DbPhoenix

This point should not be overlooked, so I'll emphasize it. Traders commonly feel that they ought to be taking every entry and milking every move for all that it's worth, and that they're still not getting it if they leave any money "on the table" (which leads them to leave the trade alone next time which, of course, is the time when the trade makes a U-turn and they end up with nothing). If you want to make serious money at this, nail your entry and nail your exit, then increase your size. You needn't be trading in and out and in and out and in and out all day long. You can do very nicely -- in fact, better than most -- by getting in at the best time, putting on greater size, getting out at the best time, then saying the hell with it and taking the rest of the day off. Don't concern yourself with all those other possible -- and usually hindsight -- trades. Define your setup, wait for it, play it well, and be satisfied.

VSA is correct, as far as that goes. There's buying and selling in every bar (which a great many people who use color-coded bars miss). If there's lots of trading activity, as represented by the bar, there will lots of buying, but also a lot of selling. What matters is the effect, i.e., the appearance of the bar. This, to me, is one of the more important points that Wyckoff -- and consequently, VSA -- makes. Someone who focuses on a list of "principles", however, and doesn't go beyond that will look at the close at the lows and think "weakness". Someone else, though, may include the enormous effort that buyers are making, which results in the level of the activity. The results of this effort are shown in the next "bar" (though in a smaller TF, one sees a dip and recovery, like a plane flying into and out of a canyon). Again, the strong buying came in during the previous bar. But its effect was not entirely realized until bar b. As to bar c, you're correct about the confirmation. It's just too bad that the whole thing took place backed up against a market-moving announcement. Incidentally, your remark above -- "it also looked as if it might break the support line" -- is an example of what I call The Dog That Didn't Bark. The fact that it did not break the line is more important than it might otherwise seem, and if one is fuzzy on how to interpret the relationship between price and volume, he can think about what "ought to" have happened, but didn't.

Days like today require a degree of patience that is almost more than I'm capable of. The "support and resistance levels" that I'm using are from points and levels that are from 1-4 weeks old, so I don't have a huge amount of confidence in them and have to be especially attuned to what traders are doing at each of these levels. But I've learned to ignore everything that doesn't take place at S or R, so I ignore moves "against" me that don't take place at or near some important level. Price, after all, does go up and down.

Yes, it's taken me a while to get around to fixing it. I would have preferred adding the edited chart to our discussion, but by then the thread was closed (and I wouldn't have been able to edit the response anyway). Not that there's been a huge amount of interest in this chart. I posted it mostly as a matter of housekeeping.

Very interesting, partly in how we viewed the same information somewhat differently. I took only four trades -- two shorts and two covers -- in this timeframe (on the NQ, but the pattern was essentially the same). I shorted just before 1000 due to the test of S/R, even though this was just before a news release, and lost a few points. But then I did nothing more until your A, shorted again, and held it until it hit and bounced off a lower support level at your 3/4. The difference? I suppose it's largely due to the reliance -- or lack thereof -- on bars, and to differences in where one locates S/R. (Also in the fact that I like to be done by lunch . . . )

I don't want to revisit this in the VSA thread since it was arguably OT in the first place, but the chart I attached to post 209 over there has been corrected, below. The "bad tick" at 1400 (highlighted in green) has been removed. The volume during the "rally" off S is now more reasonable.

But that's the difference between growing roses and going to the florist and buying them. Unless the grower teaches somebody else what he knows, then all of it is lost. (There's an ancient saying that when an old man dies, a library burns down.) I can't speak to TG per se. I'm not interested enough in it -- or any other software program -- to explore it fully. But if the program doesn't teach people exactly how to write scenarios, then it's just pretty pictures.

Point of Information. And I apologize for not going through the first thread. I assumed that when people referred to "VSA" that they were talking about the variations on Wyckoff which Tom Williams developed a number of years ago. However, there appears to be some melding of VSA with TradeGuider in this thread, at least recently. Is this the case, or is TG an entirely separate issue?

Alex and I were just in Vegas speaking at a seminar for the Traders' Expo. The room was silent and tumbleweed went by as topics such as mental discipline, money management and psychology were discussed. The slides switched to the trading setups and instantly the whole crowd perked up like watching an accident happen in real time on the highway. They wanted to know "does this guru have the holy grail??" What they do not realize is the first "boring" part of the seminar is the holy grail.

