Iterative Refinement

Quote from ivob:

No problem with drawing tapes. That's optional I would say. You have to draw the channels however and know what is a tape and what is a channel. You cannot leave them out if you want to understand completely what is going on. The colors don't matter, it's just to make it easier for yourself.



Well. A channel is finally determined by its point 3. A point 3 always has increasing volume. If you draw a channel but there's no increasing volume then it's not a channel (yet).



Annotating pennants and laterals are part of the M of MADA. It's an essential part of the monitoring and understanding what's going on. I'd say you definately are too early with simming as Mike already pointed out.

regards,
Ivo
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I still have way to learn.

Ty Ivo for pointing out that a point 3 always has to have increasing volume with it.

This was my most recent annotation (just before reading your post) :
 

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quote from romanus

Here's my logic:
1. As the snippets in my previous post show that when multiple channels are drawn, the same movement of the price may find itself being part of dominant and non-dominant move at the same time. Look at snippet 1, do you see how bars 3 through 6 is pt2 to pt3 retrace for one channel and pt3 to FTT for another.
a. Those are opposite moves but both moves share the same volume bars.
b. There is only one way to draw Gaussians on the same volume bars.
c. But they suppose to much opposite moves (opposite in a sense dominant and non-dominant).
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This is my first post on ET so please pardon me if there are some formatting mistakes.

To look at the same volume bars and get conflicting gaussians, one can think of making different forest level, tree level, leaf level and bug level gaussians.

If you look at charts over the same period of time using different time intervals (daily, hourly, or any minute fractal), you should see different channels. To draw gaussians using an hourly chart, you will be using the same period of time with probably different gaussians than using a smaller fractal.

Does this make sense?
 
Quote from cunparis:

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But the idea of creating a new channel when I see increasing volume is, at the moment, puzzling me.
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If a bar closes on increasing volume (compared to the previous bar) + price continuing in that direction. Immediately draw a new channel, if possible.

All I am saying is to draw (new) channels as quickly as possible. Immediately process new information. On ES as well as YM. Doing this prepares you for what will come next so you won't be surprised.

regards,
Ivo
 
Quote from romanus:
I tried really hard but failed to see the difference in that logic and the logic I applied constructing this channel:
Bars 17 and 19 are increased black volume.
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romanus,
Your gaussians on bars 1-16 are for a DOWN channel, but on Price you drew an UP channel. That is a MAJOR MIS-MATCH!

The B2B which you recognized is the START of a new UP channel, NOT the p3.

Jack in the reference threads posted an exercise to draw Gaussians, and later posted the answer. Spyder has also posted that drawing early in the futures thread. Also, perhaps this picture will help. I know I am late to this party, and hopefully am not stirring up trouble.
 

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Quote from cunparis:
IBut the idea of creating a new channel when I see increasing volume is, at the moment, puzzling me.
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There are some posts by Mak which discuss "steepening" a channel, in the futures journal I think, though possibly in the Question for Grob thread.

Think about when you're already in a 123 channel (post-p3), and one of the retraces (non-dominant traverses) stops far short of the RTL and begins another dominant traverse on big volume. This is when you can easily see a new channel path developing with a p3 on the beginning of this latest steep travese, and p1 somewhere further back near the original RTL (which is still valid BTW).

I almost always draw either a channel or a tape at the very least on that steep traverse because I can use this new steeper channel to protect profits. (Even if I am not trading, I need to be in the habit of annotating correctly.)

BTW, on another note, it may help to separate sim, trades, entries, etc from monitoring = annotating and analyzing. Thinking about being late and negative ticks is a PnL and action focus which does distract from simply learning the channels, gaussians, and where is the market now? Posting charts & asking questions is an excellent way to learn the first M & A. Truly, there is no reason to think about entries while learning this part - just think about What is the market doing now? and not a position.

Best wishes!
 
I just found at least one mistake in my MADA for the 4/21/08 debrief. Bar 2 showed a change to up. After Bar 2 I should have been anticipating a change back to down after the inc P, dec blk V, and dec volatility. Instead I wrote, "Anticipate change to up." I don't know if that was just a typo or if I was Monitoring incorrectly at that time.

Either way the correct action was to Wait.
 
Quote from LostTrader:

Think about when you're already in a 123 channel (post-p3), and one of the retraces (non-dominant traverses) stops far short of the RTL and begins another dominant traverse on big volume. This is when you can easily see a new channel path developing with a p3 on the beginning of this latest steep travese, and p1 somewhere further back near the original RTL (which is still valid BTW).
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LostTrader,

Thank you for giving an example of what ivob was referring to. When you put it like that, it makes perfect sense to me. That is something I've been practicing doing but must have missed it in the chart I posted (I'm going to go back and look when I get home from work).

I even remember Spyder saying Jack uses the same pt 1 but that Spyder uses the pt 3 as the new pt 1. I've been trying it both ways, using pt 3 as new pt 1 whenever possible (sometimes it just doesn't seem right and then I use pt 1). Have you tried using pt 3 as the new pt 1?

I've also been widening channels too. A really steep channel can't continue forever but sometimes the change signal tells me that the trend is still continuing just not as steep.

I also started this morning the Building Minds for Wealth. I missed this one earlier (I read the channels one but not the mind). After reading just the first 23 pages, it makes sense why one should wait for simming and trading.

I am reminded of Annakin, and I don't want to sim or trade and fall to the dark side. :)
 
Quote from ivob:

Regarding 11:15. Nothing happens here.... Price just went up a few ticks and closed lower in your direction. No reason to exit and even less to go long. Change did not announce itself.

Hope this helps.
Ivo
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FWIW, I saw the LL on decr vol as a signal to anticipate change to long. YM also formed a LL on dec vol.
 

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How anyone can say that volume is NOT a leading indicator of price is simply beyond me ?!?!

Did you folks catch the gaussian formation starting from bar 14-21? As we came up into that FTP and then lateral, and then 14-17 projecting R2R \/. Then the non-dominant black ( \B ) on 18 and 19 to form the PT3. BEAUTIFUL! I cannot say how satisfying it is to be on the right side and let the market push you into profits as the rest of the gang (traders) realize what is going on and then start piling in... Simply Awesome!

On a side note I thought I would share another one of those fun mind games . I thought of the spinning ballerina when I saw this one. Amazing what our mind "Sees" or doesn't :)

http://www.humorsphere.com/fun/8787/colortest.swf
 
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