I thought I’d share how I apply the PITCHFORK in reality… I think you’ve seen me talk about my swing trades recently on the VXX as the market has pulled back… I’ve anchored my trade entries around the pitchfork that was setting up on the Daily chart – with entry AFTER the pitchfork setup on the HOURLY chart…
1. First thing when I saw the W / D / H charts, I knew I wanted to find a long entry.
2. I wanted an option that I was comfortable swing trading – I decided to look under the MARCH monthly table. Each of my 3 trades was just ATM or one strike OTM – no heroics. Each was a MAR ___ Call… The first was the $18 call that I held until price jumped up off the 8 ema – and the value exceeded 100%… The second was the $19 Call – managed the same way… The third is outlined on Google Group under Swing Trades – and was the $23…
3. Once the price action met my criteria on the higher time frames – M chart had divergence and wanted to go my way… D Chart – setup on Dec 1st with a double bottom and strong divergence – the first entry cross was on the Hourly chart below that Daily…. Once these pieces were in place – I was free to enter / exit / manage each trade on the Hourly chart….. This is where the PITCHFORK became my friend…
4. Occasionally I’d look below the Hourly —- but only for clarity not for entry…. These were swing trades and I wanted to make sure I had solid support on the hourly chart… I didn’t rely on overnight information – my confirmation was the inverse pattern on SPY only – no need for futures charts…. Just the 3 Grid you see attached and assurance that the SPY was inverse.. Hourly chart is also attached….
5. Once the VXX began to move – I simply waited for the next intersection of the moving averages to decide “go or don’t go” —- very methodical… You’ll notice on trade 2 – it didn’t make much difference if the entrance was the interaction of the moving averages – or the pull back the following day…. This is why I often start with just a small position and add if the opportunity arises…. Trade 3 – was just predicated on re-entering on the first possible continuation opportunity (hence price pulling back to the 50 sam)….
6. Now each trade paid over 100% – hence why I exited as price extended well beyond the 8 ema —— off the 8 – back to the 8 —- while I was in MARCH options – I decided not to live thru the pull backs… It’s an idiosyncrasy of mine – it may or may not be contagious – you might or might not contract it…. I netted – just over 400% total from the 3 trades…. When I reviewed prior to sharing this – had I retained my original entry and just held on —- I’d have been at about the same point today at the high – if you factor in the slightly lower fees of just one trade….. So you’ll have to test what works best for you….
I hope this detail helps – and that you use the PITCHFORK to help you recognize that there COULD be a POTENTIAL trade setup —- you’re challenge is to confirm that there is / can you find – afford an appropriate option / if you get a clear “go” – what time frame will you use to finesse your actual entry….
Thank you for sharing the PITCHFORK script Eminimom — careful everyone – there are a lot of scripts out there that might not be working correctly or add any clarity to your trading —– make sure you test any that you upload – and please remember that SIMPLE is usually better…. Keep it Simple!
- This reply was modified 5 years, 2 months ago by sueZmacD.