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Eiger
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Everything posted by Eiger
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Here is a failed trade. I'm not sure why it didn't work? I went long at M on a No Demand bar at pretty good support. I did not read any major supply, unless the bars at 2 & 3 were distribution, but I still don't think that would be enough to take the market down. Maybe the two bars before M were signaling "stay out," I don't know? It is still early in the afternoon and I would think that yesterday's high, being so close, would be a tempting magnant? Maybe not. Anyway, if anyone has any VSA insights, i would love to hear about them.
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I am sorry to question your certainty, Zdo, but it is unfounded, as you can see here: And that is my complaint. As happened earlier, someone posts a VSA-based chart, and then gets chastized for using VSA principles. This thread gets derailed by people who state they have no interest in VSA, have their own blogs, but just can't seem to control themselves. They have a different agenda. And, when this is raised, all kinds of nonesense comes out, none of which has to do with VSA.
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Well, Brownfan, why would anyone expect anything different from a person who tries to pesuade me to use candlesticks because they are so much easier? And, that's right, db, continue to try to reframe. It's not about what has been talked about on this thread, it's that you keep trying to persuade others to not use VSA on the VSA thread! BTW, I like that you bring in the 5-minute chart - very on track with the discussion at hand. I didn't quite read how your version of "price action/the thing" is relevant to the volume, spread, close, background, i.e., VSA? Must have missed it. Doesn't matter, it is all intellectual masturbation, to me. I'd rather analyze markets and make trades, anyway. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Speaking of the 5-minute chart, here are two trades from this AM: 1 - Premarket: a wide spread down bar, closing in the middle, indicating large interests were buying as others were selling as a reaction to the 8:30 AM news. Price drifted lower retesting the 1361.50 rally high from March 24th. Note the Shortening Of Thrust at support indicating a lack of downside follow through. A - Fairly wide spread dipping lower but closing on the opening - more buying. B - After the open, a drive lower back to the support area, but not much volume comes out for such a wide spread. Next bar recovers all that was lost on B and then some, and closes on its highs. Buying. C - A Test on low volume (less than the previous two bars) and entry on the close. Trade exit just below first resistance. D - Wide spread up bar closing onthe lows with ultra high volume. Next bar unable to advance on high volume. Weakness came into the market, and price falls lower. E - A no demand UpThrust and entry for short on the close. Note No Demand 2 bars earlier. F - Above average volume comes in and price closes in the middle, indicating possible climactic or stopping action. Next bar is down on volume less than the previous two bars, showing supply has suddenly dried up. Although I was playing for a retest of the lows, trade exited on close. Market rallies. Eiger
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Please don't try to reframe this; you cannot. You keep insisting that people here pledge alliegiance to your version of "price action," or "the thing," as you call it. VSA is all about reading bars--how it closes, whether it is an up or down bar, and the width of the spread. It is also concerned with the volume on those bars, and how this occurs in the context of the background. These bars, volume, and background are read to understand how large money is influencing the market. On page 12 of The Undeclared Secrets That Drive the Stock Market Tom Williams says this about VSA methodology: "The price spread is the range from the high to the low in the price bar. We look at this in regard to the spreads of the other bars preceding the one under investigation and those that follow. Is the spread abnormally wide, abnormally narrow, or just plain average and how much volume has accompanied it? Again, any spread taken in isolation means little. Like the volume, it is the relative spread we must always look at. We will also use the close price to determing the direction of the spread. If the market has rallied strongly during the day and has closed near the highs of the day, we say we have a wide spread up closing on the highs. Conversely, we may have a narrow spread down compared to the previous day's spread. We also pay great attention to whether the bar is an up bar or a down bar." You never discuss these VSA-related things. VSA has absolutely nothing to do with your personal version of "price action." Nevertheless, you persistently attempt to disuade people from analyzing charts from a VSA perspective and insist that they focus on your personal version of "price action," or "the thing," as you call it. You do this with virtually every post you make to this thread. Talk about this stuff on your personal blog; here it is quite off topic. Please stop.
