through a Crisis

Sweeler — Sun, 08 May 2011 21:04:43 -0000

I admire the way you handle this "crisis." When you consider the dramatic gains the system has produced the last few years, this "crisis" is NOTHING. I'm sure your impatient clients will quiet down during the next bear market!

Since I was the one who suggested the Triggering Levels, I will say that they aren't that helpful and probably cause some clients confusion. The levels seem very general since a few of the recent triggers have occurred several points away from the highest trigger.

Otherwise, this service is fantastic, and people need to realize what a great product they are getting at a relatively low price. Cheers.

Re: Going Through a Crisis

John Palatine — Sun, 08 May 2011 05:35:29 -0000

The system was bullish all along, so we merely traded continuations of the current trend. The stop-losses were the only unfortunate factors due to event-driven reactions recently.

Re: Going Through a Crisis

John Palatine — Sun, 08 May 2011 05:29:45 -0000

Thank you for your comment. I remember other clients having requested frequent market analyses which resulted in more regular posts. But a weekly wrap up with an outlook would make perfect sense.

Regarding those blog categories, all posts are sorted by date with the latest appearing first. You can simply load up the front page to read the last ones. Additionally you might want to include your email address in the newsletter (on the right hand side) to receive new posts by email. Nevertheless, I invested some time to clean up.

The strength of Dynamic System is to pick turnarounds very accurately at triggering levels. Apart from that, it has a general bias. For instance, it is not recommended to go short if all triggers point bullish. The tight stop clearly is an advantage, but if not placed at a trigger or significant low/high, chip-chops can be the consequence.

Re: Going Through a Crisis

Stott2 — Sat, 07 May 2011 14:42:01 -0000

Just a few thoughts here.
1. Some news letters in my opinion are overly cautious or overly aggressive. That is why I am here with Trendarchitect. John, you mention that you have tons of emails coming in and you cannot answer all of them. I agree. But maybe the reason people are emailing you so much is that by looking in just the client area we cannot know how you are thinking. You may have a 2 line comment with a signal. Then we go over to the blog page and we see 6 different blog topics on the top. I have to go through each one to find your latest comment to see what you are currently thinking. I am sure that many of your clients are having the same problem. We know why you sell because the plan hits a stop loss. I love the short stop losses. But we often do not understand why you buy or why you are waiting on buying when the market is in an uptrend. A couple of times this year you issued a buy signal when the previous few days were down days. How can the market be trending up when we have a week of down days? On at least 2 of these occasions you got out real quickly when stop losses were reached. Lucky for me I hesitated and did not follow the buy signals. And there have been other times that we have several up days and there is no buy signal. It seems confusing. I have to ask the same question that Rocket Science Trading asked about “discretionary (trades) and not based on the system.”
2. My suggestion would be to have 1 main comment section on your main client page of trendarchitect.com. Weekly or every few days you post a comment on what the reports and charts are telling you and what you current thinking is. Keep it short and to the point. An occasional chart or graph is good also. If several people email you the same questions, they can be briefly answered in this 2-3 paragraph section instead of having you respond to all the emails or comments separately.
3. Don’t try to maintain those 6 blog sections- Economy, General, Performance, Stock Market, Trading Tactics, and Trend Following. These topics are all interrelated and it seems that you can have 1 section that combines all of them like I mentioned in #2 above.
4. I still don’t understand some sections on your client page. You have those 4 triggering price levels which all say bullish but you have gotten in and out of the market several times this YTD. The SPY graph underneath has a downtrend for the week but you got in and out quickly on 5/5 and then back in on 5/6. Is that trend following or following a hunch?
5. With all this getting in and out quickly, not getting in when the weekly trend is up, and getting in when the weekly trend is down, has me really confused. It might be simpler to just follow the 50 day moving average (or other moving average) with a 1-2% stop loss.

Sorry for the long comment.

Re: Going Through a Crisis

Guest — Sat, 07 May 2011 12:00:14 -0000

Are you saying the the last 3 long trades were discretionary and not based on the system? If so it would have been nice to know that at the time the signals were issued

Re: Going Through a Crisis

Prakash — Sat, 07 May 2011 05:19:31 -0000

Like market it likes to take weak hand out of market. It's no different in system trading I agree with John

Re: Current State of the Trend

John Palatine — Mon, 02 May 2011 12:09:49 -0000

Hello Alan, the market is pretty extended if you ask me. Risk to reward ratios currently do not add up. I would love to get involved in the SPY again, but need a good entry opportunity first. At the same time we must mind the ubiquitous 137.00 resistance area from the past. We had held cash positions for a longer while, so it is nothing unusual. Meanwhile our strong position in EUR/USD should compensate it.

What I'm more concerned about is the value of the dollar which is getting crushed badly in recent months (see Gold or Euro). In response, signals for new markets will be introduced to Dynamic System soon.

Re: Current State of the Trend

stott2 — Sun, 01 May 2011 11:32:41 -0000

Hey, John. Just wanted to get your thoughts on the current state of the market. I am a little surprised that you have not given a buy signal considering the recent uptrend over the last couple of weeks. What are you seeing as you evaluate the charts and the economy? I am all for being cautious. Some believe that the feds and big banks are manipulating the market. As soon as they get all the investors to jump in, then things will probably take a dive. What is your take?
Alan

Re: Trading Signal Comments

John Palatine — Sun, 10 Apr 2011 05:56:57 -0000

This feature has been implemented just now :-) Expect to see a more informative notification with the next signal.

Re: Failed Trades and When to Reverse

John Palatine — Sun, 27 Mar 2011 05:15:03 -0000

Trading is about identifying what the general market sees as well. Accordingly the stop is placed objectively to the nearest significant low (in a long position).

Re: Failed Trades and When to Reverse

Rm686 — Sun, 27 Mar 2011 02:02:17 -0000

The question is now that the market moved up where is the stop. How do you fiqure where the stop is. I s it the prior low?

Re: Warning Signs of a Second Wave Down

John Palatine — Tue, 22 Mar 2011 07:32:33 -0000

Yes, more momentum would have been really welcome which never really came. From a day trader's standpoint, this criteria would not really matter, though. The false breakout would have been a very low-risk entry opportunity already. Another break of this resistance rendered the trade a fail. Since this trade did not work out eventually for the longer term, I want to discuss it in a separate post soon.

Re: Trading Signal Comments

John Palatine — Tue, 22 Mar 2011 06:50:54 -0000

Hello Kevin, your suggestion makes perfect sense. Give us a few more days and I will gladly make this change to the notification emails.

Re: Trading Signal Comments

John Palatine — Tue, 22 Mar 2011 06:45:10 -0000

Thank you for your feedback. The linked articles you refer to are coming from the Delicious (bookmarks) account and are included in this blog's feed. I agree with you that information should be reduced to the point and therefore external links won't appear anymore.