Lavender's Chart Explanation

First let me explain my 5 minute chart of the EMini S & P 500 - which TradeStation has denoted as @ES.D for the continuous contract.

 It is exactly like Marsh's -

• 5 minute candlestick chart based on price with a 10 period moving average (purple line) - subgraph 1

• Stochastic Slow 8,3,3 based on 5 minute - subgraph 2

• MACD 22,50,5  based on 5 minute - subgraph 3

• MACD 12,26,9 based on 15 minute - subgraph 4

• Price and indicator levels plotted on right axis.  

• Date with time line plotted on bottom axis.

Then I have added the following:

 1 - to upper graph - a 34 period exponential moving average based on price – This line changes colors: cyan if it is moving UP and magenta if moving Down

2 - to stochastics graph - a dotted green line highlighting 80%. The area between 80% - 100% is an "overbought" area of interest to me.

3 - to stochastics graph - a dotted magenta line highlighting 20%. The area between 20% - 0 is an "oversold" area of interest to me.

4 - the section of the chart between the upper price candles and the stochastics graph – I have added an indicator that visually plots Marsh's Time Zones. Red zones - green zones - reverse zones (blue) - and night zones (gray)

Now understand that basically I am using the 5 minute chart to 'see' the trade setups.

I use time zones, price/chart patterns, Dow & Nas levels, S & R (fibs+pivots), etc. As many of the same thought processes as I can get from Marsh - repeat to 'self'.

Then I am using a smaller frame chart to 'look inside' the action of the 5 minute candle. This means that most, if not all, my trading would be considered Power Trades & not for everyone. I use the 'inside' chart to determine my entry and then also my exit.

 For these reasons I use:

• A few different charts.

• A few different - very fast - indicators.

The concept is what I would like for you to understand.

Choice, availability, and/or limitations with your charting software could determine which type of smaller frame chart you choose to use as well as which indicators to use in this fashion. Again, what I am showing you is how to make some Power Trades. Use all the same basics and then add a few select nuances to enhance your entries and exits.

I have attached a single screen shot of today's action in a given time frame. (Advanced Workshop). This screenshot is a 'split screen' and I have minimized each chart in order to fit on 1 screen.

 Please note I slightly changed the background color between charts to help separate them. My intention is NOT to look at all 4 charts at one moment like this in 'live-time'. I am merely trying to condense with a 'picture' to explain on which chart I put which indicator as mentioned in Lavender’s Cheat Sheet. We will work with how I use them and we can make numerous alterations during our workshop.

Starting Far left:

• Chart #1 is Marsh's 5 minute chart exactly as described above.

• Chart #2 is a 1 minute chart with time zones & slow stochastics added. (same settings as Marsh's 5 = default)

• Chart #3 is a 500 share / volume bar chart.

• In sub graph 1 - price is represented with Heiken-Ashi candles  (black = warning)

• little blue tick on each candle = close

• 34 EMA is cyan-magenta line

• Fibonacci Bands (similar to Bollinger Bands except I can 'tweak' more)

• Dashed Red = mid-line     Black - inner band     Blue - outer band

• In sub graph 2 - TRIX black & red lines with dashed zero line

• Linear Regression Curve - dots change color with direction change

• Chart #4 is a 233 tick chart

• sub-graph 1 - Bollinger Bands length of 20 and standard deviations 2,-2 –

• heavy red lines upper and lower with a mid-line = dashed red

• 34 EMA is cyan-magenta line

• sub graph 2 - TRIX black & red lines with dashed zero line

• Linear Regression Curve - dots change color with direction change  

Please note I am trying to show you a couple of indicators with the same settings for use on different smaller frame charts.

Please print this single chart and look it over with your Cheat Sheet. And just to give you a 'teaser' - look at the action on each chart around the 3:00 reverse time zone. I put a dashed vertical line on all 4 charts when that 'signal was there' for this gunslinger to say oh yeah!!!

Please review and see what you can see...

Lav

Click here for Lavender's chart for July 11th

Click here for Lavender's Cheat Sheet

Lavender's Commentary for June 29th

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