A New Hope:
A systematic approach to trading applied to ETH
John Slazas is the founder of JS Services Research and Trading LLC an independent technical research company that offers a unique set of multi-market multi-state solutions that help clients gain a systematic approach to trading. Our Analytics incorporate both technical and behavioral variables, that have been developed from observations over the past 30 years, into a quantitative model, to numerically define a markets technical profile. JSAnalytics, more than anything else, are an awareness tool that provides clarity to what the current conditions are, so trading methods can be optimized by aligning tactics with these facts.
Hope in trading is a fantasy created by the ego’s desire to be “right”. It masks the conscious mind’s ability to see clearly what the body or unconscious mind knows to be true, fooling it, sometimes just for a moment, into “thinking” that what we know is true, this one time will be false.
Moments matter. Hesitation is expensive. If a hopeful “opinion” is held on for too long it can snowball into a significant drawdown or worse.
Your body or unconscious mind is constantly assembling facts or data. These facts improve awareness to what the truth of the current market STATE conditions “is”. The cleaner the data or unbiased facts, the higher of a confidence level we have in accepting the “truth” of the current condition, improving the ability to intuitively act decisively in real time.
When the ego takes charge by filtering the “data” through a biased opinion, emotional reaction, or basic “I’m right, the market is wrong” thinking, the clarity of the market condition is clouded. The resulting trading decisions are flawed, as they ignore or “curve fit” the facts. The body or subconscious mind does not have this filter and knows the “truth” behind the ego’s veil.
When the brain lacks enough data (facts) or does not trust the filtered Ego facts, it produces doubt. Doubt causes fear. When this happens the Ego produces HOPE.
The HOPE illusion can be amplified by the ego creating a psychologically attachment from the success or not of the trade, to self-worth. This is one reason many high win loss ratio strategies that risk a dime to make a penny are appealing. A trader feels good “winning” 9 days out of 10 even if it is only making a penny and can emotionally deal with losing it all on 1 day, better than managing 9 losing days in a row and winning big on the 10th. Unfortunately, many qualified strategies never make it to the profitable 10th payout day, as HOPE illusion seduces the trader to break the rules “this one time”, because the Ego “knows better”. The vicious circle can continue as long as the risk parameters and level of funding in the account allow it. All of a sudden reality sets in, the veil is lifted and you are out of business. The strategy didn’t work…..nothing works….but there is always HOPE that someday it will work because I’ve invested so much time and effort into it.
When actions are based on emotion or forced will, “I HOPE I will make money”, which ignores or is blind to the current market truths (facts), we try to comfort ourselves with prayer and promises to the universe to produce a 50 cent move in our favor.
This type of HOPE paralyzes us at the moment when we should be acting, without thought, intuitively to change our situation or positon. HOPE is the “tell” of your body (sub conscious) alerting your conscious mind that your ego is making a decision counter to the facts you know to be true.
This awareness is power
The next time in trading that you find yourself HOPING, immediately focus on the facts of the condition that make your position true.
For example if you are long the market and the price action is maintaining positive structure but is “squeezing” your position. Remove the doubt from your mind. Have confidence that current condition “facts” support your position and any minor price action against these facts, that is causing angst, is just the market trying to shake you out. Turn the emotion into action by anticipating a price to move in your favor and leverage the FACT that the positive conditions remain “true”. Conversely, if the FACT FOCUS reveals that price action is breaking structure against your position and your ego has manufactured an “I bet it’s a head-fake” scenario, even though structure has clearly been broken, ACT to exit with confidence, recognizing that you are only HOPING for a result.
If we have bad data, ie a subjective bias, opinion or conjecture to start with, instead of it being a qualified opportunity, it becomes a wish that is lacking facts, and therefore our full confidence. The HOPE illusion will produce doubt and fear that can easily overtake decision making and mask the real opportunities.
Successful trading is anticipating price action from observations of market facts. Maintaining a FACT FOCUS provides awareness of what the current condition “is”. Facts we trust and know are true. This knowledge builds self-trust and confidence that provides real clarity that dissolves HOPE, offering a foundation for improved intuitive decision making.
A NEW HOPE — A systematic approach to trading applied ETH
JS Services is a purveyor of quantitative FACTS which define the STRUCTURE of the market and offers traders and investors an objective resource to systematize a trading approach. By observing price action (“real-time” FACTS) within market STRUCTURE, awareness to the current condition is improved providing real clarity and a price framework to design trade strategies. A FACT foundation replaces hope with actionable knowledge for improved intuitive decision making.
Market STRUCTURE — the FACT foundation
JSServices PriceMap analytics define the STRUCTURE of the market with 3 price points; a price band or CriticalRange and a Sentiment bias level (R LEVEL).
