The Price / Volume Relationship

[Breakeven 10]

  Ezzy said:

 

Did Spydertrader actually say that leg was a traverse?

If it is in fact a traverse, was there any extraordinary context or event?

How did the prior traverse form? There was a drill about that in this thread.

 

 

Jbarnby is correct, that was the last traverse of the channel 10/14/10. I brought it up as there seemed to be some similarities with Frenchfry's container, and because of the disscussion of the existence non-dom containers.

[Breakeven 10]

  cnms2 said:

B2B2R2B, or digging in: (b2b2r2b)2R2B.

 

I am with you there. I agree that if this is a traverse (and I trust that it is) that is the way it must be.

 

What I am wondering about is, where the dominance occurs between pt1>pt2 (see attached). Hell, I don't even see true IBV.

 

Thanks for your thoughts!

[Ezzy 10]

  Breakeven said:

Jbarnby is correct, that was the last traverse of the channel 10/14/10. I brought it up as there seemed to be some similarities with Frenchfry's container, and because of the disscussion of the existence non-dom containers.

 

Not saying anyone is wrong here. I know the chart well (and know you do too ), it's a very good example to bring up. Spydertrader gave start and end points for the channel as well as a lot of guidance over several days during in that period. Never came right out and said that leg was a traverse - but yes it is.

 

There is a minor point to be brought out. Many times someone gets help on an area, working on a certain aspect of where they're at, and it might conflict with what someone else understood on the same area. For some hearing "so-and-so said" turns off thinking as something gets blindly accepted instead of thought through, and then made into a hard and fast rule. Spydertrader has been trying to teach us how to figure things out on our own. Because when the chart, or context changes the answer will change. Great examples of that here.

 

On the prior traverse:

 

  Quote

If you complete the annotation process for a channel (thick container), you should see two very similar traverses and one different traverse. Determining why the two are similar vs why the one is different should then become easier for you.

 

- Spydertrader

[gucci 10]

  Breakeven said:

I am with you there. I agree that if this is a traverse (and I trust that it is) that is the way it must be.

 

What I am wondering about is, where the dominance occurs between pt1>pt2 (see attached). Hell, I don't even see true IBV.

 

Thanks for your thoughts!

 

I think I understand your way of thinking on the dominance of the first leg.

 

Ezzy made a good point concerning turning a guidance into a set of hard rules.

 

First of all, one should ASSUME non dominance until and when the market tells otherwise, right? It seems to me that you came to a CONCLUSION, that there is no dominance in the first leg based on the rules for BOs and FBOs instead of ASSUMING it and then waiting for the MARKET to tell you exactly what you have..

 

If you look at what the market does LATER, you can see that the dominance is there, but one couldn't see it because of the rules for BOs and FBOs. Look at the volume of the 2R tape. You see increasing red which drives the price in the non dom tape to the right till it breaks the RTL of the tape.

 

Remember back then Spyder sometimes called faster fractal traverses” thick” tapes.

He also gave a definition for it which not really everybody found usefull. It was (and I paraphrase) “anything less than that which defines a traverse”. Now I understand that this was actually the best definition that covered all cases.

 

This is exactly what we’ve got here: something less than a traverse.

 

But it is at the same time something that is larger than a simple tape.

 

(Concerning the increasing red in the non dominant tape. (2R) Remember the three cases for an increasing volume in the non dominant direction?)

 

Now look at it this way. Going to a point 2 the market couldn’t do it in one simple tape. There were obstacles (traders trying to go short in this case) which had to be overcome, hence pennants,laterals and BOs. But how was the market supposed to overcome it without dominance which eventually created this messy tape?

 

Anyway, the moment you see the non dominant tape, you know where your B2R should be.

 

See another example in the attachment. It is a bit different but still makes my point. (The last pink traverse)

 

I hope I didn’t add to a confusion.

 

 

HTH.

 

 

Edit: by the way, such behaviour of the market and the overall decreasing black volume in the traverse gives a clue about dominance or the non dominance of the whole traverse.

Edited April 13, 2011 by gucci

[Breakeven 10]

Thanks for the comments guys.

 

Your thoughts make a lot of sense. I need to roll this around in my head for a bit.

 

Thanks again!

[Ezzy 10]

Charts for the period around 4-28-09 for SK0. Both with and without the gaps.

 

The 5min chart has the volume cropped to better see the majority of the bars.

