DbPhoenix

So lest the original point not be lost, where was the "background of weakness" that prevented the trade discussed in post 477 (which is what prompted this arc in the first place)?

There's absolutely nothing wrong with taking yourself out for a long lunch, followed by a stroll in the nearest park. You can then begin again tomorrow, all bright-eyed and bushy-tailed, without subjecting yourself to all the regrets you will feel over not having followed your plan, or over having followed it and lost money anyway.

As to the latter, that depends on whether you are exiting based on a predefined reversal signal or you are exiting out of fear that whatever profit you may have may turn into a loss, or you are already in a loss position, or you are trying to make back money that you lost on an earlier trade, or you're tired of a string of losses and want to win for a change, and so on. The market couldn't care less about any of this.

It's not a question of being precise and perfect. It's a matter of locating support and resistance accurately, then monitoring traders' behavior when those levels are approached. If one monitors that behavior in terms of where a bar closes, then he is inserting one or more filters between what is happening and his perception of it. One determines an expectation according to the information that is available to him at the time he determines the expectation. In the next instant and the following instants, more information becomes available which may, all or in part, change the expectation, all or in part. If one has decided in advance that he will be "wrong" then and for all time if his expectation requires modification, then he will not be available to whatever the market offers. He will instead sit there, immobilized, trying to figure out where he screwed up.

Again, the bar interval has nothing to do with the target. A smaller bar interval enables one to read price action more accurately. That's all. It carries no target baggage unless the trader chooses to hook it up himself. As to whatever disappointments there may be, these are the result of a lack of skill in interpreting price -- and volume -- action, not of the bar interval one chooses to display twice.

On the other hand, however many points one "wants to make" have nothing to do with the number of points that are available, which is a chief reason why so many traders cut their profits short. As to artificiality, daily, weekly, monthly are not necessarily artificial since there is in fact a literal close (at least with regard to stocks). Intraday, however, is a different proposition since there is no close during the day (this is what is fundamentally illogical about applying VSA to an intraday timeframe). In any case, what is support or resistance on a weekly will also show on a daily, as well as intraday, which is a convenient means of determining what is "important" S/R and what is trivial.

The "smaller" S&R don't translate into anything. They are merely components of the waves of buying and selling. The "target" remains the same, in yesterday's case, 1710. Many novices will link "small bar interval" with "small target". This is a fundamental misunderstanding of what reading price action is all about. As Bearbull pointed out earlier, one is more likely to misunderstand intent with a longer bar interval than with a shorter one.

This common misunderstanding arises from an equally common misunderstanding as to the nature of support and resistance. There are "support" and "resistance" in every tiny swing on a tick chart, but one is not required to trade that just because he happens to use a tick chart to follow price action. Yesterday, for example, support was at 1675. Resistance was at 1710. That's what the trader trades, regardless of what bar interval he's using to monitor price action, if he's using any bar interval at all.

This is a common misunderstanding, that because the "bars" on a smaller interval chart are shorter and the volume is by definition less that the targets are nearer. The targets, however, remain exactly the same. One buys support and sells resistance. The chief difference is that one is buying support at support and not waiting five minutes or fifteen minutes or an hour to do so. If one can't read the signals, it's most likely because he's trained himself to focus on bars rather than on price movement. If he also views every aggressive move in either direction as a potential trap, he will find himself reduced to perpetual inaction.

Actually, the setups are identical. The only difference is whether one wants to trade according to the clock or to the balance between demand and supply at key levels.

No, that's the timeframe that Eiger was asking about. One can go on for as long as the wave lasts, but the focus must be on the flow and not on bars and closes in order to interpret the balance between buying pressure and selling pressure at any giiven segment. For further info, check the "Dailies" posted to my Blog. Edit: I should point out again that the keys are support and resistance. Without that, one can easily get lost in the trees and end up being tossed around like the ball in a game of KeepAway. Keep your eye on the prize.

. During the first 25 minutes, the bars that illustrate the greatest amount of trading activity are generally related to positive or neutral price bars. The waves of buying and selling can be more accurately linked to price action by using an even smaller interval. . .

I've combined the charts I've been posting this week to the VSA thread and this one and put them more or less in order in my Blog. The chart for today may be found there as well. Comments and questions are welcome.

If you want me to stop posting charts, I'll be happy to do so. They do take time, and I don't like wasting it.

