If You Can Draw A Straight Line (You Can Become A Successful Trader)

[dbphoenix]

What a good idea

Let me offer a question: What happens when you are looking at an accelerating trend rather than a flattening one and when it then starts flattening where do you draw your trend line from?

Depends on the bar interval and the timeframe. If one is using a weekly interval and using the last departure in November '12, then there's been no change in the trendline. So far.

However, if one is looking at supply/demand lines, which are quicker to track demand/supply imbalances within the overall trend, it's a matter of the line being broken, in which case one is looking at either a reversal or a shift to ranging.

For example, if you look at p. 11, you'll see that price has reached the upper limit of the weekly trend channel. The weekly trend is still up, but that doesn't mean there are no counter-trend trades. Those are some of the potential tactics in trading a channel.

In any event, if you look down at the hourly, you'll see that the demand line is broken once price reverses off the upper limit of the weekly channel. At this point, you either have a reversal or you move sideways. Here you have both, but you can't know that in advance. So once this line is broken, you go for the reversal. When this doesn't work out either, you take the long, according to the rules, as you have no way of knowing whether or not price will exit the upper limit of the channel and change course again.

If you then look at the chart on the next page, you'll see that price finds R at that last swing high, which is also the upper limit of the trend channel. Once the demand line is broken, one takes the short.

And, yes, it seems like a lot of in-and-out, but if the trader has no idea what he's looking at, then a rules-based approach is the preferred course. Most would rather resort to indicators, which is fine, but that's not what trading price is all about. The advantage of this particular approach is that (a) losses are strictly contained and (b) the trader is not allowed to exit a winning trade just because he feels like it.

 

[Sharky]

I exchanged PMs with Sharky about the Harriman House thing, but I don't see how it would work. For one thing, it's not a real "book"; it's an eBook. And it's not the sort of thing people are used to, or at least people who are unfamiliar with my writing.

Actually most of the review copies that Harriman House (and others) have offered, are in eBook format. If you've got an eBook reader, even a Kindle (the new Paperwhite, is awesome btw!) it's easy to upload a pdf to it. They just send 10 copies out to the emails we give them, and then wait for the reviews to come in.

So if you wanted to do it, it's perfectly possible, up to you how many copies, and any restrictions (perhaps you'd want to hand pick who gets to review it). Ultimately, it's good for the members, as they get a free copy, and give an honest appraisal, and it's good for the publisher, as it's a bit of free marketing. Everyone loves a win-win!

 

[Pat Riley]

If you've got an eBook reader, even a Kindle (the new Paperwhite, is awesome btw!) it's easy to upload a pdf to it.

No, I don't. But I can see you now, sitting by your pool in your snow white speedos, dark, tanned, lithe form pulsing in a manly fashion while you manfully prod your Paperwhite, softly moaning, and wait for your pedicure team to arrive.

Mmmmm....

 

[tar]

No, I don't. But I can see you now, sitting by your pool in your snow white speedos, dark, tanned, lithe form pulsing in a manly fashion while you manfully prod your Paperwhite, softly moaning, and wait for your pedicure team to arrive.

Mmmmm....

This is a straight thread Pat ...

 

[Pat Riley]

This is a straight thread Pat ...

I used to be straight, but hen I saw Sharky in his speedos.

Actually, this looks like as serious thread that could do without me pointless babble. Apologies ta all. I'm back on the sidelines.

 

[tar]

I used to be straight, but hen I saw Sharky in his speedos.

Actually, this looks like as serious thread that could do without me pointless babble. Apologies ta all. I'm back on the sidelines.

Some of your posts at f's thread are missing ?

 

[barjon]

Depends on the bar interval and the timeframe. If one is using a weekly interval and using the last departure in November '12, then there's been no change in the trendline. So far.

However, if one is looking at supply/demand lines, which are quicker to track demand/supply imbalances within the overall trend, it's a matter of the line being broken, in which case one is looking at either a reversal or a shift to ranging.

For example, if you look at p. 11, you'll see that price has reached the upper limit of the weekly trend channel. The weekly trend is still up, but that doesn't mean there are no counter-trend trades. Those are some of the potential tactics in trading a channel.

In any event, if you look down at the hourly, you'll see that the demand line is broken once price reverses off the upper limit of the weekly channel. At this point, you either have a reversal or you move sideways. Here you have both, but you can't know that in advance. So once this line is broken, you go for the reversal. When this doesn't work out either, you take the long, according to the rules, as you have no way of knowing whether or not price will exit the upper limit of the channel and change course again.

If you then look at the chart on the next page, you'll see that price finds R at that last swing high, which is also the upper limit of the trend channel. Once the demand line is broken, one takes the short.

