The YM leads the ES - Jack Hershey The above often cited phrase has generated significant controversy over the years. One need look no further than the library of work posted by Jack (on ET or USENET) to find many examples. As one who witnessed countless occasions where the YM diverged both in direction and pace from the ES, I once failed to see the logic behind Jack's assertion. However, my failure to comprehend stemmed from my own self created obstacles. You see, I had incorrectly interpreted the above quoted statement and added my own modifier. Jack did not say, "The YM always leads the ES on every tick." Notice, by running the phrase through my own mental filter, I sent myself down the wrong path. I, in effect, created my own hindrance to success. Fortunately, I figured out the error of my ways. Now, we can spend our time looking for examples where the YM fails to lead the ES, but really, how does that help a trader make money? Instead, by focusing on the FTT, we can use the YM to provide an advance warning of an FTT formation allowing us to nail the ES FTT on the exact bar on which it forms. First we need a measurement of Volume Pace. Similar to the fashion in which we added ES Volume lines, add the same lines to the YM at the following levels: 1200 High 600 Medium 400 Low 200 DU I use 250 for my YM DU level, but the above Volume levels Jack has recommended. Now that we have our metric for evaluating Pace, we simply annotate the YM in the same fashion as we do the ES - in an effort to locate the FTT's slightly ahead of time. Remember, we want to keep both the ES and the YM on the same resolution. When you annotate, be sure to focus your eyes on the 'bigger picture' (Forest) with respect to the YM. otherwise, you will think you see an FTT everywhere you look (bacteria, on the leaf, on the limb, of the tree, in the forest). Attached, please note an example of the YM leading the ES on an FTT. The charts come from December 18, 2006 - if memory serves. Briefly: On the YM, the 13:46 bar Opens at 13:46 and Closes at 13:48 - surely we all agree. On the ES, the 13:45 bar Opens at 13:45 and Closes at 13:50 - surely we all agree. And now, Please see, on the attached chart, how an FTT on the YM signals (a minimum of) two full minutes in advance of an FTT on the ES, and thus, provides a short signal. Notice too, only two tics separate the high and the close of the 13:45 ES bar. At the end of today, review each FTT on the ES and see for yourself how the YM provided you an advance warning by 'matching up' the correct time frames. Can you see how the YM gives out its signals in advance? Can you also see how the YM also provides signals which turn out to be Hitches, Dips or Stalls on the ES? You should then also see how staying on the 'Big picture' avoids any concern about these 'flaws' creating a problem. We simply hold right through them. I'll have more later on using the YM, but I wanted to begin with the above as a "first pass." As always, if the above post creates more questions than it answers, please feel free to post them here. - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1346565> Edit: Ignore the indicators on the above charts. As you know, we no longer have them on the ES and the YM.
I suppose you were one of the "There are two guys dueling it out on laptops in our kitchen as I speak.......... In a nutshell, you are saying that more often than not we should be able to see an FTT forming on ym in advance of ES, thus giving us about 2 minutes warning. Good trading to all.
Firstly, a brief but sincere thx, for the effort put in here to teach. And what lessons ! I've done my best to follow along so far.. My attached chart shows one of the difficulties I have, namely around the last set of BO and FBO's. The white horizontal lines could only be drawn late on in this sideways move, so in real time I was losing the plot a bit as to what was a real BO ...perhaps my main channels are wrong ? Any help appreciated.. And again my sincere thx... P.S May I take the liberty of a request..? would it be an idea to start each month/part of the lesson as a new thread...?
You are apparently dropping down in resolution attempting to do brain surgery with a sledge hammer. See my recent post (and attached drawing) on resolution levels. I have purposefully failed to annotate 'the taped' channels today in an effort to keep everyone at the 'forest' level and not down looking for bacteria on leaves, on limbs, on trees inside the forest. - Spydertrader
Less a duel than a laughfest, but yes, I attended. What I am saying to you is The YM leads the ES when it matters - at sentiment change. Since our methodology involves recognizing the market as it transitions from continuation to change status, The YM provides an early warning for the ES. - Spydertrader
look at volume, price can't go at low vol, thus you know it is more likely to be CCC (no BO) than real BO.
Spydertrader, thx for reply. Seems I'm trying too hard. Attached chart is a better view..? I'm correct in establishing the main channel (green) from pt's 1,2, and 3. it seems. nkhoi, thx, I've included the gaussians...u r right.
I'll post my chart at EOD so you can compare and see where you need to improve. I have also added some 'finer' detail in the afternoon, so you can 'see' the difference. - Spydertrader