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Too bad this thread has once again been hijacked with the same old non-VSA pap. It is truely unfortunate, as I thought this thread was getting focused and becoming useful for VSA traders. Why is it that those with their own threads and blogs insist on pressuring others who don't subscribe to their world view? What is it with you people? Your own personal threads and blogs aren't enough?! If I don't swear allegiance to your ideology you will keep trying to bully me into it? This is impoverished thinking and behavior. Please stop trying to drag this thread down to that level.
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Hi. There is only one YM contract, and it doesn't vary in size. One contract is one contract. Its value will vary, depending on the value of the DOW 30 stocks. A YM contract's value is $5.00 times the Dow Jones Industrial Average Index. Each point is worth $5.00, so if the index goes up by 100 points, the value of the YM contract goes up by $500.00. Although contracts do expire four time a year, there is no time decay to worry about. If you buy or sell a contract, you put up margin (it is different than the preimum paid in buying a call or put). The exchange sets the margin, though it may be modified by the broker. Required margin amounts will sometimes change when the volitility of the market changes. Current speculative margin requirements set by the exchange for the YM is $3125 for intial margin, $2,500 for maintenance margin (meaning that if your trade suffers a loss of the intial margin, you need to put up an additional $2,500 for margin, not just the loss amount). My broker requires $1750 in margin for day trading the YM, but you have to close the position by the end of the day, else it goes to $3,500 (which is more than set by the exchange). Margin can be less when part of a hedge or spread strategy. Since you are an options trader, think of a futures contract as an at the money call or put that you have written (sold) without any farther out offsetting option. You need a certain amount of margin in your account for any naked option you write. It is conceptually the same for YM contracts. Each night, your account gets marked to market. Any profit or loss is credited or debited from your account. So, if you have $5,000 in your account to start, and you enter long (buy) one YM contract during the day, $1,750 is "frozen" in your account. That margin is set aside to cover any loss you may have. You are free to do whatever you want with the remaining $3,250. If your trade makes 50 points in profit and you close it out, the initial margin is released and $250 is credited to your account. If you close the trade at a loss of 50 points, $1,500 is returned back to your account ($1,750 margin less $250 in loss). If you decide to hold the trade overnight, the margin will increase to $3,250 for each contract you hold. It is a bit different than options
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I am away out of town and not trading through early next week. I won't be near a trading computer during the weekdays. A few quick comments: Just because there is a support level and price hits it and bounces from it does not mean we are now in an uptrend. It also does not mean that price will travel from that support area to the next overhead resistance area, especially in a downtrend. Trends: A simple, but effective rule of thumb for a downtrend is to see a series of lower highs and lower lows. Once you see a lower high followed by a lower low, you should be thinking short, watching for low volume, narrow spreads, and looking for no demand and upthrusts on the next rally. On Monday, the market made a high. Tuesday saw a lower high. Yesterday, there was a lower low and another lower high -- I am doing this from memory (I don't have charts in front of me), so I could be off, but you should get my drift. We are in an established down trend. Resistance for today was at yesterday afternoon's rapid run up (about 3:00-3:15, or so). That is key resistance for today because obvious supply came in there, driving the market down to the lower support area (about 1336, I think), making another lower low. Put up a 30 or 60-min chart that includes this week's data (from Monday) and draw trend lines. You should be able to see the downtrend clearly. (I think I posted a chart showing the downtrend yesterday?) Weakness on the daily: Sebastian also provided us with an astute analysis of the market. He saw significant supply confirmed by a failed test. Just a casual look at the daily chart would show a recession of volume on the last few days of the rise, indicating some level of weakness. Practical application to trading: Tom Williams makes a clear point in his book: As a trader, you really want the market to tell you what to do. During the last two days, it was saying you wanted to be short. If you take a long trade at support in this kind of environment because you see a little demand come in, that's OK, but it is best to trade this as scalp only, until we have an uptrend or a clear indication that good demand is coming into the market and the trend is likely to change. You can't expect bigger moves on long trades in a down trend. In any event, most trades over the last two days were best taken on the short side. See you next week, Eiger
