Spydertrader's Jack Hershey Futures Trading Journal

[The Swordsman]

I meant once in a trade which turns out to be a misidentification, one must react to get out. In a volitile market, the difference in reaction times based on the skill level of the trader will differ, which causes a greater loss to the less skilled. Thats all I'm saying.

I am a firm believer in anticipation, I'm not saying anything against that. Just a little miscommunication on my part.

Quote from Spydertrader:

Can you see a mindset difference between these two posts?

- Spydertrader

 

[Spydertrader]

Quote from bundlemaker:

I know it's not supposed to be. But a significant % of scenarios where I "anticipate", based on what I believe to be a complete data set, ends up being wrong 5 seconds later. Then I correct, but 5 seconds later, I'm wrong again. This is the barrier I face.

You are not anticipating, or you are not anticipating correctly. You are most definitely guessing. Sometimes you guess right, and when you do, it reinforces the 'guessing' paradigm. However, when you guess incorrectly, you say, 'it ends up being wrong.' Nothing can 'end up being wrong.' Nothing. Understand this point. Nothing can 'end up being wrong.'

A Trader might misread the market signals.
A Trader might confuse continuation with change.
A Trader might miss a signal off a particular tool.
A Trader might lose direction with respect to the right side of the market.
A Trader might not yet have the ability to differentiate between continuation and change at an Intra-Bar level.

A Trader does not, 'end up being wrong.' We cannot 'end up being wrong' because we do not guess. We know what must come next based on a sufficient set of data. In other words, we know, when we know.

We begin with the following premise:

The Market is always right.

If the market is always right, then the 'system', which uses (as its foundation) the change in market sentiment derived from the market itself, does not produce error. However, the Trader can (and often does) generate tons of error. The trader is not 'wrong' in the sense of 'predicting future outcome' unless, of course, the trader is trying to predict future outcome.

As a result, the solution becomes: Stop trying to 'predict future outcome.'

To even think the words, 'this ends up being wrong' is to misunderstand the conceptual goal of this process. As a result, one needs to learn to correctly anticipate, but before then, one needs a method to judge whether or not one has sufficiently grasped the fundamentals before moving forward.

A metric anyone can use to determine, whether or not, they have grasped the fundamental precepts behind this Journal - involves determining for yourself, whether or not, you can distinguish between continuation or change at the close of every bar. Do nothing Intra-Bar. Wait until the bar has closed and ask yourself the question, "Is this continuation or change?" Do not attempt to determine what must come next. Only answer the one question on every bar.

If you can, on almost every bar, answer the question, then you know that you know this stuff, and can move forward. If you cannot answer the question on almost every bar, then one needs to do some review. In either case, where you could not answer the question, you need to understand why.

Again, in case anyone somehow has confused the point of this exercise ...

It is not an attempt to make someone profitable. It is a metric for showing you where you need to do more work.

Also, everyone should read Mak's post again (several times in fact). He points out what one can learn from a Price Bar (and not just Open, High, Low and Close).

I apologize for this post's length, but trust many will find it's contents useful to their efforts.

- Spydertrader

 

[Talas]

I've been lurking and studying for a few months... and thought I'd solicit feedback on my annotations to see if I'm getting the fundamentals correct.

Any feedback is sincerely appreciated.

Thanks,
- Talas

(P.S. I realize the level of detail in my annotations varies. It's due to working full time and alternating between work and playing market catch up.)

 

[Spydertrader]

08-16-2007 ES Chart

- Spydertrader

 

[river]

Quote from Avi 8:

How to 'know' I have a pt 3.

Timely discussion on point 3’s. Thanks Avi 8 for initiating the discussion. I had a difficult time locating the point 3 for the following channel:

My annotation of this morning’s chart had an FTT at the 10:30 bar--my point 1. I used the high of the 10:50 bar as my point 2. I continued monitoring for the point 3 using January’s toolset but had a hard time using Gaussian formations and PRV to assist me. Half way through the 11:00 bar I annotated the bottom of that bar as my point 3 based on price action only—neither PRV nor the recent earlier bars’ volume seemed to match my understanding of a “textbook” point 3.(Perhaps I misread price, volume or PRV.)

