First, thanks to all that have contributed to the journal. I especially appreciate cnms2's nov1 &2 charts. Please keep them coming. I have a question which I have been confused for so long and finally taking the courage to ask. Also, with some computer problems, I lost all my kept data on volume gaussians. So here goes. when one draw volume gaussians, is it connecting the peak volume to the trough volume and vice versa? Quite a few times the peak volume is not the highest/lowest price bar. Thanks
cnms2, In realtime, why wouldn't you see the 12:00 bar as an ftt on decreasing volume? And wouldn't the increasing green volume at 13:35, following decreasing red, also be a change signal? tia
OK. Volume gaussians always make sense in hindsight - right? (If not, do some work here first on old charts.) So in real time the gaussians are messy - they are forming and often do not make sense until later - AHA. One big volume bar is often all it takes to complete the picture. But the trick is you can still anticipate what gaussian (BR or RB) is forming and with price action, channels, tapes and/or formations and PRV be in a very comfortable place where you know what must come next. In other words you are long and anticipating increasing black PRV. Here it is - HOLD.
This is a link to all the material that Pr0crast has on his sct universe file browser. There are some really good videos that were created by the Tucson group here. You can find under videos /meetup there are quite a few here, especially January 26,2007. This group covered some great material with Jack Hershey on camtasia during these days. Thanks to the feedback on pm's I received regarding this material and Pr0crast for the go ahead on his link. Pr0crast's sct universe file browser link: http://pr0crast.com/ajaxfb/
Yes. On a finer fractal than the others. Not all volume decreases or increases can be treated the same. It depends where/when they happen, and also how they fit in the bigger picture. When you prematurely or incorrectly reverse, once you realize it you reverse again and stay on the right side of the market. This might cost you a little. EDIT: Look at the slope of the LTLs of those retraces. I didn't draw their RTLs on my chart.
Draw the gaussians how they make sense to you. They're a visual aid to identify the market sentiment. In my opinion there are now hard rules how to draw them and how to interpret them, and small differences between yours and Spydertrader's shouldn't be that important as long as they reflect your view, and work well for you. Gaussians shouldn't be drawn mechanically and expect them to give us mechanical signals. This is one of the reasons for which you can't automate these methods, this is one reason for which looking over somebody else's shoulder is not enough for you to get it. Quite often it happens to me to re-read some of Jack's, Spydertrader's or others' posts and to understand now in a different light what they wrote. My mindset now is different than one month ago, or whenever I read those posts for the first time. What I'm writing here might not make sense now, but might make more sense later. As an example: there's no other knowledge or rule that I'm using in my trading beyond what I've already posted lately on this thread. Also, if you read some of my older posts, they might contradict some of my more recent ones, as I learned more and I understood things differently. I'm sure I still have a lot to learn on this journey, and I still expect to have many aha's. This is not only fun but very rewarding ...
I draw my gaussians so that their colors reflect the relative price action, and their slopes the relative volume action. I draw gaussians on the finest fractal I see on my chart, or almost the finest. I also draw a higher fractal gaussians kind of matching my trading fractal. They usually connect extreme price points (best trading points). In the most cases the two slopes of each gaussian are of a different color, to show which is the dominant sentiment at that moment. When the lines I draw don't exactly show this, I still integrate them in mind over a few bars, to have a dominant sentiment.