Quote from jack hershey:
As you approach the intersection.........
Okay. Seriously.
You are looking at the market in a very astute manner. Our context is this: We are trading plateaux by plateaux. We get the drill down completely on that plateaux and as we look ahead we see the scramble we have to make over the talis and stuff to climb and struggle up to the next level to cruise across.
The time spent on a given plateaux is the profits made, nothing else. Profits define skill.
Wash trades are very significant in this measure of skill. They are powerful because they prevent erosion of prior successes.
We are not going to be living in the land of win loss ratios, draw downs, consecutive anythings. macro randon this or chaotic thats.
We anticipate; we have sequences. They all lead us to flawless trading.
when we approach this plane of attentiveness, we discover that we can clearly see when the market pops a flaw into what is going on. The beginning of wash trades doesn't begin by your having this perception or these sequences under your belt.
so you are now tuned to desiring to know how to do it. And clearly you see that you might not actually "wash" every one because of costs etc.
What the drill is all about is pushing everyone to become very conscious of the telltales, and in particular the flaws that creep in.
You may be saying now:"Get on with it" On the other hand some of this stuff could fill a book.
I will post here an early warning system for you on this stuff. All these things that come up are extremely important and the most important thing is that you bring them up.
I am starting the wash story now.
For all time keep in mind that volume "pushes" the price. This means specifically that volume is ahead of price getting it to where it is going. It's a timing push.
People make up the market and their consistency and numbers rule the roost. If the particular people, at any time, who control things loose their punch or are slow to maintain the group's will, there is a failure to achieve completion.
Translations: We can look at a lot of this from the viewpoint of physics. There is also a rhythm of things caused by loosely connected intentions and needs. It is like war games played on several levels.
Physics, psychology and war.
kay we have all the fluff off the table and we focus on the market through volume (the people exercising their will) and price (what they want and control).
We need to focus only on the failure stuff. This makes washing a KISS thing.
Whenever we enter (using rules of a given level) it is from anticipation and with an expectation. We are putting ourselves ahead of the herd so they can drive us and our profits. The one and only thing that has to happen is that the herd keeps the push going by sustained and increasing efforts.
That is it. No more is required.
Now you can "see". It explains everything. I did a post for zbear's colleague in a chop session yesterday. I quantified the volume there as a way of "calibrating" the readers.
All we have to do is glue to the volume on the trading fractal after we enter. We can do prorata stuff to see if it is sustained incerasing or pooping out.
i havean interruption.
I'll be right back
Okay
Right after entry we focus on volume. We do a prorata continuing assessment to determing if it is sustained, increasing of decreasing. It has to keep rolling along to continue the price action. If it doesn't then a failure will occur.
You go to the 1 min as well. This lets you see the signal to noise ratio on the vilume. Youcan divide volume here on this fratal into a base value (the noise) and the variable part (signal). Think of it as a carrier (noise) and a signal (variation). If the signal is not susained and persent and being enhanced, then you are potentially into a flawed situation.
Yesterday in that detailed post I mentioned I tried to introduce the notion that there can be an expectation that the people playing have roles where subgroups of them are furthermore identifyable. I, for simpilicity of ID's use a harmonic identification.
The people who swarm into things often look like accumulators. We have had the experience here with situations where there are strong urges to exit (these are not based on market stuff but relate to past experience with money in markets and particularly loosing money after having "made" it)). We stem this by focussing on what is right and developing (the point1,2,3 of trend formation). Accumulator swarms turn into distribution swarms.
In cycles they turn out to be triggered by a peaking of money velocity. The money is being made ever faster and they get anxious. Anxiousness leads to action.
If you look at the scoring chart you see that A/D has twice the frquency of volume. Volume in turn is twice the frequency of price.
In a potential failure situation, we track volume. You can reinforce this with the flipping of A/D that shows up as a harmonic on the price. It is best detected as a money velocity change.
For those who like maths. The harmonic is an odd one (third) and very prevelant (good amplitude) and without an offsetting phase angle.
For varying market paces it shows up in a variety of formations. I have then sorted out on a matrix and related to the fractal level as well.
You will get all of this to KISS.
Let me build a record though.
All the above gets you out. It also keeps you in with confidence. Both of these things turn you into slalom players soon enough during congestion.
We are out by now if the volume didn't sustain and increase.
If you are an expert ( making 150 to 250 K a year per contract), you can play congestion opposing the whiplash of others who are paying you. you chicken out when convergence switches from an odd harmonic over lay to an even overlay. This is when mechanical trading stops giving up losses. there is a post going on here about a system that is nearly chaotic that retruns alittle bit. It is in the market about 1 1/4% of the time. Imagine it as one that works aftr I tune it up. What I would finally deal with in it would be when to shut it down as a consequence of a turnip or rock issue (getting blood out of either). There are limits where you just get into fibrulation.
This is where the harmonic goes to even (second)and then volatility indicators have to kick in to make the trading signal measurements.
The shift is from triangular wave forms to square waves. From convergence to centering. The volume get so low that you almost do not have a signal riding the carrier. thus you just get two levels of volatility to use as signals.
What is buried in all of this is the BO for the next trend.
Centering ends with a loss of noise. Hard to imagine but the people are sitting there and they are in dissagreement and thus frozen from participation. I use set of equations (Boolean) to track all of this stuff. The "landing" of trends is the practical place but the "centering" is also a volume driven price phenomena.
When volume goes below DU (dry up) you are dealing with noise phenomena. This stuff is priceless in value for really killing the market. The reason is quite simple. The market is not being made and anything that hits it is going to be seismic. We will use this at the expert level to prep for the pm start ups coming out of 13:15. Ifsome good slalom people begin to post I will ease into it.
Summary.
We learn to wash to save bucks on prior profits.
Volume is the simple key. It has to sustain the entry; if it flags as the micro trend begins we see this as a prorata measurement and by popping over to the 1 min.
Market exit.
BE sure if you previously had anxiety at point 3 times, to stay relaxed on this just like you have become relaxed while setting each of the points3's for trends.
watch the MACD and the Stoc on this volume assessment; they correlate quite well.
Some experts can tack here (do a reversal) by seeing on the 1 min what's upbut don't if you see a slalom.
