Considering you have chosen to trade the Non-Dominant Traverses on a Trending Day, Yes. This is the beautiful part. Everything just slows right down. This answer gets you in the ballpark, and is one of the events which can clue one into what must come next. The real answer has to do with the sequences which unfold over time (like dominos falling in a row) - including the one you posted. To be clear, other sequences exist in addition to the one you posted. Nicely done. - Spydertrader
Ok, I think I've posted something similar before, but this action tricks me in real time so I'm looking for the best way to analyze this. In the attached snippet, notice how we get a down tape with an RTL BO on dominant volume. To me, this looks like we are now going to shift direction into a new pt. 3 channel. All is fine so far. By the close of the bar, we see price has retraced a good way back up the bar. To me, at this very moment, this is a warning sign that the change I anticipated *might* not happen. What could happen is the following: 1) price will continue the down tape, giving further confirmation of a change in trend. 2) price will shoot back up and take out the previous high. The question is, if we had shorted as volume was picking up and price was breaking out to the downside, we would know for sure that our trade was on the wrong side until price confirms it by breaking out again to the upside. What I see is a situation where taking a loss is unavoidable and the chance of further whipsaw elevated. I guess my confusion is about timing this action. Once the short position has been taken, at what point should we reverse our position, knowing that we were wrong? Thanks, RT
I view your question as follows: "I want to take action within a single five minute ES bar, what tools can assist my ability to do so?" Note how your posts makes no mention of what occurs previously. As such, you have left the realm of adjacent bars, and traveled down into the rabbit hole. Nothing wrong with this, but when viewed from the standpoint of looking back across the last 11 months, what tools might assist your ability to 'see' inside a five minute ES bar? Certainly, the YM, Str-Squ, DOM, and OTR each provide Intra-Bar (ES) signals. Asking how to 'see' inside a Five Minute Bar without using the appropriate tool, is a bit like attempting to do Brain Surgery with a Sledge hammer and a Pick Axe. The beginning of this journal contains many examples where people attempted to do just this. - Spydertrader
During a price cycle we travel around the Jokari window in a figure eight. In a channel we go from pt1 to pt2, which is shown as lower left to upper right as we BO of the old channel's RTL (for an up channel or long), the opposite occurs in a down channel (upper left to lower right). See arrows in attached <img src=http://elitetrader.com/vb/attachment.php?s=&postid=1704868> During an apparent failure we would travel from the green shaded box (as volume decreased we expect a change in price direction) back to the box on the left (volume increasing with price CHANGING direction again). This occurs during 'flaws' and retraces when viewed from a larger fractal. This has been presented before, I believe in the msn group.
Look at the first three bars today versus the first three bars of a W/M day. Just the ES bars only. What are the differences?
Spyder, your point is a good one. Right now, I don't want to even think about decision making inside of a 5m bar. To keep it simple, let's operate with our 5m bars, 5m volume, and 5m PRV. I think what you're saying is that down at this level where I would take the short intrabar, to reverse properly I need to use the additional tools to see what's happening on a finer time frame. Let's step back for a moment and look at the progression of the day, with only the information I suggest. From the start, we build tapes and channels, confirming through the progression that volume progresses consistently (gaussians). We can have a succession of different channels, for example: up channel -> dn channel -> pace decrease dn channel -> up channel -> pace increase up channel -> pace decrease up channel -> pace decrease up channel -> etc. etc. This is in fact, the progression of channels (at least that I have) from the start of the day. What I've generally noticed is wide channels, through this kind of progression, can lead to very thin channels that look to be on a finer fractal. But are they? As illustrated in the attachment, the progression leads to channels inside channels, all the while remaining consistent with gaussians. The issue is, it's easy to get "sucked in" to a level of detail such that additional tools are needed to stay on the right side of the market. The question is, if we are to simply use PV and channels, without those additional tools, how do we avoid getting sucked in. Another way of looking at it is: if we restrict ourselves to 5m price and volume (in order to master this relationship first), what do we need to AVOID doing so that our decision making keeps us on the right side of the market? My thinking is that some of these channels in the progression have to be overlooked for trading decisions, otherwise we will be drawn into a level of resolution that demands those additional tools. What think you? RT
Cmon Avi, you cant make the assumption that 3 up bars to start the day = trending day. Look at 11/29. Similar open, mkt opens down a bit, but we have 3 up blk bars in a row. Today the trend continued, on 11/29 we tanked hard to new lows. Then we rallied back up to new highs, then tanked almost all the way back down again. I agree 3 blk up bars to start the day COULD lead to a trending day, but its not a given.
Edit: my purple down channel towards the beginning of the session is incorrect. It should not be there, as the first down tape it contains did not take out the lowest value of the previous down tape. RT
Ok, what did you mean then. Volume bars? You said look at the first 3 ES bars, I assume you meant price bars.