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Welcome! I'll just take a stab at this one for now. The main concept is when you are looking at volume Gaussians, it is not 1 simple mathematical pattern so to speak. (There is a math pattern, but it would be pages long) The main idea is this-- during say Black Volume Gaussians (increasing or decreasing), that does not mean each bar is black! You can, and frequently have, Red Bars as part of Black Gaussians. Black Gaussians do not mean every bar as part of them is Black. They just mean the overall movement is up but you still need to have context to identify them correctly. Similarly, during lateral formations, you can somewhat treat those very small volume bars as a single Non-Dominant leg of the sequence. I'm grossly oversimplifying it, but the idea is you can have even 50 bars occurring in a lateral formation each at very low volume, half red, half black. For the fractal you are trading, you will probably be treating those as a single leg of non-dominant volume. Laterals are both extremely important and one of my main weaknesses. There are different possibilities to exiting laterals and I have not consistently identified these cases. There are several traders here who as soon as they see 3 bars of a lateral, they know which way it will exit. Somewhere in here there is a "Lateral Drill" which is one of the most important posts. That's probably would I would work next on if I pick this up again. Correction: Black Gaussians don't even mean that price is going up, prices can even be flat in a Non-Dominant Black Gaussian. That relates to lateral formations. But, for Dominant Gaussians, you need at least 1 bar where price is moving in the dominant direction and volume increases. Where the subtleties come into play what does "increasing volume mean" exactly? This is where it gets into the subtleties. There are cases where 1 bar has higher volume than the previous bar and yet still does not "count" as "increasing volume" in terms of forming a Dominant Leg of the sequence. It often does count (and beginners should start with that), but there are cases where it also needs to be higher than the volume 2 bars ago. In other cases, even that isn't sufficient and it needs to additionally be higher another previous peak in volume.

In terms of coding, not sure if you are referring to tools to assist a trader to make it easier to annotate charts and trade real time. Or if you mean algorithms to "back-test" the market where this method is coded into deterministic math. For the first, yes, Spydertrader and some of the students worked together to create a special Trade Navigator suite. It does a lot of things for you including highlight the bars red or black correctly, mark lateral formations, and I think a few more things like Peak Volume and IBGS. I forget how to get that setup, I think the instructions were in an Elitetrader thread called something like Tools to Trade Price/Volume or something like that. It was the biggest thread in their software section so if you sort from views it was #1, but I haven't been on that site more than a couple times in many years so not sure if they deleted it or not. There are other software addons for this besides Trade Navigator, but that is the most definitive and complete tool and where most of the effort when into last time I was doing this. In terms of the second, the system is deterministic and thus possible to codify. It often looks subjective only in the sense that most students have not mastered it, but for people close to Spydertrader's level they typically produce identical charts when they fully annotating them. At least that is my understanding of it. There are several efforts to codify the system and trade it by fully automated expert system but I'm not in the loop on these. I don't think it is compatible with range bars.

