DbPhoenix

I don't want to play censor, which I wouldn't be able to do anyway since I'm not a moderator. But I don't especially want to play traffic cop, either. To do so, or even to try, would throw a blanket over free discussion, and that would defeat the purpose of the thread. That having been said , I equally don't want this to turn into yet another debate about VSA, MIP, SMI, candles/uncandles, bars/lines/dots, LII, and so on. What's being said in the book and in these posts is independent of all that, or should be. You may think that top and bottom-fishing is not a good idea while others do quite nicely by doing just that. You may think that candles are indispensable. Someone else may think they're silly. In other words, just because someone doesn't understand something doesn't mean it's nonsense; just because someone doesn't know how to do something doesn't mean that it can't be done. Using inaction as a weapon means simply that one must learn to be "aggressively inactive" while waiting for what he has proven to himself and for himself to be high-probability setups. Someone else may think that his HP setups are completely loony, but that's not the point. They are his bread-and-butter setups, and whether or not anyone else can profit from them is irrelevant. He wouldn't be implementing them if he weren't making money with them. Unless, of course, he himself is loony. It is the nature of trading that the trader is going to spend a great deal of time waiting, unless he doesn't have the discipline to wait for what he wants (though he must of course also know what it is that he wants, which is where defining the setup comes in). If the trader doesn't know exactly what it is he's looking for, then he is far more susceptible to being sucked into low-probability trades, particularly if he is eager to trade. By thinking of inaction as a weapon and using it as such, he will find himself aggressively withstanding the Sirens who are tempting him to act impetuously. He will be "aggressively inactive". As to the "flow", no one should be concerned with interrupting it because there likely won't be one. There will be quite a few rules touching on a variety of subjects and there's no particular linearity. But keep in mind that these rules should apply to everyone, regardless of what he does or how he does it or when he does it or how often he does it. If everyone avoids being judgmental, everything should go swimmingly.

RULE #2: Don't get irritated or angered by long session of folding. We are all playing probability over a long run. Understand it. Accept it. Mentally prepare for it. Keeping our heads makes all the difference. (William)

One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do. Most people always have to be playing; they always have to be doing something. They can't just sit there and wait for something new to develop. I wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime. Even people who lose money in the market say, 'I just lost my money, now I have to do something to make it back.' No, you don't. You should sit there until you find something. (Jim Rogers)

Unfortunately, it's more like a dodecahedron. And therein lies the rub.

RULE #1: Learn to use inaction as a weapon. Most of the time, the market is indeed random. One can only win consistently by avoiding activity most of the time and trading only the few times during the day when a high probability trade occurs. It is our job as traders to wait more than we trade. (William)

. If you really are interested in getting enlightened, one way would be to go off to Tibet, crawl in a cave, and sit there meditating for thirty years. Another equally good way – but much, much faster – is to trade the S&P. (Bill Williams) Motivated by Frank's excellent MIP thread, I'm initiating this thread to explore Larry Phillips' Zen and the Art of Poker. A lot of smart stuff has been posted on message boards, and much of it has been lost, not because it has literally been deleted (though that is sometimes the case), but because it has been forgotten. People move on, they quit, they die, and it's important to pass the good stuff on so that those who read it when it was posted aren't the only ones who benefit. Years ago, a guy named William posted the rules from Phillips' book one by one in order to encourage reflection and discussion, and this is my purpose as well. I'm not going to post all the rules because, as I said to William at the time, not all of them are as clearly applicable to trading as others. But you will see how very applicable to trading many of these rules are. There's been quite a lot of editing here. William edited the rules himself, and I've edited William's elaborations to some degree. Keeping that in mind, the bold entries are from Phillips' book and the rest, unless otherwise attributed, are William's. I'll post the rules one at a time, and I encourage those who are interested to read each one, think about it, and post those thoughts here. This thread may then become a means by which traders may grow.

I'd look at it this way: . . As for tomorrow, I may do an ES day for my last day. The numbers will be 23, 30, 40 and 48, for starters. .

Actually, it looks arbitrary without the box (all the context charts are posted in my blog). And it's been a confirmed S/R line since the end of January.

I know you don't follow the NQ per se, but you may be interested in today's blog entry.

You had more elements to support the long case because you weren't sensitive to those that spoke against it. As to the reaction at 42, that's fine. But you traded off 44.5. No, you'd take only the best ones. You have to decide whether you want to trade or you want to make money. As for the chart, I imagine at least a couple of people have been following this. I'll let them take a whack at it, if they can do so without being contaminated by hindsight.

