Iterative Refinement

[Spydertrader]

Quote from Jesus_Freak:

Stocks

Two days ago, Price provided a Formation FBO (from a Lateral Formation). Hence, we see a signal for change. No opposite signal for change signaled from the market from then until peak Volume today. As such, entering short resulted from your failure to recognize the market signal. Congrats on 'seeing' the correct signal and trading it. However, the clues provided by Peak Volume remain crystal clear. Someone trading with real money should not require an answer to this question.

With respect to flaws, we covered this topic extensively in last year's Journal along with formations. I recommend a thorough review.

- Spydertrader

 

[Jesus_Freak]

Quote from Tums:

Draw the Gaussians on the volume and the picture will shine through.

Tums,
Though I try to pay attention to volume, I am still working my way through channels in the futures journal. However, I have looked at the brief summary of Gaussians and can see how they work in a "perfect" channel, i.e. no flaws, and a perfect FTT, i.e. R2R and B2B situations. However, when it comes to seeing it in more complicated situations, I have yet to "see the light."

I have attached a basic attempt at it. It seems to me that we have a few days ago a typical B2R situation in a black channel. I have corrected June 14th to be a black channel and one sees steadily decreasing black volume the next two bars. Then we see increasing red volume. This suggests that it is going to traverse back down the channel. Then we get today. An inside bar with decreasing volume. I have not gotten to the description of flaws yet in the futures journal, but from what I gather in reading here and looking at peoples charts, this may be one. Here is my "uninformed" understanding

Flaws
1) Dip - a bar that moves in the opposite direction of trend, is not an inside bar, but is on decreased volume.
2) Hitch - An inside bar on decreased volume.
3) CCC - a series of inside bars with low volume.

If my understanding is correct... this is a hitch, so far, with the potential to become CCC.

Again, I understand the basics of volume (decreasing volume=change, increasing volume=continuation, extreme volume=change) but the finer details are still beyond me.

Thanks Tums

 

[ehorn]

Quote from Jesus_Freak:

...I must admit a macro bear bias was also weighing in here....

IMHO, It is very important to always maintain a neutral bias and do what the market dictates (as viewed through the principles taught).

I thought I would throw up a longer term (daily fractal) view of WAB, to highlight the importance of annotating all operating channels.

HTH

 

[Jesus_Freak]

Quote from Spydertrader:

Two days ago, Price provided a Formation FBO (from a Lateral Formation). Hence, we see a signal for change. No opposite signal for change signaled from the market from then until peak Volume today. As such, entering short resulted from your failure to recognize the market signal. Congrats on 'seeing' the correct signal and trading it. However, the clues provided by Peak Volume remain crystal clear. Someone trading with real money should not require an answer to this question.

With respect to flaws, we covered this topic extensively in last year's Journal along with formations. I recommend a thorough review.

- Spydertrader

1) As far as the peak volume issue is concerned... you're right. It is clear. As I look through the history of WAB (or any stock, I suppose) in the Equities Chartscript 5.0, the rule is confirmed (as if there should be any doubt). One just has to look at bexp today to see what peak volume means as well. I guess I get unsure of myself sometimes.

2) I am reading through last years journal and I am sure I will get there eventually.

Thanks again Spyder.

JF

 

[TIKITRADER]

ES U8 Daily Chart June /19/ 2008

Daily ES bar made a LL and a LH today on increased volume. Also the bar formed an IBGS and failed to close outside of the lateral movement.

Daily bar range = 17.5 points

Volume exceeded yesterday by 90,520.

Close of daily bar = 53% of range today.

 

[Jesus_Freak]

Quote from ehorn:

IMHO, It is very important to always maintain a neutral bias and do what the market dictates (as viewed through the principles taught).

I thought I would throw up a longer term (daily fractal) view of WAB, to highlight the importance of annotating all operating channels.

HTH

Ehorn,
Thanks for the reminder. That's why I mentioned my bias, as I realize that was probably the primary reason for my mistake. When the bias becomes the context I am seeing things through it results in seeing things incorrectly.

Thanks for that longer view. And another reminder of the importance of seeing those large channels. It was not "necessary" for me to see the trade today, but it certainly makes it crystal clear. it would have also made my decision easy at the end of the day today. With the huge macro channel draw in, along with the extreme volume, the decision is easy.

JF

P.S. I am going back to some charts that confused me the past couple of days and drawing larger channels..... very enlightening

 

[cnms2]

Change signals:
-Peak volume.
-Increasing volume with reduced price bar range.
-Intrabar gaussian shift.
-Lateral movement FBO.

Quote from TIKITRADER:

ES U8 Daily Chart June /19/ 2008 ...

 

[Mr_Black]

Dear Uncle Forest please send me Point III

 

[tobbe]

Chart for today. Interesting mix of laterals and sharp moves - not to mention the action by the CO RTL at about 13:10 - 13:20.

I find it a privilege to have access to Spydertraders journals, and even more so that he still finds time to post in this one. Thank you, again, Spyder.

Something else I've been meaning to write for a while -- I think there is a subtle difference between "this looks like an inside bar, volume is down, I'll draw some yellow lines for this formation and we'll see if it holds" and "oh, look NT is drawing a lateral". At least when it comes to training the mind. IMHO, of course.

While I'm at it - Spydertrader has repeatedly stated the importance of 'thoroughly annotated charts'. Now, how do you learn to do that? I used to think I was 'annotating thoroughly' ... ok, so I didn't put everything on the charts, but I "knew" what I left out and they sure looked the same as Spyders to me..., almost at least, with a few (to me) unimportant differences...

In the journals there are several references to the importance on posting your charts in public. Avi 8 told me to do just that, in the ET chat room - 14 months ago. Do I wish I had listened? It makes all the difference. So if you're anything like me, stop hiding and start posting. Hopefully, you'll discover something.



I will not be posting any charts for a while. I'll be travelling, for some time.

 

[Spydertrader]

Quote from tobbe:

In the journals there are several references to the importance on posting your charts in public. Avi 8 told me to do just that, in the ET chat room - 14 months ago. Do I wish I had listened? It makes all the difference. So if you're anything like me, stop hiding and start posting. Hopefully, you'll discover something.

Excellent advice. Enjoy your travels.

- Spydertrader