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DbPhoenix
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Everything posted by DbPhoenix
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Regarding the various "upthrusts" and why they didn't make good shorts today, it may help to set aside overhead resistance for the moment and look at the trend, or "stride". Note here that even though the YM and ES are struggling, they are also each coming off their respective demand lines. And while they have been unable to maintain their strength since mid-April, they nonetheless remain in uptrends in this interval. . As for the NQ, note that its demand line has altered its course. . Keep in mind that resistance is not a line but a zone. And that the herd is always right. Except at turning points. .
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Edit: Incidentally, you posted something about bias. If one looks at market internals and the behavior of small, mid, and largecaps, it's difficult not to acquire a bias. However, it is absolutely essential that one remember that the market can be irrational for far longer than one might believe. Therefore, one must focus on what's there, not on what one expects to be there or wishes to be there. The "smart" money is not any smarter than anybody else. There's just more of it. So when the elephants are swaying back and forth or wandering in a circle or taking a nap, one must be sensitive to that and not make more of it than it is. And if one gets tired of waiting for the mouse and decides to hang it up ten minutes before the big stampede that begins as soon as they've left the room, that's okay too. One can't trade well if he's so bored that his eyes are beginning to bleed.
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But you did such a good job.....
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I don't recall W saying anything about it specifically. One can infer certain things, but I've seen inferences become axioms, and that can lead to all sorts of trouble. One can infer, for example, that the "smart money" hasn't a clue, which helps to explain a lot of what's been going on. But there's not much one can do with that unless he can become especially sensitive to volume surges, breakouts, and fades. There have also been very good trades on both the long and short sides in what anybody would call very dull markets. So, again, one has to be sensitive to flow and pay little or no attention to individual bars. One of the few rules-of-thumb that appear to hold up is that one can't expect one trend day to follow another in the same direction. There has to be a rest of some sort at some point, even if it's only a turn in the opposite direction (e.g., the /\/ pattern we've followed the past three days). As for the daily range, no. As I understand auction market theory better, I rely more on support and resistance. Auction market theory also adds another level to Wyckoff, which enables me to become more sensitive to flow. A side-effect to this is that I don't trade as much, which can be a good thing or a bad thing, depending on how one looks at it.
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I hope so. I stopped keeping records of this sort of thing some time back, but daily ranges are twice what they used to be, and the number of trend days has dramatically increased. It's been suggested that two-thirds of the trading days end up in the quartile opposite to where they began.
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I don't know where they are, either. I may not have posted it at all. In any case, this is how I display it. Note that new highs were not shabby yesterday.
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Somehow I think that if I had answered your question with nothing more than "one can theoretically assume that the 'magnitude of the profit expectations [will] differ because of the magnitude' of the bar intervals", you would have asked if that was all I had to say. Instead, I made an effort to explain what I meant. As for whether or not the gains made with a particular bar interval are worth it, this applies to every approach that incorporates bars, whether it's VSA, Wyckoff, Market Profile, candlesticks, or even indicator-based approaches. And the gap between theory and application is wide also regardless of the approach. If you view all of this as an attack on VSA and find it tiresome, then why did you ask the question? I've pointed out some inaccuracies and inconsistencies, yes, as have Bearbull and others. You are welcome to visit the Wyckoff thread and point out whatever inaccuracies and inconsistencies you find with what's posted there as well.
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You asked a question. I answered it. If you've interpreted everything I've included in my answer as an attack, that's your prerogative. I should point out, however, that I posted the answer only because you asked the question.
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Well, not exactly . Every move, whether trivial or consequential, begins at the tick level. Where one locates S&R is not necessarily dependent on the bar interval, and one needn't be satisfied with tiny profits just because he's using tiny bars. But this has all been addressed before and anyone who's interested can do a search. I only want to point out that scalping is not a necessary consequence of using small-interval bars if one is focused on movement rather than individual bars.
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Probably not. I was going to post the new high/volume of advancers stuff a couple of days ago, but there's a danger in viewing that kind of data as a "signal". There's an important difference between commentary and "making calls". There's also an important difference between "gathering evidence", as Wyckoff put it, and making "recommendations". I don't recommend going short or long because I really couldn't care less whether anyone does either or neither. It's not my money. But it's important to note that a lower high has been made. Or volume is crap. Or new highs in the underlying aren't keeping up with new highs in the index. Translating "note" into "act", however, takes some doing, and one must have some justification for doing so other than "it seems like a good idea". In any case, stockcharts.com is available to everybody for free, and everyone who's interested ought to know by now what to chart and what to look for. If anyone doesn't, I can look for the posts later and provide links, unless somebody knows where they are and can save me the time.
