Iterative Refinement

[guavaman]

Quote from northchuck1:

Could anyone comment on trading last friday's ES between 10:30 and 1:30.

Called on FTT on the ES 10:50 bar, entered long. Then the YM had inc. red PRV at 11:00, so reversed short.

Questioning my decision at this point, but even if I would have stayed long on the FTT, the 10:10 ES bounced off of the 20 SMA, and the YM had a breakout down on inc. red PRV - second chance at reversing short. The question "what comes next", inc. black PRV if I called the FTT correct did not happen.

But then I bounced around for the next two hours in what ended up as a two hour later channel, anyway seems to me. I kept reacting to spikes in PRV, only to have it retrace the other way, always finding myself on the wrong side of the lateral channel. Losing all the while.

Volume was still above dry up, but I really missed the boat during this time frame. Any words of wisdom, or how this would be traded would be appreciated.


Edit: Meant to say a three hour lateral channel !!

Since I don't have the benefit of reviewing a replay of the market my interpretation may be a bit off. With that said here is my take.

I had the FTT at 10:40 bar with the 10:50 bar creating a PT3 up. I bring this up because in my view you entered on the PT3 and not an FTT a point of distinction worth noting. In both entries you were on the right side of the market.

The 10:55 bar was increasing black, but also formed an IBGS which indicates change (on some resolution). Even though the 10:55 bar is not an FTT, in my opinion, reversing short on the 11:00 bar was an option especially since PRV was showing increase. At the 11:05 bar permission was again given to look at the YM . The YM was in a formation lateral off an Sym. pennant. The direction Price breaks out of the lateral on increasing volume indicates what the right side of the market is. The 11:06 YM bar breaks up.

The lower black volume on the 11:05 bar told us to anticipate change. The 11:10 forms a FTP (on increasing red :eek: ). Since ES is in a pennant formation we hold. The 11:15 bar forms a lateral, continue to hold long. The 11:20 bar is decreasing red volume, continue to hold long (on our resolution). Again I am not able to see how PRV acted on either the ES or the YM, but looking at my static YM chart and it doesn't appear that YM really showed increasing red volume in any significant way, although I may of course be mistaken here .

....and that's the way I saw it

 

[Haroki]

Quote from LittleMac:

Haroki,

what would the higher high, lower low higher low, lower high info show you with regard to the Guassians? Are you simply saying the fact that the March 2 bar in ASIA has a lower high and a lower low means the stock is actually experiencing incr red and therefore a BO of a channel. Cause I have ASIA currently in a lateral movement starting from the large green bar several days ago. Just wanted to see what insight the bars are giving you. Todays bar is an Outside Bar but the stock still continues in the lateral.

Comments appreciated

For me, a lateral that has a 30% range is playable. Think of it as a neutral channel. Lotsa room to work with there. Today would have been a bad example due to the outside bar, as you noted, but oppurtunities DO exist. Look at my chart and see the oppurtunity there.

For example, I did just that with CUB today, for a quick 4% Take a look at your chart there. Friday was low volume, red, and closed juuuust outside the lateral. So it was on my hotlist to go long, given its love for the mother of all laterals.

But the real lesson is to learn that a higher hi/ higher low is in general a BLACK volume bar , regardless of what the charting software gives you. There ARE exceptions, of course - say you have a stock that has a daily price range of 28-30 dollars, and closes at 29. Tomorrow opens at 29, has a high of 30.50, but closes at 28.50 on higher volume. Higher hi, higher low, but closed down at the lowest price. So what did you have for the day? If you were to look at a 30 minute, or a 5,2,3 stochastic, you'd probably see a shift to down volume as being dominant, and thus should be short.

Lotsa stuff! But if was easy......

 

[northchuck1]

Quote from guavaman:

Could we trouble you for a chart of the offending time frame?

Actually I've been comparing my pathetic channels to the charts you've been posting. Seems you're the daily chart poster for now.

Keep 'em coming, it's greatly appreciated. Gives me something to compare to and think about my own channels.

 

[northchuck1]

Thanks much. This is just the medicine I need sometimes.

