Fractal Theory I

[baro-san]

I recently read a decent post:

How to trade
tl;dr– Learn multiple methods, leverage what you know works in each of them rather than trying to copy any one method.

Step 1 - Find a trader who seems super smart and is willing to share their knowledge (whether it be via forums, chat rooms, published writing, or in person). Learn as much as you can from them and try to replicate their method to the T. Be wary of anyone selling knowledge. If the knowledge was good, they wouldn't need to sell it to make a living.

Step 2 - Realize that you will almost certainly not be successful by strictly trying to replicate someone else's method.

Step 3 - Repeat step 1 with an additional trader or two.

Step 4 - Use all that you've learned to create a new hybrid method, where each strategy you've experience some success with in the past informs the setups of other strategies. IMO this is when you become profitable as a trader, and it's usually at least a couple years after starting. Based on your hundreds to thousands of hours of screen time with different methods, you will have developed your pattern recognition and be able to spot especially high probability opportunities where "the stars align" and you will be able to walk away from opportunities you might have taken before. You want a trade to scream at you, not be something you agonize over.

My Journey
tl;dr– Learned many methods. 1000+ hours of screen time and letting one method provide context for others is what made me profitable. I don't trade at the moment, so I can focus on my work.

I started learning from this weird guru named Jack Hershey who was retired and spent all his free time sharing trading knowledge in his local community. The problem was he was kind of batshit crazy, and an attention whore. But there was value in what he was teaching. You can find his old posts online if you search for them.

I had some luck trading stocks using a beginner's method of his whereby you filter a universe of stocks by certain criteria, then map where they are in cycles that correspond to price/volume advances/declines. The ones that are in "dry up" volume and in the right part of the cycle you monitor like a hawk and then buy when they start to go up on increased volume (pro rata volume for the day is 3x the dry up volume level). The idea is you front run the big moves in a high probability way.

With some success under my belt I moved on to his more advanced stuff, which was less a method than a way of thinking around price/volume. At it's core, price advancing on increasing volume followed by price decreasing on decreasing volume is a bullish pattern that repeats itself (and forms channels). Watch for the opposite to identify a reversal in the trend (price decreasing on increasing volume).

Jack was a little nuts and thought it was possible to be "always in" but reverse your position at certain points based on price/volume analysis. He thought it was the ultimate in "capital efficiency". But he never offered to demonstrate this to anybody. I assume he was full of shit.

Of Jack's huge following, one guy appeared to be having the most success - a guy who goes by Spydertrader. He created a series of epicly long trading journals for the eminis where he took what made sense from Jack's methods and created his own method based on it. It's essentially channel trading but with much more nuance, and bringing in price/volume for context. The instructional focus seemed to be mostly on drawing channels in a religiously particular way, day in, day out. What I and others got most from this exercise was massive accumulation of pattern recognition and training myself to see patterns in a contextual way.

I had the pleasure of meeting Spydertrader in person. Very down to earth guy, loves Nascar, super friendly, and on the verge of retirement (he was bringing in $20k+ a day from trading for a few hours). I remember being online with him the day of the crash in 2008, and he made over $70k shorting the emini futures.

I was trying to trade futures using his method at this point but not having much success. I could identify a lot of the setups but it seemed like when I tried to put them into practice myself, there were little bits of context I was missing that would often make the difference between profit and loss.

I took a break, finished college, and got consumed by my work. At some point, I started to get interested in trading again, after watching a video by a guy going by the name of Petefader. Search for his threads on Babypips - he was similar to Spydertrader in a lot of ways in that he seemed to have a method he was very confident in, and was spending a lot of time sharing it with the community. He also spent time on a Skype group explaining live setups to anyone who wanted to listen. This method was focused on using fibonacci retracements (with some additional nuance) to make money on the EUR/USD.

I started to see tons of overlap with setups from Spydertrader's and Jack Hershey's methods. And where there was overlap, I seemed to have a higher success rate. I was profitable.

Petefader started evolving his method some to be more based on VSA/Wyckoff, and started a new trading journal to reflect this change. This got me going down the Wyckoff rabbit hole, which goes deep. Again, I saw a ton of overlap between VSA/Wyckoff, fibonacci, and Spydertrader setups. Suddenly the iffy setups from Spydertrader's method I could filter out because of the context provided by VSA/Wyckoff. I was even more profitable.

