Building
Logical & Efficient Workspaces
The purpose of this
section is to offer basic ideas to help better organize and create your day
trading workspaces and computer charts.
Although
much of the information is related to day trading Stock Index Futures and
specifically the DOW Futures Contract, the overall structure described likely
offers some benefit to also the stock and futures trader.
With
the many clients we have worked with over the years, there is one theme that
seems to repeat itself. That is that many, many traders will take a few charts
and “Load them up” with indicators.
If
one is trading the Stock Index Futures Contracts, DOW, S&P or NASDAQ, it is
simply not possible to properly manage all the incoming information using this
“Load up” technique.
The
very best way to deal with this subject is in the video format (see videotape
#6) the information presented in this manual is to provide some complementary
information to that discussed in the videotape library.
Therefore,
we encourage you to view the information contained in videotape #6.
As
mentioned in the video, working with these workspaces is done so in a different
order than the order in which these workspaces are actually opened within your
TradeStationâ charting
program.
The
following list is the correct sequence in which to open the workspaces. Once the
workspaces have been opened, and the trader restarts the charting program, one
is prompted to “Open workspaces from last session”. This is the prompt which
will open the workspaces in the order previously selected.
The opening sequence is:
1. 5 MIN – TARGET
2.
5 – MIN DIVERGENCE
3.
MARKET DIRECTION
4.
TRENDLINE
5.
60 MINUTE
6.
T-BONDS
7.
ADV – DECL / SPREAD
8.
DOW CASH 5 MIN – DAILY
9.
MAIN
How
to use these workspaces as a group is best viewed on videotape #6. The following
images are included in the manual to provide a complementary printed record that
may be referred to when building and adjusting your own workspaces.
It
is by no means necessary to use the workspaces in this specific order or with
the above names. These ideas are provided as suggestions only, feel free to
structure your personal workspaces in any manner you find benefits your personal
trading routine.
Please
also refer to videotape#6 for discussions about the indicators placed on the
various price charts within the workspaces.
Since
the last workspace on the list named “MAIN” is the most widely used screen
of the nine listed, we will discuss this one first.
Below
is an image of the workspace #9 titled MAIN.
·
The chart
at the far left is a 5-minute chart of the DOW Futures,
·
The center
chart is a 1-minute chart of the DOW Futures
·
The chart
to the far right is a 1-minute chart of the DOW Cash Index.
1
2
3
4
5
There
are 5 quote screens below the price charts, we will open each quote screen to
demonstrate the headings for each of these.
Below
is Quote screen #1, which provides prices for the Dow Industrial Cash Index
& S&P 500 Cash Index.
 |
Below
is Quote screen #2, which provides data for NYSE Advancing &
 |
 |
Below
is Quote screen #4, which provides data for NYSE TICK & TICKI market
internal indicators.
Below
is Quote screen #5, which provides data for US 30 Year
T-BOND Futures.
5 MIN – TARGET
The second workspace we will now look at is actually the first listed on the
Opening Sequence List. Titled 5 MIN –TARGET, it is dedicated to charts used
for identifying exit targets on a 5 minute time frame. Any time frame is
suitable, 5 minutes was selected because it allows one to view the entire
session on one chart.
1
2
The
primary chart on this workspace is shown above. It is where the CD RTT Indicator
(Real Time Target) is located.
On
this chart the indicator is plotted 3 times using the settings
·
CD RTT SENS
10 @ 100PCT
·
CD RTT SENS
10 @ 80PCT
·
CD RTT SENS
5 @ 80 PCT
At
the bottom of this workspace are 2 other charts used for defining exits.
Below is an expanded view of
the chart labeled #1
On
this chart is installed the CD Auto Pivot, CD Auto Pivot HI and CD Auto Pivot LO
Indicators. All three indicators have the PLT Input set to 300, this is one way
of having all 9 support and resistance levels appear on the chart. The other
method to view the indicators in this manner is to set the ALL_PLOT input to 0.
This
setting quickly gives the trader a perspective as to where the market is trading
within these defined support and resistance levels.
Notice
the values plotted to the far right of the chart, these are the values the
indicators plot for the following day’s sessions upon the close of today’s
session.
Below
is an expanded view of the chart labeled #2.
This
chart has the CD Exhaustion and CD Exhaustion2 Indicators installed on a
5-mintue chart.
