It also helps to keep the daily in mind. This is how it shaped up Monday evening (posted yesterday morning, before the open): http://www.elitetrader.com/vb/attachment.php?s=&postid=484481
Hi Flashboy, I specifically used the words Bearish Divergence (price action only). That means the divergence is based on action in the price and has nothing to do with any indicator. There are all kinds of divergence signals...divergence based on indicators and divergence based on price...the latter requires you the really understand supply and demand. For me...I can understand and see the supply and demand via candlestick s/r levels, candlestick patterns, price and volume. As for divergence via indicators... There's nothing wrong with divergence via indicators and it is the preference of most traders. I remember while back you and I talked about a candlestick pattern and I had to use ET search menu to find that discussion... Thread didn't last long via the usual type of replies that cause me to lose interest in the thread. Thus...most traders consider trading via price and volume only and/or candlesticks is either voodoo or give them mythodology like status... http://www.elitetrader.com/vb/showthread.php?s=&threadid=24804 You also posted the following chart: http://www.elitetrader.com/vb/attachment.php?s=&postid=374989 In your prior chart...your line is drawn to a candlestick which you say the following... Entry would be a buy stop above this bar?? Well...two intervals prior to that is a little white candlestick in your chart at a price of about 1031.50 That was one particular type of Bullish Divergence (price action only)... Like indicators...there's are numerous ways of using divergence via price action only and in your chart example there's one particular one I call a Bullish Price/Volume Divergence that was signaled at that small white candlestick. I won't spell it out for you...your going to have to do whatever you need to do to learn about price and volume (supply and demand) to see that divergence there... It's there and is a repeatable price pattern with high probability for profits with good trade management... PhD not required. From your prior chart I'm talking about in that old thread...from what I can tell...profit target 1 (PT1) for me would have been around 1033.25 during that demand thrust and my remainders would have been at PT2 during another demand thrust around 1035.25 and the final demand thrust on your chart around 1037.00 (most likely at 1036.50) would have been PT3. If you don't understand...revisit that chart and my chart I also posted in that thread...over and over and over again... You'll start seeing some unusual price action involving particular type of candlesticks. Look at ES 15min chart for today...same pattern via the candlestick that closed (not open) at 1145am est at a price of 1125.25 It reached its PT1 @ 1126.75 (time to take profits on some contracts) in that demand thrust that would have allowed me to move my initial stop protection up into a breakeven or 1 tick better than breakeven trailing stop for the remainders... Remainders that would have been pick pocketed around 1324pm est... Still...overall...a profitable trade. Study today's chart information I discussed above if your really interested... Study dbphoenix Price and Volume thread if your really interested... http://www.elitetrader.com/vb/showthread.php?threadid=29005 Re-read, re-read and re-read some more. Trading via price and volume (no indicators) isn't voodoo Just requires you to shed your indicator clothing (get naked sort'uv speak) and see the real flesh... Being nude is usually an uncomfortable feeling for most especially when your hard earned money is on the line. I'm very glad dbphoenix thread didn't die like all the others before it by other traders that discussed Price and Volume. Not enough controversy I guess and is often boring discussion. NihabaAshi
*grin* No, no controversy, though I've sometimes been tempted. But beating people into submission isn't why I started the thread. Rather it seemed like a lot of people needed it. Given the number of thread views, that seems to have been a reasonable hypothesis. Whether anybody can put any of it into practice or not is beyond my control, though perhaps not my influence. Most novices are like Flashboy, looking to be told what to do, looking for the blue line. Witness so many of the reactions to Vad's book. Nobody wants to understand what's going on. They only want to be told what to do. Which, of course, is why the guru, newsletter, chatroom, mentor industry continues to thrive.
Okay. .thanks again guys.. I'm going to reread dp's thread again tonight.. Let me see if I have today's action right.. the price divergence occurred at 15:30 est?? I got long here a little late though @ 1452.50.. What about the 4 reversal candles that occurred from 15:05 - 15:15.. they occurred on pretty substantial volume.. although they were only roughly half of the volume from the 9:45 - 10:00 time frame.. What, if anything would have kept you from going long here?.. I entered long here.. got stopped out.. but reentered again at 1452.50.. Also, what about the 10:15 area.. was that also the price divergence you are referring to??
