The Price / Volume Relationship

[saturo 10]

Hi everybody

 

I am new to this method and after reading and studying this thread and also a lot on ET forum , I am somewhat stuck on the way to draw gaussians.

Gucci I looked over your chart and tried to establish the same on my own.

Between bar 10 and 20 I am doing something wrong .

Do I mix fractal levels ? if so how do i recognize that.

Or am I drawing these gaussians completely wrong .

TIA

 

See attached. I drew in a faster fractal L to R "thing" (thinner lines)

 

Note how it all happens "under" gucci's falling red Gaussian.

 

Edit: what you have as falling red in your circle should be R2R - falling red to falling black on the same fractal is not a valid Gaussian annotation.

[phantom 16]

Sorry I joined this forum so late; I'm appalled at the misinformation floating around in these forums.

 

The fact is that VOLATILITY precedes price movement, and there is really no human way to discern the relationship between volume and price movement in tradeable terms. This is why most pros have gone to tic charts, which eliminate the volume constant altogether (basically all tic bars on a chart have relatively the same volume).

 

When a market goes into consolidation, the price bounces off of short term support and resistance. While it does take an increase in volume to initiate a breakout of S/R, I contend that its not anything one can measure with consistency, because not only does volume increase when a breakout is occurring, the volume also increases when the market is reversing (see squat pattern in Bill Williams' TRADING CHAOS).

 

But when a tic chart shows a consolidation breakout from a 4 or 5 bar wide consolidation pattern, the breakout bar is generally relatively a big green breakout bar or a big red breakout bar (referenced to candlestix) which closes outside the consolidation range and the volume is relatively equal to the preceding bars in the consolidation zone.

 

I stopped looking at volume relationships long ago because there are surer ways to create trades that have great reward to risk ratios and low risk tolerances.

 

Study volatility relationships to price, not volume relationships, and save yourself YEARS of frustration...

 

Hope this helps.

 

 

Luv,

Phantom

[gucci 10]

So... the quote is in reference to the 2X portion of X2X 2Y 2X... see attached attempts to apply the logic to your posted chart. Have I applied the logic correctly?

 

I do not understand what the highlighted phrase refers to... what are the "three iterative refinements" ? ...maybe the 3 levels of Gaussians and corresponding levels in price?

 

Three levels refer to the three fractals.

[cees 10]

See attached. I drew in a faster fractal L to R "thing" (thinner lines)

 

Note how it all happens "under" gucci's falling red Gaussian.

 

Edit: what you have as falling red in your circle should be R2R - falling red to falling black on the same fractal is not a valid Gaussian annotation.

 

Thanks Saturo

 

It seems that sometimes the Gaussians are drawn from peak to trough on Pricelevels and sometimes on Volumelevel.

I suppose this depends on the formation of the pricebar.

[gucci 10]

Very interesting chart! Thanks for posting.

 

I understand the slower fractal orange and blue objects.

I understand the faster fractal pink object.

I do NOT understand the green object (highlighted on attachment).

 

Your comments prove that you did not study the first chart. Look at the dashed traverse in the first chart you didn't even ask questions about.(starting at 16:10) anyway...

 

 

 

 

Point 3 of the slower fractal orange thing overlaps with Point 2 of the faster fractal green thing... I thought this was "invalid" ...

 

 

 

It IS invalid if you ascribe both of the traverses in question to the SAME fractal, which they aren't.

 

 

it's like the slower fractal thing is ending inside the faster fractal thing before the faster fractal thing completes.

 

 

No, it is like the faster fractal starting before the slower fractal reaches completion. It is bottom - up, nothing new.

 

 

 

 

It's like a snake eating itself

 

 

Indeed it is and it is a beauty, isn't it?

 

Note how the traverse, that gave you trouble, starts after the movement from point 1 to point 2 of a SLOWER fractal completes (creating the pink FASTER fractal traverse in the process).

 

The green FASTER fractal traverse overlaps with the pink FF traverse at ftt of this pink FF traverse

 

Likewise the SLOWER fractal UP traverse overlaps with the SLOWER fractal DOWN traverse at the FTT of this DOWN traverse.

 

Note the loci of the corresponding points 2 in both pairs of traverses.

 

So when staying on the same fractal there are no "inconsistencies" or "invalidities".

