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Mr. Ocean's SLA Journey To Competence
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Mr. Ocean's SLA Journey To Competence

  #81 (permalink)
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DannyOcean View Post
Track the imbalances between Supply and demand with straight lines. When price takes off in one direction or the other, wait for the retracement.

So if executing with the hourly, track that with straight lines. Since we're looking for a short to ride out the mean reversion, longs aren't a wise choice.

Good so far?
@DbPhoenix

How does all of this apply to the chart above?

Where and how does this intersect the weekly trend channel?

Has the stride been broken? Where?

Do you have a retracement after the break? Where?

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  #82 (permalink)
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DbPhoenix View Post
How does all of this apply to the chart above?

Where and how does this intersect the weekly trend channel?

Has the stride been broken? Where?

Do you have a retracement after the break? Where?

This all takes place at the top of the weekly trend channel.

The stride has been broken about 2 days prior to the last day shown. We are in a retracement after the break at the far right edge.
@DbPhoenix

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  #83 (permalink)
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DannyOcean View Post
This all takes place at the top of the weekly trend channel.

The stride has been broken about 2 days prior to the last day shown. We are in a retracement after the break at the far right edge.
@DbPhoenix

So according to the rules, what do you do now?

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DbPhoenix View Post
So according to the rules, what do you do now?

Short the retracement. On the Daily.

How does that translate to the Hourly?

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DannyOcean View Post
Short the retracement. On the Daily.

How does that translate to the Hourly?

The first step is to determine the current trend of the market (Wyckoff): the Weekly

The second step is to determine one's place in the current trend: the Daily

The third step is to determine the proper timing of one's entry into whatever it is he's trading: the Hourly.

See the pdf if this is not clear.

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So once the stride is broken on the Daily, I go down to the Hourly to determine the proper short entry. Correct?
@DbPhoenix

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@DbPhoenix

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DannyOcean View Post
So once the stride is broken on the Daily, I go down to the Hourly to determine the proper short entry. Correct?

If post 85 is not clear, and the examples in the pdf are not helpful, I really don't know what more to do.

I'm sorry. Perhaps some other method would be more suitable.

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DbPhoenix View Post
You say "right track" as if there's only one way to do this, but it is anything but mechanical.

I don't remember if I said so in the book but the charts in the book were done in real time at the time. Therefore they are no more than an illustration; they are not a template. Trades were taken, for example, without regard for time of day, largely because this is used all over the world, and traders in England and Eastern Europe have opportunities that we don't, so to consider the overnight as "noise" is at best insensitive. The most one can take away from all this are the principles, which was the intent.

This is further modified by the trader's individual quirks, particularly with regard to risk tolerance. If and when one becomes supremely confident with this, a 10 or 20pt stop may be nothing. A 40pt stop may be another matter. But one can't prescribe any of this. There is also the issue of management, which at the beginning tends to be cautious. As one becomes intimate with his market, the management may become looser, enabling the trader to hold longer; he knows when a particular break or pullback is nothing to be concerned and when it signals real trouble.

Having said all that, you are enmeshed in lines and channels. If this were a recipe, you'd be timing the "beat at medium speed" so that it took exactly three minutes, no more, no less, without ever thinking about what exactly this beating is supposed to accomplish, much less why it's being done at "medium". What you have here is way beyond too much.

The point is to go short when price hits the upper limit of the weekly trend channel. Where and when and how one goes short is detail. The objective is to be short at a level and at a time when one is at least reasonably secure in his decision to be so.

I have a problem viewing dark on black, so I'll provide my own example.

Let's say that for whatever reason you want to go short at the test of the channel in February (as distinct from any other test):

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One could short using weekly bars, and some big-money traders trading OPM might do just that. But you aren't willing to assume that much risk. You want something more precise. So you look at the daily:

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Though you wouldn't know it at the time, in real time, you've got 10 days to decide what to do. How do you know when to enter? And where? This is where the SLA comes in:

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There's no reason to enter until price is done testing the upper limit of the channel. Once the last fanned demand line is broken, you can take an aggressive entry, aggressive in that there's no lower high. Such an entry would also mean a stop that may be too wide for you: note the DP.

You could also wait for the lower high and enter there. This would mean more information and the price would be about the same, plus the DP would be lower. Or you could take the third entry, but this is available only in hindsight. Price could easily have plunged after the second entry, and there are neither an information advantage nor a price advantage in waiting for it, even if one somehow knew that it was in the cards. If even the second DP represents too wide a stop, one can enter any of these retracements using a 30m bar, or 15m, or 5m, or less. Any of these would mean a much tighter stop. What is more pertinent is whether or not you'd be there to take it. However, if you can see price approaching the extreme of this channel, you can make it a point to be there. Or assume the risk of a wider stop. That's your choice.

Using a more recent example, which is a short off the upper limit of the range rather than the trend, given that the last test of the trend channel was two months ago, one can see that although the previous daily swing high has been tested, the hourly demand line had not yet been broken. This isn't necessarily a deal breaker, but it's something to consider.
If one chooses to wait for these breaks, he can see that the upper limit is being tested again after the open on the 24th.

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If he elects to go short there, and why not, he can zoom in all the way to the 5m chart and enter with as tight a stop as one could reasonably want. And if price breaks through this level and makes a higher high, he can plan for that trade as well.

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After that, it's just management. No surplus of lines or channels or whatnot. Just follow the price.

I think fear is getting the best of me and I'm just looking for confirmation after confirmation. It does make sense, and I appreciate your help all along the way.

This post, especially the hourly chart, helped me immensely. I just want to clarify some points:

1. The first red dot would be an aggressive entry given that the last swing low hasn't been broken and because there isn't a LH yet, correct?

2. The second red dot is more suitable given that the last swing low was broken AND you have a LH to go off of, correct? The only thing that messes with me about this entry is that this swing high exceeds the previous high before the entry is triggered (right under the grey "DP"). This entry also provides a smaller stop at the grey DP because a LH has been printed?

This is all dependent on being at the extreme of the Weekly channel, of course, which it is.

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You are (a) viewing all of this in hindsight and (b) not following the rules properly. Due to these, your focus is on the potential losses incurred by making what are essentially random trades. Given the width of the stops that appear to be necessary, it is not unreasonable to invoke fear.

Rather than skip around, I suggest sticking with one trading opportunity at a time. You have for the most part been interested in entering on or about 3/23. Focus on that. Then move on to something else.

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