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Hi Dan, I place the most emphasis on the daily highs and lows. The market will trade around these areas quite a bit. I don't really think too much about how many times price has hit a specific level in terms of weighting it more or less important (though obvious, major congestion areas are unlikely to be penetrated on the first try). Instead, I focus more on the tape action as price comes into one of these areas. I do not try to get the high or low tick if i am looking to sell resistance or buy support. I am more interested in taking a trade with confirmation than getting the very best price, so I am happy to wait for that confirmation. Usually, if I am focused on getting the very best price, i am ignoring something else that is important, and I always seem to pay a price for that. What I do think about is when price breaks through a given level. Support and resistance are opposition. When price breaks through the opposition, the odds are very good that it will continue in the direction of the break through. I am then looking for weak rallies or reactions to take a trade in the direction of the break through. Those are high odds trades. And, if the market gods are favoring me that day, price will come back to test the opposition area . Wyckoff originally talked about this using the analogy of dams. He said that engineers don't build dams right next to one another. So when the dam breaks, there isn't another dam right behind it to hold back the water. Same with price. Once it breaks through the opposition, you can anticipate continuation. Eiger
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Unbelievable, isn't it? I was just taught to use the actual price levels painted on the chart. These work so well that I never felt the need to use pivots. Remember, I am trading the S&Ps. Cable trends a lot; the S&Ps is more of a counter trend market. Most of the time I will have my exit just below/above the resistance or support as a target for an exit. I know there will be activity there and I want to get filled. If it goes through it and continues, I just wait for a retest of that area or a retracement, and if appropriate, reenter in the direction of the origninal trade. My worries are more about price not making it to the S/R level, which sometimes happens. JJ talked about what price and volume should look like on the approach, and as usual, he is spot on.
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Hi Sledge, I don't use pivots of any kind - sorry, I am a pretty plain vanilla, basic kinda guy . I just use the highs and lows on the daily and hourly, and note weekly S&R as well.
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And we do tag 1365.50, just like a magnet. I love this stuff
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You needn't be hard on yourself. This is a real challenge. As I said earlier, you know more than you may think you do. A little psychology ... Unlike most people, when a pro athlete discovers a limitation in her game, she's estatic. Why? Because now she has something concrete to work on to improve her game. Otherwise, she never knows, and never gets better. And she knows the discovery of limitations is more important than virtually anything else she can imagine. Once she identifies a current limitation, she can put together a plan to overcome that limitation. Believe me, if she is a serious athlete, she is out there every single day on whatever field she is playing on with her sincere intention to overcome her limitation, and working very, very hard at it. It takes great effort, but she knows that overcoming her limitation will give her a new asset in her game. This is why discovering her limitations is more vital than anything else. She knows it's the only way to improve her competitiveness and win more events. Trading is a performance activity just like sport, it just doesn't include the physical. The more we learn about our limitations and develop a plan backed by sincere intentions, the more we can improve and overcome whatever challenge we face. Never call a limitation a weakness; it isn't. Never view a limitation as a critical comment about yourself; whatever limitation you have in trading has nothing to do with you as a person. Instead, view it with excitement, because now you can do something for yourself and get better . Ok, back to trading ... Use the higher time frames to give you a picture of the market in terms of trend, support & resistance. Then confirm your picture with the 30, 10 or 15 and 5 min charts. When something sets up, use the 5 or 3 min to trigger the trade. Taking a trade because it looks attractive on the 3-min chart when everything else is going in the opposite direction is not generally a good idea. Our first job as traders is to protect our account so we can come back tomorrow and trade. So, look to take trades with the wind at your back; try not to fight the overall trend and tone of the market. Hope this is helpful Eiger
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FWIW, maybe this will help clarify. This is what I do for Support and Resistance. I do the same thing on the daily and weekly charts. I update them every night, and keep the hourly on the screen all the time. It is part of VSA. Tom Williams in his book, the Undeclared Secrets, says us day traders would be well served by paying attention to the daily and weekly charts. Can you see the structure of the market and how the prior resistance at the 1336.50 area has become support and has acted like a magnant for this market today? I don't know if we will actually touch it, since volitility has dropped so low, but we are within a point or so of it. When you start to frame out the market like this, you will begin to see how much we trade around the daily highs and lows, and how the hourly and even weekly S & R become so important. Eiger
