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Gring0
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I would recommend those interested in SLA-AMT approach to pay attention to how price moved the past day or two. It's a really nice example of SLA & AMT coming together for an entry. Weekly/Daily gave the location to focus on and smaller bar intervals using SLA gave entries (easier to see on 1m & 5m).
Gringo
Gringo
dbphoenix
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dbphoenix
Guest Author
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I'm adding this to the book, but it may also be of general interest:
The beginning trader generally has little or no understanding of market structure. He has no concept of the interrelationship among markets, much less between markets and the economy. Price charts are a meaningless mish-mash of colored lines and squiggles that look more like a painting from the Museum of Modern Art than anything that contains information. Anyone who can make even a guess about price direction based on this tangle must be using black magic, or voodoo.
But those ads on TV are so persuasive. Earn $100,000 A Week In Your Spare Time! At Your Kitchen Table! In Your Bathrobe! All one has to do is buy Hidden Secrets of Market Wizards Revealed! (plus shipping and handling). Or that software with the red and green arrows (how hard can it be?).
So you open an account, subscribe to Level II, install your charting software, and are absolutely mesmerized by all the flashing lights and colors. DOM? You bet! And all you have to do to participate is . . . click.
Before you’ve lost all your money, the thought that you haven’t the least idea what you’re doing may prevent you from blowing your account entirely. You realize now that this is not easy, it’s hard, it’s work, but rather than chuck it, you elect instead to take the subject “seriously”. You locate your library card and/or shop Amazon. You check out – or take much of what you have left and buy – all the “recommended reading”. You take the courses. You attend the seminars (box lunch included). You subscribe to the chatrooms and websites and newsletters. How-To book or notes in hand, you scan the markets every day. After a while (sometimes a good long while), you notice a particular phenomenon which pops up regularly and seems to "work" pretty well. You focus on this phenomenon. You begin to find more and more instances of it and all of them work! It’s all true! It Works! Your confidence in the “setup” grows and you decide to take it the very next time it appears. You take it, and almost immediately your stop is hit, and you're underwater for the total amount of your stoploss.
So you back off and study this setup further. You go back to the books, back to your notes. And the very next time it appears, it works. And again. And yet again. So you decide to try again. And you take the full hit on your stoploss.
This can go on, believe it or not, for years. The pot of gold is placed tantalizingly within reach. The winning lottery ticket is dangled before one’s eyes. The nickel slots pay off, finally, before taking back everything they’d given you and then some. If they never paid off, even the most devout would eventually say screw it and find some other way to throw away their money, maybe Cabbage Patch dolls. But just when the trader is ready to chuck it, the nickels fall into the cup, the fires of lust flare up yet again, and he’s off.
The technical term for this is intermittent positive reinforcement. The market pays off just enough, just often enough, to keep the trader hooked. Just when he’s completely fed up with the enticements and the baloney and the false assurances that he will eventually succeed if only he keeps at it, keeps trying, keeps up the “good work”, he lucks onto a winning trade. It may not be enough to cover his losses. Not nearly enough. Not even close. But it’s a win. And where there’s one win, there’s got to be another. Surely. But there isn’t. And won’t be. Until he’s ready to chuck it all once again. And there it’ll be. Just enough. And another year goes by. Then another. Then five. Then ten.
Practically everyone goes through this to at least some extent. Some bring down the curtain on this little play when they find out just how much work is going to be involved not only in understanding all of it but in morphing that understanding into a consistently profitable – not just intermittently profitable – plan of action. They may be smart or not, but they at least have enough sense of self-preservation that they can smell the danger they’ll be in if they linger. Others refuse to give up, even after the market has begun banging their heads like a Chinese gong. After all, only sissies quit.
Some, though, will be able to back away from this wheel of fortune and observe it, detached, disinterested, and eventually see a pattern, a pattern of wins and losses, what is called “the win-lose cycle”. They will note, for example, that out of every twenty spins, twelve come up winners and eight come up losers. The stick in the spokes, though, is that one is unable to predict the outcome of any given turn. Does this mean that the outcome of any given turn is “random”? Well, it depends on how you define “random”. But regardless of how you define it, the outcome of any of the aforesaid turns is unpredictable, which, on the face of it, puts you in the same spot, i.e., what do you do?