 

The pace lines don't adjust when the the time period changes, so they aren't accurate on the other time periods. The top green pace line is additional and different coding from the original six normally on the chart.

Edited April 15, 2011 by Ezzy

[Ezzy 10]

Here's one to add to the group above. It's the YM.

[gamblerKi 10]

Hi gucci,

 

For your posted DAX annotation charts, is the attached colour convention correct?

 

Please correct me if I am wrong. Thanks!

[gamblerKi 10]

Hi gucci,

 

For your posted DAX annotation charts, is the attached colour convention correct?

 

Please correct me if I am wrong. Thanks a lot!

[gucci 10]

  gamblerKi said:

Hi gucci,

 

For your posted DAX annotation charts, is the attached colour convention correct?

 

Please correct me if I am wrong. Thanks a lot!

 

Yes.

 

YAW........................

[johnw 10]

  Spydertrader said:

Volume leads Price. Always. And without exception.

 

 

- Spydertrader

 

The Egg leads the Chicken. Always. And without exception.

[saturo 10]

I have a question about this Spyder chart (I believe it was the last full chart he posted in the IR thread).

 

I have highlighted an area on volume and corresponding area on price. Here is how *I* see it:

 

- Spyder has drawn a medium falling black gaussian over 5 bars.

- IMO price is going up for the first 3 bars and going down on the last 2.

- I assume that there is an unannotated skinny B2B 2R over those 5 bars.

 

My question is - why were the first 3 bars NOT annotated as a THICK level rising black gaussian with the 4th bar being FTT of the THICK? As it stands it appears that bar 4 is FTT of the unannotated skinny B2B.

[cnms2 10]

  saturo said:

I have a question about this Spyder chart (I believe it was the last full chart he posted in the IR thread).

 

I have highlighted an area on volume and corresponding area on price. Here is how *I* see it:

 

- Spyder has drawn a medium falling black gaussian over 5 bars.

- IMO price is going up for the first 3 bars and going down on the last 2.

- I assume that there is an unannotated skinny B2B 2R over those 5 bars.

 

My question is - why were the first 3 bars NOT annotated as a THICK level rising black gaussian with the 4th bar being FTT of the THICK? As it stands it appears that bar 4 is FTT of the unannotated skinny B2B.

I guess he wanted to emphasize the B2B leading to the accelerated green pt2 (the spike bar). How would you annotate that area?

[gamblerKi 10]

In the attached chart 1 (chart_1.png), bar 1 to bar 7 (the pink numbers) was the last dom traverse of the up channel. Gussian sequence of the last dom traverse was:

B2B(bar 1 to bar 4) 2R(bar 4 to bar 5) 2B (bar 5 to bar 7)

 

It was expected that last 2B (i.e. bar 5 to bar 7) should be increasing black volume, but what must come next (increasing black volume) did not materialize. Is it the idea of WWT?

 

My thoughts:

1. The sequence was complete, even what must come next (increasing black volume) did not materialize

2. When price fell below the low of bar 1, this confirmed the up traverse already finished. But can we know it earlier? I think bar 4(IBGS) and bar 5 indicated the last dom tape would be weak as volume of bar 4 was strong.

 

Would you correct me if I am wrong? TIA.

 

chart_2.png is the whole day (4 June 2008)

 

The original chart of chart_1.png is from Spyder and it can be found in:

Forums - Iterative Refinement

[saturo 10]

  cnms2 said:

I guess he wanted to emphasize the B2B leading to the accelerated green pt2 (the spike bar). How would you annotate that area?

 

In the light of knowing what comes after...... the annotation makes sense to me as it stands. What I don't exactly understand is why you can't draw in a THICK black gaussian over the first 4 bars when you CAN'T see the future.

 

In that case Bar 5 is falling red approaching RTL... rising red on bar 6 with BO would confirm. Chart shows us that this is not the case... it's a MEDIUM thing.

 

Where is the clue that we are dealing with a medium gaussian in this context and not a thick thing PRIOR TO bar 6 arriving? This is not a rhetorical question - I've been pounding my head against that snippet for a long time :crap:

Edited May 9, 2011 by saturo
clarity

[saturo 10]

  gamblerKi said:

It was expected that last 2B (i.e. bar 5 to bar 7) should be increasing black volume, but what must come next (increasing black volume) did not materialize. Is it the idea of WWT?

