The Price / Volume Relationship

[cnms2 10]

  gamblerKi said:

Hi cnms2,

 

Thanks very much for your feedback.

 

Attached is the snippet of DAX 1 min chart (2011/5/26). I drew that up tape gaussian (b2b2r2b). The up tape started around 10:12 and arrived point 2 at 10:18 because of the increasing red volume bar. The up tape finished around 10:25 because of the 2 increasing red volume bars at 10:24 and 10:25 (although 10:24 and 10:25 represent down bars).

 

Am I right?

The method discussed in this thread works on any time frame, as long as there is enough liquidity. You can annotate the 1 min chart using the same methodology as the 5 minute chart. This doesn't necessarily mean that zooming from the 5 min into the 1 min is like using a magnifier. For this reason, it's probably better to stick to one time frame and extract all the information from it only. A faster chart may help carving turns, but only when your trading chart tells you to look for them.

 

I believe that your 1 min chart gaussians are not fully accurate.

[cnms2 10]

  mslk said:

hey cnms - i'm having a hard time figuring out your chart ... would you care to describe it a little? TIA - mslk

Your request is too vague, and implies too much effort from my part, that might not even be helpful to anybody. Better: ask a specific, limited scope question, accompanied by a chart snippet, and your opinion. Somebody on this board might be able to help.

[203NG 10]

This is my attempt to annotate yesterday (done end of day). I would be grateful if one (or more) of the more experienced traders could take a look and let me know what's right (if anything) and what's not.

Edited June 9, 2011 by 203NG
No attachment

[FJK 10]

  203NG said:

This is my attempt to annotate yesterday (done end of day). I would be grateful if one (or more) of the more experienced traders could take a look and let me know what's right (if anything) and what's not.

 

My input:

 

You should consider annotating more fractals. One below and one above the fractal you currently trade. If you don't currently trade, you should consider how much you will improve by annotating 3 or more fractals.

[203NG 10]

  FJK said:

My input:

 

You should consider annotating more fractals. One below and one above the fractal you currently trade. If you don't currently trade, you should consider how much you will improve by annotating 3 or more fractals.

 

Thanks for your comment. This was done end of day in an effort to get the basic/"bigger picture" correct, because I found myself totally confused during the day with faster fractals. Of course this is by no means a "thoroughly annotated chart", I guess what I want to know is do the trend lines and gaussians that I have drawn accurately reflect the market or is there something that I have missed.

[cnms2 10]

  203NG said:

This is my attempt to annotate yesterday (done end of day). I would be grateful if one (or more) of the more experienced traders could take a look and let me know what's right (if anything) and what's not.

Start by making sure you have a good data source, and change bar coloring per Spydertrader's recommendations. Try to build your annotations starting from the fastest observable fractal up. I'm sorry that I don't find anything right yet. Just start from the beginning of this thread, very carefully reading and studying every word in Spydertrader's posts. Then keep practicing, re-reading, again and again.

[203NG 10]

  cnms2 said:

... I'm sorry that I don't find anything right yet....

 

Thanks cnms2 ... I'm sorry too:bang head:

 

I am a secondary Maths teacher. I have always found that Maths came easy to me, and I am amazed sometimes at how some of my students struggle with things that to me are so easy.

 

But its seems that with regard to trading, I am ironically in a similar situation, after years of reading threads and staring at charts :doh:

 

I read a quote from Spyder about the maths of trends, quote "The second derivatives of Price and Volume define a trend". The second derivative of a function changes sign well in advance of the function value (which only changes direction when the first derivative changes sign) and I don't know how the second derivative of volume let alone both together would work... but thats not my main question.

 

I am posting an old chart of Spyder's from ET, with the tapes and traverses annotated (by Spyder). I have annotated the Gaussians. I would like to know if my Gaussians are correct and if not what I should do differently. Secondly, Spyder's point 3 of the blue traverse occurs on an IBGS, WITHOUT INCREASING VOLUME. My understanding is that for a point 3 to be a point 3 there must be increasing volume, I would appreciate any comments about this i.e. am I being too rigid, what about the bar before with increasing volume and decrease volatility, ibgs means "guassian shift whether on increasing volume or not etc. I started reading some of Spyder's posts at the beginning of the thread. He says "unless and until the Volume Cycle Sequences reach completion, the current Price Trend cannot end". I understand volume sequence (up trend) to mean b2b2r2b with the last 2b being increasing volume after point 3". I cannot reconcile my understanding to the attached chart:confused:. If somebody could enlighten me I would be most grateful. TIA.

[cnms2 10]

  203NG said:

Thanks cnms2 ... I'm sorry too:bang head:

 

I am a secondary Maths teacher. I have always found that Maths came easy to me, and I am amazed sometimes at how some of my students struggle with things that to me are so easy.

 

But its seems that with regard to trading, I am ironically in a similar situation, after years of reading threads and staring at charts :doh:

 

I read a quote from Spyder about the maths of trends, quote "The second derivatives of Price and Volume define a trend". The second derivative of a function changes sign well in advance of the function value (which only changes direction when the first derivative changes sign) and I don't know how the second derivative of volume let alone both together would work... but thats not my main question.

