Trading the SLA/AMT Intraday, Part II: Questions and Discussion

[DbPhoenix 42]

I've been asked this question more than once over the years, so, having answered it again (the turnover among beginners is pretty impressive), I'm posting it again here:

 

Is The Wyckoff Method or Volume Spread Analysis Legit? Just wondering if it's actually useful or not.

 

Whether they are useful or not depends on what you're looking for.

 

There are actually two "Wyckoff Methods": one is Wyckoff's own, the original course written in the early 30s; the other is the Robert Evans adaptation developed in the 50s and sold by the Stock Market Institute. The latter is what virtually everyone uses -- including what I call the "Wyckoff Posse" -- for a variety of reasons. I find the original to be of much more use, at least to me. But then I always seek out original sources, such as with Steidlmayer and what eventually became Market Profile.

 

VSA came about as a result of Tom Williams' study of the Robert Evans adaptation of Wyckoff's course but was also influenced by the writings of Richard Nye. The original here was called The Undeclared Secrets That Drive The Stock Market.

 

None of these use indicators, so that may exclude them from your consideration. Otherwise, Wyckoff's original course is available for free, so you can decide its usefulness for yourself (the Evans adaptation is still under copyright). As for Williams' Undeclared Secrets, there are pdfs of it floating around. As Williams is very much alive, they may not be legal, but not all authors object to these free pdfs as they provide free advertising. Whether or not you google it is up to you.

 

If you are looking for work on pure price action, with nothing on the chart except for the price bar or the tick, then these might be right up your alley. These three -- Wyckoff's original course, Williams' first work, and Steidlmayer's Markets and Market Logic -- are about all there is.

 

And, incidentally, though you didn't ask, if you're interested in scalping, Wyckoff's My Secrets of Daytrading in Stocks may be of use to you. This is also available for free. It focuses on tape reading and P&F. There is also Livermore's How To Trade In Stocks, also free, which is essentially the same approach as Wyckoff's, though Wyckoff's book goes into far more detail.

 

The key difference between Wyckoff-in-the-original and the Evans/Williams adaptations is continuity of price. Wyckoff began as a tape reader, so he sees price as being continuous, which of course it is. The "bar" is irrelevant, a convenience for illustration as they didn't have tick charts in those days. The idea of limiting oneself to a "5-minute bar" would make no sense to him. Nor would he sign on to the notion of "noise". If one misses this, then there's little point in studying Wyckoff at all. Just buy somebody's software and follow the arrows. Or read someone who trades price "bar by bar", which means trading bars, not price (usually with an indicator or two thrown in). But those are the choices if one elects not to study Wyckoff in the original..

Edited January 2, 2016 by DbPhoenix

[goodoboy 10]

If there are any lost, lonely souls out there who would like to learn how to trade price without crutches, feel free to post your questions here.

 

Thank you Db for your efforts and willingness to help. I am one of those souls.

 

I am still reading SLA/AMT for now, but I shall have questions soon

 

Thank you

[DbPhoenix 42]

I've been asked this question more than once over the years, so, having answered it again (the turnover among beginners is pretty impressive), I'm posting it again here:

 

Is The Wyckoff Method or Volume Spread Analysis Legit? Just wondering if it's actually useful or not.

 

Whether they are useful or not depends on what you're looking for.

 

There are actually two "Wyckoff Methods": one is Wyckoff's own, the original course written in the early 30s; the other is the Robert Evans adaptation developed in the 50s and sold by the Stock Market Institute. The latter is what virtually everyone uses -- including what I call the "Wyckoff Posse" -- for a variety of reasons. I find the original to be of much more use, at least to me. But then I always seek out original sources, such as with Steidlmayer and what eventually became Market Profile.

 

VSA came about as a result of Tom Williams' study of the Robert Evans adaptation of Wyckoff's course but was also influenced by the writings of Richard Nye. The original here was called The Undeclared Secrets That Drive The Stock Market.

 

None of these use indicators, so that may exclude them from your consideration. Otherwise, Wyckoff's original course is available for free, so you can decide its usefulness for yourself (the Evans adaptation is still under copyright). As for Williams' Undeclared Secrets, there are pdfs of it floating around. As Williams is very much alive, they may not be legal, but not all authors object to these free pdfs as they provide free advertising. Whether or not you google it is up to you.

