Mike wrote:WideEyed wrote:Dewey McG wrote:lhDT wrote:Dewey McG wrote:...Bob mentions using the AO as confirmation for an entry ....
... the purpose of the RSI2 is to place pending orders only, whatever the AO is.
(-> correct me if I'm wrong)
I think the AO is just there for manual entries ? (color change in a trend with MA240 as SL).
(-> correct me if I'm wrong)...
Top of page 14 in the new manual:
the RSI 2 signals to set your pending orders and the AO confirms your entrances and warns you to exit
My understanding is that you set the pending orders when RSI2 flattens and then you let those orders activate irrespective of the AO colour. That interpretation seems to be confirmed by Bob's B trade on page 15 which activates on an orange.
Yes, that's how I understood the rules: RSI2 flattens, I set pending orders and leave. While waiting for the pending trades to enter, price still going in the oposite direction sometimes crosses a Pivot-S/R-Line and I modify the entry price of my pending trade accordingly (if I happen to be around). The order fires when price gets hit. When an AO color-change confirms I feel better about the trade otherwise I start to doubt whether to stay in or get out
Mike
I am sitting in HK airport waiting for my flight out tonight. Went down to the pier and had a subway sub sitting on the docks with the wind blowing through my hair. A nice spicy Italian sub. hmmmmmmm.
Any way you have it right. You are not waiting for the AO to change colors to enter. You have set pending trades while price is going in the wrong direction or is ranging. When price breaks back into the trend it will trigger those trades and also make the AO change color. Your setting of the pending trades had nothing to do with the color of the AO but the RSI 2 or STO 5 being flattened and whether you are above or below the 240 line. Those are the two key reads back into the trend.
The AO only confirms the direction when you are already in the trade. The trade is triggered by your pending trade not the color of the AO. The AO plays its most important role in deciding to close a trade or keeping it going. When the AO changes color the run is usually done, however the RSI 2 or STO 5 can also play a role. If they clear the opposite side of the AO historgram even if the AO color has not changed that is a clear indication the trade is not going in your direction and you can close or plan a 2nd trade. This is a warning especially when a news story hits that price direction has changed and you dont need to wait 4H later for the AO color to change. So closing out a trade series can be dependent on AO color change or RSI 2/STO 5 breaking below the AO histogram bars. You can even close when the RSI 2/STO 5 breaks back off from flatlining especially if you got a nice haul going and you want to finally rake it all in.
The most difficult call will be the AO changing color but the RSI2/STO5 not breaking through the histograms showing the move still has strength. That will be the hardest interpretation in the system. I hate to see profits disappear so I tend to pocket profits and restart the setting of pending orders but that is me. I hope this helps. Anyway back to HK and waiting on for my flight.
