Sam Seiden-Understanding The Exact Process Behind The Movement In Price

[doubletop11 10]

Sam Seiden's information is very logical and generally quite easy to understand. It's basically attempting to identify high probability areas to buy and sell. Conceptually it's a little different than traditional support and resistance, but not that much. I like the fact that it quantifies with a numeric scale based on the 6 "odds enhancers" whether to pass on the trade, wait for confirmation, or trade with a resting limit order.

 

Support/resistance, supply/demand, whatever you want to call it, is all relative.

 

I to think it is all relative. However, something that I have found while using the APA Zones is that there's this idea of confluence of zones. IE an ES trade that I just got out of here's how it looks. I use the 15min chart with a bunch of other charts. But I enter on a 377 tick. Reason being is because you can see the intra-zones of the bigger time frames on the tick chart. Therefore the stop loss on this trade was 2 ticks. This works a lot and after 10 mins I pull up my stop loss to +1 or +2 just to play it safe (pending market). Hold until it either comes back on me or I get my targets. This doesn't work all the time, but It does a majority and I have an amazing RR ratio because of it.

[breakthrough 10]

However, something that I have found while using the APA Zones is that there's this idea of confluence of zones......

 

I am a student of Sam's and I can tell you that he also looks for a confluence of sorts in his Supply/Demand theory along with his odd's enhancers. He has always told us to look for a zone on a larger time period then drill into that zone with smaller time frames to fine the turning point that we should put our money on. I have checked out the APA Zones and it has made my life easier to identify these zones on multiple time frames and multiple markets. With the free time, I can look at more markets and choose to take the zone or not based on my criteria and Sam's "odd's enhancers".

[joshdance 10]

Whatever method one uses to "map" the market to identify value and trade location, whether it's an EMA, fib area, POC, VWAP, pivot, prior support, round number, or anything else--the difficulty in trading is essentially this--will the market reverse at this area, trade through the area, or rotate around the area?

 

Any of the above-mentioned ways to determine a potential trade location is only half the battle. Take your chart for example: in a 38 point ES range on the chart, there are 6 areas you've identified as potential tradeable areas, with the total range of those 6 areas being 11 points, or 28% of the total range on the chart. That information, by itself, is simply the map.

 

Now, the skill in trading (one I figure I will always be striving to improve upon and become better at even when I can call myself "good" one day) really is: what do I do when price gets there? Again, in your chart, price is at the lower end of the third zone from the top. There are three zones above, and three below. Do I short now? Do I wait until we get higher and short at the highest zone? What if price reverses at the second zone from the top and doesn't make it all the way? Do I short there? If I do, where do I take my profit? If price goes down now, do I buy at the next zone, and if so, is my target the previously visited zone?

 

So many questions, which simply cannot be easily answered. Simply buying or selling at the next zone reached is obviously not a formula for consistent success, and assumes a market that is always ranging, and ranging within a very small range for that matter. The market being observed must be read using some method to determine it's possible future direction. The ability to do this, IMO, is what makes a trader successful. I think having the "map" is essential and is part of a good plan, but knowing how to actually read the map, and then drive and navigate the roads, is where the skill lies. Put another way, even a young child can look at a "zone" or line on a chart or any other measure of value, and click a button to place an order. But this is not trading, is it?

[doubletop11 10]

Put another way, even a young child can look at a "zone" or line on a chart or any other measure of value, and click a button to place an order. But this is not trading, is it?

 

Personally, as I have traded. I have found that 80% of the trading battle is in your mind. the rest is technicals / fundamentals. There's trade management, money management, etc. So I would agree with you. Having a map and being able to read it is important. Yet all of us need an edge more then just having a map.

I guess the real question in this thread is how good is the supply/demand zones, support/resistance map?

[doubletop11 10]

Can someone tell me exactly how those pivot point highs and lows are defined? In that period of sideways consolidation, there are two lines. How do you determine exactly where to put those two lines? Are the lines based on the highest close and the lowest close within that area?

 

Hey Tradewinds, I can't tell you every time how to identify those pivot high/low areas. It's taken me a lot time and a lot of equations to get it where it is right now. But the basic idea of the zones that I use is to take the wick of the pivot bar. AKA: "bar in control" as I like to call it. Then we will run it down to either the open or the close of that candle. This is all based on a couple of different things and every once in a while you take the whole bar.

First: Range: look for other bars that are in the same range as that "bar in control", BIC.

Second: If this is a huge bar compared to the preceding or succeeding bar look at just taking the wick.

The idea is to get the true essence of the zone. I personally like smaller zones. Yes, you will miss trades, everyone does.

