Was This a Valid Short

[forrestang 10]

I think the picture should be explanatory of what I was seeing at the time.

 

This was on Monday, 1 June 2009, @ 9:05CST.

[forrestang 10]

Something else from earlier today, 2June2009:

[Tams 20]

I think the picture should be explanatory of what I was seeing at the time.

This was on Monday, 1 June 2009, @ 9:05CST.

 

 

 

"Was this a good short here?"

 

matching the volume that causes the price to go up,

and volume that causes the price to go down,

will help you visualize the participants of the market.

[forrestang 10]

"Was this a good short here?"

 

matching the volume that causes the price to go up,

and volume that causes the price to go down,

will help you visualize the participants of the market.

 

 

I'm not sure what you mean?

[Tams 20]

I think the picture should be explanatory of what I was seeing at the time.

This was on Monday, 1 June 2009, @ 9:05CST.

 

 

 

 

What do you mean by "technically a down bar"?

[Bear Mtn. 10]

 

I'm not sure what you mean?

 

Sorry Tams, if I've got this wrong, but I think you were meaning that yes there was high volume on the up bar... but then low volume on the down bar. Therefore, although the move up faltered, there aren't many keen sellers.... hence the drift up. Thats how I'd interpret that situation (albeit with hindsight) so be interesting to see what others think...

[forrestang 10]

What do you mean by "technically a down bar"?

 

Forgive me as I'm still a bit new to this, but when i say down bar, I just simply mean a bar that closes lower than the previous close.

 

And I was thinking we'd want to see a 'no demand' bar after a buying climax, where you'd have a slight probe above the climax to see if there are still anymore buyers present before the distribution phase is over.

 

And 'No Demand' bars occur on upbars correct?

 

I might be thinking waaay too much into that buying climax and what a good entry is? it's possible the reason that didn't work for me yesterday was because the move up was for real, and there was no resistance over head.

 

Actually, the highest resistance level I have is 939.00, and typically i'd want to see a climax occur around a resistance level, and I didn't have any annotated as we've reached new levels......as far as the data I have is concerned.

[Eiger 10]

The most important question to ask for this trade which will answer your question about whether or not it was a "good short" is this question: What was the background? Forrestang, can you show us what the background conditions were prior to this trade?

 

Eiger

[Tams 20]

Forgive me as I'm still a bit new to this, but when i say down bar, I just simply mean a bar that closes lower than the previous close.

 

And I was thinking we'd want to see a 'no demand' bar after a buying climax, where you'd have a slight probe above the climax to see if there are still anymore buyers present before the distribution phase is over.

 

And 'No Demand' bars occur on upbars correct?

 

I might be thinking waaay too much into that buying climax and what a good entry is? it's possible the reason that didn't work for me yesterday was because the move up was for real, and there was no resistance over head.

 

Actually, the highest resistance level I have is 939.00, and typically i'd want to see a climax occur around a resistance level, and I didn't have any annotated as we've reached new levels......as far as the data I have is concerned.

 

 

 

you then have to ask yourself which is the way you want to go...

 

1. I want to Short because the buying has dried up.

 

2. I want to Short because people are selling.

[forrestang 10]

you then have to ask yourself which is the way you want to go...

 

1. I want to Short because the buying has dried up.

 

2. I want to Short because people are selling.

 

Ok, I get you.

 

This short was because I was thinking buying had dried up.

 

Is my logic correct for thinking buying had dried up? How would you confirm that selling was occurring?

[Tams 20]

a close below previous bar's close does not necessarily mean a "Down" trend has been established.

 

it is a "down" close in relation to 5 minutes ago.

 

it is still an "up" price in relation to previous bar's LOW,

or median price.

[forrestang 10]

The most important question to ask for this trade which will answer your question about whether or not it was a "good short" is this question: What was the background? Forrestang, can you show us what the background conditions were prior to this trade?

 

Eiger

 

The background is something I'm not akin to understanding yet, as this was relatively early and there was nothing that stood out to me.

 

Similiarly with the second pic I posted of what happened today, I'm not sure of what the background is telling me if anything?

 

Forrest

[Tams 20]

Ok, I get you.

This short was because I was thinking buying had dried up.

Is my logic correct for thinking buying had dried up? How would you confirm that selling was occurring?

 

 

 

I always tell people:

 

Don't be a hero,

 

you don't have to be the first to sell a top,

or the first to buy a bottom.

[forrestang 10]

I always tell people:

 

Don't be a hero,

 

you don't have to be the first to sell a top,

or the first to buy a bottom.

 

Is trying to pick tops/bottoms something that comes with looking at VSA? I don't want to think along those lines as I always hear it's not possible to do consistently.

[Tams 20]

Is trying to pick tops/bottoms something that comes with looking at VSA? I don't want to think along those lines as I always hear it's not possible to do consistently.

 

 

There are ways to pick Top/Bottom.

It is possible; I know people who do it consistently.

