I encourage you to "forget what you think you know" for the time being. I do not intend the statement to be taken in an argumentative tone. I realize you disagree with the assumption that volume leads price, but the answer to your question (at this stage of the learning process) is volume. At other stages of the learning process the answer is Volume and another tool alert the trader to what is and what is not an FTT. There are no errors with an FTT signal. However, You appear to be operating under the assumption that FTT's sometimes present themselves outside the basic rule set: 1. FTT to FTT (reverse) 2. FTT to FBO (exit) 3. FTT to BO (hold) Understand please what I mean to say: 100% of the time an FTT results in one of three end effects: 1. Another FTT 2. An FBO 3. A BO Read the above again. 100% of the time. This is the fundamental basis for the entire methodology. I fully realize how posting such a statement flies in the face of all things known to be true based on trading probability and statistics. I completely understand the almost visceral response generated by uttering the above phrase. I have no intention of debating the often religious truisms which exist in an environment of a trader's mindset. One could (in hindsight) take a chart, find all the FTT's, and 100% of the time, locate the appropriate trade and profit potential based on the above rule set. However, doing so serves no purpose to the trader. Since I know of no brokerage company which owns a Time Machine, we can at least agree that one cannot trade in hindsight, nor can a trader profit from hindsight. The goal then becomes, how quickly can one identify and properly react to an FTT. What input parameters does one use to correctly identify the FTT, or as the case may be, identify when a trader has made an error in identifying an FTT. Right now, we use 2 tools to identify the FTT - ES Price and Volume. Using only these two tools will result in (real time) misidentification. Having errors of misidentification at this point is not a bad thing. It simply means one of two things: 1. A trader has not yet learned to correctly spot an FTT, or 2. A trader needs another tool to spot the FTT faster As we add more tools (and gain confidence in their usage) the flaws become easier to distinguish from an actual FTT. Unlike past attempts at transference, I plan to keep this Journal on pace at specific steps in the process (outlined in the Syllabus). While each individual trader is welcome to jump ahead on their own (one is always welcome to review Jack's library of work), I do not plan to 'skip around' and risk adding additional confusion to the thread. While I apologize for such a lengthy answer to your question, I encourage you to view this post in a positive light. I'm not asking anyone to join a cult, convert to a religion or drink gallons of grape Kool-Aid. I do expect anyone reading to entertain the possibility that what I have shared contains merit. Good trading to you all. - Spydertrader
I have what is probably a fairly basic question. My ability to spot FTTs in hindsight and draw channels is progressing nicely. What needs a lot of work though is spotting them real-time. For example, in the attached picture, as you are trading how do you know that bars "a" and "b" are not FTTs? How many bars after the proposed FTT do you know for sure that it was actually an FTT? When exactly do you pull the trigger as you are trading these FTTs? I feel as if I'm not sure a given bar was an FTT until five or six bars later.
Lets assume, in real time, a trader did identify that bar as an FTT. What happened next? We see an FBO. What do we do as beginner traders on an FBO? We exit, and wait for another FTT. A few bars later we get one, and we are back on the right side of the market. - Spydertrader
You beat me to it... I could probably fill in the other half of the chart thats missing... A LA VOLUME!!!
Spydertrader. Again, thank you for your thorough answer. I shall be quiet and await the revelation of the ruling role of volume. But for the sake of completeness, I will point out a fourth immediate outcome of an FTT, not all that uncommon: a consolidation, often unbearably long. But that of course always leads to two of your outcomes: BO and FBO. In NQ we have another outcome, which in your terminology you might call an FFBO. You are indeed a brave man to undertake this explication. One trusts that Nwbprop is watching. Mike.
Oh, hell, the suspense is killing me. Would we have called an FTT Friday morning at bar 5, 6 or 7? Clearly a trick question given the volume pattern, haha! And regardless of your answer, it makes my point that a better entry (in this case bar 9) often follows an FTT. (I wish Jack had been born later so he would use candlesticks - so much clearer.)