Spydertrader's Jack Hershey Futures Trading Journal

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Hi,

I have been trying this lately (putting RTL as soon as you have a point 1) and I find it very interesting. Just draw your RTL after point 1 and make a good guess how steep it is given the current volume (or in other words: low volume = it takes more time for your pt3 to be formed).

I am amazed how often point 3 happens very close to the line. Sometimes I just think "This cannot be point 3, it's too soon given current volume" and what happens is some chop and finally our pt3.

Just ask yourself the question: "How steep can this channel reasonably be considering current volume?". If your retrace channel is steeper than the dominant one while volume was dropping you know something is wrong. When double checking you often find the gaussians not matching the channel... We simply don't have our channel yet.

As an extra indication of volume dropping I use average true range indicator. When bars become smaller this indicator often tells me so even before I notice. Especially on YM 2min chart. I do this because low volume periods cause me a lot of trouble. I just didn't see the low volume period coming. Hopefully now this belongs to the past.

regards,
Ivo



Quote from makosgu:

Pt3, pt1, RTL... Any point that begins a traverse. By rank, pt3 would be the safest. Unfortunately, I cheat so I typically put in my pt3 well in advance of it happening. When I get pt1, I immediately draw my RTL and LTL before I get pt2. This is typically because I have an expectation for the cycling that is usually 2 to 3 bar per traverse and 1 or 2 for the retrace with an expectation for the bars volatility given the type of volume we are seeing. It's kind of spooky. In other words, even the angles and width of the channels have typical values, for me that is. As a result, I put them in place to furthur clarify the right side. If I get a flaw like an FBO, then I do away with the new channel and flib back to the previous one. If the action rides the RTL, I will either adust my RTL or switch into a LATERAL CHANNEL or PENNANT modus. The characteristics of which are also very different...

Regards,
MAK
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Quote from PointOne:

http://www.elitetrader.com/vb/showthread.php?s=&postid=1523652&highlight=draft#post1523652

I actually stopped doing this as it started to become too much like prediction (with all the negative EQ if you are wrong). I still put in the line so I remember that I am anticipating a P3, but I do not always attempt to guess the angle.
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Hello,

Yeah. Well, the word "guess" is completely wrong in this context. The line is there just to tell you a p3 still has to come and in many cases comparing the channel we think that we have with current volume we just know we did not have point 3. So it all has to be placed in context.

regards,
Ivo
 
Quote from cnms2:

In my interpretation, forest and point 3 trading was introduced for two reasons:
- because it is a little easier (less risky) to identify timely a point 3 than an FTT
- to slow down trading and allow more time to the beginner to observe and analyze.
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Totally understand your point... but your example isn't very timely as you identify your PT3 not 1, not 2, not 3, but 4 bars after it happens. IMO this seems not less risky, but more risky. You're lucky you didn't get in at the veeeerrrrryy end of the move. Yes, the closer you enter to the PT3 and the more aggressive you are, you might have a couple more washes. But the same goes for entering way too late...

In the case of your example, in fact it would have been impossible to get in 3 bars earlier because incr black vol didn't come until the bar you got in on. This behavior of course is characteristic of being between a PT1 and a PT2 (decr black to incr black), whereas at an actual PT3, you'd have decr red to incr black, where it is much simpler to get in at the origin of the traverse w/in 1-2 bars.
 
Quote from PointOne:

http://www.elitetrader.com/vb/showthread.php?s=&postid=1523652&highlight=draft#post1523652

I actually stopped doing this as it started to become too much like prediction (with all the negative EQ if you are wrong). I still put in the line so I remember that I am anticipating a P3, but I do not always attempt to guess the angle.
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In time it will become easier to do it before the fact... Earlier in the thread, I posted 3 RT posts. In the second, shot I got the EEK I had projected circa the RTL BO on YM... Eventually, the early annotations become routine. Operating in the uncharted space is more of a projection. If I get a FLAW, I know that a possibility has been eliminated. Here were the screen captures...

YM RTL XO/PT1...

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1359645>

Several minutes later, I then posted this...

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1359661>

Several minutes later, I then posted this... Note how I annotated both the TRAVERSES and RETRACES of the channel.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1359680>

Eventually the channel went on several legs (ie. TRAVERSES/RETRACES) longer than what I had projected but the result was that there were no surprises. For me, the 2M YM gives me an additional MEDIUM level resolutions not only because it's 2M, but also because I can see the cycling within the legs of the YM channel against the legs of the ES...

At some point, this becomes business as usual...

MAK!
 
Our "dialogue" sounds too much as my current experience with jury deliberation... I won't argue more... :)
Quote from Pr0crast:

Totally understand your point... but ...
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