My blue RTL. However price went so fast it already passed. It was something I did not consider at all. I expected a point three up after the breakout. "What gets us into trouble is not what we don't know, it's what we know for sure that just ain't so." - Mark Twain In general volume in the afternoon was not very high which is the reason why we should anticipate fbo's and moves like this one in my opinion. I cannot believe how bad I was trading at certain moments. I almost made up for a few losses in the morning and then after a few winners I tend to get too comfortable which is very bad. Especially in low volume periods this is deadly because change happens frequently. regards, Ivo
November Follow-Up (If1-If2) I have hesitated discussing the IF1-IF2 Logic until this point in the Journal for one very important reason. The reason for my hesitation stems from the fact that using IF1-IF2 incorrectly, places the trader immediately on the wrong side of the market. In other words, applying IF1-IF2 to areas for which it was never intended makes no sense at best. And at worst, creates additional problems for which the trader doesn't have a viable solution. How can one use If1-If2 incorrectly? By relying on it to provide a signal when other tools should have already provided the signal for you. If1-If2 is used as a safety net, a last ditch effort (if you will), and only in such an environment, then the likelihood of incorrectly using the logic for signal generation reduces significantly. I have never used the If1-If2 logic in conjunction with an entry. The signal for determining an incorrect entry comes much sooner than any signal provided by If1-If2. The same holds true for reversals, incorrectly applying If1-If2 logic at reversal points (especially during times of 'choppy' Price action) almost assures the trader ends up whipsawing themselves right out of the market. However, one area where one can safely use If1-If2 does exist, and I have often used the logic here - even when I either miss a better signal, or fine level tools appear to not provide the clarity I feel is needed. This area is the Outside Bar. Now, If1-If2 isn't designed to instantaneously turn a trade (or a trader) from losing into profitable. Use of the If1-If2 logic allows the trader to get back on the right side of the market - period. Nothing more; nothing less. More often than not, placing yourself back on the right side of the market provides the trader the opportunity to recoup the losses generated from the time where their trade placed them on the wrong side of the market. However, this is not always the case. Remember, If1-If2 provides opportunity. One still needs to continue to monitor the market signals as time passes - before, during and after executing the If1-If2 trade. One should only ever need to execute the If1-If2 logic once per bar - with rare exceptions (such as FOMC Announcements or other News Release reaction bars). Fortunately, the market provided one of those rare exceptions today - at 10:00 AM Eastern Time. In the very rare event one does need to execute If1-If2 more than once per bar, do not allow your brain to 'calculate' how many points you have earned or lost performing the trade. Remember, If1-If2 puts you back on the right side of the market when you have missed something that would have signaled change much earlier. As a drill, try using this logic on every bar in an effort to reinforce the importance of correctly using the logic as described in previous posts (See Oddiduro's descriptions). I hope everyone finds the above information useful. - Spydertrader
I spent a couple of days doing mechanical APA and without success. the failed exercise taught me one thing - there's no such thing as "mechanical APA", it's all about DOM and RTC. APA is not a shortcut/path to SCT, it's the result.
Not being an expert, but here is how I read this... An FTT\ - then price retraced on lower black volume... yes it walked out the RTL\ (on the lower vol so I deleted the \ channel)... had a DT - possible new p3\ - followed by a DB = FBP w/ 20MA support ... and price rose ALMOST back to the new RTL\ and ... then fell on rising vol confirming the new p3\ as well as breaking the 20MA. Doesn't mean I caught it as a trade BTW... just watched.
Comparing the ES daily chart to the ES intraday chart to see inside the sym. p that formed on daily today. Combined charts side by side for a look. It will be interesting to see how price reacts from the sym p. overnight and into Tuesday.
Useful but strangely ant-climatic I was kind of figuring that they might be useful around formations - seems quite a few have false BO's. Of course these would be outside bars pretty often. I'm sure I am not alone in noticing that lateral movement is often choc full of formations (look at this afternoon). Perhaps caution should be exercised on OB's in lateral periods. I also understand (maybe incorrectly) that Jack sometimes uses a BO of bar 3 to enter the first trade. I wonder if the procedure may be useful then (assuming something else does not come up to tell you that you are on the wrong side). I guess what I am wondering is whether they present a reasonable fallback position if you do not see other signs you are on the wrong side? (This may be the case for a course level trader or exmple). Just kind of brainstorming but its late here so the output might be poor Cheers.