 

I am posting an old chart of Spyder's from ET, with the tapes and traverses annotated (by Spyder). I have annotated the Gaussians. I would like to know if my Gaussians are correct and if not what I should do differently. Secondly, Spyder's point 3 of the blue traverse occurs on an IBGS, WITHOUT INCREASING VOLUME. My understanding is that for a point 3 to be a point 3 there must be increasing volume, I would appreciate any comments about this i.e. am I being too rigid, what about the bar before with increasing volume and decrease volatility, ibgs means "guassian shift whether on increasing volume or not etc. I started reading some of Spyder's posts at the beginning of the thread. He says "unless and until the Volume Cycle Sequences reach completion, the current Price Trend cannot end". I understand volume sequence (up trend) to mean b2b2r2b with the last 2b being increasing volume after point 3". I cannot reconcile my understanding to the attached chart:confused:. If somebody could enlighten me I would be most grateful. TIA.

This is an obvious example of "volume leads price". The dominant red volume takes over the non-dominant black volume before the tape sequence in the price panel seems to end: "trends overlap". The volume sequences are always obvious at traverse level; they may be less obvious at tape level.

 

Jack found the way the markets work, and openly explained it to whoever wanted to listen. Spydertrader understood it and translated it in a more accessible language, introducing some original helping concepts too. For those who study this method, sometimes various concepts don't make sense. This is because those traders don't fully understand the significance of those concepts, and how to apply them. This method is not a set of rules to be mechanically applied, in any context.

 

You wrote that you're a math teacher and that you studied this method for years. It may be time for you to try to look at it with a different mind set. Try to forget everything you've learned, and study again Spydertrader's posts here. I believe this should be enough to make you profitable. Be aware that looking at charts posted by Spydertrader on older threads might not apparently make sense. I'm writing "apparently", because it is just a matter of perception, not substance.

 

Also, to not add more difficulty to your quest, stick to the ES 5 min chart, using Spydertrader's coloring.

[cnms2 10]

  cnms2 said:

This is an obvious example of "volume leads price". The dominant red volume takes over the non-dominant black volume before the tape sequence in the price panel seems to end: "trends overlap". The volume sequences are always obvious at traverse level; they may be less obvious at tape level. ...

See attached an illustration of the "trends overlap" concept.

[NYCMB 10]

  203NG said:

Thanks cnms2 ... I'm sorry too:bang head:

 

I am a secondary Maths teacher. I have always found that Maths came easy to me, and I am amazed sometimes at how some of my students struggle with things that to me are so easy.

 

But its seems that with regard to trading, I am ironically in a similar situation, after years of reading threads and staring at charts :doh:

 

I read a quote from Spyder about the maths of trends, quote "The second derivatives of Price and Volume define a trend". The second derivative of a function changes sign well in advance of the function value (which only changes direction when the first derivative changes sign) and I don't know how the second derivative of volume let alone both together would work... but thats not my main question.

 

I am posting an old chart of Spyder's from ET, with the tapes and traverses annotated (by Spyder). I have annotated the Gaussians. I would like to know if my Gaussians are correct and if not what I should do differently. Secondly, Spyder's point 3 of the blue traverse occurs on an IBGS, WITHOUT INCREASING VOLUME. My understanding is that for a point 3 to be a point 3 there must be increasing volume, I would appreciate any comments about this i.e. am I being too rigid, what about the bar before with increasing volume and decrease volatility, ibgs means "guassian shift whether on increasing volume or not etc. I started reading some of Spyder's posts at the beginning of the thread. He says "unless and until the Volume Cycle Sequences reach completion, the current Price Trend cannot end". I understand volume sequence (up trend) to mean b2b2r2b with the last 2b being increasing volume after point 3". I cannot reconcile my understanding to the attached chart:confused:. If somebody could enlighten me I would be most grateful. TIA.

 

Hi 203NG,

 

Is the chart for ES 18June2008? TIA

[203NG 10]

  NYCMB said:

Hi 203NG,

 

Is the chart for ES 18June2008? TIA

 

Hello NYCMB,

 

Spyder was commenting about a trade by LittleMac. The trade was in a stock named MELI.

 

See http://http://www.elitetrader.com/vb/showthread.php?s=&postid=1973881&highlight=take+care+with+your+MELI+trade#post1973881

[xioxxio 10]

Thanks for that, This JHM is very interesting stuff.

[nkhoi 10]

Jack posted some thoughts in trading forum and career forum but they got deleted right away. I was able to so save them in chit chat forum/ technical strategy thread (click on views to sort all threads by views, it ranks fourth place)

[FJK 10]

  nkhoi said:

Jack posted some thoughts in trading forum and career forum but they got deleted right away. I was able to so save them in chit chat forum/ technical strategy thread (click on views to sort all threads by views, it ranks fourth place)

 

Can't find the post. Link?

[gamblerKi 10]

Hi FJK,

 

I think nkhoi is referring to this link:

 

Forums - Technical Strategy

 

Hope this helps.

[gamblerKi 10]

Attached is my annotation on 2 May 2011 and 3 May 2011.

