Real Time Price Action- Clue to Puzzle?

[mister ed]

Db - firstly welcome, I am sure your contributions will be enormously appreciated here at TL.

Now a questiom, would using a Point and Figure chart with a smallish box size serve the same purpose in 'opening up the bar'? Advantage would be you don't have to specify a time-period for the bar the price will continue up or reverse depending on buying/selling pressure alone?

[DbPhoenix]

It might, but I dont do P&F. What matters most, though, is getting a great price and making money with as little risk as possible. If P&F helps you do that, go for it.

Db

[DbPhoenix]

	Quote:
	It's easy to say that this or that bar is "no demand" or a "test" in hindsight. But when the market is open there can be conflicting signals and I don't yet completely understand how a trader can identify the right spikes in volume as demand/supply/etc, especially on such a low timeframe as the 1-min charts that have been posted here.

That's why I've come to rely more heavily on support and resistance and what happens there and pay less if any attention to what may or may not be signals that happen elsewhere. For a long time, I thought of the lower timeframes -- particularly the 1m and lower charts -- as being "noise" because everybody said so. And they certainly seemed so. But then I realized that they seemed to be noise only because those -- including me -- who thought so weren't listening (sort of like the alien languages on Star Trek that sound like white noise on a radio). Then someone -- I forget who -- stated that, as far as the markets were concerned, there was no such thing as noise. It all contained information. That one may not recognize it, or understand it, was beside the point.

If you're going to have important S/R on the weekly at 1800, it's going to be there in every other timeframe as well. Other S/R levels will reveal themselves as one travels down through the timeframes, but he isn't required to trade every last one of them.

	Quote:
	Quote: Note that the selling climax does not exactly jump out at you. If you didn't have support drawn at 1765, you might not even notice it. But there or nearby is the place to enter, if you're going to enter at all. In you chart from post #138, could you not draw resistance at 1778? It looks like there was a slight volume spike around 13:09 immediately followed by a downbar, isn't this a rejection? It looks like price found resistance on the previous day there too. And it is around that 'special' 1780 level that you've talked about too...

Sure. 1780 has been important for both S & R for some time now, as has 1800. But that wasn't germane to the question or to my answer, so I didn't get into it.

As to the rejection, there's another one at the far left, but I was already short, so I didn't particularly care. The short had taken its own sweet time to pay off that morning, so I mostly just wanted the trade to be over.

You'll find many of these rejections throughout a day, but are there enough traders involved to make the rejection important enough for you to profit from it, or are they just looking for something to do until Happy Hour?

	Quote:
	Quote: Beginning at the end of the day on the 21st, then tested twice on the 25th. It didn't seem to be more than minor support for pre-planning, but price didn't think of it as minor when it was reached for the second time that day. That entire zone from 1760 to 1770 established on the 19th and 20th offered potential support, of course, but 1765 became a kind of fine-tuning. But how do you know if support from a previous day or week will still be important? If you look at a chart and you can point out where support is, do you take note of that level? I mean the next day it might be breached and so you think it's incorrect. But the day after that it may be tested. Is support from two weeks ago as important as from two days ago? I find it hard to reconciliate all these different support levels from various days and various different timeframes... It looks like support (or resistance) is all over the place all of the time

Nobody said it was easy (except the people selling courses and software).

I start with the macro, as I show on p 50 and following in the PVSR pdf I posted to my Blog. Then I work my way down to the more minor S&R levels. On my chart, I use lines of three different thicknesses, the thickest being reserved for major S/R that's lasted for weeks or even months, the next for S/R that's not quite so important, then the thinnest for what has been S/R only now and then and hasn't been terribly reliable but has also provided some excellent entry/exit signals (most often I find that what looks like minor S/R is actually something more major that I just overlooked; if I go ahead and plot the line, I'll notice other consistent levels over past days that just never registered with me). I also use three different colors for support, resistance, and the midpoint (what Wyckoff calls the equilibrium level [similar to what MP calls the POC]). This may seem to others like unnecessary busy-ness, but it helps me to see at a glance where I am while also avoiding a double-think at a time when I don't need to be doing that.

And, yes, S/R is all over the place all the time. And a scalper is likely to be concerned about those minor levels because he wants a reliable entry that results in a quick profit. But I prefer to make one or two trades a day and ride them, so I wait for tests of the more important levels. If price never gets there, I don't trade that day.

	Quote:
	Quote: I hesitate even to bring up S/R since the behavioral dynamic driving price here may not even lend itself to trading ranges, or at least not the pretty kind one finds in futures. So are you saying that FX moves are less "clean" than those in futures? May I ask if there is any reason in particular you are trading the Nasdaq? Over at ET a lot of people are trading the S&P. Do you think the Nasdaq is less choppier?

I haven't studied FX so I don't understand it particularly well, nor do I understand the people who trade it. Without any of that, I'm flying blind, and why bother? And not having volume doesn't make things any easier. But if someone else wants to give it a shot, what business is it of mine?

