Spydertrader's Jack Hershey Futures Trading Journal
- Thread starter Spydertrader
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RT,
I am with you on this. On my chart the 11:20am bar broke the RTL on increasing RED forming the "R2R".
I see Ivo's chart and on his that bar did not close outside the RTL.
Also noticed the increasing PRV late in the 11:25am bar and then continuing right into the 11:30 am bar. Made a note and ES at 1471.25 when I thought continued uptrend,
On my charts, Price created an Outside Bar at 9:45 AM. Even if you didn't have the Outside Bar, Price did return to the Dominant Direction of the Carryover Channel. Now, we do see this every once in a while (Greater than expected volatility on a certain Level of Volume.) One need look no further than the Pace and Volatility work posted by Mak several years ago to understand this can happen. To avoid this sort of thing, focus on trading only the dominant traverses.
1. You entered on a non-dom of a carryover channel.
2. You entered prior to having the current channel (as you entered only on the retrace of the carryover) fully form.
3. Sometimes, as I say, these things happen (Price moves farther than expected). When a trader finds themselves on the right side of these moves, its great, but when on the wrong side, the trader doesn't feel so good. Focus on what you did correctly, and next time, determine (in advance) what 'lines in the sand' need crossed before you'd exit (with a profit).
If you plan to enter off FTT's, be prepared to 'see' this stuff (Greater than expected Price Volatility) every once in a while. You can't play both sides of the fence. Draw the lines in the sand and stick to them until you gain sufficient expertise to move the lines closer together.
Each of the above has their "pro's and con's" which must be evaluated with respect to your own psychological hurdles. exiting early often causes one to miss a major move, but exiting late often one to hold to long giving back recently earned profits. You have to decide which method works best for you - while taking great care not to jump fractals. Start with what works for you and build a plateau of success on that. Only after repeated success at your given plateau should you consider moving forward.
Do that every day, and you'll bank a million dollars by the end of 2008.
You show price break out of a Pennant on increasing Volume. Now, what must come next in order for the Pennant BO to be followed by a change in trend? Did you see what must come next after the BO? If not, then what must come next, didn't. Therefore, the market invalidated your hypothesis. Since Volume on the Second BAr of a Pennant usually shows significantly lower levels than current pace, we expect increasing Volume on the BO. After the BO, we monitor for that which must come next. If we do not 'see' it (as you did not), then we need no clearer signal in order to take action.
Good Trading to you all.
- Spydertrader
meaning, failure to break out of the RTL to the downside.
Let's put ourselves right after the close of the pennant breakout bar. A new pennant is starting to form on low volume. If we are to think what is possible to occur next, we have the following:
1) we might see a hitch, stall, or CCC.
2) Price will push down to break out of the RTL
3) Price will push back up of an RTL bounce, yielding FBO.
Obviously 3 ultimately occurred by the end of the bar. What gets me however, is that we can often get a combination of the 3 possibilities within one bar. For example, price could push up, increasing the width of the pennant, then push down to meet the RTL, the push up again.
In order to avoid overtrading inside of a bar, the issue comes down to how fast and often we should sweep what's happening intrabar in order to act correctly.
I suppose one could simply wait until end of bar, to confirm that we have
1) violated our down tape, and
2) done so on decreased black volume
to know that we indeed have not changed dominant direction. We would enter later, but the analysis is more conclusive than intrabar, where the both price and volume are in the process of converging to our end of bar result.
RT
Heres the change in dominant this morning. I sat through it for some reason however a great chance to get in presented itself at the first FBO ('point 5' if you will). I actually managed to hit the high tick (a bit of luck and a bit of judgement). It was particularly nice as at no time was there any 'heat' at all. Price immediately fell 3 or 4 ticks and then about 30 seconds later plunged. It dosen't get much better, Old channel broken, new dominant confirmed, a great place to enter, pace picking up immediately to carry the trade and what did I do? No prizes for guessing. 
As a clue I did it in the 30 seconds price 'hung' there.
Trust yourself trust your tools. Sometimes the message is very loud and clear.
Cheers.
As a clue I did it in the 30 seconds price 'hung' there.Trust yourself trust your tools. Sometimes the message is very loud and clear.
Cheers.
Quote from cnms2:
That's why I posted it ...You're welcome!
Another MAK pearl MAK PV Post which, IMO, should be understood COLD. The volatility is in one tick (0.25 points) increments and is equal to the high of the bar minus the low of the bar. The volume is in "number of contracts" and has been partitioned both into deciles and Hershey pace.
Note that he has omitted the 9:30-9:45 and 3:45-4:00 time periods from his calculation and the extent to which his chart can be realistically extrapolated to those time periods, I do not know. The first quarter hour is the block of time traditionally devoted to "synch" while the last quarter hour not infrequently provides one with an excess of WTF experiences.
One of his key points is that with DU and VDU market pace (the three lowest deciles) you have an increased likelihood of getting screwed. That is with only 1 tick of slippage going in and coming out you will have an increased likelihood of experiencing Monty Python's "giant rotating blades" up close and personal, i.e., under these conditions, there is about a 10% chance of making more than 2 ticks. That's why CCC (and other low volatility periods during the day) are nap (or eating, or smoking, or whatever) times.
lj
FWIW, I am not posting charts because I'm still learning, do not have a futures feed (but will probably use DTN) and, like Jack, do not believe in sim. I know many will disagree but since we are big people, we can disagree.
The decision you have made to avoid the simulator does not represent the best possible choice. While I understand, as an adult, you remain free to follow whatever path you deem best, your decision provides a recipe for disaster. When learning to trade, one must master two demons. The first, learning to internalize all aspects of the system requires a far different skill set than simple memory games taught in most public schools. The simulator, when used at the appropriate time, allows the trader to accurately gauge the level of knowledge transfer still required before moving forward without having to deal with the second demon - the psychology of having one's own money in the market. Dealing with the second demon becomes far less difficult if one has built an incredibly strong foundation with their trading education. The confidence developed from routinely profiting day in and day out represents a cornerstone in the trader development process. Without such reinforced positive experiences, doubt, second-guessing and 'freak-out' roam free within the learning traders mind - exactly at a point in time when they can do the most harm. By learning confidence in one's abilities first, and then entering the arena to battle one's own psychological hurdles, one minimizes the appearance and the effect doubt has on the trader. In addition, by first minimizing, and then, dealing with the psychological issues second, fear and greed fail to gain a foothold in one's mindset. As such, by separating the two aspects - learning the system, from learning to develop the discipline needed to trade - one arrives fully prepared for whatever the market provides.
Again, feel free to choose whichever path you feel best suits your needs, but at least now, you do so fully informed about the reality of your decision.
Good Trading to you.
- Spydertrader
Thank you for your thoughts. I could not agree more that rote memorization in lieu of understanding is a true recipe for disaster (like trying to memorize the 32.5 things that might happen at the RTL). The method must be internalized, to use your term, and without doubt the sim is one way to do that. The NLP mind-view (for want of a better phrase) is also very useful. There are others.
I am much more concerned with beasty #2 and how sim can affect it. Should my current plan for becoming proficient (= routinely making money) in trading the Hershey method fail, I will have this post to return to. I mean that sincerely with not a whiff of sarcasm.
To my mind the most important attribute of the successful trader should be brutal, self-honesty. Brutal. You cannot progress if you continue to clutch the lie you are telling yourself.
lj
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