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Trading the SLA/AMT Intraday


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Trading the SLA/AMT Intraday

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  #1 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012



For an explanation of what this is, click SLA/AMT

End of Market



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 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012





 
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 DbPhoenix 
Phoenix AZ
 
 
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 DbPhoenix 
Phoenix AZ
 
 
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 DbPhoenix 
Phoenix AZ
 
 
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 supermht 
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Welcome DB, followed you on ET and TL. Hope to learn more from you here

 
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  #8 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

There's virtually no interest in this, but I'll try to update it once a week.

 
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 gregid 
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DbPhoenix View Post
There's virtually no interest in this, but I'll try to update it once a week.

Lack of interest comes from lack of understanding. I admit first time I had seen your original post I've missed the link to Traders Lab with those 2 pdfs. So looking at the thread at first I thought: "great a guy posts chart screenshots with trendlines/SR lines"

Wish your thread good luck but advise you add a bit of narration anyway

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 DbPhoenix 
Phoenix AZ
 
 
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The charts are pretty much self-explanatory to those who've read the SLA/AMT. But I posted the following to ET a while ago for those who were new to the whole idea:

Given that Saturday was given over to an influx of Piranhas, Trolls, and Trolls-In-Training, I have to back up a bit to return to business, which is deciding what to do this afternoon when the market re-opens.

So far, none of the trolls have offered any opinions on what should be done when the curtain rises. This may be the result -- or cause -- of a question that was asked earlier: "Don't you people ever tire of yesterday's news?" The answer, to a price action trader, is, of course, no, as yesterday's news and the news of all the days preceding yesterday (or, technically, Friday) provide the context for the upcoming session. Some traders prefer to wait until the market opens before they assess the situation and then trade by feel, in "real time". What they miss is that in the market there is no "real time". By the time that "real time" trade is noticed, much less posted, it's already in the past. In the market, as in life, there is the past and there is the future; there is no "now". Therefore, if one wants to make the most of the upcoming session, it is wise to prepare.

For example, here is Thursday's chart:



Notice that while the weekly trend is up, the daily trend is down. And it is down in a channel, which is common among mean-reverting instruments. Notice also that it reversed off the upper limit of the channel three days previous.

Here is Friday's chart:



In a mean-reverting instrument, price will gravitate toward the median of the channel that is created by traders as they move away from that median, i.e., the "value area", the level or zone where the bulk of trades take place within a narrow range of prices. Without knowing anything about "yesterday", a move such as this comes as a complete surprise, and those who trade by "feel" often end up on the wrong side of the trend. They are the buyers who are taking what the sellers have to sell on the way down.

For convenience' sake, this is a copy of the chart I posted two up. You can see that we are at a juncture here. Will price bounce off that juncture? Or will it plunge through and make its way toward the lower limit of the daily trend channel?



Astute price-action traders will note that we were involved in the same conundrum a few months ago: price dropped to the median of the weekly channel and seemed to hold there for weeks on end. However, if one provides the additional context of the daily channel, price held at that particular juncture for only 4-5 days:



And rather than make it all the way to the bottom of the daily channel, price instead rallied up to and through the upper limit of the daily channel all the way to the upper limit of the weekly channel. Will this happen again? Maybe. Maybe not. The PA trader doesn't care one way or the other; he goes where price leads. Which is where the range comes in.

Here is where we are now:



The range represents traders' search for equilibrium, or a balance between supply and demand. The juncture of the median of the daily channel at about 42 and the median of the weekly channel at about 37 adds drama to this, but what is more important is what traders are doing at this level in this timeframe (9 hrs). At noon they were hovering around 45. They then tested the waters at 50 and 30, coming back to 45, settling in at 47 just before the exchanges pulled the plug.

Though this is an embryonic range, there's enough information here to provide at least a preliminary assessment of what traders have in mind. A lot has happened since Friday afternoon, though, so the PA trader must be nimble. But if price settles into this 30-50 range when the market re-opens in a few hours, there are only two options available to the PA trader: buy long or sell short:



And that's really all there is to it: context, preparation, execution. If one ignores the context and doesn't prepare, his execution may not be quite what he imagined it would be.

There are three kinds of men. The one who learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.

Those who have just tuned in and are interested in this subject might find The Foresight Thread informative. These charts whizzed right by those who see no need for context or preparation, but that they are worth doing should be self-evident.

 
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  #11 (permalink)
 gregid 
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DbPhoenix View Post
In a mean-reverting instrument, price will gravitate toward the median of the channel that is created by traders as they move away from that median, i.e., the "value area", the level or zone where the bulk of trades take place within a narrow range of prices.

How do you qualify instrument as mean-reverting? Do you rely on common knowledge, statistics, your discretionary assessment?

Keep up the good work!

 
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  #12 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

About the SLA/AMT.

I didn't realize that I could upload it here (the max at ET is 2megs).

So, here it is:



I'm also uploading the sections in Wyckoff's course on "The Law of Supply and Demand" and "Judging the Market By Its Own Action" as these are critical to understanding and implementing the SLA/AMT.

And, finally, I'm uploading Section 7 of Wyckoff's course in which he analyzes a year in the life of the stock market, almost day by day, for those who get hooked on this PA stuff and would like additional practice with the guy who pretty much invented the approach.

Attached Thumbnails
Trading the SLA/AMT Intraday-sla-amtf.pdf   Trading the SLA/AMT Intraday-law-supply-demand.pdf   Trading the SLA/AMT Intraday-judging-mkt-its-own-action.pdf   Trading the SLA/AMT Intraday-wyckoff-analysis-1930-31.pdf  
 
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  #13 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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gregid View Post
How do you qualify instrument as mean-reverting? Do you rely on common knowledge, statistics, your discretionary assessment?

Keep up the good work!

We cross-posted, and I just uploaded the SLA/AMT pdf.

In a nutshell, the prices in a mean-reverting instrument cluster around a mean (actually, a median, but "mean-reverting" has become the common usage, so . . .), all of this having to do with the auction market and how demand and supply interact to reach "equilibrium", or a generally agreed-upon price. I'll post the weekly trend chart from two weeks ago as an illustration.




If you read the pdf, particularly Appendix E, that should explain the basics.

 
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 Nicolas11 
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Hi, DbPhoenix.

It's nice to be able to read you here. Your work is a source of inspiration, at least for me!

Nicolas

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 DbPhoenix 
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Nicolas11 View Post
Hi, DbPhoenix.

It's nice to be able to read you here. Your work is a source of inspiration, at least for me!

Nicolas

Well that's good to know. The going is rough for PA traders on other sites.

 
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 Nicolas11 
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There is lot of effort here on futures.io (formerly BMT) to keep a constructive and positive environment.

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 damnpenguins 
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DbPhoenix View Post
Well that's good to know. The going is rough for PA traders on other sites.

@DbPhoenix - it might be worth switching over to futures.io (formerly BMT) for a while to avoid the trolls... I read the thread before Magna cleared things up. It was deplorable.

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 DbPhoenix 
Phoenix AZ
 
 
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I wouldn't be posting there at all if it weren't for that stupid thread. But even though the "professionals" don't understand it (which says plenty right there), people do benefit from it; they're just afraid to post anything about it, which is unfathomable. I do understand that these interminable dogfights lead to page views and clicks, but, if that's the primary goal, why moderate at all?

Oh, well At least the SLA is done, and it will be around far longer than I will.

 
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 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

I realize that most of those who view these posts are doing so out of curiosity, but I may as well follow the above trade until it's done.

Note how price tests and bounces off the median of the range formed after the market re-opened.


 
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 supermht 
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today's pre market range is 4360-4377

 
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  #21 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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supermht View Post
today's pre market range is 4360-4377

I'd go with 73 and treat the spike as an outlier. There generally aren't enough transactions in a spike to matter. It's more psychological.

 
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  #22 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

See what I mean about 73?



