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DbPhoenix
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Everything posted by DbPhoenix
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Since this thread goes on and on, and may go on and on into the unforeseeable future, I have a question. You may already have provided the answer. If so, my apologies. But I and possibly others require a little verification. When in this room, are you seeing the charts and the trading platform that Felton is using? By that I don't mean that one is using one's own chart of whatever that just happens to be the same chart but that one is seeing the very chart that Felton is using to trade, along with whatever trading platform he's using so that one can see his exact trade entry transmissions at the instant that he makes them? Or is it the usual "took a trade here", "exited the trade there"? If I'm not explaining this clearly enough, I'll give it another shot. But it appears that Felton is explaining what he's doing rather than allowing students to SEE what he's doing on his own platform. Correct? Db
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While I agree with your plan overall, you say "take a short" and "exit my long" as if you're trading only one contract. If this is the case, it's an enormous mistake. Nothing triggers regret like The Trade Not Taken or The Trade Exited Too Soon, but these are unavoidable if one is trading only one contract. If you're paper-trading, there's no reason to trade only one contract. Trade at least three, if not five. As long as you nail your entries, you have nothing to lose. This post in the Trend thread provides one suggested means of paper-trading multiple contracts. Since the market doesn't open for a couple of hours, I suggest you modify your plan with multiple contracts in mind. Those who trade only one contract do so out of fear, but their hit rate will never be high enough to assuage that fear. The markets just aren't predictable enough. You may find that trading multiple contracts -- even if only on paper -- will do more toward dissolving your fear than "reducing risk" by trading only one. Risk is reduced by trading correctly, not by limiting the number of contracts traded. Db
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B. If there's any inconsistency between volume and the TICKQ, there's just no time to puzzle it out. By the time you've reconciled the two, the entry's gone. Besides, letting volume interfere defeats the purpose of using the TICKQ in the first place. You want the minimum amount of information required to make a decision. Db
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Nice to know the TICKQ is still helpful. Db
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And I don't have to argue about whether or not one can profit from "TA". These posts make my case for me (see "How hard is this" three posts back). Db
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And, as anticipated, price rolls over. From this point, it's not about trade entry but trade management. Db
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As I said earlier, and repeat here so that those who read this won't draw an insupportable conclusion, any swing high of course occurs because supply overcomes demand. But whether the volume is low or high or middling is irrelevant to the rollover. If one studies the phenomenon, he can find many examples of all. Remaining in a trade to the point where one is well in the hole simply because volume is this or that is a level of risk well outside the Wyckoff approach. Db
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RULE #17: You cannot apply the principles of Zen until you know the game perfectly -- inside and out. Having the proper attitude of Zen calm and confidence does no good if you do not know the game. Zen will not make up for, or offset, incorrect ... play. As a result, there is a certain amount of ordinary, old-fashioned work involved in mastering the game -- a certain amount of sweating the white beads before the days of tranquility come along. The most important thing to know, above all things, is exactly how to play the game. No outlook, attitude, or philosophy is as important as this. Good [trading] is not a "mood", it is a series of individual decisions. It does not occur by "Buddhistically" meditating ourselves into some dreamlike mental state, but rather by knowing the game well and being in synch with it -- by inserting ourselves correctly into the flow of what is going on in front of us. No Zen attitude will make up for this lack. You may be quite Zen-like and have all the attributes of Zen calm, but if you play incorrectly, the result is that you will get destroyed. Practice, and long hours at the table, are indispensable.
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Technical Analysis: Is it voodoo? Or does it work?
DbPhoenix replied to Soultrader's topic in Market News & Analysis
Actually, they are TA, though perhaps not by your definition. And, as I said, charts aren't necessary. Early tape readers didn't use them, though they may have used P&F notations. Many modern-day tape readers don't use them either. Charts are an elective, not a required. Db -
Technical Analysis: Is it voodoo? Or does it work?