Welcome! The short answer is yes. While I made progress and my charts “I think” were getting more accurate, at a certain point I felt I would really have to dedicate even more time and energy to be successful. I had various life events going on (changing job, major relocation) and lost a lot of momentum and haven’t been learning trading since then. I work on mostly video game development and network programming projects for my main side projects these days. But, I enjoyed the learning experience of this method quite a bit, and you never know, may return to it one day. Check out page 1, post #3 on this thread and you will see examples (I’ve taken it and edited the image and attached it here too). The “VE” (Volatility Expansion) can be considered Point 4 which has to be formed on increasing volume. Price will next fall in the non-dominant direction on decreasing volume. Then, volume will increase again in the dominant direction, and the trough of that volume is where your Point 5 is. These 2 new points have created a new, accelerated channel. Now either 2 things happen, you get a FTT which is a Point 1 of a new sequence in the opposite direction. Or.. price traverses the new channel, creating yet another VE (a Point 6). Seem familiar? Another way to this is instead of Point 4 and Point 5, that the original Point 3 has now transformed itself into a brand new Point 1 of a new accelerated channel. Point 4 in this line of thinking is really a new Point 2, and Point 5 is really a new Point 3. Whenever you create a new channel, one of the first questions you should strive to answer is what fractal is it? Is this new channel on the same fractal as I was just on? Or 1 size bigger or 1 size smaller? In the VE case, I think they are always the same fractal as the original (unaccelerated) channel. Not quite sure I understand but I’d would say the main thing is the volume patterns (Gaussians) much match. up channel = B2B = decreasing black volume followed by increasing black volume 2R = decreasing red volume 2B = increasing black volume A note is decreasing volume can sometimes manifest itself as sideways movement as opposed to price movement in the opposite direction of the channel. Keep in mind, not a hard and fast number but 90% of this system’s accuracy comes from the Volume pane, only 10% comes from information on the Price pane. Look at the very first sentence of this thread “Volume leads Price. Always. And without exception.” Notice he does not say Price leads Price, but Volume leads Price. On a related note, let’s say you are looking at a chart and you look at just the Price pane (a big mistake!) and you see what “looks” like a crystal clear up channel with 3 points etc. Then you look at the Volume pane and you see the volume patterns do not match. That always means you have misidentified the channel. It could be just a subset of a different channel or a different fractal than you had in mind etc. But it is impossible to have an up channel without this volume pattern in this system. The peaks and troughs in the Volume pane are really what identify channels. Once you get to a certain amount of experience in annotating charts, you’ll even quickly recognize this and self-identify this in your own charts. I have some old charts I’m sure years ago posted somewhere in this thread that I added a note onto a prospective channel saying something like “my Gaussians don’t match! Thus this channel is clearly wrong, but I can’t reconcile it with the surrounding channels”. This is actually pretty common to run into for many students. I’m not quite sure what you mean here, but basically the main thing is you have 3 points (at least) in a sequence. It may end with a FTT or it may continue (sometimes for a whole day) if you continue to see the Gaussians showing decreasing non-dominant volume and increasing dominant volume. Eg in an up-channel, if the whole day (which happens on rare occasion) all the black volume bars are increasing and all the red bars are at lower volume than the previous bars, the trend hasn’t changed. Yes, it is just cut-off there, but if you extended that chart there would certainly have to be a 2B there. Correct. That first R is the final dominant movement (2R) of the previous channel. There are many subtleties here, you cannot always identify the Gaussians exactly by just looking at a few bars. The general Gaussian logic holds and is the best starting place for interpreting charts, but you can’t break it down into just a small number of simple rules like “3 increasing red bars on the volume pane for sure mean xyz”. You have to identify what fractal you are on, which is not an easy task to do consistently, etc. This is where some of the challenge to learning this method lies. . Fairly quickly in the process, you have to look at multiple timeframes (fractals) at once however. At the very least (and often times this is all you need to do), that is specifically 3 levels of fractals. This becomes important because understanding what is going on with the immediately larger and immediately smaller fractals at any particular point can give you dramatically clearer understanding of what is going on. I believe in many cases it is actually even a requirement of getting the correct result. All that said, when first starting out, it is easier to as you suggest, it probably is easier to try with just a single level of granularity, and just don’t worry about “getting stuck” so to speak and move on to the next channel when one doesn’t make sense. Once you can add 3 fractals at once on a chart things will become clearer so that is the direction to strive towards. Yes, it’s pretty cool When I randomly look at a stock chart for a few seconds now (even something as lame as Yahoo’s default quotes without the good charting software), my eyes can’t help but try to visualize channels, aligning them with Gaussians. It’s kind of like playing or composing music, it is like your brain just goes into a new mode and you see things that many other people won’t see. Indeed it is. The accuracy the top traders of this system have is spectacular and far superior to anything else I’ve seen. Well, not sure what you mean here— some days you will see mostly very flat looking channels and other days channels that occur at very high or very low angles. You will see channels that are very wide and channels that are pretty tiny. Along the same lines of this, the higher the volume, the easier it is to annotate (and thus trade) with this system as well as generally more profitable. I remember back in 2008 around November when there were market drops of 5% and more, some of the traders using this system had some of their best days ever. Some traders of this system don’t even trade except on days they know will have heavy volume (Federal Reserve decisions, unemployment #’s etc) as they will probably making 3-5 times more money those days than average. The other days can be spent at the beach