 

 

Is there a good reason to even bother annotating the green thing? .. or is it essential to seeing where we are in the sequence of things.

 

Of course there is. You do not have to annotate it, but you DO have to pay CLOSE ATTENTION to the happennings inside each of traverses. Why do you think there is no noise nor anomalies in the market?

 

Look at the FTT of the slower fractal down traverse.

 

What you see here is a BO of a pennant. (note that price still stays outside the boundaries of the pennant) Usually such an event doesn't signify a return to dominance one needs to confirm the point 3 of a traverse, right? In this case however it is all the market has in the pipeline for the increasing red volume to confirm the point three.

 

Why?

 

The (dominant) movement from point 3 to FTT of the SLOWER fractal is accompanied by the concomitant movement from point 2 to point 3 (non dominant) of the FASTER fractal. So the dominant down movement is "carried " so to speak by the bullish sentiment of the FASTER fractal traverse. Likewise the (dominant) movement from point 1 to point 2 of the FASTER fractal traverse is "carried" by the bearish sentiment of the SLOWER fractal traverse moving non dominant from point 2 to point 3.NOTE how the FASTER fractal moves from point 1 to point 2. DO you see increasing volume there?

 

 

 

Now try to study the chart I posted. Try to understand how one can SEE the dashed traverse.

 

Another area worth studying resides between 9:45 and 10:05. Try to think in terms of dominance and non dominance while painstakingly taking into consideration all available information. DO NOT think UP any new rules, use the available ones and think in terms of fractals.

 

If you do, you will find out that one can argue about the locus of gaussian trough in that area.

 

AND you can ALSO find out why it is NOT of paramount importance in this specific example. (The same holds true for the B2B trough at 17:00)

 

On a side note you have no business looking for FTTs at VE's . (read your comments again.)

 

HTH.

Edited May 15, 2011 by gucci

[gucci 10]

Hi everybody

 

I am new to this method and after reading and studying this thread and also a lot on ET forum , I am somewhat stuck on the way to draw gaussians.

Gucci I looked over your chart and tried to establish the same on my own.

Between bar 10 and 20 I am doing something wrong .

Do I mix fractal levels ? if so how do i recognize that.

Or am I drawing these gaussians completely wrong .

TIA

 

 

Of course you are doing it wrong. You missed a whole bunch of important annotations containing all the information needed. Where is CO? Where is the degapping? Where are three annotated fractals? Why did you mixed up AHT and RTH? How many time in ET did you have to read the instruction from Spydertrader to thor.... and cor.... ann.......the chart?

 

Sorry for the terse voice of my response but it is you who should DO the work. I myself made such mistakes numerous times, believe me, you can search for my stupid posts in ET. The point is my responses will not put into your mind that what should be build there...

[saturo 10]

Your comments prove that you did not study the first chart. Look at the dashed traverse in the first chart you didn't even ask questions about.(starting at 16:10) anyway...

 

:doh: I thought you were trying to get me to see something RE: FTTs. I see now that I was wrong.

 

...accompanied by the concomitant movement...

 

OK.. I believe you are trying to get me to see something about overlap. I DO see how this applies to my original Spyder snippet and related questions.

 

It also looks like this is "detailed anatomy of a new pt1"

 

I believe the critical concept is that no matter if volume is rising or falling over the course of a container... that volume will results in an absolute volume level for that container. This absolute volume is considered in the context of the parent container.

 

So.. going back to this http://www.traderslaboratory.com/forums/attachments/34/24586d1305344596-price-volume-relationship-bar_by_bar.jpg

 

Bars 2 & 3 say "dominant black"

Bar 4 says "dominant red" AND because it is a higher volume peak than bars 2&3 "dominant red on the next slower fractal"

 

Therefore bar 4 is the key that the blue pt3 has not yet come... and in the light of bar 4 the dominant volume on bars 2 & 3 now say "overlap area."

 

Hopefully I am on the right trail?

 

I'm not done studying your post yet...... and many thanks for taking the time to think through and post a response!

[saturo 10]

I am going to make an attempt to walk through the 9:45 to 10:05 bars. I asked if it was important to draw in these overlap traverses... this example illustrates why it is important.