 

If you are looking for work on pure price action, with nothing on the chart except for the price bar or the tick, then these might be right up your alley. These three -- Wyckoff's original course, Williams' first work, and Steidlmayer's Markets and Market Logic -- are about all there is.

 

And, incidentally, though you didn't ask, if you're interested in scalping, Wyckoff's My Secrets of Daytrading in Stocks may be of use to you. This is also available for free. It focuses on tape reading and P&F. There is also Livermore's How To Trade In Stocks, also free, which is essentially the same approach as Wyckoff's, though Wyckoff's book goes into far more detail.

 

The key difference between Wyckoff-in-the-original and the Evans/Williams adaptations is continuity of price. Wyckoff began as a tape reader, so he sees price as being continuous, which of course it is. The "bar" is irrelevant, a convenience for illustration as they didn't have tick charts in those days. The idea of limiting oneself to a "5-minute bar" would make no sense to him. Nor would he sign on to the notion of "noise". If one misses this, then there's little point in studying Wyckoff at all. Just buy somebody's software and follow the arrows. Or read someone who trades price "bar by bar", which means trading bars, not price (usually with an indicator or two thrown in). But those are the choices if one elects not to study Wyckoff in the original..

Edited August 12, 2015 by DbPhoenix

[rabcnesbit 10]

Hi Db,

 

I know you favour/generally trade the futures with the SLA/AMT. My questions are:

 

1) Will SLA work with other instruments like stocks and forex? I know you intimated a while ago that AMT might not as these instruments are not 'mean reverting'?

 

The SLA applies to any auction market, as does auction market theory. But a mean-reverting instrument is easier to trade as it is easier to anticipate moves, or non-moves in the case of chop. What is equally important to the trader is knowing how to recognize bottoms and tops and coming to terms with his tolerances for information risk, price risk, and time risk. I became interested in futures because I got so tired of the gapping back in '99-'00. Futures are 24/5. And of course that idiotic PDT rule.

2) Does the SLA work on all time frames, especially higher time frames - H4, D1 etc?

 

Yes. I'm unfamiliar with those designations, but yes. The condensed version uses an hourly interval, but Appendix G in the book explains how to apply it to intraday trading. The earlier "intraday" thread addresses that as well. I should point out, though, again, that the SLA is not suitable for scalping; you'd get stopped out too much. Though I watch the 5s to see how buyers and sellers are interacting with each other, I find the SLA to be of little use below the 1m.

 

3) Why does the SLA work, considering the fact that the trend lines will be different for different time frames?

 

If one follows Wyckoff's suggestion to begin with the weekly and zoom in to your locus of interest, the trendlines don't change. The weekly trend is what it is. Those trend lines transferred to a daily chart or hourly chart simply provide a more detailed view, like Google Maps. One can have shorter-term trends within longer-term trends, but these are more accurately found using demand/supply lines. If one doesn't know the difference, this can be confusing. At some point,though, all this becomes irrelevant. The point is to track the balance between demand and supply. The lines are simply a way of staying on course. Unfortunately, I used them too much in an earlier draft to illustrate what I was seeing, but many people latched onto that and began filling their charts with all these lines which in some cases completely obscured the price movement. So I had to throw all that out and redraw the charts that remained. Now, I hope, the focus is where it should be: price.

 

Thank you.

Edited August 13, 2015 by DbPhoenix

[rabcnesbit 10]

Hi Db,

 

I know you favour/generally trade the futures with the SLA/AMT. My questions are:

 

1) Will SLA work with other instruments like stocks and forex? I know you intimated a while ago that AMT might not as these instruments are not 'mean reverting'?

 

The SLA applies to any auction market, as does auction market theory. But a mean-reverting instrument is easier to trade as it is easier to anticipate moves, or non-moves in the case of chop. What is equally important to the trader is knowing how to recognize bottoms and tops and coming to terms with his tolerances for information risk, price risk, and time risk. I became interested in futures because I got so tired of the gapping back in '99-'00. Futures are 24/5. And of course that idiotic PDT rule.

2) Does the SLA work on all time frames, especially higher time frames - H4, D1 etc?

 

Yes. I'm unfamiliar with those designations, but yes. The condensed version uses an hourly interval, but Appendix G in the book explains how to apply it to intraday trading. The earlier "intraday" thread addresses that as well. I should point out, though, again, that the SLA is not suitable for scalping; you'd get stopped out too much. Though I watch the 5s to see how buyers and sellers are interacting with each other, I find the SLA to be of little use below the 1m.

