DbPhoenix

Definitely easier on the eye. Thank you. Good point about 30 being the midpoint of that smaller range. And when activity is that regular, one can suspect that what appears to be the repeated testing of 34 may be the creation of a new range (and the VAP bears that out). Since we are now well above that range (0800), it may provide more solid S than if it were little more than a couple of swing points (though the VAP suggests that the more substantial S lies at 33). Assuming that we stay up here for the next hour or so, will you be looking to go long on a test of 33/34, assuming everything else is in place?

However, there's no way of knowing what you're looking at or what your plans are unless you post them ahead of time. If all of this is done after the fact, then the thread is no different from any hindsight thread, of which there are many. Again, you're welcome to participate in the thread, but remember that the thread is about foresight, not hindsight. If you prefer not to post anything in advance, the CWS thread would perhaps be more appropriate.

While distinctions among the threads may seem artificial at times, the purpose of this particular thread is to encourage participants to post their plans for the upcoming day, then, if they wish, to review the day in order to compare what they did with what they thought they were going to do. In this way, hindsight analysis has a different function than the usual CouldaWouldaShoulda (which has its own thread). Therefore, it would help those who follow this thread if you were to post your charts in advance of the coming day and explain what you're looking for and what you plan to do if and when you see it. In this way, you and wj and whoever else is interested in participating can discuss the various options ahead of time rather than after the fact.

Today was an excellent illustration of the difference between the opportunities which the market provides and the readiness/willingness of the trader to take advantage of them. It is important to consider these two aspects separately, because a failure on the part of the trader to profit from an opportunity should not be rationalized into an assertion that the opportunity never really existed. You were correct that the range stretched from 13 to 30. But as everyone who has read the material on S&R should know by now, S&R are found in zones, not in specific numbers. To say that S is at 13, then, means that support will be found somewhere in the area of 13, though probably within a point of it. This proved to be true last week, when buying pressure turned price a point ahead of where one expected to find support, and unless one anticipated those pre-emptive turns and understood what they meant, he'd be sitting there watching price leave without him. This morning, price appeared to be finding S at 14, and there was a TD at 14, all entirely consistent with the thesis that price would once again turn ahead of anticipated support and reverse to the upside. But price wasn't ready to do that. Instead it resumed its decline, double-bottomed at 12 with another TD, then reversed to the upside, all the way back to the opposite end of the range, to 30, just like AMT suggests it should. So why wasn't 12 taken? It was a point below S rather than a point above (assuming that one had nailed 13 as S with laser-like precision), but so what? Support is support, and all the signs were there, including climactic volume. I suggest that 12 was not taken by those who had taken 14 because those who had taken 14 had done all they were supposed to do and it didn't work out. This not only diminished their confidence in taking a long off 12, but the failure of 14 may also have put them slightly in the hole, which is generally not a position of strength for taking what suddenly seems to be another aggressive and risky trade. But what if there had been no TD at 14? What if it had not been taken? What if there were then no failed trade going into the continuation to 12 and no loss? What would 12 have looked like then, the poke below 13, the TD, the climactic volume? Would it have seemed under those conditions a no-brainer and an easy long trade to the opposite side of the range? The market provides the opportunity. The trader must know what to look for and where to look for it. But he also must be ready to take the trade and willing to take the trade. If he isn't ready, or willing, or both, he then has a subject for his "post-game" analysis which is more likely to be more to the point, or close to it, than a complete overhaul and re-analysis from the bottom up of his entire approach to the trading day. He may, in other words, be far closer to consistently winning trades than he thinks he is. Consider, for example, the climactic volume that occured at turning points last week: 1026 on Wednesday, for example, or 1247 on Thursday (which, perhaps not coincidentally, occurred at 1712.5). These volumes do not occur at every turning point like a flashing red light. But they do provide information to the trader who is ready to receive it. Perhaps a trader who had not just taken a loss off a too-early long off 14 would have interpreted the activity at 12 differently. But a step up for the trader who did try that long and did take a loss would be to evaluate the activity at 12 without allowing the fact of the failed trade and the subsequent loss to influence his assessment.

Breakout trading in absentia? Whoa!

It doesn't necessarily involve statistics. The rest of what you've quoted can be found here. And if you continue to have trouble figuring out what to look for, check here, here, here, here, and, if you are thinking about daytrading, here. If you have any questions, feel free to ask.

Yes, today was both easy and simple: an immediate rejection of R with a TD, followed by a move down to S and a bounce with a TD, including a higher low if extra time was needed, then back up to R and another rejection. No TD that time, but a double top. The midpoint at 24 created some problems, but AMT won out, and the most difficult task was to do nothing. Make sure you check that your protective stop was cancelled.

