Spydertrader's Jack Hershey Futures Trading Journal

[Ezzy]

With regard to the FTT's, it seems everyone would be thrilled with a concrete description like: A bar with a higher high and higher low than the previous bar, with decreasing volume. But it can't be that way. It's more like a detective work weighing the evidence, because they are not all the same during their formation. How the bar formed - speed, retracement, volume, the forward progress - it's always a bit different. Sometimes the next couple bars move up on lower volume then form a FTT, sometimes extraordinary volume is a clue, sometimes it's a reversal bar. With the tools available at this point you can't expect to nail it everytime on the right bar, sometimes you wait for more confirmation. There isn't really a "right" or "correct" time on a particular bar - this can be a difficult concept especially for a systems type trader or anyone trying to find the "right" time. As tools are added, you get more clues and timing gets better. So even if everyone is looking at the same FTT, the point at which they can say it's an FTT will vary.

Regards,
EZ

 

[PointOne]

Quote from Ezzy:

With regard to the FTT's, it seems everyone would be thrilled with a concrete description like: A bar with a higher high and higher low than the previous bar, with decreasing volume. But it can't be that way.

Yes! As you say, just because we observe the market primarily at a granularity of 5 minute bars, we have to be sensitive to the volume changes within the bar formation.

The important thing, in terms of extracting the available money from the move, is to get in as close to the new TL as possible (the right side).
Nailing "point one" each time is the aspiration but until we reach that level of awareness one is tempted to break a reversal into an exit and a new entry (after further confirmation - or even as late as point 3). Reversing may be too much to start with (you feel you have to be twice as right and may reach data processing overload).

Later, as your awareness increases, you may realise that your exit (cover) was exactly the optimum reversal point, so you can begin to make it seamless with reversals.

I'm based in Singapore. Imagine taking 50-100 points out of the Nikkei before lunch ($4 per point), 10-20 points out of the DAX (€25 per point) in the afternoon and finishing the day with 5-10 points from the ES opening session. (We're talking fractions of the daily range; 6 hours active trading screen time; repeatable low stress process). Ambitious newbie BS? We'll see.

This has the makings of a wonderful journal and I look forward to following it daily and contributing whenever I have something of value to add or a question that I believe has not been fully addressed in previous posts.

 

[Aurum]

Quote from Joab:

I just can't draw the rays (yet) with my current software (ensign).

Joab,

Add a price line study (not sure what it's called exactly) onto the volume pane. Go into the properties of the study, and set the constant value to be e.g. 10k. It will show up as a solid line then on volume - repeat as needed.

Personally, I would advise you to not use Ensign as a charting package for this methodology. It's critical to be able to see the higher timeframe (fractal) channels on the lower timeframes - and you can't do that with Ensign unless you manually copy the channels. To be able to switch timeframes and have my channels remain intact has been worth far more than the additional cost of QCharts vs Ensign.

-Au

 

[Aurum]

PointOne made such an excellent commentary on the FTT here that I wanted to point it out.

Thanks PointOne - and I look forward to your input as we move forward in '07.

 

[Atlantic]

Quote from spooz_trader1:


...
Take a look at the 'ftt' in the short traverse. After Spyder mentioning to look at the Vol after an FTT (a bunch of times ), an LED finally went off in my head. There was increasing Vol after the FTT! I think similar or decreasing Vol would have probably led to a flaw.

by the time you know how much volume that 5 min bar has - it is far too late to do anything - you should have gone long about 5 min. earlier.

 

[makosgu]

In trading we do not wait for information to become available before making decisions. Rather we analyze the data that is continually available. Why someone would wait until the end of the bar to evaluate the volume is an ERROR. This is a terrific example of what NOT to do in trading. If all the while, you cannot see that your PRV meter is indicating INCR/DECR as soon as 30 seconds into the current bar (ie. 4.5 mins before the end of the current bar), then we need to fix this problem. In equities, it is the same as taking the position before 11 am when you see volume has already exceeded DU. Why do we take position in equities??? Because we know that before the end of the day, we will have volume that is in excess of DU. The rational is very simple. If by 11 am you have already met DU volume, then surely by the end of the day, you will have more than DU volume. Using the equities volume profile, you can actually accurately project your EOD of day volume via PRV like projections...

Regards,
MAK

 

[dougcs]

Quote from Spydertrader:

Consolidation (another flaw), or as Jack terms it CCC, occurs between one FTT and the three End Effects metioned previously. Beginning traders also hold through this flaw - as all the other flaws.



Had you followed the advice given below ....



Eventually, you would have arrived at this chart.

SNIP

First, thanks Spyder for taking on the challenge of teaching us these methods for ES. I've done well with the stocks methods and look forward to learning the FTT et al methods.

As I am somewhat chart impaired, I'd want to ask about your labelling conventions.

In the chart referenced above used to answer the bottom dwelling, sucking fish's question (; , at about the 10th bar and just after the HVS, you show a green FTT.

As it is in green I am assuming it is an FTT of the upward sloping green channel.

If I am correct then as there are 4 parallel green channel lines, 2 below and 2 above the FTT, my question is which of these channels does the FTT refer to?

I attached this chart with my question and channel references marked on it.

TIA,
Doug

 

[Spydertrader]

Quote from dougcs:

If I am correct then as there are 4 parallel green channel lines, 2 below and 2 above the FTT, my question is which of these channels does the FTT refer to?

The "Green FTT" refers to the "Green Channel" created by the RTL you have labelled as the "Lowest Green Channel" and the LTL you have labelled as "4th Green Channel" on your attached chart. Originally, the channel used only the "Lowest Green Channel" and the "Second Green Channel" as its boundaries. However, when price improved (on a previous day) the channel expanded creating "Volatility Expansion" lines (which you have labelled as "3rd and 4th Green Channels"). These Volatility expansion lines simply widen the channel. Because I always extend my dominant trends over into the next trading day (in an effort to squash any perception of 'hindsight annotation'), I left in the extra lines. However, the lines labelled as "2nd and 3rd Green Channel" could be eliminated if it makes the view clearer.

Hope that helps clarify.

- Spydertrader

 

[dougcs]

Quote from Spydertrader:

The "Green FTT" refers to the "Green Channel" created by the RTL you have labelled as the "Lowest Green Channel" and the LTL you have labelled as "4th Green Channel" on your attached chart. Originally, the channel used only the "Lowest Green Channel" and the "Second Green Channel" as its boundaries. However, when price improved (on a previous day) the channel expanded creating "Volatility Expansion" lines (which you have labelled as "3rd and 4th Green Channels"). These Volatility expansion lines simply widen the channel. Because I always extend my dominant trends over into the next trading day (in an effort to squash any perception of 'hindsight annotation'), I left in the extra lines. However, the lines labelled as "2nd and 3rd Green Channel" could be eliminated if it makes the view clearer.

Hope that helps clarify.

- Spydertrader

As is almost always the case your answer has greatly lessened my confusion.

Getting back to conventions, am I correct that your labelling convention, are color coordinated, ie, a green FTT goes with Green channel lines, orange to orange, etc?

Thanks,

Doug

 

[Spydertrader]

Quote from dougcs:

Getting back to conventions, am I correct that your labelling convention, are color coordinated, ie, a green FTT goes with Green channel lines, orange to orange, etc?

Correct. FTT, FBO and BO correspond in color to the channel of the same color (formed by the numbers of the same color).

- Spydertrader