Eiger

Because that wasn't the point of the post. The point of the post was all about background in context of the higher time-frame, 15-minute chart. The area you circled wasn't relevant to that discussion. I would encourage you to go back and read the entire post with both charts. As I try to point out, looking at the trading time fame bars without understanding the background conditions is tantamount to trading random patterns. Sure there are technically plently of VSA indications in that hour, but it was a slow drift down after a good rally up so these are ignored. There was no SOW. Any NDs, HUTs etc were not high odds indications for trades. Given the SOS in the background, these are only random bar patterns. The market will make you pay dearly for trying to make trades out of these. The market had already tipped it's hand to the upside. Until the market hit resistance later, any worthwhile trades were longs, not shorts no matter how many NDs, etc. there might have been. Eiger

I agree with you about the bailouts ... Re: disgusting: Think about the the poor schmuck who lost his job in December after 15-20 years with the company and now has a hard time making ends meet. He looks at AIG and thinks, Gee, these guys helped create this recession that cost me my job and may even cost me my house, my taxes have helped bail their cookies out of insolvency, and then they get big bonuses! In this guy's mind, disgusting is probably too mild a term. And then there are many others who are still working but are really scared they will be losing their jobs next. They see themselves trying to do the right things, believe they've worked hard, and never thought about getting rich, just make a living. But now they are living in fear that the axe will fall on them and they really don't know what to do. They have no clue. Then they look at AIG and see people getting major rewards for doing the wrong things. The smarter ones see AIG not only as getting caught up in greed and doing the wrong things, but refusing to acknowledge that experience and continuing to be greedy by taking bonuses when undeserved. Fool me once, shame on me; fool me twice ... People are very pissed off.

Hi Mantra, Good Questions. The key to your questions and difficulties reading this market is in the background. I can never emphasize this enough: Always seek first to understand the background, then look at your trading time frame chart and bars. The background is your context. You have to have some context to take trades. If you don't have the background firmly in mind, you are trading random patterns. It doesn't matter if you are using fibonacci, MACD, VSA, MAs or any other methodology. If you don't have the background conditions in mind, you are trading random setups, and this is one good receipe for failure. You have the background on your charts. It's in the 60-min chart. Looking at that chart, I see an uptrend. The 60-min is making higher highs and higher lows. Although not shown here, volume comes in on up bars and tends to recede on down bars. There has been no climactic action or a clear tiring of demand at the top of the rally on the 60-min. These would suggest a turn in the market, but they are not there. There is no weakness. Everything points to strength. When you have good strength in the background as you do on this 60-min chart, you want to be looking for long setups on your trading time frame. Longs in this background context will be safer and will produce greater profits than shorts. If you do elect to countertrend trade, it should be scalp-only, otherwise, you will be paying the market for your play. That is what you found out when thinking about shorts. Upthrusts and No Demands do not work well in uptrending conditions, just like Tests fail in downtrends. Background. Let's go a little deeper into the 60-min chart so you will be able to recognize these conditions again in the future: From the bottom of the chart at 1, the market rallies at 2. Look at the character of that rally. What do you see? Wide spread up bars pushing through the resistance (supply) and continuing higher. Demand has clearly overcome supply at this point - bullish. The market rallies up to he market at A. Note what happens here. There is a resistance line drawn at A representing supply from the old top to the left. Note the qulity of the reaction at A. It doesn't react much. The market is not giving up ground. Instead, it is holding its gains. THus, rather than reacting, the market is just resting and absorping whatever supply exists from the old top. Supply is unable to take control, and this is bullish behavior. At B, we see a similar event. You can see to the left, there is a larger congestion area compared to the old top at A. Thinking about this logically, this area is larger and could represent an impossible obstacle for the current market to overcome. However, just as at A, the market rests rather than reacts here. It is longer in duration than the resting at A, but this makes sense because the supply area to the left s larger. Nevertheless, the gains are held. No big reaction takes place. At the bottom of the trading range, the market tried to go lower, but lower prices were rejected. All of this is bullish behavior. With all the bullishness in the background, it is far better to be looking for long trades rather than shorts. Hope this is helpful, Eiger

The breath is a classic point of focus for mindfulness and meditation. Whenever you notice your mind wandering into an unwanted or disrupting space, focus on your breath. Yoga and pranyama (yogic breathing) is really not about the postures, but all about preparing the body and mind for meditation. Yoga has a 3,000+ year tradition in the study of the mind and consciousness, and has a lot to offer in this regard. Pandora - what a cool site - thanks for this