How do I identify important support or resistance levels intraday? I often have no problem identifying support on a higher timeframe, but these "zones" are too wide to trade of really. Like you show on your chart in the PDF files there are macro levels which are relatively easy to identify. But these zones are extremely wide when you plot these lines on an intraday chart. I don't know about the NQ but on the ES for example I see zones as wide as 7 points that offer support. Often I see price reacting to these levels during the day, but sometimes it's on the upper boundary of the zone, other times it's on the lower boundary. But using stops that are wide enough to compensate (> 7 points, so around 10 points) on the ES isn't very useful when the market on a daily basis moves around 20 points. What happens to me a lot is that I take a long trade from support on decent volume, only to get taken out because price finds support 15 minutes later 3 points lower and then reverses. Other times it looks as if I got the entry near-perfect on the lower boundary of a support zone, but price breaks support and immediately travels back into the range. A false break in a matter of speaking. When I look on a higher timeframe (30minutes or so) then I see a nice hammer-like formation forming. But on a 3 or 5-minute timeframe (which are the ones I use most of the time) this isn't visible, let alone on a 1-minute timeframe. If the macro S/R forms a range that is consistent enough and wide enough to trade, then you'll have S/R also within that range (see my Blog post on Support & Resistance and Trading Trend). Sometimes price will, for example, drop to a previous support zone and bounce nice and clean, creating those lovely swing points that always wind up in books and articles and video presentations. But it is the nature of support zones that they are created by previous buying. When price returns there, it wants to know if that demand is still there. This usually takes time. And sometimes it means probing around in there to find that demand, like probing the hole in your mouth where your wisdom tooth used to be. This is where the lower the bar interval, the better, so that you can see the push and pull directly and not in summary. But that's not something I can explain to you in a message board post. Perhaps someone more talented and skilled than I can. In the meantime, you just have to put in the screen time. If you plot these three different kinds of S/R, don't you have lines drawn all over your chart? :\ In some of your earlier posts on ET you had charts with "important" levels such as the previous day high, low and close... If I understand correctly you've changed your stand on some things you posted in the past. Does this include things like PDH? In my own trading, I used to draw lines around the PDH and PDL ànd use S/R from a higher time frame, say an hourly chart. Sometimes I'd get really nice trades off these levels from the previous day, but my frustration comes from not knowing what or how to do when I have a line drawn on say 1358 from the previous day but also two lines that identify support between 1345 and 1355 where important support is. Back in those days, nearly everyone traded stocks, and the PDH and PDL and PDC can be and often are important. Stocks also often gap between the PDC and the open. But nowadays, a great many people trade things that don't close (unless the market literally shuts down) and often make their highs and lows outside RTH. Therefore, "day" begins to lose its meaning, and one can't rely as much on those swing points as he used to, anymore than he can rely on the "trading clock" or that mid-lunch reversal that was so dependable for so long. But as for the number of lines, yes, it can get out of hand when we're stuck in a hinge as we have been in all the major averages for the past six weeks. And sometimes price reacts against an S/R level that you didn't anticipate. But that's trading. The only guarantees are those provided in courses and seminars. I'm not particulary interested in FX, but I do want to know what I can do to understand the people who are trading an instrument. What do you mean by that? Getting to know actual traders? Are people that trade the ES different than those who trade the NQ like yourself? Not actual traders but the thinking behind the trades of those who choose a particular instrument. YM traders, for example, seem to like it because they think it's cheap, and they think they can use tight stops and lose less. Of course, none of this has anything to do with how much money one makes trading the YM, or even whether or not he makes any money at all. But these things crop in posts I read that are written by one trader or another. I don't know if I understand your analogy completely. With an old lady do you mean it moves slowly? Because when I look at charts, there seems to be a striking similarity between the ES and the YM a whole lot of the time. The NQ and Russell seem to follow a path of their own. Anyway, I've focused my efforts on the S&P, but I take it you see the market a trader picks irrelevant as the same principles would be valid amongst all markets, right? The same principles apply to all auction markets, but that doesn't mean that all markets are the same. The same principles apply to all home construction, but not all homes are alike. Isn't that an emotional reaction to trading? You say the trade would be valid but you didn't take it because you were tired. I'm convinced you know what you are doing, but how does a trader know when to quit? Should he quit after the first winning trade? The next three days he might have all losing trades. If you can make it a winner the first trade of the day, than that's fine I guess. But most of us probably don't manage to do that. Being tired is no more an emotional response than a headache. And a trader stops trading when he can no longer trade his plan properly.

Ha! One or two more won't matter. But speaking of scenarios, does VSA explain how to write scenarios (or some other word, perhaps) for trades?

I understand what you're saying, Eiger. Unfortunately, these discussions inevitably end up as debates/arguments over meanings of words and go on for dozens of posts and which, I suggest, are beside the point. As you say, the focus should be on the activity -- whether one uses bars or something else -- and on the probability of price moving in one direction or another. Perhaps traders are unused to developing scenarios for their trades. Or they're shaky on trade management in the first place. In any case, if a trader is determined to state unequivocally that price is going to move this way or that and that's all there is to it, any suggestion to him that the outcome of any given trade is unknowable is likely to be greeted with a guffaw and an Aw shoot.

