The Price / Volume Relationship

[ptunic 10]

Thursday, Feb 22, 2010 (in progress)

[MomentumMike 10]

I don't quite understand your view here...

 

Sorry. What I meant was that I never saw a down container form where P1 would have been at 1525 (close of bar). I saw a down tape start there and then an up tape start at 1600. I fanned for the down stitch at 1415 and my up tape continued the next day. On bar 3, the up tape's price was higher than the P1 price. So, I made the mistake of thinking that both tapes belonged in the up container, which I thought had broken out at 1545.

 

The attached is what I was seeing. Please excuse the quality. I don't have a gap removal tool, so I patched it together.

 

That down stitch bar at 1615 was my problem. I didn't think it broke the tape.

[ptunic 10]

Thursday, Feb 25, 2010

[MomentumMike 10]

Thursday, Feb 25, 2010

 

There is a question on the attachment about fractal levels. Not sure what I saw today.

[Spydertrader 10]

There is a question on the attachment about fractal levels. Not sure what I saw today.

 

What you have drawn (red and blue) does not accurate reflect reality. You might try deleting all lines and try again in an effort to 'see' what you missed in real time.

 

- Spydertrader

[Spydertrader 10]

Thursday, Feb 25, 2010

 

O.K., so you 'lost track' of things, and as a result, the the day's plot became a little muddled for a spell. Now (at the end of the day), the market has clearly provided some certainty on the subject. Having said that, are you certain all trend lines accurately reflect the market? Perhaps, some of your longer term trend lines have created a bias (in your mind's eye) causing you to 'see' things one way - instead of another.

 

Debrief is an excellent time to double check, and validate (in addition to learning something new).

 

- Spydertrader

[romanus 10]

Because "The Blue Thing" does not accurately reflect the information provided by the market.

 

- Spydertrader

 

Because placing "The Blue Thing" on your charts fails to provide sufficent information for most individuals to distinguish between one fractal or another. In other words, "The Blue Thing" says to the trader one thing, when quite another thing entirely is taking place.

 

- Spydertrader

 

 

If you’d be so kind to clarify something for me, please. When does the market provides sufficient information to determine that "The Blue Thing" does not belong on the chart. (A) by the time the lateral formation is created – 11:00 bar eob , (B) by the time the completed b2b2r2b sequence is created of certain thickness – 11:10 bar eob, (C/D) by the time two more sequences in opposite direction are created inside what would have been "The Blue Thing" otherwise – 13:20 bar eob. (see attached)

 

How does one arrive at developing a rule set to deal with the specific context of "The Blue Thing"? If I were to define "The Blue Thing" in binary terms, I arrive at the following: “the completed sequence where both Point Two (of the sequence) and an FTT (of the sequence) are inside the lateral formation created by the bar that begins to move the price from p2 to p3 of the faster fractal container which builds Point One to Point Two of the sequence AND all three components of the sequence are built from faster fractal containers, which are in turn built from even fasterer fractal containers”. So far I have not been able to locate the context that meets the definition that I constructed for "The Blue Thing". Is this the case of the incorect definition (e.g. too rigid)? Is there something similar to "The Blue Thing" that YOU have seen in the past on ES, YM, or anything else, that allows YOU to say: “OK, this "Blue Thing" represents the same context and based on how things worked out last time, placing the lateral annotation here would be a mistake.”? And if so, how did YOU determine that "The Blue Thing" represents the same context from which you generalized (derived) the rule set to be applied to "The Blue Thing".

 

I understand that you created this thread to assist in learning themselves how to fish as opposed to teaching how to fish. To me, the water appears to be so muddy that I can’t even see the fish to begin with. As always, any insight you can share on this subject would be greatly appreciated. Thank you.

[rs5 10]

Thursday 25 February 2010

[ehorn 10]

My view of the day...

Edited February 26, 2010 by ehorn
wax on wax off... breath in breath out... wax on wax off... :)

[Spydertrader 10]

When does the market provides sufficient information to determine that "The Blue Thing" does not belong on the chart.