I thought it might have merit where you could reasonably anticipate change. Use your APA IF1/2 to make sure you are on the right side of the market regardless of whether you anticipated correctly or not. In any case once the bar makes higher HLC the procedure should certainly be put aside I would think. From Spyders post perhaps it should never have been contemplated there at all!! Cheers.
Consider for a moment how you decide whether the market has signaled continuation or change. As I posted several months ago, one can perform a simple drill to determine at the end of a bar (close) which signal the market has provided. Most people following this thread will, no doubt, find themselves in a situation very similar to what follows. Some bars quite easily show continuation, while other bars quite easily show change. A third category of bars appears 'confusing' to the trader. For now, we shall name the set of bars which fall into this third category 'uncertainty.' Most of the bars which fall into the 'uncertainty' subset represent some part of a formation (Lateral, Pennant, etc.), or at worst, a flaw (Dip, Hitch, Stall, HVS, CCC). At some point after a bar (which falls into the 'uncertainty' category) another bar begins which you know as continuation or change. Since we are operating (in the above example) at the end of the bar, can easily then draw our lines in the sand differentiating between our temporary areas of 'uncertainty' and those areas which we know signal continuation or change. One then needs to do nothing but wait while Price moves out of these areas of 'uncertainty' and into the areas where we know what must come next. With time and experience, these areas of 'uncertainty' shrink in both size and number, until the trader arrives at a place where no mater what follows the current bar, the trader automatically knows what must come next. unfortunately, the transition from such a state takes more time than most people want to admit. However, for now we can use The ES Chart (in conjunction with PRV, Channels and Gaussians) to 'light the way' through an area which a trader might find falls into an area of 'uncertainty.' Rest assured that every bar falls into a category of continuation or change, but such knowledge does not help if a trader cannot 'see' the difference. As such, mentally create a place where 'uncertainty' can play itself out, while one waits on the signals for continuation or change to materialize from your own point of view. By example, How many times has the scenario pictured below occurred during a trading day? How many times have people wondered, "Is this an FTT? Do I have change here? Should I reverse?" The example drawn below (See Attached) shows Price moving quite a distance downward, and then bouncing back up off its low to close some distance above the low. The next bar opens 'inside' the previous bar. Did the YM show Change? Did Str-Squ signal? Was there a DOM Wall? Did I miss an OTR Spike? Surely many have had these same thoughts run through their mind. What I intend for everyone to understand is that no such concern need exist. At this exact point in time, things may appear 'uncertain' to may. Will price continue downward? Will Price reverse and head higher? One need not know these answers just yet. If one already has a short position, concern over 'giving back' profits already accumulated surely exists in the minds of many. In addition, if one is sidelined waiting to enter, concern over if this is a Point One (or Three) plays a role in indecision. Again, none of these concerns need materialize. At this exact point in time we have a 'Forming Pennant' pictured below - meaning, if the bar closed right now, everyone could agree we have a Sym Pennant showing on the chart. does that sound like an area of 'uncertainty' or does everyone know exactly what a Pennant looks like, and what action to take when one arrives? As a result, at this exact point in time, no need for concern exists because what must come next before one has either continuation or change is another formation. Price cannot transition from its current position unless and until it moves through a Flat Top Pennant or a Flat Bottom Pennant. Sure, Price could move very quickly from where it is now to where it plans to go, but it must transition through another point before it can break the high, or break the low, of the preceding bar. While waiting for Price to move, the trader has time to contemplate what might come next in an effort to understand what must come next. Price can move up and break the high of the preceding bar, Price can continue lower breaking the low of the preceding bar, or Price can hold steady and not move very far at all from where we see it now. If Price moves higher, then we most certainly have change. If Price moves lower, then we definitely 'see' continuation. And finally, if Price holds steady through to the close of the bar, then our forming Pennant became an actual Pennant, and we begin the whole process over again. Certainly, the market has provided other signals during this five minute bar, but no need to concern ourselves with those for now. Simply, by using only the ES Chart, we can all but eliminate these temporary areas of 'uncertainty' and transform them into periods where we simply wait to make a decision or take action. For If1-If2, simply do the drill described and 'see' for yourself where it fits in best. I believe what you find will change your outlook from one of stress to one of calm. I hope you find the above useful. - Spydertrader