Candlesticks - Volume

[dbphoenix]

You continue to bring value to the table: rigidity, blindness, slavishness, fixed conditions. Given this bias, it's no wonder that you avoid being more definite and definitive in what it is that you're looking for. It's as if your psyche recoils from the prospect. You're also anthropomorphizing the setup as if it's supposed to do something for you, and the setup is nothing more than a tool.

When all is said and done, you still haven't addressed the issue of the higher low. You say it's there for all to see, and yet you focused on buying lower lows. Why? If a higher low is so clear to you, why didn't you wait for one?

 

[frugi]

Textbook prod and response ... all good for the brain though

Because one of my setups involves waiting for a high volume hammer that makes a LL and follows a positive TICK divergence and what I call a "volume divergence", then buying a lower volume test of the hammer's low within a few ticks of said low. This extremely crude and unsatisfactory scalp setup (c70% strike rate on average) had the temerity to fail twice (yes the market signalled the failure - it didn't do so independently ) but I followed it diligently, give or take a slightly unconvincing TICK divergence, and on the third attempt (a slight variation of the setup due to hammer / doji substitution - discretion applied) I bought just after the hammer and scaled out of the rest of the position today and did quite well. Job done, if ineptly and with a touch of slipped discipline. I trade similar stuff every day and when the discipline is tight the setups work on aggreggate.

It was you who first mentioned the higher low not me! At any rate I addressed it in my previous post.

You continue to bring value to the table: rigidity, blindness, slavishness, fixed conditions. Given this bias, it's no wonder that you avoid being more definite and definitive in what it is that you're looking for. It's as if your psyche recoils from the prospect. You're also anthropomorphizing the setup as if it's supposed to do something for you, and the setup is nothing more than a tool.

I like language and use these anthropomorphic words in an attempt to clarify my arguments. It's much more fun than reducing everything to dry yeastless jargon. I don't actually think of my setups as frugi's little helpers running around gathering points, though the image is quite touching.

I'm afraid I'm not a student of psychology so I don't understand your references to value and bias, but, especially if I am guilty as accused, I would appreciate some reference material explaining these terns. Terns, in winter? Wretched keyboard can't type.

I didn't think I was avoiding being more definite about what I seek. As I have said I am uneasy with the notion of relying purely on definite setups, because of their intrinsic limitations, but my psyche certainly salivates at the prospect of unravelling the "why" behind them. How exactly to do this to a high level of competence is of course another matter, but thanks to a few kind folk I'm already starting to provide it with the odd morsel of delicious food.

Where are Bramble and Socrates? Their input would be valuable. Perhaps they're enjoying a devilish game of croquet on an uneven pitch.

 

[dbphoenix]

Because one of my setups involves waiting for a high volume hammer that makes a LL and follows a positive TICK divergence and what I call a "volume divergence", then buying a lower volume test of the hammer's low within a few ticks of said low. This extremely crude and unsatisfactory setup failed twice but I followed it, give or take a slightly unconvincing TICK divergence, and on the third attempt (a slight variation of the setup - discretion applied) I bought just after the hammer and scaled out of the rest of the position today and did quite well. Job done, if ineptly and with a touch of slipped discipline.

It was you who first mentioned the higher low not me! At any rate I addressed it in my previous post.

I mentioned the higher low because tsuntzu suggested you follow the trend and short the lower lows, the culmination of which, of course, would be a double bottom or V bottom with a higher low, and since you professed to follow the so-called Ross Hook on that thread, my comment about the higher low seemed appropriate, since there was no reason for you to be trying to catch this particular falling knife.

In any case, if the setup is unsatisfactory, why are you playing it? Do its satisfactory and unsatisfactory outcomes each share common characteristics?

I didn't think I was avoiding being more definite about what I seek. As I have said I am uneasy with the notion of relying purely on definite setups, because of their intrinsic limitations

There seems to be an issue of awareness here since you're doing it again, characterizing "definite setups" in such a way that makes them undesirable, i.e., their "intrinsic limitations". One doesn't have to be a student of psychology to know that words carry values: freedom, slavishness, flexibility, rigidity, open/narrow-mindedness, etc. Given the words you're attaching to the subject of setups, it's no wonder that you avoid defining them. Therefore, when they seem to occur in real time, you're not sure whether they are there or not, or, if they do seem to be there, whether you should make use of them or not. By the time you've decided, you have perhaps done the right thing, but perhaps have instead done the wrong thing, or done nothing at all.

