Iterative Refinement

Quote from ljyoung:

...You CAN'T get a traverse level signal for change until AFTER the old 1,2,3 is completed and we already know what that involves. So don't look for 'signals of change' when looking for your point 2 unless you wish to trade that retrace as a tape trader. It CAN'T be a reversal.
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I disagree completely with this. (that it cannot be a reversal)

Anything can happen. Anytime. To be absolutely sure there will be a point 3 is predicting.
How do you know some news (or whatever) doesn't come out at some moment destroying your complete perfect picture.
It happens.

You really have never seen price moving up on increasing volume (point 1-->2) and subsequently moving down on increasing volume never making a point 3 up.
It happens.

The point is that as soon as we get the increasing red we know this cannot be a 2-->3 traverse (providing we are not breaking a lateral or a steeper RTL and don't have a spike bar). So we simply assume we have a new 1-->2 traverse the other way. What we thought to be point 2 becomes point 1. If we are quick we don't lose much.

So you don't always simply hold until you get a point 3. In the case you get increasing volume against what you thought to be the dominant direction then you don't hold and you don't expect a point 3 anymore but you are on your way to a new point 2. There has been a flaw in the sequence.

So in my opinion reversals can happen anytime. The good thing is that the market will give a signal so we can respond.

regards,
Ivo
 
Quote from Spydertrader: 07-26-08 03:15 PM

Nicely done. In addition, another of the 'three times' one can 'see' increasing volume when Price moves in a non-dominant direction (Right trend line Break, Formation BO / FBO or 'Spike' Bar) also appears on the chart. ....
- Spydertrader
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Spydertrader
I want to make sure I’m not interpreting your above comments, too literally. I know Lateral Formations and Pennant Formations are included when considering a Formation Bo/FBO. Are Lateral Movements considered to be in the group of “Formations”?

Thanks,
Phineas
 
Quote from ivob:

I disagree completely with this. (that it cannot be a reversal)

Anything can happen. Anytime. To be absolutely sure there will be a point 3 is predicting.
How do you know some news (or whatever) doesn't come out at some moment destroying your complete perfect picture.
It happens.

You really have never seen price moving up on increasing volume (point 1-->2) and subsequently moving down on increasing volume never making a point 3 up.
It happens.

The point is that as soon as we get the increasing red we know this cannot be a 2-->3 traverse (providing we are not breaking a lateral or a steeper RTL and don't have a spike bar). So we simply assume we have a new 1-->2 traverse the other way. What we thought to point 2 becomes point 1. If we are quick we don't lose much.

So you don't always simply hold until you get a point 3. In the case you get increasing volume against what you thought to be the dominant direction then you don't hold and you don't expect a point 3 anymore but you are on your way to a new point 2. There has been a flaw in the sequence.

So in my opinion reversals can happen anytime. The good thing is that the market will give a signal so we can respond.

regards,
Ivo
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Hi ivo,

As you did with me, so I must disagree with you. It is a verity, a truth, an absolute certainty that: No 1,2,3? then no reversal. Retrace, yes but reversal, no. I am as certain of this as I am that on God's green earth, if you drop an apple from your hand it will hit the ground. The 1,2,3 is the "sequence" thingy.

All you have to do, as a traverse trader, is sit on your duff and wait for the reversal AFTER the 1,2,3. That's what Jack and Spyder (and I'm sure others) do. He has said a gazillion times that the thing he does most is HOLD. Well, the 1,2,3 is why.

lj
 
ES Daily Chart August 8 2008

The green non dominant traverse of this down channel needed a valid retrace.
I have annotated a dashed dark brown trendline.

I would like to know if it is a valid retrace?

If so price will resume the dominant for a second time and then we look for a change signal.

Any feedback?
 

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Quote from ljyoung:

Hi ivo,

As you did with me, so I must disagree with you. It is a verity, a truth, an absolute certainty that: No 1,2,3? then no reversal. Retrace, yes but reversal, no. I am as certain of this as I am that on God's green earth, if you drop an apple from your hand it will hit the ground. The 1,2,3 is the "sequence" thingy.

All you have to do, as a traverse trader, is sit on your duff and wait for the reversal AFTER the 1,2,3. That's what Jack and Spyder (and I'm sure others) do. He has said a gazillion times that the thing he does most is HOLD. Well, the 1,2,3 is why.

lj
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Hi,

So you say a tape on increasing volume cannot be followed by a tape on increasing volume in the opposite direction?

I don't have to look back very much to see examples of this.

Just enter on point 1 and wait for point 3 blindly and you get killed big time. You need to monitor very well how the movement from point 2-->point 3 is.

Ivo
 
Quote from Spydertrader:

Oddly enough, the above quote falls in direct conflict with how the market actually operates.

- Spydertrader
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Well you have seen many more charts than me so I am open to learn.

How can you actually know for sure that something will not happen at some moment?

All it requires is suddenly many buyers or sellers coming in.
How do you know this won't happen?

I agree that if it does happen the market will logically signal it and one can take action probably at an early stage.

I even recall one skype chat in the beginning of this year where we were all expecting a point 3 down including you. What happened was increasing black bar after bar and new highs. I remember you saying literally: "These things just happen in the market"... I never forgot this.

Another quote I recall: "When you see increasing red, no need to be in the trade anymore". This involved an uptrend.

Anything can happen, the good thing is the market will show it.

regards,
Ivo
 
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