Making JH' SCT and all his material alive

Discussion in 'Journals' started by WchPl, Apr 25, 2018.

  1. WchPl

    WchPl

    This is a journal for sharing, with the goal of accomplishing the work required, and with the tools of Jack Hershey’s SCT. We will not be discussing anything but this topic in here.



    In an effort to make Jack’s material still alive, and the with the will to reach a level in which « there is no reason not to be in the market at each and any time », we will try to make a journey through the entire methodology of Jack, from scratch.

    I must warn you of one thing : English is not my native language, so my english comprehension is limited sometimes. I try to be as understandable as I can but this is quite an effort for me most of the time. So please bear with me and let’s try to be intelligible for all.

    I encourage then anyone willing to engage himself or herself in the process, in order the get the AHA moment, and will begin an updating of everything I know for sure, for then going towards the resolution.
    Anyone just curious or totally noob on the method is welcome too. Beginning from scratch is where resides fertility.




    All the provided here, and in the next messages that will inaugurate that thread, is based on my comprehension of the SCT and Jack’s material .The main sources are the following :

    https://www.elitetrader.com/et/threads/sctlearning-from-scratch.282221/

    https://www.elitetrader.com/et/threads/market-system-of-operation.280654/

    https://www.elitetrader.com/et/threads/i-am-getting-my-butt-handed-to-me-on-a-daily-basis.275733/

    https://www.elitetrader.com/et/threads/spydertraders-jack-hershey-equities-journal.38777/

    https://www.elitetrader.com/et/threads/spydertraders-jack-hershey-equities-journal-ii.56555/

    https://www.elitetrader.com/et/threads/spydertraders-jack-hershey-equities-trading-journal-iii.83605/

    https://www.elitetrader.com/et/threads/spydertraders-jack-hershey-futures-trading-journal.83604/#post-1309674

    And add the « Building Minds For Building Wealth » and « Channels For Building Wealth» PDF documents that you’ll find in the links listed above.





    Some generous people who have helped me with the work that is to be done, consider now that my work could be a light for other people working silently on the method too, and that other people could be a help for me. Time to share.

    I am ready and happy to share with you all the material I have. The goal is : reach the point when there is no reason not to be in the market at each and any time.


    I will be soon posting a series of 6 Messages, each corresponding with the plan that follows :

    1 – The fundamentals

    2 – The independent variable

    3 - The dependent variable

    4 – The price volume relationship

    5 – MADA routine

    6 - Problems





    The work is HUGE. But I know it worth it. Then for all of you guys, willing to join the journey, I’ll be happy to share with you. Feel free to share any material linked to JH method, or any comprehension of the method that you have in mind. My goal has two levels : solve my problems, and help anyone with its own problems.



    NB : I will not begin really from scratch in what I'm gonna post ; some things will be implicit. I suspect new workers on that stuff to ask me some more details to understand the whole I'm gonna provide, and confirmed workers of the SCT to understand what is sometimes, between the lines.



    So here will be an attempt to transmit all I have in a effort to share, help and be helped. Here we go.
     
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  2. WchPl

    WchPl

    1 - The Fundamental

    The fundamental of the method could be that the laws that rule the market as a human activity are way beyond the power of human beings.

    Then, if a human understands that law, one can then see in now, a result of before.

    By going back to before, and by seeing it as the new present, one can see its present (in fact, the past), and its future (in fact the real present). By this move, we can see what is happening now, where it comes from, and by following the story of the present bar by bar on the chart, we can anticipate what can or not come next.

    Some forces dictate on the market their behavior to actors of this market. If, on a chart, one follows bar by bar, annotates his chart (MADA) on the price pane and do the VTP (Volume Test Procedure) on the Log, and knows that he knows what is going on now, therefore one « catches » the current forces at any time on any market, as long as it provides sufficient liquidity.

    So, here it is, concretely :

    • The fundamental law is that : when the volume trend is up, so when volume increases, the price trend is continuing. When the volume trend is down, the price trend is changing.
     
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  3. WchPl

    WchPl

    2 – The independant variable

    The independant variable is the Volume. The volume indicates the number of contracts that the totality of the actors on this period of time sell and buy, mixed. From the behavior, unpredictable and unanticipable of the volume, price lives and evaluates on the chart.

    But, it is not because volume behaves as it wants, that we cannot anticipate what price will do, and this is because we also monitor volume. From Volume, we can deduce Price.

    The fundamental basis is that when volume increases (there is more and more contracts bought and sold), the current price trend is continuing. When volume decreases, the price trend is changing.



