One of the great things about channels is that they overlap. A new channel always begins within an older channel. Channels form trading cycles as opposite overlaping pairs. The basic tennant of channels that MUST be followed is that getting the RTL straight is the beginning of doing proper channel monitoring and analysis. In geometry the channel has a name: parallelogram. Opposite sides are parallel as in a form of trapezoid. The RTL slope determines the trading sentiment long or short. The Bookmark is the dividing line. Some pedantic folks confuse parallelograms with the lateral price case. This is a stupid act. The fact that trends overlap is often the course of circular reasoning on the part of some. We will begin to acquire a set of working tools by going through a deductive process. A certain complete foundation allows us to add building blocks to be able to use channels to determine the ongoing market sentiment and consequently take the full offer of the market. 20 to 40 days of repetition can allow the neophyte to become expert. One weekend will suffice to get everything in order to do repetitions. the market will provide the forward moving information to become consumate in not time flat. For the most part, a lot of people will be unable to do any of this. Prior beliefs will make the task impossible. these beliefs will just come into play and derail any efforts. As we saw already a person said "if you really want to learn... " and then he slit his throat. He has beliefs stemming all the way back to pragmatic floor experience at the CBOT. That is where he learned (gained a belief) that September begins the fourth quarter. Get a reem of paper and a pencil and a big eraser. Draw a large bar on the sheet and put arrows to its parts and name them. One bar is a parcel of information. You drew the dependent variable. Now add the independent variable. put arrows to the parts and name them. In the lower right number and initial this page.
Sure. Bar 5, highlighted as an OB, on the 30 min chart for Tuesday, I believe 9:30 to 10:00 your time, that you posted here: http://www.elitetrader.com/vb/showthread.php?s=&postid=3900110#post3900110 The comments in the box pointing to this bar 5 appear truncated on the chart you posted. My definition of a retrace is price movement towards the right trend line on decreasing volume. I have no intention of throwing this definition away, it serves me well; I would, however, replace it with another definition if I find one that serves me better. Since you suggest I throw mine away, what do you suggest I replace it with? Depending on the context, I may anticipate (in real time at the start of the movement towards the right trend line) that a retrace will become a reversal (e.g. if I think an FTT just occurred), but until the right trend line is broken on increasing volume we only have a retrace (by my definition). A move towards the right trend line that fails to break out, by my definition, is just a retrace. -river
You have discovered something already. In the present bars are the only thing forming. Two bars form. One for price and one for volume. Each is in a context. The independent variable, volume, has a bar that is constructedwith two parts: one is advancing in the dominant and the other is advancing in the non-dominant. You labelled these parts on page one. (maybe) Slow down and look at the volume bar on page one. Pages 2 and 3 can be devoted to text that you write about the volume bar. Stay on the upper half of page 2 and page 3 for now. Cut and paste in the long expression on page 2 and the short expression on page 3. Channels deal with sentiment and you can see that the sentiment on a volume bar is designated. You see that many alternatives can exisit to apply in the proesent; be sure to be complete in your use of the specific posible logic and connect the possibilities using the Boolean convention of the "OR". A lot of people's beliefs will not allow this tsk to be completed at this momment; the beliefs have to be set aside first. you have to give permission to yourself to open the door to possibilities. If you re using one of my libraries just slam the cut and paste onto the pages and devour the contents.
Thank you for the review of the essential elements. Iâm comparing your two posts here closely with my application of the channel system before asking any clarifying questions. I remember the first post of yours that startled me like an unexpected bop in the nose. After reading and thinking about that post, I never looked at a chart quite the same way again. http://www.elitetrader.com/vb/showthread.php?s=&postid=1078337&highlight=hcour#post1078337 -river
Move to your page four. Write "relative" across the top of the page. Put this post on the page. The basic algorithm of the market's system of operation puts the market variables into context and covers all the market system possibilities. AND a Parametric Measure comes into play from the algorithm. The PM is a vector. Vectors have two aspects" magnitude and direction. The direction part is called sentiment. Sentiment is detemined relatively. The independent variable is in command. IF .... is the proviso that creates status, condition, circumstance and situation (context). The context is bilateral and the picture is the Gaussian of volume. The HS of the algorithm is simple. If you are a person who is unfamiliar with systems and their definition go and find out about systems. Wikipedia is insufficient for this effort. So are the "dummies" type books. Also find out about algorithms and HS's and PM's. Trends are usually thought of in terms of price. There is "Price Action" in peopless heads because they are into making money. Actually, making money takes care of itself if you know that you know what is going on. Working in an anticipatory manner allows the future you sense to just come into the Present later and you process making money in the present as a mechanical routine on a platform where your capital is contained. So we have arrived at the acronym that defines channels: RDBMS. For me RDBMS stands for Relative DataBase Management Systems. OverDriven faults me on this as just the way I like to sprinkle ancronyms around a lot. We put data into channels and get an operational system for managing to take the full offer of the market. Draw a Gaussian. to the right draw a new Gaussian. Invert it. attach the closest ends. You have a cycle of two gaussians. Let an axis go across the middle. Scoring uses 7 of these cycles. One cycle of price, two cycles of volume 4 cycles of A/D. Above the axis are digital 1's and below the axis are digital 0's. Convert the 8 posrtions into a series of events and you will see the binary score appear for a trading cycle. Convert the binary score to a decimal score and you see "The Pattern's" eight portions scored. The market system moves from one condition (context) to another in an Order Of Events. As you see this vector status has a magnitude that varies continually (in a granular manner) through the trading cycle. By looking at cycles within cycles, you can see how the same shape is is used and the cycles are interlocking in a relationship. this is an interlocking fractal relationship. We now have a foundation. I will put all of this to work by using building blocks surmounted on this foundation. We will look at a bar by bar process that is contained. The container is a parallelogram. The market communicates information where events are named as bars are created one after another at a fixed bundling of information. A RDBMS is monitored and analyzed using how the prssent forming bar RELATES to the prior bar. Since we wish to be certain before the present, we lock-in all flowing information at the moment it becomes certain and will have no statistically significant variation after this moment in its forming. Lets build a channel so it has full utility for decision making.