 

The volume sequence ALWAYS complete. The problem is that it is not always glaringly obvious on the chart... you have to do some deductive logic. The other problem is that they nest so you have to keep track of what has to unfold to complete things... as pace slows it gets more complex.

 

IMO the most likely case is that the volume is "embedded" in bar 7. There is a heck of a lot of volume in that bar and it wouldn't take a lot to overtake the volume of the prior bar (especially if you think in terms of volume acceleration).

 

Because bars 6 & 7 create a down stitch (refer to the 10 cases) the volume could be hiding in that little upper right "corner" above the close of bar 6. A stitch is just a variant of an OB where price is stunted in one of the 2 directions.

[Ezzy 10]

  saturo said:

My question is - why were the first 3 bars NOT annotated as a THICK level rising black gaussian with the 4th bar being FTT of the THICK? As it stands it appears that bar 4 is FTT of the unannotated skinny B2B.

 

There is what appears to be a discrepancy between the thick gaussian pt3 and the price annotated pt3. Why? What happened?

[cnms2 10]

  saturo said:

In the light of knowing what comes after...... the annotation makes sense to me as it stands. What I don't exactly understand is why you can't draw in a THICK black gaussian over the first 4 bars when you CAN'T see the future.

 

In that case Bar 5 is falling red approaching RTL... rising red on bar 6 with BO would confirm. Chart shows us that this is not the case... it's a MEDIUM thing.

 

Where is the clue that we are dealing with a medium gaussian in this context and not a thick thing PRIOR TO bar 6 arriving? This is not a rhetorical question - I've been pounding my head against that snippet for a long time :crap:

See attached my view, without the benefit of knowing what followed.

 

The way I understand this method, one trades only what one sees, and not what one expects to happen. Also, as volume leads price, sequences pictured by my volume annotations lead sequences pictured by my price annotations.

[saturo 10]

  cnms2 said:

See attached my view, without the benefit of knowing what followed.

 

The way I understand this method, one trades only what one sees, and not what one expects to happen. Also, as volume leads price, sequences pictured by my volume annotations lead sequences pictured by my price annotations.

 

Thank you so much for taking the time to put together the chart.

 

We agree on your annotations as the action unfolds.

 

More direct question:

 

Let's suppose I'm a traverse level (THICK gaussians) close-of-bar trader.

 

Is there anything that tells me to HOLD through the first panel of your sequence of charts? And if yes - what is it?

 

"volume leads price" - I've heard it a million times but perhaps I need to question my understanding. My understanding is that if you know your place in the volume sequence you know what price will do next. Can you summarize your understanding?

Edited May 10, 2011 by saturo

[saturo 10]

......,.........................................

Edited May 10, 2011 by saturo
Revised earlier post

[cnms2 10]

  saturo said:

Thank you so much for taking the time to put together the chart.

 

We agree on your annotations as the action unfolds.

 

More direct question:

 

Let's suppose I'm a traverse level (THICK gaussians) close-of-bar trader.

 

Is there anything that tells me to HOLD through the first panel of your sequence of charts? And if yes - what is it?

 

"volume leads price" - I've heard it a million times but perhaps I need to question my understanding. My understanding is that if you know your place in the volume sequence you know what price will do next. Can you summarize your understanding?

I'm not sure what you're asking. Point on the chart which gaussian you call THICK? What sequence do you ask why you should HOLD?

 

In principle, you hold through pt 2-3 retraces on your trading fractal, and when you have a new pt 2 you may keep holding or not function of your assessment of the strength of the move.

 

Some of the successive gaussian throughs you're seeing correspond to the various fractals' RTL crossings. The B2B annotation on the chart you posted tries to emphasize this.

 

Regarding the "volume leads price", it happens on all fractals simultaneously, so what you see is the effect of all of them. In summary, I watch on the volume pane the absolute and the relative values bar to bar, peak to peak, groups of peaks to groups of peaks, keeping in mind that volume increase means continuation, and volume decrease means change.

 

You have to be careful to distinguish between anticipation and prediction. Anticipation, in my understanding, means that you see what has already happened, and knowing how sequences unfold you decide what is the right side of the market (on your trading fractal), then trade accordingly enter, exit, hold, or reverse. Prediction means that you decide based on what you expect to happen, which is different.

 

If you're an end of bar, traverse trader, don't expect to make the full traverse range, because when you trade based on anticipation the signals you monitor and analyze will make you trade a little later. If you try to pull the trades sooner you may start to get into prediction, guessing, and your percentage of correct decisions will decrease.

