Iceberg Trading
Description:
Indicators define icebergs. The indicator values are determined by considering several
factors: Icebergers have removed their original capital and they have made three times
that capital already. Icebergers are skilled as well and they can advance those skills in
settings of greater risk. This means they can remain in the market for longer periods and
take more kinds of trades. It is also true that they stage through several renditions of
iceberging to get ready for SCT. Each stage builds more NLP pictures. All the indicators
are designed for integration over a spectrum of fractals. Concurrently they are designed
for the skill level of the user. Intermediates continue to need protection against failure
and, secondly, losses. As usual, other side of the coin provides two central trader themes
that are absolute requirements: continuing reinforcing success and continuing display of
the NLP pictures that continue building the foundation of consistent decision making
excellence
Icebergs are always in effect. But are not always traded. As an iceberger advances level
by level he trades more and more of the time. Icebergs include fast (rocket) and
moderate paced trends. Icebergers enter after the FBO period. The number 13 in the
MACD indicator assures this. Making the slow line
on the fast stochastic pass out side the 20/80 band
further helps to assure we are past FBO. Requiring a
minimum money velocity at the inception of the first
trend of the day, assures that the physics concept of
momentum is at play. The design of MACD as a 5,
13, 6 configuration assures the above and one other
significant consideration: preventing indicator
bridging. The original designer defaults were done
before PC’s and the advent of PC’s significantly
affected market operations. This shift caused most
indicators to bridge.
Icebergers are kept in trades until there is no trend.
The fast stochastic anticipates the right channel line
BO. This happens at Point 1 of the successor
channel, which is found inside the existing trend
I have done the illustration in a manner that
icebergers can see how rocketeers are trading as
well. There are four levels of iceberging. Each
includes more risk and more profits.
The four levels of Icebergers exist.
Level I is like rocket trading but the exit is later. Entry is the same at point B when
rocket criteria is met. This allows the Level I to harvest money after he rocket has
slowed to a moderate pace from fast pace. In the illustration the rocket exits at C and the
level I exists at E. In this example the Level I stands more risk and, in this case, makes
less money. The chances are, however, more money will be made, usually. The exit is at
the point where the fast stochastic lines come out the other side of the 20/80 tape. Longer
trades separate iceberger level I’s from Rocketeers.
Level II traders enter on the fast stochastic. The entry is earlier than the slow stochastic.
The 5, 2, 3 of the fast stochastic compared to the 14, 1, 3 slow stochastic causes two
major changes. The front end (entry) is flashier meaning sooner entries. This stretches
the trade. We save the second characteristic for levels III and IV. The remainder of the
Level II duplicates Level I. The same exit is used on the slow stochastic. This lengthens
the trades further.
For levels III and IV, the entry/exit modus is discontinued in favor of continuous trading.
This is to prepare pictures at low risk for SCT. Two stages are required for the transition.
Level III begins the process by simply changing the exit of level II to a reversal. This is a
natural occurrence. The exit of level II actually qualifies as an entry on level II. We
begin to allow this after the level II trading has generated profits and the trader has
accommodated a higher money velocity in his NLP pictures. He is looking forward to
taking on more trades. He recognizes the connection between the exit and the fact that
the exit is an entry in the opposite direction. This is an AHA event. So right off in level
III there are twice the opportunities of level II and no more risk. The daily money
velocity puts the trader at double he experienced on level II and far beyond rocket
trading. He is getting used to doubling his performance in a specific market on one
contract.
Level IV deals with optimizing reversals. The level III reversal is late compared to the
trading cycle; so is the entry to minimize risk of FBO. Level IV traders are ready to
enhance their NLP pictures by adding optimization as a picture that is part of trading.
