SCT High Velocity Profits Q and A Journal

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Quote from Bearbelly:

Thanks Mak but I did not get any results for 2 pair.

edit: check that. I did get quite a few on "two pair".
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Google ET for "2pair" without space between "2" and "pair". In other hand you can google for “pair” and “grob109” in nickname section.

As I can understand, 2pair formation in Jack's approach plays the same role that atom plays in physics. This part of SCT totally coincides with market profile concept. Two pair of price levels is the smallest space where market can build value. So then entire price movement can be divided into two conditions: stall in 2 pair and transition between 2pair areas.

If you want to get in details of 2pair stall and profit from it you NEED to use fine tuned methods. One of the methods that I think success is bid volume VS offer volume analysis. Look attach please. I have charted ES in constant volume increment of 350 contracts per bar. Increment size is the consequence of usual best bid/offer volume and allow represent 2pair/transition picture quite precisely. Additionally “Volume Up” indication is present and it displays for each bar volume traded at offer so VolumeDown=(350-VolumeUp) contracts traded at bid.

As you can see every time when price spikes up from 2pair stall VolumeDown variable falls to zero for lower pair of 2pair formation. Accordingly when price spikes down from 2pair stall VolumeUp variable falls to zero for upper pair of 2pair formation. Is is very important that we can use “inversed logic” to analyze 2pair formation. I try to explain. Suppose price is in 2pair stall and we are looking to open long/close short. We have two possible ways:
1. Check whether upper pair dominates and trade if yes. In the best case entry price will be offer price of upper pair, in worst offer price of upper pair + 1 tick and even more for fast market.
2. Check whether lower pair does not dominate and if yes – trade immediately. In this case we get fill at offer price of lower pair most often and offer price of upper pair in some worst cases. This is what I call “inversed logic” and this method can put chance to be profitable in our favor. Of course this entry method require deep knowledge and experience – it cannot be differently if we are on fine tuned level.

BTW, all parts of Jacks method (coarse, medium and fine levels) are very logical and mostly clear to me. What is not clear at this time – how to put all levels in one holistic picture. So the question is when to move from coarse to medium and from medium to fine to reach optimum balance between trade frequency and PL per trade. At this time I fail to make only 20-40 actions per day to stay at the right side, it requires 50-60 and more what is commission explosive and inefficient.
 

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Thank you rustrader for a very interesting post. The problem for me is that even if you manage to figure out where the two pair is going next there is no guarentee that it is going to continue. However I can see where learning this two pair behaviour could help you save the spread on entry at times which would definitely be nice.
 
I presume this is the place to ask a question regarding SCT, I have a simple question, when drawing the channel 3 points are used, how do you know in advance where pt 2 and pt 3 are ?
If you don't know in advance do you just widen the channel in realtime as the prices unfold, in that case how do you account for any existing trades that may have been placed ?
If you know in advance pt 2 and pt 3 and can accurately draw the channel then how do you do this ? I can't even get past this basic element of SCT, I am really trying to understand but just how do you do it ?
 
Quote from rustrader:

...
BTW, all parts of Jacks method (coarse, medium and fine levels) are very logical and mostly clear to me. What is not clear at this time – how to put all levels in one holistic picture. So the question is when to move from coarse to medium and from medium to fine to reach optimum balance between trade frequency and PL per trade. At this time I fail to make only 20-40 actions per day to stay at the right side, it requires 50-60 and more what is commission explosive and inefficient.
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second post from bottom
http://elitetrader.com/vb/showthread.php?s=&threadid=30568&perpage=6&pagenumber=6
 
Quote from osho67:

I presume this is the place to ask a question regarding SCT, I have a simple question, when drawing the channel 3 points are used, how do you know in advance where pt 2 and pt 3 are ?
If you don't know in advance do you just widen the channel in realtime as the prices unfold, in that case how do you account for any existing trades that may have been placed ?
If you know in advance pt 2 and pt 3 and can accurately draw the channel then how do you do this ? I can't even get past this basic element of SCT, I am really trying to understand but just how do you do it ?
More...


when drawing the channel 3 points are used, how do you know in advance where pt 2 and pt 3 are ?

The market tells you. Look at my corrections in the thread that ckicken little is running on the emregency exit drill.

you have to know some basics, however.

1. You have to know how to draw a channel using two consecutive bars. In these two bars there are four bar ends. Three of the four are used to to make the three points. Look at the bar ends on the right side of the chart. This is where points 1 and three lie and point 1 occurred before point 3 in time.

Kep this in mind: All channels have right sides that are trendlines. There is where point 1 and 3 lie. the other point point 2 is chosen by making the channel as volatile as possible. What this means eye balling the width (vertical) and seeing which bar end makes it biggest. If they give the same result you are right in choosing either one.

