May 2003

We found a great free voice communication program that you should download and install.   Ventri1o is used by traders to talk to each other using their computer's microphone and speakers.  This article will describe how to download, install and use Ventri1o.

Note:   If you have the older Ventri1o 2.1 or 2.2 installed, use the Windows Control Panel to uninstall Ventri1o before installing the newer 2.3 version.  The older versions will not work with the Ventri1o server that Ensign uses.

Installation
Click on this link to download Ventri1o:     Ventri1o 2.3

The link takes you to the Ventri1o web site.  Click the Download button for the Clients, Windows i386 - 32bit selection.  The version is 2.3.0.

Click the button to Run the program from the web site.   The download is 1.9 Meg.  Upon completion of the download the installation of Ventri1o will commence.   Accept all defaults for the installation.   

Find Ventri1o on your Windows Start menu.  You can run the program from the Start menu, or right mouse click on the menu and create a shortcut.  Then drag the shortcut from the menu to your desktop.

SetUp
Run the Ventri1o program by clicking on the Ventri1o icon on your desktop or by finding Ventri1o on your Windows Start menu.   After Ventri1o runs, click the small square button to the right of the User Name entry.

On the form that shows, click the New button and enter a nickname to be known by.  Click the OK buttons to close the forms.

Now click the small square button to the right of the Server entry.  The following from will be displayed.   Click the New button and enter Ensign Software as the name for the server.  Click the OK button.   

Enter the Hostname or IP and Port number as shown in the picture.   Use this password:   enspwd123

Click the OK button to close the Connection Editor form.

Click on the SetUp button on the Ventri1o form.  It is very important that you check the Use Push-To-Talk Hotkey checkbox.  Uncheck the Play Key Clicks checkbox.  Click in the edit box by the Hotkey label.  Then press the keyboard key you want to use to activate the microphone.  The right side CTRL key is recommended.  

Some users have had problems getting their microphone to work.  They returned to the Setup form and changed the Mux drop down selection to Record Control, and the Line drop down selection to Microphone.  This might help you if your microphone does not work.

Click on the Events tab and change all of the drop down box settings to 'Nothing'.  Then click the OK button to close the form.

Connect
Click the Connect button on the Ventri1o form.  You will be in the lobby which looks like this example.

Rooms are available and show as names by the blue and red plus signs.   You can go into a room by double clicking on the name of the room in the list.    You can return to the lobby by double clicking on the name of the room a 2nd time.  This 2nd double click on the room name exits the room you joined.  The rooms with a red plus sign require a password.  The Ventri1o passwords will be the same passwords that are used in the Ensign Chat rooms.

The form shows other members in the room.   Hold down the keyboard key you assigned to activate your microphone.  The green speaker icon by a nickname indicates who is talking.  Talk into your microphone and everyone in the Ventri1o chat room will hear you.

Ventri1o does not need to have focus in order for it to be used.  Just hold down the key assigned to activate the microphone and talk.  The Ventri1o form can be behind another application such as EChat2, or it can be minimized.  Ventri1o has excellent voice quality and is free of annoying pop-up ads.

Ventri1o makes a great companion program to use with EChat2.   Use EChat for a text transcript and to view chart images.  Use Ventri1o to add voice.  We hope you will use and enjoy both EChat2 and Ventri1o.  Together they make a great way to be in touch with other traders.

Note:  Microsoft's DirectX product is an essential OS upgrade required to install Ventri1o 2.3.  The only source for dinput8.dll (and possibly other files) which is required for Ventri1o 2.3 to run is MS DirectX 9.0 (or better).

Ensign Software uses EChat2 and Ventri1o to provide customer support and training.  This is a fantastic cost free alternative to making a telephone call to Ensign's support staff.

Speakonia is a free text-to-speech program that will automatically say any text that is copied to the Windows clipboard.  A computerized voice can be heard through the computer speakers, reading the text.   Download Speakonia (free) from this web site:  http://www.cfs-technologies.com/home/?id=1.4.

Speakonia is a great companion program for the Ensign Windows chat room or with EChat2.   The Ensign chat room has a Read checkbox that when checked will copy the arriving transcript text to the clipboard.  Thus, by running Speakonia and checking the Read checkbox in the chat room, the transcript will be spoken.