But you must employ the finer "Tools" to read the market at the finer level.

You also need a deeper understanding of the auction process that is happening behind the scene.

 

Picking Top/Bottom can be intense; not everybody wants to trade at that intensity.

 

 

.

Edited June 2, 2009 by Tams

[Eiger 10]

The background is something I'm not akin to understanding yet, as this was relatively early and there was nothing that stood out to me.

 

Similiarly with the second pic I posted of what happened today, I'm not sure of what the background is telling me if anything?

 

Forrest

 

Well, you are missing the key piece if you don't understand the background. Focusing only on the last few bars will only cause you to contribute your trading account to the market paticipants who do understand the background. At the point you took a short, they would have been happy to buy it from you. VSA is all about understanding the background first, then applying the VSA signals.

 

The attached chart is a 60-minute chart of the ES. It shows data going back into late April. You can see there was an uptrend that stalled on May 7 & 8. the uptrend had been in place since March 9 and, by anyone's standards, has been a strong trend, moving about 35% off the bottom.

 

Throughout May, the market has been in a trading range. There had been no indication of significant supply coming into the market. Instead, the market held the gains it made off the March lows quite well. We discussed this on the VSA III thread last week. Overall, the market has been bullish and remains so.

 

Friday afternoon, the market began to rally on good volume and wide spread, but stalled at the top of the range and at the May 7 highs. On Monday morning, the market rallied further pushing some 21 points above Friday's close by 10:30 AM. The Friday - Monday rally is seen at A. This is known in VSA as Pushing Through Supply. It is a vigorous move up and out of a trading range, the top of which is a supply or resistance area. It signals that higher prices can be expected. What you thought was a buying climax is the one exception to the high volume rule in VSA. You would only know that this exception was occuring by looking at the background first.

 

So, looking at the background first would answer your question about whether or not this was a good short. The answer is no, because the background was exceptionally bullish.

 

Hope this is helpful,

 

Eiger

[Eiger 10]

Chart for last post ..............

[forrestang 10]

Hope this is helpful,

 

Eiger

 

It is! I have a 60 min on my screen now and see what you're talking about where it pushed through. Concerning VSA, would it be unwise to initiate any shorts when such a thing occurs? To include the short I posted from this morning?

 

Would you personally look only to the long side when you get a Push Through Supply?

[Bear Mtn. 10]

So, looking at the background first would answer your question about whether or not this was a good short. The answer is no, because the background was exceptionally bullish.

 

Good post Eiger, but doesn't forestang's goals for the trade (i.e. what sort of entry was he looking for - a quick retracement or something more substantial) come into it?

 

If he was looking for a day position then yes the background would be critical in going with/against trend. Maybe you could enlighten us as to what sort of position you were aiming to get into forest? Although I have a guess at an answer already considering your on a H1 bar...

[forrestang 10]

 

If he was looking for a day position then yes the background would be critical in going with/against trend. Maybe you could enlighten us as to what sort of position you were aiming to get into forest? Although I have a guess at an answer already considering your on a H1 bar...

 

I was looking for a retracement of some sort.

[Tams 20]

I was looking for a retracement of some sort.

 

 

Why ask for a hamburger when you can have steak?

 

 

Rule # Uno: The Trend is Your Friend. Don't argue with a friend.

[Eiger 10]

... doesn't forestang's goals for the trade (i.e. what sort of entry was he looking for - a quick retracement or something more substantial) come into it? ...

 

You (by your statement, I don't mean you personally) are basically telling me that you want to put your preferences ahead of the market. Not a prudent idea. The background will help you assess what type of trade is likely to work. Let the market tell you what to do, not the other way around.

 

Eiger

[Bear Mtn. 10]

Not really Eiger... what I meant was more that within any trend (this one being bullish and with established background as you pointed out) there will obviously be short term moves to the downside periodically. What I was wondering was if forest was trying to catch one of these by studying buying action / volume. If so, wouldn't this be legitimate - as long as expectation as to the potential risk / reward are kept in check?

 

Hamburger vs. Steak as Tams put it, right enough... but I just wondered if forest really was trying to order the hamburger (and he was)

[brownsfan019 17]

Just one observation as a non-vsa guy - the thread was rather simple 'is this a short'. It quickly turned into a 3 page discussion w/ all sorts of opinions.

 

What appears to an outsider as a simple question has needed 3 pages so far and there are still questions.

 

Don't take this the wrong way, but does this stuff work in real-time? If so, can any of the VSA'ers join us in the p/l thread and show that it does? I've seen this kind of stuff discussed here for a while, yet have never seen any definitive proof of this working in real-time.

 

I ask b/c if no one is making this work in real-time, then these questions are just the blind leading the blind.

[Tams 20]

I don't appreciate your repeated "harassment/invitation" to join your p/l thread.

 

There are reasons for participation,

and there are reasons for opt-out.

 

Proving one's method works is NOT a reason to post at the p/l thread.