CriticalRange (UP — Upside Pivot; DP — Downside Pivot)
The Critical Range represents the hard level boundary, outlining the price structure that defines the market STATE. The Critical Range provides insight to when shifts in STATE will occur by identifying where they will occur.
In general: Trading within the CriticalRange identifies the STATE condition as NON TREND and outside the CriticalRange as TREND. When price action is observed within the CriticalRange structure, in the context of the market STATE, awareness is improved to validate current conditions.
Sentiment Bias (R LEVEL)
The Sentiment Bias or R LEVEL is the price level where the bias for the trade period shifts from positive to negative and vice versa. This FACT further defines the market STATE characteristics by its position in relation to the CriticalRange and is the level with the most influence for the trade period.
In general: Trading above the R-LEVEL is positive and below, it is negative. Observing the differential between the current price and the R-LEVEL provides insight to its influence as either a repellent when near or attraction when far away.
Practical Application ETH 2017
The following is a practical application example of applying the PriceMap Structure in ETH which has been published Monthly since MAY 2016. The graph below shows the CriticalRange and Sentiment bias R LEVEL plotted for each published Month to date.
FACT focus what do we know to be TRUE?
• IF the MKT is above the R LEVEL (green line) THEN sentiment is positive and below negative.
• IF the MKT is inside the CriticalRange (red and blue line)* THEN it is a NON TREND type STATE and outside a TREND type
o Note the R LEVEL may be equal, within or outside the CriticalRange boundary.
Historical Performance (using the chart above as a reference)
May16 — ETH maintains a trade above the 9.25 R LEVEL identifying a positive bias and produces a BREAKOUT of the CriticalRange and a TREND move higher holding structure above the 10.30 UP
JUN16 — ETH starts the month in a positive position above the 13.10 R LEVEL and produces another CriticalRange BREAKOUT and TREND move. This TREND however breaks structure by falling below the 15.65 UP, negating the positive TREND, putting the MKT back into a NON TREND state for the balance of the month.
JUL16 — ETH starts the month in a defensive posture below the 12.90 R LEVEL and stabilizes off the 9.25 DP signaling a NON TREND trade period. The MKT transitions up through the 12.90 R LEVEL, which is also the CriticalRange mid-point, topping out at the 15.35 UP confirming the NON TREND STATE and closing “weak” below the Sentiment Bias.
AUG16 — ETH prepares for the Hard Fork and maintains a soft tone in a non-event trade period.
SEP16 — ETH opens the month above the 11.65 R LEVEL sentiment bias and does its best to impress but runs into a wall at the top of the CriticalRange at the 15.40 UP falling back into a NON TREND type STATE
OCT16 — ETH starts the month in a positive position and then quickly transitions below the 13.00 R LEVEL producing a negative signal which dominates the bias through the month.
NOV16 — ETH maintains an edge opening trading below the 11.40 R LEVEL and continues to TREND lower producing a downside BREAKOUT below the 9.30 DP.
DEC16 — ETH starts the month on edge pressing the 7.10 DP CriticalRange extreme and fails, producing a downside BREAKOUT. The MKT cannot maintain structure below the 7.10 DP and breaks negative structure. This produces a positive REVERSAL signal putting ETH back in a NON TREND STATE and a higher expectation targeting the 11.50 R LEVEL.
JAN17 — ETH starts the month above the 8.05 DIR and quickly transitions through the 9.65 UP R LEVEL attaining the DEC16 11.05 R LEVEL.
ETH FORECAST JAN 2017
Below is a Daily ETH chart with the JAN2017 CriticalRange and Sentiment bias along with 2 price target projections plotted. To the right of the chart are the respective ETH prices along with the full PriceMap framework for ETH JAN 2017 STRUCTURE. For a complete PriceMap tutorial send a request to firstname.lastname@example.org .
ETH JAN 2017 Monthly Structure
Current Fact Focus as of JAN 10th, 2017
• ETH has broken out of the CriticalRange above the 9.65 UP R and is currently in a positive TREND mode with all trading above this price point. As long as this is TRUE, the expectation for ETH is for it to build positive price structure targeting the 12.65 UT2 (Upside Target #2) with the potential to go as high as 14.85 UT3 (Upside Target #3) into months end early FEB17.
• 19.30 is the “event” high point however it is more likely the rally will exhaust below 14.85 as the current price action is demonstrating more of a “stop and go” trade which is not indicative of a market that is going to produce an accelerated event.
• A failure from 9.65 UP R (below 9.45) is a “tell” that the positive TREND is over and the MKT is back in a NON TREND position with the potential to re-test the 8.05 DIR month lows. 6.65 DP is the low point for any negative turn of events.
To remove emotion and create a more systematic approach to trading the KEY is observing PRICE ACTION, within market STRUCTURE, in the context of the market STATE to gain CLARITY on the current condition so you can align your tactics these FACTS.