It does seem to go on, doesn't it? But whether one predicts, anticipates, expects, forecasts, foretells, looks forward to, prophesies, or divines (and so on), what distinguishes a from b is whether or not the outcome of any particular trade is knowable. If he believes that it is not, his approach toward entering and managing the trade is going to be different from the individual who believes that it is. And it's going to be more in line with the precepts advanced by Wyckoff, and, I presumre, VSA.

If file size isn't important, then perhaps adding gifs to the list is not important. But for anyone who's interested in minimum file sizes, it's worth looking in to. Thanks for expanding the gif attachment size.

The Camtasia price is a little stiff. The software I've been playing with provides conversion to animated gif, so the file size is much smaller (so far, less than a meg). However, I see you don't allow gif uploads. Any particular reason? You do allow gif uploads to the blogs, but only up to a half meg. Any reason for that, or can it be increased?

Could you provide a bit more information on this, or is this available elsewhere on the site? Are these videos resident here? If so, what formats and file sizes do you accept? If not, where can they be posted? What's the typical file size for these videos? Is there a limit, or does it not matter? What programs do you suggest for creating these videos? Are there any decent ones that are low-cost or free? Why all the cookie requests when entering the video section? Are they really necessary?

That's why I've come to rely more heavily on support and resistance and what happens there and pay less if any attention to what may or may not be signals that happen elsewhere. For a long time, I thought of the lower timeframes -- particularly the 1m and lower charts -- as being "noise" because everybody said so. And they certainly seemed so. But then I realized that they seemed to be noise only because those -- including me -- who thought so weren't listening (sort of like the alien languages on Star Trek that sound like white noise on a radio). Then someone -- I forget who -- stated that, as far as the markets were concerned, there was no such thing as noise. It all contained information. That one may not recognize it, or understand it, was beside the point. If you're going to have important S/R on the weekly at 1800, it's going to be there in every other timeframe as well. Other S/R levels will reveal themselves as one travels down through the timeframes, but he isn't required to trade every last one of them. In you chart from post #138, could you not draw resistance at 1778? It looks like there was a slight volume spike around 13:09 immediately followed by a downbar, isn't this a rejection? It looks like price found resistance on the previous day there too. And it is around that 'special' 1780 level that you've talked about too... Sure. 1780 has been important for both S & R for some time now, as has 1800. But that wasn't germane to the question or to my answer, so I didn't get into it. As to the rejection, there's another one at the far left, but I was already short, so I didn't particularly care. The short had taken its own sweet time to pay off that morning, so I mostly just wanted the trade to be over. You'll find many of these rejections throughout a day, but are there enough traders involved to make the rejection important enough for you to profit from it, or are they just looking for something to do until Happy Hour? But how do you know if support from a previous day or week will still be important? If you look at a chart and you can point out where support is, do you take note of that level? I mean the next day it might be breached and so you think it's incorrect. But the day after that it may be tested. Is support from two weeks ago as important as from two days ago? I find it hard to reconciliate all these different support levels from various days and various different timeframes... It looks like support (or resistance) is all over the place all of the time Nobody said it was easy (except the people selling courses and software:)). I start with the macro, as I show on p 50 and following in the PVSR pdf I posted to my Blog. Then I work my way down to the more minor S&R levels. On my chart, I use lines of three different thicknesses, the thickest being reserved for major S/R that's lasted for weeks or even months, the next for S/R that's not quite so important, then the thinnest for what has been S/R only now and then and hasn't been terribly reliable but has also provided some excellent entry/exit signals (most often I find that what looks like minor S/R is actually something more major that I just overlooked; if I go ahead and plot the line, I'll notice other consistent levels over past days that just never registered with me). I also use three different colors for support, resistance, and the midpoint (what Wyckoff calls the equilibrium level [similar to what MP calls the POC]). This may seem to others like unnecessary busy-ness, but it helps me to see at a glance where I am while also avoiding a double-think at a time when I don't need to be doing that. And, yes, S/R is all over the place all the time. And a scalper is likely to be concerned about those minor levels because he wants a reliable entry that results in a quick profit. But I prefer to make one or two trades a day and ride them, so I wait for tests of the more important levels. If price never gets there, I don't trade that day. So are you saying that FX moves are less "clean" than those in futures? May I ask if there is any reason in particular you are trading the Nasdaq? Over at ET a lot of people are trading the S&P. Do you think the Nasdaq is less choppier? I haven't studied FX so I don't understand it particularly well, nor do I understand the people who trade it. Without any of that, I'm flying blind, and why bother? And not having volume doesn't make things any easier. But if someone else wants to give it a shot, what business is it of mine? As for the NQ, I played with the NQ, ES, YM and ER for quite a while, but I understood the NQ better. It appeared to provide more reliable S/R than the others, it had a wide enough range to offer decent trading opportunities (especially after the extraordinarily long dry spell of tight ranges in all the index futures), there was a lot of volume in it, and because of its constituents, it moved a little differently, often leading the others, generally acting independently. The ES has always reminded me of an old lady. The NQ is something more of a hell-raiser. The YM is something of a new guy who's trying to become one of the cool kids, but they haven't reached the point of letting him sit at their table at lunch. The ER is something of a toddler who can't make it from one end of the room to the other without banging into everything along the way. A final question, I looked at your "recommended literature", but there seems to be nothing relating to Wyckoff about it. I have already read the Day Traders Bible in the past, but to be honest it didn't really help me understand the markets better, there are little charts in it too. So perhaps somebody could point me in the right direction and tell me where to find all these Wyckoff gems? Depends on what you mean by "related to Wyckoff". It's all related to Wyckoff's concepts in one way or another, but it's true that the meat of it all is Wyckoff's original course. Unfortunately, SMI holds the copyright and won't make the course available unless you plunk down $950 for the whole package, including the original course and all the mucking about they've done with it. Someone gave me the course as a thank-you for what he said he learned from me, and I took what to me was most pertinent to modern trading, added what I'd learned from others of similar mind and from my own trading, and created my own book. It certainly "looks" simple and easy, but one man's exit signal can be another man's entry signal. I mean why did you not go long where you closed out? You said support was at 1800, so would this not be a valid entry then? Yes, it would be. I didn't because I was tired. When I get tired, I tend to do stupid things. I don't have to make the maximum number of points every time I trade. The market's there every day. As for my "homepage", I don't have one. Home is wherever my stuff is, and at the moment, my stuff is here in my Blog. I'll look into whatever I posted in my profile, though.