At the very least, understand that there is no such thing as a 100% win approach. When novices gauge the success of a particular setup, they get caught up in the win cycle. They don't wait for the "lose" cycle to see how long it lasts or what the win/lose pattern is. Instead, they keep touching the pot and getting burned, never understanding that it's not the pot (setup) that's the problem, but a failure on their part to understand that it's the heat from the stove (the market) that they're paying no attention to whatsoever. So instead of trying to understand the nature of thermal transfer (the market), they avoid the pot (the setup), moving on to another setup without bothering to find out whether or not the stove is on.
The first step, then, is to determine whether or not the stove is on, i.e., determine the conditions under which any given spin of the wheel is most likely to come up a winner, understanding at the same time that there are no guarantees, declining to be upset by a loser, remembering that over a series of spins the overall result will be profit. The next step is to spin the wheel every time the aforesaid conditions are present and to do so without reservations and without hesitation. Sounds simple enough. Why then do so few do it? Largely because those who don’t do it believe that they don’t have to. They believe that they are smart enough, talented enough, knowledgeable enough, skilled enough that they can spin the wheel however and whenever they choose and come up a winner, or at least do so often enough to make consistent money.
This particular kind of self-assessment is called a “superiority bias”, also referred to as “illusory superiority” or “the Lake Wobegon Effect”, the latter referring to Garrison Keillor's fictional town where all the women are strong, all the men are good looking, and all the children are above average. It is a cognitive bias “whereby individuals overestimate their own qualities and abilities, relative to others, in a variety of areas including intelligence, performance on tasks or tests, and the possession of desirable characteristics or personality traits.” We believe that we are better-than-average drivers, that our intelligence is above average, that we are more tolerant than we are, more sensitive, more perceptive, more rational, more accomplished and, of course, less subject to bias. So why wouldn’t we make great traders?
The market, however, couldn’t care less how skilled and talented and intuitive the trader thinks he is. The market doesn’t even know him. That market is going to do what the market is going to do, which is pretty much what it has done for thousands of years, and it’s up to the trader to face facts and acquire enough humility to negotiate his way toward at least minimal success. Once he is ready to address the market without all the attitude, acknowledging that trading is not a video game, he can begin serious study, beginning with those questions posed in “Developing A Plan” (p. 21, the SLAB): What exactly does he want? What is he trying to accomplish? What sort of trading makes the most sense to him? Long or intermediate-term trading? Short-term trading? Day-trading? Trend-trading? Scalping? Which is most comfortable? What instrument – futures, stocks, ETFs, bonds, options – provides the range and volatility he requires but is not outside his risk tolerance?
And so he "auditions" all of this in order to determine what suits him, taking all that he has learned so far and experimenting with it. He begins to incorporate the "scientific method" into his efforts in order to develop a trading plan, including risk management and trade management. He learns the value of curiosity, of detached interest, of persistence and perseverance, of taking bits and pieces from here and there in order to fashion a trading plan and strategy that are uniquely his, one in which he has complete confidence because he has tested it thoroughly and knows from his own simulated trading and real-money experiences that it is consistently profitable. This eventually becomes his “edge” (the knowledge gained through research and testing that a particular market behavior offers a level of predictability that provides a consistently profitable outcome over time).
He accepts fully the responsibility for his trades, including the losses, which is to say that he understands that losses are inevitable and unavoidable. Rather than be thrown by them, he accepts them for what they are, a part of the natural course of business, of the win-lose cycle. He examines them, of course, in order to determine whether or not some error was made, particularly one that can be corrected, though true trading errors are rare. But, if not, he simply shrugs off the loss and goes on about his business. He understands, after all, that while the market deals the cards, he is in complete control of how he plays the hand, of his risk in the market.
Eventually he is able to meet the market on its own terms but without ego. Planning, analysis, research are the focus of his time and his effort. When the trading day opens, he's ready for it. He's calm, he's relaxed, he's centered. Trading becomes effortless. He is thoroughly familiar with his plan. He knows exactly what he will do in any given situation, even if the doing means exiting immediately upon a completely unexpected development. He understands the inevitability of loss and accepts it as a natural part of the business of trading. No one can hurt him because he's protected by his rules and his discipline.
He is sensitive to and in tune with the ebb and flow of market behavior and the natural actions and reactions to it that his research has taught him will optimize his edge. He is "available". He doesn't have to know what the market will do next because he knows how he will react to anything the market does and is confident in his ability to react correctly.
