Iterative Refinement

[Spydertrader]

Quote from Specterx:

It occurred to me that there was no increasing black (=blue) volume after pt3, which (afaik) makes the channel invalid - is this correct?

Correct. One must 'see' increasing dominant Volume after a Point Three to confirm a valid channel.

Quote from kat007:

After reading Atari's - the only context I could come up is that at bar 6 - one should hold UNTIL pt3 arrives and THEN look for VE, Flaw, FTT. What am I missing?

You aren't 'missing' a thing. Clearly, the Jokari Window tells us the market has indeed signaled 'change' on Bar 6. However, because we know the 'sequences' of Price and Volume, we know Point Two follows Point One, just as Point Three follows Point Two.

Since the market already showed us increasing black Volume we can know the market has left Point One and continues to progress to Point Two. Once a trader then 'sees' a signal for change, the trader then knows the market has reached Point Two and plans to travel to Point Three. Once the market arrives at Point Three and confirms the channel, the trader should then begin to watch for signals of change. Holding through the retrace of Point Two to Point Three insures two things. One: the trader avoids finding the position whipsawed by the market, and Two: the trader avoids 'jumping fractals' and maintains the correct resolution level - at all times.

As such, while Bar Six did signal change, the market simply signaled a move from Point Two to Point Three.

Learn the sequences from Point One to Point Two to Point Three, and you'll, not only 'see' change, but know the reason to hold.

- Spydertrader

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1910802>

 

[Specterx]

Quote from kat007:

I'd like to thank Avi 8 for initiating today's discussion and Atari for the valuable analysis - I tried to apply Atari's analysis to bar 6 to see why one should hold until bar 9 - (I'm annotating only with the ES) - when bar 6 closed - it's too obvious to me that it MUST be a change - Retrace has started (decr Vol) - and Price had the IBGS character - When bar 7 opened and quickly moved lower - I was very happy to see that my anlysis was right .. until bar 8 of course! After reading Atari's - the only context I could come up is that at bar 6 - one should hold UNTIL pt3 arrives and THEN look for VE, Flaw, FTT. What am I missing?

I wasn't watching the market RT until a few bars later, but that would have puzzled me as well. Some possible answers:

- On the Coarse Level you might be waiting for a Pt3 to be established to establish context before entering (I would be, at least). Bar 6 could be seen as a Pt3 of the carryover channel; Bar 7 would then show up as an FTT of that same channel at some point intra-bar and you'd reverse (wash or small loss depending on entry). The pt3 for this carryover channel was eventually established on bar 9.

- Also on the Coarse Level, if you were looking for a new Pt3 up then bar 6 wouldn't have been an entry since we hadn't yet seen a non-dom traverse out of the tape from bar 3 (this traverse occurred on bar 7).

- If you were trading on a finer resolution, bar 7 would show up as a BO of the tape that quickly turned into an FBO (breaking back into the RTL on high PRV, plus analysis of the DOM/YM/short-period ES) - again allowing for a wash or small loss depending on entry

 

[Specterx]

Spyder, I have a question about your gaussian annotations from this morning.

I see that you annotated bars 9-12 as an area of increasing red, with decreasing red from 12-14. I marked bars 3-8 as increasing black and 9-13 as decreasing red, since that's what the formation looked like to me. Clearly your annotation is correct from a p/v standpoint as we know now that bar 9 marked the beginning of a dominant traverse, but I saw those four red bars as a period of generally decreasing red volume.

Is the key here that bar 9's volume was less than bar 8 (decreasing B) and also less than bar 10 (increasing R, indicating a B\/R), and that once established the increasing red pattern holds until we see some change in the price pattern (in this case, FTT and BO of the tape on bar 13?). So a gaussian vector holds for exactly as long as a sub-forest-level price formation (a tape or a pennant) holds, and gaussian peaks/valleys always and only occur at the ends of these formations...

 

[Spydertrader]

Quote from Specterx:

Is the key here that .....

Nope.

The key here is that your software doesn't color Price and Volume Bars correctly. As a result, you 'see' things differently - which often results in a missed signal or two.

A few Solutions:

1. Change the default settings for Price and Bar Coloration in your software.

2. If your charting software doesn't allow for Solution One, obtain new software which does permit proper coloration of Price and Volume.

3. Mentally translate the Price and Volume Bars into their correct coloration.

Good Trading to you.

- Spydertrader

 

[limitdown]

Quote from Mr_Black:

more trades i think this one was BO from lat formation....

just curious,

those fib notations, were they software generated or manually applied?

 

[Mr_Black]

Quote from limitdown:

just curious,

those fib notations, were they software generated or manually applied?

I don't use Fib numbers...????....All my notations are manually applied

 

[Specterx]

Quote from Spydertrader:

Nope.

The key here is that your software doesn't color Price and Volume Bars correctly. As a result, you 'see' things differently - which often results in a missed signal or two.

My price bars are indeed colored incorrectly (it's on my to-do list of things to fix ) but our volume bars are the same. See the attached side-by-side pic; I overlaid your annotation on my chart in dark blue/dark red. The difference is that you marked the three 'intra-tape' bars (between the two FTTs) as increasing red. Avi8's chart from p.523 shows something similar, but he placed his increasing-red peak at bar 13 (tape FTT/IBGS/pt2 down) while yours is drawn a bar before.

The problem is that I needed to show increasing red at some point, but I didn't; I was comparing the red volume after bar 9 to those blue peaks prior to bar 9, and then got fooled again by the general "downtrend" of volume across those four red bars (10-13).

A follow-up question: if the move following bar 9 had been a non-dom traverse leading to a bounce off the RTL/FBO, rather than a breakout of the trend, would bar 10 necessarily have shown lower red volume than bar 9 (or, if bar 10 became an IBGS/FBO of the uptrend, lower volume within the 'red' portion?)

 

[palinuro]

Hi,

The postmarket discussion always happens to late for me, but here's my ES chart and Log for yesterday AM.

I had a couple of specific questions (in the "YM" column), but appreciate any feedback. I seem to be stuck in repetition of the same uncertainties and mistakes, and think I need help to move beyond.

Thanks

-palinuro

 

[Spydertrader]

Quote from Specterx:

I was comparing the red volume after bar 9 to those blue peaks prior to bar 9, and then got fooled again by the general "downtrend" of volume across those four red bars (10-13).

Increasing or decreasing refers to the previous bar, and not, some 'general downtrend' or prior peak.

Quote from Specterx:

if the move following bar 9 had been a non-dom traverse leading to a bounce off the RTL/FBO, rather than a breakout of the trend, would bar 10 necessarily have shown lower red volume than bar 9 (or, if bar 10 became an IBGS/FBO of the uptrend, lower volume within the 'red' portion?)

1. Traverses by definition involve significantly more bars than one.

2. Non-dominant by definition requires decreasing Volume.

3. One could 'see' increasing Volume as price retraces in the Non-dominant direction in three specific examples (previously discussed in this thread). Outside of these examples, Price moves in a Non-dominant direction on decreasing Volume.

- Spydertrader

 

[Spydertrader]

Quote from palinuro:

Why not change and New point Two (if Trading These)

You did have change and a New Point Two. See my chart posted yesterday. The 'retrace' simply developed over the end of one bar and the beginning of another. For this reason, I advise holding through Points Two and Three.

Quote from palinuro:

Is holding through retrace correct here?

I can't see the bar in question on your chart, but if the 'retrace' involves Point Two to Point Three, then yes, holding through this specific retrace remains a good idea. If the area in Question does not involve Points Two and Three, then follow the signals for change.

- Spydertrader