I was thinking about buying in the same spot, but here is why I didn't. The setup looked decent as a bounce of a previous support level. However, I had glanced over at the Russell 2000 and the SP Midcap 400 futures, and both had sliced right through support and were already setting new lows for the day. While this method isn't 100%, I have found that it saved me from bad entries on numerous occassions. -bbc
Attached is a chart. It covers the ES for two cycles of hitting the top of R. Rather than give you a fish, I will give you, briefly, a total orientation to making a lot of money. In making money you use channels to have an orientation to a given market. We saw that by trading on several fractals concurrently, you could really clean up. Segmented accounts are used for this. To do the optimum for takingmoney out of the market, a person trades, as independant entities, at least three fractals: LT, IT and intraday. All have channels and all have traverses of these channels. Channel traverses can be the basis of frequency of taking profits. Presently a traverse of the LT channel is 60 to 70 points. IT channels are what traverse the LT channel for the quarter. ES04M is a bear channel. The prior LT channel was a Bull channel. IT channels last 5 to 8 days. In this quarter (ES04M) we have had 7 completed IT channels. The attachment ID's these and numbers them from the beginning of the channel. IT # 3 long came up to the right trend line of the LT channel (see green Flat top pennant in middle). The left and right FTP's show similar bashings. IT #7 tested it times 4, 5, 6 and failed to BO. The lateral IT # 5 is where tests 1, 2, 3 occurred. This is called the Top of R. and it is holding strong in this Bear quarter. a person must annotate all charts with the LT and IT trends to have a perspective. To make a lot of money, a person does 4 things: 1. Knows how a day works. (you do not know this yet) 2. Have the context for the upcoming day (you are getting to this now.) 3. Knows how the H/L relates to the potential of the market to delivery profits. (This is no a possibility to consider in ET at this year) 4. sets a daily profit goal based upon the H/L. This is a SNAFU for ET'ers so far. Details on the above 4. I posted on all four relative to Tuesday. Here is a synopsis. 1. All days have four trends. M or W in appearance. The 10:00am news trend netted 4,000 for 10 contracts. This was trend 1 and was fast paced. Trends 2 and 4 were short each and netted 3,000 dollars each; they were medium paced trends. Trend 3 was long and a slow paced trend. Slow paced trends make the most money; it made 11 points for 5,500 dollars. Thus knowing you are going to trade 4 trends makes it easy to plan to make money. 2. You must know the LT trend and what IT trend is going on in the LT to have a context. On Tuesday, we started in the context of a long IT trend bashing into the right line of the LT trend. This "M" day had a first channel bash into the Top of R. we knew the value of Top of R; it was the sell price on the first trend. The back off ends and thrend 3 tried yet another time with 11 traverses (each one moving in a 2 to 3 point channel). For trades on each trverse, you passed through a specific ES value up to 7 consecutive trimes. Trend 4 was a killer situation. It ened about everything in sight: IT trend 7; the FTP formed between the IT and LT; and it balsted five points into the next IT short trend to begin day 1 of that trend. 3. H/L the day was in a FTP so a high H/L range is not easy to come by unlass...... we had a definite "unless" My target for making money is 3xH/L. That is 33 points; for ten contracts that is a gross of 16,500. Call it 15,000. Trend 1= 4,000, trend 2=3000; trend 4=3000; the slow trend with 11 traverses midday was 5,500 or 500 times 11. 1 point per trade per contract. 4. I set a goal of 3x H/L range. See 3 above. the tasks I do are as follows: 1. monitor by gathering data. 2. do analysis. 3. decide to hold or act. 4. Act by doing nothing or hitting T on IB's TWS. To do the above I follow these details. 1. I do PRV on 5 min chart 7 times every five minutes to determine it volume is accelerating or decelerating. If it is decelerating I look for a 2 pair on the DOM and if it reaches a dwell one tick pair back from the end of the translating bar, then I trade "before" a spike appears. Otherwise I sit on my tail. 2. analysis. I do almost no analysis unless required. I only do analysis if I have an impending failure to traverse from right to left in one of four trends a day. if the trend is fast, I use the context (bashing R or S to reverse. If a trend is medium I do not reverse on fist left to right treverse but I do reverse when the travese makes more than three ticks net per traverse. For slow trends I trade all traverses. all trades use the 2 pair and spike process for gathering data to analyze. 