Here are some thoughts on the two pics you had in your post. The lower snip starts out well. But you pause in annotating as the dom traverse begins yet once again. Were you to draw it you would see the ftt you typed is a good one for the missing annotation on the dom traverse. A non dom follows and goes to the RTL and the Dom traverse follows again and, again you didn't annotate it. There is a lot of time and the lines are thin and still allow you to see the bars, etc. what you get if you do the dom and the non dom traverses is a good way to be able to make the two halves of the volume Gaussians fit in with the price movement on this important level of detail. (Dom increasing first half and non dom decreasing second half) As you can note in the recent ET pages, there are people on several levels of understanding. you can see that if a person not annotating price began with any level, then he could see the value of additional lines of various weights and finally lines of all needed weights and in a color scheme as well (Spyder level of exactitude). This leads to the volume Gaussian undertakings and moving up to a complete level of annotation. Rays always extending out as well. With thin traverses always in the NOW and projected past NOW. With the envelope of the traverses (as point 3 is achieved from two traverses). Both are projected into the white space. And with the halves of Gaussians making up Gaussians superimposed on the levels of the rays, a person is up-to-date and riding the current bar (he can know the probability distribution of the bar final height as well) and be doing PRV with the volume of the forming bar. The benefit is that he is ready, after a month of repetition of this, to add another layer to his ingrained belief system in his conscious and larger unconscious mind. At this point, he also has the ability to see trends run and turns be made in the period of overlap of consecutive chanels. This is a trader's dream and further it is symbolically annotated with respect to price and volume symbols. He is doing 4 to 10 trades a day using FTT, BO and FBO, pts 1, 2, and 3 and some internal formations. The whole of volume is labelld by the ray level names and the Gaussian symbols and the trasition symbols that associate with retraces becoming reversals. In effect the coarse timing of the market is understodd, annotated in advnace and is roughly tradable through the entire day. This is the foundation of the continue and change orientation of the P V relation. You must have in your annotation a thin line level of traverses or pattern there for every bar from now on. Once you have "containers" you can put FTT's in the containers on the correct level and every level of channel and traverse annotation. I didn't do the chart for you but you can do it (add the few lines) and post it so the difference may be seen and understood. I would say to others who are just at the observation level or who feel that it isn't worth much, to do it for the last week over the three day break we are having. Take blank 5 minute price and volume daily charts and construct, after the fact, illustrations of this level of monitoring, analysis, decision making and action. Fill in the symbols of price and volume. you can make up a logging sheet and fill it in as you go (about 20 pages of logs). Add trades to the logs using the three rules. For the most fun, go high stakes and trade 50 contracts doing this FTT trading. Then when you trash this approach, if you do, you will be damn sure that what you ARE trading beats this beginner skill level at 50 contracts...
Excellent example to focus on. In terms of sequences, we had peak volume ex-post (long), price continued for another bar (momentum, 2nd chances to reverse / exit long) BUT we did not see R2R, so any short following a reversal would need further confirmation or be quickly cancelled. Open question: when price is hugging the TL how do you definitively decide that although it is technically a FTT it is also continuation, using PV only?