In Speakonia, click the menu Tools.  Check the Enable Clipboard Reading menu.   When selected, the Enable Clipboard Reading menu will show a depressed square to the left.

Speakonia can also be used for more purposes than just reading the chat room transcript.   Ensign Windows has a command in its ESPL language named  'Clipboard' .  This command allows the ESPL language to copy text to the clipboard.  When combined with the speech program, some interesting possibilities were opened up.  ESPL can now be used to copy changing Prices from a chart to the clipboard.  This enables your computer to say the price as the symbol trades.  ESPL can also be used to copy the News Title to the clipboard.  This enables your computer to read the News Title Line to you, when a News Alert is triggered.  The following ESPL program (below) shows an example of both of these capabilities.  The syntax of the  'Clipboard'  command is also documented. 

In our opinion, the reading voice of Speakonia is excellent quality and easy to understand.  This great little program will read the content of the Windows Clipboard whenever the content changes.   Ensign Windows can use Speakonia to implement a talking quote machine with the following ESPL examples.   Another use would be to have Ensign Windows read News Titles when a News Alert is triggered. 

Clipboard

procedure Clipboard(Text :string);

The Clipboard command is used to copy Text to the Windows clipboard.  The Text can then be pasted into another application or window.  Some customers use this feature to enable the computer to talk to them.  Use the Speakonia program to automatically say whatever is copied to the clipboard.  For example, news alert titles can be copied to the clipboard.  The computer would read and say the news title line.

Example:  The following example copies the price of a symbol to the clipboard.  Each time the price changes on a chart, the computer will say the price.  Click the 'Studies' button, and then click ESPL button 1 (who=51) to apply the study to the active chart.  The program below also allows news story title alerts to be read.  Click button 1 in the ESPL script editor window to activate the news reader.  Click button 2 to stop the news reader.  Set news alerts in Ensign Windows to trigger the title lines to be read.

Example 1:  Call out the current chart price.   Select button #1 on the Study panel to add the feature to a chart.
Example 2:  Read the News Title for titles that trigger a News alert on the News form.

{-- Main Program --}
begin
  if ESPL=1 then AlertEvent(eNews,69); // Enable  News Title Alert Event
  if ESPL=2 then AlertEvent(eNews,0);  // Disable News Title Alert Event
  if ESPL=51 then SayChartPrice;       // Call out the current chart price
  if ESPL=69 then Clipboard(IT);       // Speak the news title
end;

Let me start out by saying that there are almost as many ways of using stops as there are trading methods.  In my opinion it is the most personal part of your trading system.  Each trader needs to determine which method they want to use for stops and still be within their own comfort zone.  If you are outside your comfort zone, then emotions are in position to take over and you will lose the focus you need to manage the trade correctly.

You should never enter a trade without having a predetermined place at which you will cut your losses.  Yes, you will get stopped out only to watch price take off like you thought it would, but that is part of the game we are playing.  If fact, if you do not have the right mindset for taking a loss, it will hinder you from becoming a good trader.  Getting upset over it only takes away from you ability to focus on what the market is telling you.

Many traders also feel that getting stopped out is a loss.  It really isn’t.  In fact, you have won.  By being stopped out, you have won most of your money back.  Preservation of capital is so important to be able to continue to play this game.  You also have the ability to reenter if price does eventually go the way you thought it would.  Lastly, you have eliminated the frustration of not being disciplined by getting out when your predefined stop hit.  One of the signs of a successful trader is having small losses and not huge ones.  Think of that the next time you do not exit immediately and without hesitation when your stop is hit.  Losing properly requires skill, discipline and maturity as a trader.  Some say a stop is like insurance.  A trade without a stop is a gamble.

As a trader, you need to ask yourself if you are going to use the same time frame for signals, entries and exits or go to a lower time frame for the entries and /or exits.  This is a common practice but hard for beginning traders to do as they tend to focus on the lower time frame instead of waiting for the signal to setup on the main time frame.  Once you have learned to do it though, it should improve your results.

One of the most common ways to determine your stop loss is to use the preceding price bar or the price bar you were filled on.  Which one is used is nothing more than a matter of traders preference.

