SRspider

Some Observations today. I see we broke through the hinge that was forming and then retraced back which looked like an opportunity to possibly short. An we are near a SL on the Daily Chart.

Ok thanks for that. It does make sense. I know it doesn't always happen but after a break out sometimes we get a reaction. I think for me I would rather wait for that to jump on , especially if I don't have the data on the ranges that you spoke about. I will though start looking more closely at the NQ since that is the instrument I trade mostly. Thanks again. This particular type of data gathering can be done with static charts. You can collect the data in just a few days.

Thanks DB for the input. When you buy a break out what might you consider to make it more probable that it is not a false breakout? I would imaging that the volume must be higher. A question that is on everyone's lips. The answer lies in collecting ranges and determining how many points price must rise above the range to signal genuine intent. This will vary, of course, depending on the instrument, so there's no point in testing a bunch of stuff you have no interest in trading. If you're interested in trading the NQ, collect NQ ranges. If you're interested in stocks, then I'm afraid you're going to have to collect data on each. This is all part of the characterization process. If you don't go through it, you'll pay. As to volume, I wouldn't bother. The gurus will tell you that volume must accompany a breakout, but this isn't true. Volume often waits a bar or two or several before kicking in largely because the breakout itself goes unnoticed. Only after the breakout does the volume come in. Or at least one hopes it does if one went long. If you're interested in volume, I suggest you look at the volume thread, below.

Ive been covering a lot of the material since yesterday and making notes. I can see how the context is extremely important in figuring out what trades to look for and where. In determining topping or bottoming action i see that there are several indications. 1. Climactic volume 2. The slope of the incline or decline of the price action 3. The closing of the bars that poke the lows or the highs 4. Once that climax is identified a techical rally follows if it was a selling climax. 5. The key is then the secondary reaction which should create a higher low. Not necessarily. Price may dip below the previous low but pull back up due to buyer interest. If this bar "closes" at or near the high, this indicates buying interest and can be bought just like a higher low. The VSA people like to call this a "spring", but there's no need to come up with a special name for it unless you're trying to sell a system to somebody. Beginners like lots of lingo. 6. If this in turns breaks a supply line there is a good chance the market will enter into an accumulation phase and should be bought. 7. Then there should be some good volume increase on the up move after that secondary reaction. This is also key because buyers are willing to pay the ask As far as buying on a dip in an uptrend. Several key factors come in to play 1. Coming down to a support area not necessarily. Be careful with regard to "support" and "resistance". Price is reaching a level where buyers are interested. You can't always know this in advance. Judge the market by its own action. 2. Shortening of the thrust down 3. Closes near each other 4. Low volume on the way down, because sellers are having to lower the ask in order to fill orders 5. Mini selling climax is oka 6. closes then near top of bars and higher volume on the way up, again because buyers are willing to pay the ask 7. Narrow range bars or narrower When I start seeing this type of action it would be safe to buy that dip for a continued up move. He describes it as "dullness" Works the opposite for selling a rally in a down trend. Ranges can be accumulation or absorption or they can be distribution. Some of the clues obviously is the context that led to the range. But once in the range lets say we are starting to see bars with higher lows and higher highs within the range or pokes under the range that come back up through and the volume on higher closes is bigger than the volume on lower closes it may be showing signs of absorption . the opposite for distribution. Ignore all of that. Buy a breakout through the upper limit of the range. Short a breakout through the lower limit of the range. Keep it simple. There is a lot in that book to take in. Am I getting this right? Thanks for your help.

Thanks DB, I will give it a go this weekend and post any questions if you don't mind. As far as the charts go , I'll just be watching for now and try and view in the context of what I will be reading.

Hi Db, Regarding springs and upthrusts , its just terminology I picked up taking other courses and reading stuff on Wyckoff, if it is or is not (Wyckoff) I am not really sure and maybe its something made up. But regarding reading the market. This is kind of what I mean , I noted on the QM chart of today. Its hindsight to its easier to see but to see it real time is what I would like to accomplish. I am willing to start over and erase it all if you can point me in the right direction. You may have read the Evans' version of Wyckoff's course. Wyckoff's original course was not released from copyright until a few years ago. I suggest you look at the Wyckoff Lite stickie uptop. It has a link to the original course, if you want to read the whole thing. If you don't, suggestions are made to abbreviate it. What is most important is Section 7.

Ok thank you for your feedback. After giving this some thought what I would like to be able to do is analyze the market via the Wyckoff method using the supply and demand lines ranges spring and up thrust tests climactic selling and buying pushes through supply or demand or breakouts while incorporating volume. In this analysis be able to spot trading opportunities on a 5 or 3 min chart managing my risk effectively. How do you think I should approach this ? What do you mean by "spring" and "up thrust test"?