The 50% neutral line of the relativistic fast stochastic is deployed here to cause the shift
of timing to go to neutral. When the stochastic comes off the 20 or 80 it only means the
trend is slowing. Crossing the 50% is the indication that the trend ended. Going past the
50% gaining momentum is the signal of a reversal of trend. It means that the new trend is
possible but subject to failure. If failure to form a trend occurs the lines converge and do
not make it out of the other side. Level IV trades take on the risk of reversing at the
advent of the 50% crossover with divergence. Increasing momentum carries the reversal
into an opposite trend and the money velocity continues. More money is made at the end
of the trade and more money is made at the beginning of the next trade.
This increase on money velocity is the final stage before SCT except one. The traders
now have a lot of idle capital. He has tripled his initial capital as a beginner. He has
removed the initial capital. Going through the stages of iceberging has been more
effective than the beginner effort. He is well over six times up on his initial capital
As a mentor I temper the process of iceberging by adding contracts as warranted. It is
good to add one contract by level II. When reversal trading begins there is a pause at 2
contracts, then 2 more are added and then 1 more. At level IV it is easy to handle
doubling contracts after a pause. This puts the intermediate trader at 10 contracts and
making on a per contract basis quadruple the initial money velocity.
Money velocity of accounts is the standard of measure not points per day. The trader
learns his NLP money velocity pictures by changing contract levels. Most traders do not
even plan on increased money velocity from increasing trading skills. We learn this part
first and add the second part of money velocity pictures by adding more contracts when
the trading method is set in concrete.
We are prepared for SCT where performance is measured after money velocity. This is
where the measurement is a combined measure of what the market offers and what the
trader extracts. On both sides the efficiency is high and the combination is manifold.
Trade descriptions
Level IV enters on 50% crossover with divergence of the fast stochastic lines. See A.
This is earlier and higher risk. Level I’s enter as do racketeers. Levels II and III enter
using the rocket rules on the fast stochastic (5, 2, 3).
Levels I and II exit at E when the fast stochastic comes out the other side of the 20/80.
Level II’s reverse at E into a long trade. Level IV’s reverse at D on the 50% where lines
are divergent.
Point x shows a successful 50% cross over with divergence that fails. This affects only
level IV’s; they go long on the divergence and reverse back into short as the divergence
fails (convergence and x=over sequence). See FR.
For comparison, rocketeers enter on B and exit on C. They see the trend begin and then
the indicators fall in place. MACD, then volume, then fast and slow line of the slow
stochastic. Entry at 1046.3. The stochastic “entwines” until C. Exit at about 1040.2.
Profit 6.1 less costs
EXECUTION
The following text is oriented to execution. Execution has four parts:
1. Data Gathering to assure you have considered all factors and to assure you have
associated the go/no go criteria with each and every factor. This absolutely
destroys the NLP picture of using signals to trade; concurrently it builds the
picture that the total salient market conditions must be considered at all times.
2. Analysis sorts out and combines all aspects of the data set to obtain a “go’ if and
only if, the criteria is met. This is an intellectual process.
3. Decision making. Decisions are based upon beliefs. Intermediate traders build on
their beginner pictures and they still have an awesome difficulty with which to
deal. Their beliefs come from the past and are founded on all segments of their
past lives. The Tony Robbins stuff can create quite a disparity just as parental
Rich Dad, Poor Dad factors can. Parents also convey as “money as religion”
themes of ethics and morals. Intermediates continue to create their personal NLP
pictures for investing and trading. First, this strategy provides repeated
provisional pictures based on rational logic. Repeated success allows the new
provisional pictures to hold more sway in the person’s make up. A process is
unfolding. By setting holistic pervasive criteria for trading rockets, the traders
learns to share responsibility with the market and he learns to not step over the
line and usurp responsibilities accorded only to the market. Pictures infill and
become comprehensive enough to assure a routine of extracting the capital
offered and available form the market. Building wealth is also a part of
intermediate trading. Several stages of increasing money velocity occur as
doublings. This foundation cannot be eroded. Lastly, one final initial picture was
built as a beginner. Initial capital is removed when the beginner has made 120
points in the ES. Now the intermediate has gone through reinvesting the profits as
well by getting to 240 poi9nts over all profit. This is a tripling of the 2000
nominal margin for one contract, the maximum # of contracts tradable in the
beginner mode. It is followed by building up to trading 10 contracts with a
quadrupling of money velocity. This is a new place. Plans must be considered
from this point on as to where to put profits. They will go into the equities
strategies.
