SLAyers' Notes

[Gring0]

Even before the open today, price had shown to reverse around 1415. This was the first hint that there was a chance of a TR in the mix (or it already was in TR). Notice also the tightness of the range, as opposed to DL really getting breached with conviction. Price barely crossed the line and then went back up. So for me a potential TR and weak break of DL caused caution. This doesn't mean I wasn't at least still alert. Thing change fast in trading, but I wasn't watching when price failed at 1456 and didn't want to initiate a position in the middle of a TR.

I knew that price might continue down and I might miss the move, but I have come to be mostly at peace with these outcomes. Chasing leads to more trouble in my case as the entry is worse and any adverse move ends up in the red quickly. For me that triggers less than pleasant emotions and I avoid situations like these (mostly).

I also kind of glanced at S&P (ES) to see how it was doing. It's action was showing more strength as the price was higher than the previous (daily) swing high. NQ on the other hand was around the same region though not dropping. Both were pointing towards a bit of stability of demand and not of weakness.

So for SLA-AMT person, the fact that there was a TR before the regular market open was the ticket to try to enter at the extreme 1450 area if price failed. One essentially is then trading reversals. The width wasn't large enough of this TR for me to try it. Faster traders (those with smaller intervals) could have exploited it with reasonable risk control.

Gringo

 

[manraygun]

Db, at what point were you confident of a range being established? I can see that by early yesterday the top was clear, but not the bottom. Is there a need to have both sides clearly defined before applying AMT? This is the second time you mention shorting 4455 so I suspect you really don't need both. Thanks.

Edit: I remember you discussing a situation like this with a clear top and messy bottom. I have it somewhere, so no need to type the answer up again. Thanks.

 

[Gring0]

Db, at what point were you confident of a range being established? I can see that by early yesterday the top was clear, but not the bottom. Is there a need to have both sides clearly defined before applying AMT? This is the second time you mention shorting 4455 so I suspect you really don't need both. Thanks.

By the time the TR is completely visible and confirmed it's usually too late. Information risk vs. price risk.

Gringo

 

[dbphoenix]

Db, at what point were you confident of a range being established? I can see that by early yesterday the top was clear, but not the bottom. Is there a need to have both sides clearly defined before applying AMT? This is the second time you mention shorting 4455 so I suspect you really don't need both. Thanks.

Edit: I remember you discussing a situation like this with a clear top and messy bottom. I have it somewhere, so no need to type the answer up again. Thanks.

A lateral range is suggested the same way a diagonal one is: two swing highs with an intervening swing low, or vice versa. The upper limit was "established" on Monday. The intervening swing low at 22.75 was not tested until yesterday, and price dropped all the way to 14. The upper limit has since then been "clean". The lower has not. But as the trades are taken off the upper, the lower really doesn't matter unless one isn't trading live and has to set an exit at some number to be tripped in his absence.

The focus should be on resistance and the location of the danger point, not on how textbooky the range is. The trader then has to decide how much he's willing to pay to play, the "price of admission". If he's not willing to risk anything, then he's better off passing on the trade and collecting data instead.

Trading the entry live makes a lot of difference. Live one can easily see the failure at 56 at 0945 NYT, even if one is watching only the houly. There is a ret on the 1m at 0950, but, if one isn't trading live, it isn't going to do him any good. (An entry below this would mean a 7+ pt risk)

 

[barjon]

Hi guys, just trying to catch up.

The long was held until the break of the DL or earlier (and higher) if one had been impressed by the continual bashing head against the brick resistance. Given the fast retreat when price was at that level some weeks before not much of a surprise that it should prove made of brick and a good reason to exit as that became apparent.

An SLA short was signalled after the trend break, with the resistance being the danger point, or the short DbP mentions on the latest failure. Either way, people should be short with the somewhat ragged bottom of the range in view or reliance on the SL when it builds?

 

[dbphoenix]

Given that there are multiple "trends", referring to them as demand lines may aid clarity. Or not. In any case, there are more than one in play here (see post 90). The more acute line was broken today and a short entry placed below yesterday's low would put the daily trader into a short (he could also wait for a retracement). However, the "longer-term" trend shown in post 90 isn't anywhere near being broken.

Therefore, what any given trader does here depends on what interval he chooses to trade and what he wants from this trades. There is, in other words, no one way of managing all this. The daily trader will manage it one way, the hourly trader another. The trader who can trade live will manage it one way, the one who can't another. One may have initiated a short trade and that trade may so far be successful. But now what?