    On the chart, volume appears as columns. On a volume column we have two indications if we consider the column (I also call it the volume bars) alone. It has a level : the number of contracts, and a color : the color corresponding to the position of the close of the price corresponding bar, compared to its open. If the price bar has its close down the open, the color of the volume bar will be red (for short), if up, then black (for long).
    Now, by combining two volume bars, we get some more indications. Cause we can compare the level of each bar, and establish an evolution ; there are three possible : up, equal, down, but the path that leads here can be very different from one to another.
    Now by combining three volume bars, we get some even more indications, cause we can get a trend comparison.




    There are different combinations (combo) of bars, that are disponible in the links quoted previously.
    To give some material about it I can say : There are basically 4 kinds of volume pattern when we consider 3 volume bars in a row. They are exposed in the attached Volume Patterns hand drawn document.
    In the Message 6 – Problems of my plan, I will go deeper in the analysis to expose where I enter in the territory of uncertitude, doubt, intuitions and suppositions.
    For now, we can count on the fact that the 4 kinds of pattern we can observe with 3 volume bars in a row are : a peak : this is when the second of the three bars, is the highest ; then a Trough : this is when the middle bar is the lowest ; a continuation of increasing, this is obvious, and the opposite is obvious too.


    What is clear here, is that there are 2 of those 4 kinds, that provide a signal of change, and the two others a signal of continuation.
    In other words :
    When volume increases : the price trend is continuing. So when the volume continues to be increasing (left down corner of the hand drawn document), the price trend continues to continue in the same trend.


    When volume decreases, the price trend is changing. So, if the volume continues to decrease, the price trend continues to change. This ends with the B2B and the R2R concept.


    Concretely, in the MADA routine, we annotate the evolution of Volume by performing the VTP. This is both performed with annotating the price pane at the same time on the chart.



    By doing so, we have a price spectrum, a volume spectrum, and by seeing if volume is continuing to increase/decrease, or if it’s changing from increasing/decreasing to decreasing/decreasing, we can see if the corresponding price trend is continuing or changing.



    A very important concept to understand is that when volume increases (so the price trend is continuing), we are in a DOMINANT moment, move, situation, context.

    When volume decreases, it is showing NON-Dominance.

    To understand the concept of Dominance : the dominance, the domination, is when the force is superior and so wins. If we take a long channel, so a price trend container going up, we will see that when it formed itself, there was a long price segment, followed by a short segment that failed to go slower than the point in price beginning the previous long trend, and followed finally by a new long trend. The basics, the logical thing, is that in this sequence, the LONG trend is DOMINANT in this context, in other words it is STRONGER than the short trend that is currently expressing itself, but being beat by the volume leading the UP PRICE bars. And therefore, here the short trend is Non dominant.

    The same, but reversed, happens on a short channel : when price is going towards its LFT (so dominant move, from right to left), the price segment is, geometrically on the price pane, dominant, so it is down (short). And when price goes to the RTL, price is non dominant.



    An important thing is to catch when a non dominant segment price in the channel, begins to be supported by an Increasing volume. Because that would mean that, for example : we’re in a long channel context, price just bounced on its LFT, creating a Tendance point after Pt3 and is now going towards its RTL. On the prior price segment, there was a long trend in price, supported by an increasing volume trend. Now, price is non dominant as it goes short, and suddenly, volume passes from a decreasing trend RED colored, to an Increasing RED Volume trend. This is known as R2R = « Red To Red » = From dec volume Red colored -> To Inc Volume Red colored.
    The same happens on the other side : in a short channel, after Pt3 price goes down in dominance, bounces on the LFT, goes back to its right one and begins through its journey to be supported by an increasing black volume : This is simply B2B = Black to Black = From decreasing black volume to increasing black volume.

    This signal is a strong signal that Price is, on a same given trend, passing from non dominant volume support to a dominant one. The price trend is changing. This will create either a fanned, accelerated, broken out reversed new channel, we do not care. Cause we are to take advantage of any of the end of the story of that first context.



