I see the second and third short as errors, but not the first and fourth. The longs were betting on speed when the environment was signalling channeling trend. I also missed the initial break from the hinge. So the first two longs were in non man's land of both poor price and info risk. I recognized the weakness upon the sharp drop to 3497 and the compression that followed, but had shifted to passive mode due to the compounding of errors. I am assuming by clean move you are referring to the down move. While price did rocket off the 79 PM level during the open, it compressed after that and there was no free and clear trend move until the weakness resulting in the drop back to the 79 level. Unless you are calling the up channel a clean move? Yes, I would be interested in your suggestion regarding channels. The PA environment I find most difficult to trade is a channeling trend. Your thoughts and suggestions on it would be welcome.
By clean move, I was referring to the continuous long sentiment from the open to 11 AM. All short legs were quick FBO's. Price was pretty much only heading in one direction, up. At least, on the 5m fractal that I posted. You seem to be trading on the sub-fractal of the 5m, which I think would be better to just hold through the non-dominant ones at this point in time, but we can break those moves down into each leg in order to discuss them. We can discard Shorts #2 and #3 since they were errors, and #1 as well since we use different information to trade the open. A down-trend just completed at the close yesterday, and shorting into a new up-trend during high volume is akin to stepping in front of a truck to me. However, you dropped it quick so no harm done. Regarding Short #4 and Long #1 and #2. I'll show you what it looks like using channels, although doing this without volume is like eating a meal with one's hands tied behind his back. Channels are made up of three points [P1, P2, P3]. They either fail or the pace accelerates on the next point. Your longs were taken out in the middle of nowhere, like you said. If you're trading the legs of a 5m channel, take them close to the rtl. If you're trading the dominant sentiment of the 5m fractal, I guess better late than never, and hold until weakness confirmed. The first channel is blue long. P1 is actually from yesterday, but it's accelerated on Bar 1 of the open. You correctly note that there is an ftt around ~9:50, failure to maintain pace. If you're going to take the following short, at least do it at the ftt, and reverse/exit if it turns out to be an FBO [single leg trend]. If you're uneasy taking it that early, just wait until a confirmed p3 forms. You can use the rtl to manage your trade. So the down sentiment ends with FBO, it's a single leg so it doesn't have a channel on the 5m. Light blue up-trend #2 begins. This time it doesn't fail, it accelerates into green, so we move all our points forward. p3 is used as a point one, the VE is used as p2. Accelerated channel fails 10:05, very short red down channel occurs, then lime green up channel. You're long at point two right on the left trend-line again for Long #3. After that you lose focus, so we can stick with this for now. The sub-fractal ftt's form the trading fractal channel, which illustrates the dominant sentiment. As you can see, it's FTT signals the dominant sentiment shift to short many minutes before the sharp drop at 11:15. Attached is a visual. The closed mind may see this as gibberish, overly complicated, or unnecessary. Unfortunately they will never know exactly what price is doing at all times. Perhaps they will label periods where they don't understand how to perceive the sentiment as 'chop', or maybe blame HFT's for making day-trading impossible for them.
You are right about the potential for taking the 4th short a little earlier. My thesis was based on the Failure of Hinge BO to continue and an earlier short through SAR after the DT (on the 1 min at 0848) would have kept price risk low, while keeping information risk about the same. I understand the opening sequence leading from the surge off OL to break from hinge and stall at PM R. I understand the weakness from 1007 to 1015 preceding the cascade. We are using different vocabulary, but the conclusions are by and large the same (opening short notwithstanding). I see that your method offers you consistency, since it is extremely rule based. Mine relies more on the quality of my judgment from moment to moment, thus being susceptible to inconsistency while offering more freedom. Do you believe this is an accurate assessment? Would it be possible to show how you traded this? This will help me to see whether there are indeed any trade-offs between what I am attempting and what you are suggesting. Or perhaps I will find out that your approach is better on all counts. Thanks for the detailed post outlining the channels. I had a few technical questions regarding definitions, but I wanted to first take a step back and start off from the big picture.