Does this count as a "call"? (private joke)

 
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  #23 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


 
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 DbPhoenix 
Phoenix AZ
 
 
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 DbPhoenix 
Phoenix AZ
 
 
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 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

A near-perfect example of a breakout and a retracement. They are not all this clean, but this is what you should have in mind when you're trying to decide in real time the probabilities of your trade being successful. In a case like this, there's nothing to think about.



And whether it ultimately fails or not, you still have your 5+ points.

 
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 wilson619 
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@DbPhoenix

Would a valid buy entry also be on the break of the supply line (1200-1300) and subsequent retracement ( failure ), that is above the bar that created the peak of that retracement? There were several channels and "fanned" demand lines unbroken and all above their medians?
Very interesting thread, I've just started watching your SLA on the 5 min/15/Daily TF. Thank you for sharing and glad you're here at BM. I haven't been able to tolerate EliteTrader for quite some time.

Wilson

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 DbPhoenix 
Phoenix AZ
 
 
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wilson619 View Post
@DbPhoenix

Would a valid buy entry also be on the break of the supply line (1200-1300) and subsequent retracement ( failure ), that is above the bar that created the peak of that retracement? There were several channels and "fanned" demand lines unbroken and all above their medians?
Very interesting thread, I've just started watching your SLA on the 5 min/15/Daily TF. Thank you for sharing and glad you're here at BM. I haven't been able to tolerate EliteTrader for quite some time.

Wilson

Somebody's been studying

The purpose of this simple and uncluttered chart was to show how elegant a retracement after a breakout can be, as if the market is shoving money into your hands. However, there is a lot more to this for one who shorted the reversal at 42 at the open.

If one enters the reversal/rejection, he's in long before the retracement, if there ever is one, which is the point of reversal trading anyway. If one draws a supply line, it's broken just after the HL at about 22-23. But if one is trading a 5m chart, there's no retracement before price reaches the upper limit of the range again, which is where 1m charts come in so handy when trading ranges. Of course, if one doesn't like trading ranges, it's a moot point, but learning to do so can be rewarding if the range is wide enough to be profitable.

 
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 wilson619 
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Still reading @DbPhoenix , but here's the 5 minute (TF) chart I was looking at. What I focused on was not so much the ranging, but more the inside upward channels created by the buyers. So I guess this would constitute a continuation entry?

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 DbPhoenix 
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Still reading @DbPhoenix , but here's the 5 minute (TF) chart I was looking at. What I focused on was not so much the ranging, but more the inside upward channels created by the buyers. So I guess this would constitute a continuation entry?

WAAAAAAAYYYYYY too many lines. WAY.

You need only one. Do you know which one that is?

(You don't have it drawn, but can you figure it out?)

 
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  #31 (permalink)
 wilson619 
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Well I guess you're referring to the entry to the last swing demand line not drawn. I've used one chart for all time frames, so there are Daily, 15minute and 5min lines shown... convenience. I just changed the periodicity on this same chart. According to your instructions there should only be a demand line(s) (and fans), but there's also a range and coil (2 lines each). Just tracking supply and demand without erasing the lines. Works for me cause I need practice identifying all the areas where buyers and sellers are active, at least in the beginning

 
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 DbPhoenix 
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wilson619 View Post
Well I guess you're referring to the entry to the last swing demand line not drawn. I've used one chart for all time frames, so there are Daily, 15minute and 5min lines shown... convenience. I just changed the periodicity on this same chart. According to your instructions there should only be a demand line(s) (and fans), but there's also a range and coil (2 lines each). Just tracking supply and demand without erasing the lines. Works for me cause I need practice identifying all the areas where buyers and sellers are active, at least in the beginning

Well, no. But perhaps you haven't got to the AMT part yet.

What you want to focus on is implied by "2. When price takes off in one direction or the other, wait for a retracement", as all trends begin with ranges, and expressed in the AMT section by "first, find a range, preferably one with an easily determinable upper and lower limit." Once you've finished both sections, the SLA and AMT, this should all become clearer.

In the meantime, as the suspense is palpable, you again don't need any of the lines you've drawn. All you need is one, at 1264.5. Granted the lower limit of this is crap, but you could serve lunch on 1264.5. Aside from the fact that this level is repeatedly tested, the nature of the break just a few minutes before 1200 tells you this is important. They're not futzing around here. They're running for daylight. And when they back up to pick up those passengers they left behind, they do so at 1264.5. All this confirms that you have a winner on your hands. For six points anyway. Which may not seem like much (I have no idea where this eventually went), but having confidence in the trade enables you to trade size, which is where the money is.

Don't trade lines. Trade price. Try to see where demand and supply interact to hand off the ball to each other. See where the blockades are. Look at pace and activity and extent. The lines are there only to keep you on the path. If you're focused on them instead, your trades will be gone before you even know they were there.

 
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 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

Regarding the above post, I provided a link to The Foresight Thread in post #10, but it's a long post and the link is easily missed, so I've provided it again. I can't guarantee that it will be helpful, but at least it demonstrates how to approach the day.

 
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 wilson619 
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Thanks for the link @DbPhoenix, I did see it and planned to spend some time on it this weekend. Here's my take on SLA/AMT for TF this morning. Comments welcome. The 60 min chart of course was key demand/supply.

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 DbPhoenix 
Phoenix AZ
 
 
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wilson619 View Post
Thanks for the link @DbPhoenix, I did see it and planned to spend some time on it this weekend. Here's my take on SLA/AMT for TF this morning. Comments welcome.

Yep, a lot less clutter. Use only what you need. And clearly you're in a big middle. I haven't characterized this market, but your choices are limited: trade reversals off the limits or enter upside or downside breakouts. If you don't like trading reversals, then I hope you have a good book at hand because you have nothing else to do but wait.

 
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 Nicolas11 
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Hi @DbPhoenix,

If I may, two questions...

The first is embedded in the enclosed pic.

Second: even if the thread is clearly entitled "intraday", would you allow daily charts to be posted by followers?

Thanks in advance,

Nicolas


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  #37 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Nicolas11 View Post
Hi @DbPhoenix,

If I may, two questions...

The first is embedded in the enclosed pic.

Second: even if the thread is clearly entitled "intraday", would you allow daily charts to be posted by followers?

Thanks in advance,

Nicolas


As to your first question, if you were following lines only without regard for context, and some people need to do that then, yes, it could be a long entry. But remember that the lines are merely an aid to following price, not the other way around. One won't damage himself by just following the lines. Here, for example, a long entry would be exited almost immediately.

However, once one becomes sensitive to price movement, he'll see that price has made a lower high and a lower low, and there's nothing in the daily chart to suggest a climax. And although price does "break" the line, it does so casually, showing no inclination to reverse but rather to move sideways. Compare this to the next break, eleven bars later. This one is far more forceful and more likely to prompt an exit than the previous one.

There are only three strategies but a limitless number of tactical sets. What tactics one employs depend on a number of criteria, one of which is fear. If one chooses to exit immediately when a line is broken, there's nothing to stop him from doing so. But, after a while, one learns that not all breaks are created equal. Some breaks precede a sideways movement that can last for minutes or hours. Others are the result of price taking off in the opposite direction. Some go quite far. Some sputter out quickly.

The fact is that even in downtrends -- in this case -- the countermoves can be pretty damaging, and to hang on just because one "believes" that the downtrend will reassert itself eventually is not a wise course to follow. To exit a position just because price appears to be reversing but doesn't actually get anywhere is annoying, but that's it. As long as one remains calm and sees that price can't get more than halfway back through this downmove, he can if he chooses to do so enter another short at about the same level that he exited the first one, no harm done.

I would suggest to someone who's become afraid to take legitimate trades to exit this immediately at the break of the first line. If he decides to go long and his long is triggered, he'll be out of it almost immediately, so that's not a problem. The plus is that there are now only two directions price can go: sideways and down. How long it will go sideways is anybody's guess, so I'd suggest a sell stop below this sideways movement. When it triggers, watch it closely until it makes a lower low, at which point the SL can be fanned. When this line is broken, again, exit the trade immediately, though this time with a few points in the bank. Then, instead of assuming that it's all over, watch to see how far price can rally. If it can't rally more than halfway, try another short.