    This echoes to the Ruleset the Great SpyderTrader had provided : the thing to understand with SCT and Jack’s universe, is that with this method, we pass from a win/loss mindset to a win a little/win a lot one. Why so ?
    Simply because the core of the matrix, the model, is the FTT. This moment when price discontinues to do what it was doing., and goes right back to its RTL instead of keeping on going towards its LTL. At this moment, as dominance is moving from a sentiment to another as for price, the action required when an FTT is identified is REVERSE, cause things are CHANGING.
    Then, after the FTT manifests, only 3 events can happen :

    • FBO : and price bounces on its RTL and begins to go up towards LTL so we EXIT until dominance appears on long price trend
    • BO : so the RTL is broken, the price trend continues to change so we did well to reverse and we hold (and so if no order was opened we open, if we were already in, we can add some more contracts)
    • Another FTT : REVERSE one more time, like on any FTT.
    So after a FTT manifests, we reverse and wait for price to reverse itself to reverse too. Whether this change in price will last a lot or not does not matter. If it continues long time, you win a lot, if it does not last a lot, you win a bit. That’s why we pass from a win/loss to a win alot / win a bit mindset.



    I will not discuss more the independent variable, as what's next in the method is what I'm currently on, so this is will be treated in the 6th Message.
     
    Last edited by a moderator: Apr 25, 2018
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  4. WchPl

    WchPl

    3 - The dependant variable

    Price is the dependant variable. Usually it is the variable we most focus on, whereas it should be the reverse.

    Price behaves and DOES what volume TELLS him to do. That communication ends with the price bars unfolding and describing a path that we will talk about a bit in order to remember some basics always necessary.

    When one see a bar of price, one can see different information :

    • If the bar is alone : one price bar gives a color which is the sentiment of the bar. If the close of the price bar is under its open, the color will be red, the sentiment is short, price is going down.

    • If this bar appearing is compared to the previous one, then we compare two bars : in addition to the sentiment and the color, we have a trend by comparing two price bars. There are 10 cases of price bars, that is attached in this post. By identifying the corresponding price case on any new bar compared to the prior one, we go through some sequences of trends accelerating, fanning or reversing themselves.
    To help with that, I attached my hand drawn « A Price Bar » document that shows the bar as it presents itself, with its legs.

    NB :

    1. compared to the price bar that is attached on that document, we understand that the order for numbering the legs if the price bar has a short sentiment, is opposite (leg one is the upper one, leg two always in the middle, leg 3 the lowest leg).

    2. The length and number of legs per bar is important. The thing to keep in mind is that if a bar has no Leg 1 and no leg 3, so only one leg, then this is a strong signal the trend is continuing ; if a bar has a long leg 1 for example, and a shorter leg 3, it is a sign that the trend is going weaker. A big Leg2 is a sign that the trend is continuing. The utility of the number and nature of each leg is very well explained if this is not clear in the first Link I posted above (SCT learning from scratch, by JH).


    There are some « tools » that can be used and must be understood to be able to annotate the price pane.

    First, it is the PATH. See attached an illustration, the « path of price bar » one. When we see a price bar finished and so its definitive form reveals itself, we then have some indications as the color, highs, lows, open, close etc. But, there’s something very important to remember : what price does INSIDE a price, repeats itself over and over at whichever fractal or timeframe we monitor and watch (keeping in mind that fractal and timeframe are not the same).

    When we have a price bar with a long sentiment, the easiest way or path that price made is the one illustrated. Of course, if we have a short sentiment price bar, the path will be reversed (so it would open, go up for highest high forming then Leg 1, then drop to its lowest low and form Leg 2, and finally go up to close and creating Leg 3 which reduces Leg 2).
    This is very helpful when comes time to tape.



    Another useful tool, is the zigzag chart. This is done by knowing how to identify each price case, and by making zig and zag overlap. In other words, the zig zag is made by describing for each pair of 2 bars the dominant move (zig) and the non dominant one (zag).
    When we can identify each price case, we begin to tape and to understand the concept of Point 1, 2 and 3, FTT, FBO, VE etc. This is part of the necessary things to know.


    For this, find attached a simple illustration :

    Idealized long Channel Story with basic points : we get here the basics. We have a long channel going on. Point 1 and point 3 are on the same line, and Point 2 is on the opposite line. The line linking Pt1 and Pt3 is the Right Trend Line (RTL), the other one is the LFT. From Point 1 to Point 2, we get a long move, an up trend in price so to speak, and this is Move 1 = M1. We have M1 Dominant cause in a long trend, long segment are dominant. From Point 2 to Point 3 we get M2 which is non-Dominant. Finally, from Point 3 to the tendance point, we get M3 which is back to dominance.
    So Point 1, 2 and 3 delimitate the container that bounds price with two parallel lines. The line giving the trend is the Right one, always the RTL. After a Pt3 manifests, on this example price goes towards the LFT, touches it and then goes back to its RTL. This case is RARE, and the bar considered here would be called « a tendance bar ». That’s why we call it in terms of trend « the tendance point ». Could have been « trend point ». From Tendance point to RTL, we are in a non dominant move in terms of trend. In this case, price touches its RTL and bounces on it to go back towards the LFT. This is called a FBO cause Price here FAILS to BREAK OUT…..its RTL.


