this has been great doing the drills so far. my understanding of the process so far is: 1- we have the 10 price cases and the only ones that make money are the translations(XB,XR). if we have an internal case we need to merge it to a single bar using the high,low,open,close of all the bars in that internal formation, 2- we identify the leg 2 of the forming single bar to determine sentiment and dominance. 3- we combine all the same (color)leg 2 bars to form a profit segment. geometrically this could be done with a trendline(under price for long and above price for short) 4-A- we further combine this process with volume(the independent variable) to determine if that profit segment is in a longer term dominat or non-dominant cycle.(i would assume increasing vol would mean dom and decreasing would mean non-dom) however we haven't talked about volume much yet. B- there was also a mention of when to measure volume in conjunction with the price cases.i assume we measure on translations and not on internals(or combine internals into translations so we can measure) but again i am just speculating. if the foundation is to be laid out without guessing but as pure data analysis it needs to be solid and i'm afaraid i'm a bit behind on 2 things :what actually constitutes a leg 2 of a single bar.(pic attached) and how to best combine internals into a single bar to determine leg 2.(what to do with laterals:do we combine individual bars inside it or all of it into one, what to do with outside bars when they are bigger than both the bar before them and the 2 or 3 translations prior, what to do with stitches if they go, sym-stitch etc...) i'll try to attach a pic to further clarify... thank you very much
Hi everyone; I have read all of your posts. So I will comment to each of you and then I will select various work products and express the consensus the group has gained. Drill 1 through 4 are in the bag for most. There is still a little mystery about the three legs of a bar. Do the following mentally. look at a few hundred bars notice each fits into a given call of the 5X5. By looking at many many bars, you can onclude that you know all the variations. Also notice the two main techniques used to methodincally construct the two types of 5x5's. One shows a vertical orientation to shaps and change in shapes and the other shows a horizontal orientation. Completing a 5x5 by using a method other than random is a deductive reasoning process. A. Lo of MIT has not done this as yet. Why? He is oriented to inductive processes and this has "trapped" him and his staff. The horizontal orientation is the easiest now for learning to make money. complete bar,when formed, can always have three legs. BUT it is not necessaryfor all bars to have three legs. It is only necessary for a bar to have on unnilateral element and that element is the dominant leg. Leg 2 is the domint leg and either leg 1 and leg 3 can be missing. Both are always non dominant legs. Now that this matter is becoming more clear reread the role I described that appalies to the Doji which came into being 400 years ago . 5-1 relates to volum; , 5-2 and 5-3 deal with trends as price characteristics. The make a universal market cycle pattern, we have to merge price and volume Orders of events. We look at the simplest container mentioned for a trend: a parallelogram. In it, price moves from point 1 to point 2 to point 3 and, in the simplest case, price moves to the end of the trend. This is a minimum of three moves and a maximum of an odd number of moves in a container set by three points. For one trend, price hase three moves between four points and volume has four elements where two are moves and two are points. Points just take a moment and are extremes Moves involve durations and durations contain bars. The above information is sufficient to merger price and volume into a cyclic pattern of two complete opposite trends. to best consider this problem we reason using a characteristic of price called sentiment. As a trend makes more money the price moves which do the are called dominat moves and they move with the sentiment of the trend. As you read we are letting all the pieces fall into place. Moves against the dominant sentiment (non dominant moves) in trends are called retraces and reversals. In all trends dominant moves go from left to right. This is forward movment in a trend. Non dominant moves are from right to left. This is a backward movement in a trend. Those familiar with "Scoring" of trends already know the ratios of frquencies of the three variables in scoring . This aspect is first deduced in developing and designing the universal pattern of trends. To put all these pieces together the best place to start is with the relationship of volume and price moves. Once this is explored and resolved then the solution become immenant. Pairing dominance in price with increasing bars in volume. is half the pairing. The other half is pairing non dominance with decreasing volume. Read the above a few times and stch in some parts of a trend. then put two opposite trends next to each other and construct the pattern the same way a civilengineer would sketch in a bridge (cycle of trading). It is very importance to do the discovery work yourself.
The next few drills will deal with both the system of operation of markets and the tradr's routine From post 1 you see that a routine is required for doing trades on a trading platform. Drill 6 Drill 6 is to define for yourself the four elements of How time is spent during Regular Trading Hours (RTH). The most common approach is OODA as designed and described by John Boyd. Boyd, as a fighter pilot trainer, wanted his fighter pilots to survive the bets they placed in dogfighting. CW traders do the same when they bet to trade in markets. As has been seen so far, there are many other trading approaches that work. Ours Monitors information first. Doing this invloves annotating. Annotated information is then analyzed. Another way to say this is to see the results of an ATS display on the screen. An ATS takes in information , processes it through a software program and then the program highlights the display to provide a complete status report for sensing. So after monitoring there is "Analysis". Our complete system always provides the status and context bar by bar. This means the user always "knows that he knows." The D and A. of MADA are done on the trading platform. For Drill 6 write a report on how time is spent as you do work during RTH's. we will iteratively refine this report as you learn more You will also want to take advantage of others insights. Drill 7 Drill 7 is a mechanical explantion of how you use the trading platform information to trade in a timely manner. The D and A of the right side of MADA are your concern. For Drill 7 write a report that lists the step by step procedure for the four aspects of managing a trading platform: Setting it up See illustration 1 attached hereto and made a part hereof. Drill 7-1 Pre open opening and setting up the trading platform Drill 7-2 Entering the market Drill 7-3 Holding during a profit segement Drill 7- 4 Reversing during RTH's to take a profit segment. Drill 7-5 Sidelining during RTH's. Drill 7-6 Exiting for the day. Drill 7-7 Debriefing the day's trading. Drill 7-8 defining the carry over for next day's open. Make all the trading platform explanation steo by step lists.
