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zeon
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Everything posted by zeon
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I'm sorry, but if I understood correctly you disagree with the example dbphoenix give Tuesday then? How do you know this 'double bottom' isn't a change of the trend? We've failed to make a lower low and the demand is breached and we've moved up above the last swing high... (Don't get me wrong, I agree this is a bear market; I'm playing devil's advocate here).
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Within the context of Tuesday's selling climax and re-test, I thought it might be interesting to discuss 'the big picture'. Mainly, because I seem to recognize the same concepts and as they apply on each timeframe,... From what I can see: (a) is a selling climax on huge volume, and demand overcomes supply because if you blend the bars, it's a hammer-like formation and price closes well off the lows (b) a break of the demandline © a higher low (d) a re-test of the low, and on lower volume (e) a shake-out and in effect another test, on higher volume but price closes off the lows (f) a higher high (g) and a higher low => confirmation of new uptrend (h) a new (cyan) demand line can be drawn Forget for a minute that everybody is saying that this is a bear trend and just look at the chart. Or for the sake of the exercise suppose that this is a intraday chart instead of a daily one, doesn't this validate taking a long position? What elements have I interpreted incorrectly?
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Do you mean that the charts aren't accurate? I am aware of the differences between the futures and cash market for example. I actually posted the question about the offset between both in another thread. Perhaps you could shed some light on it too.
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In the absence of demand and trendlines, what else would Wyckoff consider an exit signal? I mean, I can't see much of a demandline other than one drawn after the break of the hinge, but that one is very steep. So would Wyckoff wait for a breach of the last swing low? Price is at 1855 meanwhile, so would he wait to see his stop taken out (now around 1840 like you said) or have some other means of determining to exit?
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Thanks, at least my bias was right to be looking for long entries. I justed wanted to know if the reason I couldn't find any was my lack of knowledge or the fact that there just weren't any high probability entries.
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Yes, the 9th is basically the reason why I had that level as resistance. Also in part because of the action on the 25th and 26th of March. I take it he moves his stop up below the last swing low in an uptrend and vice versa in a downtrend. Allright, but let's assume he's not holding overnight. So he can't be long from yesterday. I remember reading this in the day traders' bible: "A pure tape reading day trader does not care to carry over night. The tape is then silent, and he only knows what to do when it tells him. Something may occur at midnight which may crumple up his diagram of the next day's market. He leaves nothing to chance; hence he prefers a clean sheet when the market gong strikes."- Wyckoff So if you are not long on the break of 1825, there's not much to do except for stand aside and wait another day?
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If I'm correct, price opened at resistance and hovered a long time below 1825 while the volume steadily declined. Is this absorption? From my point of view, one would be looking to the short side given the market rallied after news premarket up to resistance where it stalled. Also, the ES was going up while the NQ was on a standstill. 45 minutes after the open we broke higher on huge volume. I take it this would be the entry signal for some, but as has been mentioned in this thread Wyckoff himself wasn't particularly fond of this type of trades. Perhaps, in the context of this thread, it would be interesting to point out which other entries were possible today. Personally, I can see none... I can understand there's no reason to exit longs, but that's assuming one is in nice and early.
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I believe you said yourself on occasion that posting on messageboards can be distracting when you are concentrating on the chart. Anyway, I think you know your posts are being followed, but like others have said it's not always easy to keep up. This thread is only a couple of days old but already has +100 posts. I did take notice of your posts at the time ('real-time'), I just didn't want to be the one asking the questions. You must be thinking "here he is again"... so I was kind of hoping someone else would respond to your comment but nobody did. But back on topic, support dating back to January, was at least 20-25 points lower on my chart. Am I looking at something else?
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As you mention yesterday, I might as well ask the question here. You posted that the 'Wyckoff' entry was about 25 points in the black. I take it you are refering to an entry around the open then, because 25 points was exactly the width of the move from the open till the lows. Anyhow, the green line is where I had drawn support, based on the lower border of the box. Also, the day before price touched the lows several times. Support was broken, and therefore - as I remember you saying before - going long on the selling climax in 'the middle of nowhere' is higher risk. So I could not see any reasons than to wait for a short on a retracement back to support. That happened later in the day and when it approached the green line from the other side volume peaked (red line). This is where I envisaged a short entry, on the basis of (a) trend continuation (b) lower volume on a retracement and © a breach of support. Can't really get my head around what happened next.