You can send a PM with email and I will forward to you a couple of mindfulness exercises I use with traders. It will take a few days, though, as my main computer and backup drive are at the tech's being worked on. I'd be happy to list the articles, but there are many and unless you have access to a major university library system that includes a strong emphasis on medicine, science and psychology, it won't be very helpful to you as the journal titles will seem obscure. The main point of the research to date is that elite performance is associated with lower levels of left-hemisphere cortical activity during performance and training activities. It is a distinguishing characteristic of elite performance. The left cortex is associated with verbal-linguistic activity, which is simply a precise way of saying that the left side of the brain is where most of our thinking occurs. High levels of thinking, however, hinder performance primarily because attention is directed away from the performance task and towards one's private experiences of thoughts, emotions, and sensations. Worry and anxious thoughts create very high levels of verbal-linguistic activity (thoughts) which occur in the left-hemisphere cortical areas. Mindfulness has been shown to reduce cortical activity in general, and appears to be especially useful with worry and anxious thoughts. Greater awareness of one's own attentional process is also fostered by mindfulness. What all this means is that through mindfulness practice, a trader can reduce overall worry and anxiety, and when performance-hindering thoughts do occur, the mindful trader is better able to notice them without becoming ensnared by them, and then to self-regulate where they put their attention -- either on their worries and anxious thoughts or on what needs to be done to manage the trade. This helps align them mentally with other high level performers. Hope this is helpful, Eiger

I think the NYSE Ticks are incredibly useful in trading the S&Ps. Here is a link t a pretty good article that will get you started: https://www.lbrgroup.com/images/terry_april_2002_AT.pdf Brett Steenbarger has probably done the best work on the Tick, including creating several useful indicators. His material is not really well-organized though, so you have to hunt and peck your way through a lot of blog and article posts. You can google steenbarger and ticks and it will return many of the articles. Here is his site: http://traderfeed.blogspot.com/ Eiger

He's right. Goals, imagery and positive self-talk (affirmations) have little impact on performance. A recent analysis of all published studies assessing setting goals, guided imagery, self-talk, and other 'traditional' interventions showed no effect on performance. A few studies that used some of these in combination showed some positive outcomes, but there are too few studies to call the combinations reliable. This was conducted by Zella Moore (2008), a sport psychologist, and was well-researched. Mindfulness is different. Good research shows positive effects on performance. With practice, mindfulness improves attention and concentration. Notably, it does not change negative thoughts. It does, however, give you some distance from what your mind is telling you. With practice, you can see thoughts for what they are - just thoughts, not necessarily reality or the truth. Most of us are 'fused' with our thoughts, meaning we tend to buy into whatever our mind is telling us. Here's a good example: You enter a trade and it begins to show profit. As soon as it does, the mind is saying, "Hey, you better take your profit before it turns against you. Don't be foolish, just take the profit." And, so you do. You get a small profit and then watch as the market goes further in your direction. You've cut your winner short. And, what does your mind tell you now? "Idiot, you should have stayed in. Look at all the profit you missed. Will you ever learn?!" Which do you believe? The unfortunate truth for many is that we believe both! Mindfulness allows for us to decenter from all that the mind is telling us and take a different perspective - one of observing our thoughts rather than inviting them in for tea. Facinating research with elite atheletes is showing that a significant difference betwen the elite and the average athelete is in their level of cognitive activity (i.e., the amount of their thoughts). It is not that the elite don't have anxious and other negative thoughts. They do. They have just learned over years of practice and performance not to buy into them. They turn their attention to the performance task-at-hand rather than focus on their thoughts (which helps keep the level of thoughts lower). We now know that things like mindfulness can aid in and accelerate this process. Eiger

Ani - You need to post your charts correctly as we cannot see the details. Charts need to be uploaded separately and not pasted into the text area of the post reply box. Click on GO Advanced (bottom right corner of post reply box) and you will see a section to upload charts, which have easy to follow instructions. From what can be seen on your charts, it looks like you are missing the background conditions of a trending market, which typically takes more than one bar of weakness to turn.