    So we have Pts1, 2 and 3, tendance bars/points, FBO. This was the basic points. Now, go to the nuances.



    Idealized Long Channel Story with Accelerating action : this is a case with more nuances, more points, and that embodies one of the nuances that can surge compared to first ideal situation debriefed above. The phenomenon described here starts with the same as the prior example : so we have dominant M1 from Pt1 to Pt2, non dominant M2 from Pt2 to Pt3, and back to dominance from Point 3. From Pt3, here, price goes towards its LFT but instead of bouncing on it and begin a journey back to the RTL, price Breaks out the LFT, which ENLARGES the Channel. Then price goes back to the RTL. We call this reverse point over the LFT a Volatility Expansion (VE). From that VE, we get some M4 and non dominant. This journey back to the RTL is interrupted when price stops and reverses and goes back to the LFT one more time. At this time, we have a new Point 3 « inside » the prior channel, and we create the dark blue channel. As we can see, there is an « elevation » of the green channel that converts itself into the dark blue one : the new channel has its RTL MORE SLOPED, in the same direction as before (long). This phenomenon is called ACCELERATING. The trend here appears on the new Pt3 as the same as the prior one (green channel) but that same trend does accelerate, making higher highs quicker.



    Idealized Long Channel Story with Fanning action : That situation is the symmetric of the previous one : the phenomenon of Accelerating deals with the fact that the RTL becomes more sloped.
    Fanning deals with LESS SLOPED RTL. The quickness, the magnitude and the volatility reduce when a RTL is fanned. The slope reduces its angle, the trend is the same as before, but the PACE is reducing.




    Idealized Long Channel Story with FTT Action : this is the most important, most common and most used of the cases that can happen. We get here M1 from Pt1 to Pt2 in dominance, then non dominance between Pt2 and Pt3. From Pt3, price begins to bounce and to go towards the LFT. But suddenly, it stops to continue towards the LFT, reverses, and begins to go back to its RTL. This moment, where Price coming from its RTL and going towards the left one, fails to traverse the channel from RTL to LTL is called the Failure To Traverse = FTT. As we’ll see, many FTT are new point 1 for a new channel forming. In this case, we expect to see another channel, maybe fanning, accelerating, or REVERSING. A FTT is a signal that price DISCONTINUES to do what it was doing and the PA (Price Action) is changing.





    So, we have Price as the dependent variable. From price bars, we identify the different price cases, from price cases we determine channels. There are different levels of channels : they are the fractals. It echoes to the granularity of the market too, as a fractal, even if it’s hard to find a simple definition. A fractal is a level of construction, and when we switch to another fractal, we see the same things…from another level, from another fractal. Think of the path of price into a bar…it’s like looking inside the bar.



    Now let’s go deeper : from pairs of two bars we identify price cases, and then we tape : a tape is the most little channel that is possible to build on TWO price bars, forming the pattern in question (there are 10 : XB, XR, Hitch, SB, SR, FTP, FBP, Sym, IB, Lat). I join here the matrix of the 10 price cases, and will explain how to deal with the channel that it is to build on each price case.

    NB : notice how the color of the bars does not count to tape, it is just about the form, the pattern, the shape that 2 bars in a row show.

    XB Case : here, the lowest low of Bar 1 is Pt1, Pt2 is at its highest high, then it goes short to make a Pt3 which is the lowest low of Bar 2, and then price goes to the LFT, crosses it, makes new highs over the LFT : this is a ve. So only with two bars, we can draw a channel corresponding to the market path « inside » the bars, and we are able to identify most of the points on this container that is the channel.

    XR case : similar to the previous one : we have 3 points, symmetrically organized compared to an XB Case, and a VE.

    Hitch : rarest case. Almost it never happens. We have two channels containing the price, which are straight, neither up(long) nor short (down). There is no trend, this is a Wait moment.

    IB : most of bars, when they begin to unfold, begin as an IB. On this case, we have two opposite channels competing. We annotate both of them and we can see FTT. To help the eye to see the FTT in this kind of situation, look at the close of the second bar and compare it to the highest high (for the up tape) and to the lowest low (for the down tape). This is valid for any Price Case.



    NB 1- for OB ; the convention is to draw the long tape by connecting the low of the previous bar to the OPEN of the second one and this creates RTL. For the short tape, we link the high of the first bar to the open of the second one, and this creates the RTL.

