Spydertrader's Jack Hershey Futures Trading Journal

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Since we're still in the month of Gaussians and PV, I wanted to post while we're still on topic.

From Jack's "Building Minds for Builiding Weath", PV is:

If the Volume trend is UP, then the Price trend will CONTINUE, or,
If the Volume trend is DOWN, the the Price trend will CHANGE

When I apply the above statements to channels and Gaussians, I read them as follows:

If Price is in an operating UP channel and the dominant Gaussian peaks (B2R's) are decreasing, then anticpate CHANGE, or,
If Price is in an operating UP channel and the dominant Gaussian peaks (B2R's) are increasing, then anticpate CONTINUATION.

And of course, similar for operating down channels:

If Price is in an operating DOWN channel and the dominant Gaussian peaks (R2B's) are decreasing, then anticpate CHANGE, or,
If Price is in an operating DOWN channel and the dominant Gaussian peaks (R2B's) are increasing, then anticpate CONTINUATION.

By "operating", I mean you have found Gaussians that sync well to your channels. I believe this is an important statement. Gaussians should validate your channels. But these are my opinions.

If I understand PV and have described this properly, Increasing/Decreasing DOMINANT Gaussians are important to recognize. Although this is probably true at any fractal, I'm really talking about Gaussians that are wider than a bar or two. Sure, tapes operate, but I'm talking about Gaussians we see in the trees and Forest.

I've attached a "theoretical" Gaussian/PV chart. In the Up channel, there are 3 "wide" Gaussians. And the dominant peaks are decreasing. What's happening here? Well, Price is moving higher on lower/decreasing BLACK volume. Right? And note the channel is "operating". PV says anticipate CHANGE when the Price trend is UP and the Volume trend is DOWN (decreasing). So, anticipate CHANGE.

In the down channel, there are again 3 wide Gaussians. But this time, the dominant peaks are increasing. Price is moving lower on increasing RED volume. PV says a Price trend will CONTINUE if the Volume trend is UP (increasing). So, anticipate CONTINUATION or NO CHANGE.

Of course, this isn't cookboook or mechanical. It's more of an Art, in my opinion. Volume could come in at any time in the opposite of the anticipated direction. And news can wreak havoc, as we all know. But this is my interpretation of PV. And I hope I got it right...

I didn't annotate the FTT's, FBO's, BO's, R2R, etc. Exercise for the interested reader :D

Sorry for the long post. I'd appreciate any feedback, especially if i'm on the wrong page...

spooz
 

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Quote from spooz_trader1:

By "operating", I mean you have found Gaussians that sync well to your channels. I believe this is an important statement. Gaussians should validate your channels. But these are my opinions.
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With respect to your interpretation of the Jokari Matrix (See Attached), you appear to have the correct understanding with respect to the Price-Volume Relationship. In addition, your charts provide a clear example of the phenomenon of 'overlapping trends' and how this overlap validates the various resolution levels. However, I caution your viewpoint with respect to 'operating channels.' Channel - Gaussian Synchronization exists within a binary framework. Channels and Gaussians either sync, or they do not sync. If they do not sync, then you have an incorrect channel. No varying degrees of Synchronization exist. Just as we see the fractal nature of channels on your chart, so too, do Gaussians exists within this same fractal framework.

By example, if Price exits a right trend line on decreasing volume, you have a clear indication and signal from the market. The signal says, "You have an incorrect channel." Even if no possible signal existed prior to that point in time, even if no logical method of drawing the new (or fanned in this case) channel existed before this current point in time, the market has spoken loud and clear.

Gaussians and Channels must always exist within a state of Synchronization. If they do not, a mistake exists somewhere, and requires an immediate fix. Either, the trader has drawn in an incorrect channel, or the trader finds themselves monitoring on an incorrect Resolution Level.

Instead of viewing Synchronization as a 'better or worse' phenomenon, try making the ever-so-slight shift to a binary paradigm. Doing so may help provide some extra clarity as to how the market unfolds, as well as, how price heads in a direction because it can only head in that direction.

If you don't see the bold type yet (as you view the market), don't worry, you will. :D

Again, nice work with the Jokari Matrix and your charts.

- Spydertrader
 

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Quote from Spydertrader:

Gaussians and Channels must always exist within a state of Synchronization. If they do not, a mistake exists somewhere, and requires an immediate fix. Either, the trader has drawn in an incorrect channel, or the trader finds themselves monitoring on an incorrect Resolution Level.

- Spydertrader
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This is an important statement IMHO. It helps the trader accept full responsibility for his actions rather than blaming the market for not moving the way the trader wanted it to move. The market is always correct and always giving out clues and it is up to the trader to be on the same side; if the move is not developing as per plan the market is still correct and it is upto the trader to find out where HE has made an error. It could have been the data set, analysis, decision or action but all errors lie with the trader. The good news is that these errors are easily fixable once we realize that the responsibility for fixing them lies in our own hands.
 
Would you guys clear something up for me. One thing I get confused about is when price steadily increases on decreasing volume. I can see that decreasing volume is forecasting change in the attached channel but still overall price is increasing while volume is decreasing and I thought price was only able to increase on increasing volume. I am sure I missed something along the way.

<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1414681">
 

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Quote from spooz_trader1:

Since we're still in the month of Gaussians and PV, I wanted to post while we're still on topic.spooz
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Spooz: thanks for your work here - it's well done and exactly what was needed to spur additional "on topic" comments and thought before we move on.
 
Quote from Bearbelly:

Would you guys clear something up for me. One thing I get confused about is when price steadily increases on decreasing volume. I can see that decreasing volume is forecasting change in the attached channel but still overall price is increasing while volume is decreasing and I thought price was only able to increase on increasing volume. I am sure I missed something along the way.

<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1414681">
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Price can only increase on increasing volume in an UP channel. The same for a DOWN channel for price to continue to go down.

Conclusion IMO is in this case that price is in a down channel --> the main channel is down (in an up channel price would move lateral on this volume) and you're seeing a non dominant traverse. This traverse is part of a down channel. When you see increasing price on decreasing volume the market is ready to change so wait for the market to tell you "change". In your case it already did by forming an FTT followed by decreasing red volume and a breakout of RTL.

Wait for a 1-2-3 setup to go short which may or may not be preceeded by an FTT. In your case the FTT is already right there in your channel as well as point 2 on the third bar from the left.

regards,
Ivo
 
Aha. Looking back at Spyders recent post I see what you are talking about. Backtracking a bit I see that we were in an overall downtrend from the previous close so I was not looking at the correct channel. Fascinating stuff.
 
Quote from Bearbelly:

Aha. Looking back at Spyders recent post I see what you are talking about. Backtracking a bit I see that we were in an overall downtrend from the previous close so I was not looking at the correct channel. Fascinating stuff.
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Hear ye, The Gaussian has spoken !
 
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