Iterative Refinement
- Thread starter Spydertrader
- Start date
It clearly was a BO after the fact, it is very simple to see. At the time it is a big picture retrace, after the BO on increasing volume and reversing my position, the market is now 12 points away from my entry. Am I supposed to hold through it and then reverse on my BO? I know those are the rules, so would they apply to even something this extreme? My main question here is, how do we handle a fundamental factor (like today for this rally)?
What is the one thing you do not want to see if short? What signal can the market provide when short to indicate your position rests on the wrong side of the market?
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1832848>
Ehorn gave you pretty good advice.
At forest level trading we wash AS SOON as price moves against us and, while I do not recommend staying in a position that moves against you (especially 12 points), had you reversed on the BO, I believe you would be up for the day.
If you entered on a PT1, PT3, or FBO of a forest level - Yes.
The rule is to ALWAYS stay on the right side of the market. This is accomplished by MADA.
If price moves against you, wash and look for a PT1 or PT3 entry on the dominant channel.
This is the ES daily chart attachment from yesterday March 12, 2008.
I missed this morning, but monitored most of the afternoon
So, I realized this morning where thereâs a big hole in my understanding (there are several others). I think it is a resolution issue, but not entirely sure. For some reason, two seemingly competing ideas are difficult for me to sort out. Knowing that the pieces of the puzzle to this methodology should and do fit neatly together, Iâd appreciate any help the Jedi Council can offer.
Assuming a downtrend, the conflict with my pictures boils down to not being able to resolve the following two expectations (or âanticipationsâ):
1) Expecting to hold long after an FTT as long as there is decreasing volume and non-dominant price movement back up toward the RTL
2) Expecting price to begin to decrease if price is increasing on decreasing volume.
Expectation number one comes from the attached document, specifically section âBâ of the Gaussian annotation.
Expectation number two comes from this post by Spydertrader from the âTrend Following Delusion Shatteredâ thread:
Using the following two assumptions:
If Volume is increasing, then Price will continue its trend over time.
If Volume is decreasing, then Price will change its trend over time.
I arrive at the following:
If Volume is increasing, with an increasing price, then price will continue to increase.
If Volume is increasing, with decreasing Price, then price will continue to decrease.
If Volume is decreasing, with increasing price, then price will begin to decrease.
If Volume is decreasing, with decreasing price, then price will begin to increase
Assuming a downtrend, the conflict with my pictures boils down to not being able to resolve the following two expectations (or âanticipationsâ):
1) Expecting to hold long after an FTT as long as there is decreasing volume and non-dominant price movement back up toward the RTL
2) Expecting price to begin to decrease if price is increasing on decreasing volume.
Expectation number one comes from the attached document, specifically section âBâ of the Gaussian annotation.
Expectation number two comes from this post by Spydertrader from the âTrend Following Delusion Shatteredâ thread:
Using the following two assumptions:
If Volume is increasing, then Price will continue its trend over time.
If Volume is decreasing, then Price will change its trend over time.
I arrive at the following:
If Volume is increasing, with an increasing price, then price will continue to increase.
If Volume is increasing, with decreasing Price, then price will continue to decrease.
If Volume is decreasing, with increasing price, then price will begin to decrease.
If Volume is decreasing, with decreasing price, then price will begin to increase
So, to give you real life glimpse of whatâs going on when I get confused (uh-oh!), please see attachment. Still assuming a downtrend, we have a FTT. The next bar we get decreasing volume on increasing price, so we expect the trend to change right? But⦠Iâm also expecting to hold long as price moves back toward the RTL on decreasing volume, thinking that more decreasing volume with increasing price is an acceptable outcome for WMCN (but I shouldnât be thinking this should I?). I suppose these are two separate questions. One is about WMCN and the other about when you know to exit.
Thanks in advance.
Thanks in advance.