Hello, zeon. If it's all the same to you, and since most of your questions are directed toward me, I'd like to move all this over to Sledge's Real Time Price Action thread: http://www.traderslaboratory.com/forums/f34/real-time-price-action-clue-to-3494.html Even though VSA is rooted in Wyckoff, Williams added his own flourishes. And TradeGuider took it in a direction that to me is misguided. But this just isn't the place to debate that point. If someone wants to learn the TG way, what business is it of mine? And by moving this discussion to the other thread, elements of VSA, MP, Wyckoff and whatever the hell else can all be blended together and simmered to come up with something that may do nicely without necessarily having a name.

I should point out here that none of this is about How I Trade. If I get into that, then I'm just "selling" yet another system for somebody to copy ("but where do you enter . . . "). I provided a specfic example of what I look for under a specific set of circumstances because somebody asked for it. But these trades are not, of course, 100%. Sometimes the entry doesn't work. Sometimes it doesn't work in consecutive attempts. Not because the activity has been misread and not because the setup is bad but because it just happens (Mark Douglas is an important accessory to any trading approach). The concepts of the selling climax and the buying climax, the tests, the selling/buying dryups (or "no demand/supply") are important if not critical to determining turning points. But even if they are there, and even if they are called with dead accuracy, that does not mean that the turning point will actually occur. A "no demand" scenario is not forever, nor does it guarantee a move that will pay for that condo in Aspen. It means that there is no demand at that moment. It does not mean that demand will not suddenly reappear two or three or four or twenty bars later. I've found that if all of this occurs at support or resistance, the odds of the scenario playing out as expected are increased enormously (which is where MP can make its own contribution), which is why I ignore everything else. I've also found that support and resistance appear to be the determinants of whether or not other "patterns" work or not, such as the so-called "Ross hook". Therefore, again, it ain't a sure thing. On the other hand, just because it didn't work out doesn't mean that the trader screwed up. Nor does it mean that the approach "doesn't work". Caca pasa. You fold and wait for the market to deal the next hand.

An important observation, and of course from a Wyckoff perspective as well. However, this particular bar did not play a part in the setup. But even if it had, I likely would have dismissed it because it is literally a tick bar. Therefore the data is suspect, partly because of the brevity of it but mostly because of what you observed and concluded.

It's not my intention to be combative. But if there were no demand, price wouldn't rise. Good luck to you.