I know I probably did this all wrong but here is the logic behind the trades today First Green arrow was a long on a retrace after the break of that small double top or small range.That stopped out so it leads to the first red arrow which was a short on the failure which also stopped out. The second green arrow was a long based on the fact that they were holding the 50% mark of the range. that one worked out ok. The Third green arrow was a long basded on a break out of the range but it came back intot he range and stopped out. I tried the long again on the fourth green arrow and was again stopped out. Not the best outcome today and I know probably didn't do things correctly. Whether you did it "right" or "wrong" is way too early in this process. While I like the clean chart as it is so much easier to read, you should not be trading at all unless, as I said yesterday, you only want to borrow an element or two from the SLA. But if you want to learn the SLA, you're going to have to spend some time observing without thinking about trades and where you'd enter and where you'd exit and where you should have entered and where you should have exited and so on and so on and so on. This is in a way of form of rewiring. The more messed up you are, the longer it will take, but with replay it won't take nearly as long as you might think. My charts, which I posted to ET, follow: While I don't want to nag, I do want to point out, again, the advantages of trading a longer bar interval. I realize no one who's posting is doing this, but I continue to encourage those who are not in a position to daytrade to explore this option. A 1m chart of today's activity. 0800 is not especially early, even if one works at home.

Hi Db I'm trying to stick to the SLA/AMT, so if your taking about the ma and the tick chart at the bottom I can remove those since I'm not really using them. Except maybe the TICK chart to better time an entry. Your comments are appreciated. thanks

First red Arrow a short at the top of the channel.Didnt amount to much so I scratched it. The first Green Arrow a long on a retracement after the range break. But it was close to the upper channel line so I didn't expect much and just scalped. The second red arrow a short after the price action showed weakness a failure to go up and at the upper trend channel line. Fourth Red Arrow a short after price failed to move up at that lower trend channel line. A break of the demand line as well. this was a full stop out. Fifth Red arrow a short after the demand line break and a retracement back up. I don't really like taking more than five trades a day and i am feeling that I took these pretty quick, but those were the setups. Going to observe now and see if something really solid sets up. I see also that we broke down through a hinge on the daily chart so I have more of a short bias. Chart2: Took another short after the break of the support or bottom of range and a retrace back up to the support now resistance.

Tomorrow I will start my journal. The main objective is to practice reading the market and identifying opportunities to trade. Mainly day trading the NQ on a 3 minute chart, but will do analysis on the weekly, daily, hourly, 30 min, and 3.

Thanks for the feedback DB. The second red arrow is a short on a re trace after the break of the first range box you have drawn. The last red arrow was a short on a re trace after the break of the second range box you have drawn. Were those valid if viewed in that way? Thanks again Yes, but the longer you wait, the more likely you are to get stopped out.

I think I understand the concept. Here are some of the trades I saw today in real time. Please let me know if i'm on the right track. Saw this other Long after the Supply Line Break and Retest. It was good til the top of the range there. Yes and no. More yes than no. Trading ranges means trading reversals, and one can't trade reversals until the limits of the range have been established. If the range is exited before these limits are established, then there's no trade. Which is why I avoid trading ranges. If nothing else, that provides a break as everything ranges for at least a little while, sooner or later. Therefore, the only trades you have that are in keeping with the SLA are the long off the retracement after the break of the supply line and the short off the retracement after the break of the demand line. Whether or not you stay in the latter depends in part on your risk tolerance and in part on your faith in AMT. All of which is moot, of course, if you had entered far earlier when price dropped out of the opening range at 0945. Then you wouldn't have to fool with any of this. I went ahead and annotated this opening because it was and is interesting and is typical of the kind of real-time confusion that can assault the SLAer if he isn't completely confident in what he's doing. You start with the range, which is usual though not every session begins with one. But every one of these entries gets stopped out. According to the SLA, you ought to stop after one, but people keep going. Then the demand line is broken but there's no retracement on the way down. So no entry. Then you have what appears to be a double bottom, so you go long off that. This earns a few points, but the price goes nowhere and forms what appears to be a lower high. By the time the LH is confirmed, you're stopped out again. If one can keep himself from becoming annoyed, and this is far from easy, the next trade, the first short, can work if one can hold onto it and not exit the trade when the next plus one bar heads all the way up to 57. But, if he can't, and tries re-entry on the next short off the retracement, he finally gets the payoff. All of this seems like a monumental PITA, but if one includes the context, it becomes far simpler. You'll noticed that there is an overnight range, not posted, from 64 to 70 that begins at 0630 and isn't broken until 0830. Knowing that that range is there would most likely prevent the SLAer from any of those longs as he'd be more likely to wait for the "extreme". When he sees price fail at 64, he'd be likely to short the break of the demand line at 61 or 60. This avoids the whole shorting mess described above. Result? One trade, short, at 61 or 60.

Many people associate being wrong with being stupid. And no one wants to be stupid hence the resistance to accepting the loss and cuttingit quickly or taking a stop out without the need to prove yourself right again quickly. Traders need to realize that being wrong has nothing to do with how smart you are. You will have losing trades even if your a genious period. If your following your plan and you are consistently losing take a closer look at your plan.