 

Obviously all of the above is "in my view".

[saturo 10]

  cnms2 said:

I'm not sure what you're asking. Point on the chart which gaussian you call THICK? What sequence do you ask why you should HOLD?

 

See attached. Why should I not be short on the last bar of the chart if I am trading the thick level gaussians on bar close?

 

  cnms2 said:

In principle, you hold through pt 2-3 retraces on your trading fractal

 

In my hypothetical scenario I've held through pt3.

 

  cnms2 said:

keeping in mind that volume increase means continuation, and volume decrease means change.

 

So in your view is "volume leads price" is just shorthand for the content of the old "jokari matrix" ? http://www.elitetrader.com/vb/attachment.php?s=&postid=2902253

 

About prediction vs. anticipation... in my view another way to look at prediction is that you make a decision based on insufficient data in the monitoring step or faulty logic in the analysis step of MADA.

 

So let's say a person is terrible at monitoring... by definition every decision will be a prediction. As an aside - I think I'm pretty good at monitoring... faulty/incomplete logic is my problem :doh:

 

  cnms2 said:

Obviously all of the above is "in my view".

 

Understood. I've noticed that about this stuff -- the foundation is the same but everyone has their own flavor.

[saturo 10]

  gucci said:

Concerning the increasing red in the non dominant tape. (2R) Remember the three cases for an increasing volume in the non dominant direction?

 

Hmmm... what is the 3rd case?

 

- BO of a formation

- BO of prior RTL

- ?

[cnms2 10]

  saturo said:

See attached. Why should I not be short on the last bar of the chart if I am trading the thick level gaussians on bar close?

 

 

 

In my hypothetical scenario I've held through pt3.

 

 

 

So in your view is "volume leads price" is just shorthand for the content of the old "jokari matrix" ? http://www.elitetrader.com/vb/attachment.php?s=&postid=2902253

 

About prediction vs. anticipation... in my view another way to look at prediction is that you make a decision based on insufficient data in the monitoring step or faulty logic in the analysis step of MADA.

 

So let's say a person is terrible at monitoring... by definition every decision will be a prediction. As an aside - I think I'm pretty good at monitoring... faulty/incomplete logic is my problem :doh:

 

 

 

Understood. I've noticed that about this stuff -- the foundation is the same but everyone has their own flavor.

The containers formed between pts 1 & 2, and pts 2 & 3 are formed in the same way. After pt 3 there's there's no such container formed yet. Look at the thinnest tapes on the chart.

 

It is the "old jokari matrix" applied on multiple levels (fractals) simultaneously.

 

As long as you trade based on what you expect to happen, not based only on what happened and what is, you predict (guess). Any amount of data or the perfect analysis can't predict with 100% chance of success. Keep doing MADA to determine the current "right side of the market" and stay on it. Don't think of what the price will do, or of your P&L.

[saturo 10]

  cnms2 said:

The containers formed between pts 1 & 2, and pts 2 & 3 are formed in the same way. After pt 3 there's there's no such container formed yet. Look at the thinnest tapes on the chart.

 

I believe you mean container from 1 & 2 and container from pt3 to ftt, no? This rule is a tough one for me... I've tried using it but I never got to where I trusted it. Is this a hard or soft rule for you? (on a scale of 1 to 10).

 

  cnms2 said:

It is the "old jokari matrix" applied on multiple levels (fractals) simultaneously.

 

I meant no disrespect to the old jokari matrix OK... I am constantly on the lookout for basic premises that I've gotten wrong. Looks like I have this one correct. As you point out ...the difficulty is in the simultaneously part.

 

Your annotations and gucci's post jogged my brain a bit and I have a possible (additional) reason to HOLD.

 

In my attachment there are 3 circles

 

Circle 1 - rising black volume - rising price ... BUT it breaks the orange TL and closes back inside.. don't consider it dominant yet because it's a (F)BO bar.

 

Circle 2 - rising volume - rising price ... BUT it breaks the orange and pink TLs and closes outside... don't consider it dominant yet because it's a BO bar.

 

Circle 3 - rising volume - prices makes a slightly higher high but the close is on the low of a fairly volatile bar... this is NOT dominant black

 

In all three cases there is no dominant black to hang an FTT on.

 

Is this good analysis?