He understands and practices "active inaction", knowing exactly what it is he wants, exactly what it is he's looking for, and waiting, patiently, for exactly the right opportunity. If and when that opportunity presents itself, he acts decisively and without hesitation, then waits, patiently, again, for the next opportunity.
He does not convince himself that he is right. He watches price movement and draws his conclusions. When market behavior changes, so do his tactics. He acknowledges that market movement is the ultimate truth. He doesn't try to outsmart or outguess it.
He is, in a sense, outside himself, acting as his own coach, asking himself questions and explaining to himself without rationalization what he's waiting for, what he's doing, reminding himself of this or that, keeping himself centered and focused, taking distractions in stride. He doesn't get overexcited about winning trades; he doesn't get depressed about losing trades. He accepts that price does what it does and the market is what it is. His performance has nothing to do with his self-worth.
And at the end of the day, he reviews his work, makes whatever adjustments are necessary, if any, and begins his preparation for the following day, satisfied with himself for having traded well.
To nurse the idea that because you are a successful merchant, manufacturer, physician or business man you are qualified to take part in the vast operations which center in Wall Street is to mislead yourself into worry, strain, nerves, failure and break-down in health, business and fortune. The stock market is something you must learn, just as you originally learned your own trade, business or profession. The foundation knowledge must be acquired; to this must be added the technique.
Trace your record as a successful business man, for instance, and you will recall that you started as an office boy or clerk, gradually worked up to the position of manager, partner or officer and director. In your own line you are a success. Could you have succeeded without long training and practical experience? Certainly not.
Why imagine that you can hand a check to a broker, ask his advice or tell him to buy this or that stock on the strength of some tip, rumor or hunch, and begin making money and keep on making money in this most difficult and complicated business – one in which millions fail and a comparatively few succeed?
–Richard D. Wyckoff
If you want to change your experience of the markets from fearful to confident, if you want to change your results from an erratic equity curve to a steadily rising one, the first step is to embrace the responsibility and stop expecting the market to give you anything or do anything for you. If you resolve from this point forward to do it all yourself, the market can no longer be your opponent. If you stop fighting the market, which in effect means you stop fighting yourself, you'll be amazed at how quickly you will recognize exactly what you need to learn, and how quickly you will learn it. Taking responsibility is the cornerstone of a winning attitude.
–Mark Douglas
Let the market do its own forecasting. In short, we may let the market, and our proper analysis of its own technical action, be sufficient for our own personal guide as to what is going on inside the secret sanctums of the directors' meeting room, the corporation order books, the private conferences of professional operators and the other indefinite mediums of gossip and unfounded rumor.
We need not go near a brokerage office in person; we need certainly not hang over the ticker or devour the news releases as they come over the heated wires. Without ignoring other basic news and confirmed information, we may rather sit back in our own office or study, not secure in our own conceit, not smug with contented over-confidence, but assured none the less that if we have properly prepared ourselves, properly attuned our inner ear and eye, with study, with patience, with hard work, experience and understanding, then our most faithful friend in practical market operation is the market itself, as it outlines in the present its probable future course for those who can successfully read its signs and signals.
–Richard W Schabacker
Certainly there are some people who jump into the market with such a glaring insufficiency of knowledge that we can predict with fair accuracy about how long it will take them to lose their capital. It may not be so obvious that there are others, hardly any better off, who collect unnecessary and irrelevant facts the way a pack rat collects bits of colored glass, beer bottle tops, and buttons. Too much information of the wrong sort not only adds nothing to clarifying understanding, it can confuse the issue so hopelessly that it is impossible to see what is going on at all.
–John Magee
If every man and every woman that puts in days, weeks, and months, in a brokerage office [or it's modern equivalent: the Internet] would put in that same amount of time staying at home, or in their office, studying the past action of the market, they would make a success and would find that time would turn into profits in the future.
Make it a rule to quit wasting your time, because time is money. Put in your time studying and you will be well repaid for it.
–W D Gann
. . . there is little reason for the proponents of either fundamental or technical analysis to worry about the numberless traders speedily adopting the useful methods employed in selecting securities and timing commitments. At least 95% of those who enter the stock market (including the readers of this work) can never be stimulated to study it seriously and logically – the greatest proportion because they haven't the time, or are simply too lazy. The market opinion of this 95% is at heart the perennial human hope to make something for nothing; and the results are, and will continue to be commensurate with the reasonableness of the hope.