    2 – for Lateral : I have not provided the drawing of the Lateral which is the tenth parice case. I know I have some troubles with that case, but I still do not kow what I don't know. Then the only thing I can say for now, which is what I do, is considering each Lat as an IB I tape + another tape. The only conventino is that when an IB manifests, I annotate a pre-lat (horizontal blue channel) projected until the bar creating the IB , and if the third bar creates a Lateral, then I put another horizontal boundary, pink this time to signl a Lat happened. Then I put a 3 on my volume pane to remember there was a Lat. A Lat can be broken after 2 bars or unlimited. Some Laterals incorporate hundreds of bars.



    And so on. There is some subtility I know I do not get yet, with the Lateral. A Lateral, for sure, is a combo of an Inside Bar + the third bar being inside (with a lower high and a higher low) the first bar. From this, a Lat is observed. After that, the convention is to say that the Lateral is definitely broken when at least two closes of two bars are out of the horizontal boundaries.



    I have to speak now of the main rule on the price, as for behaving and choosing, deciding and act. After any channel is created, some points can and will happen : a FTT, a VE, a FBO, a tendance bar. Any of thoses points say something :

    • FTT = the Failure to traverse is the core of the stuff. This is that moment, where Price coming from its RTL and going towards its left one, reverses and begins to go back to its RTL. This is the central point, the signal, the center of the method. At this point, we open in the non dominant price trend for the context (so for example short in a long channel).

    • VE = this is when price crosses the LFT of its container, and expands the size of the channel. The forces of the dominant price segments are getting heavier.

    • FBO : this is when Price coming from its LFT, goes back to the RTL and bounces on it, to go back to dominance towards the LFT.
    After an FTT manifests, only 3 events can happen, 100% of the time.

    • Another FTT = REVERSE action

    • a FBO = EXIT action

    • a BO = HOLD action
    The thing is to notice the OOE (Order of Events) in which the segments are unfolding themselves, and to act in function of what is happening now.


    I may have forgotten some details, but it must not be much.
     
    Last edited by a moderator: Apr 25, 2018
  5. WchPl

    WchPl

    4 – The price volume relationship

    I have already talked a bit about the price/volume relationship. This deals with the Gaussian formations, which is a concept I « know » but do not « get » enough to talk about. You can find in the links listed, the PDF about the Gaussian Forest.
    The Price Volume Relationship (PVR) is the combination of the Price and the Volume annotations, observations, deductions, and actions.


    This relationship shows itself when :

    • when a channel appears and is drawn, and price begins to go back to its LFT after Pt3. We said that in a long channel, the long price segments are supported by increasing volume, and non dominant price segments are supported by decreasing volume. So…we can expect, geometrically, to see PEAK of volume on the Pt2 of the container, and TROUGH of volume on Pt3. See the hand drawn Idealized PVR sequences.
    Let’s debrief that hand drawn document :

    Idealized Long Channel PVR Sequence : on the very left of the chart, we see price coming short, supported by a decreasing volume, so a non dominant volume supporting a short price segment. As it appears here, we do not have the previous context to give an interpretation of the context that is drawn (long green channel). But as volume is decreasing, we know that :

    • the trend is changing, it is short, and as long as volume will keep on being decreasing, the price trend will continue to go short.
    So, what we can expect is either a new short price trend coming supported by an increasing volume (so we’ll have a trough of volume), or a new long trend, supported by an increasing volume.
    So in this sequence, we are in non-dominance, and we are waiting for the return to dominance.


    On the 6th volume bar, you can see as circled in purple, the trough of volume that indicates volume is passing from a non dominant to a dominant support. At the moment we see the trough, so at the end of bar 7, we also see a B2B on Volume. So the support of volume is now dominant where price…is long as we can see.
    Pt1 has appeared.


    When price reaches Pt2 and begins to go short (bar10), we can see volume, for the first time since the B2B event, is decreasing. This is the signal of back to non-dominance. When Volume says « I’m providing a non dominant support to the price trend currently », price changes from long to short. We know here that long is dominant, short is non dominant.
    Then, price goes short with strictly decreasing volume, until Pt3 appears. As long as volume will be decreasing, price trend will continue to change from long to short, in other words it will continue to be short.


    Pt3 manifests and volume begins again, as price bounces on (and creating) its RTL, to increase, and the price begins to move from RTL to LFT which is considered as the DOMINANT MOVE. So we have Dominant Move 1 (from pt1 to pt2) supported by increasing volume, then non-Dominant Move 2, and Dominant M3 begins to manifest. Price goes to touch precisely the LFT, creating (by a trend bar) a Trend Point (tendance bar).

