Interesting... I always fan-out from pt1 (Jack's style). I wonder if this new channel (pt3 fan-out, Spydertrader's style) that you carried for the whole day helped you in any way to see where the price is going. You kept adding VEs, and it looks almost like trying to cap the up swing. The bottom line is: whatever works for each of us ...
And so it goes. As I move through the journal I came across a post by R/R (p644, last post) which has a lot of the material that I posted a couple of days ago (p1331, last post) but in addition something I missed and now appreciate more fully. To whit: Spydertrader (May 25, 2007 1:51:34 PM) 10:45 bar is FTT, right? = signal for change, but you do not know how long the change (retrace) will last. If you see a flaw in what appears to be a NON-dominant retrace, you can know the trend has already changed. You just haven't gotten to the point of an FTT yet [of the retrace channel] to form a point three down channel. Oh well, at least the "Wile E." compilation was a quasi-original interpretation, but you never know. lj
I do the point 3 fan outs also (spyderstyle) Only because it makes sense that the slope of the new channel would be less steep and if not it would be VE for us. Its really all about volume anyway. Either way I believe works just the same.
I guess what I wanted to say, and to discuss, is that a new channel has to define a change in sentiment, not necessarily from long to short. The new channel is meaningful only as long the price mimics that sentiment. For channels to belong to the fractal structure I believe they belong to, they have to look like price containers that include smaller and smaller containers, and that are included as traverses in larger and larger containers. Following this rationale, although fanning-out from pt3 could gradually lead to a 180 degrees change in sentiment, still these channels have to be traverses in a larger container.
A hitch, dip, stall is just a shallow retrace on a given fractal. If you trade a finer fractal, those could be tradable retraces. If on what you perceive as being a retrace you find a shallower but noticeable retrace, it is a sign that you may need to re-calibrate your trading fractal.
It did help me to see the market, especially in the period between 10:30 and 11:30. I drew the volatility expansions not because I'm trying to cap the up swing, but because I consider them a signal for continuation. If I see continuation there's no need to change my channels, which is why I carried it for the whole day. The FTT @ 12:45 even failed to traverse it along with the black channel
The 11:30 bar confused me. It seemed a 100% FTT to me. Price did not touch (my) right trendline and volume was lower than the previous peak at 11:00 + the bar closed below the high that was made at 11:00. In your chart it was just another VE... Seems much more clear. However, I went short at that bar but it was taken out by the next bar on much lower volume which was my indication that change was near and the real FTT would probably happen at that very bar. Of course considering where the 11:35 closed it was not my FTT. However, all this caused a loss of > 2 points. It's a pity, was doing okay but ended the day in red. Maybe should have waited for the 11:30 bar to be taken out to the downside. I guess these are the kind of things that happen on low volume days. Just like the 12:50-12:55 bars. regards, Ivo
If on what you perceive as being a retrace you find a shallower but noticeable retrace, it is a sign that you may need to re-calibrate your trading fractal. If I understand what you're saying, cnms2, if one is getting out past the limbs to the sprigs, leaves and buds, one must be very nimble, and for most it is better to move back towards the trunk of the tree. On the other hand, while still using the 5 min ES/2 min YM as the time fractal, might it not be possible to use the "higher resolution" flaws as possible indicators of things to come on a coarser trading fractal? One of the things that equity edge traders will do to try and get a larger piece of a move or to get in earlier on a move is to decrease the time fractal or move to tick charts. This works sometimes but more often it is the case that you get chopped to death by the smart$ who know pretty much exactly what you're trying to do and take full advantage of it. If I have misunderstood what you are saying, could you please give an example of what you mean. TIA lj