3. Decisions. I have a complete set of NLP pictures for using to make all decisions based upon analysis. I am complete for SCT trading 100% of the day when the NYSE is open. 4. Action. I hit T as the only item I have to consider. all possibilities are posted on the TWS all the time. I move the arrow to the color and the proper # of contracts line. I may scale at market. The above is geared to tuesday to be in synch with the thread. for the three market paces, volume drives the pace. Fast pace is vol > 10 to 12K. For medium pace vol is between 4,500 and 10K. for slow pace vol is < 4.500. For meeting targets each day, 1/3 is done on slow pace; most is done on medium (two trends usually) and least is done on fast pace as the day begins (say about 20 to 25%) in 10 to 15 minutes. At this point you can see drawing all channels and traverses is a requirement of knowing where you are. the single NLP belief that is extremely important is to "trust" the expression "channels work". You find this out by using channels and seeing that the channel boundary on the left is hit for each right to left traverse. Then the channel boundary is hit by the following traverse. Channel boundaires are parallel. Channels are a geometric depiction of price movement in the face of a given level of "push"; "push" is measured in crude decrete non overlapping ranges of volume. I have these bands showing as rays on my volume display. By assessing whether the volume velocity is accelerating or decelerating 6 times every 5 minutes, I nkow how price is going to move on the DOM bid/ ask pairs. I hit T as required to continue to make money throughout the day. A person on ET said that ES is very orderly. I have to agree. If it were not, probably as a 71yo, I would have to "get with it" because of my age handicap. If I have to replace my headlamps on one of my cars, I have to nail 1,500 dollars on each of two contracts on a day.
Thanks Grob, 2 quick questions if you don't mind.. 1. Where are you gettting your charts from ..my 60 minute chart only goes back to 4/1.. yours goes back to early Feb... 2. You said you kept hitting T.. what is T?
Hi Flashboy, There were lots of price action only divergence signals yesterday via either price alone, price and volume, candlestick patterns et cetera... as there are any other trading day. Yes to your question about 1530pm est price action. As for your reference to 4 reversal candlesticks 1500 - 1515pm est... I don't see anything tradable there...no divergence and a dark hammer at 1500pm est that got no confirmation signal. Also, I'm not sure if you follow BREAKING WORLD news (good sources are Bloomberg, CNN, BBC)... Around 1440pm est the intensity by the US against the insurgents in Fallujah was being broadcasted live... At 1445pm est in the NQ...a dark hammer formed in Bearish Divergence position (I missed the setup)... With those three key elements... Bearish breaking world news, dark hammer and bearish divergence... Those meaningless 4 candlesticks you called reversal would have been more meaningless to me in the wake of what was occurring via the bigger picture I described above. That answers the question of what would have kepted me from going Long during what you call 4 reversal candles. You also made reference to substantial volume. It's not so much the quantity of volume...more often than not...its what the volume is doing. Yes to the question about the 1015am est price action. Many traders ignore news...to me that's a blanket statement. I ignore important business news. However, I pay very close attention to key economic reports being released and I NEVER ignore breaking world news...these two things almost always have an impact on Eminis. Note: I did not say I trade the news. I'm saying when news is released or hits the market...I start looking for my normal trade signals...if something appears...I don't hesitate. For example...the thing about Fallujah around 1440pm est...I was looking for bearish signals but saw none. Thus, I did not enter a Short position. It was only after hindsight review did I see what I missed. NihabaAshi