DbPhoenix

If the trader had been short, he'd be out at the break of the daily SL, particularly if he were a beginner. However, the daily never provided a long signal and as yet has not provided a new short signal. If he's trading the hourly and had gone long after the SL break, he'd already be stopped out. If he'd taken a short last nite, his trade would be in limbo.

Not just that but also determining your criteria for failure rather than relying on your feelings. If, for example, price returns to the last swing low, is that a failure? This can easily be determined by testing. If price returns to the last swing low and drops below it, is that a failure? What are the odds that price will rally if it exceeds the LSL? If it reaches it but doesn't exceed it? If instead you entered at the LSL and are worried about your trade, then you are no longer focused on price but on yourself. If your criteria tell you to exit the trade because price has returned to the LSL, then exit. Otherwise, there's no reason to exit simply because you perceive that your trade is in "danger". If it's difficult to see the difference, just imagine that you're not in a trade at all.

See also "A Final Note" at the end of Developing A Plan.

A reminder of the "preliminary support" process. Note that the bottom occurs after a series of "climaxes" and is relatively tame.

I'm posting this here rather than T2W because I don't want to invite the attention of the Wyckoff Posse and their extraneous prattle about ice and creeks. If their attention is attracted anyway, here I can at least delete it. I'm posting it at all because I think it's important. One can see the range we broke out of and the -- for now -- climax low along with its climactic volume. I say "for now" because one never knows in real time whether the climax is the real thing or a show of preliminary support (the Wyckoff Posse will tell you in hindsight). After that comes the technical rally and the test, which, consistent with Wyckoff's protocols, occurs on lower volume (i.e., less activity). If one enters on this test, his stop will be below the swing low, the "danger point", which is a pretty wide stop for someone trading his own money, but there it is. Today's activity was not encouraging, and the retracement off the swing high will not be confirmed unless and until price moves past that swing high. That is, however, the weakest spot to go long. To the brave go the spoils, but the brave can also end up riddled with bullet holes. As I said above, all of this may be no more than a show of preliminary support, and price may have much further to fall. In real time, there's no way of knowing. But it is nevertheless important to know and understand what one is looking at before he can even begin to formulate plans on how to take advantage of it. Today, of course, we have options other than daily intervals to trade. Trading an hourly interval, for example, would greatly reduce risk. The chief message here, though, is that this is a climax scenario and it is important to live it in real time, not just in hindsight. If it turns out to be important, one can say to himself at least that he was on top of it throughout, as it was happening. As for the money, if that's an issue, there's always the Q:

Chart review for this morning. Beginning with the chart above, the LOLR is hypothetically down (by "hypothetically" I mean that the hypothesis is . . . ). Looking at the pre-market situation, there are two ranges, the hourly and the 15m (this does not mean that the market is "fractal"; it's just a plain ol' zoom). One can also see that the median of the hourly range is the same as the upper limit of the 15m range. Inside the 15m range, there is an uptrend on the 5m. Therefore, depending on when one begins his trading session, he has a choice among two ranges and an uptrend. Combining all of these, one can use the trigger off the 5m and enter on the 1m, anywhere below 4302.75. Next potential op occurs when price reaches and breaks through the upper limit of the 15m range, which is also the median of the hourly range. Price makes a lower high on the 1m after failing to break through the upper limit of the 15m range. Entry can be made anywhere below 10.75.

Few traders -- including those who characterize themselves as "price action traders" and excrete an unending series of courses and books and dvds and plugins and software programs and so on -- understand what trading price alone is all about. And even those who do in many cases aren't curious enough about price movement to commit to the nearly continuous task of adapting to ever-changing market conditions (which is the chief advantage of trading price). And of those few who are curious enough and who do understand what trading price entails, even fewer are interested in posting to message boards. Why would they be, given the toxic environments one commonly finds there? Instead we get the incessant bought-here-sold-there Turette's-style "trading journal" which is of no value whatsoever. Over three thousand people all over the world have downloaded the various SLA drafts. How many of them are actually using it? I have no idea. Occasionally someone will pop in and post a few charts then disappear again. Or I get emails and PMs. But trading forums are not exactly welcoming when it comes to trading without aids. To be so they'd have to at least acknowledge the possibility that all those aids just might be useless, and when one has devoted years of his life to futzing with settings, this requires a long, hard, cold examination of one's trading life that few people are willing to engage in. It's easier and less painful to just quit, even if it's taken them ten years to do so.

Given that we are well into the previous weekly channel, it's time to begin monitoring the activity with reference to Wyckoff's scenario. I'm going to assume for the time being that while this may be climactic, it is only preliminary support. The further it falls, the more necessary a real test will be.

Infamous, maybe. . . . .

Traders trade not the market but their perceptions of it - DbPhoenix Gee. I'm a signature now.

Double-topping at the midpoint of that range I posted Saturday.

Note that this long is identical to the dynamic illustrated by the 0933 trade in the previously-posted charts.

