Iterative Refinement

Quote from R/R:

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Bi9: I would like to debate this point.
The 12:30 ES bar remained ON THE LINE (lower lateral horizontal trend line) therefore I disagree with your statement. So let's try to clear this up so we all have the same understanding.
Please take a look here, however the context was VE and LTL. Isn't a Lateral described by horizonal trend lines?
http://www.elitetrader.com/vb/showthread.php?s=&postid=1801255#post1801255
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Glad you brought this up. I don't think the bar crossing the formation boundary gives permission since price is outside the formation. I also drew a dashed faster paced line off the flaw that was just created to see if it might have given permission, even in that case I am not sure.

Spyder could you please clarify if the following situations gives permission to look at the YM:

a) Current ES bar is crossing the formation boundary. Even though price is outside the formation, the current bar is the breakout bar.

b) Current ES bar touches the fast based ES channel however price is already in the middle of the channel. (My interpretation is we don't have permission).

Thanks
 

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Quote from Breakeven:

Or put another way, what did I miss on the 12:28 YM bar? What was the YM telling me that would have kept me short on this bar?
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Begin to think in terms of Dominos Falling and mentally watch them fall as you anticipate the future as it moves into the Now. Price breaking higher on increasing black PRV would then continue to move higher. A change intra-bar would first manefest itself when Price moved off its extreme forming a 'spike' bar, and next creating an Intra-bar Gaussian shift, and then, if Price continued to move opposite of its original direction, Price would break the opposite extreme - creating an Outside Bar. Volume continuing to increase while Price moves opposite of the dominant Volume represnts one of the first dominos of change. Follow the dominos from there.

- Spydertrader
 
Quote from bi9foot:

...Glad you brought this up. I don't think the bar crossing the formation boundary gives permission since price is outside the formation...
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Let's go back to the basic principle of why we use the YM. We understand the YM leads the ES at times of change. So we have defined guidelines of when to use the YM based on times of change only, to eliminate over trading.

Let me pose some questions: Is a lateral breakout a time of change? Isn't this an obvious time to use a leading indicator to perhaps be able to detect an FFBO sooner?

How would you apply the permission rule to an ES RTL breakout? Would it only apply when the leading edge of the price bar touched the trendline or the entire time the bar was on the line?

edit: deleted part of second paragraph that was unclear
 
Quote from cunparis:

I can post the fix if anyone is interested. If the original author is ok with it, I wouldn't mind enhancing it a bit.
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I'm sure anyone trading equities would appreciate any contibutions you can make to the effort.

Quote from cunparis:

I'm curious why you changed from equities to futures.
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Some traders, like myself, start with equities. doing so make it very easy and slow to learn the sequences which take place across all markets. Since equities operates on a daily fractal, a trader has a long time to decide to take a trade or not. Later, those same traders moved to futures in an attempt to apply their knowledge in a more lucrative environment. Some of the futures traders started out learning the futures side several years ago, and started to follow along in the previous Futures Journal. Sometime in November 2006 I began posting Futures Charts to Journal II. You'll pick up the trail when you arrive at the point in the reading.

After seperating the two groups (as was the convention for years with these methods), I decided to recombine the two groups so both could more easily learn from each other's insights. So far, it appears to be working.

The conversation ebbs and flows between the two groups with no one side dominating the conversation. feel free to contribute anytime.

Quote from cunparis:

It seems big. Please let me know if you see anything suspicious.
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Compared to the period of time where you find yourself reading, the Hot Lists are much bigger now. The reason for this stems from the fact that The Final Universe has more than doubled from the 30 or so companies back then - to over 80 now. Nothing looks suspicious.

Quote from cunparis:

Is it ok if we post about equities trades here?
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Most definitely. Post away.

Quote from cunparis:

Good luck to everyone for the week ahead.
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Good Trading to you as well.