An interesting contrast to yesterday. Here we fell entirely out of the previous day's value range and price range. Gapped, as a matter of fact (though technically the futures don't "gap"). Not only that, we dropped below the midpoint of the entire range that began two weeks ago and came to rest at the midpoint of the heaviest volume range for this this week. All relevant lines from previous days are extended with dashes to act as potential levels of S or R or both. One might expect traders to fill that gap, or at least move toward it. Absent that, a continued move down. Instead, they form a hinge. At 1000, price falls out of it but reverses before it makes much progress, perhaps finding S at the same level that the opening low did. A test. Then it takes off in the opposite direction, back toward that longer-term midpoint and the opening high. Another test. Having tested both ends, traders take price down to the low of that same volume concentration (the blue line). This price is rejected rapidly and forcefully, leading one to expect that the countermove will be as forceful, particularly given the TICKQ divergence. Instead, price waffles around for 20m before finally advancing. And here's where it gets interesting. Ordinarily, one would expect price to travel to R, at which point one could reverse or cash in and go home. But where's R? First price stops at the midpoint. But rather than bust through like it did yesterday, it falls back 10pts. Then it futzes around here for half an hour, finally moving on to the next level of "resistance", the previous day's low, filling the gap. Then to the previous day's close. THEN ALL THE WAY BACK TO THE OPENING HIGH before taking off yet again for the top of the previous day's volume range. Anyone trading one contract must have been driven crazy trying to figure out what to do, but even those trading multiple contracts would have had to be on their toes. The most logical place to exit would be a point equal to the distance between the midpoint of the opening range and the initial range extension to 1700, i.e., 1730. This point would also serve to fill the gap, more or less. But the only way to rack up those extra 30pts without getting tossed around would be to leave at least one of multiple contracts back where it was bought at 1700 or thereabouts and just leave it the hell alone. Therefore, the only "error" today was not to have taken the long at 1700. Given the number of resistance levels along the way to 1760, one could have been forgiven for taking profits just about anywhere. And incidentally, zeon, you're not going to get any comments to your Blog unless you allow comments to be made. See your Blog Control Panel. Brun, hope you're still getting something out of these. . .

Nice to have something with moving bars. They show the struggle between buying pressure and selling pressure so much more clearly, esp that "unchanged" bar. Thanks, Sebastian.

. For today. I keep looking for ways to make this clear to others, but perhaps there's no substitute for multiple examples. . .

I use the same interval for both, 1m for each (the NQ, that is, but the idea and process are the same). Apparently I use the TICK(Q) differently than most. When I first played with it years ago, before Wyckoff, I couldn't see what everybody was so excited about. Now it makes more sense, or at least the way I use it makes more sense to me. Anyway, I posted charts of what I saw in yesterday's action here, yesterday evening: http://www.traderslaboratory.com/forums/31910-post117.html

. First chart provides context. Each of the next two shows the first and last half of the day. . . . .

Perhaps the easiest way to illustrate it is with constant volume bars. This is a copy of a chart I posted yesterday to the RT thread as an example of prep. Each of these bars represents 100,000 contracts. Note that in area between 1272 and 1280, you've got 800,000 contracts. However, in the area between 1280 and 1310, the range is three times greater but the volume is half as much, so at any given price point, the number of contracts traded is less. This helps to account in part for the ease with which price retraced all the way back to 1286. Another example may be found at the end of the day. Note that there are four bars between 1308 and 1315, but only one between 1315 and 1320. This creates an "air pocket" in which one can expect to find little support. . .

. A quickie chart of the ES: . .

. For tomorrow: . .

If you're having trouble recognizing selling climaxes and retests in RT, first make sure that you've located S&R correctly. Then watch the TICK or TICKQ. Today, for example, the TICKQ was -648 at the "selling climax" and only -156 at the "retest". Seeing this divergence between two different measures of selling pressure may give you the confidence you need to take the trade.

That the success or non-success of the trade may have to do with news. Whether one pays any attention to the news or is even aware of it is immaterial. One of the more common errors made when backtesting, either manually or by computer, is not to include events. Doing so can result in unpleasant surprises when trading setups in RT.

One must also include the element of news when separating movements after retests as successes and non-successes. It's not possible to reach valid conclusions without including all the pertinent elements.