–H M Gartley
Easy Street
The beginning trader generally has little or no understanding of market structure. He has no concept of the interrelationship among markets, much less between markets and the economy. Price charts are a meaningless mish-mash of colored lines and squiggles that look more like a painting from the Museum of Modern Art than anything that contains information. Anyone who can make even a guess about price direction based on this tangle must be using black magic, or voodoo.
But those ads on TV are so persuasive. Earn $100,000 A Week In Your Spare Time! At Your Kitchen Table! In Your Bathrobe! All one has to do is buy Hidden Secrets of Market Wizards Revealed! (plus shipping and handling). Or that software with the red and green arrows (how hard can it be?).
So you open an account, subscribe to Level II, install your charting software, and are absolutely mesmerized by all the flashing lights and colors. DOM? You bet! And all you have to do to participate is . . . click.
Before you’ve lost all your money, the thought that you haven’t the least idea what you’re doing may prevent you from blowing your account entirely. You realize now that this is not easy, it’s hard, it’s work, but rather than chuck it, you elect instead to take the subject “seriously”. You locate your library card and/or shop Amazon. You check out – or take much of what you have left and buy – all the “recommended reading”. You take the courses. You attend the seminars (box lunch included). You subscribe to the chatrooms and websites and newsletters. How-To book or notes in hand, you scan the markets every day. After a while (sometimes a good long while), you notice a particular phenomenon which pops up regularly and seems to "work" pretty well. You focus on this phenomenon. You begin to find more and more instances of it and all of them work! It’s all true! It Works! Your confidence in the “setup” grows and you decide to take it the very next time it appears. You take it, and almost immediately your stop is hit, and you're underwater for the total amount of your stoploss.
So you back off and study this setup further. You go back to the books, back to your notes. And the very next time it appears, it works. And again. And yet again. So you decide to try again. And you take the full hit on your stoploss.
This can go on, believe it or not, for years. The pot of gold is placed tantalizingly within reach. The winning lottery ticket is dangled before one’s eyes. The nickel slots pay off, finally, before taking back everything they’d given you and then some. If they never paid off, even the most devout would eventually say screw it and find some other way to throw away their money, maybe Cabbage Patch dolls. But just when the trader is ready to chuck it, the nickels fall into the cup, the fires of lust flare up yet again, and he’s off.
The technical term for this is intermittent positive reinforcement. The market pays off just enough, just often enough, to keep the trader hooked. Just when he’s completely fed up with the enticements and the baloney and the false assurances that he will eventually succeed if only he keeps at it, keeps trying, keeps up the “good work”, he lucks onto a winning trade. It may not be enough to cover his losses. Not nearly enough. Not even close. But it’s a win. And where there’s one win, there’s got to be another. Surely. But there isn’t. And won’t be. Until he’s ready to chuck it all once again. And there it’ll be. Just enough. And another year goes by. Then another. Then five. Then ten.
Practically everyone goes through this to at least some extent. Some bring down the curtain on this little play when they find out just how much work is going to be involved not only in understanding all of it but in morphing that understanding into a consistently profitable – not just intermittently profitable – plan of action. They may be smart or not, but they at least have enough sense of self-preservation that they can smell the danger they’ll be in if they linger. Others refuse to give up, even after the market has begun banging their heads like a Chinese gong. After all, only sissies quit.
Some, though, will be able to back away from this wheel of fortune and observe it, detached, disinterested, and eventually see a pattern, a pattern of wins and losses, what is called “the win-lose cycle”. They will note, for example, that out of every twenty spins, twelve come up winners and eight come up losers. The stick in the spokes, though, is that one is unable to predict the outcome of any given turn. Does this mean that the outcome of any given turn is “random”? Well, it depends on how you define “random”. But regardless of how you define it, the outcome of any of the aforesaid turns is unpredictable, which, on the face of it, puts you in the same spot, i.e., what do you do?
At the very least, understand that there is no such thing as a 100% win approach. When novices gauge the success of a particular setup, they get caught up in the win cycle. They don't wait for the "lose" cycle to see how long it lasts or what the win/lose pattern is. Instead, they keep touching the pot and getting burned, never understanding that it's not the pot (setup) that's the problem, but a failure on their part to understand that it's the heat from the stove (the market) that they're paying no attention to whatsoever. So instead of trying to understand the nature of thermal transfer (the market), they avoid the pot (the setup), moving on to another setup without bothering to find out whether or not the stove is on.