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This isn't hindsight, because what I copied here is what I observed for myself at the time and typed in a text editor. I was however observing the 'extremes' (1825 and 1845) and not considering trading from the middle. So price opened on huge volume which brought us straight back up to resistance (1845). It stalled there and reversed rather strongly (on the 5-minute chart the second bar takes up more half of the first one). However, volume recedes on the next bars and most of them close in the middle. Volume takes off further but there's a sudden reaction, apparently in the middle of S/R at 1835. The bar closes near the high. Next is a strong reaction back up. At this moment I was thinking: if this moves back to resistance this could lead to a short opportunity. However there wasn't much suppy at resistance (only a short pause and notice the volume taking off, but price not going lower much => no effect). Next a wide range body, very wide actually on massive volume. Price goes up more than 10 points in 5 minutes. Wow. Next 15 minutes are three tiny little bars, again on receding volume. A retracement. But how far will the retracement go. The next resistance is at 1865, but again going long here is trading in the middle of nowhere. If I were to considering long, I'd wait for a retracement back to 1845. But as I was thinking that, price went up quickly on confirmed volume. And so right now we are at resistance, 1865. The demandline isn't broken yet and there's no lower high. So shorting this is not an issue. Going long now is very late imo, we've already moved 30 points in two hours. Like they say, flat is also an option...
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Cool, that's exactly the line I drew before the day. A lot of talk of this breaking down again, but I had my line drawn and it looks like reacted to that. Also, at the same time the ES bounced off support, the NQ reversed off the midpoint of yesterday's range at 1835. Just observing from a neutral standpoint, but I'm sure amazed at the amount of 'order' there sometimes is. Actually finding a trade somewhere in there is another thing.
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Because it seems like a good idea to follow advice from a more experienced and profitable trader. My primary concern is making a good entry and then squeezing as much out of it as possible. Trading from S to R and vice versa seems the logical way to do that. I don't want to go back to taking 15-20 trades per day. On the other hand, in trending days price might break that support or several levels but I don't know why I should care if there was a reversal signal and I took it, than I followed the plan. For example if today the trendline wasn't broken then I could've just stayed it with some contracts after lightening my position at support. Look at where the market closed? I think - in hindsight - exiting for the reasons I stated was a good thing to do at that time with the information available in the chart. Shorting at the break of 1825 would be the re-entry I mentioned, but that one wouldn't have turned out nice :\
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Ehm, forgive me for asking, but I was under the impression you yourself found it safer to lighten your position 'at the midpoint of extremes'. And I believe in the PDF files and in a couple of posts you said that when there's a reversal signal you exit. It looks to me as if you're contradicting yourself now (or it could be me making the wrong assumption/interpretation). There's always the possiblity for re-entry, not? Why wait to see if support breaks in a downmove, if you have to sit through a 50% retracement? I don't know how much that has to do with emotional maturity really... It seems that there's a small line between hope and patience. But it seems like wishful thinking if you're waiting for a break of support after a reversal signal took place. Why not exit your position - like today - when there's a reversal signal and consider re-entering later?
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It looks like we just went below that 1825 support. I'm not sure if I understand the option you suggest correctly. Are you saying it would be smart to leave some reserve open, like in today's situation, despite (a) the failure to make a lower low (b) the trendline breach and © the reversal signal? Looks to me like you'd have to let price travel back to your entry point for at least 10 points.
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After a bit of self-reflection I've come to the conclusion that I prefer to exit on the first warning signal. Even though this might not be the end of the move, I'd definitely want to lighten my position. For example today - presuming I would be short - I would have taken off some contracts when price reached 1825. Later, when it failed to make a lower low AND broke the downtrendline, I would've exited my whole position. Then there's also the third option, exiting completely and reversing... but I don't think I'm quite ready for that yet.
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All off this is on paper, since I stopped trading with real money. But suppose I wasn't stopped out on my long and I would be in, then I would be looking for price to go back up to resistance. But then I noticed price suddenly reversing sharply at 1835. First I thought there was news, but then I thought of something dbphoenix talked about in his blog: the midpoint. Wow, this stuff is pretty amazing. 1835 is right in the middle of support (1825) and the peak where I started drawing my trendline 1845. Or perhaps it's just all a coincidence...
