Spydertrader's Jack Hershey Futures Trading Journal

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No, you are right, you didnt say selling isnt the right play. I guess I read that because you said lateral of an upchannel which implies holding your long (or not getting short) in my mind. That is my mistake.

However, you might not have read my post carefully, I said selling INTO the 2:20 bar which implies that I got short prior to the close of the bar. Once the bar closes and I can see a lateral formation I should get ready to possibly exit my short if I dont see what I anticipate, which is red volume taking price lower. See, at the time I sold, I sold into declining vol in an up channel which, in the given context COULD provide me with an FTT IF I see what is necessary to confirm that. The next bar gives me indication that perhaps I did indeed sell and FTT as price heads lower and on increasing red volume. The next bar starts lower on increased red appearing to have a potential BO in progress, however the bar closes back inside the channel giving me an FBO and, therefore, an exit of my short for a gain of 1.5 pts.

So I saw this sell as an FTT which led to an end effect, an FBO.

Quote from Spydertrader:

Nothing wrong with 'seeing' things differently. We all should see events a bit different than the next person. As long as we arrive at the same endpoint, no harm is done. However, suggesting the information I provided exists only in hindsight means you missed something along the way.

Did the closes of the bars line up "in hindsight" or did they line up in real time? Unless your charts mysteriously change the close at the end of day, I suspect all this happened in real-time, and not as you suggest. Call the whole thing a goat if you like, but whatever one decides to 'name' the event, doesn't change what the event actually is - lateral movement. Had you decided (in real-time) that you did not see lateral movement, then I recommend at least considering the possibility lateral movement existed when decreasing black volume in an up channel materializes the next time you see it, else, you might find yourself upside down on the wrong end of a rocket.

Secondly, figure out which resolution you want to trade on, and then use the appropriate tools to capture the signal. If you want to trade Intra-Bar, then you need to be prepared to have anticipated incorrectly by the time the close of the bar arrives. When a bar closes inside the previous bar, as opposed to closing outside the previous bar, I recommend viewing such a circumstance as a difference, and not (as you appear to be suggesting) as a similarity. The converse of this is, if you want to trade End of Bar, then one has to be prepared to give up profits in order to wait for the time well after when "you know that you know."

Lastly, please point out where I posted "selling here wasn't the right play" because I do not recall saying anything of the kind. I simply pointed out what formation existed and what such a formation means to the vast majority of individuals trading. Now, if you want to trade within such formations, nothing stops you from doing so. After all, you appear to have made out just fine in this circumstance. However, I recommend disassociating 'right' and 'wrong' from that of market direction as soon as possible. It's a slippery slope straight down from needing to be 'right'.

Good trading to you.

- Spydertrader
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Quote from Spydertrader:

Without exception, Decreasing Volume on Improved (in a downtrend, dominant Volume increases as price decreases) Price represents a signal for change. Now, lets look at the types of change which might materialize.

1. Lateral Movement (Price closes within the previous bar)

2. Flaw or Formation (short term change)

3. Non-dominant retrace (FTT, LTL Bounce)

Are you sure your "five examples" don't fall into the above three categories?

- Spydertrader
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You are correct, the examples will be categorized into one of the above. However, I view these situations as continuation. I am struggling with the decision points on when to reverse. If on my res. level I am to hold through such situations, I dont see how I can view them as change.

Sometimes they will lead to a change, sometimes they wont. Barring a gaussian shift, I find it difficult to determine a good reversal point..
 
Haven't posted a chart for a while.

So here's mine for this morning. Currently I am expecting a point 3 down because we broke out of the blue channel. Maybe we already had it (FBO red channel) I think I was a little early by drawing the lightgreen one.


regards,
Ivo
 

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So the RTL / LTL and the channel are correct in my view. It may not be in the way you annotate.

Sorry for not responding last PM but I went to bed. It is apparent that we indeed do have different conventions for labelling channels. For me, points 1 and 3 are always associated with the RTL aka "the trend line" and point 2 is always associated with the LTL aka "the left channel line". The RTL will always be further to the right, on any chart which I am looking at, than the LTL.

As for traders drawing different channels for the same time period, I agree with you that this happens and if one compares charts from various traders for the same time period it will be seen that this happens not infrequently.

In the attachment, the channels that yourself and Spyder have drawn, are rather different. Part of the reason will be trader preference but another portion is due to the fact that the data sets which you and he are looking at are not the same. In particular the 14:25 bar has a lower low in Spyder's chart and there are several other spots on the two charts where subtle differences exist. So what does one do with these two variables: trader preference and non-equivalent data sets?

As to trader preference, I would leave that up to the traders to decide whether their way of doing things is "appropriate". The market will rather quickly let you know if the variation isn't. If one is silly enough to tell oneself a lie, the flogging will tend to last longer.

There are two aspects to the data set variable. The first is that one should be as sure as one can be that one's data set is as close to what is REALLY happening at any given moment in time in the market. How can you be sure? One way is to pay $1500 a month for a Bloomberg terminal. Sorry, I can't afford that. At the other extreme is to use market data from a a commercial software vendor or from your friendly neighbourhood broker. What the latter two entities typically dispense is what is called "third" or "fourth" tier market data. Stay away from it. There are any number of reasonably-priced data vendors and you should use one of them.

The second part of the data set thing, is that once you have satisfied yourself that you have "good" data, then you must be faithful to your data and not change what you are doing to it based on someone else's data set. If you believe that your trader-specific way of doing things is kosher, then you need to stick to it, unless of course it becomes clear that what you are doing is not appropriate. Then you must adapt or perish.

The compleat Hershey methodology is the closest thing to a stock market "hair-trigger" that I have come across. When as little as one tick can cause you to consider doing something, you must be comfortable with the tools that you are using to achieve this level of market know-how.

lj
 

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I'm goin to sleep...

In hindsight, I missed drawing the step trendline from 1486.25 to 1480 with the corresponding gaussians to signal change as I had my own biases take the better of me (thinking yesterday's big move should reverse); the same mistake applied on my exit where I should have placed a stop on 1492.50 . I was also being too careful (i think) to wait for the MVA xover before I pulled the trigger on both ocassion...

Lesson I learned: Let the market tell you the story; as spydie said...don't let expecting lead to believing...

As usual, I appreciate any comments so I could better myself...

Good trading to you all...
 

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Quote from RoughTrader:

Hi Eric,

I was wondering why you chose to annotate the center action as a lateral instead of the up/down channels in there?

RT
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Just seemed to look "right" in hindsight. Seemed a little silly to me to have an up channel with a slope of only 1 tick per 20 minutes. If I had done it real time there would probably be several sub channels within the big lateral channel, but when trying to catch up on the day's annotations after sitting down I do the bare minimum that will get me up to speed.
 
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