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I don't want to get into a protracted discussion of what VSA is or isn't either. But it's important, for newcomers anyway, to understand where an application of VSA is appropriate and where it isn't. To point out that VSA is not necessarily appropriate to every trading application is not necessarily an attack on it. It's easy to understand that a trader who elects to employ an approach that focuses on bars may choose an interval that provides a half-dozen bars per day rather than dozens, or hundreds. But even though he may understand that, for example, an hourly "no demand" bar is an amalgam of all the thousands of trades within it, even down to the tick, and that the "no demand" character of that bar may be more "meaningful" than a 1m "no demand" bar, and further that that bar may imply a larger move than that implied by a shorter-interval "no demand" bar, he must also carry a hell of a lot wider stop with that hourly bar, and he must be at least as specific with the hourly bar as with a shorter-interval bar regarding the conditions for determining whether and when the trade is correct or incorrect. In order to determine whether any of this is "worth it" or not, one must have an internally consistent approach, if not a strategy, complete with a set of explicit and straight-forward rules that can be tested, both backwards and forwards. If the equity curve is not much better than flat, he must wonder if he's fundamentally incapable of interpreting the "background" behind his entries or if his approach and his rules are taking him in the wrong direction. Therefore, yes, one can theoretically assume that the "magnitude of the profit expectations [will] differ because of the magnitude" of the bar intervals. But the gap between theory and application can be exceedingly wide.
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Regarding the above chart and the others like it, Wyckoff stresses that, in addition to trend and whatever channels may be formed by apparent consistency in the intrusion of demand and supply, one must also look to previous areas of support and resistance, which is what we're doing now. Yesterday there was an upthrust in the Nasdaq and the Dow. There was also an upthrust of sorts in the SPX, but there've been so many over the past few weeks that they are forming their own base . Whatever these thrusts mean in and of themselves does not matter as much as where they are occurring, i.e., against important, previous support. Therefore, both intraday and EOD traders would do well to concentrate on how price behaves at this particular juncture.
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POSTS #22 TO #30 of this thread have been moved from the VSA II thread to here as they were not of much relevance to the application of VSA - Mister Ed. I like Bearbull's post as well. However, I should point out that what is or is not relevant depends in large part on what the trader is trying to accomplish, which in part is what I was trying to say to winnie. Defining a "no demand" bar is vastly easier than defining "support" and "resistance", or "demand" and "supply". Not only is it easier, it is necessary if one is going to code a signal into software. Perhaps this is why the focus of VSA is so different from the Wyckoff material on which it is based. What so many newcomers to VSA don't understand is that a "no demand" bar means "no demand" at that time, and that the lower prices that the bar implies may occur for only a couple of bars. It does not mean that price is going to plummet 10 or 20 or 30 points in the next five minutes. Therefore, if one is interested in scalping, finding these bars may be just the thing, and VSA may be everything he's ever hoped for. However, if he's looking for something that points to larger moves, VSA may not be quite up his alley, since that larger move depends on features that are not quite so easy to define, such as "background", and from there, it's just a step or two to "feel". Therefore, one must evaluate VSA in terms of what it is, or at least in terms of what it has become, and not expect it to be what it isn't and can't be. Bearbull has done a nice job of highlighting the difficulties that those who are looking for more than a few ticks or points are going to face, particularly those who lack the displine to stop themselves out, much less SAR, when the trade does not move in the desired direction.
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[VSA] Volume Spread Analysis Part II
DbPhoenix replied to Soultrader's topic in Volume Spread Analysis
Fortunately, you have several choices. This particular site is rich in discussion of trading by price action, particularly VSA, Wyckoff, and Market Profile. Some are more logical than others, some are more internally consistent (not studded with multiple exceptions, like raisins in an oatmeal cookie) than others, but while each of these approaches addresses the subject in a different way, but they are all about judging the balance and imbalance of supply and demand in an auction market. You must decide what is most in keeping with your view of the market and of market participants. You must also decide whether you want what is essentially a scalping strategy or a trend-following strategy. You appear to be taking your time with this, time to gather the information and think about it. This is relatively rare among new traders and is to be commended. -
An update to the SPX "forest" chart I posted last week (336 and 344). Whether we go up or down from here is a separate concern from gathering data. The permabulls will miss out on the shorts, the permabears will miss out on the longs.
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[VSA] Volume Spread Analysis Part II
DbPhoenix replied to Soultrader's topic in Volume Spread Analysis
Winnie, if it makes sense to you that the price of something can rise if there's no demand for it, VSA may be just right for you. Otherwise..... -
Given the number of once-upon-a-time T2W members who've fled T2W in the last couple of months, and given the understandable impulse to adopt new identities, there can be more than a little confusion regarding just who it is whom one is talking to. Therefore, would those of you who've adopted new names disclose who it is that you used to be? Unless of course there is some compelling reason for beginning again with a clean slate. Like having committed some felony or other...