If you are entering a long above the high of the previous bar you may:

1. Use the prior bar stop – place an initial stop 1 or 2 ticks below the previous bar’s low.

2. Use the current bar stop – place an initial stop 1 or 2 ticks below the current bar.

Some traders use a combination of both by normally using the prior bar, and then if the risk is too high for their rules, instead of passing on the trade, seeing if the current bar method brings the risk back into range for their trading rules.

Using this method for when price is in a trading range:

The stop can either be at the low of the range when long, high of the range if short.  Or if risk is too high then the High/Low (H/L) of the breakout bar can be used.

Another problem can be created by runaway price creating a long bar when you are in the trade and using the H/L of the bar would be giving a lot back to the market.  For this situation, I still use what Mike Bruns taught, which is not to let price get more than 2 points away from your stop.  This assures you of locking in profits while still giving it some room.

Those of you who use Fibonacci levels might use price targets to exit with.  

This excellent chart posted by Scorp shows two measured moves (blue lines).  Marking measured moves shows how price moves the same distance after pausing.  This chart also shows how Fibonacci projection of 127% worked again.  A measured move is when price moves up or down then pauses either with retracement or sideways consolidation and then takes off again in the same direction.  The first move up or down more often than not matches the second move up or down.

The Ensign Windows draw tool used for the measured move in the example is the Formations tool.  On the tool's property window check the first three lines, and have the C-D leg parameter set at 100 so it is drawn at 100% of the size of the A-B leg.  You draw three points, A, B, C and the tool will measure the leg from C to D.

Q:  On your first chart, do exit once the stop price is hit or when the 2min candle is complete which close at or beyond the stop level? Remember, these candles are changing dynamically.

A:  I personally do not wait for the bar to complete, but then I am not trading off of the 2 minute chart.  If the low of the prior bar is my stop then I am out.

Q:  What’s a hard stop?

A:  A stop that is actually entered with the broker is a hard stop.  It isn’t mental.  Until you can trust yourself to execute a mental stop without hesitation, I recommend you use hard stops.   A hard stop is great to have when the power goes down

Price target can also be done with price patterns.  Some examples are head and shoulders, triangle, and wedge,

This chart shows how to project a target from a head and shoulders price pattern.  Many price patterns have their own rules for projecting price targets.

Other traders use stops to determine when to exit a trade.  We will mention many of them but I am also sure there are many more out there with new ways being devised all the time.  Some prefer to use trailing stops.  In my opinion, for this to work well, you need to find a "smooth" chart.  By this I mean where most of the bars in an up trend have higher highs – HH – and higher lows – HL.  This will help prevent you from getting stopped out on small price movements within the trend.  Which chart is "smooth" can change during the course of the trading day.

Once you determine this, it is now possible to use the prior bar or two bars ago H/L as a place to put your stop.  If the prior bar, you may want to add a tick or two if the trend is strong.  You can also use a larger stop in trailing price.

Another technique is to drop to a lower time frame and put a Simple Moving Average (SMA) on the highs and another one on the lows.  The chart example uses a 5 period SMA on each.

The upper red line which is a 5 SMA of the highs would be used as a stop for a short.  The lower blue line which is a 5 SMA of the lows would be used as a stop for a long position.

Another method is to use the last swing high for shorts and last swing low for longs.  The following chart gives an example of using last swing highs for a short.

Many charting programs have a study called Parabolic Stop. This chart shows an example.

A big volume spike is reason enough for some to exit as this happens when there are traders taking their profits because they feel the move is over and other traders are buying to play the price movement in the other direction.  For many traders, the candlestick pattern gives them the signal to exit.  These reversal patterns can be found at http://www.litwick.com/ under glossary.

Another effective stop method is the high/low stop, which much of the time is the last swing high/low but tightens on a longer move.  The High/Low stop is the highest high or the lowest low of the last N bars, plus or minus a slack offset.  The slack is added to the high of the last N bars, or subtracted from the low of the last N bars.   The best slack value to use can be determined by back testing.   A value to use for N would be in the 3 to 5 bar range.

As you can see, there are many strategies out there.  Find one that is in your comfort zone to use consistently and your trading results should improve.