 

Third Bar from the left (I believe that is the 11:10 Bar)

 

How does one arrive at developing a rule set to deal with the specific context of "The Blue Thing"?

 

Start by understanding what you know to represent a Lateral Formation. In this specific thread, we have discussed a process for differentiating one specific type of Lateral Formation. While a trader may not have reasoned through all possible outcomes of The Lateral Formation Drill (and Follow Up), the trader does know subtle differences, within this specific type of Lateral Formation, do exist. The process, for the trader, then becomes learning how these differences translate (based on Context and Order of Events) to chart annotations. As such, moving beyond The Lateral Formation Drill (and Follow Up) to other types of Lateral Formations (prior to reaching a fully differentiated mindset) does not provide clarity. In fact, doing so adds unneeded complexity. Therefore, unless and until one has a complete understanding of one specific type of Lateral Formation, I recommend focusing exclusively on that alone. Place no other examples of Laterals on your chart. You might find that these 'other types' of Lateral Formations bias your thinking, rather than, provide the clarity they were intended. In other words, take things one step at a time.

 

So far I have not been able to locate the context that meets the definition that I constructed for "The Blue Thing". Is this the case of the incorrect definition (e.g. too rigid)?.

 

It appears that you are wondering, "How best to construct (define) a Blue Thing?" This is a fair question. However, I'm merely suggesting you do not need to know how to build (create, construct or define) something, until you answer the question, "Do I need to build (create, construct or define) something?" Right now, unless and until one can go through any example of a Lateral Formation (as defined by The Lateral Formation Drill [and Follow Up]) and know the outcome, then placing additional examples of any other type of Lateral Formation (e.g. those that do not conform to The Lateral Formation Drill [and Follow Up]) on one's chart may create a bias in thinking. That bias, may cause the trader to believe something has developed, when in reality, something has not.

 

Is there something similar to "The Blue Thing" that YOU have seen in the past on ES, YM, or anything else, which allows YOU to say: “OK, this "Blue Thing" represents the same context and based on how things worked out last time, placing the lateral annotation here would be a mistake.”? And if so, how did YOU determine that "The Blue Thing" represents the same context from which you generalized (derived) the rule set to be applied to "The Blue Thing".

 

Most Definitely. What is more, you've seen it as well. In fact, it is that which caused Double Eagle to place a skinny line on his chart - rather than an accelerated Medium Weight Line.

 

I determined the need existed for a change in 'Annotation Technique' because I repeatedly 'jumped fractals' while attempting to maintain fractal integrity. Since, "The Market is Always Right!" the source of error had to be my own. But wait a second, I have no errors! Well, eliminate the impossible (the market is occasionally wrong) and whatever is left (Spydertrader mucked up his annotations), however improbable, must be possible. As a result, I went back to what I knew to be true, and tested it. I did the same, over and over again, with everything I knew to be true - step by step, piece by piece, bar by bar - until i located the source of my error.

 

This is the process of differentiation.

 

I understand that you created this thread to assist in learning themselves how to fish as opposed to teaching how to fish. To me, the water appears to be so muddy that I can’t even see the fish to begin with. As always, any insight you can share on this subject would be greatly appreciated. Thank you.

 

I understand reaching , what appears to be, amazingly high levels of frustration while traveling down this road. As a result, I have no problem assisting those who require a nudge in one direction or another. I also understand I can often add to that frustration when I provide answers which appear to provide less than optimal information. Some have suggested my answers appear more like 'riddles' than as an offer of assistance.

 

My best suggestion would be to stop focusing on all unknowns - at once - and instead, focus on the unknowns - one at a time.

 

HTH.

 

- Spydertrader

[MomentumMike 10]

What you have drawn (red and blue) does not accurate reflect reality. You might try deleting all lines and try again in an effort to 'see' what you missed in real time.

 

Spyder, thanks very much for your response.