 

Black Skinny line: tape

Blue Medium line: up traverse

Pink Medium line: down traverse

Green Thick line: up channel

Red Thick line: down channel

 

Any comments on my chart? TIA

[gamblerKi 10]

From my understanding, pt 2 of a new container must be outside the previous container.

Quote from gucci

"A point 2 must BE outside of the previous thing RTL. AND it MUST be preceded by X2X sequence of the volume. One of these conditions wasn’t fulfilled at the time in questionon on the trading fractal."

http://www.traderslaboratory.com/forums/technical-analysis/6320-price-volume-relationship-63.html#post106288

 

In the attached charts (spyder's old charts in IR thread), why are Point 2 of those circled containers inside the previous container?

[gamblerKi 10]

  gamblerKi said:

Attached is my annotation on 2 May 2011 and 3 May 2011.

 

Black Skinny line: tape

Blue Medium line: up traverse

Pink Medium line: down traverse

Green Thick line: up channel

Red Thick line: down channel

 

Any comments on my chart? TIA

 

green skinny line: up faster fractal traverse stuff

orange skinny line: down faster fractal traverse stuff

 

updated version, based on Jack's feedback.

 

Any comments on my chart? TIA

[cnms2 10]

  gamblerKi said:

green skinny line: up faster fractal traverse stuff

orange skinny line: down faster fractal traverse stuff

 

updated version, based on Jack's feedback.

 

Any comments on my chart? TIA

I find difficult to read your charts, so I can't comment on them.

 

Regarding spydertrader's charts, I believe it's a great exercise to try to reverse engineer them, and it would be an even better exercise to have their unannotated versions, to firstly try our hands on them, and only then to check how our work compares to the master's. Also, as it was repeatedly mentioned, they may have been drawn from a different perspective than the one emphasized at the beginning of this thread.

 

Regarding an apparent contradiction, in some places, between where the point 2 is annotated, and the "rule" that it has has to be outside the old RTL ... It definitely has to be so, because that's the way the jokari windows work: the dominant volume increases, and the non-dominant volume decreases.

 

I believe that what you've noticed on those charts, in most cases, it was spydertrader's intention to emphasize specific things like: accelerated traverses that redefine the boundary of the right side of the market, traverses that grow into channels firstly defining the new right side at traverse level that become later the new right side at channel level.

 

Maybe you should take only one instance and give your version of annotation, and the reasons behind it.

 

Anyway, good luck in your endeavor!

[gamblerKi 10]

cnms2, thanks very much for your feedback!

 

Another question: does anyone know when was the recent channel point 1?

[Ezzy 10]

  gamblerKi said:

From my understanding, pt 2 of a new container must be outside the previous container.

 

I agree with cmns2 regarding the acceleration, and also deceleration. That was also a transition into breaking out the fractals. Remember each pt1 to pt2 needs an R2R or B2B, and 2 to 3 needs a 2X and so on. You'll find places where the original lines where accelerated and decelerated. The laterals were handled a little differently so allow for that.

 

Also the charts weren't de-gapped so a new point one might be an acceleration or deceleration point from the prior day.

 

I only have one unannotated chart handy, it's the 15th of Oct but has the prior day's peak which may add a little more perspective to your first pt2.

 

Regards - EZ

[xioxxio 10]

I have been trading JHM now for the last few weeks and it has been amazing. I have mainly been trading it on the "bark and leaves" level, since I am not using my own money . I have been using it on the SPI and KOSPI. Has anyone tried it on the NIFTY? There is no DU volume ever.

 

My advise to all newbies is watch the Tuscun Meetup Videos. The penny will drop.

[xioxxio 10]

Jack and or Spyder spoke about “outside bars” as not common occurrences. In the markets I cover they are very common. I can’t seem to find any documentation on how to handle them with respect to taping.

 

 

I treat that bar as the change it direction of the tape, is that correct?

[NYCMB 10]

  Spydertrader said:

Sure thing.

 

- Spydertrader

 

Does anyone know the logic why Spydertrader painted those bars in Red or Black?

 

TIA

Edited August 4, 2011 by NYCMB

[stepan7 10]

  NYCMB said:

Does anyone know the logic why Spydertrader painted those bars in Red or Black?

 

TIA

 

public bool IsPriceUp(bar)

{

bool r = false;

if ((high[bar] <= high[bar + 1]) && (low[bar] < low[bar + 1])) // Down Move

r = false;

else if ((high[bar] > high[bar + 1]) && (low[bar] >= low[bar + 1])) // Up Move

r = true;

else if ((high[bar] <= high[bar + 1]) && (low[bar] >= low[bar + 1])) // Inside Bar

{

r = (close[bar] > open[bar]);

if (close[bar] == open[bar])

r = IsPriceUp(bar + 1);

}

else if ((high[bar] > high[bar + 1]) && (low[bar] < low[bar + 1])) // Outside Bar

r = (close[bar] >= close[bar + 1]);

return r;

}

 

If Price is not Up then Price is Down.

 

Happy Trading

Edited August 4, 2011 by stepan7