Spydertrader's Jack Hershey Futures Trading Journal

[ivob]

Hi David,

I agree with everything except for the following.

>Assuming that one went long at the close of the 15:40 bar
>(1419) one should be anticipating a rally with decr black vol.

This doesn't have to be the case. Another option is that a flaw would follow the FTT so in this case a red bar with 40%-60% of the volume of the previous bar. This is exactly what happened (15:45 bar) so there was no warning sign.

>The fact that the 15:45 bar is red shows that what we have >here is a flaw and the appropriate action would be to reverse at >or near the close

The fact that it was a flaw made me stick to my long. 15:45 was red but on very low volume so I thought 15:45 was a flaw on a left to right traverse --> stay long. As flaws only happen in the dominant direction I thought dom direction had changed.

However, maybe what you mean is 15:40 + 15:45 together form a flaw.

regards,
Ivo

Quote from dkm:

Yes. Paricularly with the intrabar shift, although this makes interpretation of volume somewhat tricky.

What is the correct thinking here? Volume too high for it to be an FTT?

Many FTT's occur on peaking volume so I don't think vol can be "too high"

Channel was very steep and there had not been a retrace yet so expect another pt3 down?

Since the initial pt 3 at 13:35 there were numerous flaws and ve's so anticipation of an FTT was appropriate imho.

The next bar (15:45) had flaw volume so had you gone long at 15:40 then you would have held here.

Of course the next bar is breakout of FTP telling you the long side is not the right side. However this could have costed 2 points.

Using coarse tools only (ES, YM and prv) I don't think that a price movement of 2 pts is unusual before seeing a signal that shows that an "ftt" was actually a flaw. |Assuming that one went long at the close of the 15:40 bar (1419) one should be anticipating a rally with decr black vol. The fact that the 15:45 bar is red shows that what we have here is a flaw and the appropriate action would be to reverse at or near the close (1417.75), a loss of 1.25 pts. In hindsight, what we have prior to 15:40 is an hvs; a flaw that the "tree level" trader should hold through, but this is easier said than done when one is anticipating an ftt.

 

[dkm]

Quote from ivob:

Hi David,

I agree with everything except for the following.

>Assuming that one went long at the close of the 15:40 bar
>(1419) one should be anticipating a rally with decr black vol.

This doesn't have to be the case. Another option is that a flaw would follow the FTT so in this case a red bar with 40%-60% of the volume of the previous bar. This is exactly what happened (15:45 bar) so there was no warning sign.

>The fact that the 15:45 bar is red shows that what we have >here is a flaw and the appropriate action would be to reverse at >or near the close

Yes, 15:45 was red but on very low volume so I thought 15:45 was a flaw on a left to right traverse --> stay long.

However, I think what you mean is 15:40 + 15:45 together form a flaw.

regards,
Ivo

Ivo,
If we conclude that 15:40 is an FTT then we need decr black vol with price returning to the RTL. If red vol appears during the trip to the RTL, I consider that this invalidates the "ftt" and I then anticipate flaw. The intrabar shift during 15:40 makes interpratation of the volume difficult but I think I'm right in saying that the whole 15:25 to 15:45 is an hvs (although I may be wrong). My point is that we need decr black vol until RTL BO and then b2b in order to confirm the reversal of trend. The requirement for decr black vol failed at the very next bar (15:45), thereby invalidating the "ftt". I do find hvs flaws and laterals particularly troublesome when trying to identify ftt's and a frequent source of "small" losses.

David

 

[BlowFish]

Quote from ivob:

Was there anyone here who thought the 15:40 bar was change?

What is the correct thinking here?
Ivo

Yes me too.

Pretty much agree with everything dkm said. Though not sure about the following bar being a stall. Technically I am sure it was but the whole preceding sequence of bars was a lateral fault in the dominant down trend. When price didn't start to rise immediately I was thinking the whole thing was still one lateral fault even though quite long for a HVS.

I also agree with the comment they made about reversing. It is likely to cost a forest trader maybe half a dozen ticks when things are volatile like that. Of course we can all see it came pretty good even setting up a channel with more pace This is one reason I think it is very valuable to talk about actions. This is the acid test that your Monitoring & Analysis and particularly Decision are on the right track and timely.

Cheers.

 

[ivob]

Exactly. If you see the whole thing as a flaw then you are right.

Another thing I agree with now is that if the next bar (after change) does not have decreasing non-dominant volume better close the position assuming you opened one when you saw change.

However, flaws after an FTT or LTL bounce we see all the time and they mean the dominant direction has already changed. It confirms the change. "We don't normally see flaws appearing in non-dominant traverses" I recall Spyder writing. So I concluded the dominant direction had changed already. I think I made a mistake here because 15:40 of which we thought it was an FTT is part of the flaw.

If the whole area is a flaw then we have continuation (down) if 15:45 is a flaw, then we have continuation (up, after the change). Pls correct me if I am wrong.

With a flaw I mean for example a very low volume small red bar in a downtrend (after LTL bounce or FTT) or a very low volume black bar in an uptrend (after LTL bounce or FTT).

We see low volume bars of the opposite color all the time before BO's.

Anyway it was not easy and I did end up being on the right side but it costed more points than I wanted. Still ended the day in green.

High volume bars with shadows confuse me. I decided to trade only pt3's and very clear FTT's and I thought this was one.