 

3) Why does the SLA work, considering the fact that the trend lines will be different for different time frames?

 

If one follows Wyckoff's suggestion to begin with the weekly and zoom in to your locus of interest, the trendlines don't change. The weekly trend is what it is. Those trend lines transferred to a daily chart or hourly chart simply provide a more detailed view, like Google Maps. One can have shorter-term trends within longer-term trends, but these are more accurately found using demand/supply lines. If one doesn't know the difference, this can be confusing. At some point,though, all this becomes irrelevant. The point is to track the balance between demand and supply. The lines are simply a way of staying on course. Unfortunately, I used them too much in an earlier draft to illustrate what I was seeing, but many people latched onto that and began filling their charts with all these lines which in some cases completely obscured the price movement. So I had to throw all that out and redraw the charts that remained. Now, I hope, the focus is where it should be: price.

 

Thank you.

 

Sir DbP, thank you most kindly for your time and patience in responding to my questions.

[DbPhoenix 42]

Those who have read post 1 will of course be in a better position to understand the topic than those who haven't. Those who have been curious enough about it to actually work with it – or at least play with it – will be in a better position still. Those who have read it will also understand that the SLA/AMT is essentially an interday approach, beginning as it does with an examination of the weekly chart, through the daily, to the hourly. The examples provided in post 1 employ hourly "bars", or intervals. Applying the SLA/AMT to an intraday environment requires an understanding of the difference in dynamics: there are obviously many more trading opportunities presented and therefore trading decisions that must be made employing a 1m interval than when employing a 60m interval.

 

The basic SLA/AMT presented in post 1 is a primer. Training wheels for the beginner. Rehab for the damaged trader. The beginner will learn discipline, patience, all the good stuff below. The damaged trader will, one hopes, find his way back to a disciplined and professional approach, assuming he was ever disciplined and professional in the first place. If he wasn't, then it may provide him with a reset and reboot. A way back. The damaged trader will find it vastly more difficult to start over. But it can be done.

 

If one wants to be a winning trader (and who doesn't), there are certain characteristics that one must either have or acquire. Fortunately, the SLA/AMT addresses all of them.

 

1. Losses. One must accept the fact that he is going to incur losses, no matter what bar interval he chooses. The task is not to avoid loss but rather contain it. The SLA/AMT is designed not to prevent loss but to keep losses minimal.

 

2. Preparation. Doing nothing before the beginning of the session in anticipation of exciting, new experiences pretty much guarantees that those experiences are not going to be pleasant. No, one cannot know for sure what is going to happen, but he can know where he is with regard to whatever extremes are in his neighborhood, probably ranges. If he hasn't reviewed at least the weekly, daily, and hourly charts before his session, he has no one to blame but himself for what happens. If he has reviewed these charts, he will have a clearer notion of where and how far price may go, which may help him stay in a trade rather than jump out simply because price has gone against him a tick or two.

 

3. Planning. The SLA/AMT is its own plan. But if it isn't followed, if it's "tweaked", it can't be expected to function properly. Yes, there are minor decisions that must be made on the fly if one is truly reading price and not just being led on a leash, but as one gains familiarity with price behavior, these decisions become matter of course, like slowing down at a Yield sign. Larger changes, however, will most likely require at least minimal testing. Changing something just because "it seems like a good idea" is not likely to yield the desired result. As for ignoring the rules altogether, well . .

 

4. Discipline. Without discipline, whatever you do will result in failure. The SLA/AMT, however, forces you to be disciplined. If you keep fighting it, like hitting the snooze button over and over again, it will fold its arms and lean against the wall, waiting for you to pull yourself together. If you are a beginner, but especially if you're damaged, it is essential that you follow the rules. Yes, you will have to decide what, for example, constitutes a "break" of a line: a tick, two ticks, a point or two. But not five. Not ten. Not half your account (an hourly interval, of course, requires a bit more leeway than a point or two). And you must do this every single occurrence. Otherwise the SLA/AMT is no better than that trading plan you got in your mailbox from Profits 'R Us.