The other thing to do is look at multi-time frames to help you determine if your zone is right. A lot of time these zones will have that confluence that I talked about earlier. This help in making sure that zone is the right size. It's all very techie. So if you want to get together and talk on skype or IM. I'm more then game.

 

As far as getting it over to tradestation, good luck! I know several have attempted this feat. So after you get logic down of zone drawing and a way to store them into memory until violated. You still need a way to draw a rectangle from easy language. Easy language isn't so easy. Tradestation won't let you draw rectangle or extend that rectangle into the zone that we would need it to be. Not even mentioning how to calculate the bounce count on a rectangle that doesn't draw. So if you want to program it yourself by all means. I wish you luck. It's taken me a long time to figure that stuff out.

As I said before, hit me up and we can talk, after all we are all building on information from others anyways.

cheers,

[VTK 10]

The ability to do this, IMO, is what makes a trader successful. I think having the "map" is essential and is part of a good plan, but knowing how to actually read the map, and then drive and navigate the roads, is where the skill lies.

 

Good one Josh!

 

Actually all of us are dealing with odds.Being able to pinpoint when odds are highly in our favor and when not is essential thing.In other post in regard Sam's strategy you have said;"...and notice how well it works sometimes, and how miserably it fails at others."

Guess what..again it's about odds.And that is why i am using odd enhancers to figure out are odds in mine favor or not.As i said earlier there are bunch of supply/demand levels all over the place on all timeframes.If it would be easy as picking any level and making money out of it then me and others using this strategy wouldn't have any edge.

Being able to pinpoint key levels of supply and demand "is where the skill lies" when it comes to this strategy.

Cheers!

[zdo 20]

doubletop11, et al,

 

Good points about SR being "relative", intermittently powerful, etc. Even though I use them all the time (under certain mkt conditions), in my mind they always seem like they have the 'strength' of a vapor trail in the sky...

 

??'s

You mentioned the "wick of the pivot bar" for zone creation; which, at first glance, is not creating quite the same zones as those used by Seiden (Wycoff, dbPhoenix,). Basically, Seiden's appear to be roughly centered around horizontal 'congestions'. Is the "wick of the pivot bar" the basis of the APA Zones? Is the APA algorhtm disclosed?

 

joshdance, re: "Whatever method one uses to "map" the market to identify value and trade location, whether it's an EMA, fib area, POC, VWAP, pivot, prior support, round number, or anything else--the difficulty in trading is essentially this--will the market reverse at this area, trade through the area, or rotate around the area?" Good post. ... was dealing with this same issue over in the http://www.traderslaboratory.com/forums/technical-analysis/10474-your-mean.html thread ... that question produced five pages of stuffing and 3 answers to the question

...even at TL

 

Thx.

 

zdo

[VTK 10]

Basically, Seiden's appear to be roughly centered around horizontal 'congestions'.

 

That's because those 'congestions' represent "equilibrium" between supply and demand.As soon as last order on one side is filled price will move away from area of basing.In that case area of basing is area for which we can tell that there are more buyers than sellers or other way around.

 

 

joshdance, re..:--the difficulty in trading is essentially this--will the market reverse at this area, trade through the area, or rotate around the area?"

 

Simple laws of supply and demand are guarantee that there are price levels where odds are highly in mine favor so i just look for those areas to solve those dilemmas.

By quantifying supply and demand of any market it's possible to anticipate next move of price with quite high degree of accuracy.

Just look below at SPX500 monthly...When price is so high on chart and it reaches quality supply level like it did it just can't pierce thru it like it wasn't there because supply exceeds demand at the level.Same is for lower demand level.It can't just run thru it as price is quite stretched and it's reaching quality demand level.

http://img683.imageshack.us/img683/6578/spx500.png' alt='spx500.png'>

 

For me,looking at the markets thru googles of supply and demand made all the difference when it comes to trading.

[zdo 20]

looking at the markets thru googles of supply and demand made all the difference to me too :rofl:

 

... same questions still... Is the "wick of the pivot bar" the basis of the APA Zones? Is the APA algorhtm disclosed?

 

 

 

Have a great weekend all...

[VTK 10]

I didn't mention those APA zones and i don't know anything about them.

 

P.S.

English is not mine native language so give me a break from all that laugh because one error...:security:

Edited September 2, 2011 by VTK

[doubletop11 10]

looking at the markets thru googles of supply and demand made all the difference to me too :rofl:

... same questions still... Is the "wick of the pivot bar" the basis of the APA Zones? Is the APA algorhtm disclosed?