We found one bar is always forming and it locks-in with certainty at some point in its formation. Since vectors are the measure, this explicity states (rather than implies) that the measure is comparable or "relative. For channels only two of the ten price cases allow for magnitude and direction to be measured. Page 5 Draw the cases and circle the two that provide for measuring. Label the sentiment of each. Each case has a left side and a right side. the slope of the right side determines the sentiment. Use the slope sign to depict long if positive and short if negative. This is the Right Trend Line (RTL) Draw in the left trend line on each case. Contain all of the information. This is the Left trend Line (LTL). For each case draw in the volume portion of the Gaussian. Draw two additional combinations to show all the possibilities of the HS and its PM. You have drawn all possible channels. As FF has said his channels look like mine. He knows this and I do not. Why? I post mine and he does not post his. We have done 5 pages and we now have all possible channels drawn. All we have to do is "read" the market from the channel depiction. Write in either "Continue" or "Change" just to the right of your four cases. At this very point is where the rubber meets the road. to trade cand cmake money you have to have this answer sheet down pat. Make sure you you are able to deduce what is explained on this very complex page it is what separates the adults from the children. It is at this point where you decide to be a bettor or whether you decide to "know that you know." Sit there and decide which variable tells you what is going on. Let me continue. Look at the other 8 cases and draw lines to the tops and bottoms of the shapes. Notice none of them describe a parallelogram whose RTL yields a slope that can dictate a vector measurement of market sentiment. If you wish makes some notes on all of these failures. Our eyes feed (optical nerve from the retina a digital light sensor) our minds. The three most significant operators (in order of signifcance) are: space, shapes within space and change of shapes. conclusion we can use what we know to help us have perception of what we see. This is sufficient to be an expert trader. this is what makes trading so easy and why it takes so little time to learn to trade as an expert.
Small note. To learn to trade you have to do work. By now you know that reading will not teach you to trade. Work comes in the form of drills. you use the reem of paper to do each page. First you make each page by reading the instructions. then you do parts of each page from memory. when you can do a page from memory, then you do it ten times more. It is like mental push ups. If you make a mistake, then you start the count over at one. use a hiliter to note the facts I types. besure to write each fact on one of the pages where it fits. as you redo the pages from memory do not fail to leave out any fact. So far you do not have the pages 2 and 3 finished if you do not have the library to cut and paste. The short cut for having the two pages in your mind is to have the cases that are OR'ed in your mind. Count the cases in the math expression and find a way to understand all of their contributions. We are just learning to be experts in applying channels to take a multiple of the ATR every day.
to finish up learning about channels, we review and then move forward. We have the long and the short channels. We can tell if a channel is continuing or if it is changing. Changing means it will become the opposite kind of channel next. "Next" is a place in the future. If the present channel tells you that a change is NEXT, you look into the future and use the necessary knowledge you have at your fingertips to envision this future and test it to see a "pass" or "fail" on the test. Draw a pass and a fail status using one more bar in the future. A bar is a price and a volume pic. So on sheet 6, divide it into four parts top to bottom and put a line down the middle. Eight boxes. Name the boxes for the future coming into the Present for a pass or a failure of the four cases you put onto page five. Let the left column be pass and the right column be fail. Be prepared to use your big erasor as you fill the boxes with three bar pics. Lastly, make a bar bell of two circles with a line interconnection if you have any identical pics drawn in. We will be using page six to name elements in the system of channels. Doing page six is just an example of thinking in a deductive manner. Passing and failing are just catalytic structures we put into our thinking picture. I am asking for some thinking. It will be neat to see the inventors at work. As they do stuff we can evaluate how directions get followed or not. There may not be anything new in trading. You are organizing in the part called channels. Fabricate.