 

5. Patience. The best trades are found at the extremes, either of range limits or channel limits. If you're nowhere near one or the other, you have nothing to do but watch (and don't try to be clever and draw teeny-tiny ranges and teeny-tiny channels in teeny-tiny bar intervals to rationalize and justify your lack of patience).

• Learn to use inaction as a defense against your tendencies toward impulsive action, e.g., "revenge trading", or fear of "missing it", or "making up" for that loss.
  
  
• Don't get irritated or angered or feel like a martyr when waiting.
  
  
• Regard patience as a central pillar of your strategy. Don't assign it a secondary or lesser role.
  
  
• Don't be impatient about patience. One part of your brain is telling you to be patient while another is saying, "What's taking so long?" These must work it out and learn to live together.
  
  
• Begin by being patient, but don't forget to stay patient. The important thing is not whether you are controlled and disciplined at the start of your session, but also at the middle, the end, and all points throughout. (from
  Zen and the Art of Poker
  )
  
  

One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do. Most people always have to be playing; they always have to be doing something. They can't just sit there and wait for something new to develop. I wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime. Even people who lose money in the market say, 'I just lost my money, now I have to do something to make it back.' No, you don't. You should sit there until you find something.

 

–Jim Rogers

6. Record-keeping. It is essential to collect and maintain records of your end-of-session reviews (you are of course doing end-of-session chart/trade reviews). If you do not keep track of what you did right and what you did not-right and the results of each, you won't be looking at early retirement any time soon. Avoid, however, the I'm A Useless Sack drama. Focus instead on what you saw correctly, what you missed that you should not have missed, what you missed that the greatest trader on the planet would have missed, which trades were made according to plan and which weren't (along with why, so that you can avoid the same behavior in future).

[DbPhoenix 42]

For example, the following is what is presented at 0900 NY time for the NQ.

 

What do you see?

 

What do you do?

 

 

[lajax 10]

Daily Bar

 

Although the price is in a downtrend, there is no ease of movement to the downside and although the Price fell below the 50%, was unable to maintain at those levels, therefore this shows certain level of Strength in the price and perhaps the unwillingness of the traders to keep pushing the price to the downside.

 

Hourly Bar

 

The price is in a downtrend, once again there is no ease of movement and a Hinge is formed, notwithstanding, the price breaks the Swing Low around 4512,50 therefore one should expect that the traders go to test the 50% of the previous up movement in order to identify signals of weakness or strength.

 

15 min bar – 5 min bar - 1m bar

 

The down trend seems to decelerate its movement and a hinge is formed, notwithstanding the sellers try to test the Swing Low around 4502.50, but they are unable to maintain the price below this area and the price rebounds, situation that gives signals of strength

 

Therefore in this context I would wait for a retracement after the break out of the hinge.

 

 

I would like to know your thinking process and what would you do in this context?

 

We'll see who else gives it a shot. You and Gozilla are all who are actively working on this.

 

BTW: thanks for this kind of practical exercises, I really appreciate it,

 

 

Edited August 15, 2015 by DbPhoenix

[Gamera 15]

I feel a little rusty with limited practice over the last month "If you don't use it you lose it" springs to mind.

 

Similar thoughts to Lajax,

 

Daily is making a series of LL and LH, but, Price is unable to sustain a move below the MP of the up move at 4510 or the century mark at 4500. Price did make a severe move below this level but it was rejected strongly, whilst the trend is down, the rejection of the move lower indicates strength.

 

Hourly chart shows support at 4512 has been broken, price did not get far before the drop was stopped at 4500.

 

15min - 5min The drop flattened out just above 4500 and price began to range, the upper extreme drops slightly but support holds on this timeframe just above 4500.

 

1min chart shows a DB at support then a test of R at 07.5 followed by a BO, price rets at 4510.

 

Going into the open I would be looking at an immediate range of 4500 - 4512 it is touch and go as far as a range play via reversals is concerned, but given the MP of the large move at 4510 and the daily hinge, range plays might be messy.

 

Breakout trades initiated beyond the extremes give targets on the upside starting at 28 (15min - 5min) and 55 +/- beyond that, on the downside 4437 would be the first port of call though price might choke a little at 94 as this is the MP of the most recent low - high.

 

4437 roughly acted as resistance in the early part of July so it was not a huge surprise to see where price was halted in the drop a couple of days ago.

 

Hinge posted might not mean much as it is not filled in, but given where the possible apex lies I thought it interesting.