4. Action results with entries and exits. Using the results of a decision based upon
the congruence of beliefs and analysis results, causes trading actions. They are
swift and decisive and correct.
A. Data Gathering
Level I
Price: No Criteria
Volume: Use for entry. Band B (10 to 12K) or better.
MACD: Use for entry. The histogram has to show a divergence of = or > than the
absolute value of 0.4. This means, for long trends +0.4 and for short trends -0.4. This
value is an initiating value only. It does not have to be maintained nor does it’s absence
dictate an exit.
Slow Stochastic (14, 1, 3): Use for entry Fast and slow lines out side the 20/80.
Variations: use 25/75, use end of bar only measurements. Both variations are higher risk
Fast Stochastic (5, 2, 3): Use for Exit. Lines emerge from other side of 20/80.
Other Formations: Any prior formations may exist. Rockets form channels; use the
channel report to carry out any of all the channel possibilities.
Level II
Price: No Criteria
Volume: Use for entry. Band B (10 to 12K) or better.
MACD: Use for entry. The histogram has to show a divergence of = or > than the
absolute value of 0.4. This means, for long trends +0.4 and for short trends -0.4. This
value is an initiating value only. It does not have to be maintained nor does it’s absence
dictate an exit.
Fast Stochastic (5, 2, 3): Use for entry Fast and slow lines out side the 20/80.
Variations: use 25/75, use end of bar only measurements. Both variations are higher risk
Use for Exit. Lines emerge from other side of 20/80.
Other Formations: Any prior formations may exist. Rockets form channels; use the
channel report to carry out any of all the channel possibilities.
Level III
Price: No Criteria
Volume: Use for entry. Band B (10 to 12K) or better.
MACD: Use for entry. The histogram has to show a divergence of = or > than the
absolute value of 0.4. This means, for long trends +0.4 and for short trends -0.4. This
value is an initiating value only. It does not have to be maintained nor does it’s absence
dictate an exit.
Fast Stochastic (5, 2, 3): Use for entry Fast and slow lines out side the 20/80.
Variations: use 25/75, use end of bar only measurements. Both variations are higher risk
Use for reversal. Lines emerge from other side of 20/80.
Other Formations: Any prior formations may exist. Rockets form channels; use the
channel report to carry out any of all the channel possibilities.
Level IV
Price: No Criteria
Volume: Use for entry. Band B (10 to 12K) or better.
MACD: Use for entry. The histogram has to show a divergence of = or > than the
absolute value of 0.4. This means, for long trends +0.4 and for short trends -0.4. This
value is an initiating value only. It does not have to be maintained nor does it’s absence
dictate an exit.
Fast Stochastic (5, 2, 3): Use for entry Fast and slow lines out side the 20/80.
Variations: use 25/75, use end of bar only measurements. Both variations are higher risk
Use for reversal. The lines approach and begin to go through the 50% They also are
diverging. Reverse at this point.
Other Formations: Any prior formations may exist. Rockets form channels; use the
channel report to carry out any of all the channel possibilities.
B. Analysis
KEY ELEMENT: All criteria of data gathering must be met. They are achieved in
a sequence that is not predetermined. The last one arriving in time gates the
decision and action for entry.
Monitoring continues. During monitoring the exit is determined by the fast stochastic.
The least risk exit/reversal occurs when the fast line meets the criteria of the level.
Variations: use end of bar measurements.
C. NLP Decision Making
A “go” from analysis is reinforced by NLP pictures saying that rockets are valid for
making money using the entry and exit rules. The market provides the circumstance
through measurements of indicators.
Action
Intermediates: Confirm your iceberg entry and determine that the iceberg is now
operating at low risk. Exit or reverse when action is required.
SCT. Follow SCT rules by superceding intermediate rules.