    After TB manifests, we remember how it happened on Pt2. « Currently » (after TB manifests), we know that when volume increases, he brings a LONG driving force to price ; when it stops increasing and begins to decrease, it brings a SHORT driving force to price.

    At this point -> we can see the first peak of volume that lines up vertically with Pt2 of the channel. We will deal deeper with that in my 6th Message, cause it opens some problematic areas for me.
    We can see too the first trough of volume ; the second one which is upper the prior one, and that lines up with Pt3. The volume peak lining up with TB is higher than the prior one that lined up with Pt2.


    So : After TB manifests, we know that : we’re in an uptrend, each segment going on inside the container is called a Traverse. There are dominant and non dominant ones. And we know that the global long trend in price is led by a long volume trend. So, that means that our green channel is a dominant traverse of a much larger long channel . To get the volume trend of the whole much larger channel, we would have to enlarge our display and see more of the chart in the past.

    Let’s continue with the debrief : Price is short, volume is showing non dominance. Price is changing, to a short orientation, and it will last until volume increases AND price reverses to go towards its LFT. That happens when price touches its RTL and bounces on it for the 3rd time. We have a trough of volume. Then price begins to go long, volume is back to dominance.

    Then, suddenly, as price goes long, it begins to be led by a decreasing volume. This is no supposed to happen in a long traverse of a long channel led by an increasing volume. Plus, the volume peak corresponding that manifests, is UNDER the last volume peak that lined up with the TB.
    So at this moment, we know price trend is changing at the level (fractal) of the up traverse. Then price falls and begins to return back to its RTL. And at the same time, volume passes from a decreasing from an increasing move, red colored. Dominance has changed its side. We get R2R. FTT.





    There may be in the last paragraphs, the resolution already here of the core. I still do not see things this way in livechart. And this is the maximum I’ll say to illustrate the PVR in this sequences, cause what’s next in the analyse is where problems begin for me.

    One more tool that is understand : the turns. We know that volume all day long alternates between increasing and decreasing trend, and price evoluates between short and long. So we know volumes brings a dominant force or a non dominant one to price. The Turns, that are to be annotated on our price pane, are three kinds of all the turns that can happens, in order to price/volume relationship.

    C turn : the C turn is annotated on the price bar when the corresponding volume bar is higher than the previous one AND when the price trend given by the tape drawn, breaks out the prior tape. This is a new trend in dominance. At this point, we note a Bookmark, noted BM, which is a horizontal little line at top or bottom of the price bar. If the C turn shows a short trend, the BM will be short so we put it in red and at the top of the bar ; if the new trend is long, the BM will be green and at the bottom of the price bar. This is a passage from a dominant ove to another dominant move, dominance is passing from a side to another. It is called a C turn (D-D) for from Dominance to Dominance.

    A Turn : the A turn can only happen if a C turn already happened. It's when, after a C turn, Volume decreases AND the price trend (compared to the one created by the C turn) reverses. This is from Dominance to non dominance. This is called A turn (D-nD).

    B Turn : the B turn can only happen after an A turn. This is when price and volume are both back to dominance : volume increases, and price trend reverses a second time to be the same as the one observed at the prior C turn. This is back to dominance so we call it B (nD-D)..



    All those turns are to be annotated on the price pane AND on the Log.

    The Log is the most comfortable document to get and fill to annotate, follow and always remember all the information of each and every bar that previously manifested.

    This is a good indicator of signal for dominant and non dominant moves.





    NB : as for Bookmarks, there's a convention : we annotate two BM when a OB appears : one long at the bottom, one short at the top of the second bar creating the OB.

    There's only one thing I have to add, and this is about the nested fractals.

    What it really important to understand is that each and every tape drawn (the most little channel that can be drawn on two bars), gives information.

    Before going deeper with that, we need a little hand drawn chart. See the :



    ZigZag and overlapping Fractal/Tapes : this is a 7 price bars chart. I have tapped at each bar, so we get 7 tapes, each in light grey lines. Then, you can see some pink and blue lines. Those are the Zig and Zag moves of each tape. So, for any tape showing long trend, we have an up-oriented pink ZIG and down oriented blue ZAG, and for any tape showing short trend, we have an up oriented blue ZAG and a down oriented pnk ZIG. This shows dominant and non dominant trends.
    Each time we see a tape, we can say « we have a trend ». As seen, we can have no trend (hitch for ex), a short trend (XR), a long trend (XB), or opposite trends (IB or OB).