Hey Matt, welcome aboard! I took a break from this years ago, (might one day try again!) but still subscribed to this thread. I can try to answer a few of these. FTT stands for Failure to Traverse. The basic idea is you have 3 legs consisting of dominant movement, nondominant movement, and then more dominant movement. Also, the 3 inflection points here create a channel. After you have established the 2nd leg of dominant movement (which occurs immediately beginning on the "point 3"), the price will be making a "run" for the channel boundary. The basic idea is if it is able to reach that channel boundary (and with sufficient volume.. this part is somewhat fuzzy to me) -- then the Trend is intact and what will occur next is nondominant movement and then further dominant movement. In other words you will have a "point 4" and "point 5". This can continue indefinitely. There have been entire days where this goes on the whole day, I think I've seen as many as 11 points or something though hypothetically it can go on forever. That said, most of the time you only get 3 or 5 points and then you get the FTT. The FTT occurs when the dominant price action is not sufficient to touch the channel boundary. This is when the trend has changed to another direction. The point 4 of the trend you were on, has now become Point 1 of a new trend. Yes, it means black-to-black or red-to-red. The B2B always means black (upward) price movement, first with falling volume, then rising volume. So in both parts of the B2B, price is more or less moving higher (it is "black", aka "upward" price action, after all). The different is in the first part of the B2B, volume is decreasing. This (almost?) always happens right after the FTT, while you are still overlapping the previous channel. Then, the 2nd part of B2B occurs when price has exited the previous (red) channel. You (almost?) always see a big boost in volume at exactly the point where the new channel has crossed the previous channel. Well, as I mentioned in 1), trends can move onwards for indefinitely. So, for black channels, you have these combinations: B2B-2R-2B B2B-2R-2B-2R-2B B2B-2R-2B-2R-2B-2R-2B B2B-2R-2B-2R-2B-2R-2B-2R-2B ... etc... Well, you have bigger and smaller channels. 3 (or more) small channels together give you 3 (or more) points, which is enough to make a larger channel on a bigger scale. They are fractal in nature, in other words those larger channels in turn can be used to create even bigger ones. So the bigger channels contain smaller channels within them. But, if you are sticking to channels the same "size", then the b2b 2r 2b r2r 2b 2r are distinct, except that the FTT of one becomes the Point 1 of the next. You can think of them more like this: b2b-2r-2b-FTT -> r2r-2b-2r-FTT etc The FTT and the first r of the r2r are exactly the same Point (specifically Point 1). The channels overlap from the FTT of the previous channel until volume starts to increase in the opposite direction. I sort of answered this above, but one thing to clarify is it isn't the 3 min or 5 min charts per se that you use to "magnify". Channels are always made up of smaller channels. Also one thing is I would highly recommend sticking to purely the ES 5 minute chart, as that is what 99% of the examples are in. If you gain skill in that, you can always move to other time frames or instruments.. the logic is universal and works on anything (where there is sufficient liquidity, so not penny stocks). Indeed, you have found the most recommended, "safe" entry point for beginners! Find a point 1, point 2, point 3, and as early as you can enter in the direction of that dominant trend. Keep in mind, there certainly are many times when price will move against you (as the FTT can come 1 bar after the point 3, leading to an immediate loss). But, the idea is if you enter immediately after a point 3, your maximum loss is no more than that point 3 bar. Even an FTT inside the channel may still lead to some profit, and if you get a point 4 then that could be a lot of profit. If you get consistent at entering after the Point 3, then the next trade to learn as I understand it is the FTT. This one leads to much higher profits, but also takes much higher skill. Though really every Point is just an FTT at a smaller channel size, but at least of the channel size we typically use (5-30 bars of 5 minutes ES), that would be the next hardest trade to learn (the FTT off that sized channel). Then typically (as I understand it) you don't want to take trades between Point 2 and Point 3 at least of that time frame, as even if you identify them correctly there just isn't much room there so your risk to reward ratio is too high. This said-- I think the general recommendation is don't even try to practice trade without really first annotating charts for a while. Eventually you want to do it of course (trading is the whole goal after all), but there is a lot that can first be learned just by annotating the charts. That depends on your skill level. At a certain level of mastery, you are able to consistently anticipate where things are headed, allowing you to profitably trade via the method. I wasn't able to get to that point, but several of the students here who I met in person have been trading this method full time as their only source of income for years. It is by no means easy to learn, I'll admit (to my knowledge there are just a few who have), but I believe it can be done by anyone with time and dedication.

Monday, November 1, 2010.

Thursday, October 21, 2010.

For those using charts with the opening (overnight) gap removed, is it advisable to look back several days if you are comparing if price went higher than a previous high etc? Or do you switch to using a chart with the gaps present if you are in these situations (where you are looking back more than just the previous tape/traverse, but possibly several days)? I was reading the post a few days ago about knowing at what point you know for certain a trend has ended and that got me thinking a bit

Monday, Aug 30, 2010.