It's all a matter of watching price, not lines. One could make all of these decisions without having drawn any lines at all. However, many traders just can't follow price without some sort of visual aid. They get lost. Like a whiteout. And they can no longer distinguish between up and down, and end up trading tiny little trends and making tiny little profits and tiny little losses and racking up big commissions. If nothing else, these lines may help the trader to assume and maintain an attitude of calm that will enable him to assess price movement and potential trading opportunities rather than struggle with a perpetual state of anxiety and fear.

As for your second question, daily charts are fine. However, in order to become something other than a theoretical exercise, one who trades these charts must be very clear about how and where and when he's going to enter these charts and how much risk he's willing to assume with regard to recoil. We all like to see price plunge the instant we transmit our short, but what if it doesn't? How many points is the trader willing to let travel into the red before his bowels loosen? One of the chief advantages of futures is that they trade 24/5, and the trader can place a protective stop anywhere and at any time he chooses. But first he must make that entry, and he must write in detail just what he's going to look for to tell him that he was right and what he's going to look for to tell him he was wrong, then adhere to those criteria without question and without hesitation

 
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  #38 (permalink)
 Gozilla 
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DbPhoenix View Post
There's virtually no interest in this, but I'll try to update it once a week.

I have been following along as best I can and continue to appreciate the effort you are putting into answering the questions regarding the material.

I also agree with @damnpenguins about that thread on ET getting a little out of hand, that kind of behaviour put me off getting involved sooner and opening up a journal when I was looking for somewhere to start documenting my efforts.

Glad to see you posting here.

Gozilla/Gamera.

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  #39 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Gozilla View Post
I have been following along as best I can and continue to appreciate the effort you are putting into answering the questions regarding the material.

I also agree with @damnpenguins about that thread on ET getting a little out of hand, that kind of behaviour put me off getting involved sooner and opening up a journal when I was looking for somewhere to start documenting my efforts.

Glad to see you posting here.

Gozilla/Gamera.

I don't like Ignore lists. They're childish. And they shouldn't be necessary. But they're the only way of negotiating certain sites. I finally gave up the other day and resorted to one, and it does definitely keep one on task. It's not unlike being in a dysfunctional family with a great many small children. There is TL, of course, but it has become a ghost town. If one is looking for a mountain cabin with the nearest neighbor miles away, tho, it may be just the ticket. Otherwise, futures.io (formerly BMT) may be the better choice. Let me know what you decide to do. Without journals, it's really all just a bunch of pseudo-intellectual gurubabble. Note, however, that I'm not an elite member, so if you want my comments, you'll have to open it up in the general population forum. If issues arise, it can always be moved to TL.

 
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  #40 (permalink)
 Gozilla 
Aberdeen, Scotland
 
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DbPhoenix View Post
I don't like Ignore lists. They're childish. And they shouldn't be necessary. But they're the only way of negotiating certain sites. I finally gave up the other day and resorted to one, and it does definitely keep one on task. It's not unlike being in a dysfunctional family with a great many small children. There is TL, of course, but it has become a ghost town. If one is looking for a mountain cabin with the nearest neighbor miles away, tho, it may be just the ticket. Otherwise, futures.io (formerly BMT) may be the better choice. Let me know what you decide to do. Without journals, it's really all just a bunch of pseudo-intellectual gurubabble. Note, however, that I'm not an elite member, so if you want my comments, you'll have to open it up in the general population forum. If issues arise, it can always be moved to TL.

I've been maintaining a journal here for a while now, graph icon bottom left of this post should take you there. (it's not pretty) the exposure to other traders is a bonus even though I largely keep myself to myself as I feel I am not really able to add much to the conversation or offer advice.

I got ahead of myself last time home, so, inspired by lajax I am backtracking back to backtesting and taking my time with it, (I think it is the fastest way forward for me as I am still battling old habits) then forward testing and then if I get as far as sim trading I may look to continue my notes similar to the observation notes I made at TL, but, I will continue to use my journal for reviews, thoughts and ideas.

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  #41 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


Gozilla View Post
I've been maintaining a journal here for a while now, graph icon bottom left of this post should take you there. (it's not pretty) the exposure to other traders is a bonus even though I largely keep myself to myself as I feel I am not really able to add much to the conversation or offer advice.

I got ahead of myself last time home, so inspired by lajax I am backtracking back to backtesting and taking my time with it, (I think it is the fastest way forward for me as I am still battling old habits) then forward testing and then if I get as far as sim trading I may look to continue my notes similar to the observation notes I made at TL, but, I will continue to use my journal for reviews, thoughts and ideas.

Seems you have some interference. Don't know why people do that.

You'll forgive me if I don't read the whole thing. Where should I start?

 
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  #42 (permalink)
 Gozilla 
Aberdeen, Scotland
 
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DbPhoenix View Post
Seems you have some interference. Don't know why people do that.

You'll forgive me if I don't read the whole thing. Where should I start?

Tough to say where a good point to start would be, I first came across the straight line threads in December 2013 and what I was observing up to that point is the reason why those threads made so much sense to me.

Beyond that, I took a break from journaling over the summer and studied the material and charts in more detail and tried to reason with myself as to why I respond to certain emotions live that don't crop up in sim. Over the last couple of months I tweaked how I approach ranges as I was heavily reliant on SLA in range and I have struggled to adapt hence the reason I feel the need to go back a few steps and start again.



It might save time to skim over the charts as some of the posts waffle on for a while, but, for the sake of posterity I try to record anything that might be of interest, the post above was leading onto the change and it might be evident on the charts and the reasoning behind the trades I took.

Thanks again.
Gozilla.

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  #43 (permalink)
 Tap In 
Bend, OR
 
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DbP, I spent some time this weekend reading your writings on SLA. While I didn't know it was called SLA, I was please to see someone with your experience reading the market in much the same way I do. You have eloquently put into words what I have been doing since last October when it suddenly dawned on me, after years of watching the markets, that all moves begin with a break of a line. Ever since, I have been drawing straight lines in almost the exact way that you advocate. I have not seen this type of analysis in many other places. While this has not yet translated to huge profits (due to a fundamental lack of confidence lost over many years of failure), I feel I am close to making it happen.

I assume you want participation in this thread? What would you like to see in terms of participation? Charts posted with trades? Questions asked?

If you are at all interested, I have a journal here:



You can start anywhere since nothing much has changed from the beginning.

 
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  #44 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


Tap In View Post
DbP, I spent some time this weekend reading your writings on SLA. While I didn't know it was called SLA, I was please to see someone with your experience reading the market in much the same way I do. You have eloquently put into words what I have been doing since last October when it suddenly dawned on me, after years of watching the markets, that all moves begin with a break of a line. Ever since, I have been drawing straight lines in almost the exact way that you advocate. I have not seen this type of analysis in many other places. While this has not yet translated to huge profits (due to a fundamental lack of confidence lost over many years of failure), I feel I am close to making it happen.

I assume you want participation in this thread? What would you like to see in terms of participation? Charts posted with trades? Questions asked?

If you are at all interested, I have a journal here:



You can start anywhere since nothing much has changed from the beginning.

The SLA was originally "If You Can Draw A Straight Line (You Can Become A Successful Trader)". But all that was too much of a PITA to type over and over again, so I abbreviated it to the Straight Line Approach, which was the result of years of effort trying to explain Wyckoff and having little luck as so few wanted to read Wyckoff's course.

All that aside, what do you think I can do for you? I look at only a fraction of what you look at, and any advice I might be able to give wouldn't have much effect given the elephants in the room. But of course you're welcome to ask any questions you like.

You may also want to follow Gozilla's journal ( ). I don't know whether or not what I'll be posting there will be of any use to you, but it will save repetition.

 
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  #45 (permalink)
 Tap In 
Bend, OR
 
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DbPhoenix View Post
The SLA was originally "If You Can Draw A Straight Line (You Can Become A Successful Trader)". But all that was too much of a PITA to type over and over again, so I abbreviated it to the Straight Line Approach, which was the result of years of effort trying to explain Wyckoff and having little luck as so few wanted to read Wyckoff's course.