In general if you have no position I think it's better to wait after these bars for continuation (down) and then a clearer FTT. The other option if it was change, is to simply wait for BO, 2, and 3 before entering. Change usually happens one or two bars after peaking volume I recall Jack saying in one of his videos.

regards,
Ivo

Quote from dkm:

Ivo,
If we conclude that 15:40 is an FTT then we need decr black vol with price returning to the RTL. If red vol appears during the trip to the RTL, I consider that this invalidates the "ftt" and I then anticipate flaw. The intrabar shift during 15:40 makes interpratation of the volume difficult but I think I'm right in saying that the whole 15:25 to 15:45 is an hvs (although I may be wrong). My point is that we need decr black vol until RTL BO and then b2b in order to confirm the reversal of trend. The requirement for decr black vol failed at the very next bar (15:45), thereby invalidating the "ftt". I do find hvs flaws and laterals particularly troublesome when trying to identify ftt's and a frequent source of "small" losses.

David

 

[palinuro]

Quote from dkm:

Ivo,
If we conclude that 15:40 is an FTT then we need decr black vol with price returning to the RTL. If red vol appears during the trip to the RTL, I consider that this invalidates the "ftt" and I then anticipate flaw. The intrabar shift during 15:40 makes interpratation of the volume difficult but I think I'm right in saying that the whole 15:25 to 15:45 is an hvs (although I may be wrong). My point is that we need decr black vol until RTL BO and then b2b in order to confirm the reversal of trend. The requirement for decr black vol failed at the very next bar (15:45), thereby invalidating the "ftt". I do find hvs flaws and laterals particularly troublesome when trying to identify ftt's and a frequent source of "small" losses.

David

David,
if the retrace after the (supposed) FTT is itself a channel, won't it be characterized by its own dominant and nondominant traversals? So while overall we should see decr black toward the big channel RTL, within that smaller channel we should see incr black alternating with decr red.

It seem to me this happens often, though I think it depends on the width of the original channel.

I get stuck all the time on just this point: is the decr red a retrace of the retrace, or is it the end (or failure to materialize, as in this case) of the retrace. So far I haven't figured out any sure way to determine this quickly enough not to lose points, just as Ivo did here.

 

[WGTrader]

Quote from cnms2:

You should also be aware of the max and the min prices of the post market session.

That's what I've been doing at the start of each morning to get a feel of the price container for the start of the day. Here is today's channels before the market open. cnms2, is this sort of how you do it as well?

 

[dkm]

Quote from palinuro:

David,
if the retrace after the (supposed) FTT is itself a channel, won't it be characterized by its own dominant and nondominant traversals? So while overall we should see decr black toward the big channel RTL, within that smaller channel we should see incr black alternating with decr red.

It seem to me this happens often, though I think it depends on the width of the original channel.

I get stuck all the time on just this point: is the decr red a retrace of the retrace, or is it the end (or failure to materialize, as in this case) of the retrace. So far I haven't figured out any sure way to determine this quickly enough not to lose points, just as Ivo did here.

If the channel is wide then yes, of course, there will be dom and non dom traverses within the retrace to the RTL, in which case, we have a new pt3 channel. Here we are talking about just two bars, 15:40 and 15:45. I may be wrong, and I would welcome correction, but having struggled with the question "Is this an ftt or a flaw?" for 11 months, it would seem that if one does not get decr non dom vol after what I presume is an ftt, then chances are it's a flaw. Of course, this is by no means 100% but it seems to help in the quest for consistency.

The biggest problem I find is that pt3 channels can be anything from almost tape-like to forest width. The market simply does not operate in convenient "resolution levels".

David

 

[ivob]

Weird day. Weird chart. There was no point3 down for the strong move between 9:55 and 10:10. I guess 10:40 was an attempt but that would not be a very steep down channel considering the good volume... Besides 10:30 bar showed strong increasing black so 10:40 really confirmed the uptrend as 10:35-10:40 was just lateral movement.

I caught both point 3's (sold at 1429) and made a few minor mistakes as well. +6 pts so far.

BTW the current moment is a very good moment to short IMO.

regards,
Ivo

 

[RoughTrader]

Quote from ivob:

Weird day. Weird chart. There was no point3 down for the strong move between 9:55 and 10:10. I guess 10:40 was an attempt...

I caught both point 3's (sold at 1429) and made a few minor mistakes as well. +6 pts so far.

regards,
Ivo

Ivo,

I have that down move as a single tape. It's a really wide tape though. I thought the following upmove would be a non-dom retrace of the down-trend, but we had a B2B suggesting a new up-trend. Just gotta be on guard that not every pattern completes as a pt. 3 channel.

RT

 

[ivob]

Quote from RoughTrader:

Ivo,

I have that down move as a single tape. It's a really wide tape though. I thought the following upmove would be a non-dom retrace of the down-trend, but we had a B2B suggesting a new up-trend. Just gotta be on guard that not every pattern completes as a pt. 3 channel.

RT

Yeah I have a green lateral channel...
I think the thing to do is just to watch the sym pennant.

I also saw the B2B. If a retrace goes that far (100%) and you see increasing volume you know it will continue.

Anyway I thought I saw a point 3 down somewhere along the way but then quickly washed for a small profit

regards,
Ivo