 

9:45 is bar 1. I'm calling skinny-lined things tapes.

 

Bar 1 - Down tape has formed breaking out of an up traverse. Dominant red makes its first appearance. Point 2 of unannotated down traverse.

Bar 2 - Falling black heading to RTL of tape.

Bar 3 - Rising black on tape BO. Point 3 of the down traverse is established.

Bar 4 - Falling volume "walk out" of accelerated tape RTL.

Bar 5 - OB shows dominant red. Original RTL of 2-3 tape is broken. Volume sequence complete for down traverse.

 

Bar 5 shows rising red but the overall volume is lower than the prior black tape. We suspect overlap on one fractal higher than tape.

 

(as an aside - it looks like there is some micro-overlap happening on bars 3-4-5)

 

In this case the overlap traverse (green lined thing) shows an FTT two bars later. So if you did not annotate the overlap traverse you would potentially miss the FTT.

[gucci 10]

I am going to make an attempt to walk through the 9:45 to 10:05 bars. I asked if it was important to draw in these overlap traverses... this example illustrates why it is important.

 

9:45 is bar 1. I'm calling skinny-lined things tapes.

 

Bar 1 - Down tape has formed breaking out of an up traverse. Dominant red makes its first appearance. Point 2 of unannotated down traverse.

Bar 2 - Falling black heading to RTL of tape.

Bar 3 - Rising black on tape BO. Point 3 of the down traverse is established.

Bar 4 - Falling volume "walk out" of accelerated tape RTL.

Bar 5 - OB shows dominant red. Original RTL of 2-3 tape is broken. Volume sequence complete for down traverse.

 

Bar 5 shows rising red but the overall volume is lower than the prior black tape. We suspect overlap on one fractal higher than tape.

 

(as an aside - it looks like there is some micro-overlap happening on bars 3-4-5)

 

In this case the overlap traverse (green lined thing) shows an FTT two bars later. So if you did not annotate the overlap traverse you would potentially miss the FTT.

 

You are on the right track.

 

However, you have to be more precise when using the words "traverse" and "dominance". Are you sure that bar 1 represents a dominant bar of a TRAVERSE?

 

It is a BO bar. What does any formation represent?

 

 

Why is the thing annotated with dark green lines to the left of the area in question doesn't represent a traverse of the trading fractal?

 

Look closely at bar 3. What do you see?

 

A spike bar (even IBGS in this case) on increasing black. Now the increasing black stands for the "bullishness" (think for a moment: "bullishness" of what?) but the spike stands for the "bearishness"(think again: "bearishness" of what?). Rings a bell somewhere?

Edited May 16, 2011 by gucci
Bar 3

[cees 10]

Of course you are doing it wrong. You missed a whole bunch of important annotations containing all the information needed. Where is CO? Where is the degapping? Where are three annotated fractals? Why did you mixed up AHT and RTH? How many time in ET did you have to read the instruction from Spydertrader to thor.... and cor.... ann.......the chart?

 

Sorry for the terse voice of my response but it is you who should DO the work. I myself made such mistakes numerous times, believe me, you can search for my stupid posts in ET. The point is my responses will not put into your mind that what should be build there...

 

I know already that I did something wrong,otherwise I would not have asked.Since it was the same chart you posted already annotated (Except for the Sessionstart) I could have copied it offcourse.( I don't ask you to do anything ,just asking for some guidance)

Why you take the Soffex Session and not the Eurex , is not clear to me nor is it stated anywhere.

For the opening Gap ,I have the shift tool coded by Tams and it was a 1 click operation to have it on the chart, I am deeply sorry that i didn't do that.

 

Well I've got the standard answer and thank you for that.

[saturo 10]

You are on the right track.

 

However, you have to be more precise when using the words "traverse" and "dominance". Are you sure that bar 1 represents a dominant bar of a TRAVERSE?

 

It is a BO bar. What does any formation represent?

 

 

Why is the thing annotated with dark green lines to the left of the area in question doesn't represent a traverse of the trading fractal?

 

Look closely at bar 3. What do you see?

 

A spike bar (even IBGS in this case) on increasing black. Now the increasing black stands for the "bullishness" (think for a moment: "bullishness" of what?) but the spike stands for the "bearishness"(think again: "bearishness" of what?). Rings a bell somewhere?