Would someone mind briefly outlining what they saw during this timeframe and how they chose the point 3?

-river

 

[8833broc]

My 1100 thoughts and chart attached.

The Up Trend was clear to me but I was thinking around 11
that I was going to refit/redraw the uptrend. After i noticed
the 1102 UP price bounce I redrew the LT RTL ( dash lime green ).


Highlighted in Blue and referenced as BB5 in my attached notes
I was not sure of what I should be anticipating or watching
for next. The prior 3 bars looked "tapeish" and the green
volume leveling out had me thinking a new fanned
pt 3 down was coming soon.

 

[bundlemaker]

I just learned something. I made up my own exercise based on Spyders last post. I took today's chart, totally hindsight, and labeled (or tried to) each bar as continuation or change.

Couldn't do it.

Among the noted challenges were trying to sort out various resolution levels. But, more signifiantly, I realized that I really don't understand how the PV relationship works. Sure, I can recite the Jokari matrix, I can explain the general principal, but even afterhours, static chart, nothing moving, there are a number of points that I can't tell you change from continuation.

One of the all time best seller sticking points is this: when assessing what a gaussian is telling you, one must look the histogram over the entire traverse. But, at some point, an action point is reached, at which time, at a minimum, one needs to look bar to bar (not to mention PRV intrabar).

There is an abosolute, logical disconnect here (based on my understanding, NOT what Jack or Spyder is doing/teaching). How can I distingquish change from continuation from one bar to the next, AND gauge the gaussian over the whole traverse. Currently, I do not see how this is physically possible.

Many thanks to all who are participating in this conversation, as it is really helping me to crystallize where I'm diverging from what is being taught.

 

[callmate]

I found MAK’s post and Spyder’s chart on 2pair and spike very useful in order to understand the concept. Thank you for the clarification. I also used the search function to read anything I could find on the topic.

With reference to Bundlemaker’s post above I have difficulty with bar to bar analysis. I find it much easier to stick to forest level when determining change or continuation.

For continuation, I am on the look out for flaws, VE, PRV, break of rtl and increase in volume, whilst keeping an eye on ym.

For change, I try to identify FTT, pt3, b2b or r2r and harmonics.
I look at the NOW bar in terms of volume, prv and compare it with the last bar. This is my simplistic approach. I may not be in tune with most people here but I find staying at this level helps me.

 

[Talas]

<i>There is an abosolute, logical disconnect here (based on my understanding, NOT what Jack or Spyder is doing/teaching). How can I distingquish change from continuation from one bar to the next, AND gauge the gaussian over the whole traverse. Currently, I do not see how this is physically possible.
</i>
I'll preface this with the statement that I'm still a novice, so caveat emptor...

Continuation / change is a matter of how the current volume "fits" into the Gaussian. The ideal Gaussian rises bar over bar nicely and falls bar over bar nicely - every bar fits nicely. The problem becomes differentiating non-ideal behavior from changes in pace.

So, volume/pace in the context of the current Gaussian tells you whether you've got continuation or change.... if the pace 'fits' into the your current view of the Gaussian, you've got continuation. If it doesn't 'fit', you've either got a flaw or change.

For instance, if the current Gaussian shows decr black volume, we anticipate decr black volume or incr red volume. If it's neither, we've got one of three scenarios - flaw, change, or an error on our part (important to always check this one).

Please correct me if I m off the mark.

 

[vjr]

Quote from bundlemaker:

I know it's not supposed to be. But a significant % of scenarios where I "anticipate", based on what I believe to be a complete data set, ends up being wrong 5 seconds later. Then I correct, but 5 seconds later, I'm wrong again. This is the barrier I face.

bundle, i understand what you mean. the same thing was happening to me before. but then i realized that i was traveling to far down the rabbit hole and went back to basics (i.e. see the below post and it helped a lot).

Quote from Spydertrader:


A metric anyone can use to determine, whether or not, they have grasped the fundamental precepts behind this Journal - involves determining for yourself, whether or not, you can distinguish between continuation or change at the close of every bar. Do nothing Intra-Bar. Wait until the bar has closed and ask yourself the question, "Is this continuation or change?"
- Spydertrader