Depends entirely on your setup. Mine is based on support and resistance. I've very clearly defined what I want to see there. If I don't see it, I don't take the trade. If I do see it, I do take the trade. Without exception. There are hundreds of hammers, shooting stars, gravestones, dark cloud covers, no demand bars, upthrusts, shakeouts, etc, etc, etc in any given chart. It's up to the market student to determine which to pay attention to and which to ignore. I pay attention only to those which occur at support or resistance. So whether or not the ease in selling pressure at support and the shift to buying pressure would cause you to cover or not is beside the point unless that is part of your setup. Since it was and is part of mine, it's my reason to cover. And adding to my short is not an option since that's not part of my setup. What price does thereafter is of no importance to me unless I've entered a long trade. But I didn't. I was done. As to "temporary", the trader has no way of knowing whether the shift in balance is temporary or not. He has to act based on what's in front of him. As to whether a lack of "supply", or, more accurately, selling pressure (unless you're talking about something that actually has a supply, like stocks) equals demand, or buying pressure, it depends on what's happening with price. If selling pressure eases and buying pressure takes up the slack, but no more, price will sit right where it is. If selling pressure eases and buying pressure increases, there will be less resistance to a move up in price, which is what happens in the first bar I've arrowed, as well as the second. As to what happened afterward, price went pretty much nowhere, but, again, I didn't care. I entered where I was supposed to, rode it all the way down to support, and exited where I was supposed to. There were no further setups for me that day, though I'm sure there were plenty of setups for other people. And if all this seems oversimplified, I'd have to agree. That's exactly what you have to do in your setups and your trading: oversimplify. Make it as simple and straightforward as possible so that you know exactly what to look for and exactly what to do if and when you see it. No panic. No euphoria. You see it, you act. You don't see it, you play solitaire. If I may, the following is from the "journal" post to my blog: Therefore, focus on the setup. One setup. Determine its characteristics. Define it so specifically and so thoroughly that you can recognize it without any doubt whatsoever in real time. Decide provisionally where best to enter, what the target ought to be, where the stop should be placed, and so on. Only after the setup is defined and tested (and it can't, ipso facto, be tested until it's been defined) can one even begin to think about trading it with real money, much less trading multiple setups. Attempting to shortcut this process merely expands the amount of time it will take to develop the necessary skills. Nothing is gained by painting the house before scraping it, cleaning it, and priming it since you'll have to do it all over again sooner rather than later. You are free to create your own based on whatever jingles your bells. You may, for example, focus on divergence. Or higher swing lows and lower swing highs. Or candlesticks of one sort or another. Or trendline breaks. Or base breakouts. Doesn't really matter. What matters is that you keep four concepts in mind: demand/supply, support/resistance, price/volume, and trend. In this way, you can create your own setups which hundreds of thousands of other traders won't be watching along with you. You must understand, however, that what determines the success of the trade is the trader, not the setup. If you're looking for something that "works", you may as well save yourself a lot of time and stop right here. What will “work” – or won’t, as the case may be – will be you. As for the bars, just for grins, compare this chart to the one I posted earlier:

Here's a simple, straightforward example. There are many others in the material in my blog. Support is at 1800. I doubt there's anything new here, whether one follows VSA or Wyckoff or SMI. But when I see the retest of support with far less trading activity, that says to me "We're done". And I know they're not lying because of what happens to price. Effort, result.

Don't worry about trading off it. Just plot it in a separate window along with your usual bars and see if you can sense the flow. No hurry. And, yes, it's very nice for confirmation.

This is a post I've saved. It may be off-topic, but I like it, so here it is. First I spent many months drawing trend lines on charts until I understood a little something about "trend stages" and then followed price along in real time trying to apply the accelerating /decelerating trend thing. But it wasn't enough. So then I went through the same charts and wrote down the length of price bars during 3 different parts of the trading day, to find out what an expansion bar, a wide range bar, and a wide bodied bar were, and what was a normal or average price bar .( I was ashamed to ask about these at the time because it seemed that everybody already knew but me.) But that was not enough. So then I set out on the road to find the mystery about S/R. I looked at both price highs/lows, and calculated pivot points to find out which level price reacted to more often. I did this with a combination of trend lines and wide bodied bars or the lack there of. After a few months of doing this every day, I got a pretty good idea what S/R was all about. In the beginning I also was studying an opening range breakout strategy, which first ignited the idea of contraction/expansion and how that affected the outcome of a BO. Then I started looking at individual price bars, and where price opened and closed in relation to the overall range of the bar. On and on and on... The point is that this is how I built up my base of understanding of P/V behaviour, by going over the same territory again and again and again with a new piece of the puzzle, and also carrying forward with each discovery. If there is an easier way of learning what is important, I don't know what it is.