Quote from guavaman:


The 10:55 bar was increasing black, but also formed an IBGS which indicates change (on some resolution).

I

So what is a forming IBGS ?? Inside Bar ?? Eleven months following this and this is one I've missed.

Quote from guavaman:

Since I don't have the benefit of reviewing a replay of the market my interpretation may be a bit off. With that said here is my take.

I

I've got a camtasia of that day. Been doing most days as of late. Give me a shout if you're interested in it. They typically run about 650m.

 

[northchuck1]

Quote from Ezzy:

That's a really good catch. If starting with a 2 bar channel, you do get a volume increase and VE. But it's still only a tape at this point, not a channel. Still looking for point 2.

- EZ

Given that chart (2/29), then how would one draw the channels after that VE at 12:30 ? I'm assuming the VE is the pt. 2 itself. Is the 12:35 or 12:40 bar the pt. 3? Kinda throws the whole pt. 3/VE thingy off. Can anyone show the "corrected" channels" ??

 

[northchuck1]

Quote from northchuck1:


So what is a forming IBGS ?? Inside Bar ?? Eleven months following this and this is one I've missed.

Okay, I'm a little slow. Intra-bar-gausian-shift ??

 

[Avi 8]

Quote from guavaman:

...I had the FTT at 10:40 bar with the 10:50 bar creating a PT3 up. I bring this up because in my view you entered on the PT3 and not an FTT a point of distinction worth noting...

Excellent Gman! It is worth noting because we are thinking of SEQUENCES of possibilities. Get started at the wrong point and the CONTEXT is different.

The 10:55 bar was increasing black, but also formed an IBGS which indicates change (on some resolution). Even though the 10:55 bar is not an FTT, in my opinion, reversing short on the 11:00 bar was an option especially since PRV was showing increase. ...

Very Good!

Note the inc red volume though. What does this mean?
These are the SEQUENCES we must have cold. Notice we now have TWO different CONTEXTs to deal with and must think about each of their SEQUENCES.

Notice Gman's chart posted on Fri. I added the fanned RTLs due to the inc red telling us we are still in a downtrend. AND at the same time we have a new channel UP. Two more FTTs show up because of these fanned RTLs. See how the SEQUENCES start to add up? What can we do? Is it confusing?

We keep running through ALL the possibilities and rule them out, one by one, as the day progresses.

...The lower black volume on the 11:05 bar told us to anticipate change. The 11:10 forms a FTP (on increasing red :eek: )....

Aha! No 'eeks', just the market 'telling' us to check our channels. Are they drawn correctly? The gaussians will tell you. I revised the gau to show incr red - dec red TO inc blk, which 'happens' to correspond to the BO of the 'fanned' RTL.

<img src=http://elitetrader.com/vb/attachment.php?s=&postid=1816972>

 

[northchuck1]

Quote from guavaman:

At the 11:05 bar permission was again given to look at the YM . The YM was in a formation lateral off an Sym. pennant. The direction Price breaks out of the lateral on increasing volume indicates what the right side of the market is. The 11:06 YM bar breaks up.

Sounds reasonable. But seems the 11:05 bar is just a failed BO to me. Coming back inside the channel. Not at RTL, not at LTL, no inside formation. Why permission to go to YM ?

 

[northchuck1]

Quote from Avi 8:



Aha! No 'eeks', just the market 'telling' us to check our channels. Are they drawn correctly? The gaussians will tell you. I revised the gau to show incr red - dec red TO inc blk, which 'happens' to correspond to the BO of the 'fanned' RTL.

<img src=http://elitetrader.com/vb/attachment.php?s=&postid=1816972>

And just when I think I've got his comments figured out !!

You've confused me with your correct gausians. After the black to black, then you're FTT, I'm cornfused the way you've drawn them.

Have to make it simple stupid for some of us !

 

[northchuck1]

At this rate, I'll hit 50 posts by April !

Geez, my brain is fried. I've been looking at channels since 8:00 this morning. Starting to have dreams about gaussians ! Sick puppy !!!