YM U7 2 minute chart.
Spydertrader's Jack Hershey Futures Trading Journal
- Thread starter Spydertrader
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Hey ST,
I have a question about the 11:20 bar. It looks like a flaw to me. At first I thought it was a potential pt 3 in the down channel so I got short, then price BO'ed my RTL on increasing vol and since flaws can not happen on non-dominate transverse. I thought we had a major trend change so I got long, but then price tanked. That was a nice 1 2 combo on my P&L. Still managed to salvage the day with 4.25 pts gross on 16 trades.
Any information you can give would be appreciated.
thxs
vjr
I have a question about the 11:20 bar. It looks like a flaw to me. At first I thought it was a potential pt 3 in the down channel so I got short, then price BO'ed my RTL on increasing vol and since flaws can not happen on non-dominate transverse. I thought we had a major trend change so I got long, but then price tanked. That was a nice 1 2 combo on my P&L. Still managed to salvage the day with 4.25 pts gross on 16 trades.
Any information you can give would be appreciated.thxs
vjr
I have a question too Spyder, when you are through with vjr's
So, one very important thing we've learned recently is that the great majority of FTT's occur after a VE, a flaw or both. And we also must have 3 pts established FIRST before looking for a flaw and/or a VE. My question has to do with what we do AFTER we have to fan out our channel (IE using the old pt3 or old pt 1). Sometimes we have to increase the slope (for pace) and sometimes we have to lessen the slope. Now after we fan out, do we now consider this a new 3 pt channel? Meaning do we see it as a new channel w/ our 3 pts already established and now we must look for a flaw and/or VE before the next FTT?
Hopefully I articulated that well enough, if not I will retry.
So, one very important thing we've learned recently is that the great majority of FTT's occur after a VE, a flaw or both. And we also must have 3 pts established FIRST before looking for a flaw and/or a VE. My question has to do with what we do AFTER we have to fan out our channel (IE using the old pt3 or old pt 1). Sometimes we have to increase the slope (for pace) and sometimes we have to lessen the slope. Now after we fan out, do we now consider this a new 3 pt channel? Meaning do we see it as a new channel w/ our 3 pts already established and now we must look for a flaw and/or VE before the next FTT?
Hopefully I articulated that well enough, if not I will retry.
Quote from vjr:
Hey ST,
I have a question about the 11:20 bar. It looks like a flaw to me. At first I thought it was a potential pt 3 in the down channel so I got short, then price BO'ed my RTL on increasing vol and since flaws can not happen on non-dominate transverse. I thought we had a major trend change so I got long, but then price tanked. That was a nice 1 2 combo on my P&L. Still managed to salvage the day with 4.25 pts gross on 16 trades.
thxs
vjr
Hope you don't mind, but I'll take a stab at this.
From your comment about "potential pt 3 in down channel", please note you can only have one pt3 per channel. I may have it wrong, but from your wording it sounds like you may think pt3's show up multiple times in the same channel. If so, this is NOT correct.
Look at ST's chart at this time. YOu'll see he annotated a new up channel just as you suspected. But, just as quickly he identified an FTT of that up channel (11:30). Depending on your resolution level, change can take as long as a day or more, or just a handful of bars. Once you got long, you needed to continue monitoring for change, which you missed. I can really relate to this, as it's something I've only recently begun to handle.
First you red volume on the 11:30 bar. Volume was such that you might have thougt it was an FTT (but better to guess early and wrong than late and right, as early and wrong will allow you to later make money even on your errors). Next bar breaks the long RTL on increasing PRV from early in the bar. No question of change at that point. When change is clear you must act NOW.
Hope this helps a bit.
from today's ET Chat...
on FTT, retrace of the retrace... etc.
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on FTT, retrace of the retrace... etc.
http://www.elitetrader.com/vb/showthread.php?s=&postid=1502377#post1502377
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You first attempted to short a "Retrace of a Retrace" on the 11:20 AM Bar. (See dkm's post last Friday). Now, if you trade on the leaf and / or bug resolution level feel free to continue. However, if you trade on the Forest / Tree resolution level, then you need to avoid these situations entirely. Today's ET Chat Room Log contains a discussion with respect to why one should avoid these scenarios. A review of the 'Retrace of a Retrace' discussion should provide the clarity you require. With respect to the 'getting long then market tanking point, once one 'see's a Volatility Expansion, its time to begin looking for FTT's. We had one the very next bar. Knowing when to begin to look for FTT's (signal for change) places your brain into the correct mindset, and allows the trader to anticipate the change sooner. As a result, you should experience smaller losses (and even some profit) should you encounter this scenario again in the future.
