Quote from Spydertrader:
What benefit results from drawing tapes using a formation? When one has a formation, one knows** the direction of the Break Out, and that direction IS the right side of the market. As such, drawing tapes which include the BO Bar creates a far simpler method of knowing when the right side of the market has changed after a Formation BO. After all, its after the BO where things can get 'messy' for the trader. Before the BO, we having little to do, but wait. You need a tape to tell you to wait? 
- Spydertrader
**Disclaimer: Formation FBO's and Outside Bars present an entirely different matter.
The first part of my blab had to do with how to draw particular types of channels
de novo and then morphed into a discussion about whether contextual considerations should be brought to bear when attempting to do this. This is separate from what to do when you find yourself "inside" a formation, e.g., pennants or a lateral.
In answer to your question about whether it is particularly useful to draw tapes while inside the formation or are tapes necessary in order to wait, the answer to the latter is an unequivocal "no" but if one was going to try and trade inside the lateral then the tapes should be useful (not on my list of things to do at present). As you have outlined, the matter of most consequence is just waiting for the BO, and wait you must because when you are inside these formations, pennant or lateral, you do not know which way they are going to breakout - ever. Again as you have outlined, when the BO has occurred, with a close above or below the appropriate extremum of the
harami or "honking big bar", you prepare to draw your tape using the BO bar as the first bar of the tape. I think I have this correct and if not please nail me.
With respect to the disclaimed entities, the formation FBO just means you're back to where you were before it broke out,i.e., it returned to the formation envelope. The outside bar scenario is a different kind (correct?) of formation (equivalent to an
engulfing bar) but again you cannot predict which extremum of the "honking big bar" is going to form the point 1 of the new channel. If I'm wrong about these two things, "Please, sir may I have another " (ho, ho).
Your continuing "hover", Spyder, is greatly appreciated and you will be sorely missed when you move on. Thank you for your interest.
lj
Edit: I haven't done "Harmonics" yet .:eek:
