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MRW
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Everything posted by MRW
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These charts are inversions of the price action in the charts that accompany Determining The Trend of the Market by the Daily Vertical Chart in the post DB put up. I had, for some time, asked myself how the opposite price pattern would look with the same volume as so many times during the trading day I would see things that looked like the opposite of these price patterns. Interested in any and all insghts and comments! Full page fax print.pdf
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For those who think the T&S tape can be read consistantly to trade these days, with the advent of the NYSE Hybrid, I'd suggest you give it a try. If you've not done this before, and think the approaches used prior to the Hybrid will work on anything more than a random basis, you're in for an unpleasant surprise. Yes, I'm sure there are a few people who did this before and managed to adjust, but a great many more have found this approach to not work anymore. Bids stepping up, offers stepping down, looking at Level II and OpenBook to view market depth, reading the specialist in a given stock - this is all misleading at best now with iceburg orders, and people breaking huge orders up and continually entering them. Most of the T&S tape readers have either switched to longer timeframes or been unable to trade. I traded prop in the days of T&S tape reading, and am still adjusting to longer timeframes. Most of the complaints about Graifer's book seem to come from those with no perspective upon which to judge it. If you've traded for awhile, and especially if you've had to adjust to the big changes of the last few years, you'll appreciate what this book has to say.
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DB, while reading Wyckoff's Determining the Trend of the Market by the Daily Vertical Chart, he mentions putting a ruler between price points to gauge the rate of price ascent, and compare it with other rises. I know you've written about supply/deamnd lines extensively, but did Wyckoff make any other direct refences to constructing and/or using trendlines? Probably due to a lack of experience on my part, I've been leery of trendlines as they seem to be a sort of "artifact" created by the chart at times, and not as substantial as support and resistance areas/levels. Perhaps there's a thread elsewhere that addresses this? Thanks once again!
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DB, I may have read and thought about this post of yours more than any other. It certainly helped today. I've been watching the 1 minute charts on the SPY, and over and over we've seen climactic action, yet prices fall to new lows after brief rally, or perhaps supporting attempts. It's interesting to think of waves and climatic action, rather than individaual bars - and, as you say, easier. Thanks for a great post!
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Another thought, if you'd like to comment, DB, or anyone else...this applies to U.S. equities (and the SPY and ETF's), which is all I trade right now. It seems as if these waves can easliy cross time periods such that the beginning of a wave at, say, 2 PM, might run until the close and then continue with the next days open and morning (or longer). I'm also noticing that areas or levels of support and resistance can be from prior days or even weeks. I guess the point is that the daily close means less then people might think; it's just an arbitrary line in the sand that we draw, not necessarily one the market draws. Thoughts?
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THanks, OAC - interesting!
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Thank you, OAC and Nic!
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Thanks for the reply, Nic - just curious, who is Barros? I wasn't trying to quantify this, just saying that one way to sort of organize my thoughts was to think of 100% retracement as sideways price action and things less than 100% to be increasingly indicative of a trend, perhaps. How did Barros come up with 78.6%, I wonder?
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When reading the Market Technique excerpt from the Wyckoff Course that DB posted, Wyckoff talked about rallies and reactions as indicators. Wyckoff said: "...when a stock declines 10 points, a normal rally would be approximately one-half, or about 5 points. A smaller rally would indicate technical weakness and a rally greater than one-half would indicate technical strength." It occured to me that this one-half might apply to price movement in a trend, and that the stronger the trend, the less the retracement. It also occured to me that one could put retracements on a sort of "scale" by putting a 100% retracement into the category of a sideways move on one end of the scale, and the less the retracement, the stronger the trend right up to the point of vertical moves illustrating buying/selling climaxes on the other end of the scale. Probably a blinding glimpse of the obvious, but it seemed like a revelation of sorts when the idea popped into my head.
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I've always been more than a little suspicious of the FX market. If the "brokers" are your counter party, isn't this the same as the old-time bucket shops? Not actually buying or selling in the market, but making a bet on direction that the broker takes the other side of or matches with a bet on the opposite direction (less the few pip spread, of course)?
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Thanks, Head - interesting to hear someone else is thinking along very similar lines!
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Just some observations - it seemed like this was the place to post them perhaps. It would seem, based upon my learning curve so far, that one of the most important things in trading is the way one thinks about the market. For example, does a price move mean something to you about supply/demand pressures or is price movement a function, say, of your mathematical model? It would also seem that a progression in learning might go from first getting one's thoughts in order, to practicing seeing the way various supply/ demand pressures work themselves, to practice one's observations by taking small, low-risk raes, to gradually working up in size as judgement becomes better. The first step then being to know what you're looking for/at, then gainig experience spotting these things, then working out some guidelines for actually trading them. Sorry for the somewhat rambling, semi-coherent thought process here - I'm just starting to get this straight (assuming I'm not way off base), I think. Would love to hear the thoughts of others!
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Thank you once again, DB - and thanks to you all as well, Head2k, BlowFish, and Gringo!
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Ok, with apologies again to Gringo, DB, would these line charts be then just a line of closing price for, say, a 5 or 30 or whatever time period? Or would these be like a tick chart with every trade shown? Perhaps something like the dot/scatter chart you had up? Come to think of it, this is probably an unimportnt question to ask - all that would matter, as you've just said, is the flow of prices, so the chart could be constructed any way you'd like. Having said that, it would be nice to see an example if you'd like to post one!
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Thank you, DB! I'm still learning to break myself of the bar emphasis. Didn't mean to hijack your thread, Gringo - sorry.
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Ok, forgive me for being a bit slow, but here's what I understand you to be saying: The interval or timeframe for each bar is different. So one bar represents a different period of time than another - say, 5 seconds per bar vs 1 hour per bar. The idea is to look for a point where a shorter interval bar is reaching support/resistance/midpoint that appears on a chart with a longer interval bar. Thus, we might look for these points where a chart with 1 minute bars matches a chart with, say, 30 minute bars. Is this correct? Thank you again!
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DB, I notice the charts you posted have different time periods. Do you think that a support/resistance level or mid-point is more significant as it appears on a longer time period, say, daily vs 15 minute? Did Wyckoff address this at all? My real-time experience would suggest that returning to a level set hours ago is more significant that returning to one set 5 minutes ago, but I'd be interested in your thoughts on this. Thanks!
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Thanks, DB! Appreciate the link, too!
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Just looking for some feedback on the way others deal with this sort of thing. Before the U.S. opening, I have always looked at the way the overseas markets performed, news headlines, fair value on the S&P, and noted any economic reports to come out that day. Then during the day, I have an audio news service that brings headlines from Reuters, Bloomberg, etc - this is mostly crap and comments from politicians, CEO's etc. This has not been so I can trade based upon any of this, but rather because I thought it might be useful to see what others were looking at and possibly reacting to. The only way I deal with this is to be flat before things like Fed announcements, big econ numbers, etc, as the volatility sometimes gets irrationally wild on these. I know Wyckoff has written about learning to trade without the news, so since I don't use this to trade from anyway, I've "shielded" myself from all this starting today - sort of a little experiment. Just wondering what DB and others might say about the way they deal with this sort of thing. Thanks!
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My limited experience leads me to the observation that longer time periods such as EOD would give you more time to think, but wouldn't change the process or work involved. Just a thought...
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Thank you all for your comments! It would appear that my epiphany continues as I am just utterly fascinated by looking at the market's action - price, volume, time, extent of moves and their opposing counterparts - in terms of waves! Today's bilnding glimpse of the obvious is that what these represent is fluctuations in Supply and Demand. My trading platform is set so that I can see a ticker for any symbols I like. This gives me the bids, offers, and trades, but also shows things like "low offer," "drops bid," "lifts offer, " etc. What this means to me now is the ongoing struggle between the supply and demand sides of the market. This is, of course, the shortest time period possible, but this applies, too, to ever-longer periods of time. I'm also slowly realizing that these waves are much more about areas where market activity is changing (or not), and that concern over exact entry or exit points is misplaced. One seeks to enter or exit in a given area where the struggle between supply and demand appears to be changing or has just recently changed. After that, it's about monitoring the market on an ongoing basis to try and detect when change is again taking place. I'd like to publically thank DB for his patience and help in a number of PM's which have helped confirm my tentative guesses and observations. This must all seem a bit amusing to those of you further down the road, LOL!
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Actually, this makes complete sense - thanks, DB! What I'm trying to do is distill all this price/volume or supply/demand, if you will, into a "big picture" view. It seems so often people get hung up on the bark of a particular tree and miss the forest. I know I'm guilty of this on more occassions than I'd like. I'm new to the idea of Constant Volume Bars, though I've heard it mentioned a bit. I believe it means that the volume is the same for each bar, but the price activity will vary - thus, we can see what price has done on this constant amount of volume, and consequently, compare relative price activity (ranges, open, close, etc.) per unit volume on multiple bars. Does this sound about right? If you've time, it would be most interesting to hear a bit more about these - uses, pros, cons, etc., or perhaps there's a useful thread to refer to so you don't have to cover a lot basics. Always appreciate the chance to learn more!
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Reading the Waves Sticky really struck a chord with me this morning. I use multiple timeframes to get perspective on price/volume action (call this what you will, it's just multiple timeframes). After reading about the Wyckoff concept of Waves, the following blinding glimpse of the obvious struck me: A bar that closes lower on a longer timeframe will be a wave down on a shorter timeframe. A bar that closes higher on a longer timeframe will be a wave up on a shorter timeframe. For example, I'm comparing today's price/volume action in the SPY on the 5 minute and 30 minute charts. THe higher close on the 30 minute bar from 10:00-10:30 EST, is the wave up on the 5 minute chart for the same time period. So...it would then seem that if you are selling a bar with a higher close on low relative volume on, say the 30 minute chart, you are also selling a low-volume rally on a 5 minute chart. This is but one example - there are, of course, others - buying low volume bars with a lower close being the same as buying a low volume decline, etc etc. Now all I have to do is be aware of the market trend overall, the stock trend overall, the action over the last few days and weeks, and on and on and on... Ok, ok, the market, for me, is slow today and I have too much time on my hands...like I said, a blinding glimpse of the obvious...
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I found this post on "BUYING AND SELLING WAVES (Sect. 5M)" interesting and have nominated it accordingly for "Topic Of The Month January, 2009"
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This is an interesting comment - "bar by bar analysis all over the chart." I'd watched some of Manby's analysis, and couldn't help but think that at times a great deal more was being read into the bars than may have been going on. It seems to me that at times yuo simply have a market looking for direction, a fair amount of indecision, and a fair amount of simply probing to see where trade/orders are. Tom talked a lot about turning points and confirmations of some move, and while I don't have the exact quote, said something to the effect that reading price action in an established trend was more difficult and less conclusive.