Spydertrader’s Jack Hershey Futures Trading Journal As compiled by
Pr0crast
Volume 4: Stretch & Squeeze April 2007
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TABLE OF CONTENTS Editor’s Note ............................................................................................................................... 1 Stretch & Squeeze ....................................................................................................................... 1 Spyder’s introduction .............................................................................................................. 1 Bundlemaker on setting up STR/SQU in Ensign .................................................................... 5 Bearbelly on getting STR/SQU set up for Quotetracker ..................................................... .... 7 DKM on getting a STR/SQU indicator working in Esignal ................................................. .................................................... ... 7 Audkid1 on getting a STR/SQU indicator working in Tradestation ....................................... 8 Spooz posts a YM snippet ....................................................................................................... 9 Spyder on handling confusing low-volume periods .............................................................. 10 Ezzy on ensuring that Qcharts STR/SQU is running on time ............................................... 10 Spyder on sufficiency ..................................................... ....................................................... 11 Spyder reiterates that STR/SQU is not an “always “ always on” indicator ......................................... 12 Mak on eSignal’s eSigna l’s limitations ............................................. ................................................................................................ ..................................................... 12 Spyder answers a bunch of questions ....................................................... ............................. 13 Excerpt from Channels for Building Wealth by Jack Hershey .............................................. 15 Bundlemaker on ideal FTT sequences................................................................................... sequences................................................................................... 15 On the uselessness of historically tracking STR/SQU .......................................................... 16 Mak on nailing the basics ba sics ........................................................ .............................................. 16 Some moral support from bundlemaker ................................................................................ 17 Ezzy on waiting for STR/SQU to synch ................................................... ................................................................................ ............................. 17 Koamana posts his QC workspace for STR/SQU ................................................................. 18 Bundle notes a helpful tip from Spyder regarding execution ................................................ 18 Bearbelly on what kind of progress one on e should be making before adding tools ................... 18 Ivo’s AHA moment regarding FTT volume ................................................... .......................................................................... ....................... 19 Help with getting mak’s spreadsheet to work ....................................................................... 19 PointOne’s Quiz .................................................................................................................... 20 Spyder posts a STR/SQU video ............................................................................................ 24 Spyder answers a question on what harmonics are ............................................................... 24 Spyder on washes and taking heat ..................................................... .................................... 24
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Bundlemaker on internal proof ....................................................... ....................................... 25 Spydertrader makes some clarifications on STR/SQU.......................................................... STR/SQU.......................................................... 26 Spyder on “quick pops” and “sticky moves”......................................................................... moves”......................................................................... 27 Spyder on continuation, change, and Gaussians ........................................................ ............ 27 Bundlemaker and Spyder have an exchange ......................................................................... 28 Spydertrader on sufficient data da ta sets and intrabar tools .................................................. .......................................................... ........ 31 Nkhoi posts a tool to find faster qcharts servers.................................................. .................................................................... .................. 31 Spydertrader on trading at market open and a nd using DOM ..................................................... . 32 Spydertrader on High Volatility Stalls (HVS).................................................... ................... 33 Spyder answers Bearbelly’s STR/SQU question................................................................... 35
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EDITOR ’S NOTE If you wish to read the April section of the journal on Elitetrader in its entirety, it can be accessed at this link: http://tinyurl.com/3bmhzl
STRETCH & SQUEEZE Spyder’s introductio introduction n With the arrival of April (and oddly enough, enough , April Fool's day), we move to the next portion of our syllabus syllabus (http://tinyurl.com/3ccaqt) (http://tinyurl.com/3ccaqt) - Stretch / Squeeze. What is Stretch / Squeeze (STR/SQU), and how does it work? Why does STR/SQU create a dangerous situation for those individuals who choose not n ot to use it correctly? How does one o ne calculate STR/SQU? To understand STR/SQU, one must first understand how the futures and cash markets interact. In a general sense, STR/SQU seeks to provide a 'signal for change' based on fair value (http://tinyurl.com/oylwu) in relation to the premium the premium (http://tinyurl.com/38fp45). (http://tinyurl.com/38fp45). For Jack's explanation of STR/SQU, see this post (http://tinyurl.com/2pzz9k). post (http://tinyurl.com/2pzz9k). For a detailed discussion from last year regarding STR/SQU, review this discussion (http://tinyurl.com/37c9hc). discussion (http://tinyurl.com/37c9hc). STR/SQU creates a dangerous situation for a trader who fails to use it correctly because doing so places the trader on the wrong side of the market. As I discussed in this post (http://tinyurl.com/2rwq6v), a trader on the correct Resolution Level only monitors change at certain 'Action Points' throughout the trading day. Just as we have seen with all other tools, we also need to use STR/SQU only at those same 'action points.' In other words, using STR/SQU at the incorrect time can cause negative results. To calculate the STR/SQU we use the following formula: ((YM07M -INDU) -'offset') Several methods exist for calculating the 'offset' value. Some have chosen to use the 'premium' value from indexarb.com indexarb.com,, while others, choose to simply use the offset created by the difference between the YM and the INDU to 'zero out' the formula. In this fashion, one can chart the STR/SQU value over time (using a one minute chart of Histogram design). Mak has ha s used a third