All that aside, what do you think I can do for you? I look at only a fraction of what you look at, and any advice I might be able to give wouldn't have much effect given the elephants in the room. But of course you're welcome to ask any questions you like.

You may also want to follow Gozilla's journal ( ). I don't know whether or not what I'll be posting there will be of any use to you, but it will save repetition.

I understand. Thank you for generously sharing your time and work.

 
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  #46 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

I was part of a discussion a couple of days ago regarding various "price action" approaches, including the SLA. It's always interesting to hear about what people are doing to modify it and make it their own. Those modifications require testing, of course, and sometimes the modifications are so severe that one must pretty much start over.

I like playing with these modifications to determine whether or not someone has come up with something better, but so far I've had the best results by just following the rules. Perhaps the greatest advantage of that approach is that I don't have to think about it. Today was a perfect example.

To begin with, the "zone":



Then the situation prior to the open. Price found some resistance just above 56, and the drop at 0845 held at the previous swing low. Then price marches upward to the open. The demand line is broken, which is no surprise, but price begins making lower highs. Depending on one's risk tolerance, he can enter at either (red) 1 or 2.

The supply line is then broken at 0953, and the long is taken at the first retracement thereafter. If one misreads this, he might try another short at 0958 or even 1001, but price recoils against this hard and fast, signaling that a long may be in order. If one follows the rules rather than cling to a bias, entering at (green) 1 should present no problem.



After that, there's really not much to do:


 
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  #47 (permalink)
 lasecondababele 
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Hi @DbPhoenix, thank you for putting together those two PDFs...
Maybe it wasn't the most salient bit, but I really enjoyed "the dog that didn't bark". Everyone stresses the importance of HH/LL/LH/HL but flipping the concept on its head and paying attention to what price doesn't do, that made it more relevant and memorable.

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  #48 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

I'm glad you got something out of it. I'm in the process of updating it and expanding it. I hope to be done with it this weekend. When it's done, and if it's not too large, I'll upload it to this thread.

 
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  #49 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

Here they are. Anyone who actually reads it, let me know of any typos or errors. I've proof-read this so many times, my eyes are ready to bleed.

Attached Thumbnails
Trading the SLA/AMT Intraday-mgdpsla2015cmpr.pdf  
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Register to download File Type: docx DemandSupplySP.docx (43.6 KB, 231 views)
 
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  #50 (permalink)
 Abde 
Germany
 
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DbPhoenix View Post
Here they are. Anyone who actually reads it, let me know of any typos or errors. I've proof-read this so many times, my eyes are ready to bleed.

Hi @DbPhoenix,

Many thanks for uploading the documents - which I really appreciate! And surely many others too.

For any reason, I´m not able to see the images in your Demand/SupplySP document (see attached screen shot).

Would you be so kind to upload it as a PDF ?

Abde

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  #51 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


Abde View Post
Hi @DbPhoenix,

Many thanks for uploading the documents - which I really appreciate! And surely many others too.

For any reason, I´m not able to see the images in your Demand/SupplySP document (see attached screen shot).

Would you be so kind to upload it as a PDF ?

Abde

I'm unable to convert it to a single-page pdf with the program I have. If anyone else can do it, I'll be happy to send them the *.docx or some other Word format so that they can convert it. (This is not something I want to spend a great deal of time on; one would think after 20 years that this stuff would no longer be an issue, like the continuing battle between Apple and Microsoft.)

The pictures aren't necessary, of course. They just make it more fun. There seems to be very little fun in trading these days. Something else that's changed since the 90s.

 
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  #52 (permalink)
 dalebru 
Indianapolis/IN
 
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DbPhoenix View Post
I'm unable to convert it to a single-page pdf with the program I have. If anyone else can do it, I'll be happy to send them the *.docx or some other Word format so that they can convert it. (This is not something I want to spend a great deal of time on; one would think after 20 years that this stuff would no longer be an issue, like the continuing battle between Apple and Microsoft.)

The pictures aren't necessary, of course. They just make it more fun. There seems to be very little fun in trading these days. Something else that's changed since the 90s.

It appears that the images are still on your hard drive, as they are linked rather than embedded. If I'm correct, converting to PDF wouldn't help. Here is a link showing how to convert all the images from "linked" to "embedded".

microsoft word - Transform linked images to embedded images - Super User

Yes, the .docx file size might become very large. The only way to ameliorate that would be to use some software to make your images smaller (lower-resolution). One simple way to do that is to use the snipping tool to make a snapshot and paste that into the .docx instead of linking the image.

I offer all of this with my normal money-back guarantee.

Thanks for sharing the documents and your insights.

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  #53 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


dalebru View Post
It appears that the images are still on your hard drive, as they are linked rather than embedded. If I'm correct, converting to PDF wouldn't help. Here is a link showing how to convert all the images from "linked" to "embedded".

microsoft word - Transform linked images to embedded images - Super User

Yes, the .docx file size might become very large. The only way to ameliorate that would be to use some software to make your images smaller (lower-resolution). One simple way to do that is to use the snipping tool to make a snapshot and paste that into the .docx instead of linking the image.

I offer all of this with my normal money-back guarantee.

Thanks for sharing the documents and your insights.

Thanks for the help. Apparently none of this works with "Word Starter" (I stopped paying for Word/Excel years ago as I never used Excel anymore and I rarely used Word except for opening old docs).

But, as I said, the only purpose to the images is to make it more fun. There are no charts.

 
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  #54 (permalink)
 trendisyourfriend 
Market Wizard
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Convert DOC to PDF Online | Convert DOCX to PDF Online

Convert DOC to PDF Online | Convert DOCX to PDF Online | Convert Word to PDF Online | Free online converter

 
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  #55 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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trendisyourfriend View Post

Thanks for the help. I'll look at it after the session is over. But before anyone else spends any more time on this, as much as it's appreciated, I'm going to try to convert the whole thing to an image file. It's not that long.

 
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  #56 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

This should be good enough. I may not be an expert on Office, but I do remember a bit about back doors.

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  #57 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

From 2004:

Quote from sulong:

Yes I'll use whatever time interval that might help me get a grasp on what might be going on in the here and now.

One thing, I'm not sure if the type of information I'm recording, is the right kind of info, that will be or is, beneficial.
I think it is, at least in regard to light V on a pull back, after a heavy V directional move.


Are you referring to a "replay", using 5 min bars, or real time, or both?


Quote from dbphoenix:

Only you can decide what's beneficial to you and what isn't as that won't be the same for everyone, which is why comments such as "trading off 1m charts is a waste of time" or "scalping is a waste of time" or "the ADX is a waste of time" and similar comments can be taken with a grain of salt. It's up to you to decide for yourself what's a waste of time or not, even if I tell you that something is a waste of time

I don't know that going through this exercise with a longer bar interval will open a window or not. It may not, though I don't think it will be a waste of time . The experience may trigger something later, like tomorrow, or next week, or next month. But I do know that you're going to continue to have trouble seeing what's in front of you until you back off a little and look at the forest, the "big picture", the "gestalt".

Perhaps you're working under what you think is a truism that there is one best opportunity for entry during the day and that, if you miss it, you're done. If that's what you're doing, you may be correct about the former. There's plenty of time to debate that. But there are nearly always multiple opportunities to enter trades during the day since there are nearly always multiple setups to take advantage of.

Therefore, don't be quite so jumpy about getting in there as early as possible and taking what is in any way acceptable. Let traders show their hands. That's part of what volume analysis is all about, since traders will indicate by their trades what they expect to see happen or what they want to happen or what they may even cause to happen.

As for this morning, did you feel that you were getting enough information about what traders were doing? Did you have a definite idea of what was being tested? Was whatever information you were getting good enough to persuade you to enter just minutes before an imporant report?