This
chart is situated within the Target workspace to give the trader quick access to
this indicator grouping.
It
not necessary to place your target tools in the same order mentioned in the
section. Place your exit indicators and tools in the order of your personal
preference.
It
is encouraged however to have more that one exit technique in this workspace,
for the simple reason that it forces a trader to observe more than one tool.
Even if is only a single tool that is predominantly used, watching additional
techniques now and again may generate new ideas.
5 MIN – DIVERGENCE
The next workspace is
the second listed on the Opening Sequence List. Titled 5 MIN –DIVERGENCE, it
is dedicated to charts used for evaluating dynamics of divergence using
oscillators and market internal indicators like the TICK.
These charts have also
has been selected in the 5 minute time frame. Any time frame is suitable, 5
minutes was selected because it allows one to view the entire session on one
chart.
The image below is the primary screen Of the Divergence workspace.
1
The
large chart to the right is a 5-minute chart of the DOW Futures, whereas the
thin chart to the far left is a 5-minute chart of the DOW Cash Index. Both of
these charts have identical indicators.
In
the event that one wishes to observe if any subtle differences are forming
between divergence patterns in the Futures market and the Cash market, one can
quickly maximize this Cash chart located behind the Futures chart.
Typically,
if divergence patterns are similar on both charts, the true tone of the market
is being shown. If a divergence is subtle and can only be observed on the main
futures chart and not on the cash chart, it can be an indication that the
futures players are setting up the market for a potential “wash-out” move.
Notice
the rally at Line “A” and the divergence on the TICK Indicator identified at
Line “B”. Notice the clean down trend that followed the divergence pattern.
Also
at Line “C” and Line “D”,
this second divergence pattern was not as aggressive as the first pattern, but
it still gave subtle clues as to which direction the final afternoon move might
go. In this case as indicated by the divergence, to the downside.
Detailed
explanation of the construction and use of this TICK Divergence tool is
discussed on videotape #4. We encourage the viewing of this section of the video
library if one is planning to use this indicator.
The
chart on the next page is an expand image of the chart labeled #1 at the bottom of the screen.
This
is where we have located a 5-minute chart on which is plotted the classic Slow
Stochastic Oscillator. This widely know and used indicator can at times provide
very useful divergence signals.
It
is best used however in conjunction with the TICK Divergence indicator, since
many times the TICK Indicator will identify divergence patterns that are not
perceived by the Stochastic.
Again,
we encourage the viewing of videotape#4 to gain a proper perspective on how to
gain the maximum benefit of this workspace.
Notice
the price decline at Line “A”, the divergence observed on the Stochastic at
Line “B”, and the rally that followed.
MARKET DIRECTION
As the name implies,
this workspace is reserved for the definition of the Major trend of the day.
There are two charts in
this workspace, the main chart is a 1-minute chart of the Dow Futures and the
chart labeled #1, behind and to the left is a 1-minute chart of the Cash Index.
As in other workspaces,
we have placed charts for both the futures and the cash, each with the same
grouping if indicators.
The reason for this
duplication is that there are occasions when one observes different signals from
each chart, which is often an additional clue of a major market top or major
bottom being formed.
For example, the CD
Market Direction Indicator may show a sideways
day with an up bias on the futures chart, while the same indicator is
showing a clear downtrend on the cash chart.
This situation often offers clues that the futures traders are not participating
in the market decline as viewed on the cash market and are in fact attempting to
introduce new buying into the lows of the futures market.
1
The
charts in this workspace also have installed the:
·
CD Median
Line Indicator
·
CD Cluster
Indicator
·
CD Auto HLC
Indicator
·
CD Auto
Open Indicator
Notice
the buy areas at points A, B, C, and D, as identified by the large dots plotted
by CD Cluster Indicator.
This
is not the workspace necessarily used to locate buy and sell points, but the CD
Cluster Indicator is located on this chart to maintain a proper perspective on
the day’s action.
TRENDLINE
This workspace is dedicated to analyzing charts with a Daily time frame. It is
called TRENDLINE simple because the two main charts as viewed in the image below
are dedicated to trendline analysis.
1
2
3
4
The large
chart to the left is a daily chart
with the Auto Trendlines applied. The inputs for these trendlines are:
Input
RHSTREN 1
These
settings will plot a Magnitude 1 trendline and will show only the two most
current trendlines. An input setting of HISTORY “YES”, will plot all
trendlines on the chart.