Those who remain manipulated by fear will manage it one way, those who have moved past that will manage it another.

Those who have learned how to read price will manage it one way, those who haven't will manage it another.

Those who have learned what they can expect from a trade and decided what they are willing to settle for will be in a better position to manage the trade productively than those who haven't.

Those who find that they aren't ready for any of this can elect to return to the primer level (see the other thread).

 

[barjon]

DbP

Thanks - I was looking daily/hourly.

I suppose the main thing on my mind was sort of price action versus SLA. On the one hand we rest content whilst the chosen DL remains unbroken, on the other we recognise earlier "dangerous" price action to depart.

 

[Splitlink]

DbP

Thanks - I was looking daily/hourly.

I suppose the main thing on my mind was sort of price action versus SLA. On the one hand we rest content whilst the chosen DL remains unbroken, on the other we recognise earlier "dangerous" price action to depart.

Yes, that's a problem. I have been short twice (FT) because I interpret the SLA rules to say "be short"

Nevertheless, with both trades, once in profit I have been forced out to avoid taking a loss.

Now, on the sidelines, I see nothing bad---just nothing happening. Patience needed. It's getting up to the hourly line that I have set.

 

[dbphoenix]

DbP

Thanks - I was looking daily/hourly.

I suppose the main thing on my mind was sort of price action versus SLA. On the one hand we rest content whilst the chosen DL remains unbroken, on the other we recognise earlier "dangerous" price action to depart.

I don't understand what you mean by "price action v SLA". The point of the SLA is to do nothing unless and until there is something to be done. If one acts "early", then the SLA serves no purpose.

As explained in both the condensed version posted in the other thread and in the book, one begins with the weekly, then moves to the daily and, if appropriate, through the daily to whatever interval one wants to trade (the hourly, if trading basic SLA). If one ignores the weekly and daily and moves straight to the hourly or any other interval, he's going to making a lot of bad trades (trading the 1m without any regard for context at all is a waste not only of money but of time). This -- as with so many other trading decisions -- stems from fear, in this case a fear of missing out. If this has not been addressed, the SLA-advanced can't fix it; the trader should step back to the basic level in the other thread and take care to complete each step before moving ahead.

In this case, if the DL were drawn properly, i.e., connecting the swing lows, there was no break until Tuesday. Given that this also constituted a double top at hypothesized R from 9/17, the probability of a reversal is increased and a continuation decreased. Whether or not the trader wants to assume the risks of shorting this is up to him. If he doesn't, he can wait for the hypothesized downmove to take place and short a retracement. His price risk will increase, but, again, that's his choice.

The choices are limited if one is trading basic SLA. If the trader views all this as trending, exit the long on the break of the DL and wait for the first retracement to short. If he views this as ranging, short the reversal at the upper limit of the range. If he doesn't know whether it's trending or ranging, then further study may be called for.

 

[dbphoenix]

Yes, that's a problem. I have been short twice (FT) because I interpret the SLA rules to say "be short"

Nevertheless, with both trades, once in profit I have been forced out to avoid taking a loss.

Now, on the sidelines, I see nothing bad---just nothing happening. Patience needed. It's getting up to the hourly line that I have set.

If you're referring to the FTSE, what one does depends on how he interprets what price has been doing for the past two months and how much risk he's willing to assume. I don't see any shorts here until Monday, but given the sloppiness of the FTSE, there's more than one way to interpret what's been going on. But then discussing this sort of thing ahead of time is part of the purpose of boards such as this.

 

[Splitlink]

If you're referring to the FTSE, what one does depends on how he interprets what price has been doing for the past two months and how much risk he's willing to assume. I don't see any shorts here until Monday, but given the sloppiness of the FTSE, there's more than one way to interpret what's been going on. But then discussing this sort of thing ahead of time is part of the purpose of boards such as this.

Well, its not ahead of time, now. Its gone up!

Looking over two months is too much for me. I'm drawing my TLs over a shorter period.

Your SLA approach is great, db, and I thank you and will recommend your thread to anyone who asks for my advice on what should be read, but there is a lot of personal opinion in it, isn't there?

 

[dbphoenix]

On the daily, no, it's still down.

