The above quote refers to the 'sequences' of price and Volume and how Price can move between these two points. Three ways exist (three 'pathways' if you will) for Price to accomplish this goal. The market provides signals for continuation or change on each and every bar. Between points Two and Three, a trader may choose to override these change signals (ignore them), and instead, choose to hold throughout the sequences which develop. In the specific example from today, should a trader have chosen to hold through points two and three, the increasing black volume bar indicated that the sequence of events required for Price to move between Points Two and Three, was not going to materialize as previously expected. Hence, anyone holding 'short' through increasing black Volume wasn't 'thinking clearly' - meaning the market had signaled for the trader to 'get back on the right side of the market' by eliminating any possibility of a Point Two to Point Three sequence. I suspect the answer to this question can be found in the charts. - Spydertrader
Per Spydertrader: "'Chubby' Tape = Minimum of Three Price Bars with Point One and Point Two on the same Price Bar with Point Three located minimum two Price Bars into the future." I think that this bar sequence satisfies the above definition, so there was a pt3 already. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1928782>
Sure. You signalled change. Still the question remains: Since we had a breakout on increasing red volume (regardless of the chubby tape before that) can a point 3 down be expect? (either a steeper one or a fanned out chubby tape = channel) I saw the chubby tape and I saw the VE, I saw the decreasing volatility and I saw the change. I just decided to hold short. That was okay, but not okay after increasing black. Ivo
: Thank you for your response, but I'm still puzzled.. What are then the three ways for the price to get to the point three??? Or to be more precise: how does the third way look like??? I must be dumb
I don't trade the 1 minute resolution ... The chart I've posted was meant to help in understanding that the 5 minute resolution is just a conventional way of looking at the market. It is convenient, but we have to understand its limitations. Some signals may be approximated with the end of the bars, others may not without giving up points. If you use a coarser resolution your profit expectations need to be scaled down. You have to try to see all the change signals. then you can trade whatever you decide. Any sign of price beginnin to struggle to advance further is a signal of change, but you may decide to wait for a stronger signal before taking action. Even if the volume of the bar in discussion were a little lower, it should've still be seen as sign of change, just weaker.
Again, I suspect one can locate the answer to this question by performing a thorough review of some Price charts. If you review my posting history, you'll find that I often have a very good reason for how I choose to provide answers to questions. Perhaps, the process of learning the sequences of Price and Volume provides more benefits than one might expect. - Spydertrader
EDIT: Sorry, maybe I shouldn't have posted this. I've reviewed the last few posts after I posted the above quote.
________ _________________________________ You must be right but somehow i have a kind of mental block hier. The only two ways for the price to get to the point three in a down trend I'm capable to dissect are: 1) P up and V down 2) P lateral and V down The only one remaining (provided the rigoros restriction on the V being down) alternative SEEMS to me to be logically inconsistent: 3) P down V down => expect change of the price trend => expect P to move either lateral or up => do not anticipate point three since only one way exists for the price to go from point 3 into the channel and that means increasing volume AND P down in our case... What is the third way???? If we add (in the first two cases)the permutation with constant volume we will get four possibilities but not three??? _
Third way = P+, V+ That's just what I thought, at least (so beware ). Although I recognized change at 1540 (close of), I was still considering the possibility of a pt3 down until the 1555 bar, which wasn't correct.
__________________________________ Thanks Padawan, but this possibility isn't a possibility per se due to " Anybody holding short through increasing black isn't thinking clearly." That would mean, that if one is finding oneself holding through the point 2 to 3 sequence accompanyed by increasing volume and rising price then one is exposing oneself to a situation where one has to be nervous ??? It just doesn't fit to the following assertion by MAK"If you are nervous, you do not know what is going on." http://www.elitetrader.com/vb/showt...ight=if+you+are+nervous#post1359838:confused: I'm lost