The Price / Volume Relationship

[Spydertrader 10]

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?

 

Ironically, someone asked me this very same question in an email earlier today. As such, I'll repost my response to them here.

 

I use no money management strategy whatsoever other than to determine each day my anticipated level of focus. IF I have a backlog of emails to return, or if I turn on Skype or MSN (Yahoo, AIM, ICQ, etc.), then I’ll trade fewer contracts – simply because I have a risk of ‘missing’ things because I’m involved with a conversation. However, If I have no distractions, I’ll max out my number of contracts on each trade.

 

In other words, looking at the market through the lens of 'risk vs reward' fails to allow the trader to see that which actually exists - in terms of the market providing information which indicates "the right side of the market." Now, does this mean a beginner, should shove their chips into the center of the table? Of course not. Until you can see (on a consistant basis) that which I have described, then it only makes sense to progress at a pace which does not create stress.

 

Earlier in this thread, ramora described how he does things. Others have made similar posts using one contract at a time - until building up sufficient comfort to progress further.

 

I didn't start trading 10, 20 or even 40 contracts a clip until months after I traded a single contract successfully.

 

Lastly, once you can see (on a consistant basis) that which I have described, you won't even need an answer to the question.

 

HTH.

 

- Spydertrader

Edited March 1, 2010 by Spydertrader
corrected spelling errors

[TIKITRADER 10]

3 decreasing volume bars on open. should be a nice day with the signals from the market

[MomentumMike 10]

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?

 

Thanks very much for your reply. I've attached another attempt at Friday. I reviewed and learned from ehorn's chart and then reworked mine.

 

rs5, thank you for your help as well.

 

Should I be applying a particular set of coloration rules for my volume bars?

Edited March 1, 2010 by MomentumMike
Added Q

[MomentumMike 10]

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

 

Mr. Black, I hope you don't mind a question from a newbie.

 

You have what appears to be an R2R2B2B sequence in your diagram. When is it OK to use this sequence? Are there actually R2R2B2R and B2B2R2B sequences here that are not completely visible on a 5M chart?

Edited March 1, 2010 by MomentumMike
removed original img

[Mr_black 10]

Mr. Black, I hope you don't mind a question from a newbie.

 

You have what appears to be an R2R2B2B sequence in your diagram. When is it OK to use this sequence? Are there actually R2R2B2R and B2B2R2B sequences here that are not completely visible on a 5M chart?

I will answer this ? with a pic .....this is from today YM

......Interesting why the green fractal ends in frame 1

[Mr_black 10]

Here is 1 more ? for you ....Why the last Green Fractal does not End after B2B2R2B??????????

[MomentumMike 10]

March 1, 2010

 

Today's effort. I was focusing on Gaussian levels. I'll start annotating laterals when I think I have a handle on the Gaussians (unless there is a reason I should not wait?)

 

I feel like I have a fighting chance due to the willingness of people on this forum to help. Thanks, all. It would great if I gained enough knowledge to do the same some day.

[innersky 10]

LAT1

 

I've seen this type of lateral a number of times, and I believe it can be described like this:

 

- order of events: the lateral starts at pt2

- context: it's a dominant lateral

it has a sym pennant

after creation a non-dominant lateral boundary test follows, that also happens to be pt3

- this lateral contains p2 to pt3, and a part of pt3 to the FTT

- it always exits in the dominant direction

 

For clarity I've attached the drill image and another example of this lateral type.

 

--

innersky

[TIKITRADER 10]

LAT1

 

I've seen this type of lateral a number of times,

 

--

innersky

 

sorry not to take off track then

Edited March 2, 2010 by TIKITRADER
stay on course

[innersky 10]

how about this . .

 

sure there are several fractals going on here, but that's not the point I'm trying to make.

 

--

innersky

[nkhoi 10]

Here is 1 more ? for you ....Why the last Green Fractal does not End after B2B2R2B??????????

...]

because there was no incr red?

[TIKITRADER 10]

sure there are several fractals going on here, but that's not the point I'm trying to make.

 

--

innersky

 

 

Re-posted to clarify intent of original post to keep on topic.

 

I keep the sequential volume order of events a priority.