The volume pattern also shows a range from 13 to 30, with a "midpoint" of 24 (the arithmetic midpoint is 22, which is where we are as of this posting). It's worth noting that, the last couple of days, buyers have charged into the market just ahead of support. Support, then, was slightly higher than plotted. This action provided clues as to the strength of the bulls and the eventual direction, up, and a possible justification for entering "late". Whether momentum has slowed to the point where this kind of behavior can be relied upon remains to be seen, but I suggest that if one has been cautious that he remain so.

On the contrary, it's very relevant: "By studying the relationships between these upward and downward waves, their duration, speed and extent, and comparing them with each other, we are able to judge the relative strength of the bulls and the bears as the price movement progresses." Thank you for bringing this to everyone's attention. As for Elliott, his view on waves was somewhat different, but the "waves" are all formed as the result of traders' psychological impulses, and if one gets all mechanical about it, he may miss what the waves are trying to tell him. I wrote the following awhile back with regard to Elliott: Put simply and in the context of investor psychology, there are "waves" of buying and selling that are governed largely by fear and greed (outside those that are the result of manipulation). In an uptrend, the greed is stronger than the fear, which is why these waves look the way they do, ie, "two steps forward and one step back". It is only reasonable that the first wave of buying be tentative. After all, these people are still grappling with the fear. And when the reaction to this first wave winds up being relatively trivial, it is only reasonable to expect that buyers will be a bit (or considerably) bolder in the next wave. The inevitable reaction to that will stem partly from prudence, partly from remembrance of past mistakes, partly from fear. But, again, it's understandable. The next wave, if there is one, can be aborted for various reasons, or it can result in a genuine panic to buy that sends it into the stratosphere, and this is one to be very careful of. Waves on the corrective side are dominated by fear, and the first reaction gives those who were unable or unwilling to exit at the break to do so at the earliest possible opportunity, and this feeds the next wave down (along with those who thought it was only a dip and are trapped by the turn). If the selling pressure is over, that's where it stops, one of the characteristics which separates a correction from something worse (remember in The Abyss where the rig is dragged toward the edge by its own crane?). If something worse is in the cards, the ensuing "rally" will become yet another wave down. Therefore, counting and measuring isn't so important as understanding what's in people's heads and empathizing with their fear and greed, unless one believes that his entry and price targets should be determined by these counts and measurements. It is essentially this dynamic which creates H&S patterns, Ws, Ms, triple tops and bottoms, etc.

What DbPhoenix says cannot always be taken to the bank, and these divergences are not always easy to call. As it turns out, a decision on your part to go long at 1699 would have been the right thing to do. However, notice that while the TQ drops decisively at your green line, it prints a higher low a minute and a half later. The next trip down, your red line, is a lower low, so whether or not there is a divergence depends on what you're comparing to what. I find that when the divergence is not clear, the entry is generally not as clean. In this case, it was. But the decisions that one makes at leisure, long after the opportunity is past, are a lot easier to reach than those one must make in real time, when they count. The more important question, perhaps, is whether or not what you see is worth the risk you'd have to accept in taking the trade. If you're truly willing to accept the risk, then go ahead and take it. And if it doesn't work out, that is sometimes the way of it. If you already have a couple of winning trades by that time, you might be more willing to take the risk than if you're in the red. There is no right answer, and nobody's going to point and laugh if you choose door number 1 vs door number 2.

Before I begin, I want to draw attention to something wj just said: The purpose of this thread is, again, to plan the trades in advance, or at least determine those levels where one will look for trades. Strange things occur once the curtain rises, but that's no justification -- or even a rationalization -- for failing to plan the next day's focus. For my part, the trades I highlight are those which are based on buying and selling at predetermined support and resistance with confirmations from a TICKQ divergence and, I hope, volume. Not everybody uses TQ and thus may take what for me would be more aggressive trades and more power to them. On the other hand, one should assume stops placed where Wyckoff would place them. Mine tend to be tighter, and I'm sometimes stopped out where he wouldn't be. Keep in mind, then, that this isn't about How I Trade but about the possibilities and opportunities offered by trading support and resistance (which Wyckoff, according to him, "developed"). So. We opened above what we pegged as R. Unless one entered premkt, he would likely wait for a test of at least 1702, if not 1701 or 1700, since the upper limit of this new range had not yet been determined. However, price took off to the upside first and found higher R at 1705 (this is one of those occasions, when the upper limit has not yet been determined, that traders will create R in real time; in order to gauge the probability that R is in fact being created, one must look at the hesitations, how hard buyers push, what the volume is like, and even a falling TICKQ). With the effort at 0933 and the TD (TICKQ divergence), one can risk the short. Price then pulls the same trick it did the previous day and dips below the upper limit of the previous range to find S within it. If one keeps his wits about him, he will "look to the left" to find that level which price may be seeking, then, if he likes, look for a TD to signal a long trade. Price then rises to what appears to be the top of a new, higher range. One can exit at the target, exit at a break of the demand line, or wait for a test and a possible TD. In any case, the short is taken. The next trade is tricky. Price hits 1699 on climactic volume. However, this does not take place at S (apparently). Nor is there a TD. Nor is there a test after the rebound. Therefore, even if one is aggressive, finding a rationale for this trade in just a few seconds might be, for many traders, a reach. If one were quick, though, or if he had happened to draw a potential support line from that last swing high the previous afternoon (the "apparently" referred to above, the one which reached up to 1699.25, three minutes before the close), he might just go ahead and take the risk. If he had (I didn't), he'd have had a pretty decent trade to the long side, out at 1706 due to R and the TD. Done in 90m. To repeat, anyone who wants to post a chart of the coming day's trading plan is welcome to do so. He may then do a post-game review of his trades in order to lend a little reality to the anticipated vs the realized. In this way, what seems to be complicated may turn out to be unexpectedly simple.