In assessing the background, I personally take a top down approach. I look at the weekly chart for the major trend and the daily chart to see where we are in that trend. That gives me the larger picture. I then drill down using the 180-minute and hourly charts for a finer view of Support/Resistance, trend lines, and trend channels. I am always aware of the S/R levels from the hourly chart, and especially yesterday's highs and lows. On the intraday charts I draw lots of lines, again for S/R, trend lines, and trend channels. I then look for confluence with important larger time frame areas (described above) and how volume and price interact within these areas. It is all about preparation, which is done religously every night. Eiger

You are right, Mike, UTs can be high volume or low volume. The HUTs that I identified here are in a downtrend. In general, a downtrend often moves on lighter volume compared to an up trend. Fewer traders participate in a downtrend. HUTs aso occur at the end of a weak rally. By definition, a weak rally indicates a rally on low volume. So HUTs will usually have lighter volume. Good observation. Eiger

FIve hours at one clip is pretty hard to sustain. In trading the S&P eminis, the market starts to slow down a bit after 11:00-11:30 on most days. The noon hour is usually very slow. These are good time to take breaks. Schedule a break at least every hour and one-half. It is a good idea to be flexible in this - if the market is moving you don't want to have to take a break. So, schedue breaks in a window, say every 60-90 minutes, depending on your market. When you take a break, do it for 10-minutes or so and get out of your chair and do something different in a different place (take a short walk, get a snack, etc). Getting away from the screen helps you to be more refreshed coming back. Also, if you have scheduled breaks, you can then better notice when you drift off and go check email, surf the net, or look at other markets, etc. It is a bit easier to bring yourself back when a break is not too far away. Another thing I have found very useful (as have other traders I know) is mindfulness excercises. Mindfuness is all about focus and concentration. Like becoming proficient in reading the chart, you can train your mind to greater levels of concentraion and focus. There are lots of other benefits to mindfulness, as well. Google it and you'll find stuff out there. Send me a PM and I will send some helpful mindfulness excercises, if you like. Eiger

Thanks for the heads up, BF. I've been waiting for this, too. I like his work very much. His material on volume and NYSE Ticks is first class.

For a very long time, I found trend days difficult to trade. Mainly, I think it was a mindset that just gets grooved when many days in the S&Ps are best traded as countertrend / reversion to the mean-type days. Watching the swings as they develop and identifying them as making higher highs (HH) & higher lows (HL) or lower highs (LH) & lower lows (LL) can be a big help. Once a trend starts, you can look for certain classic VSA indications for confirmation and entry triggers. Thursday provided a good example to the downside. A little after 11:30 EST there was a good downtrend in place with a LH and LLs. Once a downtrend gets going, the background is weakness (always, always know the background first). You can then start to look for confirmation and triggers. One of my favorite triggers in a downtrend is the Hidden UpThrust (HUT). In a regular UT on the trading time frame, there has to be an old top (resistance) in the background against which the UT rallies above, then closes below. A HUT will not have the old top in the background on the trading time frame, but will on a smaller time frame. Thus, it is a bit more difficult to see on the trading time fame, but with careful observation, it is easily detected. There are a nice series of HUTs on the attached chart. Each of these occurred in a weak rally into prior support-now-resistance. Each marked the end of that rally. You will see this classic setup occur over and over in downtrending charts. Hope this is helpful, Eiger

Good question. Technically, you are correct. Nevertheless, this is an up bar on very narrow spread, close off the highs on relatively low volume after a sign of weakness at H. The rule of thumb for both No Demands and Tests is volume less than the previous two bars. With experience, you will see that when indications are very close as in I, they can be read in the same way. Hope this is helpful, Eiger

Your 5 & 6 are excellent ideas. If you can get data back for 6 months or a year, go back to those charts and do 5 & 6. Trading requires skill development. You must practice. Stopping yourself in is placing a sell order one tick below the low of the No Demand, just different words.

I don't see your ananlysis as wrong or a trade badly managed. Use this opportunity to learn - that is the most important thing. Had I seen the bar marked C -- wider spread, close near the highs on a healthly increase in volume -- I would have exited that short. A bar like that shows that price was responding to the effort (i.e., the increased volume). Odds are very good that price will continue to rally at least until nearby resistance, which you had located your stop. Odds were good that your stop would be taken out, as it was. In cases like that, it is best to exit immediately. Most traders won't, because they are trying to avoid a loss, but the correct play is to exit with a smaller loss. So, it seems you have gained a lot from one trade: Look for no demands higher up after SOW. You had several clear signs at 1 (Stopping Volume/EORM), at 2 (UT), increased volume to the downside and the No Demand at A You can stop yourself in on a No Demand A strong up bar on increased volume indicates a further rally; it's best to exit short trades on a bar like this giving you the distinct advantage of a smaller loss Not bad for one trade. Eiger

They are quite rare on the intraday time frame. I can't remember the last time I saw one. For some reason (and I don't know why it is), Bag Holding - the mirror of EORM - is more common intraday. You may see them occur more in EOD stocks.