Scraps from the attic: There's nothing inherently wrong with indicators. If you're able to develop a consistently profitable strategy with them, more power to you. However, you should understand that all the indicators you're plotting on your charts are variations of the same thing, i.e., a means of determining trend. You can save yourself a lot of time by learning how to determine trend, then by determining what timeframe is most comfortable to you. Most traders are much like the deaf who don't know how to read lips, or at least aren't very good at it. Rather than focus on the person speaking, they instead focus on whoever is doing the signing, glancing at the speaker only occasionally, or perhaps not at all. Rather than "hearing" for themselves what's being said, they're relying on somebody -- or something -- else to tell them what's being said. Even if they can rely on the interpreter, they are still removed from what is being interpreted. Therefore, I suggest you learn to read lips yourself.

Simtrading is also the next-to-last stage of developing a plan. Therefore, the plan may not be "ready", but it may be close depending on how rigorous was the forward-testing. If one is worried about losing money, he either needs to work further on his trading plan or avoid trading entirely.

Unfortunately, it's all theoretical, despite the use of statistics. There is no reason to sacrifice outsize gains in order to reduce losses. The key here is to understand trend, trend reversal, trend interruption, trend continuation and know when to stand aside and let the market work things out. As for the “Our worst case scenario for the basic strategy is where the trader can lose 70 per cent of the time with a reward-risk ratio of 3:1. With these statistics the trader can still be consistently profitable. The winners take care of the losers.”, this is peddled to beginners almost constantly, and it is dangerously incomplete. Yes, theoretically it is true. But how many traders, particularly beginners, can take 7 losers out of 10 and yet allow subsequent winners to "run"? Traders cut their profits short -- whether they're beginners or not -- because of the losses they've realized. Their fears of taking yet another loss virtually guarantees that they will cut any profits short, as well as letting future losers run because they just can't accept more losses. Magee busted this postulate 70 years ago, but memories are short, and what was old becomes new again.

For Everyone's Information, I added something to the end of the "Wyckoff" stickie above having to do with how long it takes. Both new and old may find it enlightening.

And there's your reason. Coupled with adolescent ego. And a general lack of understanding of how the market works.

If one has exited, there are several options to re-enter: 1. If one has an extraordinary faith in these halfway levels, he can enter at "1" and place his stop at the DP. 2. If he is faithful but skeptical, he can enter at "2", also placing his stop at the DP. 3. He may also short the break below this range at "3". 4. Or he can wait for the retracement at "4" and place his stop at the next DP. 5. Or he can wait for the test at "5", understanding that the test might not occur and that by not entering at "4" he has missed the trade entirely. The double top at "5" decreases the information risk substantially.

There's a long answer to that and a short one, but even the short one is longer than one might expect. There is a line beyond which "if at first you don't succeed, try, try again" becomes "enough is enough". After five years of trying to persuade people to read W's course, much less study it, and arguing with the VSA people who think they're "trading Wyckoff" when VSA and Wyckoff have virtually nothing to do with each other, and arguing with those who think they're "trading Wyckoff" when they are actually trading Evans' adaptation of it (which is just about everybody), I decided to take another direction and develop the SLA. Is the SLA an interpretation and modification and adaptation of Wyckoff? Yes. What distinguishes it from all the other interpretations and modifications and adaptations is that the SLA is actually founded in Wyckoff's original course, not in what somebody read that somebody wrote who heard something somewhere. In that regard, it is to the best of my knowledge unique. Hint: if whatever you're reading refers to "ice" or "creeks" or "springs" or "'laws' of cause and effect or effort and result" and/or includes indicators of one sort or another, then it is not Wyckoff's original course. Granted Wyckoff's course can be a rough road, particularly for the video generation who are much more attuned to visuals than the printed word. Add to that the fact that it was written almost a hundred years ago and the stylistic differences can be challenging, though it's a hell of a lot easier than Dickens. I attempted to ameliorate these difficulties by suggesting Wyckoff Lite, but even this proved to be too much for most. Which brings us back to the SLA. And though the SLA may seem to some of those who've actually studied W's original course as a sort of Paint-By-Number approach to Wyckoff, most of those who read, study, and try to implement it (even 20 pages is too much for a great many people) are at least beginning to understand what trading price means and is and can do. Therefore, Wyckoff will now be addressed and explained within the context of the SLA. The objective is of course to launch traders on the road to making money, not to torture them with material which -- if they are under 40 -- may seem archaic. Interested traders have been playing with the SLA for a little over two years now, and far more of them now not only understand what trading price is all about, they are also beginning to make money with it.

I look primarily for ranges and where traders are declining to place trades. There's really no way of knowing why they're moving one way or another, but I find it useful to see where they're looking. The first thing here is that price is dead center of the last upmove on the daily. What this tells me first is that the day is likely to be choppy. But for the time being, let's assume that there will be something. The hourly shows that traders have been bumping up against the upper limit of the range we've been in since April. If they were interested in going up, they would. Instead they drop to 10, then back up to 50 then down to 10 again (I'm being general with the numbers here). They then slide down toward 4500, but they're in no hurry. Nothing below there. As traders spent almost two hours at 02, that may be important. So what do you see here?

For example, the following is what is presented at 0900 NY time for the NQ. What do you see? What do you do?