- Spydertrader
 
Quote from bi9foot:

Spyder could you please clarify
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What if this specific example isn't an opportunity where one receives permission from the ES to 'go look' at the YM. Haven't you forgot something here? Why did you take the previous trade? YM BO on increasing PRV, right? How do you know what you expected actually occured? One must go back and check at close of bar to make sure what was expected actually materialized. If what must come next, doesn't - expect the trend to change.

This isn't a 'permission' deal. This is a confirmation deal. Always make sure the dominos expected to fall, actually do.

- Spydertrader
 
Quote from Spydertrader:

Begin to think in terms of Dominos Falling and mentally watch them fall as you anticipate the future as it moves into the Now. Price breaking higher on increasing black PRV would then continue to move higher. A change intra-bar would first manefest itself when Price moved off its extreme forming a 'spike' bar, and next creating an Intra-bar Gaussian shift, and then, if Price continued to move opposite of its original direction, Price would break the opposite extreme - creating an Outside Bar. Volume continuing to increase while Price moves opposite of the dominant Volume represnts one of the first dominos of change. Follow the dominos from there.

- Spydertrader
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Thanks for the reply, but after several readings I don't think I am getting the point. What you are saying fits with what I was thinking at the time, but I still ended up on the wrong side for a minute or so.

I saw inc prv as the Ym broke the lateral, went long and started monitoring for more inc volume. As price started to move quickly back down the bar I did see that the more inc was not going to happen, and even saw the possibility of an outside bar, so I got back short.

Not a disaster by any means, but I now feel that I should have paid more attention to what I "knew" was happening on the ES instead of following a wiggle on the YM.

On the off chance you were referring to the circled bars on the chart I drew some lines to the bar that gave me the trouble.

Thanks again for the help! :)
 

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Quote from Breakeven:

Thanks for the reply, but after several readings I don't think I am getting the point. What you are saying fits with what I was thinking at the time, but I still ended up on the wrong side for a minute or so.

I saw inc prv as the Ym broke the lateral, went long and started monitoring for more inc volume. As price started to move quickly back down the bar I did see that the more inc was not going to happen, and even saw the possibility of an outside bar, so I got back short.

Not a disaster by any means, but I now feel that I should have paid more attention to what I "knew" was happening on the ES instead of following a wiggle on the YM.

On the off chance you were referring to the circled bars on the chart I drew some lines to the bar that gave me the trouble.

Thanks again for the help! :)
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FWIW, I found Friday to be tough also. Formations, followed by FBOs, and being slow to reverse or exit resulted in some losses, for sure. The YM bar you descibe sounds like one of those that start out looking great - inc volume on the PRV tool (QT) followed by the tool quickly deteriorating to nothing or even reversing.

I understand totally what you mean by "following a wiggle". I do this too. About the only way to eliminate this, is when it happens a time or 2, I "slow down" my deccision to enter a trade until more than 1 'domino' falls. I'm sure others find value in the finer tools here.

This invariably happens in the midday hours. Less common in the first 1 1/2 hrs and last hour.
 
Quote from Breakeven:

Thanks for the reply, but after several readings I don't think I am getting the point. What you are saying fits with what I was thinking at the time, but I still ended up on the wrong side for a minute or so.

I saw inc prv as the Ym broke the lateral, went long and started monitoring for more inc volume. As price started to move quickly back down the bar I did see that the more inc was not going to happen, and even saw the possibility of an outside bar, so I got back short.

Not a disaster by any means, but I now feel that I should have paid more attention to what I "knew" was happening on the ES instead of following a wiggle on the YM.

On the off chance you were referring to the circled bars on the chart I drew some lines to the bar that gave me the trouble.

Thanks again for the help! :)
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It seems that you are taking signals from the YM rather than using it for clues. If you are trading the ES, I would be hesitant to reverse long on that lateral BO on YM simply because the ES was still deep inside its own lateral. Damn that sounds confusing...

I'm not brushed up on the rules as Ive been gone for a while, but I would think if you are trading the ES it'd be a good idea to wait for the breakout of the ES lateral before reversing. IE breakout on YM doesnt always lead to a breakout on ES

just a thought...
 
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