I plan to have a post together later this evening which should help those with difficulty remaining on the coarse level (Forest) resolution. Look for today's ES chart at that time as well. - Spydertrader
After reviewing many of the posts, charts, notes and logs attached over the last several days, I have noticed a common theme by many contributors. In addition, several of the PM's, IM's and questions received in the ET chat room revolve around this very same question: How to avoid 'dropping down' in resolution. As beginning traders, we want to stay at the Coarse Level Resolution - the Forest Level. However, when we notice an FTT form within a dominant channel, we look to reverse - even if the FTT turns out to be an FBO or another FTT. As a result, we find ourselves dropping down to lower and lower resolutions. Now, if we had the tools for the Sub - FTT and Sub - Sub FTT levels (trees, limbs and leaves), no problem. Unfortunately, (right now) we only have a hammer and a pick axe. Too often, beginning traders have attempted to do brain surgery (focusing on the changes in color intrabar of the YM or ES) with the pick axe and hammer, instead of a scalpel and scissors. Understand, Because we do not yet have the tools needed to perform at the finer levels of resolution, we need to find a way to force ourselves to remain at the Forest View until we can gain the experience necessary to move to the next plateau. Some of the more experienced Futures Traders who trade Jack's Methods already do this, and after some recent phone conversations, those who recently adopted this philosophy felt it beneficial to their trading as well. What is required here is an ever so slight shift in mindset, and one, that should help facilitate the learning process. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1353921> On the attached Chart Snip (above), we can clearly see two dominant channels - one uptrend and one down trend. I have also highlighted the Points One, Two and Three for each, as well as The FTT's which proceeded the channel formations. Also note, the 'taped channels' used to create the Point Three Channel. Currently, we reverse on every FTT we encounter. Exiting on an FBO, reversing on another FTT or holding on a BO. For now (and in an effort for you to 'see' how the market operates and profit while you learn) I want you to set those rules aside and alter them ever so slightly. Beginning with the attached snippet we see the first down channel (red), and within it, a red FTT. Rather than reverse at this point, The Forest View Trader holds until price breaks the right side trend line. At that point, the Forest View Trader Exits, and waits for the formation of a Point Three in the direction of the FTT (highlighted yellow). At this point, the Forest View Trader enters Long off the Point Three Formation continuing to hold until price breaks the right side trend line. Notice, at the top of the snippet, we see another FTT (circled). However, once again, The Forest View Trader does not reverse. The Forest View Trader holds until price breaks the right side trend line. Once again, the Forest View Trader then waits for a Point Three Formation (highlighted Green) in order to enter short (in the snippet example) as is the same direction of the previous FTT. Again, we hold as long as price stays within the Point Three Channel. Notice, how I draw in the taped channels only until I created a Point Three dominant trend. After that point, no need to draw in the taped channels (at this resolution). As you can see (and if you can't from the snippet and description, you will by looking at today's ES chart) 'flaws' have no place in the Forest View. We do not care what bars do within the channels. We only care that price stays within the channels or not. As price moves through the channel, you should remain ever vigilant to look for FTT's in an effort to learn to anticipate what happens next (To begin to peek over the hill for an advance warning). You should also continue to monitor Gaussians using the "bigger picture" as a guide. When an FTT arrives on scene, continue to walk through the sequence of events which you would normally do at lower level resolution (Reverse on the FTT, Exit on the FBO, Etc.) In addition, when using the YM, make your annotations across a much larger period of time (See attached YM chart below). Do not draw in the 'tapes' just yet. Use the YM in the same fashion you always have, but do not act upon signals on the ES. Follow the temporary rule set above for the ES in an effort to learn how to follow the Ebb and Flow of Price and Volume. I plan (for the time being) to only annotate my own charts based on this Forest View process. In this fashion, we can all operate "on the same page" - so to speak. On my attached ES Chart, I have market the entry points for long and short with triangles and pens. All exit points marked with Light Bulbs. For those who have experienced difficulty remaining on The Forest level View, this should provide the assistance you need to remain at that level. IF any questions exist in your mind, please post them here. I want to make sure everyone can 'see' the process before tomorrow's opening bell. Thanks to Excav8Ter and Jack for their input which resulted in the above post. Good Trading to you all. - Spydertrader
Spyder - after viewing your current YM chart, I am a bit confused. Are we to be charting data for the YM on a 23 hr. /day basis, or should our start and stop times coincide with our ES chart setting? Seems like your first red dominant channel is based off of pre - 9:30 EST price action. No doubt I missed this somewhere earlier. Thanks ...
You can start your channels either in the Pre-Market for the YM or at the 9:30 AM Eastern Time opening bell - to coincide with the ES. I use the pre-market YM for my "pre-flight check" (something we will discuss later in the year) and as a sentiment gauge for determining entry or not on the opening bar. - Spydertrader
As requested, A .jpeg of some flaws. Remember, At the Forest View, Flaws do not exist. - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1354018>
Pre-Market/Post-Market/Mid-Market/Intra-Market, none of this matters in the big picture. The point of the last 160+ pages is learning and doing timely annotations. Get comfortable doing them in realtime. Doing this day in and day out, you become calibrated to how the trading instrument moves. So there is a whole bunch of things going on on my chart. There have been days where I start during lunch because of various commitments. Does it bother me that I did not annotate the previous several hours. Do I ever feel lost. NOT ONE BIT! Why? Because, I am confident in my abilities to annotate what's happening right now and then walk forward. I just simply find the most recent and significant dominant and go from there. Don't get me wrong, pre-market has it's advantages especially when the market is synchronizing large gaps. However, these types of details are limb type of details. There is no right or wrong for what data you are to include. As long as you know and do your annotations accordingly, you keep the right side in view. Keep in mind, we are at the forest level. Each bar in your channel is a tree. We all know that a forest has many trees just like channels have many bars. What is required at this point is to be able to scope the boundaries of the forest. Do not get caught up in assuming that my chart or spyders chart is the "correct" chart. Seeing the forest ASAP is good enough. We will all have variations on our forest view. However, notice how all of our variations are converging. Despite all the variations, we can all manage to stay on the right side of the forest view in a timely manner. Regards, MAK
Spyder I have an entry on point 3 and exit on BO question. See the area circled in the attachment for my question. In this case we have some channel overlap which makes this rule hard to follow within the circled area. Your graphs are excellent. Thank You!
I agree when channels overlap, it can often appear difficult to determine what to do next. In such an event, what if one altered their channel drawing slightly (see Attached) to prevent the channel overlap? How does it turn out? Keep in mind, this 'Forest View' Paradigm is less about 'rule sets' and more about forcing people to remain at the Forest Level Vantage point. Nothing says you can't peek over at the YM to know when to jump in early. However, using the above outlined technique clearly prevents a new trader from trying to utilize Coarse Level Tools in an effort to understand fine level events. I hope the above provides the clarity you need. - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1354044>