This is a daily chart of the ES for EOD as of January 4 2008.
I have not posted one in a while.
I have not posted one in a while.
Iterative Refinement
- Thread starter Spydertrader
- Start date
Don't know why, but this has happened over this holiday period with this data provider.
I have been ignoring what does not look right until things get straightened out.
I just annotate to make sense of what is happening.
I knew there was a SYM. pennant in place following a point 3 down. So I was looking for continuation for price in the dominant trend down on the daily.
We did annotate exactly and wound up in the same place, even though the data was off on part of the provider I use.
This is a little something on how I view Pennants and their relation to Flaws.
Volume displayed on an Esignal daily chart is the volume from the day before. I raised this question recently on the esignal user forum when I could not correlate volume on an intraday chart with the daily chart.
This little efs will correct the problem. Just change the file extension from .txt to .efs
Quote from TIKITRADER:
This is a little something on how I view Pennants and their relation to Flaws.
Fair enough, but one thing that continues to confuse me is how to incorporate such concepts into actual trading using intraday charts..
I had a Tradestation programmer create a realtime indicator that would identify similar patterns on intraday charts,, (thinking I could catch stocks on the move in these patterns) and it was very inconsistant..
What looks good on a 3 min, looks bad on a 10 minute, and 30 minute, etc and no time frame proved consistant..
That why I think using such formation on daily charts is the only thing that might work, and letting intraday volume ALONE (avoid intraday noise on charts) to tell you when it is really breaking out of such a formation.
Not criticising your idea, but it "looks good" but putting it into practice proved difficult.
You might benefit from reviewing this document which is just a bunch of cut and pasting of Spy's words on flaws/formations. I suspect that you misunderstand their purpose in the context of this system... I hope this helps.
Snip from document:
Also, it occurred to me that you may be thinking about equities while TIKITRADER and myself are concerned with e-minis. I cannot speak for equity time fractals.
thank you procrast I will look into it.
I always thought technical formations were reflections of psychology (support/resistance, decrease in volatility leading to explosions, etc) and that the type of instrument didnt really matter. but I will check out.
thanks.
(for the record, I wasnt trying to discredit anyones work, I am still working my way through the basic/intermediate Hershey concepts with equities, so perhaps I havent reached newer material yet, etc)
Its just when I saw that post, it reminded me of my experiences with TS, and how such a good idea "in theory" didnt work
I always thought technical formations were reflections of psychology (support/resistance, decrease in volatility leading to explosions, etc) and that the type of instrument didnt really matter. but I will check out.
thanks.
(for the record, I wasnt trying to discredit anyones work, I am still working my way through the basic/intermediate Hershey concepts with equities, so perhaps I havent reached newer material yet, etc)
Its just when I saw that post, it reminded me of my experiences with TS, and how such a good idea "in theory" didnt work
Thanks for giving me credit but. . .
I wish it was my idea. I have spent the last year learning this method with a very good group of people who contributed a huge amount of their time. Above all Spydertrader.
The flaws were covered for a good part of the year, and you can find them in detail starting September 1 in the futures journal.
I will try to help you here best I can on how these work.
They work on all time frames, and they are easy to see once you learn to identify them, and where they are taking place in the traverses of channels.
Learn to identify them first if you don't know already. You can find a large amount of that information in September of the futures journal.
Once you have the ability to recognize them , and what kind of flaw,or formation it is that you are looking at, then you want to get to this point.
Look at the last bar in the formation, the one that will be the bar that is giving clues as to its break out. Yes you can see a failed break out of a formation, at that point you continue to look at the next bar that forms.
Keep an eye on the dynamic close of the bar. It should be telling you something in the direction it toggles in.
If it toggles repeatedly towards the support or resistance , it is taking out a piece of the support or resistance each time. It weakens the wall that is present, until it can break right through.
Also note the volume at this point, you should see increasing volume over the previous bar or bars. That is another piece to identify if this is where a break out may occur.
The purpose of trading a flaw may be for the simple reason that you are already in a position in the direction of the trend.
Then a flaw forms and you will have the ability and knowledge to hold and continue your position, or see a sign of change in the formation and exit the trade. Unless your goal is to become an sct trader then you would see a sign of change and trade into the new direction of price.
I can only give you so much here in one post as it had taken a great amount of time between a group to see this unfold. If you have followed what was covered already, then just reread that section because a second time through always helps things to become clearer.
Attached is a diagram of this, and it is shown on one formation to see what is happening. Just apply the same to all formations.
Watch these formations all day. Take plenty of screen captures and record them. Capture them as they form before a breakout , then right as the breakout occurs. Do a large amount of them over a period of three months. Review all of the screen captures every night and on weekends pull them all out and compare them. Keep in mind how the close of the break out bar was toggling , and how it finally broke out.
Take notes on what you had seen on the close of the bar, type of formation, time of formation, volume on the bar (increasing ? ), and date.
Then compare notes to screen shots.
It takes a huge amount of time, and if you are willing to put in the time you will see things you had not identified previously.
EDIT: I have made a post related towards the futures and I aplologize for any mix up taken place here.
I am forgetting that this is a new journal for all to share and I posted as if it was the futures journal.