DbPhoenix replied to Soultrader's topic in Market News & Analysis
Unfortunately, James started all this (six years ago) by providing an inaccurate definition of TA. This sets up the strawman scenario. As you say, TA is whatever isn't FA. Specifically, it is the analysis of the balance between demand and supply as manifested in price movement. It need have nothing to do with bars or volume or indicators or patterns or even charts. TA in its simplest form was going on long before Schabacker. TAs have no interest in cash flow or revenues. FAs have no interest in the current price, whether intraday, daily, weekly, or even monthly (a large part of the problem at The Motley Fool in 2000). Are "patterns" useless in intraday trading? Pretty much. But they're not of much more use in daily trading (note those who call H&S patterns without understanding why they form). But patterns do not define TA any more than indicators do. TA is, again, the analysis of the balance between demand and supply as manifested in price movement. Damning it due to all the futzing around that the ignorant do with it is off the mark. Db -
And for the ES. How hard is this? Db
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Just a reminder of how all this is playing out in relation to S/R. Those who've read the thread know what this stuff is and why it's plotted where it's plotted. Db
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Yes. You will often find that these zones present themselves during the day, like springboards. They won't be available in foresight. You have to be flexible enough to incorporate them. They are unexpected refinements to the plan, not a substitute for one. And you may not. Probably won't. And you may not see a retest. And that's something you'll have to get used to unless you make a retest a requirement no matter what. Granted the Goldman-Sachs email probably had a lot to do with this, and it may only be coincidence that price rolled over at R. But it's a coincidence that works for you. No TD. [Edit: Sorry, my error. There was a TD] Db
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Since you're taking all of this out for a test drive, I suggest you examine your fear at the same time. It's only fake money. First, if you are satisfied that 2598+/- represents S, take the trade by all means. But don't let your fear take over as soon as the trade looks to be successful. Since your stop is probably 2596, your potential reward should be more than equal to that. As it is, your R:R ratio is 1. But if you let the trade alone and allow it reach R, as you should, your R:R becomes 1:3. If your fear will not allow you to hold during the early fluctuations, then move your stop to BE as soon as the price is ahead an amount equal to your stop, in this case, 3pts. IOW, you shouldn't be covering at 2602. At best, you should only be moving your stop to BE. Then just leave the trade alone. If you can't leave it alone, don't take it. As for covering at R, if you see the need for that, there's no reason not to short. If you see no reason to short, then there's no reason to cover. If you do short, there's no reason to cover until at least price has broken the supply line, if you're trading one contract (if you're trading more than one, cover one at S and hold the rest until the supply line is broken; what you do then is another matter). Do not buy until you have compelling reasons, such as a retest. But even then, consider that the easy moves are generally done by 1100 or 1130. Lunch is generally a waste of time, and it's too easy to give back whatever you made during the morning session. After 1400 may present some opportunities, but they will not likely be as easy because traders are not nearly as emotional in the afternoon as they are in the morning. Trade correctly in the morning and you'll have plenty in the bank (or at least you won't have lost anything). You can then take the rest of the session off. Db
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You cannot teach a man anything; you can only help him to find it within himself. --Galileo
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Where we are:
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RULE #16: The true journey of mastery is in each moment... Writer George Leonard, in his book Mastery, refers to this as the "goalless journey". In other words, there is no finish line; the journey itself is the destination.... According to Leonard, mastery lives within itself and the practice of itself -- doing a thing for its own sake; not just reaching the goal, but each hour, each moment, every day is the goal. Fulfill one's role as a trader each moment -- a trader's actions should be in tune with the ever-changing market instead of one's own agenda. There is no need to call for perfection in the maneuvers as long as one never deviates from the focus in fulfilling that role. Winning streak can make a trader focus on the numbers rather than be in touch with his role. So is losing streak. (William)
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The market may have failed to hold above Friday's high, but this was only after repeated attempts to penetrate resistance at 48. Thereafter, price fell back into yesterday's trading range and price was comparatively non-existent throughout, at least until 0330. So I'm not sure what message you believe volume is sending you, if any. Db
