Spydertrader's Jack Hershey Futures Trading Journal
- Thread starter Spydertrader
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This is very important.
There is a delineation between the market and the player.
Think of watching a sports event.
As you watch, instead of being entertained, take on a role in the event as a "trader". That is "get out" of the PLAY AT HAND what the action is that is going on as time passes..... what is the potential that is showing.
Look at the chart posted by MAK. Read the volatility across the top. On the left is 1 tick of volatility way to the right is a lots of ticks (points, acturally).
A "play" with high volatility is is one to be glued to because you are going to make yardage as a "trader" in the play.
WE are showing you the price and volume and their relationship as time is passing. P and V come to you, you are there in the event doing offensive and defensive ......doing what is called for on your part.
You are "riding" the bar...knowing its volatility (length in ticks at the top of chart)
We will be using this (pace and sentiment) to gate the steering to and magnification of what is crucial at any time.
Hang in there and get the full depth of each stage of this developing knowledge, skills and experience.
Yesterday, I stepped a little out of line (the YM commentary) as was pointed out. Sorry.
I was making a point to DKM and others, and I chose an easy (good chart as basis) way for me to make it instead of sticking to the ES P and V exclusively.
When you see Spyder and MAK commenting (as well as others), you are getting an adult indepth cogent view of just what is precisely on the table to be getting digested.
There are 81 bars a day. This is a huge capital reservoir changing in price as a consequence of the play of participants trading. We are the guys who are extracting this potential ALL of the time. It is our job to "know" how big the pipeline is at anytime and how fast the flow is coming out of the pipe.
By dealing with this month by month topic by topic, the absolute depth of understanding is attainable as a function of the variables of the market.
Becoming empowered is a matter of "building" within you your personal resource.
This process is a repetition of past sucessful transferences. What makes it so vibrant and rewarding, is that it is being done by a great group of those offering and a great group of those receiving on this pass.
Different people are at different places and all these nuances enrich the experiences.
It takes time to digest this stuff. Keep making the print outs and writing notes on the sheets. This makes it yours as a player in the events.
It is apparent to me that people are improving and that what is going on is getting more routine and has more depth.
This is what happens.
There is no longer a flurry of bits and pieces. Instead, the relaltionships and significances are showing up.
This is showing that the personal resourse that is being developed is moving to a collage of resourse information rather than micro rules for every little pertibation.
Coaches build teams. Ultimately, you are going to be both.
The coach is on the sidelines 24/7. You go and play during RMH using all the coaching that has become part of you. When you come off the field you debrief with your coach to be able to play better on another day.
The written resourses you collect and put together is the playbook for all situations.
As a player, you use knowledge, skills and experience all of which is carried on the playing field.
In ET, the coaching and practices are going on. You are working out on RMH either as a practice session or as a regulation game.
I am emphasizing an analogy because it clicks and makes every bar important. The composite of all the pertinent illustrations that you take and hilite to make your own is also an analogy of what is going on within.
This is what happens.
There is no longer a flurry of bits and pieces. Instead, the relaltionships and significances are showing up.
This is showing that the personal resourse that is being developed is moving to a collage of resourse information rather than micro rules for every little pertibation.
Coaches build teams. Ultimately, you are going to be both.
The coach is on the sidelines 24/7. You go and play during RMH using all the coaching that has become part of you. When you come off the field you debrief with your coach to be able to play better on another day.
The written resourses you collect and put together is the playbook for all situations.
As a player, you use knowledge, skills and experience all of which is carried on the playing field.
In ET, the coaching and practices are going on. You are working out on RMH either as a practice session or as a regulation game.
I am emphasizing an analogy because it clicks and makes every bar important. The composite of all the pertinent illustrations that you take and hilite to make your own is also an analogy of what is going on within.
The afternoon will be interesting. It was a lengthy SHORT run this morning. The whole football analogy is spectacular. Your RTL is the line of scrimmage wrt profits. LTL is 1st DOWN. We always want to advance the chains. It easier to advance the chains as more people get on the field... When they leave the field, we're prone to being pushed back.
So this afternoon, I am expecting a NON DOMINANT LONG channel on a larger fractal, and then another DOMINANT SHORT CHANNEL. Watch your channels, I would tighten up my line of scrimage to be better incorporate NOW. Why??? a and b are telling you something wrt where the line of scrimmage is right now. How do I know this??? Look at the V formations that the QB called and played... AT ALL TIMES WE NEED TO KEEP UP WITH THE PLAYS. I quickly edited your post. My RTL should be going through the tops of a and b as I quickly did this post. Check out the STRICT PV play. It is a BAR by BAR calling out. With the RTL going through b, you see that the current bar are prepping for a SHIFT!