This
Chart also has the CD Consecutive Bars Up & CD Consecutive Bars DOWN
Indicators installed.
The
large chart to the right is a daily
chart with the Auto Trendlines applied, but with slightly different inputs. They
are:
Input
RHSTREN 4
HISTORY
“NO”
These
settings will plot a Magnitude 4 trendline and will show only the two most
current trendlines. A setting of 4 gives a longer term perspective to the
trendline analysis performed in this window.
As above,
an input setting of HISTORY “YES”, will plot all trendlines on the chart.
This
Chart also has the Key Reversal UP and the Key Reversal DOWN “Show Me”
installed.
At
the top of the right chart is a chart labeled #1.
This is where we locate a daily chart which contains the SPECTRUM Position
System.
Chart
#2 below the main chart on the left
is where the CD ROI and CD ROI PB Indicators are plotted on a daily chart.
Chart
#3 below the main chart on the right
is where we plot three different exponential moving averages. An 18 day, a 50
day and a 200 day Exponential Moving Averages are plotted here.
Chart
#4 below the main chart on the left
is where the CD Daily Pivots Indicator is plotted.
60 Minute
As the name implies,
this workspace is dedicated to analysis within the 60-minute time frame. This
time frame can be helpful in finding potential reversal areas, divergence
patterns and medium term support and resistance.
1
The
60-minute time frame is a popular one with many traders and having quick access
to this time compression can provide additional perspective on price action.
The main chart is a
60-minute chart of the Dow Futures. The following indicators are installed on
this chart.
·
CD Reversal
Indicator
·
CD Entry
Point Indicator
·
200 bar
Exponential Moving Average
·
Slow
Stochastic.
The
chart labeled #1 to the left and
behind the main window is a 60-minute chart of the Dow Cash Index with the same
group of indicators.
As
mentioned, this time frame is used to identify support and resistance areas and
if desired, possible trades on a slower time scale.
Notice
at Point “A”, the CD Reversal Indicator gives a “Heads Up” signals that
this minor move is nearing exhaustion. The support at Point “B” as
identified by the CD Entry Point Indicator was the entry level to a short trade
as indicated by the line drawn to the right of Point “B”.
Also
observe the basic divergence pattern as demonstrated at Line 1 and Line 2.
T-BONDS
This workspace in
provided to give the trader fast access to T-Bond Futures data. Watching for
clues in the Bond market can be helpful to the Stock Index Futures Day Trader.
Although
since early 1999, the classic relationship of “Bonds Up ,Stocks Up” has not
been anywhere near the reliable maxim it once was, referring to T-Bond price action can still be of benefit.
One
other advantage of having this workspace available is that one can shift into
taking a few T-Bond trades if the price action looks attractive.
This image below is the T-Bond workspace. The large chart to the right is a 1-minute chart with the following indicators:
CD Market Direction Indicator
CD Median Line Indicator
CD Reversal Indicator
CD Cluster Indicator
The
narrow chart to the left is a T-Bond daily chart with the following indicators:
CD ROI & CD ROI PB
Indicators
CD Consecutive Bars UP &
DOWN Indicators
Auto Trendlines (with RHSTREN
input set to 1)
1
2
3
4
5
The chart in the top
left corner labeled #1 is reserved
for any additional analysis on daily charts that may of interest to the trader.
The image below is an expanded view of this chart, here we have installed the
Slow Stochastic and the popular %R Oscillator.
You will notice, that
the %R Indicator does not appear as typically used. Here the %R has actually
been installed three separate times, each with different LENGTH Inputs.
The different inputs for the %R Indicators are set as demonstrated in the above image. LENGTH inputs of 10, 14 and 25 are used.
The reason for this
multiple plot is that it helps to give a more detailed perspective on the
severity of overbought and oversold area in the market in this time frame.
There are also three
quote screens and one additional chart as labeled at the bottom of the
workspace.
Below is Quote screen #2, which provides data for the “front month”
T-Bond contract.
Below is Quote screen #3, which
provides data for NYSE Total Volume. Since the data for Total Volume is not
referred to as often as the other internal indicators, it is located in this
workspace rather than in the MAIN workspace
Below is Quote screen #4, which provides data for the current Dow Futures contract. This quote screen is placed in this location in order to be able to keep a close eye on the Dow contract when one is viewing the information in the T-Bond workspace.