 

Gamera

Edited August 15, 2015 by Gamera

[DbPhoenix 42]

I look primarily for ranges and where traders are declining to place trades. There's really no way of knowing why they're moving one way or another, but I find it useful to see where they're looking.

 

The first thing here is that price is dead center of the last upmove on the daily. What this tells me first is that the day is likely to be choppy. But for the time being, let's assume that there will be something.

 

The hourly shows that traders have been bumping up against the upper limit of the range we've been in since April. If they were interested in going up, they would. Instead they drop to 10, then back up to 50 then down to 10 again (I'm being general with the numbers here). They then slide down toward 4500, but they're in no hurry. Nothing below there.

 

As traders spent almost two hours at 02, that may be important.

 

So what do you see here?

 

 

[timokrates 10]

First to notice in my opinion is the hinge on the daily and the midpoint.

 

In this area (4500) price stayed for a while, formed a range in between 2 and 12 roughly - then broke it to the upside.

 

Then came back and tested the low of the range again (2.50 @ 9.32). Then it formed another hinge (on the 1M). Broke out to the upside again and formed a little range - a potential retracement - where the bottom just got tested.

 

We are still above the 50% on the 60M, but the high of 28.5 is still not broken.

 

Not an easy environment..

 

And what do you do? Is there no trade here?

 

As it is a breakout of a hinge/range and the first retracement one could enter long at 21. Do you agree?

 

Nothing earlier? Lower?

 

True, there was the option to trade the breakout from the hinge at 9:50 / around 15.

 

Lower. Earlier.

 

What I would like to ask in general: What about entries at the bottom of the range before like the test of 2.50 @ 9:30? Would you recommend those trades and if how do you enter those or what do you want to see (strength obviously in this case)? Do you use the 5 sec chart for "AMT entries" in combination with springboards or so?

 

I ask because of course the entries at the opposing range extremes are mostly the best.

 

There you are. As fabulous as the SLA is, it's only half a loaf. If one wants the whole loaf, he has to understand the synergy between the SLA and AMT. Traders have just spent two hours laying a floor at 2,5. To ignore that is at best inattentive. To take advantage of it means incorporating the 5s given how fast the market is moving. But if one understands the potential importance of 2.5 ahead of time, the movie shifts to slow motion at that point: the reversal at that level, the test two bars later, and the subsequent move upward. Even if one doesn't have the balls to take it, he should at least acknowledge its existence and think about it later.

 

All of which takes us back to the Price of Admission and whether or not one is willing to pay it. Here the DP is about 2. How far above that will put one in the clear? 4.5? 5? Is one willing to pay three bucks to get in? Or would he rather be a spectator? Most would wait for an indicator to tell them what to do but (a) they'd be late and (b) they'd be relieving themselves of the responsibility for the trade. One can also wait for more information, but the less the information risk, the greater the price risk.

 

Now what about the test of 25?

 

Edited August 17, 2015 by DbPhoenix

[lajax 10]

So what do you see here?

 

 

 

Db one question, when you say:

 

The first thing here is that price is dead center of the last upmove on the daily

 

when you characterize the location of the price in a "dead center" maybe do you take as reference, maybe, the slow pace, slow activity and the overlapping in the bars (daily bars)? or what criteria do you take as reference in order to mention that statement (dead center)?

 

See the blue lines I drew, the solid line from the swing low to the swing high and the dashed line through the middle. I don't much care about the rest of it. All that you mention contributes to where traders end up, but it's on the periphery of my awareness. We aren't at the swing high and we aren't at the swing low, which would be great. Instead, chop. At least from a daily perspective. This "range" is over 300pts, so there's plenty of opportunity for daily gains. And it's something that everybody sees. They also see that we're at the middle of it. To see the possibilities that this middle represents, the hourly may give a clue, particularly if it has been ranging, as here, which in this case is about 40pts. 40pts is worth paying attention to.

 

As I've said, I prefer taking trades that are going toward the median rather than away from it. But if one is alert and careful and doesn't allow biases to encourage him to do stupid things, profits can be made relatively safely.

Edited August 16, 2015 by DbPhoenix

[lajax 10]

 

 

So far 3 loser trades in a Row therefore I prefer to stop trading.

 

 

 

FYI, I am participating in a continuous trading combine in Top Step Trader and this is my first day, I am trading a 10k account.