    One thing important to notice in order to keep on going deeper in the analysis : as you can see, at each bar appearing, we annotate the tape corresponding.
    Each tape is formed by the last created bar, and the prior one. And each bar appearing is LINKED to the previous one by the corresponding tape.

    So, each and every tape is LINKED to the previous one by one bar.


    If each and every tape is connected to the previous one, it surges that we can therefore :

    • compare the information of the prior bar that we already compared to the previous one and that led to create the tape appearing.

    • Compare the information of the just created tape to those of the prior tape.


    As each tape is linked, each new tape confirms, or invalidates the information collected in the previous one, from wich we had already got all those same information with the B-2 bar.

    And this is the same as debriefed in the fanning/accelerating/breaking out documents : each new tape is or fanning, accelerating, breaking out or following perfectly the previous trend given by the prior tape.



    What is now, CRUCIAL, is to understand that we can deduce :



    • each bar appearing gives information, and is compared to the previous one

    • from this comparison we get a tape that gives us a trend.

    • From this tape, we compare its trend to the prior one, on which we already did the same work.

    • From this comparison we get a signal of accelerating, fanning, breaking out or following the previous trend.

    • By combining the price path, exposed and synthesized by the tapes, zigzag, price case identifications, with the volume analysis (VTP), we can know which price segment is dominant, which is not, when is volume dominant, when it is not, when it is changing, when it is continuing.
    And this leads to : FTT = action Reverse, after FTT if FTT Reverse again, if FBO Exit, if BO Hold.





    OK, we can now go deeper.

    The main problem with the fractal concept, is that most people try to understand it as an « item ». It is not an item, it is more a pattern, a form, a shape.

    In France, we have a cheese trademark called « Vache qui rit », which could be translated by « the laughing cow ». On the box of this product, which is circular, we can see a drawing. In the foreground, we see a red head of a cow (she's the one;) ), wearing an earring on its left ear.
    In the background, we see rivers, mountains and plains. But if one looks closer in the EARRING of the cow, which is circular, we can see the exact same picture : in the foreground, the red cow head with the earring, and nature in the background.


    The ONLY difference between what appears on the cheese box, and what appears INSIDE the earring, is a LEVEL of VIEW. INSIDE the earring, we see the same but SMALLER, we can see LESS details.

    Jumping from the cheese box point of view (we see the two drawings), to the earring point of view, is the movement by which we JUMP FROM A FRACTAL TO ANOTHER ONE.

    The fractal nature of something makes this thing being composed of a certain element, that does REPEAT itself over and over at whichever fractal we observe that thing.

    Why talk about this ? Cause the tapes have a fractal nature.

    Each tape is born from the prior one, they overlap, and what is seen at whichever point of view, whichever fractal, is always the same except....concerning « the size », the amplitude, the width and length.

    Before going further, we need to use another hand drawn chart, to expose what I just explained.

    See the Nesting Fractals : First Step with geometry = here we take an XB price case, we tape it. The tape is saying « we have long trend » after bar 2 finishes to form. Then, an XR appears. This contradicts the previous trend.

    At this moment, when bar 3 forms itself, we have two different tapes. In this case, the second tape is breaking out the prior one. Could have been fanning, accelerating or following.

    And what it is possible to see, is that there's at this point a larger channel that bounds price (just when bar 3 closes), integrating the two tapes. It creates a larger tape.

    At this point a question can surge : when/where do we start nesting, when/where to stop including bars.

    We're about to enter into a problematic zone for me currently. Before coming to it and going to the 6th message, I can say that :

    There are 3 levels of fractals, in fact, 3 natures of price containers. We'll take this opportunity to fix some vocabulary.



    • when we have two tapes that are not the same, there's GEOMETRICALLY (this refers here to the price pane only) a bigger fractal. When we reach that point, where we combine two different tapes and form a bigger fractal, a slower one in fact, then is born what we call a FAST FRACTAL (FF).

    • When we have two different FAST FRACTALS, we have a TRADING FRACTAL (TF).

    • When we have two different TRADING FRACTALS we have a SLOW FRACTAL (SF).
    When we have a Slow Fractal and the 2+1 levels under it (TF, FF, Tapes), we then have everything we need.

    Nonetheless, there are rules that let us say : this is now a FF, or a TF or a SF.

    And this deals with the volume, and brings us back to the PVR.

    All the matter, I know for sure, is that from tapes, we must build fast fractals, then from them we build trading fractals, and then slow fractals.

