As an example, here's a chart that 40 posted today. If one had not plotted the halfway level on this chart, which could be done as soon as price reached its high, he probably wouldn't have attached much significance to what turned out to be -- perhaps -- a "head and shoulders" (I say "perhaps" because one can't say for sure without the volume).
switching gears to Price Action via SLA
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Well, in a mean-reverting instrument, the mean represents the value area by default. It is possible for trades to cluster at one extreme and speed to the opposite and cluster there before shooting back to the starting place, but that's not the way it works out due to the negotiating/bargaining aspect of consummating a trade. Not every party gives up an equal amount, but over a series of trades the agreed-upon price will fall more or less equally between the bid and the ask.
As for the 50% thing, Wyckoff said that it was a sign of strength if for example buyers could rally beyond that halfway level in a decline and weakness if they couldn't but why? At least some of it may have to do with how far buyers are willing to follow sellers as sellers raise the ask. And buyers who didn't sell on the way down can be expected to get back as much as they are able of their paper losses before throwing in the towel and getting the best price they can, which of course prompts the continuation of the decline when those shares/contracts are thrown back onto the market. But as to why this takes place at the halfway level is probably a matter of conjecture. I've never read anything on the matter that wasn't.
Keep in mind, though, that the 50% business is at least partly fanciful. What ends up being more important for the trader is not whether or not price makes it past the halfway level but whether or not it can hold its ground, which is where the failure dynamic comes in. Price that makes it past the halfway level and fails is more frightening to the trader than price that reaches the halfway level and reverses. In the first case, the trader feels a big "whew" and then has the rug pulled out from under him. In the latter, he's almost waiting to get screwed, and there is no double-whammy.
Sounds good anyway.
As for the 50% thing, Wyckoff said that it was a sign of strength if for example buyers could rally beyond that halfway level in a decline and weakness if they couldn't but why? At least some of it may have to do with how far buyers are willing to follow sellers as sellers raise the ask. And buyers who didn't sell on the way down can be expected to get back as much as they are able of their paper losses before throwing in the towel and getting the best price they can, which of course prompts the continuation of the decline when those shares/contracts are thrown back onto the market. But as to why this takes place at the halfway level is probably a matter of conjecture. I've never read anything on the matter that wasn't.
Keep in mind, though, that the 50% business is at least partly fanciful. What ends up being more important for the trader is not whether or not price makes it past the halfway level but whether or not it can hold its ground, which is where the failure dynamic comes in. Price that makes it past the halfway level and fails is more frightening to the trader than price that reaches the halfway level and reverses. In the first case, the trader feels a big "whew" and then has the rug pulled out from under him. In the latter, he's almost waiting to get screwed, and there is no double-whammy.
Sounds good anyway.
I'm going to start out with the statement that I made a number of mistakes today - no doubt about it.
Overnight, price had been steadily rising. HH, retreat most of the way down, new HH, retreat most of the way down.
Had I been paying enough attention, I would have seen that at the open, the 50% level was utilized as a springboard (launch pad) for an up move.
I took 4 trades today. 3 weren't good for the reasoning behind them and ended up failing. The one that I took with good reasoning ended up panning out. Crazy how that works - duh.
First trade was after the market had gone up about 17 points but more slowly once 4200 was surpassed. Due to the extreme movement down, I wasn't sure if a REJ of 4208 had occurred or if it was just the first reaction from sellers after price had moved up slowly, but without much pullback. Price hit the 50% area and shot up, so I figured that there was a greater chance of price continuing up than for it to head down. BUT - I didn't act fast enough and so my entry wasn't great. Then when price didn't make a HH and went a distance below, I wondered if I'd entered on a HL and so I exited.
What followed WAS a LH and then a bounce off the 50% area again and a new HH - so of course I had to get in on it, but I wasn't paying attention enough to the way price was moving (swift move down just prior). I entered on a RET, but it was then followed by a LH and a swift drop.
So - two trades down, neither of which panned out. However, both were my 'fault'. The first was due to FOMO and the second was not paying enough attention to how price responded to that level which had already been troublesome for the first 20 minutes after the open.
