My entries are always over the hi/lo of the previous bar once the point three or rtl bounce (trade 3) seems established to me. Exits are basically a close over the rtl but are deliberately a little sloppy as thats the way they usually work out for me. If the bar is crossing the rtl at a fast pace I just bail. The entries are conservative and the exits a bit loose. You notice I did not even include volume. This is how I see the coarsest of the coarse trading, channels only, but I welcome all criticism. Any day there are decent swings it does ok. Sideways days are a pain. edit: As people in the chat room know this is not the way I actually trade. I do enter on point threes but I seldom wait for a rtl but will exit whenever I think I see a change in direction coming up. But this chart and log is the way I understand beginner COARSE trading as per Spyder should be done so if Im wrong please feel free to correct me.
Alrighty then. We have spent the last couple of weeks focusing on insuring a match exists between the Gaussians and the Channels. By always matching the correct channels to the correct Gaussian Volume Formation, a trader gains the ability to 'see' the market as never before. However, we need to place some emphasis on PRV at this point as well. Mentally calculating PRV every few seconds or so permits a trader to anticipate continuation or change by comparing the previous Bar Volume with the current anticipated Volume based on PRV calculations. Such calculations remain a critical component of analysis as Resolution Level Action Points (e.g. Forest level: Point Three and Right Side Trend Line BO). The rest of the time (i.e. Price does NOT reside at a Resolution Level Action Point), we use PRV as a learning tool in an effort to 'see' the changes taking place within the market itself, and to better understand time of change at the next lower (finer resolution) level down the rabbit hole (We learn about the Trees while sitting in a Forest). During the next week (while continuing to match Gaussian Volume formations to their correct Price Channels), we need to focus on learning (or reinforcing) how PRV plays such an important role in this methodology. Now, for educational purposes only, I want everyone to begin to calculate PRV on every bar and throughout the entire bar. The process should go something like this: "What kind of Volume do I have now? based on that number (and color), what Volume do I anticipate at close of this Bar? How does the anticipated Volume compare to the previous Bar? How does the anticipated Volume compare to my last FTT bar? How does the anticipated Volume compare to the Peak Bar in this cycle? Wash. Rinse. Repeat. Each Bar. Throughout the Entire bar. Some Things you'll begin to notice: 1. Decreasing Volume of the same color as the previous bar showing a slowing down of pace and warning of an upcoming change in market direction. 2. Flaws appearing before an FTT. 3. Changing Direction in both Price and Volume within the same Price and Volume Bars (previously referred to as FT3's in this Journal). 4. Volume starting out as a slow pace or decreasing volume, only to change gears and show faster pace or increasing volume. Volume starting out as a fast pace or increasing volume, only to change gears and show slower pace or decreasing volume. Note what happens next after these two situation develop. 5. Slowing of Pace (the rate at which volume flows into the Volume Bar) often provides a warning of upcoming change. Increased pace shows continuation. If this task becomes mentally draining, use one of the many PRV Tools posted throughout this Journal and log the observations made throughout the day. Use the debriefing time (at End of Day) to reinforce the lessons learned, and not simply as a means to critique the errors made. The above exercise should show everyone, what they already have witnessed many, many times, but for whatever reason, the brain prevented them from 'seeing' correctly: Volume always leads Price. (I'll have more proof on this when we discuss the DOM next month). For those individuals struggling to find their way with STR / SQU, I have a few items for you as well. First, STR / SQU is not an 'indicator' as those familiar with indicators understand the definition. In other words, it isn't always saying something to you, nor should anyone expect it to do so. However, at certain points in time, STR / SQU provides extremely important information. In fact, looking at STR / SQU at any other time, might show erroneous data, or worse. Right about now many are saying to themselves, "That's all well and good Spyder, but you think maybe you could give us a Hint as to when these certain times might appear?" Happy to ..... When monitoring the YM and you believe YM has reached a 'critical place' (such as during End Effects) Glance over at the STR / SQU for a few moments. What does the STR / SQU say at this point in time? When the YM approached the left trend line, also Glance over at the STR / SQU for a few moments looking for signal of change. In addition, practice the same technique when the YM approaches its right trend line. Lastly, Glance over at STR / SQU when The YM Gaussians Peak or create a Trough. As one can see by the examples above, we want to look at STR / SQU when the market approaches a 'decision point' - a place where we would expect to 'see' change take place. Sometimes, (such as during volatility expansions), we don't see the anticipated change at these points, we see continuation. At times of volatility expansion, we may not receive the expect change signal from the STR / SQU, or it might only signal a temporary one. Note how the instructions above have the trader already monitoring the YM before heading over to the STR / SQU. We already know the YM leads the ES at Points of Change. Just as we don't follow every wiggle and wart on the YM during periods of continuations on the ES, so too do we avoid monitoring STR / SQU unless YM Price approaches an area where we should anticipate change. In other words, we don't say, "The YM leads the ES on every tic." We say instead, "The YM leads the ES at Points of Change." As such, we don't think, "STR / SQU leads the YM on every tic. Rather, we think, "STR / SQU provides an early signal for change at the YM points of change. Understanding this fine distinction remains of critical importance to everyone's success. Just as a Forest Level Resolution trader has no need to stay glued to the ES on every tic (only focusing instead on Point Three's and RTL BO's), so too must the same lesson apply as we move further down the rabbit hole. We already know Channels and Gaussians have a fractal nature. The very same fractal nature applies to the lessons learned as well. Right Place. Right Data. Right Time = Right side of the market. I apologize for the lengthy post, and if anyone finds my words confusing in any way, please let me know. I am more than happy to provide additional clarification. - Spydertrader