This snip of the P, V shows a green channel and a bar bottom at the green. At that point in time the snipper stops annotating. You point out seeing the subsequent bars hugging the TL. We are approaching the half way mark on this month's focus, so we have a lot of time to get started on the January work effort still. The snip shows some green FTT's after the bar bottom first mentioned touches the green TL you refer to. We have an effort going on to get a few things straight so we have a foundation that can be used to build upon. The missing annotation of the dom traverse coming off the green line where increasing volume forms the first half of a B R Gaussian is a helful annotation to put in because it then gives a container for a dom traverse ftt if one occurs before the dom traverse goes to the RTL of the green channel. Looking at this from a "trader who is making money point of view" there are a series of decisions being made for several routines (MADA) that yield a "hold" orientation over and over as money is being made. The ftt (this is lower case and black and NOT green and in upper case) in the missing dom traverse is the place where the routine yields a decision, perhaps, that is different from hold and ,perhaps, not. at this time the volume is helpful to consider because it indicates that the price is now in non dom and moving back to the green TL. This calls for a retrace (non dom ) price annotation. The volatility as seen by the rays is stready and the bar overlap is almost maxed out. We are far from falling off the edge of the earth. For making money purposes there is not a great deal of opportunity it seems, relative to our normal money making efforts of the day. Next a bar hits the green TL and another dom traverse begins (again not annotated). wee it annotated another FTT would be typed in at the end of the rune of the dom traverse. We have been MADA'ing and getting hold as the decision and we have collected some more ticks over several bars. This is our life during these times. Again we do a non dom annotated retrace on declining volume. Had we done the two prior doms, we would be "in the mood" as the song goes when the bar comes to the green TL. This situation was the cause of the mention of the snip because this snip is different than the bearbelly snip after two such prior dom and non dom excursions. As the future moves into the present, the green TL has a higher and higher value. The forming bar begins red and is red as the volume declines more and more, all relative to the prior bar. That is the PRV of the volume is losing ground as comapred to what it has to do to exceed the prior bar. This is mental FIREWORKS!!!!!! for some people who are used to doing full annotations of traverses and putting symbols on their charts. As yet in the first half of January, the month given to getting this straight, we are still doing some coaching on how it works. MAK has, howevr, posted some bar after bar narratives andbearbelly has stated that he is no longer not busy as each bar is forming. We need to get to being busy and doing the annotations on price and volume and logging what is going on on a log. It is important because of one reason. You are in the market and have 50 contracts running and it is October, 2007. If you have 1 contract running now and you are doing the work and using the three rules, then in October you will have a different set of responsibilities and a different wardrobe and you will have shaken my hand several times by then. We are coming to a place where we see the two ships are different and not like each other after all. The fireworks begin to go off because we are typing B and O next to the green line as volume falls and we are looking for volume to increase and some things to be happening subsequently. You also have the non dom annotated and are looking at this in-the green-channel lateral non dom walk out of the green channel as you are in the market. A two tick bar occurs on a given volume. All of this work is preparing us to be very effective and efficient. We will be able to see and understand at all times the load the market can bear (in contracts); we will be carving turns right on the mark. January gives us the ability to define the boundaries of the market (annotating channels and traverses) and simultaneously determine how wide open the pipeline valve is. We are working on continuing to hold mostly and, occasionallly we are dealing with "change" What is very neat about this is that both are not done at the same time nor are they both in question at the same time. When you are looking at things from a view of "hold", then you are examining where you are in the container. Is the place in the container suitable. All containers are biased to long or short. The part of the container that is of concern is getting across it to more profits. We are proceeding to hold to cross the container to the place of best profitability. It is twilight, camp is set the fire is coals and cooking is done. Oh a grizzly steps into the Yukon river 12oo feet across the river and up stream. he slips across to the sand strand and meanders up strem along tthe strand and into the spine of gravel further up stream and more towards the middle..... the deeper he gets in the water alone the spine the more it bends into the current. As he starts swimming he still goes further up stream until he turns, head high and makes his way into the main 8 mph current of the glacial melt. I kneel down to be sure the grass I am uprouting is green and damp and the roots are full....... Ah, a ringelman one puffs upward through the black fir killing the smell I know he senses..... I check my holster and feel for reloads in my right lower pocket and pull some more grass. He only has 200 feet to cross in the diminishing current as he passes abreast of camp looking straight into our eyes..... So 4 body lengths apart is where we do the stand off as he waters the path and the smoke drifts into his jowls in the moonlight. Smoke wouldn't taste good anyways.... he moves off ........ Its going to freeze soon better get to bed.... still 200 miles to Dawson going north. If the price keeps moving across the container, we go with it, if it doen't we take evasive action to lock in profits at FTT and then go to the BO and hold through the BO. The lateral non dom becomes the cotainer of the CCC. The idea is to know whats going on all the time by annotating and doing MADA........ At the end of January our skills and knowledge will give us a new adventure with more depth and understanding.