As for the NQ, I played with the NQ, ES, YM and ER for quite a while, but I understood the NQ better. It appeared to provide more reliable S/R than the others, it had a wide enough range to offer decent trading opportunities (especially after the extraordinarily long dry spell of tight ranges in all the index futures), there was a lot of volume in it, and because of its constituents, it moved a little differently, often leading the others, generally acting independently. The ES has always reminded me of an old lady. The NQ is something more of a hell-raiser. The YM is something of a new guy who's trying to become one of the cool kids, but they haven't reached the point of letting him sit at their table at lunch. The ER is something of a toddler who can't make it from one end of the room to the other without banging into everything along the way.

	Quote:
	Quote: I'm not ignoring you. I have a very difficult time dealing with all the layers and layers of overcomplication and nonsense jargon that have been laid over what are essentially basic and really very simple concepts. Wyckoff founded the SMI in Phoenix? Wyckoff died in 1934. A final question, I looked at your "recommended literature", but there seems to be nothing relating to Wyckoff about it. I have already read the Day Traders Bible in the past, but to be honest it didn't really help me understand the markets better, there are little charts in it too. So perhaps somebody could point me in the right direction and tell me where to find all these Wyckoff gems?

Depends on what you mean by "related to Wyckoff". It's all related to Wyckoff's concepts in one way or another, but it's true that the meat of it all is Wyckoff's original course. Unfortunately, SMI holds the copyright and won't make the course available unless you plunk down $950 for the whole package, including the original course and all the mucking about they've done with it. Someone gave me the course as a thank-you for what he said he learned from me, and I took what to me was most pertinent to modern trading, added what I'd learned from others of similar mind and from my own trading, and created my own book.

	Quote:
	Quote: Here's a simple, straightforward example. There are many others in the material in my blog. Support is at 1800. I doubt there's anything new here, whether one follows VSA or Wyckoff or SMI. But when I see the retest of support with far less trading activity, that says to me "We're done". And I know they're not lying because of what happens to price. Effort, result. It certainly "looks" simple and easy, but one man's exit signal can be another man's entry signal. I mean why did you not go long where you closed out? You said support was at 1800, so would this not be a valid entry then?

Yes, it would be. I didn't because I was tired. When I get tired, I tend to do stupid things. I don't have to make the maximum number of points every time I trade. The market's there every day.

As for my "homepage", I don't have one. Home is wherever my stuff is, and at the moment, my stuff is here in my Blog. I'll look into whatever I posted in my profile, though.

[zeon]

Let me first say thank you for taking the time to reply to all my questions. I am definitely learning along the way. What you're saying about there being no noise in the markets is definitely making me think. For instance if price reverses, it usually does not do in mid-air. It's like the market is one big seemingly random chaos but once you find the key to decrypt that information everything becomes clear (or at least that's what we hope). But does this lead to believing that everything that happens in the markets happens for a reason? I particularly like your analogy to Star Trek, being a trekkie myself

	Quote:	DbPhoenix
	If you're going to have important S/R on the weekly at 1800, it's going to be there in every other timeframe as well. Other S/R levels will reveal themselves as one travels down through the timeframes, but he isn't required to trade every last one of them.

And that's where my problem lies. How do I identify important support or resistance levels intraday? I often have no problem identifying support on a higher timeframe, but these "zones" are too wide to trade of really. Like you show on your chart in the PDF files there are macro levels which are relatively easy to identify. But these zones are extremely wide when you plot these lines on an intraday chart.

I don't know about the NQ but on the ES for example I see zones as wide as 7 points that offer support. Often I see price reacting to these levels during the day, but sometimes it's on the upper boundary of the zone, other times it's on the lower boundary. But using stops that are wide enough to compensate (> 7 points, so around 10 points) on the ES isn't very useful when the market on a daily basis moves around 20 points. What happens to me a lot is that I take a long trade from support on decent volume, only to get taken out because price finds support 15 minutes later 3 points lower and then reverses.

Other times it looks as if I got the entry near-perfect on the lower boundary of a support zone, but price breaks support and immediately travels back into the range. A false break in a matter of speaking. When I look on a higher timeframe (30minutes or so) then I see a nice hammer-like formation forming. But on a 3 or 5-minute timeframe (which are the ones I use most of the time) this isn't visible, let alone on a 1-minute timeframe.

	Quote:	DbPhoenix
	I start with the macro, as I show on p 50 and following in the PVSR pdf I posted to my Blog. Then I work my way down to the more minor S&R levels. On my chart, I use lines of three different thicknesses, the thickest being reserved for major S/R that's lasted for weeks or even months, the next for S/R that's not quite so important, then the thinnest for what has been S/R only now and then and hasn't been terribly reliable but has also provided some excellent entry/exit signals (most often I find that what looks like minor S/R is actually something more major that I just overlooked; if I go ahead and plot the line, I'll notice other consistent levels over past days that just never registered with me). I also use three different colors for support, resistance, and the midpoint (what Wyckoff calls the equilibrium level [similar to what MP calls the POC]). This may seem to others like unnecessary busy-ness, but it helps me to see at a glance where I am while also avoiding a double-think at a time when I don't need to be doing that.

