Observations (an example)
- Thread starter fortydraws
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Referencing the chart in #69.
Focus ...
Hi fortydraws,
I'm confused by your down arrow (post #73) and the side arrows (posts #73 and #74). Can you briefly explain?
Am I correct in assuming that your meaning of "focus" is to identify areas of supply and demand, and that the red boxes (post #72) is to highlight the areas of balance between supply and demand?
I have found the answer to the red boxes when I re-read pp32-34 of Db's SLA-AMT e-book.
I'm confused by your down arrow (post #73) and the side arrows (posts #73 and #74). Can you briefly explain?
Am I correct in assuming that your meaning of "focus" is to identify areas of supply and demand, and that the red boxes (post #72) is to highlight the areas of balance between supply and demand?
I have found the answer to the red boxes when I re-read pp32-34 of Db's SLA-AMT e-book.
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I will preface this post by saying the use to which I put DbPhoenix's work is not necessarily as he intended it. I do my best to understand, but I am an apprentice too, and DbPhoneix is welcome to step in and correct me at any time he thinks I pose a danger to myself or others 
"First, find a range, preferably one with an easily determinable upper and lower limit. Second, determine where price is within that range. Third, locate the extremes. At this point, you have three options: a reversal, a breakout, or a retracement. If, for example, price bounces off or launches itself off the bottom of the range (support), trade the reversal and go long. If instead it falls through support, short the breakout (or breakdown, if you prefer). If you don’t catch the breakout, or you prefer to wait in order to determine whether or not the breakout was “real”, prepare yourself to short whatever retracement there may be to what had been support and may now be resistance. A more boring alternative is that price is nowhere near the top or bottom of any range that you can find but rather drifting up and down, aimlessly. No change is occurring; therefore, there is no trade, or at least no compelling trade." DbPhoenix, Whyckoff and Auction Market Theory, page 34
Step 1: Find a range
This was the first thing I learned when I started working on using SLA. Go back to DbPhoenix's old SLA journal from summer 2013, and look at the charts I was posting. From the start, I was learning to find the range. I may not have always had it right, and I flub it up sometimes still, but without a range, I'd truly be winging it. I didn't even have the benefit of DbPhoenix's handy little FREE primer at the time. But of course, being step one, DbPhoenix mentions this all over the place.
What do I mean by "winging it?" If you don't find the range - using AMT on daily/weekly/hourly trends, and/or as I often do, use ranges between what Wyckoff calls "trading points," then where are you going to look to trade? The middle of nowhere? Most likely. So you will most likely take trades right where finding an edge on the likely direction of trade is least likely. How do you think that is going to work for you?
Lacking this basic foundation for organizing your observations leads to questions such as "what about the swing low at blah blah blah." If price isn't at the extreme of the most readily identifiable range that I am trading, then what you might think is an important swing low is just prior traffic in the middle of nowhere to me, and I'll let price tell me I'm wrong. If you are not first finding the range which will direct you where to look for trades, you will likely end up analyzing every wiggle and squiggle and not getting anywhere.
In my opinion, and it is only my opinion, the chief cause of failure in applying SLA/AMT is right here at step 1 - failure to find a tradable range and the discipline to only look for trades at those extremes. When trading at extremes, when trading at trend channel limits and at support/resistance levels(which I understand to be the extremes of a trading range, and not every inconsequential reaction pivot in between as price makes its way from actual trading range extremes), even your bad trades shouldn't be so bad. And your good trades will be awesome in comparison.
As I said before, there are a few others working on this who I communicate with through PM's. I don't expect any of them to necessarily raise his hand, but each one has asked me at some point "how do you take profits" or some form of "when is it over," and each one can tell you I always say the same thing: I usually assume price is going to work its way to the opposite extreme of the range. So for me, the trade is over when price has travelled as close to the other extreme of the range as the market appears it is allowing it to go. Supply and demand lines, higher lows and lower highs are the chief tools I use to determine a trade's "uncle" point. In the middle of nowhere, I typically wait for both a demand line break and a lower high, and vice versa if I am short.