Thank you for the informative post. Here's my first question. Are you talking here about PRV for YM or ES? I tend to pay more attention to PRV for YM so far. regards, Ivo
IF you have already learned when to watch the YM and when to watch the ES, and you consistently use PRV in an effort to 'see' what comes next in the time sequence (in other words, you already know the answers to the PRV questions presented in my previous post) then change nothing about your routine. However, if you cannot 'see' the relationship between Price and Volume on every ES bar, then use the instructions above as indicated in an effort to improve your education. Just as we now know to go over and glance at the STR / SQU during certain time periods, so too does the ES and YM share the same fractal nature of 'Time Critical' signals. Everything begins on the ES, and for continuation we need not look any further. Change, on the other hand, may signal from many sources. However, if one can learn to 'see' Pace changes in real time using ES Volume, monitoring becomes an exercise in waiting for a 'green light' to signal where to go and look next. Yes, it really is that simple. - Spydertrader
This is imo a very educative post by Jack. The more I learn the more I notice we are not looking for what's happening but we are looking for what's not happening. Like price NOT reaching LTL (FTT), smart money NOT moving, high volume NOT continuing, etc. Exactly like the water on the stone. If it cannot go one way, it has to go the other way... I wrote down my interpretation of Jack's post. Maybe it's interesting for others. About reversals Smart money is holding back as a spike begins to arrive. This is a signal of reversal over just an exit and it occurs before the bottom of the spike. So in other words: there's a strong spike and str/sq gives a signal of change. Smart money is refusing to proceed. About stalls Stalls are end of trends. Price is just moving in a range. These stalls can take some time. You can sideline if direction is not defined / not clear. Str/SQ can give different signals during the stall. Hitch A hitch is a short lived low volatility (volume) stall where the trend is resumed quickly. At first a hitch looks exactly like a stall. However, ES volume should pick up quickly. If not, we have a stall. About hitches and stalls What we are looking for is the resumption of the trend at the end of mud (stall) or hitches. Smart money goes first, so Str/Sq should give the signal. About stretch / squeeze and breakouts If cash goes first and what you are seeing is smart money not going at all there is going to be a failure to breakout. regards, Ivo
Spydertrader, Many thanks for the "lengthy post." Very informative and constructive! Is this a correct way of distinguishing between CONTINUATION and CHANGE conditions? If what you expect to happen next does not do so, the condition is CHANGE, and one monitors the finer tools. Otherwise CONTINUATION rules and stick to the ES 5 minute. On Monday I'll be focusing on PRV like never before. Esteban
Actually, the process begins a step or two before you arrive at what you expect to have happen. The process begins with the context - a channel - and understanding how Price moves within this trend in conjunction with Volume. When the data begins to change (meaning, pace slows, but has not turned around in the opposite direction), one moves to additional tools to 'see' this change take place before it fully manifests itself on the 5 minute ES Chart. Compare my YM and ES Charts (and the green channels on each) during the Final Trend of the day (Friday 05-11-2007) beginning with the 15:06 (YM) Bar. Can you see how looking at the YM during certain points in time allows the trader to 'see' what happens next with the ES? The YM forms an FTT 2 minutes before the ES (red down channel in the middle of the Green Up Channel). Yet, at other times, looking at the YM provides information which, most clearly, does not assist the trader in determining continuation or change (15:22 YM). Experience provides the best way to "know when you know," and that experience needed comes from observing how all the tools work - first as individual components, then as part of a mosaic. In such an environment, anticipation permits the trader to 'see' the right side of the market, as well as, note when the WTF's appear and anticipate their arrival. Understanding that Anticipation differs significantly from prediction (and not simply on a semantics level) and places everyone in the correct mental state. Do not fall into the trap of predicting outcome, nor allow yourself to 'need' confirmation before taking action. The market speaks quite clearly on every bar. We, as traders, need only learn how to listen. - Spydertrader
Great question. And if you did treat it as an FTT and reversed, what would you look for next? When would you know you were wrong? Take a close look at the attached snippet - see the micro-channels (tree level) within the lateral - there was no ftt long. The context: where you are in the channel and relative volume. Sequence: LTL+, FTT, retrace, R2R-BO-reversal. I was only doing commentary for the morning and so a natural end to the session was the LTL+. Hope that helps. BTW, I know full well how much more difficult this all is in real time - but I do believe looking at old charts does help cement the sequences you should be looking for.
Can someone explain what PRV is? I believe that it is actually the Gaussian formations. If this is the case, do you "calculate" PRV by measuring each bar within the Gaussian formation (and each bar's conforming to that formation) to the one preceding it to "anticipate" what is to happen next? Is PRV different that PV (price and volume)? Also, can an FTT ever occur prior to a Pt3? guava inquires