 

Any comment or feedback is welcome.

 

Thanks

 

The consequence of limiting oneself to only one strategy is that one applies this strategy inappropriately, losing out not only on the misapplied strategy but on other trades that would have been successful if the other two strategies had been included.

 

Here you look to enter on a retracement, and your first trade is technically a retracement; however, it is the third one and it's more than ten points below the first. By reducing your information risk, and by declining to trade outside RTH, you greatly increase your price risk, and the trade fails. By the time what you view as the next trade opportunity occurs, you're in chop, and there should be no trades taken at all (this is to be expected as you are in chop on both the daily and the hourly, so the levels you're choosing as reference points are not necessarily pertinent). The third trade is technically legitimate, though not compelling given the depth of the retracement. Either way it should have been your first. As it was your third, you left the field, and the next retracement turned out to be the winner.

 

By looking at so much, and by drawing so many lines, you're not seeing what matters. The lines, rather than guiding you, are blocking you. There is only one line here that is of any use, the SL beginning at "0815". You're willing to pay the price, but your judgement of whether or not to pay it at all is faulty.

 

The fact that price got to the apex of the hourly hinge tells you that you're ranging, the limits of which are 4500 to 4545. The preferred course is to trade the extremes. You don't get to the lower extreme at the open. Instead you again have chop. If you feel that the opening low was low enough, then there is nothing to do until the SL is broken at "0852". If and when this occurs, it will tell you whether the OL was low enough. That the trade taken after this break fails should come as no surprise given the chop you're in at longer bar intervals. However, if you apply a two-loss rule, it can be taken, along with the next, which, as I said above, turns out to be the winner, at least with regard to trading this range.

 

By not including reversals in your strategy set, you're viewing what are reversals through retracement lenses. You are not therefore benefiting from either. You are of course not required to trade reversals, but you should study them and understand them so that you do not mistakenly trade them as retracements.

 

 

Following the rules of my trading plan a Review of the trades executed today must be done, therefore I prefer to do it in the chart in order to be easy to read

 

Edited August 18, 2015 by DbPhoenix

[timokrates 10]

What I would like to ask in general: What about entries at the bottom of the range before like the test of 2.50 @ 9:30? Would you recommend those trades and if how do you enter those or what do you want to see (strength obviously in this case)? Do you use the 5 sec chart for "AMT entries" in combination with springboards or so?

 

I ask because of course the entries at the opposing range extremes are mostly the best.

 

There you are. As fabulous as the SLA is, it's only half a loaf. If one wants the whole loaf, he has to understand the synergy between the SLA and AMT. Traders have just spent two hours laying a floor at 2,5. To ignore that is at best inattentive. To take advantage of it means incorporating the 5s given how fast the market is moving. But if one understands the potential importance of 2.5 ahead of time, the movie shifts to slow motion at that point: the reversal at that level, the test two bars later, and the subsequent move upward. Even if one doesn't have the balls to take it, he should at least acknowledge its existence and think about it later.

 

All of which takes us back to the Price of Admission and whether or not one is willing to pay it. Here the DP is about 2. How far above that will put one in the clear? 4.5? 5? Is one willing to pay three bucks to get in? Or would he rather be a spectator? Most would wait for an indicator to tell them what to do but (a) they'd be late and (b) they'd be relieving themselves of the responsibility for the trade. One can also wait for more information, but the less the information risk, the greater the price risk.

 

Now what about the test of 25?

 

 

It seems that I can not edit the post anymore, so I try it this way.

 

In terms of the test of 25 this is very interesting because it kind of highlights the main problem recognizing the end of a price wave (i.e. change of buying/selling pressure).

 

Price breaks the previous high (1M) at 23 only by two points, then struggles to get higher and drops quite hard without showing incoming strength again (5sec).

 

This brings me to the question if there is a certain price behaviour you like to see if price reaches a potential turning point and is it part of a setup? Like 3 waves or overlapping waves - and does the microscopic view on the %sec comes into play here.

 

I mean, it is obvious to me that price action is price action and watching it in real time is key. But just to frame it more in terms of entering at an extreme as early (and potentially safely) as possible - coming back to the previous "AMT entry".

 

As you can see, I also try to get rid of the crutches.