If you plot these three different kinds of S/R, don't you have lines drawn all over your chart? In some of your earlier posts on ET you had charts with "important" levels such as the previous day high, low and close... If I understand correctly you've changed your stand on some things you posted in the past. Does this include things like PDH? In my own trading, I used to draw lines around the PDH and PDL ànd use S/R from a higher time frame, say an hourly chart. Sometimes I'd get really nice trades off these levels from the previous day, but my frustration comes from not knowing what or how to do when I have a line drawn on say 1358 from the previous day but also two lines that identify support between 1345 and 1355 where important support is.

	Quote:	DbPhoenix
	And, yes, S/R is all over the place all the time. And a scalper is likely to be concerned about those minor levels because he wants a reliable entry that results in a quick profit. But I prefer to make one or two trades a day and ride them, so I wait for tests of the more important levels. If price never gets there, I don't trade that day.

You're hitting the nail on the head here. S/R is all over the place all the time, and that's exactly what's causing me a lot of frustration. No one knows when what level will be important. Price seems to "forget" about support too a lot of the time. I think I've come to understand the basics after studying charts for a couple of years, but despite some occasional success in my trading, I have yet to get consistent in my results.

	Quote:	DbPhoenix
	I haven't studied FX so I don't understand it particularly well, nor do I understand the people who trade it. Without any of that, I'm flying blind, and why bother? And not having volume doesn't make things any easier. But if someone else wants to give it a shot, what business is it of mine?

I'm not particulary interested in FX, but I do want to know what I can do to understand the people who are trading an instrument. What do you mean by that? Getting to know actual traders? Are people that trade the ES different than those who trade the NQ like yourself?

	Quote:	DbPhoenix
	The ES has always reminded me of an old lady. The NQ is something more of a hell-raiser. The YM is something of a new guy who's trying to become one of the cool kids, but they haven't reached the point of letting him sit at their table at lunch. The ER is something of a toddler who can't make it from one end of the room to the other without banging into everything along the way.

I don't know if I understand your analogy completely. With an old lady do you mean it moves slowly? Because when I look at charts, there seems to be a striking similarity between the ES and the YM a whole lot of the time. The NQ and Russell seem to follow a path of their own. Anyway, I've focused my efforts on the S&P, but I take it you see the market a trader picks irrelevant as the same principles would be valid amongst all markets, right?

	Quote:	DbPhoenix
	Yes, it would be. I didn't because I was tired. When I get tired, I tend to do stupid things. I don't have to make the maximum number of points every time I trade. The market's there every day.

Isn't that an emotional reaction to trading? You say the trade would be valid but you didn't take it because you were tired. I'm convinced you know what you are doing, but how does a trader know when to quit? Should he quit after the first winning trade? The next three days he might have all losing trades. If you can make it a winner the first trade of the day, than that's fine I guess. But most of us probably don't manage to do that.

Yet again, a long post and I hope you don't mind all these questions. It just looks as if there's a new door opening and I've found some new motivation at exactly the right time to continue my quest in becoming a better trader.

[DbPhoenix]

	Quote:	zeon
	Quote: If you're going to have important S/R on the weekly at 1800, it's going to be there in every other timeframe as well. Other S/R levels will reveal themselves as one travels down through the timeframes, but he isn't required to trade every last one of them. How do I identify important support or resistance levels intraday? I often have no problem identifying support on a higher timeframe, but these "zones" are too wide to trade of really. Like you show on your chart in the PDF files there are macro levels which are relatively easy to identify. But these zones are extremely wide when you plot these lines on an intraday chart. I don't know about the NQ but on the ES for example I see zones as wide as 7 points that offer support. Often I see price reacting to these levels during the day, but sometimes it's on the upper boundary of the zone, other times it's on the lower boundary. But using stops that are wide enough to compensate (> 7 points, so around 10 points) on the ES isn't very useful when the market on a daily basis moves around 20 points. What happens to me a lot is that I take a long trade from support on decent volume, only to get taken out because price finds support 15 minutes later 3 points lower and then reverses. Other times it looks as if I got the entry near-perfect on the lower boundary of a support zone, but price breaks support and immediately travels back into the range. A false break in a matter of speaking. When I look on a higher timeframe (30minutes or so) then I see a nice hammer-like formation forming. But on a 3 or 5-minute timeframe (which are the ones I use most of the time) this isn't visible, let alone on a 1-minute timeframe.

If the macro S/R forms a range that is consistent enough and wide enough to trade, then you'll have S/R also within that range (see my Blog post on Support & Resistance and Trading Trend). Sometimes price will, for example, drop to a previous support zone and bounce nice and clean, creating those lovely swing points that always wind up in books and articles and video presentations. But it is the