I encourage you to "forget what you think you know" for the time being. I do not intend the statement to be taken in an argumentative tone. I realize you disagree with the assumption that volume leads price, but the answer to your question (at this stage of the learning process) is volume. At other stages of the learning process the answer is Volume and another tool alert the trader to what is and what is not an FTT.
There are no errors with an FTT signal. However, You appear to be operating under the assumption that FTT's sometimes present themselves outside the basic rule set:
1. FTT to FTT (reverse)
2. FTT to FBO (exit)
3. FTT to BO (hold)
Understand please what I mean to say:
100% of the time an FTT results in one of three end effects:
1. Another FTT
2. An FBO
3. A BO
Read the above again.
100% of the time.
This is the fundamental basis for the entire methodology.
I fully realize how posting such a statement flies in the face of all things known to be true based on trading probability and statistics. I completely understand the almost visceral response generated by uttering the above phrase. I have no intention of debating the often religious truisms which exist in an environment of a trader's mindset.
One could (in hindsight) take a chart, find all the FTT's, and 100% of the time, locate the appropriate trade and profit potential based on the above rule set. However, doing so serves no purpose to the trader. Since I know of no brokerage company which owns a Time Machine, we can at least agree that one cannot trade in hindsight, nor can a trader profit from hindsight. The goal then becomes, how quickly can one identify and properly react to an FTT. What input parameters does one use to correctly identify the FTT, or as the case may be, identify when a trader has made an error in identifying an FTT.
Right now, we use 2 tools to identify the FTT - ES Price and Volume. Using only these two tools will result in (real time) misidentification. Having errors of misidentification at this point is not a bad thing. It simply means one of two things:
1. A trader has not yet learned to correctly spot an FTT, or
2. A trader needs another tool to spot the FTT faster
As we add more tools (and gain confidence in their usage) the flaws become easier to distinguish from an actual FTT.
Unlike past attempts at transference, I plan to keep this Journal on pace at specific steps in the process (outlined in the Syllabus). While each individual trader is welcome to jump ahead on their own (one is always welcome to review Jack's library of work), I do not plan to 'skip around' and risk adding additional confusion to the thread.
While I apologize for such a lengthy answer to your question, I encourage you to view this post in a positive light. I'm not asking anyone to join a cult, convert to a religion or drink gallons of grape Kool-Aid. I do expect anyone reading to entertain the possibility that what I have shared contains merit.
Good trading to you all.
- Spydertrader