The first step, then, is to determine whether or not the stove is on, i.e., determine the conditions under which any given spin of the wheel is most likely to come up a winner, understanding at the same time that there are no guarantees, declining to be upset by a loser, remembering that over a series of spins the overall result will be profit. The next step is to spin the wheel every time the aforesaid conditions are present and to do so without reservations and without hesitation. Sounds simple enough. Why then do so few do it? Largely because those who don’t do it believe that they don’t have to. They believe that they are smart enough, talented enough, knowledgeable enough, skilled enough that they can spin the wheel however and whenever they choose and come up a winner, or at least do so often enough to make consistent money.
This particular kind of self-assessment is called a “superiority bias”, also referred to as “illusory superiority” or “the Lake Wobegon Effect”, the latter referring to Garrison Keillor's fictional town where all the women are strong, all the men are good looking, and all the children are above average. It is a cognitive bias “whereby individuals overestimate their own qualities and abilities, relative to others, in a variety of areas including intelligence, performance on tasks or tests, and the possession of desirable characteristics or personality traits.” We believe that we are better-than-average drivers, that our intelligence is above average, that we are more tolerant than we are, more sensitive, more perceptive, more rational, more accomplished and, of course, less subject to bias. So why wouldn’t we make great traders?
The market, however, couldn’t care less how skilled and talented and intuitive the trader thinks he is. The market doesn’t even know him. That market is going to do what the market is going to do, which is pretty much what it has done for thousands of years, and it’s up to the trader to face facts and acquire enough humility to negotiate his way toward at least minimal success. Once he is ready to address the market without all the attitude, acknowledging that trading is not a video game, he can begin serious study, beginning with those questions posed in “Developing A Plan” (p. 21, the SLAB): What exactly does he want? What is he trying to accomplish? What sort of trading makes the most sense to him? Long or intermediate-term trading? Short-term trading? Day-trading? Trend-trading? Scalping? Which is most comfortable? What instrument – futures, stocks, ETFs, bonds, options – provides the range and volatility he requires but is not outside his risk tolerance?
And so he "auditions" all of this in order to determine what suits him, taking all that he has learned so far and experimenting with it. He begins to incorporate the "scientific method" into his efforts in order to develop a trading plan, including risk management and trade management. He learns the value of curiosity, of detached interest, of persistence and perseverance, of taking bits and pieces from here and there in order to fashion a trading plan and strategy that are uniquely his, one in which he has complete confidence because he has tested it thoroughly and knows from his own simulated trading and real-money experiences that it is consistently profitable. This eventually becomes his “edge” (the knowledge gained through research and testing that a particular market behavior offers a level of predictability that provides a consistently profitable outcome over time).
He accepts fully the responsibility for his trades, including the losses, which is to say that he understands that losses are inevitable and unavoidable. Rather than be thrown by them, he accepts them for what they are, a part of the natural course of business, of the win-lose cycle. He examines them, of course, in order to determine whether or not some error was made, particularly one that can be corrected, though true trading errors are rare. But, if not, he simply shrugs off the loss and goes on about his business. He understands, after all, that while the market deals the cards, he is in complete control of how he plays the hand, of his risk in the market.
Eventually he is able to meet the market on its own terms but without ego. Planning, analysis, research are the focus of his time and his effort. When the trading day opens, he's ready for it. He's calm, he's relaxed, he's centered. Trading becomes effortless. He is thoroughly familiar with his plan. He knows exactly what he will do in any given situation, even if the doing means exiting immediately upon a completely unexpected development. He understands the inevitability of loss and accepts it as a natural part of the business of trading. No one can hurt him because he's protected by his rules and his discipline.
He is sensitive to and in tune with the ebb and flow of market behavior and the natural actions and reactions to it that his research has taught him will optimize his edge. He is "available". He doesn't have to know what the market will do next because he knows how he will react to anything the market does and is confident in his ability to react correctly.
He understands and practices "active inaction", knowing exactly what it is he wants, exactly what it is he's looking for, and waiting, patiently, for exactly the right opportunity. If and when that opportunity presents itself, he acts decisively and without hesitation, then waits, patiently, again, for the next opportunity.
