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Thank you for taking the time to to post this Cashish, I know it takes a long time and I hope people appreciate that in an of itself.
Like so many things in life and trading, context is everything. For AB's style of trading, which is intraday 5 minute bar-by-bar, certainly volume is to be taken with a pinch of salt (dodging the VSA rotten tomatoes being hurled at me right now). In that way, volume can be quite misleading. Particularly the oft-cited nonsense about volume increasing or decreasing with breakouts, trends, etc. However, when used other ways as you mentioned, it can provide invaluable insight into the markets.
Regarding time frame--I do not have "5 minute" or "5000 volume" or "6 range" time frames in my workflow; rather, I think in terms of the day timeframe (which is the smallest that I operate on), the week timeframe, even the quarter timeframe, and then in terms of cycles independent of time. I don't use the notion of an intraday bar in my trading, because the market does not define intraday bars (though the tradition of 30 minute segments of time does hold some significance in my book). The day has a story, and the market closes, even if only briefly; same for the week, when the whole world takes two days off; and quarterly we have significant benchmarks for businesses (hence quarterly earnings). The story during the day can take twists and turns, but it's part of the same story, just like a movie may start one way and end another, but it's the same movie. Stories don't get any shorter than a day in the market, unless we look under the microscope at the HFT activity, but these don't really affect the plot, they are like extras in the background that have no real bearing on how the movie progresses or ends. Due to this belief (and that's all it is, others no doubt will disagree), the smallest bar that has any meaning is the daily bar, because there is a true settlement. Time is still important though IMO; else, we would not always see volume pick up and dry up at always predictable times. When the mall closes at 6pm, those with shopping to do hurry up, because an unstoppable event dependent on time is approaching, and it's either get their business done or go home empty-handed.
I do not subscribe to the "all methods are created equal" philosophy (some frankly suck and are not robust at all), but I do appreciate the fact that there are more ways than one to "skin a cat" and that two very different approaches can yield similar results. Thank you for highlighting an example of this.
Hope you are having a good weekend, and as always thanks for your posts!
I believe our online relationship may be suffering irreconcilable differences and any further communication between the two of us may be unhealthy for both of us. I'm afraid if I continue to participate in a relationship with someone who's core beliefs are so counter to mine, I may end up backtesting a MACD trading system! I really DON'T want to go there!
Where to Start
I guess I can start wherever I want, so I'll share a story that is currently unfolding in my life. My son is a musician, he plays guitar, keyboards, writes his own music and sings. His music has been used in T.V. show themes, commercials and private corporate advertising, you may have heard some of it yourself, of course as a father (who has NO rhythm), I think he's pretty good. The other day he called me and said he wanted to build a shelf under his kitchen sink, I told him to take a few pictures and some measurements and come by my house and I would cut one out for him. A few days later he called me and announced, "I bought a circular saw." Needless to say, terror and fear ran through my entire body! Remember, I've been "screwing around" with saws since I was 5 or 6 years old. I told him to come by the house and I'd give him some 'tips.' In short, my tip was, DON'T DO IT, don't pursue a hobby of woodworking. Of course my intention was to suggest the risk of an injury to his hands (even a minor one) at this point in his life was far greater than the reward of building a shelf under a kitchen sink. This is still unfolding, but I hope readers can read between the lines and draw their own conclusions to the RISK vs REWARD in this real life situation.
Experiences are IMO, what we're made of, they're what makes us tick, they form our belief systems and we base our decisions on them. I smashed a thumb with a hammer, and on the same hand, cut my pointer finger on the spinning blade of a table saw. The nerves are gone in the tips of both of those fingers (Yes, I still have them). My wife told me to stop, but my Grandkids still ask once in awhile for me to pick a piece of bacon out of a bubbling frying pan. I only assume, "feeling" in your fingertips would be a good thing when playing a guitar or keyboard.
Back to Trading
In his post josh said, "I do not subscribe to the "all methods are created equal" philosophy (some frankly suck and are not robust at all), but I do appreciate the fact that there are more ways than one to "skin a cat" and that two very different approaches can yield similar results."
I've been thinking of this and want to respond, at length. I also want to clean up and make clear my intentions of this thread. When I started this thread my intention was to help traders find "Their Own" method/strategy for trading the 6E, I hope (FWIW) I'm still doing that. When I read posts in threads OR sentences in books that state things (ideas/theories) in "matter of factly" ways or ways that make the statements about (ideas/theories) sound like facts, I run the other way. I suggest others do the same. Writing is not my calling in life, neither is the proper use of the English language. I have tried to avoid at all cost, with great effort and consideration NOT to state any theory I have about markets, prices, methods, indicators or studies as facts. This is not easy to do, especially if I believe so strongly in the idea or theory that I have and continue to enter trades based on it at every opportunity. I'm sure I've crossed the line a time or two in this thread but with guys like josh holding my feet to the fire on every word I type, I think I've done OK.
As always, josh's latest post stimulates my thoughts. If I'm waffling or back peddling so be it, but the following is where I thought I was taking the suggestion of,,,,,,"If you're a trader struggling to find a method, pick one designed by one of the experts that seems to speak to you and trade it. Commit to the method and commit to yourself to begin a journey of becoming an expert.
