Alrighty then. We have spent the last couple of weeks focusing on insuring a match exists between the Gaussians and the Channels. By always matching the correct channels to the correct Gaussian Volume Formation, a trader gains the ability to 'see' the market as never before. However, we need to place some emphasis on PRV at this point as well. Mentally calculating PRV every few seconds or so permits a trader to anticipate continuation or change by comparing the previous Bar Volume with the current anticipated Volume based on PRV calculations. Such calculations remain a critical component of analysis as Resolution Level Action Points (e.g. Forest level: Point Three and Right Side Trend Line BO). The rest of the time (i.e. Price does NOT reside at a Resolution Level Action Point), we use PRV as a learning tool in an effort to 'see' the changes taking place within the market itself, and to better understand time of change at the next lower (finer resolution) level down the rabbit hole (We learn about the Trees while sitting in a Forest).
During the next week (while continuing to match Gaussian Volume formations to their correct Price Channels), we need to focus on learning (or reinforcing) how PRV plays such an important role in this methodology. Now, for educational purposes only, I want everyone to begin to calculate PRV on every bar and throughout the entire bar.
The process should go something like this: "What kind of Volume do I have now? based on that number (and color), what Volume do I anticipate at close of this Bar? How does the anticipated Volume compare to the previous Bar? How does the anticipated Volume compare to my last FTT bar? How does the anticipated Volume compare to the Peak Bar in this cycle?
Wash. Rinse. Repeat. Each Bar. Throughout the Entire bar.
Some Things you'll begin to notice:
1. Decreasing Volume of the same color as the previous bar showing a slowing down of pace and warning of an upcoming change in market direction.
2. Flaws appearing before an FTT.
3. Changing Direction in both Price and Volume within the same Price and Volume Bars (previously referred to as FT3's in this Journal).
4. Volume starting out as a slow pace or decreasing volume, only to change gears and show faster pace or increasing volume. Volume starting out as a fast pace or increasing volume, only to change gears and show slower pace or decreasing volume. Note what happens next after these two situation develop.
5. Slowing of Pace (the rate at which volume flows into the Volume Bar) often provides a warning of upcoming change. Increased pace shows continuation.
If this task becomes mentally draining, use one of the many PRV Tools posted throughout this Journal and log the observations made throughout the day. Use the debriefing time (at End of Day) to reinforce the lessons learned, and not simply as a means to critique the errors made.
The above exercise should show everyone, what they already have witnessed many, many times, but for whatever reason, the brain prevented them from 'seeing' correctly: Volume always leads Price. (I'll have more proof on this when we discuss the DOM next month).
For those individuals struggling to find their way with STR / SQU, I have a few items for you as well. First, STR / SQU is not an 'indicator' as those familiar with indicators understand the definition. In other words, it isn't always saying something to you, nor should anyone expect it to do so. However, at certain points in time, STR / SQU provides extremely important information. In fact, looking at STR / SQU at any other time, might show erroneous data, or worse. Right about now many are saying to themselves, "That's all well and good Spyder, but you think maybe you could give us a Hint as to when these certain times might appear?"
Happy to .....
When monitoring the YM and you believe YM has reached a 'critical place' (such as during End Effects) Glance over at the STR / SQU for a few moments. What does the STR / SQU say at this point in time? When the YM approached the left trend line, also Glance over at the STR / SQU for a few moments looking for signal of change. In addition, practice the same technique when the YM approaches its right trend line. Lastly, Glance over at STR / SQU when The YM Gaussians Peak or create a Trough.
As one can see by the examples above, we want to look at STR / SQU when the market approaches a 'decision point' - a place where we would expect to 'see' change take place. Sometimes, (such as during volatility expansions), we don't see the anticipated change at these points, we see continuation. At times of volatility expansion, we may not receive the expect change signal from the STR / SQU, or it might only signal a temporary one.
Note how the instructions above have the trader already monitoring the YM before heading over to the STR / SQU. We already know the YM leads the ES at Points of Change. Just as we don't follow every wiggle and wart on the YM during periods of continuations on the ES, so too do we avoid monitoring STR / SQU unless YM Price approaches an area where we should anticipate change. In other words, we don't say, "The YM leads the ES on every tic." We say instead, "The YM leads the ES at Points of Change." As such, we don't think, "STR / SQU leads the YM on every tic. Rather, we think, "STR / SQU provides an early signal for change at the YM points of change.
Understanding this fine distinction remains of critical importance to everyone's success. Just as a Forest Level Resolution trader has no need to stay glued to the ES on every tic (only focusing instead on Point Three's and RTL BO's), so too must the same lesson apply as we move further down the rabbit hole. We already know Channels and Gaussians have a fractal nature. The very same fractal nature applies to the lessons learned as well.
Right Place. Right Data. Right Time = Right side of the market.
I apologize for the lengthy post, and if anyone finds my words confusing in any way, please let me know. I am more than happy to provide additional clarification.
- Spydertrader