He does not convince himself that he is right. He watches price movement and draws his conclusions. When market behavior changes, so do his tactics. He acknowledges that market movement is the ultimate truth. He doesn't try to outsmart or outguess it.
He is, in a sense, outside himself, acting as his own coach, asking himself questions and explaining to himself without rationalization what he's waiting for, what he's doing, reminding himself of this or that, keeping himself centered and focused, taking distractions in stride. He doesn't get overexcited about winning trades; he doesn't get depressed about losing trades. He accepts that price does what it does and the market is what it is. His performance has nothing to do with his self-worth.
And at the end of the day, he reviews his work, makes whatever adjustments are necessary, if any, and begins his preparation for the following day, satisfied with himself for having traded well.
To nurse the idea that because you are a successful merchant, manufacturer, physician or business man you are qualified to take part in the vast operations which center in Wall Street is to mislead yourself into worry, strain, nerves, failure and break-down in health, business and fortune. The stock market is something you must learn, just as you originally learned your own trade, business or profession. The foundation knowledge must be acquired; to this must be added the technique.
Trace your record as a successful business man, for instance, and you will recall that you started as an office boy or clerk, gradually worked up to the position of manager, partner or officer and director. In your own line you are a success. Could you have succeeded without long training and practical experience? Certainly not.
Why imagine that you can hand a check to a broker, ask his advice or tell him to buy this or that stock on the strength of some tip, rumor or hunch, and begin making money and keep on making money in this most difficult and complicated business – one in which millions fail and a comparatively few succeed?
–Richard D. Wyckoff
If you want to change your experience of the markets from fearful to confident, if you want to change your results from an erratic equity curve to a steadily rising one, the first step is to embrace the responsibility and stop expecting the market to give you anything or do anything for you. If you resolve from this point forward to do it all yourself, the market can no longer be your opponent. If you stop fighting the market, which in effect means you stop fighting yourself, you'll be amazed at how quickly you will recognize exactly what you need to learn, and how quickly you will learn it. Taking responsibility is the cornerstone of a winning attitude.
–Mark Douglas
Let the market do its own forecasting. In short, we may let the market, and our proper analysis of its own technical action, be sufficient for our own personal guide as to what is going on inside the secret sanctums of the directors' meeting room, the corporation order books, the private conferences of professional operators and the other indefinite mediums of gossip and unfounded rumor.
We need not go near a brokerage office in person; we need certainly not hang over the ticker or devour the news releases as they come over the heated wires. Without ignoring other basic news and confirmed information, we may rather sit back in our own office or study, not secure in our own conceit, not smug with contented over-confidence, but assured none the less that if we have properly prepared ourselves, properly attuned our inner ear and eye, with study, with patience, with hard work, experience and understanding, then our most faithful friend in practical market operation is the market itself, as it outlines in the present its probable future course for those who can successfully read its signs and signals.
–Richard W Schabacker
Certainly there are some people who jump into the market with such a glaring insufficiency of knowledge that we can predict with fair accuracy about how long it will take them to lose their capital. It may not be so obvious that there are others, hardly any better off, who collect unnecessary and irrelevant facts the way a pack rat collects bits of colored glass, beer bottle tops, and buttons. Too much information of the wrong sort not only adds nothing to clarifying understanding, it can confuse the issue so hopelessly that it is impossible to see what is going on at all.
–John Magee
If every man and every woman that puts in days, weeks, and months, in a brokerage office [or it's modern equivalent: the Internet] would put in that same amount of time staying at home, or in their office, studying the past action of the market, they would make a success and would find that time would turn into profits in the future.
Make it a rule to quit wasting your time, because time is money. Put in your time studying and you will be well repaid for it.
–W D Gann
. . . there is little reason for the proponents of either fundamental or technical analysis to worry about the numberless traders speedily adopting the useful methods employed in selecting securities and timing commitments. At least 95% of those who enter the stock market (including the readers of this work) can never be stimulated to study it seriously and logically – the greatest proportion because they haven't the time, or are simply too lazy. The market opinion of this 95% is at heart the perennial human hope to make something for nothing; and the results are, and will continue to be commensurate with the reasonableness of the hope.