The point of defining the setup is to recognize it in real time and to be able to decide in real time whether or not to trade it, not to be obsessively anal about its black/white, yes/no, right/wrong characteristics. In many ways, this is what Ross does, and why so many people have so much trouble finding success with his approach.

As for Bertie, you need only wait long enough.

 

[frugi]

I mentioned the higher low because tsuntzu suggested you follow the trend and short the lower lows, the culmination of which, of course, would be a double bottom or V bottom with a higher low, and since you professed to follow the so-called Ross Hook on that thread, my comment about the higher low seemed appropriate, since there was no reason for you to be trying to catch this particular falling knife.

The trades I posted did not happen to feature RHs so I failed to see the HL connection - my mistake, sorry.

 

[frugi]

One doesn't have to be a student of psychology to know that words carry values: freedom, slavishness, flexibility, rigidity, open/narrow-mindedness, etc.

Words like those you mention contain an emotional charge (which may be somehow hidden from the locutor) as well as their basic definition? If so how does this affect their use? This is interesting stuff. I must read some psychology, do you have any recs?

Given the words you're attaching to the subject of setups, it's no wonder that you avoid defining them.

I can define setups till the cows want to move house cause they're so bored of coming home to their present one. So in the basic, practical graft sense I don't avoid doing so at all. What concerns me is whether I am taking an inefficient path to profitability.

Therefore, when they seem to occur in real time, you're not sure whether they are there or not, or, if they do seem to be there, whether you should make use of them or not.

I am sure when they are there or not because their validation is a simple binary choice as we have established. Whether to make use of them or not is where discretion enters the fray. This is where things get interesting.

By the time you've decided, you have perhaps done the right thing, but perhaps have instead done the wrong thing, or done nothing at all.

Absolutely. I know the setup has been triggered and yet I am unsure whether to act. This is because I believe that not all setups are created equal and some should be avoided or indeed adjusted to fit the current conditions.

The point of defining the setup is to recognize it in real time and to be able to decide in real time whether or not to trade it, not to be obsessively anal about its black/white, yes/no, right/wrong characteristics. In many ways, this is what Ross does, and why so many people have so much trouble finding success with his approach.

Ah but aren't there two discrete elements here?

1. Recognising the validation of the setup. Easy, assuming it has been sufficiently defined.
2. Deciding whether to take it

2 is neither a part of nor decided by 1. Defining it will not help with the taking of it. If it is defined and successfully tested, then you will take it every time and let the averages work in your favour, of course, but I am not fully satisfied with these probabilities, even when they are profitable in the long run.

As for Bertie, you need only wait long enough.

But how long is enough? Twice the length of the centre to one end I suppose. :cheesy:

Energising discussion db; I really mean that. Thank you for prodding my weaknesses and making me think. But I fear before long we will hit the dreaded circular impasse so maybe we should leave it here for the moment. Have a congenial evening sir.

 

[dbphoenix]

The trades I posted did not happen to feature RHs so I failed to see the HL connection - my mistake, sorry.

You seemed to be asking what you could have done differently, one of the first answers to which would be wait for the higher low. A "hammer" means only that demand overcame supply at that moment. In order for the hammer to provide some sort of useful trading signal, the demand must then continue to an extent where it not only absorbs supply but advances the price. Wyckoff allows you to buy these V reversals, on the condition that they be pretty damned persuasive. But he cautions that whatever happens thereafter is only a technical rally, and that one can't know whether or not the trade has a higher likelihood of success or failure until a higher low is put in.

You also asked "what is a setup", so I assumed you were unclear about this. Perhaps not.

 

[frugi]

In any case, if the setup is unsatisfactory, why are you playing it?

Do its satisfactory and unsatisfactory outcomes each share common characteristics?

Because 70% puts food on my table, as long as I'm disciplined with the stops and scale outs, and I'd be a fool to reject a profitable setup merely on the grounds that it could be improved further in the future, whether by way of further refining the setup or understanding its causes more effectively. I may be ambitious but I still need money.

