Spydertrader's Jack Hershey Futures Trading Journal

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Quote from PointOne:

I did some work on this stuff today.
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Hi PointOne,

How can one see the A/D in the market ? and how can we apply the harmonics stuff to A/D ? :confused:

Sorry, maybe I misunderstood something, but your document was not clear to me.

You said 'Even Harmonic's = 'A/D Square Wave'... :confused:
Even Harmonics isn't "lateralization" = Continuation ?

:(

Best Regards,
 
Quote from Pepe:

Hi PointOne,

How can one see the A/D in the market ? and how can we apply the harmonics stuff to A/D ? :confused:

Sorry, maybe I misunderstood something, but your document was not clear to me.
More...

Hi Pepe
I'm sorry you misunderstood. I could only make it clearer by knowing where you are currently in understanding all this. There is a limit to what you can convey in half a dozen slides. I have a masters in engineering, so perhaps I take a lot of things for granted. I also start from the premise that a trader with 50 years experience, who also has an engineering background and was trained to troubleshoot complex electrical equipment for IBM in the 50's may just perhaps have got it right when he discusses harmonics. :)

This is what prompted my effort to explain as there seems to be a lot of confusion about where we look for harmonics (e.g. is it strictly bar to bar or over the course of a channel traverse), what causes them and what they mean in terms of what is coming next.

As to seeing A/D in the market - you see evidence of it in the resultant price waveform - that's the whole point of waveform frequency analysis. From there you intuit what must be going on in the underlying volume activity (i.e. is it odd or even harmonic). Jack also uses the Stoch(5,2,3) 50% crossover to gauge A/D - look it up, it is OT on this thread.


You said 'Even Harmonic's = 'A/D Square Wave'... :confused:
Even Harmonics isn't "lateralization" = Continuation ?

:(

Best Regards,
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Where did I say that? The square and triangular descriptions on the last 2 pages refer to the resultant price form, not the underlying A/D cycle (shown in green, one at frequency 4 one at 3, so you know that is what is affecting the waveform). A bit of artistic license is required in describing waveforms, and this comes after a while of using oscilloscopes in a lab.

Look at the two examples on the last two pages. The resultant price waves are formed from 3 sine waves superposed onto a constant gradient trend channel. One is faster pace than the other. Have you seen these formations before? I see examples of these forms every day (so much for saw-tooth waves not being a good example, LOL). If you know which harmonic is dominating you can prepare for what comes next.

Hopefully Jack will chip in to add some clarity. :D
(Come on, I've done the work.)
 
Quote from PointOne:

so much for saw-tooth waves not being a good example, LOL
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Thanks for your efforts with respect to the Harmonics.pdf. While I appreciate your contribution, the document appears to provide some conflicting points of information.

I didn't say Sawtooth Waveforms were not a good example. I said they weren't the best example. I don't think you intended to imply that teaching people the differences between Odd and Even Harmonics can best result from providing examples which contain both (See Attached). In addition, the fractal nature of Harmonics means they work through all timeframes - from a yearly chart down to the tic chart and everywhere in between. To be crystal clear, I don't see your efforts as incorrect as much as I see you operating on the next higher fractal (waves within channels compared to bar formations). However, perhaps the confusion results from where you have quoted Jack discussing Square Waves as Even Harmonics. With all do respect to Jack's 50 years in trading, degrees in Electrical Engineering and your Master's Degree, I have yet to find a single textbook, web site or source which suggests Square Waveforms result from Even Harmonics. In fact, they all state the opposite.

Perhaps, you could illuminate the terrain here and clarify why it appears you have conflicting information between Page Two (Square Waves) and Jack's Quotations (Page Five).

Again, I appreciate your work here, and want to avoid any perception of negativity.

Thanks in advance.

- Spydertrader

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1496424>
 

Attachments

Quote from Spydertrader:

Perhaps, you could illuminate the terrain here and clarify why it appears you have conflicting information between Page Two (Square Waves) and Jack's Quotations (Page Five).

Again, I appreciate your work here, and want to avoid any perception of negativity.

Thanks in advance.

- Spydertrader
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The confusion arises because we are comparing the difference between two series of three significant terms only: 1,2,3 and 1,2,4.

Of course both contain Odd (1) and Even (2) harmonics. The difference arises from the minor harmonic (which represents A/D in Jack parlance) which is either Odd (3) or Even (4).

We are trying to detect when this underlying harmonic changes from odd to even. So we look at the shape of the resultant wave to get this information. Note also that pace has a bearing on the resultant shape (triangular or square).