 

Maybe I'm mixing fractal levels? This time through I've managed to eliminate about 4 tapes that were only a few bars in length. Perhaps these were subfractals.

[Spydertrader 10]

Maybe I'm mixing fractal levels? This time through I've managed to eliminate about 4 tapes that were only a few bars in length. Perhaps these were subfractals.

 

Any line drawn on a chart must have a rational, objective, definable and consistant reason for doing so. Make sure all lines on your chart conform to this definition.

 

- Spydertrader

[romanus 10]

It appears that you are wondering, "How best to construct (define) a Blue Thing?" This is a fair question. However, I'm merely suggesting you do not need to know how to build (create, construct or define) something, until you answer the question, "Do I need to build (create, construct or define) something?"

It appears that I've been attempting to kick in an open door -- and all that's required is a slight shift in paradigm.

 

Thank you for pointing that out.

 

I understand reaching , what appears to be, amazingly high levels of frustration while traveling down this road.

The process is very much similar to a journey through a dark unexplored mansion. One enters the first room and it's completely dark. One stumbles around bumping into the furniture, but eventually one learns where each piece of the furniture is. Finally, after a while one finds the light switch, turns it on, and suddenly it's all illuminated. One can see exactly where you were. Then one moves into the next room and spends another few months in the dark. Unfortunately, each of the breakthroughs couldn't exist without many months stumbling in the dark that proceed them. Thank you for your understanding and continuous feedback.

[Spydertrader 10]

My view of the day...

 

You have a (Medium Weight) Volume Container which completes at noon (Eastern Time and Bar Close). In order to have had a completion at noon, the market also requires a beginning sometime before noon (and according to your (Medium Weight) Gaussians, this beginning commenced on the previous trading day). Can you annotate this specific container in the Price Pane to match your Annotations in the Volume Pane?

 

- Spydertrader

[ehorn 10]

You have a (Medium Weight) Volume Container which completes at noon (Eastern Time and Bar Close). In order to have had a completion at noon, the market also requires a beginning sometime before noon (and according to your (Medium Weight) Gaussians, this beginning commenced on the previous trading day). Can you annotate this specific container in the Price Pane to match your Annotations in the Volume Pane?

 

- Spydertrader

 

I can annotate it, yes.

 

EDIT: I was reading lateral traverse.

Edited February 26, 2010 by ehorn

[Spydertrader 10]

I can annotate it, yes.

 

O.K. Perhaps, I should have said, "Can you annotate these things correctly in the Price Pane?":helloooo:

 

EDIT: I was reading lateral traverse.

 

Think about Trend Lines for a moment. In an Up Trend, can a Point Three fall below a Point One? In a down Trend, can a Point Three fall above a Point One? Now apply what you know of these answers onto a Lateral Trend.

 

What do you see now?

 

- Spydertrader

[ehorn 10]

O.K. Perhaps, I should have said, "Can you annotate these things correctly in the Price Pane?"- Spydertrader

 

Now that is applying some context! LOL!

 

Well, I snuck by with it this morning - but I recall a discussion we had some time back about how the market can present situations where one is lulled into thinking they are correct until they are presented with a similar situation where they are NOT. The AM tricked me today by giving me just enough rope to hang my PFC premise on. Admittedly, there was little breathing room in there for a DOM short.

 

Think about Trend Lines for a moment. In an Up Trend, can a Point Three fall below a Point One? In a down Trend, can a Point Three fall above a Point One? Now apply what you know of these answers onto a Lateral Trend.

 

- Spydertrader

 

Surely. That darn PT3 was so close to my gap adjusted TL's I was second guessing my carry over values (and without the benefit of auto gap removal - I went with it). I will wipe off the lines and give it another go with a clear head in a morning debrief to see what I can see.

 

Thanks and have a great eve!

 

EDIT: ok, I will take door # 2... Down traverse completion @ 15:05 yesterday for PT1; PT2 @ 11:00 Today; PT3 @ 12:00, then onto accel. If I accept this then it was not this A.M where the initial misstep occurred, but overlooking yesterday afternoons completion which subsequently gave me an inaccurate PFC and placed me on the wrong footing.