You are correct that all-in/all-out (AIAO) requires a different management approach than scaling out, each with its own rewards and its own risks. As you know, I scale out, but, given the comments about all this being so complicated, I put it in the simplest way possible and leave it up to the individual trader to decide what's best for him regarding management of the trade. What's most important is the entry, since without a successful entry, there's nothing to manage. Another element has to do with focusing on what the market is telling you, judging it by its own action. Breaking a demand line, reaching a target, rejecting a price, hammering away at a price before moving away from it, doing any of these things (and more) on high volume or low volume -- the market is telling the trader something in each case, and his actions will depend largely on whether or not he's paying attention, on whether or not he understands what he sees, and on whether or not he knows what to do. But then there is also the psychological baggage that the trader brings to the table. If he is "damaged", for example, his need to show a profit may outweigh the objective goal of holding to the target. Thus exiting AO (if he trades AIAO) at a break of the demand line may be exactly what he needs. Learning how to scale out can wait, particularly if he does not yet trust AMT. A third element is AMT. If one has no idea how to locate support and resistance and/or doesn't trust price to behave as AMT suggests that it should, then he will likely hold most or all of his trades too long or not long enough (which is another argument for adopting a scale-out approach to trade management). If, on the other hand, he makes certain assumptions regarding price movement within AMT without going so far as to be unyieldingly biased, then his management of the trade will differ from the trader who is operating in the dark with a penlight. There is also, of course, personal preference. In the first trade, for example, the parabolic move upward suggests quick and easy profits. The experienced trader knows that these cannot hold, even though the exact turning point may be foggy. He may choose to start the day with money in the bank so that he is not entering subsequent trades with a loss, and who is to tell him that he sholdn't, or can't. It is, after all, his money. Philosophically, this is scalping, though for much more than a few ticks, and even though scalping is inconsistent with AMT, parabolic moves can be justification for taking quick profits, particularly if one is only scaling out. But even without a parabolic move, the trader may not want to wait for price to consolidate for "two hours" (or however long) before continuing or reversing. He may find that he just can't stay sharp for long while price does nothing. He may prefer instead to take his money and wait for the next hand, evaluating the next setup if and when it comes. There are many ways of managing these trades, and to explore all of them would mean a very long post, and since the means by which one manages these or any other trades depends so much on his own preferences and the character of his own demons, the permutations are nearly endless. But all of this defeats the goal of keeping it simple, as requested. So, we go back to basics, at least as the term applies to Wyckoff. What is the market doing, and where is the trader in that market (in this case, the market is in an uptrend, and the trader is faced either with returning to the previous trading range or moving upward into a new one)? Where do support and resistance lie? What does the trader look for when price approaches those levels? How will he manage his trade once he's entered? What will the market have to do to show him that he's right? What will it have to do to show him that he's wrong? And all of this can be and must be done in advance, in preparation for the coming trading day, every day. If it isn't, then nearly all the trades will seem aggressive, unless the trader waits for confirmation at every turn, which may often mean missing the trade altogether, or having so wide a stop that he exits at the first sign of profit. At the moment (an hour before opening), we're sitting dead on resistance. What is the trader going to do? What is he going to look for? If he has no idea, then he's going to remain in the hindsight world, and there's no money to be made there unless and until he translates what he learns there, if anything, into a plan for the coming day.

For whoever might post a chart for tomorrow, here's something to think about:

The climax and test volumes.