See the attached side by side comparison. I hope this clarifies things.
 

Attachments

Quote from PointOne:

See the attached side by side comparison. I hope this clarifies things.
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Thanks for the clarification. Your second .pdf confirmed what I already had thought - we were discussing two different fractals with respect to Harmonics (Channels / Trends vs. Bar to Bar). Unfortunately, I still have difficulty placing your explanation into the context of continuation vs change.

Quote from PointOne:

We are trying to detect when this underlying harmonic changes from odd to even.
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You see, this is the part that throws me, and as a result, I must ask the question, why do we want (or need) to detect the underlying changes? If when looking at a channel or traverse, I see an Odd Harmonic, I think change or reverse. - whether Triangular (Spike) or Square (Double Top / Double Bottom). If, when looking at a channel or traverse, I see an Even Harmonic (Lateral movement), I think continuation or Hold. More importantly, the tools we have at our disposal signal these changes in advance of an FTT. Now, using your examples (and assuming I do know the exact moment the market changed from an Odd to an Even), how does this help me make money? The nearest I can figure is during periods of (your) Square Wave Even Harmonic, I wouldn't want to be trading a retrace as the relative steepness of the channel / traverse renders the retrace of short duration at best and as lateral movement at worst. Well, we already hold during periods of lateral Price movement, so again, how does knowing the exact moment of Harmonic Shift provide a benefit?

Clearly what you (and Jack) describe refers to the overall type of Market. Your examples provide a very clear picture in this regard. In contrast, what I have outlined pertains to the Points of Change (or Continuation) within the overall market itself. I ask these questions because I have never viewed the market (or Harmonics) as you (and Jack) have described, nor has my trading suffered because of it (or perhaps it has, and I simply didn't realize it). If such a view as you (and Jack) describe can provide an added benefit, then I look forward to learning something new.

Although I have yet to see how such a view satisfies two fundamental requirements of this methodology,

1. Works on any fractal (not timeframe in this instance)
2. Differentiates between continuation and change

I do look forward to the continuing discussion. Thanks again for taking the time to answer my questions, and enjoy the remainder of the weekend.

- Spydertrader
 
Semi-off-topic, but here are a couple great (and relevant) quotes from an article someone sent me.

We commonly hear the statistic that 90% of all traders ultimately fail. If this is so, it is not because they lack the right personality traits, indicator patterns, or software programs. Rather, they have failed to structure their learning to facilitate expertise.
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Interestingly, chess experts do not have significantly more chess-playing experience than non-experts. Rather, a higher percentage of the experience of experts is spent in the systematic practice of various facets of the game.
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The expert trader needs to be able to review and re-experience markets and systematically rehearse facets of trading performance: entering, managing, and exiting positions.
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Hi PointOne,

Thank you for your answer and all your posted work regarding Harmonics. It has been a very interesting discussion so far.

Quote from PointOne:
I could only make it clearer by knowing where you are currently in understanding all this.
More...

I think I understand the basic notions of Odd/Even Harmonics as had been explained so far in this thread. In a very resumed form:

- Odd Harmonics means ‘Change’: They exist in two forms, square and triangle waves. They are visible in the market as “Double Tops”, “Double Bottoms” and “Spikes” in a bar-to-bar view.

- Even Harmonics means ‘Continuation’: They exist in one form, but are usually the mixing of several square and triangle waves. They are visible in the market as ‘laterals’, meaning bars with same lows and highs in a bar-to-bar view.

I can even understand a little bit further, if I think in terms of adding waves of different frequencies and amplitudes to form a resultant wave, which for me explains the ‘odd’ and ‘even’ concept.

What I didn’t understand was in part due to the terms used and the conflict meanings with them. As Spyder intervened and the discussion progressed I understand this better.

If you know which harmonic is dominating you can prepare for what comes next.
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If we could know the price waveform as a function of even or odd harmonic amplitude and phase angle, what conclusions could we take from this?

Can this be used to ‘calculate’ or anticipate future points in price trend. If we know we have a Fast pace trend, should we expect an ‘Even A/D harmonic’ and a lateral behavior after price has touched the LTL in direction to RTL? Meaning it will not be a very profit/risk reward to trade the traverse to RTL?

To conclude, if the answers to my previous questions are yes, this does not provide signals of ‘change’/‘continuation’ but rather a ‘Channel Context’, ’Profit/risk analysis’ to our trading.

Regards,
 
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