 

All times Eastern and [close-of] 5M bar.

Edited February 26, 2010 by ehorn

[MomentumMike 10]

Friday, Feb 26, 2010

 

What I saw today:

 

There was a BO of the CO up-traverse at 10:05. Pace was in line with my expectations and I saw an R2R that appeared to be on the same fractal. When the 10:35 bar “invalidated” the P1 (10:00) of my forming down-traverse, I determined that I had actually seen an FBO. Perhaps I need to be wary of this following acceleration, i.e., maybe FBO's are more common after accelerating.

 

Throughout the day, I fanned the up-traverse due to decreasing volume at the RTL.

I saw another BO of the CO up-traverse at 16:00. I’ll be waiting for P3 of the forming down-traverse on Monday morning, although because of the increase in volume at the end of the day, I think P3 may have already formed on today’s 16:15 bar. Still, the close was high on the bar, so this is TBD.

 

The volatility of the open seems to have a habit of “ruining” a nice formation like this. I’m curious to see what Monday will bring.

 

(All times close-of-bar.)

 

Thanks for any feedback!

[ehorn 10]

My view of the day...

Edited February 27, 2010 by ehorn

[become 10]

Friday, Feb 26, 2010

 

 

 

Thanks for any feedback!

 

You are right about the r2r being a problem, but you don't see that you have a more consistent problem in the rest of the chart.

As you know, the sequences are:

r2r2b2r, and

b2b2r2b.

 

On the same fractal, they alternate. You have annotated an entire ES day with only one such correct sequence, and a partial sequence to end the day. What's going on in between?

 

ehorn's chart of the same day contains nothing but those sequences, on 3-4 levels.

I suggest you study his chart closely to see what he is seeing that you are not.

 

What are the orange and blue dots in the volume pane? They seem to obscure the actual levels....

 

- become

[rs5 10]

Friday 26 February 2010

[rs5 10]

Friday, Feb 26, 2010

 

 

Thank you for your post. After reading your comment on the volume panel of your chart, I realized that I have not seen this r2r b2b combination animal on my charts in a while (while they seem to pop up all over the place in the past). What is different now?

 

As you see from my Thursday's chart I too was looking for a down sequence to follow next. Volume from start of Friday to 10:10est went from decreasing red volume to increasing red volume, appearing to be a r2r. Then as you mentioned by 10:35est market marked a higher high. Thus the market was telling me that I was not in a down sequence, thus what I thought I saw earlier was not a r2r. So what can it be? To me it meant that what I had annotated as the end of the up sequence on Thursday was not correct. The up sequence is continuing. So I scroll back and look to see how this new information might change what I had annotated earlier. And look to see how this new information fits into the picture. What must come next now with this new information? Those are the steps I take. I hope this is helpful to you

 

Happy MADA!

[dkm 10]

25-26 February 2010

 

or perhaps...

[Mr_black 10]

This is my gift for all P/V readers:)

[lowenhardt 10]

Hi guys. First I'd like to say thanks for the wealth of information and consistency you guys have put into this thread. I'm just starting a lengthy read from front to back; I'm only on page 12 at the moment.

 

The reason I'm reading this thread is because I've been watching ES price action/volume intraday (every day) for 1 year and noticed some of my own interpretations of the price/vol relationship appear in the rules set out by Spydertrader in the beginning of the thread.

 

I would like to ask if there is a point in this thread where the guys discuss position sizing/risk:reward ratios, or is that all left to each individual's decision making? Are there any sizing/R:R principles you guys use if a sequence is proven wrong and you 'reverse' long/short? Or is it constant size/R:R every trade?

 

From my own interpretations, some opportunities are more ripe than others, and I go larger size/various R:R. I would appreciate any thoughts you guys have on this from your own trading in the price/vol relationship.

 

Thanks