Yes they do, apart from the obvious one wins x and one loses y, but the characteristics not so common and discrete that a set of extra rules will necessarily sort everything out beyond a few more percentage points of hit ratio. If I knew why the action previous to and following the setup entry was occuring then the rules can then be adjusted on the fly, e.g. to scratch the setup that looked good at entry but now doesn't because conditions have changed, or to double up on the one that has fortuitously coincided with a breathtakingly subtle and cheeky campaign by the big boys that is in its favour and now suddenly visible. But I don't think you believe in the viability of this approach, so I'll leave it.

 

[dbphoenix]

I didn't respond to your previous post because you said you wanted to stop, which is probably a good idea. Therefore, I'll decline to respond to the above post as well.

 

[frugi]

I didn't respond to your previous post because you said you wanted to stop, which is probably a good idea. Therefore, I'll decline to respond to the above post as well.

No problem db. My critical faculties are initiating shutdown as you can doubtless detect. But I retire with plenty to consider in the clarity of the morning, which is excellent. Thanks again for an enjoyable joust.

 

[dbphoenix]

Just to clarify, my point of view was to short the lower high and look to add on the break of the low. Ideal world scenario but better from a risk point of view (in my opinion) then just selling the low. Incidently and not that I feel like having a major debate about it, but in my opinion its easier to pull the trigger on the lower high then it is going through the low itself. The fear of actually selling the low isn't there and of course by definition your selling into what could well be a minor uptrend, which for some reason does not have the same fear element. Yes there should be no fear in your trading full stop but again that is another debate, I was just drawing on what it used to feel like for me.

I understand. I was referring only to your overall point, which was to trade the trend, and as long as price is making lower highs and lower lows, trying to catch the bottom is beginner stuff.

As to playing it, I agree on taking the lower high, though I trail price with a stop limit to sell rather than sell the break of the swing low. This also enables a much tighter stop (and before anyone brings up the "trader's trick entry", this style of entry originated with Wyckoff, not Ross).

To clarify, however, none of this is to say that I would have entered a trade there at all. The short would have been entered much earlier (and was, only on the NQ), and a long would not have been entered except at a higher low.

 

[Indi]

simply the Best

not sure why you class it as beginner’s stuff, surely it can also be very advanced, i wouldn’t say one size fits all, its usually the case where people have no understanding of the skills needed to achieve whats in question, they just write it off.


Unlike most ,there is one proven grand master who can pick tops and bottoms, you have to see it, just pure genius.

 

[dbphoenix]

not sure why you class it as beginner’s stuff, surely it can also be very advanced, i wouldn’t say one size fits all, its usually the case where people have no understanding of the skills needed to achieve whats in question, they just write it off.


Unlike most ,there is one proven grand master who can pick tops and bottoms, you have to see it, just pure genius.

And who might that be?

 

[Indi]

And who might that be?

Well,will just wait for him to come forward,all i will say is if you dont watch market dynamics,creating pinpoint tops and bottoms,how can you dismiss it as as amateurish and not possible.

 

[chump]

"how can you dismiss it as as amateurish and not possible."..I wouldn't , but I would say it is not necessary . The name of the game is to reduce risk and maximise reward within the context of a plan that reflects the skills and nature of the trader. That's all that is necessary.

 

[Indi]

There in lies you answer Db

 

[Indi]

You are missing Mr M 's point,as he has shown in the past entering early is safer providing you can read the market.
Less likely to be stopped out unlike most ,who enter, later,with far more confirmation.

 

[frugi]

A man's grasp should exceed his reach....or for what is heaven....cheers mark j

Despite its being reversed (I think), I like this quote, because it can be taken either way round and both interpretations teach a different but equally valuable lesson.

On the one hand it is dangerous to (continuously) try and exceed one's proven capabilites, because the over-reaching hand is likely to slip, resulting in damage.

But on t'other hand, if one never reaches out for more than one can grasp then meaningful progress cannot be made.

It is only by trying the (occasional) daring reach that the grasp can be increased, as a new technique is suddenly learned.

I suppose the key lies in doing so carefully, when a missed reach won't hurt too much.

Just like bouldering, where the floor mat is only a few feet below.