From the first page of this thread I stated there's nothing new here, no fancy this or that and no secret sauce. There's no proprietary indicators and no hidden agendas. It is a collection of bits and pieces of many indicators and studies, some developed more than a half a century ago. My suggestion of "pick one" and run with it is based on my trading experience. For example, I picked Bollinger Bands and NEVER took them off my chart! I've looked at it and watched it respond to moves in the market for years. This is another point, I've traded the same market my whole trading career. Over a period of years I've found a couple signals that I take based on Bollinger Bands everytime, I trust the signal and usually put a thousand dollars of my trading capital at risk just to see, if it (the signal) will work this time. Now, another trader might put a Bollinger Band study on a Oat contract or the Mexican Peso and say Cashish doesn't know what the hell he's talking about! I agree, in those markets, I don't. I'll make another example with the use of the Trend Reaction Numbers I found in the Welles Wilder book that was copyrighted in 1978, thirty five years ago. When I first put these numbers on my 6E chart, I often said to myself, "price will NEVER go there," but time and again week after week and month after month these numbers appeared to play a significant roll in the days trading, today I won't trade the 6E without them. Again, another trader might calculate the same numbers for the beans or the S&P and cuss me for even suggesting such a meaningless set of numbers to highlight on his chart. Similar, to the previous examples I have beliefs strong enough to form 6E futures trading opinions regarding the rise and fall of Open Interest based on the L. Dee Belveal book first published in the late 1960's. Whether these beliefs are valid in the Bean Meal contract or Crude Oil contract I have no way of knowing. Lastly, and IMO, most importantly we have to throw all this into a hat, stir it up, and then,,,,,,,,,,,,,MOST of us add our Individual Discretion.
What I'm trying to say is, give your method a chance to grow. Pick one, understand what you're looking at, study it, watch it (in YOUR market) and give it a chance to show it's quality. IMO, We live in a "throw away society" and expect results for our efforts (or the efforts of others) RIGHT F'ing NOW! I believe patience, especially in today's market is a skill that has to be "brought back to life" first, then nurtured.
Watching the Al Brooks video last week made me money. I put those 1/3 of the move lines on my chart and studied them for a few days, I thought there was something there. Friday, I traded them, I made money (twice). Last night (Sunday) I traded them again, I made money. Did go balls out on a blank chart with total disregard for my own system, NO. But the alignment between the two methods was "clean and crisp" and I thought AL's insight into the market might just benefit me, it did. I'm going to keep this tool handy, keep it sharp and use it in the future. Am I going to throw out my system and become a charter member of the Al Brooks Price Action Traders Association, not today. What's the Risk of trying something new, what's the reward. Would I consider putting my trading on a shelf and pursue a music career, NO, but I'm always looking for a new tool to put in my traders tool box. Now I have one with AB carved into the handle. I sure didn't see that coming.
Say it ain't so! Actually I think we have very similar belief systems, and you will never see a MACD on my chart, nor will you see me backtesting anything! And I am all for "give your method a chance to grow," without a doubt.
Regardless of what you say, I think you are a very good writer, and I always enjoy reading your stories...
To quote Samuel Goldwyn, "The harder I work, the luckier I get" I know, who the hell is Samuel Goldwyn, look it up.
Do I take every trade that @Cashish takes, NO, not by any means. I think our beliefs and personalities may differ a bit. He's certainly more aggressive than I am. He's a MASTER, I'm a beginner . One commonality..we both BELIEVE in the studies!
Has he given me the foundation to take trades that I believe will work and take every time...absolutely.
@eminitrdr Please, if I was a Master I'd probably be shivering in my boots at the Davos, Switzerland Summit I've always been and continue to be a student of the market, just like you, realizing everyday offers an opportunity to learn something new. I may have learned the password and the secret handshake to the local "speak easy," but I look at traders like Jamie Thorsen and John Taylor as the Masters of currency trading.
Yes I agree, understanding the "normalcy" of price rotation at different locations can be extremely helpful when placing entry orders, stops and taking profits. I've always considered trading a "one man" sport, me against everyone else. IMO, unlike my trades, the market has no beginning and no end, I spend my time trading in the middle. When I reach the outer limits (ends) all I have to do is look at a bigger picture. Friday's settle 1.3325, Tuesday's settle 1.3324, Wednesday's settle 1.3325 This market is beginning to look like a bomb with a very long fuse.
I hate to sound like a broken record, just re-emphasizing what Mr. Cashish has taught us about location.
I personally "preferred" the long side. Why....PA on volume profile chart, rising POC, price stayed above globex VWAP all morning after 5am EST to name a few. I'm not saying it's right or wrong...just what I saw. Could one have traded both sides...absolutely. I'd guess Mr Cashish would have or did
I simply have a lot of faith and trust in the studies...call it whatever you wish.
Probably better shows what I saw and explained above at the time of the 10am trade....fwiw. I was looking for a retest of the HOD with what I saw on my buy/sell study.
And I am all for "give your method a chance to grow," without a doubt.