However, in the past my issue has been fear of pulling the trigger after one or more trades didn't work. Well in this case, the DL had been broken, there was a deep pullback to the level that had been an issue earlier and price couldn't breach it. So I took the short and it did quite well. But I got out when there was pullback not to my liking. I do KNOW that I've got to get used to pullback and the whole concept of LITHA…
The last trade was NOT a good decision as I just tried to jump on board rather than follow my plan of waiting for a proper RET because I was pissed at myself for bailing early.
So - not a fantastic day all around, but I was glad for trade #3. With more patience, I know I can get rid of trade #1 and either take the trade early or pass on it until further confirmation. With more observation I'll work on removing trade #2 due to S/R and the behavior of price around that area. Much room for improvement, but I'll keep at it.
Overnight, price had been steadily rising. HH, retreat most of the way down, new HH, retreat most of the way down.
Had I been paying enough attention, I would have seen that at the open, the 50% level was utilized as a springboard (launch pad) for an up move.
I took 4 trades today. 3 weren't good for the reasoning behind them and ended up failing. The one that I took with good reasoning ended up panning out. Crazy how that works - duh.
First trade was after the market had gone up about 17 points but more slowly once 4200 was surpassed. Due to the extreme movement down, I wasn't sure if a REJ of 4208 had occurred or if it was just the first reaction from sellers after price had moved up slowly, but without much pullback. Price hit the 50% area and shot up, so I figured that there was a greater chance of price continuing up than for it to head down. BUT - I didn't act fast enough and so my entry wasn't great. Then when price didn't make a HH and went a distance below, I wondered if I'd entered on a HL and so I exited.
What followed WAS a LH and then a bounce off the 50% area again and a new HH - so of course I had to get in on it, but I wasn't paying attention enough to the way price was moving (swift move down just prior). I entered on a RET, but it was then followed by a LH and a swift drop.
So - two trades down, neither of which panned out. However, both were my 'fault'. The first was due to FOMO and the second was not paying enough attention to how price responded to that level which had already been troublesome for the first 20 minutes after the open.
However, in the past my issue has been fear of pulling the trigger after one or more trades didn't work. Well in this case, the DL had been broken, there was a deep pullback to the level that had been an issue earlier and price couldn't breach it. So I took the short and it did quite well. But I got out when there was pullback not to my liking. I do KNOW that I've got to get used to pullback and the whole concept of LITHA…
The last trade was NOT a good decision as I just tried to jump on board rather than follow my plan of waiting for a proper RET because I was pissed at myself for bailing early.
So - not a fantastic day all around, but I was glad for trade #3. With more patience, I know I can get rid of trade #1 and either take the trade early or pass on it until further confirmation. With more observation I'll work on removing trade #2 due to S/R and the behavior of price around that area. Much room for improvement, but I'll keep at it.
The market does not always show its hand quickly and clearly. If traders are confused and don't know what they want, then you have little to work with. As always, just follow whatever rules you have and don't try to be cute. If you're following the SLA and you have consecutive failures on both the long and short sides, just stop. Wait until there is more clarity. Most likely the session will end up being rangey and choppy. Not every day will be like yesterday.
I'm mostly challenged with consistently following the rules I have due to fear of missing out. At this time, I'm not a breakout trader. I'm comfortable with entering on RETs and often only after a level is confirmed. That's not what I did today and that's what burns. But - it's just time to pick myself up and be more aware of my own behavior and not make the same mistake continuously.
Also when it comes to AMT, I struggle with identifying levels of importance - to look to regarding potential S/R areas. Since the market is comprised of so many traders using so many different timeframes for signals, I'm trying to determine if a swing level on the 15min chart has more impact for me using a 1min timeframe or if the hourly generally has more power behind it (perhaps more swing/longer term traders) than intraday. I get it about having too many lines as areas of interest. I don't want to NOT see something, but I don't want to be thinking every 15 points is a potential S/R area.