First, lets distinguish between creating 'Steeper' Up channels and creating 'fanned' (Out) channels. We put the 'steeper' channels in place in an effort to make sure we have our channels match our Gaussians and to insure profit protection for the 'Forest Level' traders (the 'steeper' channels bring the Right Trend Line in closer to the Price Action). With 'fanned' (Out) channels, we must fan when Price exits the channel on decreasing Volume in an effort to insure the creation of a 'correct' traverse. In other words, the market has told us we have an incorrect channel and we need to fix the situation to make sure we have the correct context to trade.
The steeper the channel we have, the less likely the channel will remain intact (Price fails to exit the RTL) for any length of time (steep channels do not last very long). Sure, exceptions exist (February 27, 2007 we had a 5 hour down channel), but in general, you'll make the same observation time and time again. The longer a channel remains intact (without a RTL break) the more likely we expect to see the sequence of Point Three, VE / Flaw, FTT materialize. Since 'fanned' (out) channels normally represent a point in time where the market is "rolling over (or under)" so to speak, we do not expect these types of channels to last very long either. Again, exceptions do exist, but in general, you'll see the same observations.
As such, we see the following: Whether or not Price follows the expected sequence of Point Three, VE / Flaw, FTT depends not on the type of channel, but rather, occurs as a function of time. The longer a channel remains intact, the greater the likelihood our anticipated sequence matches reality. The shorter the time involved with a channel remaining intact, the less likely we expect to see the anticipated sequence match reality.
Unfortunately, I cannot yet provide you with an accurate 'time' where one can say, "Well my channel has been around for 20 minutes, so I can expect the anticipated sequences to match reality now." However, just like the 40-60 Volume 'guideline' for anticipating flaws doesn't guarantee one will have a flaw based solely off the single Volume data point, so too, does a anticipated 'short duration channel' not guarantee a failure of anticipated sequence to match reality. One must continually answer the questions, "What do I need to see for continuation? What to I need to see for change?" on every bar. Following this advice provides a mindset for changing what once caused you confusion into what (in the future) will provide confirmation.
- Spydertrader
Homework
Please feel free to make a list in relation to these questions, most of the answers can be found in yesterday's chatlog. I believe you need to have a list of these in your head when watching the market real time.
1. Anytime you have an FTT, what does an FTT mean?
2. Where will you ALWAYS see decreasing red volume?
3. What do you need for change?
4. What do you need for continuation?
I hope many of you will participate, it helps to have clear definitions in your head.
Please feel free to make a list in relation to these questions, most of the answers can be found in yesterday's chatlog. I believe you need to have a list of these in your head when watching the market real time.
1. Anytime you have an FTT, what does an FTT mean?
2. Where will you ALWAYS see decreasing red volume?
3. What do you need for change?
4. What do you need for continuation?
I hope many of you will participate, it helps to have clear definitions in your head.
I will start off with the first one
1. ANYTIME you have an FTT what does the FTT mean?
An FTT signals a change in sentiment, one trend ends, another begins. This change could be on a tape, a traverse or a tree.
FTT = CHANGE
"Market acts the same way after every FTT (decreasing non-dom to trend line)" Spyder
Keep it simple
1. ANYTIME you have an FTT what does the FTT mean?
An FTT signals a change in sentiment, one trend ends, another begins. This change could be on a tape, a traverse or a tree.
FTT = CHANGE
"Market acts the same way after every FTT (decreasing non-dom to trend line)" Spyder
Keep it simple
Quote from callmate:
Homework
Please feel free to make a list in relation to these questions, most of the answers can be found in yesterday's chatlog. I believe you need to have a list of these in your head when watching the market real time.
1. Anytime you have an FTT, what does an FTT mean?
2. Where will you ALWAYS see decreasing red volume?
3. What do you need for change?
4. What do you need for continuation?
I hope many of you will participate, it helps to have clear definitions in your head.
#2 Where will you ALWAYS see decreasing red volume ? Confirming that you have an ftt on a down channel in a dominant traverse, You now have your pt.1 of your upchannel. pt 1 will have a dominant traverse to the left trendline on increasing black volume to form pt.2. It is now, in this non dominant traverse to right trendline , pt2 to the new pt3,you will have decreasing red volume, and you now have your pt3. All retraces in an upchannel should be headed towards the right channel line on decreasing red volume.
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