For Drill 8 you will be writing a contract between you and the market. It is a partnership agreement. It will contain several parts and the sub parts of drill 8 call these out. Drill 8 -1 The boiler plate scope and bounds and who is in the partnership. Drill 8 - 2 Duties of the Market Drill 8- 3 Duties of the Trader. Drill 8-4 The consequences of either party infringing upon the other parties duties. Drill 8- 5 The consequences of errors and omissions of either party. Drill 8-6 The Capital manangement routine by the Trader. Drill 8-7 Termination or violation and/or modification of the contract. Partnerships have pitfalls and it is good to takes care of the downside before embarking. writing the contract clarifies in explicit ways just what is what. Read your IB agreement to make sure your partnership has no contradictions.
Lets return to drill 5 and its sub tasks. Thanks to River for correcting my in acuurate statements that tie dominace and market direction together. It is difficult to have any original thoughts as most people find out. We have determined that the granularity of the markets is a huge stepping stone for having a fully complete system of how the market operates. Now we are reducing the market to all of the elements contained in the market system of operation. We have mentioned who othe main contributors of theorems and rule sts of other systems to be enjoined. The main men are: Keynes, Carnap, Boole, and Mandelbrot. They may all be dead by now. They created the original ideas we need. So far we are discivering parts and "The Pattern" of drilll 5 will go along ways towards formulating the systems contents in speficic invariant terms. All pieces are defined by unique mathematical expressions. The pieces fit into Orders Of Events (OOE's.) The variables of the market are defined as independent and dependent variables. All proofs of the system of operation of the markets must be deduced and induction does NOT work. The market is NEVER wrong. meaning the market is always correct. A partnership under this circum stance REQUIRES that the TRADER DOES NOT USURP ANY OF THE DUTIES OF THE MARKET. So let us go through building the pattern logically and deductively. Lets work on the middle of the trend between the two ends. 1, Focus on price moving from point 2 to point 3. Add to this the volume decreasing set of bars. You get this deduction by reasoning that the non dominant move requires less and less participation to be NOT making any forward trend progress. 2. Conclude that point 2 of price is a peak point of volume It is from this peak that volume is declining. It is not the initial peak since the trend has been under way since point 1 of price. 3. Tentatively conclude that we can name the volume peak peak 2 and give it an ID of P2. 4. At the end of volume's decrease price comes to a trough. By reasoning we find this is in an order of events.. If P2 comes before this trough, we could name the trough, T2. 5. On the price display we have gone in a nondominant manner across from left to right. We also arrive at a volume trough named T2. This price place is labelled point 3. On charts they are vertically aligned on separate display panes. 6. This is defined as a retrace. To express the retrace specificaly and uniquely is NOT difficult. When you can do this, then you NEVER confuse a retrace with a reversal. We have looked at a part of the middle of a trend. All that is left to ddo is go through the remaing parts and explain how price and volume relate. I have made the first connection and now four items in two pairs are explicitly defined. Soon All the volume independent variable terms will be presnt for everyone to use. By ding this work assignment you will come to know volume leads price. Thiss is deduced once you have assigned the P and V the correct mathematical variable classification.
Hi Jack, I just discovered this thread ... thank you for taking the time to show us the way! Hopefully I'll be able to catch-up. When studying historical charts, the "2nd leg" orientation can always be clarified by looking at a lower timeframe chart, like a 1min ; is this something you recommend doing, at least for Doji bars (for non-Doji bars, the Open to Close direction has a higher probability, but there are of course bars which 2nd leg is opposite to the Open to Close direction) ? Best regards, Dominique
Do the 4ticks bar drill and get a 5x5 matrix with all the possibilities. You will find all Doji bars are on one diagonal of the 5x5 matrix, and the Doji bars are the farthest bars away from the two bars on the endpoints of the other diagonal of the matrix. The two bars both have only one leg, one unilateral part, it's leg 2. No leg 1 and no leg 3 are strong signals the price segment in the trend is CONTINUING. So the more the bars are away from the two bars, the more the bars signal the price segment in the trend is CHANGING. So the more the bars are away from the diagonal where Doji bars lie on ,the more the bars signal the price segment in the trend is CONTINUING. So it's not very important to know the direction of Doji bars, but more important to see bars before Doji bars and be ready to take timely action. sometimes I see Doji in the middle of a price segment in a trend, sometimes i see Doji before BO of the right trend line. sometimes I see Doji near point 2. sometimes I see Doji near point 3. sometimes I see Doji is the last rush to the left trendline.