Jack, Yep, you're right. I'm normally fairly mechanical about drawing in the tapes, etc. This particular AM I guess I was so relaxed due to the strong uptrend, maybe too relaxed . I need to improve annotating the BO's and FBO's as well. I'm getting better/faster at annotating but keeping up in real-time takes consistent effort, as you know. So, thanks for pointing this out. I went back and updated my chart. I've attached another snippet below, hopefully closer to completion. Hopefully, any future snippets form me will be at least at this detail. Thanks, spooz <IMG SRC=http://www.elitetrader.com/vb/attachment.php?s=&postid=1325786>
Jack thanks for the detailed response. I've further snipped the snippet and have a question about the 4th bar shown. This is a ftt and PRV is declining. The bar closes at its high and higher than the previous bar, which may be significant. BUT I could easily undertand a decision to reverse here, at bar 4. Then you are in a pickle because the next bar has increasing PRV and price is continuing up. You think you've made a mistake and reverse, probably printing the spike at the true FTT (maybe that is what happened). You're doing everything right but you still get whipped occasionally. My question is how do you judge to hold to bar 5 or if you reversed at bar 4 to be cool and wait and see what happens to bar 5 before acting? I've noted before that a FTT despite higher volume is more significant than a FTT on lower volume (when it is probably just an earlier bar in the gaussian formation). Is this it? EDIT: under the rules this would be an FBO and you would exit, hopefully for a wash, then you'd get back in on the FTT at bar 5.
See Jokari Window. Actually, it isn't an FTT. What we see here is a type of Flaw known as a 'Stall' based on Price and Volume. However, in real time, you may have thought Price was forming an FTT. At the time you would have made your decision, Volume would have been red. However, Red Volume and significantly lower Volume levels (based on a PRV basis and compared to the previous bar) normally indicate a 'Hitch' - another type of flaw. Either way, the correct action during flaws (at this point of our learning curve) requires a trader to hold. On Bar 4, Price opens lower from where it closed on Bar 3. Even if you had believed you were in an FTT situation, when price started to head higher (as Volume turned from Red to Black), you could no longer make the argument for a short position, and you'd realize you'd need to get back long. While you cannot know at the point of reverse whether or not price will go from Stall to HVS or on to the next FTT, what you do no for sure is that you did not have an FTT on Bar 3. Of course, the above explanation assumes you had no other tools at your disposal besides the ES Price and Volume. - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1325891>
I've seen the flaw annotations on your charts, but haven't found much material about how to identify them. If these are part of the PV relationship we are covering in January, please direct me to where I can learn the details of these? (Like your last post - a great help.) It's not clear to me from the syllabus whether flaws are topical now or are being postponed until later. But I'd sure like to know more about them.
The attached chart shows how illusory raw volume can be when compared to volume normalized by total price movement within the bar (the green histogram). This is one of many reasons why I argue that volume is irrelevant, that price leads volume, and that the alleged PV relation is fraudulent. My apologies to Magna for the intrusion. You may keep the indicator with my compliments. Since it is volume-derived, it's worthless, too. FWIW, the simple trend following rules in the helper pane show that Friday you could have saved yourself a lot of SCT work by just going long all day.
"volume normalized by total price movement within the bar" Elder's Force Index is an alternative view of the price/volume relationship. It is something like: Force Index = PriceChangeOverInterval / volume It draws a histogram, centered around zero. For an interval, he may use the close of the current bar minus the close of the previous bar, but it could be done other ways. What he is attempting to visualize is the force or "wallop" of volume. In thinking about it I realized that when there is no price change during an interval, then that interval is irrelevant, because Force Index is zero in that case, not to mention that price didn't change.