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DbPhoenix
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Everything posted by DbPhoenix
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Problem with the 4 Cardinal Rules of Trading?
DbPhoenix replied to kuokam's topic in Trading Psychology
Depends on his GQ, or Gullibility Quotient. Gullibility is exacerbated by stupidity, laziness, ignorance, greed, and, interestingly, arrogance. The lower the GQ, the more likely the beginner will be to assess value accurately, making him less likely to fall for vendors' nonsense. The GQ of nearly all "traders" is quite high, and, since those qualities that comprise the GQ are exactly those which make the markets attractive to those with high GQs, those with low GQs are able to profit handsomely. It is important to note that GQ need have nothing to do with time. I've known "traders" who've been at this for years, and yet their GQs are just as high as they were at the beginning. What's worse is that they generally delude themselves into believing that they are better than they are, having had, say, ten years' experience, when in actuality they've had one month of experience a hundred and twenty times. -
All these lines may prevent you from seeing that the bottom of your trading range is a zone. A rather wide one. Therefore, when the time comes, you're going to have to focus on the B&S Waves to determine who has the upper hand and trade your reversal on that basis.
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Problem with the 4 Cardinal Rules of Trading?
DbPhoenix replied to kuokam's topic in Trading Psychology
Or one could put this into practice: The Trading Journal. This might also be of interest: Trading in 90 Minutes. -
I don't plot or quantify volume separately. In fact, I don't even draw these lines. They are solely for communicating what I'm looking at. I could also use circles or arrows or rectangles. If price is ranging, I look for the intrarange trading ranges or clusters since this is where the volume will necessarily be. It is these clusters which will act as support or resistance, not, generally, swing points (a notable exception was the platinum chart I posted last week). Otherwise, unless price is at a point where one could expect fireworks, I don't pay any special attention to it. Currently, volume is nothing special, but price is at a level where it ordinarily would launch itself. I see no evidence that it will (with the possible exception that it has failed to drop below the last swing low), but we've been following this for a while, so I posted an update. Sometimes one gets results quickly, as with platinum, sometimes one has to be patient.
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The green line is just a line. No reason for it to offer resistance. The bulk of the trades have been taking place around 97. This may offer support if price rallies from it and retraces to it. Or maybe not. What matters most is what traders are doing, and, as you say, the buyers are holding it above the midpoint of the range. For now, that's all that matters.
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I'm always amazed at how people seem to think that selling is an irreversible decision and that they can't repurchase a stock that they just sold. At times it can make very good sense to repurchase at a price higher than what you just sold at. Emotionally, however, it is very tough to do so since you are at some level admitting you made a mistake by selling in the first place. It's very difficult not to have an emotional reaction to repurchasing a stock at a higher price, but the best thing you can do is forget your prior actions and continue to follow a set methodology. I was reading an article on something called "the endowment effect" which seems relevant here. A professor gave half his class coffee mugs. He asked the half of the class that received the mugs to name a price they would be willing to sell the mugs for to the other half of the class. He asked the other half of the class that did not get a mug to name a price they would be willing to pay. The average price that those who received a mug would be willing to sell for was consistently about twice what those that didn't receive a mug were willing to pay. The conclusion is that once someone owns an object, be it a mug or a stock, they have a vested interest in it and tend to place a higher value on it than they would if they didn't own it in the first place. This helps explain why so many buy-and-holders have a death grip on their stocks. Once you own something, human nature is to convince yourself that you did the right thing by buying it and, therefore, its perceived value becomes greater than it was when it was owned by someone else. -- David Barney
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He's 52 and unemployed. It's only a matter of time. Of course, if he's married, his wife may take care of it.
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Tennessee Man Quits Job After Getting W-2 with '666' on it By Mike Krumboltz A Tennessee maintenance worker has quit his job after discovering the number "666" printed on his W-2 tax form. The man, Walter Slonopas, a 52-year-old born-again Christian, told The Tennessean that God was worth more than money. The number 666 is commonly referred to as the number of the beast and is often associated with the devil. (The number played a pivotal role in the classic horror movie "The Omen.") Revelation 13:18 in the New Testament says, "Here is wisdom. Let him that hath understanding count the number of the beast: for it is the number of a man; and his number is Six hundred threescore and six." This wasn't the first time that Slonopas had a work-related run-in with the notorious number. When he first began his job in 2011, he said, he was accidentally assigned the number 666 to be used when he clocked in. His number was later changed to 668. However, a few months later, when the company updated its clock-in system, Slonopas was again assigned the number 666. He quit, but returned to work after being given yet another new number. The Tennessean spoke with Bob LaCourciere, vice president of sales and marketing for the Revstone Corp., Slonopas' former company, about the W-2 form. He explained that the number referred to the order in which the tax documents were mailed. Slonopas, who calls the situation "unbelievable," is seeking a new W-2 with a different number on it. He says that he can't file his taxes without one.
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In this business, you never stop learning. Let me put it another way. If you stop learning, you're on your way to going out of business. Wall Street is a tough teacher but also a good teacher. If you have any weakness -- arrogance, laziness, stinginess, cowardice, procrastination -- the market will zero in on that weakness and make you pay dearly. -- Richard Russell
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I agree. Fibs are shiny, flashy things that are dangled in front of beginners, drawing them into the weeds. Ditto "pivot levels".