 

OK .. let's see if I can nail this...

 

The green thing "to the left" is a FF traverse. Why is it not a traverse of the trading fractal? The VE of the dashed overlap construct (not sure what to call that yet) prolongs the creation of the B2B portion of the trading fractal traverse. Non-dom movement after the VE belongs to the B2B.

 

Next we see 2 tapes and an OB.

 

Tape 1 - is in the non-dominant direction and has lower overall volume. It contains a rising red bar.

 

Tape 2 - is in the dominant direction but has overall lower volume compared to tape 1. I think the most important thing here is that this is an ATTEMPT at a return to dominance at the traverse level but it is NOT a return to dominance. The spike bar represented an acceleration of the tape. There was enough volume to BO of the prior tape but there was not enough volume to overtake the rising red of the prior tape.

 

The OB shows rising red but its overall volume is lower than tape 2. After the failure to return to dominance this is all the "bearishness" the market could provide.

 

At this point I'm not sure what "allows" us to draw in the green FF traverse? ... although I do recognize that we have a situation where this faster fractal thing begins and the slower fractal thing ends "inside" of it (the snake eating itself).

 

I also recognize this as the same situation as 15:30 - 17:00 from the same chart but in miniature. However this time we don't get the VE. The volume sequence of the final tape ends overlapping with the R2R of the next traverse, no?

 

Thank you so much for your feedback :thumbs up:

[gucci 10]

This should look familiar.

Edited May 16, 2011 by gucci

[cees 10]

Of course you are doing it wrong. You missed a whole bunch of important annotations containing all the information needed. Where is CO? Where is the degapping? Where are three annotated fractals? Why did you mixed up AHT and RTH? How many time in ET did you have to read the instruction from Spydertrader to thor.... and cor.... ann.......the chart?

 

Sorry for the terse voice of my response but it is you who should DO the work. I myself made such mistakes numerous times, believe me, you can search for my stupid posts in ET. The point is my responses will not put into your mind that what should be build there...

I did not ask you to do the work (it was already in your DAXchart).

As for the sessions . It appears you are using the SOFFEX session time and not the EUREX.

I don't know why , nor is it stated anywhere .

I have the shifttool for clearing the Gap , so it was only 1 click ,but that wasn't the issue

Anyway I hoped to get some guidance on the gaussians , but helas.

anyway thanks for your reply

[gucci 10]

I know already that I did something wrong,otherwise I would not have asked.Since it was the same chart you posted already annotated (Except for the Sessionstart) I could have copied it offcourse.( I don't ask you to do anything ,just asking for some guidance)

Why you take the Soffex Session and not the Eurex , is not clear to me nor is it stated anywhere.

For the opening Gap ,I have the shift tool coded by Tams and it was a 1 click operation to have it on the chart, I am deeply sorry that i didn't do that.

 

Well I've got the standard answer and thank you for that.

 

 

Well if you do not like the answers,do not read them. The frustration you are experiencing and which is visible in your post will not serve you well.

 

On a side note,instead of talking about what you could have done, try to think about why you didn't actually do it. With respect to RTH, there was a discussion over at ET.

[cees 10]

Well if you do not like the answers,do not read them. The frustration you are experiencing and which is visible in your post will not serve you well.

 

On a side note,instead of talking about what you could have done, try to think about why you didn't actually do it. With respect to RTH, there was a discussion over at ET.

 

Not reading an answer to my own question would be impolite.

 

Anyway as you stated , it took you 4 years to arrive at the present level.

 

So i guess it will take the same timeperiod before I can post another question.

 

And no i am not frustated.

[saturo 10]

This should look familiar.

 

Looking more and more familiar

 

How does my logic look?

[cnms2 10]

Hi everybody

 

I am new to this method and after reading and studying this thread and also a lot on ET forum , I am somewhat stuck on the way to draw gaussians.

Gucci I looked over your chart and tried to establish the same on my own.

Between bar 10 and 20 I am doing something wrong .

Do I mix fractal levels ? if so how do i recognize that.

Or am I drawing these gaussians completely wrong .

TIA

See a few notes I made on your chart.

 

Suggestion: read spydertrader's posts from the beginning of this thread, practice, re-read, practice, again and again and again ... Ask clear, limited scope questions based on chart snippets. Critically absorb the information.

