Iterative Refinement
- Thread starter Spydertrader
- Start date
In case you hadn't noticed, you already provided an answer to your question - within your post.
However, in case I have misunderstood the various times listed, have I highlighted the correct bar in the attached snippet? If I have, then you have placed a Point One where a Point Two needs to be. Changing the annotation creates a Point One (and a signal for change) at on the ES 14:20 [close of] Bar. As a result, the 'Peak Volume' bars to which you refer no longer present a problem.
- Spydertrader
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2073860>
I notice that fewer and fewer people are posting charts and I think this is a real shame. I can only presume that those who have reached a point of consistent profitably are not prepared to help others. There are still many here who are struggling to identify signals for change (sfc) at the traverse level using only 5 min ES and without some means of comparison with actual signals, it is only going to make the journey more frustrating. So, fwiw, here's my take on today.
Evidently, a less than satisified visitor to a certain chat room has chosen to author a cautionary tale ...
- Spydertrader
- Spydertrader
IMHO, having a perfect chart is NOT a pre-requisite to becoming profitable. Look back to some of Spyders earliest charts where he was learning to annotate in detail and become skilled at MADA and listening to the market. Surely he was extracting at this time while also deepening his skills.
It is possible that 2 people will annotate slightly differently, but still make their way to the right side. I am not trying to say that focusing on correct annotations are not a critical task (quite the contrary), but that you need to ask yourself the critical questions about your own monitoring skills.
Are you seeing the markets operations?
Are you able to perform ADA which leads to profitability from that?
I have added a few lines to your chart which were present on my chart and which helped me to perform MADA and profit. They may or may not be lines that others have. No disrespect to others, but they help me see the market and profit. This is really the bottom line.
Thank you for your help. I see my error and let me explain. Your highlighted bar is a point 2 and the "point 3" would have been the 14:15 bar (TN time and all times hereafter are TN times). This "point 3" was confirmed, volume-wise by the 14:20 bar, which thus completed the 1,2,3 sequence and as well started a new sequence by virtue of it being an IBGS/JW bar. Where I screwed up was starting a new sequence before completing the old one.
I noticed a few other things in your snippet which I'd like to ask you about.
The reason I started my 'bottom lateral' with the 13:45 bar was because I was using a 2 bar kill rationale with the LM of reference being one which I had constructed beginning with the large pace jump down bar at 11:30. Had you drawn such a lateral, its end would have peeked through the left-hand part of the snippet just below the first red bar and there's nothing like that there. Why did you not draw this lateral?
I could have started my 'bottom lateral' at the same spot you did (the 13:40 bar) and it would have made more sense to do so because this is where the pace jump occured. As I said above I was using a 2 bar kill rationale to govern the start of the lateral, but on further reflection (and I've been reflecting on this before now) I think that this is bogus. In other words once one breaks out of a lateral, it is the FIRST pace jump which dictates the position of a new lateral, if there is to be one, and not the 2 bar kill thingy (or anything else). Correct?
Indeed as you say with the corrected annotation in place there is now no problem with the peak volume signal because I am in a sequence 1 and am a 5 min ES traverse trader. Even if I was not a 5 min trader but rather an 'intra-fractal movement' trader, this would not be a valid change signal. What I just said better be correct or I'll do the dental extraction myself.
I constructed a lateral beginning with the 14:10 bar and I see that you did not. As I look at my concoction I don't see that it serves any useful purpose. In other words the stuff that followed after it was not affected by its presence. In real time though, could one have built such a critter and then afterwards, based on what the market did, discard it as being an example of a "lateral movement that did nothing" as I believe you said one time?
The final thing is the color you give to the 13:45 bar. Presumably this is so because a new high was achieved in that bar compared to the bar immediately prior to it. This type of bar configuration, sort of a "reversed flat bottomed pennant", and its counterpart, the "reversed flat topped pennant", are two doublets which aside from their occurence as what used to be called 'double bottoms ' and 'double tops' generate a "duh" in my mind when I see them. Do you have a pearl you'd like to distribute about how to handle them?
My apologies for the lengthy post but I do find these 'examinations of conscience" to be one of the more useful ways of learning. Again my thanks for your help Spyder.
lj
I do have a Lateral beginning with the ES 11:30 [close of] Bar, but I chose to 'move' the annotation 'out of the way' in order to avoid any confusion about the area under discussion. I apologize if by 'moving' the annotation temporarily, I added to your confusion.
The 'pace jump' as you put it may develop before, during or after Price exists the lateral. In other words, a trader may note the change in pace prior to the first bar out of the lateral, on the first bar out of the lateral, or on the next bar. I prefer to annotate laterals beginning with the bar which shows the pace change. However, the market frequently has its own ideas with respect to where one should annotate. As a result, I defer to what the market tells me.
Dead on exact for the 5 minute ES Traverse Level trader. With respect to 'Intra-Fractal' Movements, medium or fine level tools drive the decision making process, and as such, how fine a tool set used dictates the frequency of trades, and not exclsuively the 5 minute ES. However for purposes of this current discussion, these measures need not apply as the market (on the ES) has provided no 'reason' to seek additional information (from a 'finer' tool set).
When confusion appears on scene, simply check the 'mode' of the market at any point in time in order to 'see' the right side of the market.
Bar 1 - Increasing Black Volume, but Price closes back inside the previous bar - (mode = short)
Bar 2 - Decreasing Red Volume with Price creating a formation (Pennant) - (mode= short [no change in mode])
Bar 3 - Decreasing Black Volume, and price remains inside a formation (lateral movement) - (mode = short [no change in mode])
Bar 4 - Increasing Black Volume, but Price closes back inside the lateral (formation FBO) - (mode = short [no change in mode])
Bar 5 - Decreasing Black Volume with Price closing Outside the previous bar. Had the market mode been long previously, you now have a signal for change, Since the market mode is short, the market has provided no change in dominance here - it formed a retrace bar - perfectly normal in a down trend where increasing red holds dominance. Result? (mode = short [no change in mode])
Bar 6 - Increasing Black Volume with price closing back inside the previous bar - Once again (mode = short [no change in mode])
Bar 7 - Decreasing Red Volume with price moving in the dominant direction. Normally, a signal for change, but we have yet to confirm our Point Three (mode = short [no change in mode])
Bar 8 - Increasing Red Volume (confirming our Point Three) with price closing back inside the previous bar after creating a lower low. Change in Mode. (mode = long).
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2074158>
I recommend viewing these 'Reverse Pennant' bars, as you call them, when created on decreasing (second bar) Volume, as 'flaws' for purposes of annotation. Those individuals using the TN Toolset already have these 'Reverse Pennants' automatically annotated. Due to the increased volatility on decreased volume, one can normally expect to see these bars develop in a non-dominant sequence. Often, 'just' before Price returns to a dominant direction.
HTH.
- Spydertrader