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Thanks, I suppose I'm making some progress then after all. This is an example of where I ask myself, why is there huge volume at this particular price level ('a' on the attached chart). It's not on support, yet the market moves up after it and the bar closes way off the lows. Who is buying this then? The bar is climatic, so professional money is supporting the market here, right? Perhaps the 'smart money' isn't always that smart then. One thing is not clear in this, 'not the way VSA defines it'. How is 'no demand' defined then, I mean, it can occur at support as well at at resistance, not? I can see that now. In fact, price is only broken later and that looks like the real 'long signal'. It's also accompagnied by a rise in volume ('b'). Normally, I would set a stop below support. But given the conditions I've mentioned, I assumed price should now move up and if it doesn't straight away I am obviously wrong. It looks like 'c' is another entry possibility in case the first long was missed. The volume after 'b' than declines when turning lower but rises again on 'c'.
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Thanks Eiger. But this doesn't really change the fact, on your left hand chart (QQQQ 5-min) the trendline remains broken. And if you're trading off 5-minutes or lower you can't really use trendlines on a higher timeframe right? At least it doesn't seem logical to me. Meanwhile however price has gone up from 1825 to 1834. So it's going up like it should - according to the reasons/signals stated in my previous post. So why I am still not making money of it. :\
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This is how I look at today (uptil now): Pink line is support. It's about 1825 on the NQ, but this is a QQQQ chart. Anyhow: (a) selling climax (b) a lower low but on lower volume ànd the bar noticeable closes at the high, hower price is still below the trendline © the trendline I've drawn is broken, and there's a tiny little bar on very little volume => no supply? (d) volume picks up when price moves higher (e) volume confirms selling is done, price rises nicely, bar closes near the high and up we go Now the problem is... (e) would be a clear long signal for me, because (1) the downtrend is broken (2) there was a lower low but on lower volume (3) all this happened at support (4) there was a 'no supply' bar (5) price rises on the way up But here I am, down the same road again, price goes back to support and I'm out with a loss :-/
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Looks like the NDX is still holding support at 1825 though.
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I think that's a different kind of manipulation than the one we were talking about. For example, remember all the spam mails where you are advised to buy this or that stock (usually crap penny stocks)? Apparently it does have an effect on the stocks price, to a certain extent that those who are spreading the rumour can take profit from it. I suppose that's manipulation too.
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This is one of the major problems I have with VSA. Last week or so I posted a chart where I saw a long opportunity. However the market reversed before I took profits. When I posted the chart here, I got the response that 'after seeing two down bars' you should've exited. But on what timeframe? Two down bars on 5-minute might not even show up on a 15-min chart, etc, etc. I don't mean any offense to anybody here... I hope I can still receive constructive criticism because I am still trying to find out how best to approach the markets. Everybody's input is appreciated.
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A question here, how would a trader see the difference between absorption and distribution? Both take place against resistance and both lead to price staying put right?
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I've actually read MTM as well as The Undeclared Secrets original edition. But it's been a while. If everybody is the herd, than who's the 'professional money'. Besides, I disagree with the fact that professional money has to be 'smart money' per se. For example, when a selling climax takes place, we all assume that's where the professionals are buying and supporting the market. But sometimes the market plunges a lot further. So did the supposedly 'smart money' make a profit on those trades? Not likely. It's not because I have read and studied a book that I agree with everything that's written in it. You mention my name and dbphoenix together in one sentence, but I have no idea what his stance on this matter is, and he's not responsible for the way I think about market manipulation. I've come to this conclusion by reading other things, and by studying how the market reacts before, around news and after news. I'm not saying there never is market manipulation, on the contrary. Insiders who know someting about the stock of a company will dump it long before the public does, but is this considered manipulation? Not by my definition. I'm just saying that I don't believe market manipulation revolves around 'being in the know' or having access to 'secret information'.
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Well in that case.. The HOW or WHY for me is simple. If price goes up there's more buying pressure than selling pressure and vice versa. I don't believe it's necessary to know who's exactly creating spikes, swing points, new highs, new lows,... Because if you understand the forces that created the pattern, you can understand the traders' behaviour. If the market fails to break resistance, than for me it's because there's not enough strength, meaning there aren't enough traders interested in buying price at this level at this point in time. If there were, price would rise. If professional money is behind this in an all grand scheme to trick traders into a position, then why does some professional money actually fails to profit over time? Look at all the hedge funds that have lost a lot of money? No, sorry... I didn't mean to insult anyone by saying this or that is rubbish. It's not. I don't believe the book is bullshit. I'm not trying to persuade anyone (not that I could) into following my path of thinking, I just think it won't do a trader any good when he has the feeling he needs to fight against the big boys who are manipulating the market and trying to steal money away from him. How about the big boys stealing money away from eachother?
