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drwarbuck
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Everything posted by drwarbuck
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Ivo, Been lurking here for years and trying to make this system work. Your points on volume are well taken, although I think for trading es, volume is critical for identifying the termination of moves. One problem which continues to plag me is the interpretation of volume as market moves say with data at 8:30 compared to overnight, and then again at the open of trading. Can't rely on it because everything is more or less reset. So I tend to stand aside. But it is frustrating, because I might have a real good grasp of what market is doing in the overnight, but seem to lose my bearings with these changes in pace related to the above mentioned times. Any suggestions for dealing with this appreciated.
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I understand what you are saying. As concerns your coloring of the price bars, am I correct that the basis for the colors are always based on the immediate preceeding bar. So if price makes a lower low, it is red, if it closes inside the prior bar it is yellow, and if it makes a higher high it would be black? Not sure what rules you use for an outside bar, where price for example makes a higher high, reverses to make a lower low, and then closes inside the prior bar? It appears from looking at your charts that that bar would still be colored the same as the preceeding bar.
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MKTr Could you please explain the proper way to color volume bars? Are we coloring them red when the close is lower then the open, even if the close is higher then the prior bar? As an example, the 10:15 price bar opened at same price as close of prior bar, and closed higher, yet, you have colored it red? Shouldn't that bar be black? The 11:05 volume bar also had close above prior close and also above the open of its bar. Why do you not show that bar as black? thanks
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rs5, Could you please clarify your chart? Looking for a moment at your most recent red container , we know because it is sloping down that the sequence corresponding to it is r2r2b2r. The problem I have, is that the 2b of a down sequence is a countertrend move of a more dominant down pattern. But the 2b as it is shown on your chart, has volume way in excess of the r2r portion of the move. How do you reconcile this observation? It seems more likely to me that the large black volume at the close of the day completed the b2b sequence which began at the first ftt around 9:35. That would fit if we moved the dark blue lower trend line down, so that it included the low towards the end of the day. That way the down move which began at the upper ftt would be the 2r portion of the days up sequence, and the 2b the final move back up. Does this make sense?
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If some day you could annotate your gausian lines, it would be a big help. Label the r2r, 2b etc. thanks
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I have a question for anyone who would care to answer. Lets say you are trading the tape on a 5min chart, and you clearly identify an uptrend and see completetion of the b2b2r2b volume sequence, and then price starts down in the opposite direction. Now since there was completion of the up sequence, I understand price can reverse trend. But here is my question. If it falls back to the rising trendline, then rallies and goes above the most recent swing high, does that by definition mean that the low at the lower trendline is now pt 1 and the new high pt 2? And if that is the case, does the up sequence have to complete, or can it abort without finishing and come back down? Hope the question is understood.
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I am trying hard to understand the fractal nature of price and volume as described within this thread, and very much appreciate your time and help. I am using tradestation as my trading platform, and have yet to figure out how to post screen shots on this site. You can tell I am not all that tech savy!! It appears that each day at the close of trading, the 15:00 volume bar is a very high volume bar, and it had been my inclination to almost disregard it, thinking that it was a function of the days rth close. While this may be true, it appears that the nature of that bar is critical in understanding the message of the market? Am I correct that that volume bar, in conjunction with the volume bars at the start of the next real time session will be critical in deciphering the days volume sequence? If I am understanding this correctly, 6/8 ended at the top of the green container left trend line with red volume peaking. When price reversed direction, then one would need to see a full volume sequence corresponding to that container, which played out on 6/9 as r2r2b2r by days close. My error occurred because I was focused on the nested blue container, which seemed to be doing a b2b2r2b, but the 2b never happened because the larger container had yet to complete? So that takes us back to the right edge of the chart, and what stands out here is that the large green container volume sequence has been completed, and price actually did violate the right trend line of that container by a bit, as indicated by your notation and VE. I see a large black volume bar sticking out. It is greater then the large volume bar that ended on 6/8. So one would conclude that it is probable that some type of uptrend sequence on some fractal is about to begin. So getting back to the blue container for a minute, it could be concluded that it did its b2b on 6/8, the 2r was being formed while the green container was doing its r2r on 6/9 and that the blue conatiner completed its sequence with increasing black on 6/9
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I see how you used the closing volume from yesterday, as the start of todays r2r2b2r sequence. But my question is, how did you know that that was the beginning of the sequence and not the end. I could ask the same question as of todays close, is the large volume black spike the first part of the volume sequence b2b of tomorrow morning. If one only looked at today's volume sequences, one would have thought that this was a b2b2r sequence, and waiting for the 2b to develop into the close, which obviously did not happen. Pardon my ignorance Thanks
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Thank you for the reply. Would someone please precisely define for me FTT. I believe I was told this is failure to traverse. If that is the case, I am wondering if the bar has any characteristic in and of itself, that would allow one to identify it. It seems it is only an FTT in retrospect after price is seen to not travel any further in its current directional move.