 

The wave thing is a nice theoretical construct, but in real life it doesn't work out all that well. Like VSA.

 

I like to keep it as simple as possible. Do I enter as soon as price hits a certain level? No. I'm not that good. I want to see the stride broken first. That may happen quickly, as at 0930. Or it may take a minute or so or several, as with 25 and the following test, below. But I'm not one to just jump in. That to me is throwing money away, the roulette wheel vs the poker table. This is where the lines can come in handy, e.g., if the 1m stride is still intact, wait for that to break before entering what is now more likely a reversal or use the 5s to enter a ret. To enter before the stride is broken means additional risk. That doesn't mean that one absolutely must wait, but he must consciously weigh the additional risk.

 

What you're doing in these scenarios is exploiting the fear and confusion of others. If you yourself are afraid and confused, it's best to stay out and wait for additional information, even though that entails additional price risk.

 

Thanks a lot for your comments.

 

In terms of reversals - also mindful of what you mentioned above in lajax' post - it seems to be critical to trade those as they offer in general the best opportinities as they are occuring at the extremes.

 

This leads me to a question in terms of backtesting. As godzilla and lajax have tested the number of points after the break of the stride in regards to a potential reversal I would like to ask if this is really the way to got.

 

Well, I suggested it, so, yes.

 

Waht I mean is that if one has located the extreme and price struggles there, the price risk would be far less in comparison to waiting for that kind of break - also the profits should be higher or one would have bunkered some earlier. Would you agree here?

 

If you view it in terms of the Danger Point and enter N ticks away from that. Another option is to use the 5s, as with the 0930 reversal the other day. The market doesn't necessarily see your retracement, but everybody can see where the swing low is.

 

I also have to say that the time of day you mentioned as well is critical. Living in europe I follow the market often during the EU morning. There are opportunities as well, but sometimes it's tricky. Would you say in general that an opportunity (price reaching an extrem, doing x / price breakes the range and forms an appropriate retracement) have the same potential?

 

It's impossible to say in advance. But there have been some awfully nice moves at 0400 recently.

 

Edited August 18, 2015 by DbPhoenix

[lajax 10]

CONTEXT 18/08

 

 

I see you picked up on the daily trend channel. I've stopped posting these because so many people cling to them like life preservers, and they shouldn't become the focus. But this one is pretty hard to miss.

 

Hi Db

 

Thanks for the feedback of yesterday really appreciate your point of view. For today I think the PA at the beginning after the open was pretty similar (to yesterday), notwithstanding, I was more careful about it; first because we have been in a well-defined TR (Almost 5 hrs), in this context I was looking for a RET after the BO of the TR, however, the Price did not take a clear direction and maintained its movement framed most of the time around the boundaries of the TR.

 

For the second trade I try to Stop and reverse de position, in order to trade the TR after the unwillingness of the traders to push the price to the upside (this could be consider as a REV of the RET right?), notwithstanding because I am trading the 10k combine, the max position allowed is 1 contract therefore I had some issues and I could no enter (It was maddening because when I try to put the order my stop Loss was closed and I had to close the trade manually); in this context I preferred to Stop trading.

 

Note: Maybe today was a good trading day for reversals, notwithstanding because I am learning I prefer to stick to one strategy only and even more now that I put some money at risk (price of the combine)

 

Note 2: About the exercise of been trading the combine is little different because one starts to feel certain type of feelings such as an increase of the heart beating rhythm or sweaty hands, notwithstanding, I know that the only tool for me to face the markets is to trust in my trading plan and follow the rules.

 

I hope tomorrow be a better day :missy:

Edited August 18, 2015 by lajax

[timokrates 10]

Sorry, have to do it again - so many questions...

 

I also have to say that the time of day you mentioned as well is critical. Living in europe I follow the market often during the EU morning. There are opportunities as well, but sometimes it's tricky. Would you say in general that an opportunity (price reaching an extrem, doing x / price breakes the range and forms an appropriate retracement) have the same potential?

 

It's impossible to say in advance. But there have been some awfully nice moves at 0400 recently.

 

Thanks you, what I originally meant was: An opportunity is an opportunity regardless of the time - ok, lets say it's best during the active times of the EU morning, and the US morning and afternoon...

 

An op is an op. However, if nobody's trading, you're much more vulnerable to manipulation.

