Unholy Grail to Success

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Hey softfx,

Welcome aboard. Sorry to hear about your recent drawdown. I'm sure most of us can relate to your plight. I for one blew up my account when I first started.

At any rate, this thread was created specifically with traders like yourself in mind. Having said that, I have yet to discuss anything at length because I wanted to get the basic premises out. However, advanced traders with years of experience under their belt shouldn't have any difficulty understanding what I'm driving at.
 
Quote from saliva:

TRAP - Price Swing

Price swing is perhaps the most unconventional part of TRAP, but it is nevertheless important because it ties directly with momentum and time that are two core components of PMT. In many aspects, price swing might look similar to the minor movements described in the literature of the Dow Theory or the waves as outlined in the Elliott Wave circle. However, that's about where their resemblance ends. Here's the diagram illustrating the intricacies of the Elliott Wave.

<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=2189795" width="400">
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Chaos theory shows that there are patterns and they are infinitely hard to predict. For example according to chaos theory the measure of any given coastline is infinite. Measuring each turn and twist from miles to feet to inches to the atomic level (who knows maybe smaller).

This is a very mind exploding problem that makes me want to take sedatives every time i think about it.

Which is why the moral of this story is stick to 1 time frame because if you move back and forth you will start seeing patterns within patterns within patterns which will make you want to implode.

This would be a very very good thesis for any future economic phd's but would also turn you into a "mad scientist"
Beniot Mandelbrot did work with wheat prices i believe, but nothing too in depth.
 
TraderJoe08,

I'm not sure I completely understood your point, but it appears that we're on different pages. When it comes to "price swings", I'm more concerned about market rhythms that govern price cycles rather than outright price patterns as you suggest. Here's what I previously wrote about market rhythms.

Quote from saliva:

Time & Momentum: Market Rhythm

Does the market have its own innate rhythm? Is there a direct correlation between price relationship and market rhythm? In short, if there is indeed a rhythm that governs price movement, can we not detect distinct cycles of price pattern? This, along with the subject of market timing, will be the focus of TRAP, which I will discuss in length once I wrap up PMT.

For the time being, I would like to briefly touch upon the importance of market rhythm. Personally, I view price movement as a particular dance form that strictly adheres to the law of rhythms. The word rhythm is derived from Greek and it denotes "flow" or "cycle". In another word, it is an interval during which a recurring sequence of events occur. Sounds familiar? It should. Hence, it really all boils down to one thing for me: vibe.

Call me a vibe enthusiast. Whenever I see either strength or weakness forming in price movement, I try to also detect the underlying vibe. 1-2-3-4, 1-2-3-4, etc. I ask myself whether the strength or weakness is gaining or waning in tempo? The key is to be in synch with the vibe. Once you get the vibe down, you're then able to twist and turn in flying colors.
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Quote from saliva:

It will eventually become more clear with time, but my short answer is this: Back to the future, baby. If you know the past, you should also know where the future lies. Look through the chart and ask yourself why the HOD and the LOD were formed at those exact places.

What's up, bro! I'm also glad to see ya.
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Had been resting and enjoying life. Got back in the market in September. So far so good. Managed to catch couple big moves and cought a falling knife once or twice as well. So far happy with the results, but this is not Social Security check so no guanrantees that the market will smile at me. Staying away fgrom ES J for now (from posting that is), lurking from time to time to see who is there and who is not. BTW. this profession does have a large turn over. I hardly recognize but the few of the ESJ participants.

Nice to see you paying forward, but then again, you were always good with that, for which I salute you.
 
"Remember this logic? If the stock ain't going up, then it must come down. This same premise applies to duration as well: If it's taking too damn long, it probably ain't working! Although there's no way of knowing exactly how long it should take to cross the threshold from stage 1 to stage 2, it should never take too long. The reason is simple. The longer it takes, the greater the threat of another reversal to the downside. Hence, all failed reversals turn out to be the continuation of the previous trend."

This is excellent, this only makes sense if you really know price action. Good thread.
:)
 
Not sure if you want to go too much in depth at this point, but with what you are discussing, would you have gone short at the double top at ~1,000 (from your picture of intraday trends)

Thanks for taking the time, very informative and interesting thus far (and if the past can help us predict the future I'm sure it'll just get better :D)
 
I'll check out the market rhythm, maybe i can relate it to the chaos theory stuff i was talking about.

Thanks for the informative thread!
 
TRAP: Retro vs. Macro

Retro is a destination. Macro is a means to an end. Retro is used to make a prognostication into the probable outcome of the near future. Like a meteorologist who predicts the weather based on current observations (eg. temperature, humidity, wind speed, etc.), Retro is used to forecast the trading range for the next day based on various factors (eg. trend, direction, strength, etc.). Macro, on the other hand, tells us whether Retro is correct or not. In scientific terms, if Retro is a hypothesis, then Macro is the method by which the hypothesis is tested. Just as scientists are able to make predictions based on deductive reasoning, Macro is an observable price behavior we can use to confirm the validity of Retro.

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<big>No matter how enticing the carrot might be, if Uncle Sam has no more strength left, he ain't gonna make it!</big>
 
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