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Because you are in a downtrend from yesterday afternoon, and the market was weak with supply, an upthrust, and no demand on the 3-min chart. You will think I sound like a broken record, but you must look at higher time frame charts. Again, what you thought you saw on the 3-min chart does not give the full picture of the structure of the market. The attached chart is a 30-min chart which includes overnight data. The red arrow is where you wanted to go long. It is pretty clear we were in a downtrend all night long after putting in a lower high yesterday afternoon. The only relevant support around the open was yesterday's low. The lines drawn on your chart were illusory because of the limitations of the time frame. When I look at support and resistance, I look for the obvious. I don't use Fibonacci numbers, pivots, MP value areas, etc. Some people seem to use these well, but I personally just keep it simple and think about nearby daily highs and lows and the hourly highs and lows, if relevant. If the day before had an especially active area (volume), I will note this too, as it may be tested today or tomorrow (and this is probably like MP). That's about all I do for S&R. I also think about S&R as magnets. Traders will go and test these areas all the time. If I am short and there is an obvious support area nearby (like this AM), I look for a test of that support. The more obvious it is, the more confident I am about the target. If everyone can see it, they will usually go for it. Of course, I will buy support and sell resistance when it is appropriate to do so with confirmation whenever possible. Hope this is helpful Eiger
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Today, the market opened lower, and yesterday put in a lower high. No big demand came in off the 8:30 AM Durable Goods report, the open, or the New Home Sales report. Given this background, I am looking for a short opportunity. In the first forty-five minutes, market conditions are not very volilitle, so my objectives are modest (which they usually are). This could be another sloppy day, or it might turn out more active - whatever it is, i will try to trade accordingly. Here is a trade off the 3-min chart that tries to meet these conditions (note: there are indications off the 5 & 15-min charts as well): Bar 1 - supply enters the market on a sudden increase in volume, wider spread and midrange close on an up bar. It looked attractive, but as JJ says, it's just a bar with supply on it (pretty, though ) Bar 2 - an upThrust on increased volume that fails to penetrate the opening gap by much and closes near its open. The market is weak here, but not really moving. Bar 3 - The market slides lower and then gives a No Demand bar and my entry point Trade exited just above support. With not much volitility, the objective of this trade was to play for a test of support. It eventually goes several points lower. I don't care. Why fight support in a slow market? If I was wrong, I would book no profit. This was just a quick trade that set up well and I tried to respond to market conditions. Eiger
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JJ's post about this is spot on - you have to be comfortable with the objective. Conditions are also important. On sloppy days, I limit my objectives; when the market is trending, just breaking out of congestion, or having sharp moves, my objectives widen. Here is a page out of Wyckoff's Tape Reading Course, originally published in 1932. Ignore my highlights and notes. It is pretty self explanatory. This is a first step in thinking about trade objectives. The next would be to correlate market conditions with size and frequency of moves. Eiger
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Your last two posts are designed to generate controversey and take us off topic. Please don't anymore. Eiger
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I didn't realize that a long shadow like this sets up a zone for entry. Thanks for that insight. I assume that this is for climactic bars/candels like this? I would not go long on 1 (B). Too risky for me. I used to trade Wolfe Waves exclusively. They have you going in on the climactic bars. I got hurt too many times with what often turned into early entries. The guy I used to trade with and I eventually figured out a better way to enter. BTW, he was a great trader. He would put on a trade and then always say, "Now it's up to the market," and he meant it. He was a very good trader and taught me a lot. Anyway, I learned the hard way that it is very, very risky to buy into a wide spread, heavy volume bar. They are easy to misjudge. I almost bought on Bar 2 ©. After a climax, there is usually (actually, I think always) a technical rally that follows immediately. It's called the Automatic Rally or Automatic Reaction, depending on the type of climax. VSA doesn't talk about this, but it is one of the things that helps to confirm the climax, the other being the test. Is there some logic about Bar 2 © being in the shadow zone, or is this more a convention in candle trading?
