CandleWhisperer

Very good idea. Make a "book" of past charts with various set-ups and interesting things related to the price/volume action.

Bathrobe. Here are a few things I see. It's always nice to see new people on this thread. Welcome. First question, have you read the book? I took the liberty of adding some things to your chart. Here is some of what I see: 1. Wide spread up candle on ultra high volume closing near the middle of its range with the next candle down. Supply enters on this candle. 2. Not very high volume up candle here. The candle does close off its high and is more weak than strong but this is not a "significant" candle. With that said, if we look at market structure we are failing to make a higher high so that shows weakness. 3. This is an up thrust. Wide spread candle closing near its low on increasing volume. This is in the right place as we have weakness in the background. 4. Stopping volume. Down candle closing off its low on very high volume with the next bar up. 5. -5a. The two bars together are pushing thru supply and are thus strength and not weakness as you usually find on up bars on ultra high volume. Note that the supply level is the top of the up thrust. 5 has some supply enter as it closes well off its low and while 5a closes on its high the next bar is down. We would like to see a test to prove that the high volume was absorption volume or not. 6. We don't get it. What we get is a no supply candle that is not where we would like it to be. 2 candles later, we get an up thrust. Since the high volume of the 5-5a candles has not yet been tested, we can expect that the market will fall back down into that area for a test. This up thrust offers more credence to the notion that price should fall at least into the area of those candles. We still don't get a test candle but the market finds support...............

Candle patterns on their own are really not sufficient to make money in the markets. This is exacerbated by the fact that most "patterns" that can be found in books or on the internet are losing (low probability) patterns. What one really has to understand is the price action PRIOR to the pattern. Most traders fail here because they assume that the candle pattern defines the price action. The truth is the price action defines the candle pattern.

I found this post on "Re: Thoughts from a Professional Trader" interesting and have nominated it accordingly for "Topic Of The Month January, 2009"

Thanks for this valuable thread, but with all due respect, wouldn't a better prism to view the market from be: The market is a free for all buffet- All I have to do is collect my money. The market is a friendly place; the market will provide. Call it the "Law of Attraction" or whatever. But do most of the successful traders you know, view the market as friend or foe? I am trying to work on my mental program (read demons) and nothing I have seen would suggest to see the market as anything other than a place where money can be made easily.

Tasuki &VJ You both missed the dark (red) WRB just prior to the candle in question at A. This is a wide spread candle on very high volume closing off the lows with the next candle (A.) up. This is another sign of strength in the market. After seeing this candle, you have to ignore the "weakness" of the next two candles which close up on volume less than the previous two candles. Note that neither of these can be confirmed as no demand since neither of them are followed by a down close. What this effectively means is that the smart money is not yet interested in higher prices and they are certainly not interested in lower ones either. The market drifts sideways on the demand that entered on the WRB. The dark (red) candle prior to D is a no supply. It has volume less than the previous two candles and it is also confirmed with the next candle up (D.). D does not trade higher than the previous candle, so it would not bring you into the market and it trades a bit lower which we don't like to see. The best place to get long is the dark (red) candle after the candle E. It is no supply. The volume is less than the previous two candles and it is confirmed with the next candle closing up. That next candle does not trade any lower which is also a good sign. The entry is taken in one of two places: 1. when the high of the no supply is breached. 2. at the close of the candle confirming the no supply on the previous candle. I am pretty sure that somewhere in the Master the Markets book, Tom does mention to be careful of low volume up bars at the naissance of a new uptrend.

Thank you for the response. I am shocked at the lack of them for such an important topic. Anyway, the point had to do more with a trader's psychological make up than a strict risk/reward equation. It is possible to increase position size in such a way as to keep the r/r the same as you pointed out, but the accompanying psychological change doesn't necessarily stay the same. The idea of trading 10 contract in the es may effect a trader simply because the contract size is 10 rather than 2 even if the account is 10xs bigger when trading the 10.