An interesting day. Price popped up past R then down to yesterday's last swing low premkt, bounced, then tested your R level at 88. Here there was a TICKQ divergence (TD). Go long. Exit then off the break of the trendline or demand line (not drawn) or the multiple top at 98. Short off this when the TD appears. This short is then exited at the break of the trendline or supply line (not drawn) or held for the opposite end of the range. Exit this short at the selling climax or wait for the test (which is accompanied by a TD). This last trade is exited at the break of the trendline/demand line (which occurs within a point of R) or the test, which is accompanied by a TD. Done in 90m.

For future reference, when a hinge forms at the very top of a rise (see my last chart), it will most likely lead to a continuation. And you always have the option of bracketing the trade.

You may be right about 88, but I'm extending it up to 90+, with the other limit at 72, maybe 74. Depends on how climactic the action is when price gets to those levels, but the very most recent activity has been more pertinent lately than that going back several days. This range also gives us pretty much that same midpoint that was so useful yesterday. So shorts at the upper limit and longs at the lower, unless we break out of the range.

Few traders are gifted enough to trade price without anything else added to the mix, or without at least some philosophy or theory of market structure to provide a framework. But the trader must understand that everything that he's adding on is just that: an add-on. An alleged trader on another site maintains a journal which tracks his progress with his "price action only" approach. He is now, he says, using price action only. All he has on his charts is price. Or at least a 5m bar representing price. And volume. And Bollinger Bands. And a couple of MAs. And VWAP. And Pivot Points (the calculated variety). And Fib levels. And that's all. Is all of that price action? You bet. If price were not an essential element of what he's plotted, it would all disappear. Is it price action only? Not by a long shot. I follow price in the context of Wyckoff's view of auction market theory. Without it, I would be trading a lot more and making a lot less. But I'm fully aware that the context is applied by me and that price not only does not know what I'm doing but couldn't care less if it did. The transaction by transaction movement of price is the building block. Beginning with that, the trader creates an approach that suits himself. I'm not sure why this thread was resurrected, but I made a couple of posts at the beginning of it, last year, that may be of interest to a new group of beginners: here and here. And if one wants to play with PA, this game may be of interest. Just turn off all the indicators. Even the volume, if you like. Unfortunately, it doesn't allow the trader to short, but if you can't beat buy-and-hold, perhaps you should re-examine whatever it is you're thinking about when you trade.

Price. I'm not suggesting that you stop using volume if it benefits you. But, again, it isn't necessary. I took the same trade you did without considering volume at all. And there are trading instruments that don't provide volume, yet people trade them by price action only. One way of doing it can be found here: DTB, 1919.pdf

Lots of examples in the Wyckoff Forum, if you're interested. Otherwise, what is the one element that cannot be ignored when one is trading price? Hint: it isn't volume. Which is not to say that you shouldn't use it if you love it. But it isn't necessary.

As I said, whether or not one uses a summary chart of one sort or another, he also needs either a T&S display or a 1t chart. If you prefer the T&S display, that's fine. However, you're not trading price action "only"; you're trading price action and contract volume. And that's all well and good if one is scalping. Otherwise, the contract volume is largely irrelevant. The trade was there regardless of whether or not one paid attention to volume of any kind at all. Price movement, i.e., "action".

A 250t chart is essentially a substitute for a 3-5m chart. They are both summaries and conceal just as much information. If one is following the PA, he needs either a T&S display or a 1t chart. Given that, there's nothing mysterious about yesterday morning's action, at least on the NQ. Price finds R at the overnite high at 0936, then finds S at the opening low at 0946. The trader doesn't need expensive programs and platforms, nor does he need to clutter up his chart with stuff. But he does need to do the prep. Without that, he will remain in a perpetual state of surprise.

A point which the vast majority either cannot grasp or doesn't trust. The observable result is the same. You may recall that I saw potential topping in June given that we were having trouble at R, broke the trendline, and made a lower high followed by a lower low. But speculative fever shouted "gotcha" in July and drove the market to new highs. One could argue that it shouldn't be happening, but that wouldn't yield a profit unless he put that aside and "judged the market by its own action". As long as one focuses on the principles (and by "principles" I'm referring to those detailed in this forum) and confines the shoulds and ought tos to a place where they won't affect his trading, he can't go very wrong. In the XLF, for example, you'll note the climactic volume on Sep 2 (at S) followed by the test on Sep 3. Once one acts on that, all he has to do is follow a simple trendline (ditto Aug 18 and 19). As for RIMM, this is a reasonable place for it to pause, and both longs and shorts are wondering if they did the right thing. The character of the move away from here will reflect the extent of their nervousness.

Don't overlook this hinge:

And I'm glad you chose a day that you suspected would not be "easy". A great thread, and much appreciated.