Have a great weekend all...

 

The software is not disclosed. I do have copyright on any software that draws automatic support/resistance zones or supply/demand zones for the financial markets.

 

I agree with VTK it's about those areas of consolidation! The software just makes it plot on your chart for you.

I don't know how geeky you want me to get, but I don't mind sharing zone creation with you in code view C#. So you would have to know how to read that. but if you would like to see that please PM me.

 

Back to VTK really good perpective: I'm going to try to break it down a little on what I have observed with zones through trading and through development.

 

I'm sure VTK can draw theses zone in his sleep. However, in a computer that is a lot more challenging. Which makes zones great in theory yet hard to quantify. Right now, I believe that software does it 90% correctly to the way VTK and I see the zones day in and day out. The other 10% is still a work in progress and why I provide free updates. The zones in the software are adjustable by the user to make sure you can tweak it to how you see it.

 

So here's some logic for you.

 

Swing High:

If the pivot bar is red

- find the surround bars bars and look for range of those bar set by the strength setting (10% that is lacking in the current release)

-compare the 2 bars next to the swing high, find the common range of them. If they open together and close together, then draw the bottom to where that commonality ends.

 

If the bar is green

-As as the top except I have found that minor differences on which bar type forms the swing high. So the calculations differ a little.

 

Else

If pivot bar is smaller then both bars on either side, Draw whole bar as zone.

 

 

Then we do the same thing for the swing low.

 

Hopefully that helps to simplify it and make it more clear.

Sometime zones are only the wick, sometimes the whole bar. It just depends on price action. I have tried to base it around a lot of testing and pretty much exactly how I believe both VTK and myself draw zones. So far from what you have drawn VTK I completely agree. I also personally try to draw a smaller range of a zone based on testing of me and a group of about 10 beta testers.

 

Please also remember, I'm only looking for 1 bounce off of any zone, anything after that I need confirmation that price is leaving that area before I get in. That's why bounce counts are so important. If you personally would like to see that logic in C#, I'm more then game, I just don't want to get to geeky, or off topic into this thing.

 

On another note, if you guys would like to be apart of the skype community that all draw zones together and the forum there of. go to activetrader.ning.com. It's a free forum community based around what we are talking about. Traders helping traders is our slogan.

We have a lot of videos on there and it's a community. We do some of live trading together in webex rooms. And if you guys want to trade with me, just PM or find me on skype, I'll help in anyway that I can. However, I am finding it challenging to trade infront of people because I usually watch so many markets and they have a hard time knowing exactly what time frame my cursor is on. But I'm working through it and it's just going to make a better person and trader.

 

P.S. If you use a screen capture like Jing(from techsmith) and record your trades, you will grow by leaps. I started doing it, wow. Then I thought about posting them, my partner said I can't because I giving away to much.

Cheers,

[joshdance 10]

because supply exceeds demand at the level.Same is for lower demand level.It can't just run thru it as price is quite stretched and it's reaching quality demand level.

 

(not so) small semantic correction -- supply previously exceeded demand at the level, and vice versa. It's a different market, different traders, different economic environment (particularly in a monthly view)--we have no idea until we observe how traders behave at this price level whether supply or demand is in excess.

[steve46 12]

Josh

 

You have hit the nail on the head

 

I wrote about supply/demand zones in my thread "An Institutional look at S&P Futures". I do it differently than Mr. Seiden..but I am guessing that the concept is similar...what I know to be true is that drawing the nodes (my term for "zones") isn't a magic "set it and forget it" deal....

 

In fact all those nodes do is project previous areas where trending has occurred or where there was (past tense) a transition from balance to imbalance in the order flow. What is left out of the equation is the need for participants to come in and make it happen once you initiate the trade. That is why I need not only confluence, but a specific type of confluence ("time based pivots") that is provided by bigger fish (institutions and funds), and EVEN THEN you still have to deal with the influence of automated execution that can come in at any time and change the picture....

 

Ultimately even with these nodes (if you use my method) or "zones" or whatever else you call it, you still have to have a way to confirm that you are on the right side (if you want to make consistent money) and in my opinion the only way to do it, is to learn to read the tape. As I have mentioned once you get that skill down it is (relatively speaking) a walk in the park...because you can see when the institutions come in to buy or sell, and you can see the influence of automated execution as it enters the market (it shows up on the tape in a number of ways).

 

Steve

[JohnHL 10]

Just look below at SPX500 monthly...When price is so high on chart and it reaches quality supply level like it did it just can't pierce thru it like it wasn't there because supply exceeds demand at the level.Same is for lower demand level.It can't just run thru it as price is quite stretched and it's reaching quality demand level.