[gucci 10]

Looking more and more familiar

 

How does my logic look?

 

You confused IBGS with a spike bar.

 

(FF FTT is a spike bar which is actually the point 2 of the blue trading fractal traverse)

 

10:10 AND 10:15 bars are VERY important, why?

 

10:40 bar speaks volumes, find out why.

 

Compare and contrast 10:40 bar with 10:50 bar.

 

Note how the declining black gaussian is annotated starting with 11:00 bar.

 

On a side note keep in mind that the ftt bars usually show more volatility or "spikyness" than the point 2 bars.

 

More later...

[saturo 10]

You confused IBGS with a spike bar.

(FF FTT is a spike bar which is actually the point 2 of the blue trading fractal traverse).

 

I did recognize the 10:00 bar as the pt2 (volume pt2 not geometric). Hmmm... that bar ends a 2B tape and begins a 2R tape. How is it not IBGS?

 

10:10 AND 10:15 bars are VERY important, why?

 

I know 10:10 is important because it BO's the RTL of the FF traverse... so we advance to 2R in the volume sequence.. but that's just basic stuff. I think it's also important because it represents a slightly higher volume peak than the last 2B. We know that when we get to 2Y 2X in the volume sequence we are entering the overlap zone. This higher volume peak tips us off that "bearishness" might be the stronger force.

 

10:15 - If I follow my hypothesis from above - the volume on 10:15 bar would serve as confirmation that the high volume at 10:10 was not just numbskulls trading an obvious TL crossover.

 

10:40 bar speaks volumes, find out why. Compare and contrast 10:40 bar with 10:50 bar.

 

10:40 - it shows rising red volume but it is NOT a BO bar... this suggests a down context.

 

The 10:50 has a high volatility to volume ratio... meaning it didn't take much volume push to move the price. The 10:40 bar showed how hard the buyers had to push to just get the closing price back to the open price.

 

Note how the declining black gaussian is annotated starting with 11:00 bar.

 

I did catch that on your chart - and I've noted that on Spyder's charts as well... but I never really fully understood the geometric logic. I know that the only way for price to go down in an up trend is for volume to fall. From that perspective it makes sense to me... but the geometric aspects do not. If the falling black gaussian line represents an uptrend pt1 is immediately "taken out" which invalidates the up trend. How to reconcile the geometry?

 

On a side note keep in mind that the ftt bars usually show more volatility or "spikyness" than the point 2 bars.

 

Thank you for calling this to my attention.

 

A question about the 10:40 and 10:50 bars - am I correct to assume that the information carried there is confirmation of a trade that would have been entered at the close of 10:30?

 

Also ...the 10:10 and 10:15 would serve as anticipation for that same 10:30 trade?

 

vielen dank!

[gucci 10]

http://www.elitetrader.com/vb/attachment.php?s=&postid=1995275

[saturo 10]

http://www.elitetrader.com/vb/attachment.php?s=&postid=1995275

 

I will study this.

 

An observation about the overlap behavior... it dictates the valid placement of the slower fractal X2X trough. Pretty cool.

[phantom 16]

Has anybody actually made any money off the info posted here???

 

Just curious...

 

 

Luv,

Phantom

[Corey 10]

Yes! yw.................

 

Has anybody actually made any money off the info posted here???

 

Just curious...

 

 

Luv,

Phantom

Edited May 18, 2011 by Corey

[phantom 16]

What I would like to see posted in this thread (and I'll go way out on a limb and assume others would also like to see) is an actual trade, annotated in English showing how consistent trading decisions could be made with volume as the "indicator" and without the use of calculus...

 

Is this really asking too much?

 

 

Luv,

Phantom

[stepan7 10]

phantom,

 

And what will you do?

 

Jump to page number one on this thread and start reading? I don't think so.

 

This thread has enough information that everyone can make wise decisions for himself/herself without any additional requests.

 

Happy Trading,

 

Stepan

 

 

What I would like to see posted in this thread (and I'll go way out on a limb and assume others would also like to see) is an actual trade, annotated in English showing how consistent trading decisions could be made with volume as the "indicator" and without the use of calculus...

 

Is this really asking too much?

 

 

Luv,

Phantom