Neal

Pivot, is there any parallel with WRB concepts and VSA patterns? For instance, VSA states that after a period of consolidation, pros may wish to 'Push Up Through Supply' on a high volume, wide range up bar that closes on its high. This would constitute a WRB. This quick move keeps some of the old longs from selling (anticipating more profit), triggers buy stops on those with shorts positions, pulls in the breakout traders to participate in the up move, and encourages the participation of the anxious trader who feels he is missing the move. One would need to watch the following price action to determine if the strength continues based on continued up bars, or weak, low volume down bars. Also, this pattern on a 5-minute chart could always be a VSA 'Up-Thrust' on a 10- or 15-minute bar based on the following price action, which would be a sign of potential weakness.

What is the appropriate sized bar or candle to use? I want to specifically address the threads on ‘VSA’ and ‘Volume Based Candles’. Thanks to TinGull for his excellent facilitation and for all the fine contributions to these thoughtful threads. On 3/17, page four of the ‘Volume’ thread, Soultrader post a comment that speaks to the issue I would enjoy discussing: “I am still trying to find the ideal count (of volume based candles) for the YM chart…†There seems to be an ongoing question for every trader as to the optimal time (for minute charts) or level of volume (for volume charts) to use in order to analyze the charts. My question is: should we seek for what is optimal or useful? We have heard of the dangers of optimizing an indicator to perform well over a past period. It likely will not have a similar performance going forward. We have also heard that a trader should not seek to be right, but to make money. And of course we all know there is no such thing ‘out there’ as the Holy Grail. But still we seek and tweak. But do we continue to waste our time with pursuits of perfection and optimization, wanting to be right, and wanting to find the Holy Grail’s distant cousin? Would it be better to identify what is useful in order to create a structure from which to perceive the market? For instance, if VSA is the basis of the way you wish to look at the market, what time chart should you use? You can’t use volume charts for VSA as they eliminate the volume variation you need in order to make your analysis. Do you use a 5-minute chart to eliminate noise, but to move quickly enough to trade intraday? But could one 15-minute bar give you a different perspective than three 5-minute bars? Two large up 5m bars on high volume, followed by a strong down 5m bar could be a very nice 15m Up-Thrust (ultra high volume, wide spread up bar closing in the middle). Surely you could use multiple charts, but which would you defer to, or which would hold the greater weight? Some would offer that the higher time frame is more reliable, but for intraday trading, decision-making often has to be swift and decisive. Would it be best to consider what is useful, rather than what is optimal? Using VSA again, would it be best to find a reasonable time frame (say, 3-minutes) that you feel isn’t too noisy, but that will give you enough timely entries, and then create a reasonable trade management plan to follow? We have to apply some type of structure to the market from which to analyze. We have to accept that there are days or times when a 2-minute chart would have identified better setups, and other days that a 5-minute chart would have provided the better setups. We can chase ’optimal’ for a lifetime if we aren’t careful. Does it make sense to: 1) identify what is useful, 2) accept that there are times when other charts will better identify the setups we use, 3) consistently apply our strategy each day, and 4) be content that over time it will yield as many positive and negative results as another time frame or volume level, but will provide us with the structure we need to be able to analyze the market in order to make money. As always, our goal is to make money, not be right. Am I right?

Pivot, your entry would effectively be at close of the fifth bar in the box you highlighted, as the confirmation of the test for supply. It is confirmation because it is an up bar (price closed above the close of the previous bar). When you wait for this 'test and confirmation' to occur, sometimes it does not, and price runs up quickly from your support level. Is this a scenario you accept, and look for the 'test and confirm' setup elsewhere or at another time or level of support or resistance? When you wait for the full 'test and confirm' setup to occur, price will move away from support, thus increasing your risk and decreasing your potetnial reward. When you have the initial indication of possible strength coming in on that wide spread, high volume down bar, do you ever enter at the close of that bar, and set your protection stop loss exits such that you allow for the possibility of a test? I suppose if you considered entering 'early' on the high volume down bar, you could: 1) trade a partial position and re-enter the remainder on the test if it happened, or 2) trade a full position and have a quicker profit target for a portion of your position, and if the profit target is hit, adjust your stops to consider the possibility of the test and securing a break even trade. I am interested in how you might manage this trade and what your experience has shown to be recommended. Thank you.

Minetoo, I agree with your perspective. In 'Mastering the Trade', pages 141-142, John is discussing the merits of trading off pivot levels versus following indicators. Traders that follow indicators "are getting in and out of their positions far too late." "By the way, all market indicators are the wrong indicators, because they are all lagging. Price action is pure." I did enjoy the book very much, especially the early discussions about market internals, and the late discussions about the importance of having a trader's business plan. I recently took the two week trial, in which Hubert did most of the instruction as John was travelling. Hubert is the more active day trader, while John tends to focus on swing trading. Hubert was refreshingly honest in many of his comments. Among some of the more memorable: He said he didn't care exactly how John was identifying his setups and trading, and he was sure John felt the same. Though they do have a business together and share ideas, they each have their own style of trading. He also got on to people for "quoting the book (MTT) like it was the Bible." He emphasized screen time and becoming familiar with price action and market internals. As far as TTM idicators, he only uses three: TTM Trend, TTM Squeeze and Bricks. Even at that, I rarely saw/heard him reference them, except in hindsight to show how they might have been useful as a heads up. He focuses on tape reading coupled with pit noise and TICK readings. He also glances at other market internals for confirmation, including TRIN, Put/Call and Premium. Hubert seems very capable and consistent with his method of trading. He is interesting to follow, and his Kentucky accent and 'down home' manner are both enjoyable and entertaining. He doesn't mince words, and will speak his mind, so come with your thick skin and remove any rose-tinted glasses at the door. GCB - Why don't you swing by and give John a shout out? Your home city is a favored spot of mine. I'm a Longhorn and my son's name is Austin, if that lends any insight. Good trading to you both, minetoo and GCB.