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I am still in the process of studying this thread on my second read, so please excuse my basic questions. If one sees completion of a volume sequence on the fractal they are trading, for example a down tape r2r2b2r, does this always indicate that the next sequence will be a change of trend, or can the down sequence be followed by another down sequence? Thanks in advance
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Could someone please tell me how to stop the email notification for each post made on this thread? thanks
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Yes, that would be most helpful to hear what others saw in this tape, that would have allowed them to know that the dominant volume would be black. The volume bars 13:45 and 13:50 were nearly identical. The 14:00 bar was an outside bar, on volume higher then the preceeding bar. That one got me in erroneously, but at least I had the sense to exit two bars later. But it is what I am not seeing that I would like to know. Is volume dominance best guaged by a series of bars, or paired bars, or individual bars? And finally, if a volume down sequence completes, I assume that the next sequence can also be a down sequence? Finally can someone define an FTT, or refer me to the appropriate area of the thread to read. thanks
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You wrote, "The market moves in dominant and non-dominant fashion. Focus on what you believe you see, and later (during debrief) learn if your conclusions drawn from specific observations panned out correctly, or do you still have more to learn about a specific area." I did not mean to give you the impression that I am new to trading. I may trade like a beginner, but I have been dedicated to watching intraday price behavior for several years on a full time basis. The morning session as you pointed out began slowly and gathered momentum to the downside, bottoming on the highest volume bar of the entire move at 12:25. That terminated that downtrend. Then we had a couple of hours of low volume slowly rising price tape. It appeared that the dominant move today based on both price and volume was down, so I had expected that when volume returned to the market, the direction would be down. Because of this belief, I entered short at the close of the 14:00 candle. I exited immediately when the 14:10 candle closed. By 14:15 it was clear that the dominant volume was to the upside, but was there any way I should have been able to see that earlier. The 13:45 bar was the only clue I see, and in retrospect the bar I sold while it had higher volume then the prior bar, was of less volume then the 13:45 bar. Thanks
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I hope you will not get tired of my endless questions, but I recognize that you are a wealth of valuable information and I am most appreciative of your willingness to share You stated you did not use price targets, so I am curious as to whether you use stops? My guess is you just let structure guide you, and will exit a trade if and when the information provided refutes the reason you originally entered the trade. Is that correct? As regards volume sequences, are we most concerned with relative volume, meaning the volume of one candle relative to the last, or how volume relates to the previous trend. To highlight what I mean, if you look at the candle today on es at 10:50 est it closed above the prior candle on higher volume, yet the subsequent limited up tape occurred on volume lower then the preceeding down tape. (I would post the chart if I knew how to do that on this site). The move was terminated on the 11:10 candle, and the subsequent down tape while it did have increasing volume on two of the bars, the volume of this downtrend was lower then the volume of the preceeding up trend. So what should I be focused on. The volumes as they relate to each tape as either increasing or decreasing, or the volume as it relates to the preceeding tapes or both? Hope you can understand the question.
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That makes good sense. One of the demons I have been trying to rid myself of is exiting winning trades too soon. I know I am exiting based on reasons other then what is being provided by the chart. It is not that I don't know how to read the chart, I just need to better learn to control myself, which is all anyone can control once in a trade. Do you have any reason why you prefer OHLC bars to candles? Doesn't seem to me an important difference, but you seem to feel that candles may obscure the message of the markets? Thanks again drwarbuck
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Again, thanks for the reply. Your answer is very interesting to me. I met a fellow in a trading room about a year ago, who seemed to be ahead of my curve, and that gentlemen was kind enough to lend some direction. First, he told me that the 5min chart was the chart to use, and he focused on price and volume. Up to that point, I had always believed volume held the key, and that any attempt to predict price in a vacuum from volume seemed irrational. So his comments resonated with me. But little is written about volume, and of course most of what is written about trading is just wrong. But what really struck me about your thread, was your method of teaching, because this guy was exactly the same way. He would answer a question with a question, always making me seek the answer myself. His style is so similar to yours, that I wondered if perhaps both of you were mentored by the same individual. You said you trade the "tape" almost exclusively. Do you always wait for a 5min candle to complete before acting, or will you close or open a position sometimes in anticipation of the candles outcome? I would think that as price reaches a target, one might want to exit even though a candle has not closed. Or do you ever drop down to a 1 or 3 minute chart? Thanks for your time.
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Thanks for the reply. I am curious as to how you developed your personal skill. Did you have a mentor at one time? I would be very interested as to how you approach the market as a trader. It is one thing to annotate a chart, another to trade it in real time. Do you trade the intraday tapes, or are you looking more to postion for traverses, and channels, or all of the above? Regards
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New to this thread so please be patient. My question is on any given day we are looking for completion of a volume sequence, in order to determine if a trend has completed. Since each day may be a continuation of a sequence and then completion, how common is it that one would see more then one or two completed volume sequences for an entire day?
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I am new to this site. I also use tradestation, but wondered if you know whether market profile software can be adapted to tradestation charting. thanks