    It's maybe time to mix some crucial concepts I exposed earlier :

    • when volume increases, the price trend is continuing

    • when volume decreases, the price trend is changing

    • the PVR is the main force that makes us see that in a given context (channel), when trend long, the long segments will be supported by increasing volume, short segments by decreasing volume and vice versa.

    • So we expect on any channel to see volume increasing in the dominant move of the given channel, and to decrease in the non dominant move.

    • So we can expect to see a volume peak at Pt2 of a channel, and trough at Pt3.




    There's a little conclusion, deduction that can surge here as for when/where declare « this is a FF/TF/SF ». In order to respect my plan, I will not discuss it here, but on my 6th message, where I'll expose what I feel that could be true, and we'll talk about it.

    All the thing is to get the rule that dictates to any two tapes/FF/TF/SF to become a FF/TF/SF. The rule in question deals with volume. As volume is the independent variable and it dictates its behavior to price, it may be obvious that to declare » this is a FF/TF/SF » or « this is not a FF/TF/SF » we must see the PVR expressing itself at the level of the given fractal.

    This leads us to understand that there are families of channels. We'll use 4 : tapes, FF, TF, SF and it is all the necessary. Plus, this ends with the fact that what can be true in a given fractal, can be totally wrong in another fractal, or they can confirm themselves.
     
    Last edited by a moderator: Apr 25, 2018
  6. WchPl

    WchPl

    5 – MADA routine

    The MADA routine deals with Monitoring Analyzing Deciding Acting…If I remember correctly. It’s the name given to the procedure, the daily routine we must insert in our life to get the AHA moment and be profitable on each and every order.


    The biggest part I know about MADA is a nice amount of knowledge that i’ll try to summarize here :

    • at each and every price bar : tape + annotate the possible nested fractal that appears + add the additional notes/points + fill the log + do the VTP + debrief = solving problems and going towards the resolution.


    This is what I know for sure. And this leads to not having any area of the puzzle in the dark, and everything gets connected, linked and… AHA !!!!!
     
  7. WchPl

    WchPl

    6 - Problems

    This is the last message of my plan. I will deal here with all that I’m currently struggling with, where I’m stuck, and overwhelmed. So, some explanations will probably not be understadable if you do not know WAY MORE of the material I provided in the first 5 messages. The reading of the litterature I gave at the beginning would be enough to begin.

    I talk here to anyone willing to engage, and above all things in this session, I’ll call for some help with where I struggle so this is mostly for people already engaged in the process and having had their AHA moment already, or people knowing for sure the answers to what I’m gonna ask about.

    It will be a list of keywords, symbolizing a partially understood area of knowledge, then i'll give examples and details to illustrate the issue.

    VTP : The Volume Test Procedure consists in filling part of the Log, the Volume columns. This procedure is the one that let us declare « here is a FF/TF/SF », among differents other things. I am stuck with it. There's something I do not get that I'll explain later with an example, that makes me unable to perform the VTP, fill correctly the cells etc. I know that it's here where resides to key of the AHA moment, and this is becoming one of the biggest struggle for me along the last 2 months.



    Nested Fractals : I read, not everyday but regularly, the Nested Fractals thread, that we can find here → https://www.elitetrader.com/et/thre...ty-is-where-the-rubber-meets-the-road.195287/
    I struggle to understand how to nest properly the fractals. So, any help here would be provided. It will maybe become clearer with the next example that will come.




    Bands : this is something I have not disscusseed yet. It refers to Volume, and the story of the OOE (Order Of Events) in terms of Volume Points. There are A bands, Bthrough K bands etc. It deals with PP !. Those are foreign concepts for me still. I don't understand what they are for, what they traduce what to use them for. To illustrate what I'm talking about, I join here the « 11 sheets », made famous by JH himself if I remember right. Any kind of help would be appreciated here.



    Failsafes : I think there's a link between Bookmarks and Failsafes. I know Failsafes refer to a point were, if crossed, then a signal surges. I don't know how to ubicate the Failsafes, nor how to use them alone or in combination with BM's.


    There also some little unkown areas, but they will probably disappear by themselves, by solving near other areas.



    I will post detailed examples, concrete questions and real charts screenshoted, soon.
     
  8. fan27

    fan27

    Jack lives on through WchPl! Nice work!!
     
  9. WchPl

    WchPl

    Thank you for the kind words Fan27. Are you engaged in the process ?
     
  10. fan27

    fan27

    I find Jack's writings/strategy interesting but it is a bit too complex for me to follow. I am a systematic trader and any strategy I trade needs to be defined in code. If you could convert Jacks's "system" to a set of rules I would be happy to code it and backtest it.
     
    #10     Apr 25, 2018