Finally,
#5 is simply a 5-minute chart of the
S&P Cash Index. Plot whichever indicator you feel appropriate on this chart.
It is located here only for ease of access to charted data for this index.
ADV-DECL
/ SPREAD
This workspace is reserved for plotting in a visual form market internal indicators like NYSE TICK, TICKI, PREM, and ADVANCING & DECLINING ISSUES.
Like
other workspaces, it is designed to provide fast access to this important
information. Below is an image of this workspace.
1
The
chart at the far left labeled “A”, is a 5-minute bar chart of the Dow
Futures with 3 Moving Averages. 18, 50 and 200 bar Exponential Moving Averages
are plotted here.
This
chart is not used to generate any trading signals but is used to simply provide
quick access to this information. Since moving averages are so popular this can
be useful information; strictly used for offering an additional perspective to
price action.
Located
in the center chart, “B”, is the indicator described in videotape #6, the
Advancing/Declining Issues Spread Indicator. This indicator is used to provide a
visual image of the relationship between these two NYSE market internal
indicators.
Complete instruction on the construction of this Advancing/Declining Issues Spread is explained on videotape #6
At
the far right are plotted on a “Line-on-close” graph, additional NYSE market
internal indicators:
·
TICKI,
cumulative tick indicator of the DOW Industrials Index (point “C”)
·
PREM,
spread indicator of the S&P Cash and S&P Futures
(point
“D”)
·
TICK, NYSE
broader market cumulative tick
(point “E”)
Below is Quote screen #1, which
provides data for the NASDAQ Cash Index.
DOW CASH 5 MIN-DAILY
The final workspace we
will be discussing is the one designed for specifically analyzing price activity
of the Index Cash Market.
Although as a stock
index futures trader the sights are set onto the futures contract, it is very
valuable to have access to properly structured index cash data.
Levels of support and
resistance on intra-day time frames as well as in the daily time frame can be
quickly referred to.
The image below is one of the main window for this workspace.
2
1
The chart at the center
of the window is a 5-minute chart of the Dow Cash Index. This chart has plotted
the following indicators:
·
CD RTT with
inputs set a SENS 10 @ 100 PCT
·
CD Auto HLC
Indicator
·
CD Auto
Open Indicator
·
CD Reversal
Indicator
·
Slow
Stochastic
The chart
labeled #1 to the left is a daily
chart of the Dow Cash. It is on this chart that current and long term levels of
support and resistance are monitored.
This
chart is usually formatted to show in this form approximately the 7 most recent
price bars. To have a look at a longer term perspective, this chart can
be maximized.
Below
is an expanded image of this #1 chart.
Notice
at Point 2, which is March 10, 2000, that using the plotted line “A”, one
can quickly refer back in time to resistance level of March 19, 1999.
This
simple technique of monitoring past support and resistance levels is also
discussed in videotape #6. It is a very effective method to gain a quick
perspective of current price activity in relation to past price levels.
The
chart at the top left of the window labeled #2,
is a weekly chart of the Dow Cash.
Below is an expanded image of
this price chart.
It
is always of interest how many trading ideas and tools have value on all time
frames. This chart has the following indicators applied:
·
CD ROI
& CD ROI PB Indicators
·
Slow
Stochastic
·
18, 50 and
200 bar Exponential Moving Averages
·
CD Reversal
Indicator
There
are several signals worth pointing out on this chart. First, notice at point
“A” which is one of several CD ROI Alerts. The price bar following this
condition was a significantly larger range bar with a close at the high.
At
line “B” and line “C”, a divergence pattern was identified in this upper
area of market congestion.
Points
“D” and “E” demonstrate the CD Reversal Indicator giving signals warning
of exhaustion of these pullback moves in the market.
At the highs, at points “F”, “G” and “H”, the CD Reversal Indicator also provided valuable clues to impending pullbacks.
Conclusion
As mentioned earlier,
additional information and ideas about workspace organization is included on
videotape #6. We encourage you to view this material.
In closing this section,
we would like to mention that this information has been provided strictly as a
sharing of ideas and observations.
It is by no means
necessary to incorporate all, or even any of these ideas within your current
trading routine.
They have been provided for your reference, fell free to incorporate as many of them into your present trading workspaces as you see fit.