Thanks for the feedback. I was on the fence about that period (and many others on yesterday's chart!) but in particular those bars, changed my mind several times I wasn't entirely convinced with the mode of those bars: 15:35 [close of] : decreasing red volume , mode: long 15:40 : increasing red volume -- but lower volatility (almost half the bar size). mode: long 15:45 : increasing red volume -- but bar is in flat bottom pennant : mode long 15:50 : increasing red volume -- but bar is outside bar, bar closes inside prev bar. mode: long 15:55 : increasing red volume -- but end of day effects starting, also closes inside prev bar, also almost spike bar -- mode: long That said, totally agree, focusing at the volume it is clearly increasing red, and maybe after several bars of that it is enough to be more of a factor than whether bars are closing inside the previous bar etc. Sounds like my test for dominance is a bit too strict. thx

Tuesday, July 27, 2010.

Wednesday, July 21, 2010.

Monday, July 19, 2010.

At times you see a VE after a point 3. Usually, at this point you are now actively looking for a FTT to start a new trend in the opposite direction. However, if the VE bar closes outside the original LTL, and that bar (or another dominant bar close to it) has higher volume than any other in the trend so far, you may want to "move the NSW". When you move the NSW, you are not looking for FTTs-- you still hold your position because you are now expecting further continuation. In other words, instead of the more typical sequence: b2b 2r 2b .. 2r 2r (new dominant red container) pt1 pt2 pt3/pt1 you would instead anticipate this: b2b 2r 2b .. 2r 2b (continuation of previous container) pt1 p2 pt3 pt4 pt5 This is how I interpret it but could be wrong of course. Jack describes some of this in the particular video oddiduro111 recommended starting around minute 29:00.

Wednesday, June 30, 2010.

Monday, June 21, 2010.

Tuesday, June 8 - Friday, June 11 2010.

Once you see the sequence is complete, this does not immediate guarantee a new sequence in the opposite direction will begin. It is just that this is the earliest that you can start looking for a Signal of Change to start a new set of sequences in the opposite direction. But even if the sequence is continued by further action (in the same direction), it isn't (as I understand this) like the sequence entirely resets. You could just keep getting (in a down sequence) 2b2r on and on. Non-dominant black, followed by dominant-red. If you don't see a Signal of Change, this is probably what to expect. Also, sometimes in our charts we'll refer to the NSW (non-stationary window) moving, this is related to all this. That means we saw a VE (volatility expansion) occur, typically on higher dominant volume with the close of bar outside the previous LTL. In this case, we are expecting non-dominant movement, followed by further dominant movement soon ( r2r2b2r, get big VE so move NSW, and now we expect 2b2r and only then look for Signal of Change).

Tuesday, June 8, 2010.

Thx for the advice. It has been a while since I've gone back to the beginning, I think you are right, could be helpful! In particular I haven't grasped how the fractals that are smaller than tapes (sub-fractals: 2 bar cases versus BBT's etc) fit in together.

From my chart posted above, the reason not to short at 1400 is that we are in an up tape, in a new up Traverse. In this interpretation, we know that we cannot get a new down tape, until the this up-tape has gotten us to break out of the previous down Traverse. The first (dominant) leg of a new Traverse always has to break out of the previous Traverse's RTL, before the next leg can begin. I'm posting a second interpretation, that also would of prevented a short entry at 1400, see attached chart. This scenario I consider more complex, and less likely, but just for food for thought here it is In this scenario, I have modified the pink down Traverse 2 times. First, at 1225 (close of bar) I move the Non-Stationary window, accelerating the Traverse. I marked the accelerated Traverse as orange. The second modification of the pink ( / orange) down Traverse occurs at 1345. Here, I fan (decelerate) the down Traverse. This is because in this interpretation, I see the 1345 bar as having twice the volume of the previous bar, but 1 tick smaller range. This can lead to needing to fan. The importance of fanning is that rather than having a completed down Traverse sequence, it's like it sets us back to Pt 2 moving to pt 3 all over again (or thought of another way, we created a pt 4 and need to create a Pt 5 top). So we know that dominant down movement is coming up ahead, before we can even begin to look for a Signal of Change. So it is 1345, and we know that dominant down movement is coming soon. We see dominant down movement 3 bars later, at 1400, and then get our SoC 2 bars later at 1410 with the ob. (or perhaps if you don't consider 1400 dominant down, then 1410 would possibly count and be the SoC on the same bar).

Thursday, June 3, 2010.

Tuesday, June 2, 2010.

Friday, May 14, 2010.

Tuesday, May 11, 2010.