Not necessarilly a bad trade, just poor timing. The longer a trend is in effect, the higher the odds it will turn. At 4 you had demand come in. It didn't result in much of a rally, but it is the first time in the down trend that buying exerted itself. That is a signal to begin getting cautious and start thinking about an exit. Not certian the bar following 5 was No Demand. It is hard to see that section of the chart and volume is active in that area. You might want to repost a clearer chart. A better trade location would have been in the No Demand bars between 2 and 3 on your chart. Why is this a better location? Because you have clear weakness in the background at 1 and 2. Then volume increases to the downside following 2 and it looks like it might have just broken the low between 1 and 2. Lots of weakness there, which is then followed by a very weak rally. Note the narrow spreads and low, low volume. Either the narrow, No Demand bar where the first white diamond appears or two bars later as the market turns down would be very good entries. Repost a clearer chart so we can make sure you are seeing the No Demand properly. Hope this helps Eiger

Here's a quick response to your chart & questions: A - Climactic action - highest volume, wide spread close off the lows at the end of an accelerating downtrend No Demand? Yes, this is technically a No Demand bar as it is an up bar that has volume less than the previous two bars. However (and this is the important point), it occurs after potenetial strength, i.e., the selling climax. No Demand and Test bars occur all over the charts. They must be in the right place to be significant. Always, always, always look to the background first. When there is a SOW in the background, we look for No Demand. When there is a SOS in the background, we discount No Demands 1 - market reacts into the high volume area of A and is unable to draw supply - bullish. 2 - wide spread up bar close on the highs on strong volume - bullish. B - A higher high is put in - bullish. C & D - Testing occurs at the line you drew. This is candlestick analysis. VSA shows by volume and spread that there is no supply at this level. D is a Hidden Test or Reversal Bar in the right place - this is bullish a chioce entry location. E - Another Test - bullish and a nice entry. 3 - Higher high F - Shake Out followed by a bullish up bar G - Test and another choice location for an entry Hope this is helpful, Eiger

Many people do trade off the smaller time frames like you mention. I don't know how well they do or what the methods may be. I have no axe to grind against those methods - I am sure they are fine. They just aren't VSA. VSA was not designed for the "micro" time frames. Here's a 1-minute chart of the Friday AM session in the S&P emini. At A, there appears to be a Buying Climax -- heavy volume, wide spreads with near vertical rise, the next bar is down. At B, there is an UpThrust and 3 bars later at C, a No Demand. If you took that trade, you are immediately underwater, despite what appear to be valid signals. A little later at D, there is a 2-bar top reversal followed by a No Demand at E. You can see that volume had continued to dry up from the apparent BC as the market attempted to rally, so you figure there is weakness in the background and this is ready to fall. It does go lower, but it wasn't very rewarding. If you look closely, there are other VSA indications that I didn't highlight but give the same results. This is what Tom means about being picked off like a soldier in the trenches. The 1-minute chart just doesn't work well with VSA. Again, I have nothing against using the 1-minute or 10-second micro charts. I am sure there are times when they pick the turns wonderfully. But with VSA, they tend to give too many false impressions. Eiger

Be sure to check out VJ's post on the VSA II thread: http://www.traderslaboratory.com/forums/151/vsa-volume-spread-analysis-part-ii-3428-214.html#post58862 Outstanding analysis which I learned something from. Pay particular attention to VJ's approach. Great stuff, don't miss it. Eiger

Just excellent, VJ. .

