Hi Padawan, I was revewing the drills and noticed you had asked why I reversed long in drill 3.
We know that volume leads price. We also know the importance of proper and thorough annotations (thanks Spyder, et al, for beating that one into my head
). Now when we monitor and annotate properly, the Gaussians tell us alot about what is going on (and what is coming too), specifically with regard to continue and change. They show us that there are 2 moments where "hold" is NOT the trade. These 2 points (or windows) represent an opportunity to bank profits and stay on the right side of the market. So in drill 3 I did my part:
M - I do my housekeeping
A - I perceived DU level volume occuring on the YM (a trough on the gaussian of our leading indicator)
D - I see change, a trough forming in a gaussian on the YM (1 of the 2 points)
A - Hit "T"
Now that I have performed the sweep, I just keep doing the sweeps and look for the market to confirm or deny the analysis as the future moves into the now. If the market says no, you were wrong, I wash (or reverse) and continue on from there. But if the market says you are right... Cool, you were able to front-run and bank a few more profits!
I can hardly wait to see the next drill (or the next bar in RTH for that matter) to see if the market liked my analysis or not
This is really fun stuff!
You pointed out at least two things that I just wasnât âgetting.â First, SCT involves banking profits at points of change regardless of where we are in the sequence of the trend. For example, in the drill right now weâre at both a potential point two down as well as a potential forest point three up, but whatâs most important is staying on the right side of the market when we see change. Because the context did not suggest a potential forest pt 3 up in the earlier portions of the drill, it made sense to hold through any possible retracement on decreasing black volume. But, when the context changed to include a potential forest point three up, the answer to what must come next also changed (thx, Spyder). Is that the way it goes? Secondly, and this is probably so obvious to many, I had to smack myself on the forehead three times because I was not paying close enough attention to troughs on the YM when, in fact, YM troughs are very important. The DU volume preceding movement in price on YM is just like what we read about in those wonderful equities journals.