As for personal opinion, not really. But the trader has to decide what interval he's going to trade and how much risk he can tolerate. If you draw your demand and supply lines and trendlines over shorter periods (I assume you mean intervals, not timeframes), that's your choice. If I don't know what you're drawing and where and why, I can offer only general statements.

 

[barjon]

No hinge. Just hitting the wall at 4455. But there have been multiple ops to short at that level all morning.

Yes, it's true that " The point of the SLA is to do nothing unless and until there is something to be done. If one acts "early", then the SLA serves no purpose." But you also posted the above relating to action before the break - one couldn't have taken a short whilst one were still long.

Clearly, there is no contest if one relies wholly on SLA slavishly and without further thought. If, however, one is looking beyond SLA and recognising important price action then there is, or can be.

I appreciate that as far as SLA is concerned your stance is quite simply "just obey the rules" which is fine. From the perspective of developing a wider Wyckoff understanding it's slightly different?

 

[dbphoenix]

That post was addressed to someone who's daytrading it. You're not. But that's the point of individual journals. As for "looking beyond the SLA", that's an individual choice, but the SLA has no control over that.

As for "developing a wider Wyckoff understanding", that's another matter entirely. I spent five years in that effort, all of which can be found at TL. Nothing has changed in that regard.

 

[barjon]

That post was addressed to someone who's daytrading it. You're not. But that's the point of individual journals. As for "looking beyond the SLA", that's an individual choice, but the SLA has no control over that.

As for "developing a wider Wyckoff understanding", that's another matter entirely. I spent five years in that effort, all of which can be found at TL. Nothing has changed in that regard.

DbP

OK, thx.

Would it be fair to say that you developed SLA as a way of expressing the understanding you'd gained from that five years effort? Do you rely on it so far as your own trading is concerned or do you have a "looser" approach - albeit with well framed rules - based on your understanding, if you see what I mean

 

[dbphoenix]

DbP

OK, thx.

Would it be fair to say that you developed SLA as a way of expressing the understanding you'd gained from that five years effort?

Partly. The impetus behind writing the SLA came about because so few people were willing to read W's course, much less study it. And many of those who tried claimed that they couldn't understand the language. Plus I got tired of arguing with the "Wyckoff traders" who were trading something else entirely. So I reworded it all into the SLA. "Expressing my understanding", though, was nothing more than a means by which the SLA was written. All of this enables me to address the core concepts without involving W directly at all.

Do you rely on it so far as your own trading is concerned or do you have a "looser" approach - albeit with well framed rules - based on your understanding, if you see what I mean

The former. When I think I'm smarter than my own plan, I generally pay for the lapse.

 

[barjon]

Partly. The impetus behind writing the SLA came about because so few people were willing to read W's course, much less study it. And many of those who tried claimed that they couldn't understand the language. Plus I got tired of arguing with the "Wyckoff traders" who were trading something else entirely. So I reworded it all into the SLA. "Expressing my understanding", though, was nothing more than a means by which the SLA was written. All of this enables me to address the core concepts without involving W directly at all.



The former. When I think I'm smarter than my own plan, I generally pay for the lapse.

Well, your work certainly hasn't been wasted - it's by far the best "expression of Wyckoff" that I've come across.

 

[dbphoenix]

That's nice to hear. Thank you.

 

[dbphoenix]

About Wyckoff in particular and the difference between a Wyckoff approach and the SLA approach.

I posted a chart of what was then a hypothesized climax and test in the NQ on TL on 9/4. Only a few people saw it, but it's there nonetheless (I posted it there because I didn't want to have to argue about it).

The "Wyckoff Trader" would likely post something like this long after the fact in order to show how insightful Wyckoff was and how winning his approach is:

And all of that is true. But it doesn't go far enough, at least for someone who's trading it in real time (unless he's trading OPM in which case who cares?).

The real test, as I pointed out on the 4th, was much earlier:

Now Wyckoff would most likely have just bought this and held onto it given that the danger point is so far away. Today's trader, however, would not likely have the confidence in the Wyckoff approach to hang on through a subsequent retest. Hence, the SLA:

More trades, but no losses, and good positioning for whatever the market has next in store.

Db

 

[barjon]

I deleted a reply post which talked about a massive gap opening according to stockcharts (your traders lab post), but I see the same on your Investing.com chart posted here.

Quite unlike my Investinguk.com chart which presumably cuts the daily according to UK(European) time whereas yours is as USA.

You could get real confused