Then the lateral boundaries are placed on top of these events. The composition of the lateral, its entry and future exit have a construction built from volume based on this sequential pattern. From this a lateral boundary test is visible from a sequential view.

[MomentumMike 10]

because there was no incr red?

 

For what's it worth.... At 18:40 I see an R2R form at a relatively slower pace. That R2R is followed by a B2B at the same pace, indicating an upward bias. I'm still pondering this.

[nkhoi 10]

because there was no incr red?

For what's it worth.... At 18:40 I see an R2R form at a relatively slower pace. That R2R is followed by a B2B at the same pace, indicating an upward bias. I'm still pondering this.

as compare to black vols next to them thru out that green up move

[innersky 10]

Here is 1 more ? for you ....Why the last Green Fractal does not End after B2B2R2B??????????

 

Because pt2 is not outside the previous container?

 

--

innersky

[Spydertrader 10]

I am currently testing two improveements to the Trade Navigator Platform.

 

1. Automated Gap Removal Tool.

 

2. Freeze Slope of Trend Line.

 

Both Tools should be available in the next upgrade of TN.

 

This first version of The Gap Removal Tool does not move the annotations (e.g. Trend Lines / Gaussian Lines), but subsequent improvements to The Automated Gap Removal Tool will slide all previous day(s)' annotations (and not just pennants, laterals, EH and stitches as the current tool does).

 

By Holding Down the CTRL Key and grabbing the end of a Trend Line, the slope of the specific trend line will remain in place - maintaining its current orientation - as the trader lengthens or shortens a specific line (in an effort to 'clean up' one's chart).

 

Those interested in using The Automated Gap Removal Tool will need to contact the friendly folks over at Genesisft.com in order to have their account flagged once The Automated Gap Removal Tools comes out of Beta Testing. Having your account 'flagged' simply provides permission to use the tool and also prevents someone, who does not understand why anyone would want to remove a gap, from accidently triggering the tool. The tools removes all overnight gaps going back to the start of the current contract.

 

Of course, both improvements come free of charge to anyone who wishes to use them.

 

I plan to report my impressions on both tools to Gensisft this Friday, and I'll repost when the tool leaves Beta Testing and heads into the next Software Version.

 

- Spydertrader

[Spydertrader 10]

Today's Open with Automated Gap Removal Tool functioning. Please note the Laterals, Pennants, Even Harmonics and Stitches all slide with removal of the overnight Gap. Please also note this tool moves previous trading days so as to ensure the current trading day has the correct Price points - allowing the trader to trade directly off the chart.

 

- Spydertrader

[gucci 10]

Spyder, sorry for disturbing you with questions pertaining the wash trades but they seem to be of utmost importance. So bear with me.

 

Do you consider a reversal trade on FBO after a FTT as being a wash tade or do you deem such trades as something each trader does numerous times during RTH just as a part of a routine? Sorry for the poor formulation, but I somehow couldn't come up with a better one.

Edited March 4, 2010 by gucci
spelling

[Spydertrader 10]

Do you consider a reversal trade on FBO after a FTT as being a wash tade or do you deem such trades as something each trader does numerous times during RTH just as a part of a routine?

 

Wash trades, for the beginner (or learning trader, if you will) represent an entirely different matter, than for the experienced trader. For someone attempting to learn the language of the market, Wash Trades build confidence. Knowing one has the ability to exit (at any time) at break even removes fear and anxiety from the trading decision making process.

 

For the experienced trader, a Wash Trade simply results out of market Geometry. Annotation error (should it come into play) occurs with deminished frequency as one gains experience. For example, yesterday's (03-04-2009) midday Lateral Point Three Container provides a great example of the type of 'Market Geometry' which, even if the trader executed their trades appropriately (reverse long at the container start and reverse back short at the container end), depending on one's fill (and slippage), a trader might end up with a very small profit, a breakeven trade, or even, a small loss. Please note, in this specific example, the trader executed flawlessly, but the 'Market Geometry' (along with the midday drop in Volume) prevented the trader from obtaining any significant profit. Moments later, however, Volume returned, Pace Accelerated and the market provided increased profits per unit time.