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RULE #15: Discipline your game...it is more like patience -- pacing yourself (especially emotionally) for the length of the game. It is different than mere patience, however. It comes from a larger and longer-term view of things -- one that steps back and sees things as a whole. 1) There is a parallel between meditation and trading according to plan: we tend to create chaos by imposing our will into the processes because we want to "improve" the processes to match our preconceived expectation. Are our expectations realistic? Probably not...especially if they come right out of trading books. Let the process of either trading (according to plan) or meditation take its natural course -- stop the tampering. 2) The performance of actions [should be] in accord with the natural flow of changes rather than one's self-interest. Retire one's ambitions. Act non-coercively. Stop fixating on one's own agenda. 3) Conserve one's vitality by getting in tune and acting according to what the situations naturally call for instead of one's own will or contrivance. (William) I've said it before, and I'm going to say it again, because it cannot be overemphasized; the most important change in my trading career occurred when I learned to DIVORCE MY EGO FROM THE TRADE. Trading is a psychological game. Most people think that they're playing against the market, but the market doesn't care. You're really playing against yourself. You have to stop trying to will things to happen in order to prove that you're right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you're right, but to hear the cash register ring. (Marty Schwartz)
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We may have gotten our signals crossed way back in the CWS thread. If you're genuinely interested in volume, you will need at least to read the Volume thread as well as Section 14 of the course. Then we will be at least within shouting distance of the same page. Db
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My interpretation was offered above. I have nothing to add to it. As to the volume, if you're not going to use it, why plot it? If you are going to use it, then I suggest, again, that you evaluate how it is represented in all the related instruments, in this case, the SPX, SPY, and ES, including those stocks which make up the SPX "Wave", 4 out of 5 of which broke out of trading ranges to the upside. Otherwise, as I've said elsewhere in this thread, volume is of most value during climactic moves. This was not a climactic move. Therefore, the volume is largely irrelevant. I hope this trade works out for you. Db.
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None of this is according to plan. Your plan called for going long at a breakout of 2551. Instead you went short, at the retracement, which is why you were stopped out "instantly". Then you subsequently went short again, even though your plan said nothing about 2558. If the plan evaporates at the opening bell, then perhaps it is not clearly enough defined. What, for example, does "convincing" mean? What about "didn't feel right"? If you're going for mechanical, everything must be defined precisely so that you don't waiver once you begin trading in RT. But even if it is to be subjective, you have to define clearly just what it is you're going to be subjective about. Going with your feelings is not subjectivity; it's guessing. If you had followed your plan, you would have gone long at the BO through 51, or at the RET to 48. You would then have exited acc to some predetermined criterion, such as a break of the demand line around 56. That would have meant 5pts for the day rather than BE or a loss. Granted you would have made more by noting the tentative support provided overnite in the 34 to 37 area and jumping on the opening rejection of it, but that would have required more experience and greater confidence and more tolerance for price risk than you currently, understandably, possess. Better to learn a lesson and take the 5pts and run. It seems clear that you found your plan was insufficient. I suggest you determine why it was insufficient, then correct those shortcomings for tomorrow. Otherwise, you are pretty much back where you started. Db
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I moved your post here because the Foresight thread requires the trade to be posted in advance rather than hindsight, along with the plan, of course. I'm perplexed by several of your statements, but my questions are meant to clarify the situation, not to suggest that your choices were wrong. How are you defining "long-term trend"? What had been a downtrend appears to have been broken last week. Can you post a chart which shows what you're looking at? How are you defining "over-extended" and "short term"? What prompts you to arrive at this conclusion? See above. It appears to be trading outside a trading range that was created when the trend line was broken. Again, I need to know what you're looking at. Volume may have been lower in the ES (it was also lower in SPY), but it was higher in SPX. But whether or not one can rely on futures volume figures, volume itself is neither buy-side nor sell-side; it's both. If buying pressure is stronger than selling pressure, price will rise. If the opposite, price will fall. As for tops and bottoms, volume can dry up or be climactic at either. So "volume" isn't going to help you here. The salient points here are that price traded to the upside out of a trading range and that it closed at the high, or near to. That's about it. Hope my comments were helpful. Db
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RULE #14: Begin by playing tight, but don't forget to stay tight.... The important thing is not who possesses the control and discipline at the start of the game, but who possesses it at the middle, the end, and all points throughout. It is easy to have faith in yourself and have discipline when you're a winner, when you're number one. What you've got to have is faith and discipline when you're not yet a winner. (Vincent Lombardi) Stick to a plan despite what happened before and what will happen after. It is less about fighting and more about surrendering. (William)
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So how did it all work out? Db