Iterative Refinement

[Spydertrader]

Quote from Jesus_Freak:

I had many stocks reach DU today, and several reached FRV. I am up, and well on almost all of them. I also sold TBSI for a 14% gain today.

Nice Trades.

Quote from Jesus_Freak:

I am still trying to dissect that gap down last week. Some of it was due to the unpredicatability of the effects of an earnings announcement. However, Spyder also challenged me to sit down with the chart and really try to understand it. I am doing so, and rereading information on trendlines and formations, since it seems to be in that area I am missing something.

While I know you'll find value in reviewing the charts, the largest error involved holding through earnings. Even if you miss every other signal the market provides every signal day, following the 'no holds through earnings' rule will save you more frequently than not. In fact, some (in Journal II) used to not trade a stock a week in advance of earnings - in order to avoid the 'surprise' earnings announcements.

Quote from Jesus_Freak:

I guess I am looking for suggestions on whether or not to put stops in before trading opens(because of things like this) and other suggestions on how to deal with situations like this.

The stops are there to keep you from risking too much and to lower risk by keeping a new trader from making too many costly errors while still in the learning phase. Keep them in place for now as they do appear to be doing the job for which they were designed. As you gain experience, you won't need them, nor use them, unless you leave your computer screen for a bathroom (or smoke ) break.

- Spydertrader

 

[tobbe]

Quote from Spydertrader: Do you 'see' Volume in the same fashion as Price - even though your Volume Colors don't match the Price Colors? If not, use the Gaussians as a guide until you can match Volume Color to Price Color.
- Spydertrader

Thank you for going over our charts, and for the advice. I have been reluctant to add 'bar coloring indicators' to my chart because I want to be sure it's me 'seeing', and not only my charting software. But as I think you have mentioned before, that probably leads to unnecessary errors as well (at least for me). Gaussians are tricky, too .

edit: I suddenly realized what you actually wrote. Thank you .

 

[guavaman]

Reflections and queries of a mad man

 

[ivob]

As Jander already pointed out we probably are talking about different bars.

Pls allow me to explain why change was so hard to see for me at this important point of the day and why things where not crystal clear. One could also say I saw change various times and got chopped.

- we had a VE (on ES as well as YM). My mind says you can start to look for change.
- 9:50 we have a pennant on volume levels that could indicate a flaw.
- 9:55 pennant is broken on top on clearly decreasing volume, indicating retrace. Remain short.
- 10:00 We have increasing black. RTL break + lateral formation break. WMCN is more black on the next bar in order for price to continue to go up. This bar surprised me.
- 10:05. WMCN does not happen. We do not get more black. We get decreasing black. At the same moment YM does show a crystal clear FTT (10:10 bar) followed by a RTL break on increasing red 2 bars later. Looks very much like we have to fan out our YM downchannel (using 9:36 as new point 1).
- 10:10 ES shows IBGS and outside bar, red. At the previous bar WMCN did not happen (for a long) and the ES 10:10 bar actually showed me the short side was the correct side.

So what do we have for a long?

- 10:00 RTL is broken on increasing black so we can expect a point 3 up later on (which did happen at 10:15). However, 10.10 started as a point 3 up and was then broken.... (?) and turned into an outside bar. That was crystal clear change to me to the short side.

You stated that YM provided the answer. Is it the 9:52 YM bar where price tried to make new lows and then broke RTL? (where the arrow is) Volume was not that high there and also the next 2 YM bars did not convince me at all. I know it was a IBGS but that bar was red..

Now that I look closely it was a failed pennant breakout on decreasing red and I think I should have given much more weight to this long signal at 9:52 (YM)

Summarizing: My dataset consisted of some contradicting elements in this area but I certainly thought that the data elements supporting the short side were more convincing, at that time.

Should all this have been crystal clear?

I guess I already answered my own question (it was a subtle thing that I missed and I should have waited for the sequences to play out after that). However, as I have been doing these screenshots and writing this post already I am still going to hit the "submit reply" button

Thank you Spyder. How could I have missed that...

regards,
Ivo

p.s. annotations may not be complete because I had to redo it and tried to focus only on the important areas in order to clarify this post.

<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1911946">

Quote from Spydertrader:

You might want to 'rethink' how you define 'flaws.' Considering flaws result from decreasing Volume, and not 'Peak' Volume, I do not comprehend how you arrived at a conclusion of 'flaw' here. Moreover, the 9:50 Bar on the YM (all times eastern) provides a clear signal for change.