Let's get this out the way before we begin: 1. Anybody that answers can use hypothetical numbers (for math reasons or illustration purposes). Your personal financial status is your own business. 2. Newbie’s that are not yet trading real money but have ideas of how they plan to pay themselves when the time arises, are free to answer. The question as the thread name states is : How do you pay yourself? A few years ago I read an article about Michael Jardine of Enthios.com. In the article he said he paid himself as follows: 1. he had a minimum amount that he started the month with. For math purposes assume $50,000.00 2. At the end of the month/beginning of the next month, he took all monies above the minimum out of the account (in the form of a check to him) and started the month out new. So if he had $300,000.00 at the end of the month he would keep $50,000.00 and get a check for $250,000.00. Again, I am making the numbers up here, but you get the idea. 3. What I do not remember is what he did if the month came up short. Suppose he had $35,000.00 at the end of the month. Did he deposit the $15,000.00 to get the number back to his min level? One of the reasons he did this was psychological. It helped him under trade in size. In other words, just because he could trade 10 s&p contracts did mean he should trade that many. By keeping the size of the account down, at the start of the month, there was no temptation to increase size beyond his personal risk tolerance level. I prefer the taking out some amount at the start of the end of the month/start of the new one, but keeping the bulk of the monies in the account. Suppose there is $25,000.00 in my account. At the end of the month there is $50,000.00. I take out enough to cover bills and some externalities, say, $10,000,00 and now have $40,000.00 in the account. On the plus side, if the next month ends with a drawdown of $15,000.00 I am back where I started the prior month at $25,000.00. More importantly for me, I do not have to deposit again. On the down side, I do not get paid that month , or I got paid 1/2 as much for the last two months if you will. This brings up the other question. Are you making at least as much as you could be making if you did something else commiserate with your skill set? If you graduated from Harvard and could be making $250,000.00 a year in corporate America, but are trading instead and are making $75,000.00 a year that's a $175,000.00 loss to you. So basically, the minimum amount you should be paying yourself is the minimum amount you would be worth in the labor market. Be honest. Economists call it being under-employed. By being a trader, are you volunteering to be under-employed? Anyway, I look forward to your answers.

Tell us more if you can.

I am sure both you and BF are in no way connected to Todd. This was just a series of coincidences. In truth, if I had a website on VSA/candle volume/Wyckoff volume I would want to have it discussed about here. After all, this thread has some of the best VSA discussion out there. Plus, there have been times when this thread comes up first (ahead of Trade Guider) when the term VSA is googled. As for the site itself, you are spot on. That video said nothing. However, I do plan to sign up for the newsletter as well.

IF I was a conspiracy theorist: Phase 1: Somebody asks about Todd Krueger on the most visited VSA thread on the web. Phase 2: An article appears on the number one forum by one Todd Krueger. Placed by someone who "doesn't recognize the name." Phase 3: Todd's website goes live. The only links that are up are to courses...........

Nice chart. But think about Elliot Wave. A wave 1 on a 15 minute chart can be seen to be an entire 5 wave pattern on the smaller 5 minute chart. Of course the argument then shifts to the existence of Elliot Waves in the first place.

I don't want to toot my own horn but.......... TOOT!!!!!!!! TOOT!!!!!!!!!!!! LOL. PP and I have talked about the power of a no demand that is also a doji for a long time. Will he dare to mention WRBs next?

There is no such thing as "noise". If you believe that price is continuous and every price is valid because a traded happened there. People make price incongruent by using various arbitrary timeframes. This is because unlike price, man is a temporal being. But if these timeframes are all equally arbitrary they need to have similar properties, otherwise one would be more or less arbitrary than another. If all must exhibit similar properties, that means if you look at a 5 minute chart minus the scales it has to look like a 23 minute chart minus the scales. The result is similar to looking at a coastline from space and then looking at from a small child. The child sees more detailed coastline that resembles the one seen from space. The Ant on the coastline sees an even more detailed coastline that resembles the one seen by a child. That resembles the coastline as seen from the humble. This is the definition of self similarity. It is also a necessary condition of a fractal. We have established that any X, where X=timeframe must be similar to any x+-i, where i= any number plus or minus, if all are to be equally arbitrary. This must lead to self similarity. So we can conclude that markets are fractal.

Markets are in fact self-similar. Take 5 charts from 5 different timeframes. Remove the time scale and the price scale. You will then be hard pressed to determine what timeframe is what. On the other hand, the pattern of HHs and LLs will be seen in some fashion on all charts. Particular price patterns, like Head and shoulders patterns, will be seen on all charts. Of course, it is possible that the duration of a particular chart is not showing that pattern at that time. But the fact remains that is could. You well see resistance/support levels consistent on all charts. Therein lies the self-similarity element of a market's fractal nature.