So for those preparing to begin the observation period, start at step one - learn to find the range. It will save you time, and it might help prevent you from becoming an a$$ to those who would try to help you, and no doubt save you from a future as a disillusioned trading forum troll.
And all because you skipped step one: Finding the range.
This was the first thing I learned when I started working on using SLA. Go back to DbPhoenix's old SLA journal from summer 2013, and look at the charts I was posting. From the start, I was learning to find the range. I may not have always had it right, and I flub it up sometimes still, but without a range, I'd truly be winging it. I didn't even have the benefit of DbPhoenix's handy little FREE primer at the time. But of course, being step one, DbPhoenix mentions this all over the place.
What do I mean by "winging it?" If you don't find the range - using AMT on daily/weekly/hourly trends, and/or as I often do, use ranges between what Wyckoff calls "trading points," then where are you going to look to trade? The middle of nowhere? Most likely. So you will most likely take trades right where finding an edge on the likely direction of trade is least likely. How do you think that is going to work for you?
Lacking this basic foundation for organizing your observations leads to questions such as "what about the swing low at blah blah blah." If price isn't at the extreme of the most readily identifiable range that I am trading, then what you might think is an important swing low is just prior traffic in the middle of nowhere to me, and I'll let price tell me I'm wrong. If you are not first finding the range which will direct you where to look for trades, you will likely end up analyzing every wiggle and squiggle and not getting anywhere.
In my opinion, and it is only my opinion, the chief cause of failure in applying SLA/AMT is right here at step 1 - failure to find a tradable range and the discipline to only look for trades at those extremes. When trading at extremes, when trading at trend channel limits and at support/resistance levels(which I understand to be the extremes of a trading range, and not every inconsequential reaction pivot in between as price makes its way from actual trading range extremes), even your bad trades shouldn't be so bad. And your good trades will be awesome in comparison.
As I said before, there are a few others working on this who I communicate with through PM's. I don't expect any of them to necessarily raise his hand, but each one has asked me at some point "how do you take profits" or some form of "when is it over," and each one can tell you I always say the same thing: I usually assume price is going to work its way to the opposite extreme of the range. So for me, the trade is over when price has travelled as close to the other extreme of the range as the market appears it is allowing it to go. Supply and demand lines, higher lows and lower highs are the chief tools I use to determine a trade's "uncle" point. In the middle of nowhere, I typically wait for both a demand line break and a lower high, and vice versa if I am short.
So for those preparing to begin the observation period, start at step one - learn to find the range. It will save you time, and it might help prevent you from becoming an a$$ to those who would try to help you, and no doubt save you from a future as a disillusioned trading forum troll.
And all because you skipped step one: Finding the range.
Thank you, DbPhoenix. The lower limit at the overnight low as you drew it is of course the best way. I had drawn that range yesterday afternoon and since it remained relevant, I kept those big rectangles for today's journal observations. I hope anyone following along takes note of DbPhoenix's revisions to the chart I posted. Again, I want to be like a doctor - "first, cause no harm."
You're not wrong. But I'm most concerned with what has been going on nearest to the open. There had been three swing highs, the last two of which made a double top. If price were to break through this -- 4203 or so -- then I'd take the breakout. These have been moving fast lately. If the breakout failed, I'd short. There are only two choices other than doing nothing. Nothing "cryptic". This presents considerable difficulty to those who are afraid to trade at all.
What happens after that first trade is unknowable, but since the lower limit has been drawn well before the open, it's reasonable to keep an eye on it and try to stay in the trade if at all possible instead of bailing at the first sign of what may or may not be trouble.
What happens after that first trade is unknowable, but since the lower limit has been drawn well before the open, it's reasonable to keep an eye on it and try to stay in the trade if at all possible instead of bailing at the first sign of what may or may not be trouble.
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