So you had a Point Three Down channel confirmed with increasing Volume which created a Volatility Expansion, in addition to the YM showing an IBGS (and an FTT). Just how many signals for change do you need to reach a 'sufficient data set?'

- Spydertrader

 

[ehorn]

I did some work on the bar coloring of price and volume over the weekend. Probably will not interest most folks (exept maybe Callmate ). It looks pretty close to guava's price bars on his charts and the charts that Spyder has posted recently.

If anyone is using Ensign and finds value in coloring the bars similar to the method prescription, I have placed a doc over in the S/W thread which outlines the changes for Ensign.

http://www.elitetrader.com/vb/showthread.php?s=&postid=1911889#post1911889

 

[treeline]

Quote from Spydertrader:

See any differences between the two situations? Subtle differences make all the difference in the world.

Differences:

1. Yesterday's Bar 7 coincided with an economic announcement, whereas today's Bar 9 did not.

2. Yesterday's Bar 7 occurred on Peak V, whereas today's Bar 9 did not.

3. Yesterday's Bar 7 occurred on much higher volatility than today's Bar 9.

4. Although both bars closed below their respective opens, yesterday's Bar 7 closed at the same P as the previous bar's close, whereas today's Bar 9 closed below the previous bar's close.

5. Today's Bar 9 occurred in the vicinity of the previous day's low, whereas yesterday's Bar 7 did not.

6. Aha! There were no valid channels yesterday prior to Bar 7, but increasing black V on Bars 4-6 had already established that up was dominant. Therefore, we should have been anticipating a Pt 3 up prior to down becoming dominant. Bar 7 gave us our Pt 3, our confirming inc blk V, and a VE all in the same bar. By contrast, today's Bar 9 occurred after a valid down channel had ended with a VE followed by a RTL BO on inc blk V. Bar 9 simply looks like the beginning of the Pt 2-3 retrace, which can and sometimes does occur on inc red V. (On a side note, we didn't get inc blk V to confirm the Pt 3 up until several bars later and a fanned Pt 3).

I think difference #6 may be close to what you were wanting me to see. Thanks for the help.

 

[Spydertrader]

Quote from ivob:

Now that I look closely it was a failed pennant breakout on decreasing red and I think I should have given much more weight to this long signal at 9:52 (YM)

Right here. This is everything.

YM leads the ES.

The formation FBO (which also forms an FTT) provides a near perfect signal for change. Since we had a Short Dominant Channel, prior to, this signal, our binary system has just received a signal to head long. Since the YM does lead the ES at Points of change, we expect the ES to follow the YM's lead.

And on the very next bar, the ES does follow the YM's lead, and heads higher.

- Spydertrader

 

[TIKITRADER]

ES M8 Daily Chart May 6 - 2008


ES daily bar formed an outside bar today on increased volume, moved off of the right trendline in a dominant traverse, and closed near the high of the day.

 

[LittleMac]

I know this has probably been answered but I don't feel like sifting through a thousand pages for the answer. Ive looked over the Jokari window again and again and cant seem to relate this to anything. How does one interpret the circled volume bar and corresponding price bar?.... Very High increased red volume and basically no price movement. Essentially wouldn't there have to be another part of the Jokari window that says If Volume is Up and Price is Neutral then....

I mean my thought is that the increased red volume means continuation down since its red and if I was short to hold, thats the basic reading of it, but that doesn't seem safe to me here seeing that it price cant continue down which is what volume says it should do according to basic Jokari window

I'm not attacking the system.... I would just really like a good solid response here.

 

[ehorn]

Quote from LittleMac:

... How does one interpret the circled volume bar and corresponding price bar?...

Here is my interpretation;

The bar is an Outside bar and an IBGS on extreme volume with price volatility compression (not alot of price movement given the extreme volume). Volume (along with price behavior) is signaling change. But price has not yet broken out the SYM pennant/lateral movement. A BO on Volume will confirm direction.

I do not track this stock and would not know if other things affected the action today.

EDIT: Well here is yet another example of Volume leading Price.

Earnings news came out after hours:

http://finance.yahoo.com/q?s=sncr

After Hours: 12.94 -9.96 / -43.49% Vol. 3.08 Mil