Originally posted by glassinc
Hi,
I've only a comment on your last spy short, the blue arrow where it states 1st option to cover high volume panic selling.
I disagree that, that was your 1st option, 4 bars earlier on a range expansion down bar with the highest volume was the best place imho. That was an open @ high close @ low, I understand you may have been waiting for additional follow thru.
I've browsed you your journal, & this has been Very unselfish sharing on your part. As well as the fact that you take others comments & critques w/o taking offense. I realize there are many others on these boards that do the same, Kudos to them also!!
I wish you contiued success on your journey, & may you continue to benefit others thru your sharing.
God Bless & GFtY! Kelly 
Hi Kelly-
Just saw your post. The Chart was mine, not Tonys.
Although you probably figured that out after you submitted the
posting. I was trying to help him realize that he is wasting his
time and more importantly his money trading the Stock market
Las Vegas style. His methodology reminds me of someone who
sits in front of a slot machine and pulls the handle. Yeah, sure
sometimes you'll get a payoff. My submission would be to place yourself in front of a Betty Boop Slot and go to towne. You'd be a lot more entertained in my opinion. Now, with that said, and all due respect to Tony, and I do mean that sincerely. I respect him
very much for his postings and what he has accomplished. In that sense his attempts are Not a waste of time.
However, back to my chart and your one comment on the "Blue Arrow." I have no idea how long you've been trading. At anyrate that is not important for now. We will have different opinions. The volume expansion bar that you noticed opening on High and Closing on Low is a capitulation selloff to be sure. However, to attempt a cover on that very same bar is NOT the best bar to attempt to buy to cover. Although technically speaking there are bars before that which give you an option to cover. The point I am trying to make to Tony is he must not only have a reason to take the trade but also he must look for the opportunity with the Most likely and Highest probability of follow through. The Volume expansion Bar is Not that bar.
Two things.:
1) when attempting to cover on that bar one needs to "lead the market" quite a bit. In other words you need to be buying at least above the best bid and more likely need to be lifting the lowest offer, more likely going behind the best offer, meaning crossing the market and bidding significantly above the inside market. In a fast enough moving stock that is falling at an increasing rate the .01 spread that might be typically present could in fact be widening or widened to say .05 or more.
At the pace that bar was moving, even if you did say lead the pack on the intrabar reversal from the low to the close, you have introduced even more risk(of leaving even more money on the table) to the equation. Whereas, your buy-to-cover actions could be closing the spread unnecessarily back to a penny or less you will certainly not be participating in any potential further follow through to newer lows.
2) The speed at which the price fell is half to even sometimes a 1/3 as fast as the capitulation bounce. That is to say that attempting to cover on a super fast candle such as the one we are referring to as the Volume Expansion bar is in my opinion not good. You are at the very least chasing the best bid back up or covering by catching a falling knife. In either case you've left money on the table and were only taking profits based on "extreme" nature of the capitulation.
Moreover, in retrospect one can of course see that there were lower lows to be realized. Closing price consolidation on the following bars would give you your first sign that a reversal was in the making. At that point a trader would have some true grounds for which to base a next trade on. The Blue arrow I pointed out was an attempt to point out the "Safest" entry point for Tony on a buy-to-cover order with some conviction behind it.
On the Blue arrow bar the price moves back up over the high of all 3 bars before it. Cover your short definitely. Entry for a long position...potentially. There again, with consideration to price, a long should be taken right at the point the price moved over the high of the previous bar.
Placement of a tight stop behind it(.05-Precision is everything to me, if I'm wrong in .05, then I don't need to be in the trade), then you have a setup for what turns out to be a scalp trade that will give you time to calculate market direction. Moreover, and more importantly even if no profit is taken and your stop gets hit 3 bars later, you will have the necessary conviction to put on a short trade based on price action in relation to the overhead trendline and the confirming downward moving averages.
Hope I've thoroughly explained my trading decision on the Blue buy-to-cover arrow.
-momo