Look at the bar that accompanied the report. There's no follow-through, suggesting that the selling is over, at least for now. Is there enough here to give you the confidence to go long? How do you know price won't make another U-turn and continue to fall? What's being tested, if anything? Would you rather wait until you find out what happens at the test of the opening high? Will you go long if we make a new high?

Yes, it can be confusing, because you're not talking about just volume and the relationship between a given volume bar and a given price bar, but about your strategy, your tactics, the setups you look for, your risk tolerance, etc. And all of this is whizzing by while you're trying to evaluate everything and decide whether or not to make an entry and there's no time.

Which is why it pays to pick your spots well ahead of time, consider using a longer bar interval, and just wait to see what happens. If you know exactly what you're looking for, exactly where you expect to see it, and exactly what you plan to do about it if and when you see it, then you can be a spider and just wait for it. Otherwise, you are much more likely to become confused by all the twists and turns and end up doing the wrong thing at the wrong time, missing the real opportunity when it presents itself.

So scroll back to today's pre-open and go through it all again using a longer bar interval, bar by bar. Yes, you know what's going to happen, but that can't be helped. If you can't block that out, then choose some chart randomly from a month ago and go through the exercise that way. Then the next chart. Then the chart after that. You won't remember what happened on any given day a month ago (or two months ago), and though you won't get a sense of the pace of trading, you will at least be able to avoid "hindsight" to a large extent.


An example from Friday:




 
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  #58 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

Another example, from this morning. Context is essentially the same re the weekly, daily, hourly, etc.





 
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  #59 (permalink)
lajx
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Db one question I saw your post for Trading activity for today, and although in hindsight the entries look clear I am struggling to follow the Price action, because in some cases the RET is not clear enough and maybe I am discarding the position too early, in any case here is the day. Any comment is welcome.

BTW: Thanks for the updated PDF. Regarding to the way how I discard the position I took as reference your image in the SLA pdf (also attached)

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  #60 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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lajx View Post
Db one question I saw your post for Trading activity for today, and although in hindsight the entries look clear I am struggling to follow the Price action, because in some cases the RET is not clear enough and maybe I am discarding the position too early, in any case here is the day. Any comment is welcome.

BTW: Thanks for the updated PDF. Regarding to the way how I discard the position I took as reference your image in the SLA pdf (also attached)

The entries always look clear in hindsight. That's one reason why so many people pooh-pooh hindsight charts (I guess they never do trade reviews). It is imperative, therefore, that you make a distinction between what you can know in real time and what you can know only in hindsight. Otherwise this sort of review will only get you in a great deal of trouble.

There are several ways to play this according to the trader's objectives, which takes us back to Developing A Plan: what kind of trader are you? What kind of trader do you want to be? (To those who click the link, the docs are fixed later on). If you're still afraid of price, you're going to be tempted to take quick profits and even trade the 5s. Taking quick profits is not necessarily a bad thing in a low volatility environment. But trading the 5s can and probably will be a disaster, particularly if you haven't put in the observation time to understand what the 5s -- and a tick chart -- represent.

So, if you've read what I've written about approaching the session, you know that there was no particular support below the open, or at least none that I could see. So I left price alone to tell me what it wanted to do. But even if there had been anything worth noting below the open, entering 1 or 2m past the open is not wise. Except in hindsight. Price then bounces up. It makes a swing point, which enables me to draw a demand line (although one doesn't have to actually draw it). When that demand line is broken, switch to the 5s if you like to get a clearer picture of what traders are doing. I put "unreasonable" at the first entry because I didn't think anyone who hesitates would be able to take it, though clearly that's the best entry. If it seems as though you could have taken it, determine where your trigger would be, where the danger point lies, then decide (all in a matter of seconds) if the trade is worth it. If it is, you can't crap around. You have to act. If you're not sure, don't.

After that, you ought to be able to see how the 5s and the 1m interact. But you should also see that where the 5s would be likely to throw you out, the 1m would keep you in, and you want to stay in as long as possible. Swing points, HLs, LH, DTs and DBs can all be detected in real time. So can line breaks. Reversals and continuations, however, are not so easy. For that you'll have to do the work that Gozilla did to give you some guidance as to just how far price can break one of these lines and still stage a continuation, and how far is so far that the probabilities favor a reversal. Though the data collection and analysis can and has to be done ahead of time, the decision as to what to apply and how of course has to be done in real time. And fast. If you're in a situation where it can go either way, you have to be prepared either to change directions rapidly or bracket the trade to avoid being left facing the wrong direction.

As for when the supply line stretching down to the 0950 low gets broken, it's time to refer back to the 5s to get a better entry. Otherwise there's nothing on the 1m unless you take the ret -- or what you thought was a ret (you'll have to determine exactly what qualifies as a ret for you) -- that you took, and then get stopped out, and then get so bummed that you miss the HL. However, if you consult the 5s, you'll see that there's a ret at "4", one that you can see in RT and quickly run the DP calculations for. If you take it, there's no reason to exit, even if you hold through the pace fall-off. And if you want to stop, you can always put a stop below all this and walk away. You can't know what price is going to do after you quit, but there's no reason to exit just because you're tired of sitting in front of your computer (given the experience you have with the NQ, you know it can drift for hours midday, which it does right after that spike at 1100).

As for your chart, too many lines, too many hinges, too much looking for excuses to exit and re-enter because you're still afraid of price and you haven't done the fine work to determine exactly what you're going to do under any given set of circumstance. You're handing the reins to the market and letting it pull you around. You have to decide exactly what you're looking for in an entry and exactly how much room you're willing to give it. If your blood runs cold and your hands get clammy and you're looking for the first sign of trouble as an excuse to end the trade, then you haven't done enough observation, sorry to say, nor enough simming. In this case, if you had entered at "4", that shakeout at 1026 would not have come anywhere near you. Could you know that in advance? Of course not. But what you could do in advance is plan for it as well as plan for your re-entry, if re-entry seemed prudent.

Again, there is not just one way to play this. The trader has to decide what he wants and do it BEFORE the session begins so that he's not making decisions in a state of fear. If you get tired of sitting through that 50-minute go-nowhere range between 1010 and 1100, know what you will do about a stop underneath all this so you can walk away from the machine. And if you happen to be around at 1100 and see that spike, decide where you're going to place your stop so that you can either leave until the close or focus on a different instrument.

You may still be focusing on lines and bars rather than price. Perhaps having a 5s alongside may help relieve your anxiety as you would at least not be having to guess at what traders are doing. If you look at the Friday charts I posted, you'll note that even a 1m bar can have several swings within it. If you're still not cognizant of this, a 5s chart will help you focus on the movement of that right tick. Once you're focused on traders' behavior, you'll be better able to exploit it.

Incidentally, for you and for anyone else who happens to read this, there's a lot of information in those Friday charts regarding activity and pace and compression/expansion and springboards. Being aware of all of that and what it means can provide for much safer and tighter entries.

 
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  #61 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

For those who are new to this, posts 49 and 56 contain the SLAB and the two "bonuses" (the first effort on the "docs" didn't work out).

 
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  #62 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

I don't believe I posted a copy of last week's weekly chart here.


 
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  #63 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

So where might the trading opportunities be this morning?



 
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  #64 (permalink)
lajx
Bogotá
 
 
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DbPhoenix View Post
So where might the trading opportunities be this morning?

Around 17,25, depending on the price action

 
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  #65 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


lajx View Post
Around 17,25, depending on the price action

And what sort of activity are you looking for?

Are you looking to short? Go long?

Where will you place your trigger?

What will your stop be?

Will you move to BE? When?

What will tell you that you're wrong?

What will tell you that you're right?

 
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  #66 (permalink)
lajx
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And what sort of activity are you looking for?
Looking for a RET after the BO of this level or the FBO

Are you looking to short? Go long?
It depends on the PA, if the Price fails to go above this level I would wait for the RET and short or if the Price BO the 17,25 I would wait for the RET in order to go long

Where will you place your trigger?
Regarding to what Im testing I would place it one tick above (if long) or one tick below (if short) from the bar that would trigger the RET

What will your stop be?
In relation to the Strategy that I am testing it would be located at 9 ticks frome the entry

Will you move to BE? When?
From what I`ve seen in my data when the Price moves 5 or 6 pòints in my favor is most likely that the trade lift off therefore at this moment I would put the trade at BE

What will tell you that you're wrong?
If the Price does not what is espected to do, in first instance not confirmed the RET in which case a hinge could be form

What will tell you that you're right?
If the Price confirmed the RET, although sometimes this confirmation comes inmmediately but other times it comes later.

