Spydertrader's Jack Hershey Futures Trading Journal

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Quote from Spydertrader:

Did anybody not see it? Please post your comments either way so I can 'see' where we need to focus the next several posts.
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Spyder,

Yes, starting around 12:30 EST this afternoon, I saw a "Forest View" sequence unfold. Actually, there were a couple sequences at various "steepness".

The key for me was picking the right point/time to draw a "steeper" channel for reference. Although not shown on my YM snippet, the thick red RTL started out as a thin red channel. After a few volatility expansions (also not shown), I thickened it as shown.

I didn't log the time but when price resumed dropping, an opportunity to draw in the first steep (purple) channel presented itself. I chose 12:28 as point 1 because it looked like that was when the first R2B started forming. After the 3rd R2B, a B2B BO'd this channel. Note the purple gaussian lines. The B2B also confirmed the FTT at 13:18, right after the gaussian peak. Also note that the gaussian peaks during the sequence were decreasing. PV, right?

After BO, there was a brief stall and price began to fall again. Another R2B and time to draw in another channel as a new point 3 presented itself (dark red channel, same 12:28 point 1). After some volatility expansion, it seemed reasonable to draw in another steep channel (pink). This channel synched nicely to the two R2B's started at 13:30. After the 2nd R2B, increasing black volume BO'd the pink channel. Note the pink B2B gaussian.

I don't consider the pink channel to be a tape, even though it was very steep. It seemed completely reasonable to me based on the two R2B's completely traversing the channel. Maybe Mak can comment on whether or not this is "strict" PV.

After the B2B (and tape ftt), price stalled again for a few bars and began another R2B. So, another point 3 presented itself (14:06, dashed channel). Another R2B pushed price lower and price "walked out" of this channel on a stall.

Yet another R2B pushed price lower and the blue channel was drawn in. This time, I chose 13:32 as point 1, the beginning of a R2B. Two R2B's pushed price lower and then a B2B (see blue gaussian lines) BO'd the blue (and containing dark red) channel. Again, the B2B confirmed the FTT (not shown).

Next, after a B2R (steep thin gray channel), a tape r2r gave us a new point 3 for the thick gray channel. If I'm interpreting the Forest View guidelines correctly, this is the new point 3 in the direction of the previous FTT. And a B2B (coming out of the tape) began a new dominant traverse.

Whew.

I left out a lot of the annotations to just focus on channels and gaussians. I redrew this snippet based on my "messy" real-time chart. Although I mentioned several FTT's, drill for the interested reader to add them in... :)

I've been making a point lately to really search for channels that synch with the gaussians. I apologize if the description or annotation of these sequences is confusing.

Getting back to the Forest View, I believe the first purple channel and the gray (long) channel are good examples. In my mind, the key this afternoon was knowing when to draw new (and "fan") channels within the overall red (short) channel.

Sorry for the long post.

spooz

<IMG SRC=http://www.elitetrader.com/vb/attachment.php?s=&postid=1356711?
 

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Spyder,

Thanks for the answer to the YM ques. I just have one about the 5 min ES from Friday. Why was pt. 1 for the orange channel chosen from the 9:35 bar and not the 9:45 bar? I understand completely why it was pt. 1 for the brown channel but not the orange. Can you explain the rationale for this? Does it really even make a difference?

Quote from Spydertrader:

Today's ES Chart with comments.

- Spydertrader
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I have a quick question.

Does it really matter what color the decreasing side of the gaussian is?


And spyder, you asked for some feedback so you know where we stand. I like the change in ruleset. I found it immediately easier to stay at a coarse resolution and for some reason at this stage I find it much easier to ID the pt. 3's than the FTT's. I also like the fact that the pt. 3 entry is with the trend as opposed to the FTT entry which was fading the trend at least until the FTT was confirmed. So far it seems less damaging to get out of a wrongly ID'd pt 3 than an wrongly ID'd FTT. There is also a much smaller zone to focus in on to find the pt 3 than the FTT. The FTT could happen anytime after the pt 3 is established, where as the pt 3 can only come after the pt 2 and between the point 2 and previous pt 1. The volume formation of a point 3 is also much more clear cut for me at this point. And the RTL beginner exit is nice because our risk is predefined. As a beginner, it's comforting to have a line in the sand which, if crossed, you're wrong and you get out no questions asked. It also works as a trailing stop, so over time we know we're making money at the rate of the slope of the RTL.

So thank you for being proactive in realizing there were some difficulties for some of us with the previous beginner rules and making these alterations. The efforts both you (spy) and the other participants are putting forth are greatly appreciated.
 
Quote from Steve Tvardek:

Spyder,

Thanks for the answer to the YM ques. I just have one about the 5 min ES from Friday. Why was pt. 1 for the orange channel chosen from the 9:35 bar and not the 9:45 bar? I understand completely why it was pt. 1 for the brown channel but not the orange. Can you explain the rationale for this? Does it really even make a difference?
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all 3 channels have the same point 1

2r42c21.gif
 
the first channel is the red one, after that you have new point 3, 2 (orange), so you recycle point 1 to create orange channel. Then you have new point 3, 2 (brow), so you recycle point 1 to create brow channel
 
I can see conceptually from the chart what was done, but channel drawing rules seem to change or maybe I dont know all the rules fully. When did "recycling" pt 1's become ok to do?

I guess I just dont understand why there is an orange channel on this chart in the first place. It looks like pt 3 of the orange channel is just an FBO of the red channel. Next bar remains inside red channel and the following after that creates a volitility expansion @ 10:25. Why the need for the orange channel?



Quote from nkhoi:

the first channel is the red one, after that you have new point 3, 2 (orange), so you recycle point 1 to create orange channel. Then you have new point 3, 2 (brow), so you recycle point 1 to create brow channel
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Quote from C99:

I have a quick question.

Does it really matter what color the decreasing side of the gaussian is?


The volume formation of a point 3 is also much more clear cut for me at this point.
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Hi,

I have always been focussing more on identifying FTT's than on point 3's. Could you please elaborate on the volume of a point 3 and in general on how to recognize this?

I mean, on a downtrend you see FTT (pt 1). Price breaks thru RTL on usually low volume. Then goes up one or a few bars (pt 2) and then goes down on lower volume and stays above the FTT. Now we are waiting for pt3 to be established and price to resume going up. What do we see? Higher volume? A (mini)FTT? Is there any post about this?

regards,
Ivo
 
Quote from Steve Tvardek:

I can see conceptually from the chart what was done, but channel drawing rules seem to change or maybe I dont know all the rules fully. When did "recycling" pt 1's become ok to do?

I guess I just dont understand why there is an orange channel on this chart in the first place. It looks like pt 3 of the orange channel is just an FBO of the red channel. Next bar remains inside red channel and the following after that creates a volitility expansion @ 10:25. Why the need for the orange channel?
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Steve...

This has been going on the whole time. I dont know about 3 channels with the same pt 1, but at least 2 channels come up quite frequently. There has been discussion here in the past about 'moving' the point 3, which is what this amounts to for me.

It looks like the red channel was a much better container for price action than the orange on this anyway (if you extend the channel lines 30 minutes), so I wouldnt sweat it if you didnt have the orange drawn in (ftt was quite clear in whichever channel you wanted to look at). I think the orange channel gives you a better 'forest' view as ST would say. This helps me tremendously by holding price action over a longer period while I am trying to nail down the new points of the new trend...trying to work my way down in fractals =)

HTH...maybe Spyder will provide a better explanation
 
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