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Iterative Refinement

Discussion in 'Journals' started by Spydertrader, Jan 3, 2008.

gucci
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Quote from romanus:

No shit!
EDIT:

This
is for real.
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This reality can be pretty rewarding, unlike the usual one.

#7271 Aug 28, 2008

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romanus
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Quote from gucci:

This reality can be pretty rewarding, unlike the usual one.
More...

Here's a few thoughts and drills to leave the usual reality behind:

Using only Price, Volume, Channels and Gaussians, I want you to try and anticipate what comes next while looking for the FTT's. I do not mean to say, I want you to predict what comes next, but rather based on where you find price and volume now, what should happen in the subsequent bar(s). Speak to yourself out loud as you do it. I know that sounds rather silly, but it actually helped me, and still helps me when I speak with others via phone during market hours.

The process should work something like this:

"O.K., Price failed to reach the left trend line on really big (30,000 contracts) - huge even - volume on that last bar. PRV Volume (30 seconds) shows 2000 contracts traded and volume is red. No way volume reaches the same levels as last bar. Price already failed to exceed the last bar high. This might be an FTT right here. If it is an FTT, I expect to see decreasing red volume, followed by increasing red volume and decreasing price."

Now you would continue to monitor price and volume looking for changes to your expectations and noticing how the market changes confirmed or invalidated your hypothesis.

Expect to make errors. Expect to be incorrect in your analysis. But, keep talking yourself through each bar until you reach the midday. Review your morning. How did you do?

The above exercise forces a trader to look at the big picture (forest), while at the same time, focusing on the details (trees). At some point, you'll simply become somewhat "in tune" with the market's ebbs and flows. You'll know that price has to come down to a certain level in order to make that "Point Three" Formation. Think how you'll amaze yourself when you think it in advance and then it happens.
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Watching a chart develop in real time (over and over again) trains the brain to locate certain patterns develop within price action. The more practice one performs, the faster one learns to recognize a certain situation. It is for this reason, I have recommended learning to trade equities first as one has an entire day to decide if one sees an FTT. At the same time, I recommended practicing on a five minute ES chart - because more FTT's occur during a day on the ES than often in a month of daily equities charts.
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The more you practice watching for the FTT in real time, the more proficient your skills become. When I started, I didn't notice the FTT's until way after the fact. Believe it or not, something that helped me was to move away from the monitor every so often. The increased distance helped me to see 'the bigger picture.'
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People's eyes need to be on the chart watching Price and Volume in an attempt to note context and the subtle differences which often make the difference between continuation and change
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The first steps of this Journey begin with monitoring the market. Successful trading comes as a consequence of 'seeing' the market unfold, and realizing, what must come next.
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... it is the same each day. Price moves from Point One, to Point Two, to Point Three on each and every channel. Price traverses the dominant direction on increasing Volume. Each Point Three channel shows increasing Volume beyond the Point Three. If it doesn't, then one does not have a channel. The YM leads the ES at every Point of Change. Price initially moves from Point One to Point Two on decreasing Volume.

The same sequences of "what must come next" repeat over and over again - 81 times a day.

Make no mistake. This is how the market works. Price (Channels) and Volume (Gaussians) on the ES and the YM is all anyone needs to profit handsomely - each and every day.

Focus on monitoring what must come next and burn the sequences of Price and Volume into your brain, so that 'knowing' comes as effortlessly as breathing. When completed, the vast majority of bars will then provide crystal clear signals of continuation and change. Outside Bars and Periods of High Bar Overlap may provide some difficulty, but we have logic for those as well.
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Why not take a few days and monitor bar by bar, and ask yourself what signal the market provides? Continuation or Change? When you get the signal wrong, note the bar, and during EOD debrief, see what the YM told you during that time. The only rule is this: You cannot make a decision until the end of the bar, but you must make a decision at the end of the bar. Feel free to mentally walk through the decision process as the bar unfolds, but do not mentally (or sim) 'take the trade' until the end of the bar.

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All quotes are from Spydertrader.

#7272 Aug 28, 2008

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Mr_Black
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8 points today but I was using some fine tools
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#7273 Aug 28, 2008

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gucci
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Quote from Mr_Black:

8 points today but I was using some fine tools
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Raping the market as usual Mr_Black. Keep at it!

#7274 Aug 28, 2008

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Spydertrader
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Quote from Mr_Black:

8 points today but I was using some fine tools
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Unfortunately, since you have chosen to use finer tools for the day's trading, you'll need to hand back those profits. Expect a visit from our man in Plovdiv. I expect him there shortly. {knock. knock.}

- Spydertrader

#7275 Aug 28, 2008

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Mr_Black
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Quote from gucci:

Raping the market as usual Mr_Black. Keep at it!
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hehe with this laterals points are adding nicely

#7276 Aug 28, 2008

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Mr_Black
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Quote from Spydertrader:

Unfortunately, since you have chosen to use finer tools for the day's trading, you'll need to hand back those profits. Expect a visit from our man in Plovdiv. I expect him there shortly. {knock. knock.}

- Spydertrader
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I promise to spend all the money I made today for ice cold beer and hot chicks

#7277 Aug 28, 2008

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romanus
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Quote from Spydertrader:

Perhaps, I neglected to annotate two laterals on that section of chart you posted, and as a result, you do not 'see' the sequences. In addition, change may occur at any time. However, someone who trades on the traverse level might find it helpful to know when the market has completed a Traverse before they went looking for a change in market mode.

In an effort to assist with this, I plan on removing all 'extras' from my charts tomorrow (20 SMA and Pivot Points) - leaving in place only those elements which should aid the trader in seeing the sequences from Point One to Point Two to Point Three.
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Would you recommend somebody who is monitoring to remove 20 SMA as well?

#7278 Aug 28, 2008

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gucci
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Quote from Spydertrader:

Unfortunately, since you have chosen to use finer tools for the day's trading, you'll need to hand back those profits. Expect a visit from our man in Plovdiv. I expect him there shortly. {knock. knock.}

- Spydertrader
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Spydertrader, are you sure about Plovdiv? I guess Mr_Black is increasingly causing a stir in Sofia.

#7279 Aug 28, 2008

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Spydertrader
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Quote from romanus:

Would you recommend somebody who is monitoring to remove 20 SMA as well?
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If you find the 20 SMA 'gets in the way' more than it 'draws attention to an area,' remove it. However, if you find the times - where the 20 SMA 'acts like a trend line' helpful, then, leave it in place.

I added the 20 SMA as an aid to help assist someone trying to learn. If you find it hinders you, axe it.

- Spydertrader

#7280 Aug 28, 2008

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