It is possible that you will get horizontal channels using consecutive bars.

Once you have this done, you look for the drawn channel to progress. It is considered to continue to progress if the price bars stay inside of it. That seem impossible and so why bother to even consider this stuff any further.

One reason is that the channel can continue and further the channel can widen on the left side. we take this into account as a volatility expansion for the channel that you have drawn. It does happen and it happens often.

I have posted such annotation results in a non war zone place everyday. One of the drills I do with people who are advancing rapidly in PVT is to have them print all these charts in the evening and then put pencil check marks on each annotation as they debrief on it and come to understand the work of another person that they are reviewing.

Copy this post as soon as you read it; It may get fucked up like my other posts have of late.

2. You have to know when a channel or lowly traverse is coming to an end by the way price behaves in the traverse channel you have drawn. I have to answer your bigger question by teaching you some basics first. If you knew any of the basics you would know that answer to your questions as well because all of this on everyone of the three levels behaves the same way.

Ftt's mark the end of traverses usually. SCT traders are keen about all of these because they are where actions are taken to take profits and simulanteously be on the right side of the market for the next trade. There are about 7 ways to know that an FTT is coming up.

If a traverse is a narrow one there is a better chance that the price will go out the right side of the channel. This is known, also as the emergency exit. Before this happens on ES it is happening on the annotated YM. Look at a couple of weeks of charts that are posted elsewhere to verify this.

3. You have to know that trading happens in sequences. for channels and such you always know about the next five moves. This is a relief because you can note them ahead of time on your long. I used to post logs but they are as much a flaming target as are prints of trading. I will describe a log for a day for you to let you know what is possible for anyone with a ball point pen to do. It takes five landscape preprinted log pages. They are dated (use a stamp) and they have about 15 pages of attachments. One page 1 you will see open, indexarb. com offset to three significan figures, synch time, bar 4 BO(point 1) and then afew rows below you see point 2, a few rows below point 3 a few rows below FTT( point one), a few rows below BO, a few rows below FBO (point 2) a few rows below point 3, etc.
we are into page two by now.

we have a white board with all of this arranged vertically in order and in two colors. there are other finer notations as well. It is a reminder of what is understood as givens about trading.

FTT is point 1 always, BO is not a point on the new channel ever. (If you recall DBPhoenix this was a major screw up in his supply/demand BS.). you ride through BO as the non dominant traverse comes to a place (your current channel ) on the trendline. It pases through on a surge of volume that is the beginning of a dominant traverse of the new trend the traverses travel in as the old trend which had traverses is extinguished.

You are headed to a new point two coincident with an FBO after the BO.

We'll see how asiduous the troops are as they read this post.

Now you are equipped to do channels on two levels: small grey traverses and trends that have points 1, 2 and 3.

You even know how to ID the difference between a retrace(a non dominant traverse) and a reversal (which always occurs AFTER a retrace and AFTER a BO is occurring).
 
Quote from Stakler:

How can you ever be sure point 3 is right?
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For most pople it depends upon the indicators the person is using.

I use quite a few and they corroberate each other.

All of the indicators are shown or listed and their signals that make up the data sets is a finite set.

From that collection of data sets, there are several that come up in common sequences as the price forms point 3 and goes past it.

The leading indicators of price probably are the more important ones to consider. When they are in the data set you know that it is your job to be sure to collect information to assure that you are getting the job done.

I do reversal trades so it is extremely important to be locking in profits at the right time as you go through point 3 Ordinarily you only have about three to five different times to do this on any point 3.

I usually see the first one and concentrate on what we call the "second" chance. Nailing the second chance means that you have to go through one or more entry pair reappearing after you have been on a wash pair or better.

This is like telling you that once you have been focussed for a while on the turn, you are seeing that you made a good reversal.

Try giving a read to some of the resources on how turns occur and consider that a point 3 can fit into that type of event.


If you have gotten past the block that many people have that we do the annotation after the fact, then you can also go through the drill of putting check marks on all the annotation of every annotation done during everyday on both the YM and ES. There is also posted the entire tick charts for each so you can observe the tick formations accompanying the bar charts.

We have camtasiaed many day's trading because it is part of the evening debriefing to retrade the day to determine the differences in a non pressured trading sequence as compared to a pressured sequence.

Where the differences occur a person gets to do some learning that further refines his personal memory bank.

About the only consequence of screwing up point three is that you have to move it after taking one profit then another before you go into the dominant traverse, again.

There is no volatilty expansion of the trendline side ever so the odds of missing it seem to be remote.
 
Quote from Stakler:

What are small grey traverses ?
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Nobody knows.

I associate them with trading.

they are channels that are annotaed in single weight grey lines derived from connecting the dots on consecutive bar ends when necessary

See a mention of this as item 1.
 
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