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1319974>
Regards,
MAK
Outstanding.
1, 2, 3, FTT = 1, 2, 3, FTT = 1, 2, 3.....Midday
The volume today was up there and there was an occassional breather (low volume) giving a low volatility bar.
So you can trade as usual doing the traverses which are in the channels.
When you annotate channels is when it is possible and that is always ahead of the ftt of the channel.
As we connect the volume level to the traverses, we see the volatility expected as bars form.
Get used to looking at whether bars are "one way plays (streets)" or whether they are sloppy and lack conviction ("attitude") and vasilate more narrowly.
Keep "tuned" to the play at hand. If you are going somewhere, hold to get there.
later on we will get down to dealing with some individual plays in traverses.
Mak, could you explain a bit about the chart? The top row is points, and volume divisions/ranges are down the left side. But I am having trouble on all the numbers in the middle. How are they read or calculated?
The basic relationship of the bar length (volatility) to volume is an easy concept, more volume = larger range. Also there are times when it seems to be out of whack, where you have a narrow range bar and high volume or a high range bar and low volume. These areas can be seen as flaws and are usually turning points or points of change, much like the channel flaws.
I can see that the chart quantifies the relationship, but am having trouble understanding it because the chart "seems" to represent a bell curve where I'd expect the a linear relationship. What am I missing?
Thanks, - EZ
I know you posed the question to Mak, but I believe I can help out here.
He's captured a data set of 1606 5 minute bars (see lower right) of volume and price range (I'm assuming HL). He then sorted those bars based on volume, from lowest to highest, and took ~160 bars to form a group (a decile) starting from the bottom.
Each group then gave the breakdown for the volume range you see on the left, and the count of bars for each "volatility" level within that volume range.
See Mak's original post for more information.
In this particular chart, I do not see any "outliers" (ie. out of whack data). The line you are looking for should then be a mean. If you plot the mean of each pace, then you will find the functional relationship of what you think should be a linear relationship. The other way would be to do a scatter plot and then chart the regeression line. This will give you the line you think you want to see. My reasons for constructing this chart is to look at landscape and it's characteristics. It gives me a complete picture without being nitty picky. The point is to either agree that V is directly related to P. Large V => Large Volatility. Small P => Small Volatility. Otherwise, what good is PRV. This is one characteristic of the PV relationship that I am trying to drive home. When PRV reads EXTREME, I am expecting to see a bar with 2.0 pts of volatility. When PRV reads VDU, I expect to see volatility that is roughly 3 ticks. Sure there is variation above and below the expectation but I do not caught in the what ifs. REMEMBER, this is only half the story. The other half is with regards to analyzing CHANGE (ie. relating the PRV value to the previous bar). That tells me whether or not I will be extending the DOMINANT or NON-DOMINANT of the CHANNEL!
The linear relationship is apparent. As VOLUME increases PRICE VOLATILITY increases. An options trader would really clean up if they understood this and reworked their pricing from this perspective instead of the more common black-scholes vol/imp vol stuff. People are both thinking too hard and not enough. How that is a bit of mystery but it is apperent. I'm not sure if people know what to think. Unfortunately I won't be able to answer everyone's question. I seam to be causing an adverse effect as to what should be happening. We only need to get the picture right. This means, how does PV play out. The QB and COACH call out alot of plays. Each play has various components. We are only tuning in to the PV components wrt the chains. There are only 4 PV plays and we are monitoring and knowing the characteristics down cold. In my pseudo MAK world, we should all be arriving at very similar charts assuming we are STRICT PV. The chains on the field (ie. channels) are to help tell us which way the ball is advancing. If at any point you are playing to stop the advance of the ball (ie. defense), you cannot bank profits. The only defense we play is to make sure that we are not playing opposite the direction of the chains (ie. on the wrong side of the market). The chart is to show how the number of players in the field relate to the advancing of the ball for each and every play... In other words, it is easy to advance the ball 2.25 yards when there are more than 18K+ players on the field...
The discussion is drifting a bit and I have even more to catch up on to bring this all back to the FTT and where the big picture comes into play. However, I do not see how we can get there collectively without getting the PV facts/plays down cold...
Regards,
MAK
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