Great questions. I'll do my best -- I think any signal is more significant the higher the time frame. If we saw an Up Thrust on a weekly chart after a SOW, for example, we would expect a pretty good reaction. It would set the tone for trading (mostly to the downside) for the next several weeks. In general, I like using the 60-minute chart to "frame" the market. In other words, I can see the current structure of the market on that time frame fairly well, including important areas of support and resistance. You can see how the 60-minute chart reveals the structure and background on the attached chart. I also look carefully at the 180-minute, the daily, and the weekly charts. Different pictures and different clues are revealed by all. Framing the background and structure also helps me anticipate posiible scenarios for the next day or two. For example, we are only a short distance from the 876 high made in late January. Any pullback that holds, might take a run up to that area. If it gets there, another possibility is an UpThrust of the resistance. I am not saying that the market will act in either of these ways - I never try to predict what it will do. I am wrong enough to know I can't ever predict what the market will do. But, I can lay out possible scenarios that are likely and if the market acts consitent with those scenarios, I have trades to make. Always, always, always keep the background in mind. This is the key to VSA. We then watch the market unfold and look for appropriate VSA signals to trigger trades. When we frame out the market, and the market then acts consitently with the framing, we have a very clear sense of the background picture. If an UpThrust does occur around the 876 level, for example, we can lean on the resistance present in the 60-minute chart and be not only confident in the trade, but reasonably confident to hold that trade for a while, assuming the market continues to act consistent with background weakness. In terms of trading time frames (the time frames traded from), I prefer the 3 & 5-minute charts. Sebastian Manby will often trade off a 4-minute chart -- it splits the difference and has it's own unique characteristics. I do watch the 30-minute chart during the day. That's a hold over from trading Joe DiNapoli's techniques where the "Key of the Day" for intraday S&Ps was considered the 30-minute time frame. I know that Sebastian and Tom Williams will also look at 7-minute charts, and sometimes 9-minute charts. I think it comes down to watching what you become familiar and comfortable with. No good VSA trader that I know will trade off a tick or 1-minute chart - just too noisy and too easy to 'see' trade set-ups that aren't really there. Look at the posts by Tawe, VJ and JJ on the VSA II thread. Check their trading time frames. Look on the VSA I thread for the activite traders there and you will see the same. Tom Williams says that trading off the 1-minute chart is like being in combat during WWI. You stick your head up out of the trenches and immediately get picked off. That has been my experience, too. If you are concerned about tight stops, you could look into trading the YM. Because of the dollar value and tick size, there may be a little more 'forgiveness', though I don't trade that market so take this suggestion with a healthy grain of salt. Regardless of the market, you should understand money management priciples and never risk more than a specific percentage of your account size. Your first priority, especially in the early stages, it to live to trade another day. But this holds true regardless of experience. If the stop is too wide for your pre-established risk parameters, you simply pass on the trade. There are so many trades that occur that this should not pose a problem. If it does, you need to check what you are trading -- the market or your ego/emotions. Needless to say, it had better be the former! Hope this is helpful, Eiger

There were many "worst losses" for me. All had one thing in common - I didn't learn from them. Eiger

Hi Jeremy, I'll try to answer your questions. Bar B is a down bar (not an up bar). The lessening volume as the market drops down to B along with the lack of downside progress (look at the lows) does indicate professionals are not interested in the downside. The closes in the middle indicate there was buying on B and the bar before it. Were the market weak and going down at this point, we would have seen wider spreads down on increasing or sustained voulme, closes on the lows, and progress to the downside being made (each bar would be quite lower than the last bar with closes well below the last low and not back into the spread of the preceeding bar). There certainly was some selling on Bar C, but the volume on C and the bar before C - both up bars - was greater than the downside volume from the open at A to B. It is a change in character of the market, so to speak. We had been going down, now, all of a sudden, volume comes in to the upside on wide spread up bars. Look back over your charts and find a downtrend. You will note that rallies in a downtrend are weak on low volume, narrow spreads. Had the move from B to C been weak (consisting, for example, of bars mostly like the bar after B), then you would assume supply was still in control. Here, we see the opposite and read that (at the time) as potential demand. D and E confirm the demand. Also, C is not really an UpThrust. For a true UT, there has to be an old top in the background. Bar A on this chart is a better example of an UT. At best, bar C would be a 'Hidden' UT - a hidden UT just means that it was an UT on a smaller time frame making it a bit difficult to see on the trading time frame. I haven't checked, but if you look on a tick or 1-minute chart you would probably see an UT there. And that is the problem with the smaller time frames. Unless you are scalping only, you would be taking a wrong position against what the market is truely saying, which is easy (easier) to see and clearer on the 5 & 3-min charts. I do watch for Hidden UTs and also Hidden Tests. Many times, I will enter a position on a Hidden UT or Test. I do this, though, only when the hidden VSA indication is congruent with the overall market movement and background. For example, when in a down trend, a Hidden UT is a great trade; in an up trend, I like Hidden Tests. As always, knowing the background is the key in VSA. Hope this is helpful, Eiger