Your bars 1-4 is your Pts 1 & Pts 2. It seams as though you channeled the TRAVERSE leg of the channel but didn't expect the retrace from the Pt2 that was established on bar 4. I say established because I am cheating and using the V below it so I will ignore it for now. 5, 6, then 7 establishes your Pt 3 and retrace is over. I know this on the next bar (8) cuz I "cheated" again. Otherwise, it is the context that wraps FTT/FBO/BO (ie. Pt1, Pt2, Pt3 "channels"). In other words, I would have not seen any FTT until bar 7 (given 8) or bar 9 (given 10). Spy may have seen it differently and perhaps it is better for him to answer since you did not ask me... HTH MAK! <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1310726>
Consolidation (another flaw), or as Jack terms it CCC, occurs between one FTT and the three End Effects metioned previously. Beginning traders also hold through this flaw - as all the other flaws. Had you followed the advice given below .... Eventually, you would have arrived at this chart. For whatever reason, you have chosen not to do so. What you point out as an FTT - isn't. It's an HVS (High Volatility Stall). In yet another example, you have failed to recognize the appropriate signal. Since an HVS isn't an FTT, your assertion that a better entry exists beyond an FTT clearly has shown to be false. That is the way I saw it at the time (based on my chart). However, how I see it represents a far less important point of view. How a trader sees the data input in real time makes for how that same trader reacts to the appropriate decision making. At the beginner stages, a trader holds through an HVS. At intermediate and advanced stages, a trader trades through an HVS - entering and reversing based on the signals given via tools not yet brought into the discussion. For the sake of this discussion, let's assume you did think the HVS was an FTT (bar 5 or 6 [you pick]). The very next bar (seven) provides another FTT (in the opposite direction). Since an FTT followed by another FTT calls for a reverse, the trader who mistakenly identified the HVS as an FTT, would then be back on the right side of the market - after profiting from their misidentification. As you see, mistakes not only cause the brain to begin to train itself, but as long as the rule set is followed, can often turn out profitable. As a result, misidentification of FTT's presents far less of a problem, than training oneself to take timely action once a misidentification reveals itself. With all due respect to your trading expertise and tenure, I suggest a better use of your time might be to educate yourself with a review of my FTT posts (beginning with the link 2 paragraphs above), rather than, continually attempting to disprove the threads assertion under the guise of "clarification questions." Feel free to chose whichever direction you feel best meets your own needs. - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1310733>
Pr0crast, FWIW, just to expand a bit on the channel that Spyder drew for you... Assuming bar 1 is the first bar in your chart snippet, I added a (long) traverse and a (short) tape (that "morphed" into a traverse). After 8 bars, Spyder's pink channel emerged. So, the pink channel was created from a dominant followed by a non-dominant traverse. See attached snippet... <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1310768> Also note the traverse 'ftt's' (lower-case) emerge in the short-term channels as well. I'm starting to annotate FTT's in short-term channels like these using lower case to make them pop a bit from the medium and longer-term channels. Hope this helps... spooz
Thank you - and thank you for starting this journal. I wish each a prosperous and enjoyable New Year!
This is a key post. I always had a lot of confusion with the FBOs. This is why - on this chart, looking at the orange channel, the 1st FBO I would normally see as just a steepening of the downtrend (though slightly in this case) or a new #3 point. But if you look at it from the point of view of "what comes after a FTT" or "what to expect next" the whole progression starts to make sense. After a FTT we have a FBO, so a new trend didn't start. The downtrend continues, though not very far. After the FBO there is another FTT. So a FBO or a BO should be coming up. While this happens several times here, the anticipation of what comes next finally sunk in and helped clarify things for me. Thanks Spydertrader, EZ
and where/when exactly on your example here should/would the beginner trader have first exited and then reentered on those 5 min bars? i suppose you mean that the next entry would have been at bar 11 of your example - right? but when/where at this bar exactly - if he only has price and trendlines? at the top of that bar would surely be great, but... and before that - how does a trader (or even a new trader) know, that bar 9 is actually a "FBO" - you only that after the next bar (no. 10) turns back above the line? thanks a lot.
Mak Could you please explain how you identified bar 4 as point 2 in the above example. Bar 4 volume was over bar 3 and bar 5 volume was larger than bar 4. I can understand bar 5 becoming a point 2 when bar 6 fails to go higher on lower volume. What am I missing here?
Here is the Friday trade (in question) and how I saw it. Sheesh could it be any clearer <IMG SRC=http://charts.dacharts.com/2007-01-01/Joab27.png> http://charts.dacharts.com/2007-01-01/Joab27.png