Iterative Refinement
- Thread starter Spydertrader
- Start date
Things would look different on the next bar when the tape is broken but with the information given in the drill I would still find it difficult to know if the sequence was complete at the 5 min traverse level. It hinges on whether on not the last bar shown (the spike) was dom or non dom and whether or not a lateral was involved beginning with the second black bar. I have seen pace acceleration many times on the first bar of a lateral on your charts so clearly that is not the deciding factor. Unfortunately, correct annotation of dom/non-dom bars depends heavily upon correct annotation of laterals. I would really appreciate an explanation of when and when not to draw a lateral.
The point to which you refer represents the final bars of the previous day, and the opening two bars of the current day. A significant difference in Volume is almost always going to devlop when comparing Bar 81 to Bar 1. As such, a trader assumes non-dominance until the market proves otherwise. At the end of the previous day, the market had created an Up tape comprised of decreasing black Volume and increasing black Volume. The appropriate annotation (from the Gaussian Standpoint) is B2B. Within this annotation, the trader has heard the market signal its departure from your namesake, as well as, its arrival at Point Two. We know the market must then move from Point Two to Point Three. Since Point Two to Point Three represents Non-dominant movement the trader annotates with a decreasing red Gaussian. After the market arrives at Point Three and begins to head off into the area bounded by the trend lines, the market returns to the dominant Gaussian Annotation. Note how each gaussian accurately reflects the tapes which, in turn, accurately reflect the market's transition from Point One to Point Two to Point Three - and off into the trend.
HTH.
- Spydertrader
HTH.
- Spydertrader
The answer is ....
Draw one when the market tells you it is appropriate and do not draw one otherwise.
Right about now, you are, no doubt, thinking this answer doesn't help you.
Later, you might think otherwise.
- Spydertrader
And we were meant to able able to annotate the segment this way solely with the information we had for the drill?
I know the gaussians match the tapes, but they do not match the change in volume.
Binary vector. You are showing vectors going in the opposite direction to the rate of change. Fine, it fits the sequences (such as they are in this example). But what is the objective logic?
I'm afraid its the same issue I had previously - I couldn't explain this to someone else and keep a straight face.
Bar 2 (increasing red volume) also represents an Increased Volume with Decreased Volatility, a signal for change which occurs on the 'tape' level. So the pieces of puzzle beginning to fit as we arrive at Point 3.
Would the fact that the market has not finished the sync yet, account for the fact that Bar 2 is not the type of increasing volume (Spike, Lateral BO/FBO and RTL break) which one normally sees between Point 2 and Point 3?
Most definitiely.
When the trader sees a volume change from increasing to increasing, the trader knows only two possible scenarios can create such an event.
1. The previous sequences have ended and a new set of sequences have started.
or
2. The market has completed moving non-dominant and has started moving dominant.
The Gaussians represent dominant and non-dominant movement. Often, these changes correlate to increasing and decreasing volume. However frequently they do not. Lateral Formations represent one example of non-dominant movement where increasing volume often materializes.
Rare is the occassion when Bar 1 will show decreasing Volume over Bar 81 on the previous day. Such an event does happen, but not very often. As such, one must mark Bar one as non-dominant until the market proves otherwise. When the previous sequence ended, the market created a dominant tape. A trader knows the market moves thus - dominant, non-dominant & dominant. Since the market already created a dominant tape (and of the previous day) and the trader knows the market had reached Point Two, the trader knows what must come next - moving from Point Two to Point Three.
Quote from PointOne:
I'm afraid its the same issue I had previously - I couldn't explain this to someone else and keep a straight face.
I agree it is the same issue you had previously. However, I remain highly confident you can overcome it.
- Spydertrader
Thanks so much for the drill and taking the time to critique everybody - so very helpful!