Also when it comes to AMT, I struggle with identifying levels of importance - to look to regarding potential S/R areas. Since the market is comprised of so many traders using so many different timeframes for signals, I'm trying to determine if a swing level on the 15min chart has more impact for me using a 1min timeframe or if the hourly generally has more power behind it (perhaps more swing/longer term traders) than intraday. I get it about having too many lines as areas of interest. I don't want to NOT see something, but I don't want to be thinking every 15 points is a potential S/R area.
Three things.
One, don't be in too much of a rush to get back into trading. If your experiences here are not what you expected them to be, then back off and go back to observing. If you can't follow your rules, then consider how you came about those rules. Perhaps you made some assumptions that should not have been made. Or perhaps you did not observe enough of a variety of market environments (at least a year) to provide yourself with rules that are flexible enough to adapt. We are currently in an environment different from the one we were in last month and different from what we'll be in next month. Even rules you formulate for this environment will be useless if they're too specific and too particular.
Two, consider that if you're comfortable only with retracements that you're going to be trading only in trending environments. If the day is ranging, you're out of luck. If you're prepared for that, fine. But don't then look for trends that aren't there.
Three, review the posts I recently made to my journal on this "levels of importance" business. Also, don't draw any diagonal lines at all on your charts until you're in a successful trade and you need one to track the stride. The only lines that anyone other than you is going to see are those drawn across highs and lows (again, see the posts I just referred to). If no one can see your lines, how are they going to react to them?
Just for grins, redraw the charts you have posted above without any diagonal lines at all and repost them.
One, don't be in too much of a rush to get back into trading. If your experiences here are not what you expected them to be, then back off and go back to observing. If you can't follow your rules, then consider how you came about those rules. Perhaps you made some assumptions that should not have been made. Or perhaps you did not observe enough of a variety of market environments (at least a year) to provide yourself with rules that are flexible enough to adapt. We are currently in an environment different from the one we were in last month and different from what we'll be in next month. Even rules you formulate for this environment will be useless if they're too specific and too particular.
Two, consider that if you're comfortable only with retracements that you're going to be trading only in trending environments. If the day is ranging, you're out of luck. If you're prepared for that, fine. But don't then look for trends that aren't there.
Three, review the posts I recently made to my journal on this "levels of importance" business. Also, don't draw any diagonal lines at all on your charts until you're in a successful trade and you need one to track the stride. The only lines that anyone other than you is going to see are those drawn across highs and lows (again, see the posts I just referred to). If no one can see your lines, how are they going to react to them?
Just for grins, redraw the charts you have posted above without any diagonal lines at all and repost them.
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I hear you. I'm quite confident in my rules - it's my ability to remain patient and only take appropriate entries that requires work.
Yes - I acknowledge that if I'm only ok with a certain kind of entry, I won't be in on every move.
I've attached the charts from this morning without any diagonal lines. In hindsight, I surely see the equilibrium/consolidation/value area playing a role as well as the 50% area.
Yes - I acknowledge that if I'm only ok with a certain kind of entry, I won't be in on every move.
I've attached the charts from this morning without any diagonal lines. In hindsight, I surely see the equilibrium/consolidation/value area playing a role as well as the 50% area.
From reading some of your other posts, you seem to still have issues with holding or am I misunderstanding?
Support and resistance, again, are those levels beyond which buyers won't pay the ask and sellers won't lower it. The most important are those which are established before the open (if you haven't been following my journal posts, this is all there). Therefore, your lines are too low. If you move them up where they should be, you'll see that the initial opening move is a breakout above 04. You either take it or you don't. If you don't, you either wait for a retracement, which in this case doesn't come, or you short the failure. If you don't do either, then there's nothing for you to do unless and until price reaches the lower limit of the immediate trading range at 80. If it breaks out of the range and begins to trend, then you may have some retracements to trade. Otherwise, not.
In this case, price drops below 4180 and works its way down to 4166, at which level price reverses. There is only one retracement trade here, at or about 76.
You may also want to refer to 40's recent posts in his journal.
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