My ES chart for the day (7/6/07)...
spooz
spooz
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Spydertrader's Jack Hershey Futures Trading Journal
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Quote from R/R:
hi, I'm going to paraphrase from pg 99 of Jack Hershey's "Channels for building Wealth, v2.2":
When you have a pt1 and pt2 in place, pt3 should resume (meaning start the R to L traverse of new channel) BEFORE reaching the same value as pt1.
If pt3 is above pt1 for an expected short trend, your pt2 becomes the new pt1 as you have indicated with the question marks. Then you would look for a pt3 above the new pt1 for a long trend.
As others have mentioned this must also synch with the Gaussians.
Hi R/R,
Thanks for your answer.
Yes, I had also read this phrase in Jack's document and therefore indicated it in my drawing. However I'm a bit confused what happens next:
- I think the old (blue) channel is invalid now, since it was broken. But I don't have a new channel yet. So how to continue from here? Should I just wait without any valid channel until I get point3?
- I have done another attempt to draw the channels after having arrived at this point (see attachment). However in that drawing the FTT is not the point1 of the new channel...
See attached. Comments are highly appreciated!
Attachments
Quote from dkm:
Monitoring notes for 6 July 07, including links to es chart posted throughout the day.
Great post. I am making it part of the learning to read the chat log daily to see all the work being done here unfold live. At times it can be a real juggle to monitor, sweep, and read chat at same time, but it clears up quite a bit of questions and reinforces the journal. Just to say , it is realized the effort to add your thoughts to your chart, and appreciated.
Quote from 1.6180340:
Should I just wait without any valid channel until I get point3?
Sometimes, this is exactly what we must do - wait. Begin to learn to anticipate where the next point three has to form. Nobody can tell you how exactly you will 'see' the channels form. If you begin by annotating charts at the end of the day, you'll begin to 'see' what makes sense and what does not. Everyone learns this by 'doing,' and in time it all comes together. A review of dbphoenix's "Determining Trend Thread (linked at the beginning of the Journal) may help you to 'see' more clearly.
Quote from 1.6180340:
I have done another attempt to draw the channels after having arrived at this point (see attachment). However in that drawing the FTT is not the point1 of the new channel...
Many times, the FTT won't form the Point One of the new channel. For example, after a Left Trend Line 'bounce,' the FTT often forms the Point Three of the new channel.
- Spydertrader
Quote from Spydertrader:
Sometimes, this is exactly what we must do - wait. Begin to learn to anticipate where the next point three has to form. Nobody can tell you how exactly you will 'see' the channels form. If you begin by annotating charts at the end of the day, you'll begin to 'see' what makes sense and what does not. Everyone learns this by 'doing,' and in time it all comes together. A review of dbphoenix's "Determining Trend Thread (linked at the beginning of the Journal) may help you to 'see' more clearly.
Hi Spyder,
Many thanks for your comments.
So in this specific example you would do the same: wait?
Are my annotiations correct?
Many times, the FTT won't form the Point One of the new channel. For example, after a Left Trend Line 'bounce,' the FTT often forms the Point Three of the new channel.
- Spydertrader
I'm still unclear under what conditions an FTT would become a point1 and when a point3...
Could one say as a rule that when the current channel is an uptrend and an FTT occurs at a price that is lower than the last bounce off the LTL, that you would then use the last touch of the LTL as point1 and the FTT as point3 (like the last picture in Channels_Questions2.2.pdf)?
And when the price at which the FTT occurs is higher than the last touch of LTL that in that case the FTT becomes point1 of the new channel?
Last question:
If the RTL is broken but the price moves back into the channel, is the channel then still valid or not? And if yes, would that affect the RTL (I think it should never move)?
I have drawn such an occasion in Channels_Questions1.pdf. Are my annotiations correct?
Quote from Spydertrader:
Sometimes, this is exactly what we must do - wait. Begin to learn to anticipate where the next point three has to form.
After a while you develop a feel for the gradient (pace) of the likely channels. There is nothing to stop you drawing a draft projected TL to remind you that the channel Pt3 is still to come once the steeper "tapes" have done their thing.
Furthermore, if you record your sessions you may notice that more often than not your draft lines become the actual TL (i.e. very little or no adjustment required) and this makes you smile as you review at the end of the day.
To Phi, I'd recommend working with real charts rather than inventing "what ifs". You think you have simplified things but you are actually making it more complicated. What's more there is already sufficient material out there to know how to draw channels objectively - any subjective stuff is an overlay that comes with experience. N'est ce pas?
Spyder has since answered your questions and I think your annotations and conclusion about using the LTL bounce as pt1 and the FTT as pt3 are correct, but keep in mind the resolution you are working in.Quote from 1.6180340:
Hi R/R,
Thanks for your answer.
Yes, I had also read this phrase in Jack's document and therefore indicated it in my drawing. However I'm a bit confused what happens next: ....
You have also asked about the RTL break and price re-entering the channel. In your search for mechanical rules just note that if they exist they apply to the "classic case" which doesn't occur every time. My advice is to learn principles that you can apply to your thought process as you do your analysis asking "what do I need to see next for ....".
So, if price breaks the RTL on insignificant volume what do you know?
My answer would be you know the non-dominant traverse (retrace) has continued past your original delineation and invalidated it, but not the trend. Therefore you must fan the channel wider (redraw it) grabbing a new pt3. Spyder often recycles the previous pt3 as his pt1 for this purpose.
Now what do you anticipate to validate your wider channel?
Price moving off your new pt3 in a dominant traverse on increasing volume.
OK, what if price had originally broken your RTL on increasing, significant volume? What do you know?
My answer would be that this action has confirmed the change of trend, an X2X Gaussian is created, and you expect the new direction to be dominant.
So now as PointOne has recommended look for these situations on the real charts for reinforcement of your understanding.
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