Sorry if there is some typing errors, I try to write as fast as possible

 
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  #67 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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What about 26?

 
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  #68 (permalink)
lajx
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ONH (?)

4431 PDH

 
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  #69 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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After price broke through 17.25, what were you looking at? What did you do?

 
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  #70 (permalink)
lajx
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After the Price BO through 17,25 I waited for the RET and it was triggered however, maybe for the volatility of the Price during the open the bar that triggered the RET, confirmed it and later went down of the same bar, therefore the trade was stopped out, however despite this fact the Price did what was expected to do in this case Confirmed the RET and started the uptrend

 
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  #71 (permalink)
 DbPhoenix 
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And then what? What bar intervals were you looking at?

 
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  #72 (permalink)
lajx
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Later the Price makes another retracement, but with certain level of volatility; in the 5 sec bar interval a range was formed, but after a spike the lower limit around 20.50 the Price continues its upward movement.

The next level was around 26 but the Price shows strength when Broke through this level, and this strength is shown in the 1m and 5 sec bar interval, therefore until this moment the Price is doing what is expected.

The next level was the PDH around 31, but once again the traders show their strength and the upward movement continues. Later on the next level was around the 37.25 where was located the previous day ONH, where after a movement of 23 pts during the first 9 minutes the Price start to show some weakness first the bar that break through this level at 0840 is reversed almost immediately and later a LH is confirmed, from here the Price starts to decline but the retracements are relatively deep in front of the downward movements therefore the Price fits into a TC

 
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  #73 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Did you see all this in real time?

 
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  #74 (permalink)
lajx
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Yes but I could not coordinate this with my entries, after the first exit I tried to enter in the second retracement but this trade also was stopped out because of the volatility during the RET, later the Price lifted off and I knew that after a 20 pts to the upside that maybe was not a good idea trying to reenter again moreover with the signals that the Price was giving (Reversed bar and LH), therefore I was waiting for a deeper Retracement in order to enter in a more advantageous position, notwithstanding a hinge is formed and the Price makes a FBO to the upside (0906) and later the Price went down and a RET is triggered and confirmed (0910) at this point I was short, later on the Price makes a Reversal around 17.25 and the position is exit at 0924 and a Range is defined with the UL at 39.75 and the LL at 17.25

 
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  #75 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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lajx View Post
Yes but I could not coordinate this with my entries, after the first exit I tried to enter in the second retracement but this trade also was stopped out because of the volatility during the RET, later the Price lifted off and I knew that after a 20 pts to the upside that maybe was not a good idea trying to reenter again moreover with the signals that the Price was giving (Reversed bar and LH), therefore I was waiting for a deeper Retracement in order to enter in a more advantageous position, notwithstanding a hinge is formed and the Price makes a FBO to the upside (0906) and later the Price went down and a RET is triggered and confirmed (0910) at this point I was short, later on the Price makes a Reversal around 17.25 and the position is exit at 0924 and a Range is defined with the UL at 39.75 and the LL at 17.25

You're getting lost in the trees again.

Before the session even began, one can see the potential op at 17.25. One can also see the ONH at 25-26. One can also see Monday's ONH at 37and Friday's low at 40. These are levels that everybody sees (except for those who think that ON levels are unimportant; I wish we could put that to rest; I promise you that professionals are very much aware of them, as could be witnessed this morning). Therefore they become important. How much price has already moved is irrelevant from an AMT standpoint. Price can move over a hundred points in a day. Or ten. Don't avoid legitimate trades just because you think that price has gone "too far", or that resistance is just ahead.

You were correct to exit the trade, but not for the reasons given. Whenever price behavior prompts you to exit, either manually or via a stop, determine as quickly as possible why this became necessary. If you can't, then exit anyway and do nothing until the situation becomes more clear. In this case, price left 17.25 just fine but ran into trouble at 25-26. To avoid entering at all just because 25-26 might be trouble is insufficient. Price could just as easily have blown through 25-26 without hesitation and leave you standing. As it was, price tried four times to break through without success, finally doing so just after 0935 (and when it does so, it doesn't look back, an example of how ranges provide compression and expansion; also an example of what correct entries look like). As for a retracement thereafter, there is a slight one half a minute later, or if you recognize it, a springboard which provides another entry at 0938. Best entry, of course, and the correct entry, is the BO from the range at 26.

After that it's just a matter of following price until it gets near 40. There are multiple potential resistances up here, as I pointed out earlier. But unless you're using an extremely tight follow stop, there's no reason to exit pre-emptively.

Again, focus on price behavior, not your trades. If price isn't doing what's expected, THEN concern yourself with your trade. If it is doing what's expected, focus on that, not how much money you're making (or would be making if you had entered the trade correctly).

You should also decide whether you want to trade range or trend as well as whether or not you want to scalp. If you ignore AMT entirely, you're going to end up scalping, particularly if you trade the 1m, much less the 5s. If you want to trade trend rather than ranges, you're going to have to be firm about exiting ranges as soon as they present themselves, as you did with your first trade. There is a temptation to hang on in the expectation that price will break out of whatever and you won't be along for the ride. But you should know by now that when price stalls in these little ranges, it can remain there for hours. Better to exit, preferably at BE or better, then get ready for either an upside or downside BO.

This is what the trader is looking at the first few minutes:



And this is the springboard -- in blue -- that's provided after price breaks out of this consolidation:



Now how would you manage this on the way to 40? How would you manage a short up there?

 
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  #76 (permalink)
lajx
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Ok db thanks for the answer,

Regarding to your question it is explained in the image attached

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  #77 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Better. But are you suggesting that your stomach would be just fine with price coming back at you after your PDH note, or your PDONH note? You wouldn't freak out and exit the trade?

 
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  #78 (permalink)
lajx
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No, off course this is an exercise done in hindsight, moreover the 5 sec bar interval is really fast and is the first time that I use it. Therefore is most likely that I would have used only the 1m chart and hold the trade at least until the 50% of the previous movement around 30 (as is shown in the chart attached), but I think in this kind of environment is helpful to know the questions that you asked me in order to not freak out for example:

“How much can price break a line and still stage a successful continuation? At what point do the probabilities shift from continuation to reversal?”

BTW Here is the link where I will post this kind of observations and thanks for your detailed explanation of today



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  #79 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

I'm glad you remembered the midpoint.



And there's the trusty demand line:



There are a couple of important points here, though, that should not be overlooked if you're going to trade price instead of how you feel about it.

The idea of forgetting about your trade is central. If you enter correctly and you target your stop correctly, whether mental or hard, your trade becomes irrelevant. This is true with regard to that first pullback toward the midpoint -- a point at which most would bail -- but also the spike upward -- at 0942-- after an entry off the break of the demand line. Or the spike upward at 0946 after an entry off the LH you have noted. Both of these spikes would move past your entries, but neither would get to the danger points. Can you ignore your entries and let the price movement play out?

I suggest you replay this morning. Download it if you have to. Replay it in real time. Don't accelerate it. Get used to how price behaves and where. The activity levels and the pace. Study how the 5s and 1m relate (if you're going to trade only the first 90m, this is almost a required; you can't allow price to hide). Trade it again. Doesn't matter that it's hindsight. Focus on the price movement, not your trade. At this point, you already know where to enter so there's no reason to worry about it. This will take less than an hour.

Then do it again, in replay, same process. Focus on price. Enter according to your plan. Then forget about your entries and your trades. Focus on price. If insights are beginning to occur, do it again.

