Making of a method

Quote from dbphoenix:

As for high VAP, you aren't going to find that at extremes. VAP is highest at the midpoint of a range.
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If the swing point occurs at a level which has acted as past S/R, then VAP may be relatively high (not highest), giving the anticipated S/R level more importance.

Edit: I am experimenting with using VAP to help me approximate how strong a potential S/R level may be, which then influences the amount of confirmation I need when price is at that level.
 
Quote from game:

If the swing point occurs at a level which has acted as past S/R, then VAP may be relatively high (not highest), giving the anticipated S/R level more importance.
More...

Actually it should be the opposite. The highest volume occurs at those levels where the greatest number of trades have taken place, i.e., the middle. The fewest number of trades take place at the extremes, therefore the least volume.

Additionally, swing points don't necessarily act as S/R. They exist solely because traders were unable to find trades past those points.
 
Quote from dbphoenix:

Actually it should be the opposite. The highest volume occurs at those levels where the greatest number of trades have taken place, i.e., the middle. The fewest number of trades take place at the extremes, therefore the least volume.

Additionally, swing points don't necessarily act as S/R. They exist solely because traders were unable to find trades past those points.
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what about selling/buying climax ? , also if price gets rejected at a swing point (lack of trading/ unfair high/low..) , it might be the case that if price trades back to that swing point that it gets rejected again , and therefore acts as res/sup ? .. not ? .. despite that ,every range starts with a swing point ..
 
Quote from MadeMan:

what about selling/buying climax ? , also if price gets rejected at a swing point (lack of trading/ unfair high/low..) , it might be the case that if price trades back to that swing point that it gets rejected again , and therefore acts as res/sup ? .. not ?
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A climax may not even register on a VAP plot, nor is volume necessarily high on a climax. More often the volume comes in at various points prior to the climax.

As for swing points, yes, if price hits a particular level over and over again, it can provide S/R, but then it's no longer a swing point. The key is "volume at price", i.e., total volume at a particular price.
 
Quote from dbphoenix:

A climax may not even register on a VAP plot, nor is volume necessarily high on a climax. More often the volume comes in at various points prior to the climax.

As for swing points, yes, if price hits a particular level over and over again, it can provide S/R, but then it's no longer a swing point. The key is "volume at price", i.e., total volume at a particular price.
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ah ok .. didnt know it was about VAP .. i dont even know what VAP is.. is this something from MarketProfile ?
 
Volume At Price, i.e., the number of transactions at a given price. It's a standard plot. You can plot it at BigCharts or StockCharts among other places.
 
FT Day 15 Sept 12

R: 3189 (High and multiple retested R from 10th)
R: 3185/84 (High from 11th and LH from PM)
R: 3180 (DB from PM)

S: 3174 (SL from 11th and tested ON. Also, was the Low from the 10th. Important level)
S: 3060 (Low of 11th)

Story 1: The climb up after the test of 60 yesterday, confirms the trend as up. The test of the SL of 74 during ON confirm this hypothesis. The multiple test of this level shows that someone is willing to support price here. The LOLR is up.

Story 2: Recent PM action shows formation of LH's after price turned down from 84 and broke through PM S level of 80. 83 is also the highest recent VAP level. Price more likely to continue ranging between 74 and 84, until a definite break out of the value zone for a test of high at 89.


Review:

A repeat of yesterday's mistakes. I have the method and I see it work. But I am being thrown off by this idea of entering close to S/R. This idea has been taking my attention away from the method guidelines. It is a simple method. All I need to do is get better at executing it.

My method guidelines are:

Method: Trade in direction of LOLR at confirmed S/R levels.

1) Before the session, create context with two competing stories.
2) Wait for price to reach anticipated S/R level.
3) Observe PA to determine if tentative S/R becomes confirmed S/R.

For Reversals:
Tentative S/R becomes confirmed S/R if:
Price crosses DS line either through the passage of time or through extent of Rev wave.
Use DS line on 1 min to determine this.

For BO's:
Tentative S/R becomes confirmed S/R if:
Price breaks above level and the retracement does not go back inside value zone

4) Once S/R has been confirmed:
Wait for price to return back towards S/R level and place stop in direction of LOLR.
Use the 5s here.

5) Let the trade run unless it reaches an anticipated S/R level that turns from tentative to confirmed.

Other notes:
If price is close to a S/R level during the open, go directly to the 5s.

http://www.sierrachart.com/image.php?l=1378997992540.png
 
BO/REV strategies may not work for you here because not only are you in a trading range between 70 and 90 but the limits are poorly-defined. Therefore, don't beat yourself up for something that's largely outside your control. What is within your control is whether or not to trade at all until the market clearly tells you what to do.

As for the VAP, I have no idea what you're looking at. Could you post something visual?
 
Quote from dbphoenix:

BO/REV strategies may not work for you here because not only are you in a trading range between 70 and 90 but the limits are poorly-defined. Therefore, don't beat yourself up for something that's largely outside your control. What is within your control is whether or not to trade at all until the market clearly tells you what to do.

As for the VAP, I have no idea what you're looking at. Could you post something visual?
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74 had been defined as an important level by me. Once price fell there, the Support was not clean (as mentioned by your earlier comment regarding poorly defined limits). Nevertheless, my trades at this zone were outside the method guidelines because 74 had not been confirmed as either S or R at this point.

Instead, S came in at 70. However, the Rev wave off 70 crossed the tentative S/R level of 74 AT 0844. The retest of 74 confirmed S at the 74 zone and thus any long entries off this zone were high probability trades.....

Action (whether down or up) off the 74 level should have been a high probability trade for me.


I have marked the trades that should have been taken.
http://www.sierrachart.com/image.php?l=137900622934.png


Regarding VAP:

My thinking is that the repeated tests of 84 confirms it as R. However, while the rejection occurred during the 11th and 12th, it is the large number of trades at this zone from the 10th that constitute the core of this R level.

They make it an even more important R level than normal because any long attempt to break through this zone will find a lot of trades to work through. Having this context, the trader could either be more aggressive in getting out of long trades or more aggressive in positioning for shorts once price reaches this level.

http://www.sierrachart.com/image.php?l=1379005245486.png
 
Quote from game:



Regarding VAP:

My thinking is that the repeated tests of 84 confirms it as R. However, while the rejection occurred during the 11th and 12th, it is the large number of trades at this zone from the 10th that constitute the core of this R level.

They make it an even more important R level than normal because any long attempt to break through this zone will find a lot of trades to work through. Having this context, the trader could either be more aggressive in getting out of long trades or more aggressive in positioning for shorts once price reaches this level.

http://www.sierrachart.com/image.php?l=1379005245486.png
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Just don't forget that the R that the midpoint of a range represents is not the same as the R represented by the limit of the range and trading each may call for different tactics. And I'm sure you know that what the VAP looks like depends on the point from which you begin plotting. If you were to start at a later point, you would most likely find that 80 is more important than 84, and since you're trading today and not previous days, the most current plot will likely be the most relevant.

Which is one reason why I stopped suggesting that people use VAP :)
 
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