Price determines where support and resistance lie, not the trader. Finding a point here and a point there and drawing lines across them may give the trader the illusion of finding support and resistance, but that's exactly what it is: an illusion. What matters is remaining sensitive to the flow of information regarding the balance of power between buyers and sellers, not in dithering over trivia that price couldn't care less about. This is not to say that you should make no attempt to locate those areas most likely to act as turning points for price, but dont succumb to nonsense. Use your head. And when price approaches those levels or enters those zones where you think turning points are most likely to occur, you must remain absolutely free of bias so that you can interpret the dance between price and volume, demand and supply accurately. Either that or adopt the biases both of those who are long and those who are short. Argue the case of each simultaneously. And if the windows don't open, stand aside. If bars and closes and so forth aren't working for you, consider trading price. Just for the hell of it, try to determine where strength and weakness lie here during the same timeframe as in the earlier charts: . .

. I've drawn in the "potential" resistance level you mentioned earlier. . . How does this change your perception of strength v weakness? .

All right. Setting aside the subject of whether you are correct in your assumptions or not, your hypothesis is that this is a selling climax, and because it's taking place at what you hypothesize to be support, you should be on the long side. Now what did you see, minute by minute, that supported your hypothesis, and what did you see that did not support your hypothesis?

First, all selling climaxes are only potential selling climaxes. You won't know whether or not they were selling climaxes until there's been a successful retest. Second, why do you consider this even a potential climax? Why is the volume any more climactic that the earlier volume?

Support is not necessarily a trampoline, but you're getting ahead of yourself. You say you understand that support is not a line but a zone. So whether price penetrates or not is irrelevant compared to the importance of what it does while it's there. Which leads us to the "selling climax". Where do you see this?

So your scenario, I assume, is to buy support and sell resistance?

Fair enough. Now where's resistance? And if you want to work with your charts, click Edit>Copy then paste them to Paint on your hard drive.

All right. The lynch pin of (b) appears to be a "selling climax" at "support". If "support" is the pink line, where did it come from?

What I mean is not particularly important. What matters is what you mean. What I'm asking is that you apply whichever of these terms are pertinent to the chart and illustrate them with the chart. For example, is there a "shooting star" here? If so, where is it? Also, could you post a chart that's not cut off at the bottom?

I'm sure you understand that these definitions are very general and incorporate still more buzzwords and catchphrases that themselves should be defined. But setting all of that aside for what some people would consider an academic exercise but what is nonetheless critical for long-term success, apply whichever of the above definitions are pertinent to the chart you posted and explain step by step what you saw and why you did what you did at each of those steps.

All right, let's assume that you understand what you're seeing. Define: 1. shooting star 2. resistance 3. bar 4. down 5. re-test 6. lower 7. selling climax 8. huge 9. support If you don't want to, or can't, then all you're doing is exchanging buzzwords and catch phrases with other people who may not have defined these words and phrases either or, if they have, may not have defined them in the same way you have. The answers are in the chart. How you describe what you see is in you. It's up to you to match up the one with the other.

You still haven't explained why you're taking trades if you don't understand what you see.

Paper or not, what you seem to be accomplishing for the most part is an ever-increasing degree of frustration. If you're continuing to make a lot of poor decisions, then you clearly don't understand what you're looking at. If you don't understand what you're looking at, you can't possibly define it. Whatever you've been doing has clearly not been helpful to you. So stop doing it. I suggest instead that you stop looking for answers everywhere but in the chart. Just sit in front of your screen with a simple price and volume chart and just follow it. Don't trade. Don't think about what you would do or not do about anything you see. Don't think about how much money you would have made or lost if you had taken that back there. Just observe. Ignore all analysis regardless of where it comes from, particularly if there are a lot of past tense verbs in it ("here's the trade I took", "here's the trade I saw", etc). If you find this intolerably boring, then get yourself a charting program with replay and play the day back at 5x or 10x real time. Do this every single day without exception. Take notes. Review your notes at the end of every day, every week, every two weeks, every month. Even if you still can't detect any patterns of any kind in anything that you're looking at, you will at least have laid a better groundwork for further study than what you have now.

If you don't understand what you're doing, why are you taking trades at all?

Are you experimenting with the volume range idea?