 

I love it when that final pull-back bar just pokes its nose briefly into the previous supply zone, then heads south at a rate of knots. That is Seiden at his best.

[doubletop11 10]

Ultimately even with these nodes (if you use my method) or "zones" or whatever else you call it, you still have to have a way to confirm that you are on the right side (if you want to make consistent money) and in my opinion the only way to do it, is to learn to read the tape.

 

Steve

 

what do you mean by reading the tape? Level II data? Time/sale data?

[steve46 12]

Reading the tape = Time & Sales Strip....$VOLD/$ADD (Esignal or equivalent) and NYSE TICK. I monitor all three data points.

[Deusomega 10]

what do you mean by reading the tape? Level II data? Time/sale data?

 

He means "reading the tape" bro.... He will not be specific trust me

[doubletop11 10]

I've really tried to "read the tape" ie: time/sale and level 2 data. However, because of the markets that I watch mostly TF and CL. I just see a small spread happen every once in a while and when someone puts down 100 contracts or so. I've head of this before, watched some youtube videos of people "doing it" but I have yet have it help me at all. The zones make so much more sense to me it shows me the imbalance of buyers/sellers. Watching numbers just fly on and off your screen and seeing a ever so small spread doesn't seem to help me at all. Do you have any good reference material? I would really like to understand the merit in this practice, however I have failed to see any to date.

[steve46 12]

He means "reading the tape" bro.... He will not be specific trust me

 

Actually "Bro"....I have been as specific as I can be....simply put it is impossible to teach on a website because the "tape" rolls by so fast (the result of automated execution). Telling someone what to look for means very little....in my class (which is closed to new students) I show them while it is happening... and even then we have to replay and go on to the next situation quite a bit before they get the idea...like most things that are worth doing, it takes effort and a lot of time to get right..

 

My suggestion is find a good skilled professional and instead of acting like an ass, ask if you can watch while they trade.

 

by the way, I am doing this as a one time thing and I am not going to do it again....I have 4 students and my class is closed...my class was never intended as a commercial venture, but as a favor to my teacher.....Sorry I can't be of more help.

 

Good luck to you

Steve

Edited September 5, 2011 by steve46

[joshdance 10]

I've really tried to "read the tape" ie: time/sale and level 2 data. However, because of the markets that I watch mostly TF and CL. I just see a small spread happen every once in a while and when someone puts down 100 contracts or so. I've head of this before, watched some youtube videos of people "doing it" but I have yet have it help me at all. The zones make so much more sense to me it shows me the imbalance of buyers/sellers. Watching numbers just fly on and off your screen and seeing a ever so small spread doesn't seem to help me at all. Do you have any good reference material? I would really like to understand the merit in this practice, however I have failed to see any to date.

 

What do you mean "small spread" dt?

 

If you can combine a good trade location with a good read on order flow happening at that location, then you have more than if you have just either one by itself--I may see a prior support level, but if I see that the sellers are overwhelming the buyers at that level, then it's better to either join the sellers, or pass on the trade, regardless of how much demand their was previously at that level. Conversely, just buying or selling based on the tape alone is not particularly a good plan because of all the waves and back-and-forths in the market. But combining the two can yield a good low-risk high probability trade opportunity.

[VTK 10]

Lessons from the Pros - 09/07/2011 Issue - Featured Article: XLT Odds Enhancers - The Key to Finding Turning Points

 

Cheers!

[VTK 10]

Here is another Sam's article from March.It's really deep and almost spiritual:)

 

Lessons from the Pros - 03/01/2011 Issue - Featured Article: Don't Be Afraid

 

Regards!

[neutral 10]

Here is another Sam's article from March.It's really deep and almost spiritual:)

 

Lessons from the Pros - 03/01/2011 Issue - Featured Article: Don't Be Afraid

 

Regards!

 

to become a butterfly, you must want to fly so bad that you are willing to give up being a caterpillar.

[doubletop11 10]

What do you mean "small spread" dt?

I just mean noticing the difference between the Bid and Ask. and then on the "level II" in NinjaTrader. You can see the different levels like this.

[Gabe2004 10]

Just an example of Sam Seiden's manipulative and inconcistant method. Not to talk about lack of customer service skills.

On the left is one of Sam's charts and on the right is my question to him which he never answered.

If there was NO DEMAND in the area that Sam marked as such, why is it that price bounced off of that area 20$-40$ effectively doubling the stock price.

It looks like a DEMAND area to me.....