House of If You Can Draw A Straight Line

[Futures Track]

dbphoenix,

Sorry if I'm being dense -- my Appendix F is on Fear and it doesn't seem to answer my question.

I'm assuming "price takes off" means a supply or demand line is crossed. Is this correct?

 

[dbphoenix]

These are the rules from the beginning:

1. Track the balances between supply and demand with straight lines. Don't hug price like Spandex. Otherwise your line is guaranteed to be broken for what may be nothing more than a stumble.

2. When price takes off in one direction or the other, wait for a retracement.

3. Enter on that retracement, a few ticks above the trough of a \/ retracement or a few ticks below the crest of a /\ retracement, and stay in until your line is broken. And by "broken" I don't mean that price pokes the line. As long as buyers are in charge, stay long. If sellers are in charge, stay short.

4.When the line is broken, exit and wait for a retracement in the opposite direction.

5. Continue until you enter chop (two consecutive trades that don't go anywhere and are accompanied by a higher low and a lower high, i.e., not trending).

6. Wait patiently. Quit when you get tired and start to lose focus.​

These, however, apply at the end of the process. The process begins with

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

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

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

The fourth step is to manage the trade by monitoring the balance between buying pressure and selling pressure, exiting when the balance is no longer in your favor.​

If price is not trending within the timeframe chosen, e.g., a month, then

First, find a range, preferably one with an easily determinable upper and lower limit.

Second, determine where price is within that range.

Third, locate the extremes.
​

Terms like "break" must be defined by the trader depending on his level of confidence, i.e., how afraid he is of the trade. The more fearful he is, the more confirmation he will want. The more confirmation he wants, the more likely he is to enter late. The later he enters, the more likely he will be to get stopped out and lose money. All of which can be avoided by addressing fear directly rather than coming up with lists upon lists of rules, hence Appendix F, which deals with all of this specifically.

 

[Futures Track]

Hi.. thanks..

I've seen this text in your document, but I'm having trouble trying to incorporate it into my trading plan. I trade the YM on one minute bars between 9:30 and 11:00 Eastern. Ninjatrader has this wonderful ability to allow lines that are drawn on a daily chart to be transferred automatically to a 1M chart. I believe that I may be able to improve my trading by doing so.

Here is the daily YM chart that I have drawn on the basis of my reading of your document. My reading is that (1) the trend is long and (2) We're between the lower and the middle of the trend.

Could, under some interpretation of your rules, the black arrows that I have drawn (something that could potentially happen in the near future) represent a taking off and a retracement which would make a \/ pattern?

Thanks again... your help is much appreciated.

 

[dbphoenix]

Incorporating this into someone else's trading plan is beyond my purview. All I can do is clarify what I've written and help, if I can, to clarify what's in W's course (which few people want to read, which is why I wrote the SLA/AMT in the first place).

In any case, your chart is drawn incorrectly. Within this limited timeframe and without considering anything that occurred before, your channel should be drawn as follows:

Your chart appears to have been drawn in hindsight, but I may be incorrect in that.

Until price breaks through either the UL or LL of this TC and "takes off", the only option available is reversals off the UL and the LL.

Edit: before my editing window closes, I'll point out here as I point out in the Afterword to the pdf that the SLA/AMT is training wheels, not an off-the-shelf trading system. And even though it's certainly not black box, if one wants to create a consistently-profitable trading plan from this stuff, he must study -- not just skim, not just read, but study -- the source material, i.e., W's course.

 

[Futures Track]

dbphoenix,

Thanks... Are you saying that my chart should ONLY have the red lines you have drawn or that it should have both the black lines that I have drawn AND the red lines you have drawn?

 

[VPhantom]

chart is drawn incorrectly. Within this limited timeframe and without considering anything that occurred before, your channel should be drawn as follows:.

Quick question: here you drew a support line above, and cloned it below this up-sloping range, in order to use the earliest data points possible. However, shouldn't upwards trend lines be drawn based on a demand line?

In the case of this specific chart from left to right, the first possible second support point I see is in December, and a second less steep one is in January as @Futures Track drew originally. (I think I remember the PDF mentioning "fanning" gentler slopes as a trend matures into a slower longer term pace, which is why I mention both months.)

 

[dbphoenix]

Quick question: here you drew a support line above, and cloned it below this up-sloping range, in order to use the earliest data points possible. However, shouldn't upwards trend lines be drawn based on a demand line?

In the case of this specific chart from left to right, the first possible second support point I see is in December, and a second less steep one is in January as @Futures Track drew originally. (I think I remember the PDF mentioning "fanning" gentler slopes as a trend matures into a slower longer term pace, which is why I mention both months.)

The ranges are being missed entirely. Trendlines and channels aren't going to work because there hasn't been a trend since the end of November.

I'll reconstruct the whole thing later.

 

[Futures Track]

OK, much appreciated. I'm going to read the document again...

 

[dbphoenix]

As the interest is sincere, I'll begin at the beginning. Shoe-horning this stuff into somebody's else's perceptions does not end well.

How to find a trend and draw a trend channel, per Wyckoff:

How to find a trading opportunity:

 

[dbphoenix]

And the trade off the 1m. I was going to do this myself but thought it would make a nice quiz. Anyone who wants to play is welcome to do so.

The DTs are freebies.