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This is a very good point for me to remember (see post immediately above). You can't just take any pretty UpThrust that comes along
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I was looking at the 3-min wedge, too, and shorted the UpThrust at 11:39. When that failed to go very far, I knew it would go higher. There was just no supply. I must admit, though, I was still looking for conditions to set up a drop before the end of the day (I just love the short side ). It did seem weak, but actually these creeper type moves can be pretty strong in their own right. There were several nice Tests in a Rising market that offered good long trades pretty much all day long. Eiger
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The Boot Camp CDs are excellent. They also did a Master Class on strength and weakness which was also excellent. It is very helpful to review them and the book frequently.
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JJ talked about this very well. The only thing I would add is to look at higher time frame charts. There was no appreciable support for your long trade - it was just the opposite. On the attached 10-min chart, you can see the market ran up after the FOMC announcement the day before and made a new high. The next day, it made a lower high, and then broke through the small support that formed in the morning session. You now have a down trend. Once support breaks, it turns into resistance. Also, it wasn't light volume that broke through resistance. Here's a quick analysis: At A climactic action stopped the down move temporarily. A small trading range formed. The two supports within the trading range (the two Xs) had lower lows (bearish) -- these were Springs that failed (bearish). The top of the trading range was capped by old support, now resistance. It tried to break through this resistance three times and failed (bearish). An UpThrust occured at B. Look at the volume. It increases on the UpThrust. This is quite bearish. Also, look how deeply the UpThrust bar penetrated the preceding bar and closes under resistance - very bearish. The next bar C falls on increasing volume. This down bar © has the largest volume of any down bar since the climax -supply is coming into the market on this bar. Remember that when price approaches support on increased volume and spread, it has good odds of breaking through support. You have that here. On the next bar, D, it does break through on good volume with a close lower than any since the climax. Expect lower prices. I understand why you thought about a long trade, but it was illusory for exactly the reasons i have discussed earlier. All the bearish indications were there: a down trend, overhead resistance, two Springs that failed, an ideal UpThrust, increased downside volume. There was a confluence of indications that told the story to go short. Work through your charts every night and annotate everything you can find in accordance with VSA & Wyckoff principles, and you will soon be able to read the markets in real time. Hope this helps, Eiger
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Zeon, On the your first chart, we have a Selling Climax into higher time frame support. It is critical to understand the background. On the higher time frames, you see the important trends, support & resistance, and other important features. The first chart is the 30-min (day session only), showing the trend over the last few days. We are in an uptrend, with higher highs and higher lows. Markets usually don't turn on a dime. It takes time for an up trend to turn to a down trend and vice versa. Given that, larger support or resistance in a trend is important to be aware of. Although the 2-min chart looked dramatic, it is only a 2-min chart. It was climactic in volume and spread, and even on the 2-min, you could see buying come in at 10:02 and 10:04 bars. Whenever you see acceleration in price and price falls or rises rapidly like it did this AM, look for a climax. To see how this can be traded, take a look at the trade I posted earlier today.
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Send me your e-mail address via a private message and I will send you something you should find useful (you, too, JJ, if interested).
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Since the S&Ps are sloppy today, here's a question on trade entry I made from this morning. On the ES 15-min chart, there was stopping volume at B and a test of the high volume at E. It looked like the big money was using the Consumer Confidence news at 10:00 AM to accumulate. This area was the rally high from two days ago (1443.75), and a logical place for support (and, an example of climactic action at higher time frame support). This also showed pretty nicely on the 5-min chart. About 88,000 contracts traded on the 5-min at B, which is ultra high volume on this time frame. Look at the close. This has to be strength coming into the market. Next bar, C was a down bar on volume less than the previous two bars, indicating a lack of supply where only 5 minutes ago, it was ultra high. This caused a rally, and then another reaction. Bar E is a down bar back into the the high volume area, and is another Test. Next bar is also down, and does not draw out supply. Bar F is a reversal bar. F goes well into the high volume area and draws no supply. The close was equal to the previous bar, and only 1/2 point lower than E. I like that look of clustered closes, and I went long at the close with a fill at 1344.50. I took it off just below resistance at 1348.50. You can see the entry and exit arrows. My question: Does this correspond to good VSA trading? Was Bar F sufficent confirmation to make a trade? I know the trade was successful, but was it successful from a VSA standpoint? Eiger
