Making of a method

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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Thank you. Another Aha moment!
 
Quote from dbphoenix:

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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Thoughts on differences between S/R at the extremes versus that in the middle.

If one bases the formation of S and R on the following:

Traders buy on reactions, as price arrives down after passing the middle value zone. They sell on rallies, as it goes back to the other end. While it is not possible to know the motives of individual traders/institutions, one can say that as a composite, as a system, they took action once price diverged substantially from value. This repeating behavior creates S and R at the extremes.

While the extremes may be light on VAP, they attract short bursts of decisive buying/selling pressure. This pressure is sufficient to move price back to the value zone not only because of the motives of traders who buy/sell when price diverges from value, but also because of the lack of opposing pressure. By the time, price reaches an extreme those who had to buy/sell have already done so.

Additionally, they may not be inclined to keep selling at S because they realize that by now price has diverged substantially from value and that there is not much more to gain by betting on a further divergence from value. Thus, there is not much opposition left for the range/reversal traders.

In contrast, the S/R represented by the middle/value zone is based primarily on the large number of transactions around this zone. While one can expect price to lose pace as it reaches a high VAP level, it is less likely to bounce off this level as it does when at the extremes. If it does bounce, PA may be indicating that a new value level is in the making, and price may be getting ready to break through the current range. This may be a good marker for a Breakout anticipation trade.
 
It would be worth testing this to determine if the manner in which price reaches the midpoint is indicative of the probability that it will or won't bounce decisively and head straight back for the extreme and potentially break out of it into a trend.
 
Quote from dbphoenix:

It would be worth testing this to determine if the manner in which price reaches the midpoint is indicative of the probability that it will or won't bounce decisively and head straight back for the extreme and potentially break out of it into a trend.
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Having experienced both stock and futures trading, do you see any striking differences in S/R or trend dynamics between the two?

Since a futures contract always has both a buyer and a seller, the movement of price triggers behavior at both ends.

In stocks, apart from the % of short interest, everyone else is a buyer.

If I have sold a stock and I see it continue upwards without me, my reaction will be different than if I have sold a contract and price moves up against me.
 
FT Day 17 Sept 16

R: 3213 (High)
R: 3208 (LH from PM)
R: 3204 (SH and small congestion from PM)

S: 3194 (PM S and mp of gap up from 3176 to 3213)
S: 3184 (mp of wave from 3155 to 3213)
S: 3182/80 (previous high and previous range top)
S: 3176 (Pre gap level from 13th)
S: 3155/3153 (Previous range bottom)

Story 1: The PM selling has found tested S at 94 and the strength exhibited by the gap up resumes as traders push for the highs.

Story 2: Price fails to cross SH at 3204 and selling resumes, crossing the 94 level and going on to test the pre gap level of 76.

Positives:

I was able to follow up on last week's plan to wait for the cross of DS line on the 1 min before zooming into the 5s for entries.

Negatives:

I continue to hesitate on continuations.

The reasons for hesitating on entering the continuation were:

1) Two quick losses at the 94 zone gave me a reason to pause

Solution: While my Rev attempt off 94 was fine, the quick rejection of this attempt, in combination with the LOLR being down since ON, should have alerted me to look for shorts once price crossed the 94 level.


2) I don't have a clear plan for continuations against S/R. This make me indecisive when a wave crosses an anticipated S/R level.

Solution: If the Rev fails off an anticipated S/R level I need to forget about the prior S/R level and look to join the trend upon LOLR confirmation. If the continuation attempt also fails, then I can stop. If price is at a critical level, then I have to give myself enough chances to join the movement. The method is based on movement off critical points.

http://www.sierrachart.com/image.php?l=1379349510626.png
 
please don't take offense but i think you are still concentrating on to small of a timeframe,the bigger timeframe is more important,the smaller timeframe is what happens between that timeframes s/r.... at supp res, you get flat and wait for it to tell you which s/r is its next target,reverse or continue
 
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