The purpose of this sort of exercise is to desensitize you to yourself, to move you toward focusing on price, the market, rather than your trades, your self. If you can't get away from I I I me me me my my my, you're going to have a tough time profiting from trading price (actually you're going to have a tough time profiting from anything that isn't automated, and even that's no guarantee).

Then go through the same exercise using yesterday morning. Then try it on a randomly-chosen morning. Keep doing this in an atmosphere of safety until those emotions begin to evaporate.

As far as the hindsight issue, remember that while the details may differ, the underlying structure is the same:

Two states: ranging and trending

Three directions: up, down, sideways

Three strategies: breakouts, retracements, reversals

Plot your midpoints in real time

Watch for LHs and HLs that occur in tandem; they signal chop.

Find the extremes during prep.

Watch for springboards. Springboards are your friends.

Determine the danger points.

And that's pretty much that. And it's the same thing every day, day after day.

 
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  #80 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

About this "midpoint" business. Those who are unfamiliar with Wyckoff may not understand what midpoints are all about and why they're worth plotting, or at least being aware of.

The midpoint is a measure of strength/weakness. The idea is that if price can claw its way back more than halfway through a previous decline, the fact that doing so takes considerable strength has implications for what happens next. If it can't, that failure carries implications as well. Ditto weakening rallies. If price drops back more than half the extent of a rally, that rally is likely in trouble. By "strength", however, there is no guarantee of new highs. The failure of price to advance is the result of buyers not being willing to pay the ask. However, buyers today may be willing to pay the ask that they were not willing to pay yesterday. Or an hour ago. Or five minutes ago. Or the perception of strength by some may not be shared by enough other traders to make it a reality. Strength, however, can push price quite some distance before it gets anywhere near the level of having to decide whether it has enough gas in its tank to attempt a new high, much less make one. (Reverse all of this for declines after rallies)

The price action trader tries to find "indicators" that are created by the market itself, indicators that require no settings, indicators that are in the market and not in his head. The notion of midpoints, i.e., the strength of desire -- or lack of it -- may be one of those indicators, like advancers v decliners, or the respective volumes thereof.

The following charts should illustrate this:



Here price reverses at the MP (this is the sort of thing one will find it books because it appears to be proof of something)



Here, after a decline, price not only pushes back past the halfway level but makes a higher high:



Here price waffles around the MP for several days, but eventually plunges to 4390 (not unlike a Roadrunner/Coyote cartoon: toon physics):



Here it makes its way past the halfway level and doesn't make a new high or even come close to reaching the old one, but a 40pt rally is nothing to sneeze at. Even so, it does appear to have found support at 4390, i.e., "big money" thinks that that level represents a good buy:



And for the upcoming session:


 
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  #81 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

And as we get closer to the open, the fact that price returns to the midpoint of the range established yesterday afternoon is no accident, at least to those who understand how the effort toward balancing and equilibrium works in an auction market:



Note: it would not be unusual for price to drop below this range to the extent that it previously rose above it, i.e., 37.5. This is part of the process.

We'll see.

Chance favors the informed mind.

--Louis Pasteur

 
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  #82 (permalink)
 trendisyourfriend 
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DbPhoenix View Post
And as we get closer to the open, the fact that price returns to the midpoint of the range established yesterday afternoon is no accident, at least to those who understand how the effort toward balancing and equilibrium works in an auction market:
...

Not sure how to interpret your comment. What is your plan? Where will you be looking to be long or short given the current context?

 
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  #83 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


trendisyourfriend View Post
Not sure how to interpret your comment. What is your plan? Where will you be looking to be long or short given the current context?

As I try to avoid ranges whenever possible, I'll go long or short depending on which side price exits.

Of course, we still have a half hour to go. But I can pretty much guarantee that price won't crap around in this little range all morning.

0916: Note: If one focuses on the pre-open range from 50-65 and the fact that we just rejected the MP of it at 57.5, I'm looking at a short below 50 and a long above 65, the more likely being the short. But this leaves out all the management tactics.

0937: And price rejects 65 (it's not all imaginary after all )

0941: And we bounce off 57.50. Again.

0948: And we hover at the MP between 57.5 and 65.

0958: Now how far below the last swing low would your entry trigger have to be to avoid a false entry?

One can, of course, trade these little ranges if he LOVES fighting HFTs . . .

1017: And this is a "hinge", an effort toward equilibrium, apex 61 (where have I seen that number before . . . )

And, no, I still haven't placed any trades today.

Bummer.

1030: The thing about hinges is that they represent what one might call "price discovery". The disagreements over value create the swings from the upper limit to the lower limit. As those disagreements over value come closer and closer to a mean, the upper and lower limits angle, creating the hinge. However, if price remains inside these limits all the way to the point at which they meet, then an agreement as to value has been reached, more or less, and price is far more likely to range thereafter rather than burst out one side or the other.

So, though I may regret it, I'm leaving it for now. I may check back this afternoon. In the meantime, my bike is calling me . . .

Please clean up after yourselves before you leave: popcorn boxes, candy wrappers . . .

 
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  #84 (permalink)
 Big Mike 
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@DbPhoenix, what platform do you use? What data feed? Which broker?

Mike

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  #85 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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IB.

 
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  #86 (permalink)
 Big Mike 
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DbPhoenix View Post
IB.

It looked as if you were using free charts and data. Since you classify yourself as a "Master", I was expecting professional tools.

Mike

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  #87 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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It's a mixture of the two. I try to use freely-available sources when possible to show beginners that they needn't spend megabucks in order to cobble together at least the beginnings of trading plans, and now that even real-time streaming data is available, there's no reason not to take advantage of it. If trading turns out not to be what one expected, there's no particularly good reason to go bankrupt to find out. And not everyone has ten thousand dollars lying around to fund an IB account.

Many beginners, of course, do it just for fun, and have no interest in trading plans. They have even less reason to spend a lot on charting programs and datafeeds and so forth, though no one is stopping them from doing so. Most would rather just find some sort of indicator and rely on that, though poker would be a lot more interesting.

 
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  #88 (permalink)
 manualtrader 
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DB made 18,000 posts on elitetrader.com and sold his e-book to some beginners, now here.

 
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  #89 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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manualtrader View Post
DB made 18,000 posts on elitetrader.com and sold his e-book to some beginners, now here.

Sorry, no. The book is free.

But Mike is welcome to delete the uploads if he so chooses.

 
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  #90 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

And here we are, right back where we started:



Aren't mean-reverting markets a hoot?

 
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 manualtrader 
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"Hindsight Master!"

Please read the real time posts from the real master:


My charts for today going into FOMC. All the Greece news is sending us lower, I would expect support around 76-78 area.

Vet at lunch, so was here for FOMC. Added to my long at 2090, looking for new high today.

 
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  #92 (permalink)
 dakine 
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manualtrader View Post
DB made 18,000 posts on elitetrader.com and sold his e-book to some beginners, now here.

And the trolls seem to always follow and post nonsense and muck up his threads. If you don't like what he has to share don't read it simple as that. I for one am glad he is posting here. TL and ET I don't frequent as often but when I do it is to read his posts. What have you offered?

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 supermht 
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dakine View Post
And the trolls seem to always follow and post nonsense and muck up his threads. If you don't like what he has to share don't read it simple as that. I for one am glad he is posting here. TL and ET I don't frequent as often but when I do it is to read his posts. What have you offered?

me 2,

the only reason I go to ET and TL is reading DB's post

we appreciate DB's contribution

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 Gozilla 
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I was only able to watch the last 40 minutes of the days action and it seemed quite interesting given the recent posts, I am probably overlooking something, but, from an intraday perspective this is what I saw, of course, these things are always easier in hindsight.


There is a possible failure right after the BO, but a retest after the BO is to be expected, highlighted the hinge without thinking, must have sub-consciously applied what I read in one of DB's posts regarding the unfolding action.

The small rally off the 11th-15th MP after the DT drop fails to make much progress into the proceeding decline.