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No, you're not wrong. You're just stopping short. If you settle for volume as a "thing" (strong, weak, increasing, decreasing and all the other terms used by products that are "based on" Wyckoff) rather than as an activity, then you risk misinterpretation of what is happening with regard to buying and selling pressures. For example, and why is "increasing volume" "bullish"? Price is rising. Is that not bullish enough? Why is it more "bullish" that it's doing so on increasing volume? And here How does one know that "selling is light" because the "volume on the reaction diminishes appreciably"? How is this a "bullish indication"? And finally, Why should "prices breaking through the low point . . . on increasing volume" prompt a short? Is it the volume? Or it is the violation of the low point?
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It would help if you were to outline -- or preferably detail -- how you plan to trade this (hence Trading In Foresight). Otherwise it is more appropriately posted in the AMT thread, particularly if you haven't decided how to proceed.
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- I'm copying this post here because (a) it has particularly to do with volume and (b) it is a point that is often missed: Consider the following, and while I've pointed it out before, it rarely sticks. Price and volume tell two different stories. That they have been joined at the hip by vendors is unfortunate, but to separate them, surgically or otherwise, is not an insurmountable obstacle. Price tells you what the balance is between buying pressure and selling pressure. If buying pressure has the upper hand, price rises. If selling pressure has the upper hand, price falls. Volume tells you how hard buyers and sellers are trying, but it doesn't tell you squat about who's in charge. And that's it. Rising volume on a move downward is not a negative. Rising volume on a move downward tells you that buyers are rushing in to retard, stop, or even reverse the move downward. Whether or not they manage to do so is beside the point. Without the buyers, there would be piddling volume. When price reaches THE bottom, volume may be high or low depending on how much more effort is required, but the volume itself does not signal the bottom. The bottom is signaled by the fact that price is no longer falling. As for high volume to the upside, this is not necessarily a positive, either. The positive is that price is rising. The volume simply tells you how much effort buyers are putting in to move it. If volume is high, they're facing a lot of resistance. If it isn't, they aren't, i.e., sellers are not fighting the rise, for whatever reason. What matters most to the trader, however, is that price is rising. Who cares why? There are a number of important points to this example, but what is perhaps most important is that buyers managed to push price back to the level at which it fell. Not only that, they were able to provide a higher low. Volume, therefore, can provide useful or important or even necessary details, but it's the harmony, not the melody.
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Those who deride these "lines" should note that platinum fell 35pts yesterday after being unable to break through the resistance which is highlighted by a line. The line, therefore, and the reasons for drawing it, are worth knowing. Note also that the above chart was drawn BEFORE the price drop, not after.
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Just out of curiosity, what does any of this have to do with Market Profile?
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As regards indicators, only if the trader has little to no understanding of buyers and sellers and how their interactions move price. If instead he understands that price movement is governed entirely by demand and supply, he will also understand that indicators are not only irrelevant but that he will also always be late if he relies on them.
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Which is exactly what the two lines in the first post represent: a narrowing trading range in which traders work their way toward a midpoint, or, if you like, a POC. That it happens to form a triangle is a byproduct of this effort, nothing more. By offering a chart full of nonsense you set up a straw man to make a point. But this thread isn't about technical analysis; it's about crude oil.
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There are three basic strategies: breakouts, retracements, and reversals, all of which are viable intraday. As to charts and discussions, there are hundreds in the WF. Just search the forum or individual threads using "retracement" or "retracement*". You may want to start with the stickie on Auction Market Theory.
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You were listening to this at 5 o'clock in the morning? That's dedication.
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Consider the following, and while I've pointed it out before, it rarely sticks. Price and volume tell two different stories. That they have been joined at the hip by vendors is unfortunate, but to separate them, surgically or otherwise, is not an insurmountable obstacle. Price tells you what the balance is between buying pressure and selling pressure. If buying pressure has the upper hand, price rises. If selling pressure has the upper hand, price falls. Volume tells you how hard buyers and sellers are trying, but it doesn't tell you squat about who's in charge. And that's it. Rising volume on a move downward is not a negative. Rising volume on a move downward tells you that buyers are rushing in to retard, stop, or even reverse the move downward. Whether or not they manage to do so is beside the point. Without the buyers, there would be piddling volume. When price reaches THE bottom, volume may be high or low depending on how much more effort is required, but the volume itself does not signal the bottom. The bottom is signaled by the fact that price is no longer falling. As for high volume to the upside, this is not necessarily a positive, either. The positive is that price is rising. The volume simply tells you how much effort buyers are putting in to move it. If volume is high, they're facing a lot of resistance. If it isn't, they aren't, i.e., sellers are not fighting the rise, for whatever reason. What matters most to the trader, however, is that price is rising. Who cares why? There are a number of important points to this example, but what is perhaps most important is that buyers managed to push price back to the level at which it fell. Not only that, they were able to provide a higher low. Volume, therefore, can provide useful or important or even necessary details, but it's the harmony, not the melody.
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While I have no doubt you've done well with it, the approach is over a century old. It's been detailed in the Wycoff Forum for years, though without the MAs. But details aside, this is not a "floor-trader strategy". It may have been back in the 90s when the charts on Jim's site were drawn, but it's difficult to believe that a floor trader would be fooling around with candles, much less MAs, much less charts. Granted that "buying/shorting retracements in an uptrend/downtrend" is clunkier than "floor-trader strategy", but at least it's accurate.
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A losing trader can do little to transform himself into a winning trader. A losing trader is not going to want to transform himself. That’s the kind of thing winning traders do. -- Ed Seykota
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Estimating How Violent a Puke-out Will Be???
DbPhoenix replied to lastninja2's topic in General Trading
Generally speaking, if the breakout fails, you can expect price to return to the midpoint of the trading range. If that doesn't hold, expect it to return to the opposite extreme.