At this point trading was taking over my life. I live in the US but was up at strange hours for international Forex markets, because that's when the action was. I decided I couldn't live like that, and wanted to focus on my work more anyway. I had trading alerts set up on my phone, and they would interrupt personal time with friends / loved ones, or even interrupt my work. Not good for overall sanity and relationships.

Today, I'm just a long term holder, but I do like to think about trades and follow Bitcoin/Forex, but only when it's convenient for me and fits into my life. My favorite posters here are probably /u/trem0lo and /u/lowstrife.

Reference Links
(in the order I consumed them originally)

Spydertrader Equities Journal I
Spydertrader Equities Journal II
Spydertrader Equities Journal III
Spydertrader Futures Journal
Spydertrader Futures Journal II
Petefader Youtube Video
Petefader Youtube Channel
Petefader Fibonnaci Trading Journal
Petefader VSA/Wyckoff Journal
VSA Simplified
Tom William's Master the Markets VSA Book

Hope this is useful for some...​

 

[Bnnf]

I read this on reddit too while looking for the Skype recordings wilddog talked about

 

[xioxxio]

I recently read a decent post:

At this point trading was taking over my life. I live in the US but was up at strange hours for international Forex markets, because that's when the action was. I decided I couldn't live like that, and wanted to focus on my work more anyway. I had trading alerts set up on my phone, and they would interrupt personal time with friends / loved ones, or even interrupt my work. Not good for overall sanity and relationships.

​

This comment makes no sense to me, if you were profitable change instruments that way you can have your cake and eat it.

As far as the skype recordings don't hold your breath. I suspect those that have it are long gone.

 

[Bnnf]

As far as the skype recordings don't hold your breath. I suspect those that have it are long gone.

It feels so...

Attached, find my chart for yesterday, i had a harder time annotating than on Tuesday.
I had to correct a lot of my gaussians after a couple bars passed when realizing that couldn't fit that way. You will not find annotations on the price pane, i chose to focus myself on volume, except for the purple ellipse where i have a doubt about my volume annotations (that doesn't mean the rest is right anyway...) , should we always find a complete sequence on the faster fractal?

 

[llIHeroic]

Here are a few basic corrections. I've already spoken to you about fixing up your bar-to-bar annotations, and there has been discussion earlier in the thread how to start with bar-to-bar trend-lines and build them properly from there.

Also, see recent post #252. We don't have random gaussians and trendlines placed where ever they seem to fit. There are orderly geometry and sequential events that play out in each fractal. Volume moves in tandem with price in a specific way. I'd advise you to slow down, clean up your annotations a lot, and focus on building a comprehensive annotation skill-set. You can't just ignore price annotations or you're going to be lost without the proper context to look for volume cycles.

midtown gave you some great and detailed analysis of starting from small containers and building a larger fractal, with the volume sequences that go along with them. I would give his post some more study and try to conform your annotations more to his and other examples that have been given previously.

 

[midtown]

I have plenty of my own errors and omissions, but FWIW here is how I saw that section.

 

[Bnnf]

Thanks to both of you for the help, attached find some screenshots illustrating my procedure to construct the containers mentioned in [9-17]Messy Annotations.

Concerning post #252, if statements A, B, C, D are the rules you use to create your gaussians, aren't you just supersposing a zigzag chart on your volume pane ?
I will definitely try that though, i'm probably missing something.

Question to midtown, i ignore if it is intentional or not but i believe you didn't provide a capture of "that section", anyway, why aren't bars 47 and 48 nested in a container ? I assume you fanned the one they were nested in, but if it is the case, why aren't bars 53 and 54 nested in a container either ?

Seeing how that day developped as i'm coming back home i hope you all had a great day as well as i wish i was able to trade such moves...

 

[midtown]

Sorry, bnnf, my omission. You are right, bars 53 and 54 should have been in a container.

 

[llIHeroic]

I appreciate the effort you've put into communicating your thought process. Take a look at some of these notes. You've really got to dig into the details and build things from the ground up; bar-to-bar taping creates FC's, FC's build larger fractals, etc. Gaussians follow a continuous pattern on each fractal, which corresponds with the containers we build in the price pane. Container equality and geometry are necessary for building fractals properly. Hope this helps some.

 

[baro-san]

...

I start that move this way: