Spydertrader's Jack Hershey Futures Trading Journal

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Quote from FerdinandAlx:


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The problem rests with reversals during congestive areas, which is why I decided to focus my attention on this area.
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It's good to learn but my advise is not to force yourself to learn to trade as soon as possible in these areas. Focus on what you do well and keep on doing it.

If you can make 5 points or so a day (and considering your posts I wonder why not) you'll be rich very quickly. In the meantime you can learn about these areas. These areas don't form the big profit anyway.

regards,
Ivo
 
Hi,

First of all, it doesn't have to be a problem.

If RTL is broken just exit. A point 2 is formed and you wait patiently. Price goes up and you wait for your point 3.

What happens? The point 3 doesn't come. No money lost.

When you gain experience there will be a certain point when you just know there's not going to be a point 3 down anymore. Actually you know there's going to be fanning out when RTL is broken.

Note the counter instinctive way price often moves. If it goes up fast (from point 2-3) it looks like there won't be a pt3 and there will be one. If it moves slowly like it can come back any moment it may accelerate later on. Don't let it trick you.

Second, if volume and volatility (I use average true range for this) are dropping while price is traversing from left to right and while breaking RTL, there's going to be fanning out. It just means price takes a little more time than usual to continue.

Third: watch YM. ES RTL broke with the 10:10 bar (on decreasing volume!) but YM was still perfectly in the channel. Certainly you would never go short at RTL break in such situation.

IMO there's not one golden rule but if you consider the complete dataset you find the answer.

After a while it becomes "easy" to know what's going to happen which is a different matter than acting on it....

I think I know very often what's going to happen but don't act on it because you have to be sure. When I am sure I do act and of course mistakes do happen even then.

While learning, things that "I thought would happen" are moving in the area of things "I know that will happen".

regards,
Ivo


Quote from TraderD72:

I am currently using ES and PRV to determine PT3's for entry and then using a break of the RTL for exits.

The problem arises for me when the RTL of a channel is broken, calling for an exit, but then a few bars later forming another PT3 of a "fanned out" channel.

Happened twice today.

Looking at Spyders chart the first time was around 10am when the first BLUE RTL was broken and was quickly followed by a PT3 of the fanned out GREEN channel.

Second time was around 2:30 pm when the GREEN RTL was broken and followed by the new BLUE PT3 a few bars later.

In both cases the DOM volume was not substantial in the area of these new PT3's (at least that was my interpretation).

When the RTL breaks I find myself looking for the PT2 and PT3 of a NEW DOWN CHANNEL rather than thinking it may be a fanned out UP CHANNEL PT3.


Hope this makes sense....

Any comments or suggestions???
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TraderD72,

RTL BO's FBO's can be a little tricky as tyhey can happen a couple of different ways both can occur on low volume (and then volume will pick up to confirm or deny) and both can happen on higher volume, with a spike leading to FBO.

Sometimes we will make mistakes. It Doesn't matter. If you think you have a BO and exit thats OK. At some stage (certainly when price moves back into the channel) it will be evident we have a new point 3. What's the appropriate action on a point 3? Yup get in and enjoy a dominant traverse of a now larger but slightly shallower channel,

Cheers
 
Can you explain why you think that the 10:10 bar is decreasing black volume? Is it because its close was higher than the 10:05 bars close and that it also closed higher than its opening price.

I struggle with these bars because I saw it as dec red volume since price went lower bar to bar.

Quote from Spydertrader:

You may wish to review the chart I posted earlier. Price broke the RTL of the Blue channel on the next bar (10:10 AM) - which showed decreasing black Volume.

- Spydertrader
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I guess APA really is just being on the right side of the market at the finest level. presumably once you get clear of previous bar end you 'coarsen' up to IF1 IF2 and then move into your traverse and manage normally.

The reason this stuff interests me as it makes the decision part of MADA much simpler. It takes the idea of being 'right' and 'wrong' about future direction out of the equation - you are always 'right' providing you reverse. Many issues that traders have come from wanting certainty. This leads to predicting (well its my contention its this way round). There are a whole host of psychological demons under that stone! I will drive mine out.

I think we all accept intellectually that we let the market tell us which the right side is. I hate to admit it but at times my behaviour suggests there is something deep down that just refuses to accept this. I guess its what some of the white coats (well the Freudian ones) would call the 'ego'.

Cheers.

Quote from ericta:

No, I understand you need to do the reverse over and over until it clears the entry.
I recall in a trading journal, Jack once did 3 reversals in 30 sec period. and people laughed at him said it's brokers' dream comes true, and they were probably right, if APA falls in the hand of wrong people, like me. :)
as an experiment, I'll write simple trading system mimics APA and I'll post the result here or "software" journal if spyder think the topic is unfit.
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Quote from The Swordsman:

I struggle with these bars because I saw it as dec red volume since price went lower bar to bar.
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One could very easily view the 10:10 AM Bar as decreasing red. Decreasing red in an up Channel indicates a retrace. Decreasing Red in a down channel indicates lateral movement. The same works for the opposite direction - decreasing black in a down channel indicates a retrace and decreasing black in an up channel indicates lateral movement. Since Price closed within the previous bar, I viewed the bar as lateral movement. As Price broke the RTL (blue) on decreased Volume (a condition which often indicates a need to 'fan' outward, I felt the Up Trend remained intact (even though the channel had been breached). As such, I viewed the bar as decreasing black. However, color holds far less importance here than the change in Volume, and certainly we can all agree Volume Decreased as Price went through the RTL.

- Spydertrader

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1695849>
 

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If anyone saw the change at 9:45 bar would you mind sharing your thought process.

I was long from the 9:35 bar (green arrow) after the FTT on my CO channel. When price started heading down both the YM and ES volume was lower. Also I did not have a point 3 channel yet so I was going to hold through the retrace. When I saw the R2R in the YM I closed my position for a loss.

Since I am not good at nailing the turn at the right moment, I have been thinking I should trade the dominant traverses exit when the retrace starts and enter again when the point 3 forms.

Spy, If one was to exit when the retrace starts what would you recommend to use as an exit signal? Break of the ES, break of YM tape or when the YM or ES bar clears the prev bar in the opposite direction.
 

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whoa I just got caught of guard. Please take a look at the attachment. Notice how we just had an FTT in our current uptrend, followed by a shift in dominant direction to down (R2R in volume). As soon as I saw PRV stabilize to R2R, I reversed short. The beginning of the next bar started with a retrace upward, on low black volume.

So far so good. But towards the end of the bar, price pushed all the way back up and we had a B2B on the following bar.

What is a good way to not be caught on the wrong side when adjacent R2R, B2B combinations occur?

RT
 

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