And, yes, it seems like a lot of in-and-out, but if the trader has no idea what he's looking at, then a rules-based approach is the preferred course. Most would rather resort to indicators, which is fine, but that's not what trading price is all about. The advantage of this particular approach is that (a) losses are strictly contained and (b) the trader is not allowed to exit a winning trade just because he feels like it.

Yes, I was talking mainly about the fanning of the trend line and "This process will continue until the advance has cooled down enough and reduced its angle enough to segue into a sustainable advance"

The sort of thing I was thinking about was as the chart here. The trend line fans once (the two blue lines) then starts accelerating rather than softening. You can track the trend from the original low starting point (red dotted lines) which doesn't offer much, or you can find a "best fit" start in the accelerating trend (yellow lines)?

 

[dbphoenix]

Yes, I was talking mainly about the fanning of the trend line and "This process will continue until the advance has cooled down enough and reduced its angle enough to segue into a sustainable advance"

The sort of thing I was thinking about was as the chart here. The trend line fans once (the two blue lines) then starts accelerating rather than softening. You can track the trend from the original low starting point (red dotted lines) which doesn't offer much, or you can find a "best fit" start in the accelerating trend (yellow lines)?

That's where the trend channel comes in, though I don't go into all that in the precis I posted in #1.

Once your channel can be drawn, one can then detect overbought and oversold conditions. In this case, you have an overbought condition in early '14. The expectation, according to AMT, is that price will return to at least the median of the channel and perhaps even to the lower limit. It does reach the median, but then it breaks through the upper limit again. Big-time. This in itself suggests that the trend is entering new ground. Once you have the next swing low ("2), you can then draw a tentative new channel off "3".

What one does with this depends on what he wants. Those whose time horizons extend beyond 5 minutes will want to enter at the extremes and manage the trade accordingly until price reverses or reaches the opposite side of the channel. This will depend in large part on whether or not the instrument is mean-reverting. If it isn't, then channels will be of little to no use. But there's no shortage of mean-reverting instruments, so if one wants calmer and longer-term trading, he'd be advised to trade such an instrument.

This is the chart of the NQ I posted elsewhere last week:

And this is the chart for the ES, a bit more "real time" than '12:

 

[barjon]

Nice, although I always squirm at the term overbought. What's the old saw - "the market can stay overbought longer than you can stay solvent"

 

[dbphoenix]

Nice, although I always squirm at the term overbought. What's the old saw - "the market can stay overbought longer than you can stay solvent"

When Wyckoff coined the term, he was referring to exits from the trend channel, either one side or the other. Nothing to get excited about. Just a state of being. With the expectation that price would return to its previous trending state. And if it didn't, then one had something to get excited about, as in this example. It wasn't until indicators came into being years later that "overbought" and "oversold" became boogeymen and lost their original meaning.

I suspect that many of those who don't understand what "overbought" really means have been shorting this trend for the past 18 months.

 

[barjon]

db

Quite surprised this hasn't generated more discussion - you must have covered everything too well in the piece

My main game is trading off retracements so I was a little bemused by "Enter on that retracement, a few ticks above the trough of a \/ retracement or a few ticks below the crest of a /\ retracement" since whether you have got to the end of the retracement and a trough is difficult to determine in real time.

Zooming in, it looks like your entries were on taking out the high/low of the final (assumed) retracement bar. Is that right or do you have some other trigger?

 

[Splitlink]

Right you are, POP's work was also among the very first things I read starting out.

There is a thread about Tony.

First guy I talked to here.

Real pity and very sad end.

http://www.trade2win.com/boards/foyer/202868-what-ever-happend-bramble.html

Hey, you guys, you are making me feel positively uncomfortable with your reminiscing. We all get to the end of the line, sooner or later, and mine's a long 'un. I can go on a park bench and count wheelchairs on any Sunday. There are always a few new ones and some missing.

 

[dbphoenix]

db

Quite surprised this hasn't generated more discussion - you must have covered everything too well in the piece

My main game is trading off retracements so I was a little bemused by "Enter on that retracement, a few ticks above the trough of a \/ retracement or a few ticks below the crest of a /\ retracement" since whether you have got to the end of the retracement and a trough is difficult to determine in real time.

Zooming in, it looks like your entries were on taking out the high/low of the final (assumed) retracement bar. Is that right or do you have some other trigger?

The chief objectives of the precis that I posted are to persuade the beginner to think about price movement and market dynamics correctly -- independent of the self -- from the start and also to encourage the trader who's still struggling that there is a way back. There's nothing revolutionary about the SLA; it's simply a more accessible way of presenting Wyckoff. Whereas few would read -- much less study -- a 500p course, they'll at least give 20p a shot. But the 20p is very much the shallow end.