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[VSA] Volume Spread Analysis Part II
DbPhoenix replied to Soultrader's topic in Volume Spread Analysis
VSA Central = TradeGuider. Again, while the "VSA perspective" may be that wide spread bars are not created by buyers, one can see that this perspective is incorrect after some reflection. You're not going to have any bar at all without buyers. And whether price moves higher or not depends entirely on demand. Without demand, it won't move at all. If you want to review the past posts I've made to this thread, just do a search. I've made these particular posts in order to address winnie, not to reopen the debate. -
[VSA] Volume Spread Analysis Part II
DbPhoenix replied to Soultrader's topic in Volume Spread Analysis
Depends on where and why the bar occurs, i.e., the context, or "background". If, for example, you have a fairly lengthy accumulative base with the appropriate volume pattern, buying at a breakout of such a base -- assuming that you've correctly identified it as such a base -- is a high-probability trade. If you can't tolerate any retracement or pullback whatsoever, then you have to be prepared to (a) buy before the breakout so that those who are buying the breakout will propel you to at least a breakeven level or (b) sell when price begins to move against you, then prepare to buy again if and when the retracement has completed itself (there is always the possibility that the "breakout" is in fact a "thrust", and that price needs to spend more time in the base). Since Master the Markets has its roots in Wyckoff, there is quite a bit of valuable information there. Unfortunately, there is also quite a bit that is misleading as a result of the effort to make it "easy". Separating the wheat from the chaff can be done by the trader, but I recommend that you not put any money on the line until you've finished doing so. -
[VSA] Volume Spread Analysis Part II
DbPhoenix replied to Soultrader's topic in Volume Spread Analysis
If you wait that long, you'll be late, and a retracement will not be unexpected. On the other hand, shorting is not necessarily the appropriate choice, either, since the retracement may in fact be nothing more than that, i.e., not a reversal. VSA Central encourages the novice to assume that he's being tricked, and that upmoves on strong volume are traps. This is sometimes but not nearly always the case, and often either leaves the VSA trader standing there with his hands in his pockets as the train speeds away from the station or persuades him to short -- sometimes repeatedly -- what turns out to be a continuing uptrend. In order to understand what's going on, you have to look for more than the obvious signals, since it is the obvious signals which are most likely to be faded. -
[VSA] Volume Spread Analysis Part II
DbPhoenix replied to Soultrader's topic in Volume Spread Analysis
This is one of those partly true, mostly false ideas perpetuated by VSA Central that confuses novices and usually pulls them down the wrong path. Wide spread up bars are created by buyers. Whether there are a few buyers pushing price higher or a great many is illustrated by the volume. Either way, this leads us to the second part of the misstatement, which is that the "smart money" [sic] is selling their holdings when "everyone dog piles" into the market. Professionals are in fact selling their holdings as soon as price begins its rise, buying first to move the price, then selling into the rise if buying interest manifests itself. What pushes price higher is demand, and it doesn't matter by whom or by what the demand is fueled. What is important to the trader is to determine when the demand has permanently (within that timeframe) exhausted itself (and, no, a "no demand" bar is not enough). Otherwise he will find himself consistently trading counter-trend. -
A couple more points regarding the series of posts I made earlier. 1. The purpose behind drawing these lines is not to make the chart look pretty but to draw the trader's attention to those areas, zones, points, levels, whatever where price action is most likely to provide trading opportunities. Whether one draws lines, boxes, circles, arrows, or big, pointy fingers is irrelevant. 2. Once those areas, zones, points, etc are identified, volume becomes largely a non-event, i.e., one pays attention to it only at those areas, etc where it is most likely to mean something. That this point is so often overlooked is probably why so many people think volume is useless. For example, using the 1m time bar chart I posted earlier, I've blown up the shaded area: Until price reaches an area where a trading opportunity is most likely to occur, there's no reason to obsess over the minor ebbs and flows in volume. However, once trading opportunities are on the horizon, what might be considered directionless activity elsewhere suddenly becomes important. Here, for example, when price comes back to 1966 the second time, the fact of the test is interesting enough. That it cannot make a lower low even with all the volume is even more interesting. The bullish boost at 1329-30 becomes more important because of what has come before, as does the volume recession when price pulls back to 1975. When another bullish boost occurs, beginning at 1352, it is significant, again, because of what has come before. And when price makes an attempt at a higher high at 1401 and volume isn't there, that again becomes significant because of what has become before and provides the "classic" double-top price-volume divergence setup for the short. Without the context, none of this matters, and volume is little more than traders going about their business. With the context, it becomes a high-probability short trade.
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Indeed....
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For those who are interested, there are fourth and fifth editions of Technical Analysis of Stock Trends up for bid on eBay. These are the last editions that Magee updated himself, before "editors" got hold of the material.
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The point of my posts was not to bash either VSA or candlesticks but to illustrate certain principles that are key to understanding Wyckoff's approach. And even though there is little in common between VSA and Wyckoff, there are those who, for whatever reason, won't be able to understand either one. They may, however, be able to make a fortune with a MACD/stochastic combo. Therefore, let's focus on our business and let others go about theirs. This information is here for whoever chooses to benefit from it. Or not. As for zeon, he's already said goodbye twice, so let's not devote any more thread space to that particular arc.