–H M Gartley
Gring0
Well-known member
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No one ever said the median wasn't exciting. As far as movement is concerned it has a lot of it, and at times a bit too much. As far as entries are concerned though it's not for everyone. There have been times when turns have come from the middle. I am not a fan of this middling business and am still waiting for better risk control when and if price gets to one of the extremes. Living at the extreme can be extremely profitable. For me it's time to be patient.
There is a message in the dance of supply and demand, and today's message was quite loud. Whether it qualifies for an entry one has pre-planned for is another matter. Market is always teaching and even passive observation, perhaps more so than active engagement, can lead to many profound discoveries. Forget not the admonition by Db about demand, old TC, and the failure to make it into new ground a few times.
The future as always in unknown, and demand could very well return and propel price upwards. Our job is to get better at reading the interplay between supply and demand, and minimizing our risks to what is personally tolerable.
Gringo
There is a message in the dance of supply and demand, and today's message was quite loud. Whether it qualifies for an entry one has pre-planned for is another matter. Market is always teaching and even passive observation, perhaps more so than active engagement, can lead to many profound discoveries. Forget not the admonition by Db about demand, old TC, and the failure to make it into new ground a few times.
The future as always in unknown, and demand could very well return and propel price upwards. Our job is to get better at reading the interplay between supply and demand, and minimizing our risks to what is personally tolerable.
Gringo
dbphoenix
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Trading failures requires emotionlessness. I address that to some extent in the book and in the article I wrote, but reading about it is only a beginning. In order to trade failures, such as those today and this week, one must trust his plan thoroughly. If one begins hemming and hawing and futzing around, the trade is gone.
Only two people that I know of, though I'm sure there are many that I don't know of, have been able to do it as a matter of course: atto and 40d. But then they spent a great deal of time observing and practicing, which just about everybody is loath to do.
Such is the way of the trading world.
Db
dbphoenix
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The failure today occurred at 0951. However, whereas yesterday the trade failed almost immediately and price plunged, this morning it waffled around for over an hour. Copying out yesterday's opening along with the context as well as copying the same this morning will make a useful addition to one's notebook.
Db
Gring0
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You are right, this kind of behavior is actually textbook standard AMT from your book. A range clearly visible. Price stalls at the range and then heads the other way. Nothing more is needed if the range is wide enough. All one needs is to get in at the failure as risk is so curtailed. Some times I wonder why I am not using the knowledge I have to trade intra-day.
Gringo
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dbphoenix
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Those who don't understand what was the proper course of action yesterday morning and this morning should study this post in its entirety. Those who remain lost should stick with the primer posted to the first entry in the previous thread (listed first in my signature) because you're probably moving too fast.
Db
Db
dbphoenix
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Actually there were three, stepped. The first in the after-market on the 14th, the next from the open on the 15th to the afternoon of the 16th, then the overnight range thereafter followed by the failure to make a higher high at the open yesterday (the last was also illustrated as a range on a smaller interval).
But even those who don't trade intraday could have placed a sellstop below this with a 10pt risk. If that's too much risk, the interday trader has no choice but to take the time to consult the hourly chart in the hour or so before the open and attempt to narrow his risk. His risk using the 15m would be only 4pts.
Db
dbphoenix
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Those who do take the time to study the post linked above will understand why traders -- and which traders -- attempted to BO of the hourly range to the upside and then attempted to BO of the same range to the downside before returning to the median of that range, i.e., the equilibrium level.
Db
Gring0
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This is something I am planning to look into. Next year is around the corner and perhaps a bit of low risk upgrade to my repertoire won't be too bad. When I have time I could pull these off and the days I am busy well, hourly would be it. :clap:
Gringo
dbphoenix
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Gring0
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Venturing onto the dark side?
It's never too late to let the force awaken.
dbphoenix
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As you point out, sideways is also a direction. The prep/planning part includes what to do about that contingency as well as all the others.
If one doesn't understand what he's looking at, there is no "trading opportunity", much less anything to manage.
Db
If one doesn't understand what he's looking at, there is no "trading opportunity", much less anything to manage.
Db
Gring0
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Just showing how I am looking at it. Price is at the median and as Db pointed out there is potentially a hinge at play as well. All centered around an axis around which price is gyrating.
For those using a bit longer bar intervals, this is the Palace of Horrors.
Gringo
For those using a bit longer bar intervals, this is the Palace of Horrors.
Gringo
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