Once the trader understands that there are only two states available to price and only three strategies available to take advantage of whatever opportunities the market provides, he can begin to organize what seems to be an overwhelming amount of information and turn it into knowledge. He can also begin to develop the critical need to focus.

So, yes, enter on the retracement. But one must determine what bar interval he's going to use. Until a few years ago, we had weekly and daily and the tape for intraday. And that was it. Now we have a near-infinite number of choices from 1t on up in a variety of formats. In Developing A Plan, I ask if the trader has found an interval that provides him with enough trading opportunities but also enough time to think about what he's doing. This is not a casual choice. Once that choice is made, then he can begin looking more closely at these retracements and the contexts in which they occur. The advantage of the SLA is that it prevents the trader from doing more than trivial damage to himself. Flesh wounds at most.

As for specific entries, there are three chief tactics for entering a retracement. One is to enter inside the retracement. Another is to enter the "breakout" past the swing point that began the retracement. A third is to enter N ticks above/below the "danger point", i.e., the low or high of the retracement. But a trader can't be expected to pluck one of these tactics out of thin air. He must first study a variety of charts from throughout the year. And few want to do that. Which is where indicators come in. They make all this so deceptively simple. And if one can develop a consistently-profitable trading plan off of them, fine. But they have nothing to do with trading price.

 

[barjon]

I'm absolutely amazed that this thread has not generated any discussion about the method advanced, nor apparently much recognition or interest given the paltry number of recommends for DbP's opening post.

It's not often that a sound methodology is presented on here in such detail and with supporting rationale. it may be simple and well explained but it does not, of course, spoon feed the actual trading process and some work is necessary for people to think about it and develop their own thing.

Perhaps that's its mistake. God knows what people want from T2W, if this isn't it then I don't know what is.

 

[Pat Riley]

but it does not, of course, spoon feed the actual trading process and some work is necessary for people to think about it and develop their own thing.

And there's the rub.

I actually think Mr. B has a good thing goin and have said as much, but tis the nature of things that most want it served up nice and easy. They've yet to learn that that which is served up so is unlikely to be that which they need.

I'm not in ta doin the hard yards for the sake of it, but that it is a necessary perquisite to starting any journey - the willingness to accept that it is a process to be mastered - if ya have the intellect - not acquired for a price or a smidgen of effort.

I have a relatively easy time of it, now. But that came at the cost of enormous effort, time and sacrifice of almost everthin else at the start. I wouldn't trade that.

Sometimes we are devils to ourselves
When we will tempt the frailty of our powers
Presuming on their changeful potency

Aye, said well Will, as always.

 

[darktone]

Perhaps that's its mistake. God knows what people want from T2W, if this isn't it then I don't know what is.

Post 1 = moderate discussion and 6 likes
Post 8 = zero discussion and 1 like

I think its the usual case of people wanting what they dont really need and needing what they dont want.

 

[tar]

If its a sound method then making a live trading journal based on the method may gain some interest for it .

 

[dbphoenix]

If its a sound method then making a live trading journal based on the method may gain some interest for it .

If it's a sound method, then you ought to be able to trade it yourself after having studied it. What anyone else does with it is irrelevant.

Be that as it may, anyone who is genuinely interested in it can contact me via PM. Otherwise, bon chance everyone.

 

[Dr. Toad]

dbphoenix:

Just wanted to say I appreciate you posting this. I am new to trading, and the concept you posted was in line with my thinking as far as trading goes. I am testing my take away from this live now and I have a trading journal going for others interested to see if it can work. I don't have any questions on it now since I just started trying it...I may have questions as I test it out more. Also, since I am new, I am probably not the best at it so even if it doesn't work for me...doesn't mean it is not valid...also I do not day trade, so my results probably don't mean much to most people here.

I really like this one in theory since all the trades have a very high reward to risk. Don't know if it works for me, but I should have a good idea in a month.

 

[BSD]

Hi Split, always great to see you and your posts

Keep fit so we can enjoy em for a long time to come mate

Hi Barjon, I suppose one reason this thread hasn't attracted more attention or posts is because most people refuse to believe that it really can be that simple lol !

Most system threads that start off with workable stuff like what DB or you and I are doing for example will on most boards inevitably and within an incredibly short time span turn into some kind of a monster that will have nothing to do with the original idea.

The main reason for that, and also why most traders fail, is, I presume, because people cannot accept losses which every system will have, so instead they go on an eternal chase for a non-existing holy grail by adding on all kinda gizmos or alterations or "improvements", or simply go hopping from method to method hoping that at some point they'll have the market cracked, and never ever have to suffer through losses again.



Just read that piece you wrote on fear DB, also spot on imo.