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  #95 (permalink)
 DbPhoenix 
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I don't get into this in the SLAB because it seems to me to be a bit too sophisticated for a beginner, or even a "damaged trader" who has so much to unlearn. Maybe I'm being patronizing ("you'll understand when you're older"), but I'd rather address it with those who are well on the path and have dug into the work with both hands. So far, there aren't many.

But, since you asked . . .

I address the hinge and its dynamics in the SLAB. I also address trendlines and "support and resistance" lines and the fact that none of them provide support and/or resistance. For most young or youngish traders this is tantamount to saying that there is no God. But I don't get deeply into equilibrium and balancing nor do I get into springboards. The SLAB is a primer, and going into all that would be like discussing existentialism or particle physics in Dick and Jane.

So this is directed to those who've been doing the work. Everybody else pretend that you don't see it.

The business of a market is to facilitate trade. It has no other reason to exist. And the participants in this activity consist of those who are interested in buying and those who are interested in selling. Naturally each of these parties want what each considers to be the "best price". They will of course disagree on what the best price is. So traders spend the majority of their time negotiating these prices and hopefully completing transactions. While some transactions will take place "on the fly" in up and down surges, the volume won't be there at any given level because there aren't that many trades taking place at any given level. In fact, if price is moving rapidly, there may be considerable gaps from one transaction to the next. If one is using a bar/candle/line chart, these gaps will be covered by the connect-the-dots nature of bars/candles/lines. If one were to view a tick chart (and when I say "tick chart", I mean one tick), he'd see these gaps, and it's important to know that they are there as no support will be there when price reverses and begins tumbling back down (or rallies after a climactic move downward, which is why reversals are often so powerful). The bulk of the volume resides in those zones where the bulk of the transactions are being completed. Hence, the "range", and more specifically the mean/median of the range (one can see this graphically by plotting "volume at price"). This process involves to some extent what's called "price discovery", i.e., buyers and sellers bidding high and asking low and vice-versa in order to come up with a mutually-agreed-upon price. Sometimes these negotiations can range widely, sometimes not. But the level or zone or area of chief interest to the amateur trader is that in which the bulk of transactions are taking place, not because it is an area where he wants to trade but because it is an area he wants to avoid, what is often referred to as "chop".

To make a long story short (too late), it is not the limits of a range or trend channel that are most important to a trader but rather the mean or median (not always the same) and how far traders venture from that mean in order to find trades. When they can no longer find trades, professionals begin the return trip back to that zone where the most trades are taking place: the mean. That's where the liquidity lies. This is why these lines don't and can't provide support or resistance: they are where they are because of their varying distances from the mean. We can draw straight lines for convenience, but these moves away from the mean are actually pulses. They do, however, provide some knowledge of where the "extremes" are, those levels beyond which traders can't find trades. And if traders couldn't find trades there the last time, chances are they won't be able to find trades there this time either. At worst, it's cheap to find out as the stop can be so tight.

In this example, therefore, which some people call a "horn", the diagonal lines I've drawn, and which may be found in books and articles on patterns, are irrelevant. What you have is an expanded range, expanded around the mean of the whole thing at 52. The symmetry of it is a giveaway. Nothing else really matters beyond the mean and the distance traders are able to travel away from it before they run out of people to trade with. Beyond these limits, buyers aren't willing to pay the ask and sellers aren't willing to lower it. This may all change in this example by tomorrow morning or even tonight. But, for now, this is the hand the market is dealing and it's up to the trader to figure out how to play it. I choose to play it by ignoring it and waiting for them to begin trending for whatever reason they choose to do so. It's just easier.

This is not to say that there aren't trades here, but they require different tactics, particularly with regard to management, and I don't find the increased costs to sufficiently balance the potential profits (I'm not a scalper). My goal is 1-3 trades a day, not 20 or 30, much less 40. I just don't love it that much. When faced with something like this, which is common after a trending day, I just wait it out rather than look for something that really isn't there.



Quite often the wisest course for a trader is to look for reasons NOT to trade rather than look for opportunities that exist only in his mind.

One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do. Most people always have to be playing; they always have to be doing something. They can't just sit there and wait for something new to develop. I wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime. Even people who lose money in the market say, 'I just lost my money, now I have to do something to make it back.' No, you don't. You should sit there until you find something.

-- Jim Rogers

 
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  #96 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

I ought to post this as well, for those who are going to stay up all night to watch price:



I believe this is what the books call a "diamond". But if price bounces around within its confines, it becomes the usual hinge, and if price busts out of it before reaching the apex, there might be an opportunity. OTOH, if it works its way all the way to the apex, as I said somewhere earlier, more likely it'll just drift again. If it were Friday, I'd vote for ranging. But you never really know.

 
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  #97 (permalink)
 dakine 
Volcano, HI
 
Experience: None
Platform: Ninja
Broker: AMP/CQG
Trading: Futura2000
 
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Posts: 197 since Dec 2009
Thanks: 389 given, 162 received

Here is some early morning action on the 6e. Pardon me for the hindsight markings and not using the correct chart format. I am still trying to improve my SLA real-time trading skills. 5 Day H on the 6e was 1.402. EU open had a small opening range that tested the MP of yesterdays closing action. A possible long on the reversal there. Then you had a pullback on the b/o of the ONH for another long exiting on the break of the DL.

Though I had a long bias I missed all of those and settled for some shorts on what I perceived was a short term trend reversal for a small scalp to retest the 5 day H bo level 1.402 and the HH failure. Some other longs on the trend reversal at the 50% which turned into a hinge for some other areas for longs to test the H. Which then ultimately turned into a failure to make a HH and it looks as though we will be settling into a 40 pip range until 8:30a news and the US open as the Volume MP shifts to 1.407. Some nice clean action today. Please critique.

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  #98 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


dakine View Post
Here is some early morning action on the 6e. Pardon me for the hindsight markings and not using the correct chart format. I am still trying to improve my SLA real-time trading skills. 5 Day H on the 6e was 1.402. EU open had a small opening range that tested the MP of yesterdays closing action. A possible long on the reversal there. Then you had a pullback on the b/o of the ONH for another long exiting on the break of the DL.

Though I had a long bias I missed all of those and settled for some shorts on what I perceived was a short term trend reversal for a small scalp to retest the 5 day H bo level 1.402 and the HH failure. Some other longs on the trend reversal at the 50% which turned into a hinge for some other areas for longs to test the H. Which then ultimately turned into a failure to make a HH and it looks as though we will be settling into a 40 pip range until 8:30a news and the US open as the Volume MP shifts to 1.407. Some nice clean action today. Please critique.

Sorry, but without the context, there's really nothing for me here. It ranges until about 0410, begins to trend, then quickly begins to range again. If you're scalping, I can't advise you on that. If you're trading ranges, then the SLA can be of little help as it doesn't apply to ranges. I'll look at the 6e later after my eyes have fully opened and try to come up with something helpful.

 
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  #99 (permalink)
 dakine 
Volcano, HI
 
Experience: None
Platform: Ninja
Broker: AMP/CQG
Trading: Futura2000
 
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Posts: 197 since Dec 2009
Thanks: 389 given, 162 received


DbPhoenix View Post
Sorry, but without the context, there's really nothing for me here. It ranges until about 0410, begins to trend, then quickly begins to range again. If you're scalping, I can't advise you on that. If you're trading ranges, then the SLA can be of little help as it doesn't apply to ranges. I'll look at the 6e later after my eyes have fully opened and try to come up with something helpful.

Fair enough. I wish I traded the NQ so we would at least be on the same page. I have just grown so used to the 6e that it is hard to change. I have been through all the material and have been there since the good ol TL days. I just want you to know I appreciate the knowledge you share and it's been great to see how the method has evolved.

 
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  #100 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

I don't know if the SLA can be of any use to you. Or AMT, for that matter. It's easy to see in hindsight that you've been ranging since the beginning of February. If you bought the test during the middle of April, you'd be out by the middle of May, at which point and since which point you've been ranging. You broke out of an hourly range at 1.1385 but haven't gone anywhere since. If and when you get past 1.1466 there might be something for you, but this looks like it involves a lot of waiting, unless you're scalping.


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