I sketched in my trades during the sequence in question on the ES. I would say that your observation is accurate in that yours decisions are more discretionary. I believe after a certain point the mind stores information about the market operation into the subconscious if it's learning process is not hindered or obstructed by false beliefs. I use the algebraic system detailed in my thread, and one of my peers uses channels and volume gaussians to annotate the entire day. We've compared charts, and we have almost the exact same turns and sentiment shifts recorded. So, I definitely think that the market has a set system of operation, and there is more than one way to understand it. After a certain point if one builds a decent enough framework and puts in the time to learn from the market itself, it starts to become almost second nature to see how it's moving. The way I trade is definitely quite explicit, but there is a lot of room for finesse that I am still learning and developing, such as which fractal to trade, which series of turns to pass on taking due to subtle details, etc. If I could go back, I probably would have either went flat at 9:55 - 10:00 or held the initial long during the low vol bar sitting on top of a relevant turning point until after the market made up its mind, instead of paying the spread a few times to stay on the right side of the market during the ambiguity. Next time I'll do differently.
What you are showing me as your trades is staggering in terms of how much of the move you are being able to capture. There is no comparison between what I am attempting and what you are doing. We are not talking about just a little better, but rather, orders of magnitude better. How?
The thread I created with jack details a lot of this. The premise is that the system of market operation can be fully known. A brief synopsis of the theory is written about on the first page. In short, all market variables are granular, and one determines the other. All the work in defining the specifics has already been carried out. I am willing to discuss concepts and compare ideas here and there, but I am afraid I do not currently have the time or the energy to do another teaching iteration yet at this time. Feel free to browse the old material if your interest is piqued. It really isn't rocket science, it just takes a large amount of work to store all of the relevant information in the mind.
Heroic, you should post your NQ calls etc in Niko's NQ chatroom: http://stinto.net/en/chat.htm?refId=rnylr# I've only been in there once, but i'd like to watch you in action.
I wouldn't be averse to providing calls sometime, except I don't know if that would be the place because I trade ES. If you would like to see some turns pointed out during the action, sometimes workwithus provides them in his thread. Don't want to clutter up game's thread, or get too focused on providing calls, which are interesting sometimes, but not really useful for anyone other than the trader imo, because all trades require management. Open is dominant short today, will reverse long at 4-5 ticks, maybe sooner depending on how the DOM looks above the opening price if sentiment changes. --- http://www.elitetrader.com/vb/showthread.php?p=3934701&posted=1#post3934701 Edit: Double price turn occurred at bar 1. Didn't bother trying to carve it both ways, short at 1773.75 for first trade. Long 74.25, price above turning point I mentioned during the open. -0.5 first trade. Short 74.5, back to wash. Long 75.25. Been a grind so far. Hopefully we'll see some volatility finally for this long leg.
Window for editing posts is passed, I'll stop here. I think this has been a good demonstration of my current skill set. Not yet adept enough at carving intra-bar turns to profit while staying on the right side of the market. All of the runs are captured, which more than make up for the washes during indecisive times, but I think this has been a good demonstration of the method I use so people know what they're getting into if they want to look into it further. It's not all magical reversals right at the exact tops and bottoms of swing points, although sometimes that is how things work out. Last Edit: Previous long was held until 76.5, for closure's sake.
Don't want to clutter up the thread, but wanted to point out 10:30 to 10:45. This is the first completed sub-fractal trend of the day that I've recorded. The RDBMS uses two fail-safes, which take care of late reversals based off sentiment changes which happen on a fractal smaller than the one being observed, with either extremely minimal losses or slight profits. All of the trades I posted this morning were fail-safe trades, as trends kept fizzling out before going anywhere. The real meat of the method is capturing completed trends on the trading fractal. We had one starting at 73.5 and completing at 78.25. One of these pays for dozens of fail-safe reversals, and this was only a three bar trend. The short from 76.5 to 73.5 was a decent run as well; which had a trend intact for four bars until triggering a fail-safe. Looks like right now [11:10 EST], we're having a lateral with sub-fractal sentiment of long at the moment. Usually the falling volume all throughout the morning would signal some nice trends as it picks back up, but with the FOMC it's likely that volume will remain is dry-up for an abnormal amount of time in anticipation of the statement.