 

In terms of the 5Sec I develop a bit to a pain in the ass - sorry for that. But do you want to see a certain behaviour comparable to what you want to see on the 1M? Like break of the stride or a general reaction/rejection / failed test etc.?

 

What I want to see primarily is what's going on within the 1m bar. A 1-tick chart doesn't work for me as I have to zoom out so far that I can't see what's going on. For instance, I see now a general listlessness rather than a purposeful direction. So I sit and I watch and I wait. But not for much longer.

 

Thanks again... Yes I think I understand. The motivation for me is that with the material you presented one is able to really locate the important levels or zones in advance. Then you obviously want to be in as close to the level and turn as possible. Very often the 5sec is even not necessary if price breaks a range for example and recovers immediately with force (what "they" call a spring I believe). This for me is the most practical way to enter a reversal with a clearly defined danger point.

Edited August 18, 2015 by timokrates

[OmDBnamah 10]

Namo Gurudev,

 

The other thread SLA/AMT II seems to be closed so not sure if this can be posted here.

 

My real time observations and actions today (not real as I just observe NQ for learning purposes, can't trade it here)

 

Daily and hourly trend is down

 

Range on 15m was 4530 - 4538

 

So I thought short and switched to 5m interval

 

Short entered at 4528 post test of 4530 from below

 

Now I could see that 4500 was the next stop however this is where I need your help.

 

Even in my real trading I am normally aware of where price might pause/reverse/test however I am unable to exit the trade even if I am in profit. (Is it greed! as I am not afraid to give price some room and take a loss if it happens)

 

Any suggestions on how to go about it would be appreciated.

 

Regards,

K

 

1. Track the balances between supply and demand with straight lines.

 

2. When price breaks a line, exit.

 

Thanks for your reply.

 

So you do not recommend exiting in line with AMT especially if the move was quick like today and waiting to draw a line might mean giving up some of the profits.

 

Also is it ok to track using 15m (if I trade 60m) so as to lock in some profit...

 

Regards,

K

 

I recommend doing whatever you have to do to trade profitably and emotionlessly. If exiting on any break of whatever line you've drawn in the interval of your choice enables you to do that, then do that.

Edited August 19, 2015 by DbPhoenix

[lajax 10]

Trades. 19/08

 

[DbPhoenix 42]

For Everyone's Information, I added something to the end of the "Wyckoff" stickie above having to do with how long it takes. Both new and old may find it enlightening.

[Gamera 15]

I was a little surprised to see the extent of the drop yesterday and have noticed that continue into the open today.

 

Price has now dropped out of the daily TR, could this be considered an oversold condition like last time? or could this with the situation elsewhere be a tipping point?

 

Gamera.

 

 

 

It's not possible to know whether it's oversold or not except in hindsight.

 

The more immediate concern is whether or not the short was taken and, if so, when and how? If it wasn't, why not? If a long is to be taken, where? How?

Edited August 21, 2015 by DbPhoenix

[Gringo 10]

Time to wake up. Vacations are wonderful. On return finding price around the lower TC - priceless.

[DbPhoenix 42]

Scraps from the attic:

 

There's nothing inherently wrong with indicators. If you're able to develop a consistently profitable strategy with them, more power to you.

 

However, you should understand that all the indicators you're plotting on your charts are variations of the same thing, i.e., a means of determining trend. You can save yourself a lot of time by learning how to determine trend, then by determining what timeframe is most comfortable to you.

 

Most traders are much like the deaf who don't know how to read lips, or at least aren't very good at it. Rather than focus on the person speaking, they instead focus on whoever is doing the signing, glancing at the speaker only occasionally, or perhaps not at all. Rather than "hearing" for themselves what's being said, they're relying on somebody -- or something -- else to tell them what's being said. Even if they can rely on the interpreter, they are still removed from what is being interpreted.

 

Therefore, I suggest you learn to read lips yourself.

[Gringo 10]

I am wondering what happened to the oversold indicator lovers these past few days. It must have been catastrophic buying through these oversold conditions. Deep pockets perhaps can withstand such torture but normally a leak in the balloon ends up deflating it over time.

 

Gringo

[DbPhoenix 42]

Double-topping at the midpoint of that range I posted Saturday.

[Gringo 10]

Here's what I am looking at. It's for a longer term perspective. Of course there's nothing written in stone when it comes to how price might behave.

 

 

Gringo