 

In this scenario, the experienced trader does not concern themselves over any Wash Trade 'gradient level' result. "Bummer! I lost a tic!" Isn't on the table here. The experienced trader simply knows "these things" (flat or extremely low slope) happen from time to time, and as long as they remain on the "right side" of the market, profits will flow into their account like water flows from a fountain.

 

The beginning trader still needs to build such levels of confidence. As a result, practicing 'The Wash Trade Drill" builds this much needed confidence - over time. The results of practicing The Wash Trade Drill, not only tells the trader he (or she) has the ability to exit at breakeven during all types of markets, but more importantly, the results of The Wash Trade Drill, alert the trader to the fact that more work may need to be done, across a variety of areas. In other words, one does not simply randomly enter when performing The Wash Trade Drill. One enters appropriately, then makes every effort to exit at breakeven. In other words, taking a profit or a loss when performing The Wash Trade Drill is not the goal. Done correctly breaking even on each trade is ver difficult to do.

 

With respect to how I view an FBO, my answer would depend entirely upon the specific context in question. I could view it as A. Screw-up. B. Benefit (additional profit) C. Jumped Fractal D. Unnecessary Vocabulary E. Innaccurate description of market information. or F. Perfectly anticipated result.

 

Personally, I do not see the need to describe such things as an FBO. I believe other (perhaps, phrases which provide additional clarity over the generic FBO ) descriptions exist which more accurately represent the information the market has attempted to convey.

 

HTH.

 

- Spydertrader

[treeline 10]

Here is a second version of my 02/24/2010 chart.

 

Much better.

 

- Spydertrader

 

In his second version of 2/24 (attached), double eagle's line weights and font sizes seem to indicate that the green container from 1405-1520 on 2/23 is equal in fractal weight to the green container from 1600 on 2/23 to 0955 on 2/24. The line weights and font sizes also seem to indicate that the maroon (brown?) container from 1000-1025 is equal in fractal weight to the other two containers.

 

Are these 3 containers actually on the same fractal? Or would it be more accurate to say that the containers 1600-955 and 1000-1025 are smaller fractals which are building P1-2 and P2-3 of the teal container, and the teal container is equal in fractal weight to the 1405-1520 green container?

 

It's probably clear that I'm considering a couple different interpretations of Spydertrader's "Much better" comment. Thanks in advance for any clues.

Edited March 4, 2010 by treeline
originally typed the wrong color for 1600-0955

[NYCMB 10]

In his second version of 2/24 (attached), double eagle's line weights and font sizes seem to indicate that the green container from 1405-1520 on 2/23 is equal in fractal weight to the green container from 1600 on 2/23 to 0955 on 2/24. The line weights and font sizes also seem to indicate that the maroon (brown?) container from 1000-1025 is equal in fractal weight to the other two containers.

 

Are these 3 containers actually on the same fractal? Or would it be more accurate to say that the containers 1600-955 and 1000-1025 are smaller fractals which are building P1-2 and P2-3 of the teal container, and the teal container is equal in fractal weight to the 1405-1520 green container?

 

It's probably clear that I'm considering a couple different interpretations of Spydertrader's "Much better" comment. Thanks in advance for any clues.

 

Hi Spydertrader and all who are interested in PV relationship

 

I have the same question as treeline had.

 

Besides that, I would like to know how to treat "old trendline A" after we have Accelerated "trendline B" and "trendline C". Shall we -----------

 

1) Discard old trendline A?

 

2) Up grade old trendline A one fractal slower?

 

Any help would be greatly appreciated. TIA

[ptunic 10]

Thursday, Mar 04, 2010.

[Spydertrader 10]

Hi Spydertrader and all who are interested in PV relationship I have the same question as treeline had.

 

After reviewing treeline's questions, perhaps, they could best be addressed by the person who created the annotations.

 

Besides that, I would like to know how to treat "old trendline A" after we have Accelerated "trendline B" and "trendline C".

 

Unless you have never accelerated a trend line in all your years of annotating charts, you should already have the answer to this question. If you do not realize that you already know the answer to this question, what does the market do moving forward from the point in time where you feel things become confusing?

 

- Spydertrader

[ptunic 10]

Friday, Mar 05, 2010.

[Mr_black 10]

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