House of If You Can Draw A Straight Line

[nopac]

Db, I read your TL thread and the phrase, "...just flow with the major shifts between demand and supply" really hit home for me. I'm not sure what your plan is for this thread but if you have time, would you mind giving us newbies a summary of how to best monitor the shifts between demand and supply?

I've tried to piece it together from previous threads but, as you pointed out, many of the images are missing and it's hard to put it together in any kind of logical order.

I realize that the breaking of a supply/demand line is only the beginning. We also want to watch the behavior of the market after the line is broken. We also want to monitor things like ability/inability to break important horizontal levels after the line break to determine the extent to which demand/supply balance has shifted.

I'm sure there's a lot more to it than just this, so if you, or anybody else for that matter, could give us a quick refresher on that, it would be greatly appreciated.

 

[dbphoenix]

ah , ok , we formed lets say a double top.. ie failed new high.. traded back into a pre-market range and failed to advance from there.... even thou .. shorting the low of the 1 min bar somewhat is risky... (only if one cant see how it develpoed thus far and from then on in realtime)

but then again if one cant take the risk he should better stay out.. or he actually didnt see whats going on within price..

which points out a problem showing only snap shots of price(charts). instead of actuall price movements in realtime or videos.... which is actually the main source one should trade of... (not snap shots)

so.. if one follows price in real time he may see things one who only focuses on bar intervals doesent see.. !?!

thnx DB ..

There are many things one can see in real time or replay that one can't see in static charts, e.g., hesitation. However, in this case, all that one needs to know has been plotted in advance: the trend channel, the first aborted attempt to exit the trend channel, the sideways movement just before the second and failed attempt to make a higher high, the drop below the pre-market range. All this takes place by 0935. One doesn't short just because it feels right, though if he hasn't analyzed the context, that may be all he has going for him.

 

[Scaleout.Scalper]

There are many things one can see in real time or replay that one can't see in static charts, e.g., hesitation. However, in this case, all that one needs to know has been plotted in advance: the trend channel, the first aborted attempt to exit the trend channel, the sideways movement just before the second and failed attempt to make a higher high, the drop below the pre-market range. All this takes place by 0935. One doesn't short just because it feels right, though if he hasn't analyzed the context, that may be all he has going for him.

Cant help myself, great name would had been The House of Hindsight !

 

[dbphoenix]

Db, I read your TL thread and the phrase, "...just flow with the major shifts between demand and supply" really hit home for me. I'm not sure what your plan is for this thread but if you have time, would you mind giving us newbies a summary of how to best monitor the shifts between demand and supply?

I've tried to piece it together from previous threads but, as you pointed out, many of the images are missing and it's hard to put it together in any kind of logical order.

I realize that the breaking of a supply/demand line is only the beginning. We also want to watch the behavior of the market after the line is broken. We also want to monitor things like ability/inability to break important horizontal levels after the line break to determine the extent to which demand/supply balance has shifted.

I'm sure there's a lot more to it than just this, so if you, or anybody else for that matter, could give us a quick refresher on that, it would be greatly appreciated.

Just keep it simple. Is price going up or down or sideways? Has the angle of ascent or descent changed? Is the move "clean" or is every bar a battle? Is there a lot of hesitation? When do traders appear to be running out of steam? patience? time? money?

All of this will come in time, but a great deal of observation is required. If one can't wait to trade, he will merely prolong the process. Once one has a lot of observational data, he can begin to get a feel for what traders want and where they're planning to go. In the meantime, the lines and levels can keep him more or less on the right track and prevent him from losing more than a minimal amount of money.

 

[nopac]

That's helpful, thanks.

I can see what you mean when you say that actual observation of real price movement is necessary to really sense the balance (as opposed to just looking at static, after-the-fact charts. I'm gonna do some replays and see if I can start developing this ability. Would it be accurate to say that a trader needs to develop intuition for this stuff?

 

[dbphoenix]

Once you've put in enough hours and observed enough live or replay action, intuition doesn't enter into it. If you understand what's happening, you can then decide what needs to be done.

Take the NQ, for example. We settled at the mean of the November trend channel I drew above and we're still sitting there. Above us is 54, the level beyond which buyers won't go. Below is 48, the level beyond which sellers won't go. Eventually traders will move beyond one or the other, perhaps tonight, perhaps tomorrow morning. It's your job to decide what exactly you're going to do regardless of which direction traders move. If you don't know, then that becomes your primary area of study. Intuition is not germane.

 

[dbphoenix]

 

[boru]

Good to see you posting on the SLA again Db, I think you were born to teach. God knows you try, and I'm grateful (and many more I'm sure)

 

[nopac]

I've decided to start my own thread based on my attempts to apply Db's SLA method. Would love any comments and feedback you care to offer.

Thanks

 

[dbphoenix]

See chart two posts above for what was posted before the open this morning.

Having lifted off the mean of the channel, price then moves all the way back to the upper limit of the trend channel: