Spydertrader

(M-A-D-A) Monitor, Analyze, Decide, Act. This four part paradigm represents the process by which individuals choose to enter into a trade. We will spend the vast majority of the time focusing on, and learning to, properly Monitor the market in an effort to thoroughly, completely and correctly annotate a chart. Although The Price / Volume Relationship operates across every trading instrument, for the purposes of this discussion, we will use the S & P 500 E-mini futures contract (commonly referred to as ‘The ES’). Please use a Five minute ‘Bar (OHLC) Chart’ (set for RTH [9:30 AM to 16:15 Eastern]) - only showing Price and Volume – you’ll require nothing else. To Be Continued ... - Spydertrader

Volume leads Price. Always. And without exception. In order to comprehend how the above statement (both in concept and in practice) represents a true and accurate assessment of market dynamics, a trader needs to understand the basic structure of all markets and how such markets operate. Since all markets represent a fractal nature, it turns out, Mandelbrot had it right all along. By correctly and thoroughly applying a framework, in an effort to ‘see’ the various fractals operating on a market, a trader can begin to see the Price / Volume Relationship at work – all day, every day. Succinctly, unless and until the components of one fractal reach completion, the next slower fractal cannot begin. It trading terms, unless and until the Volume Cycle Sequences reach completion, the current Price Trend cannot end. In general terms: if Volume is increasing, then the Price Trend is continuing. Such is the essence of the Price / Volume Relationship. Much debate has ensued over the years with respect to whether or not Volume represents helpful and / or useful information with respect to understanding Price change. In addition, those individuals who do find value in Volume analysis have long argued their viewpoint for the best methodology for divining the information from Volume itself. For those interested in continuing such discussions, I recommend reviewing the plethora of threads already in existence as I have no plans to engage in yet another long drawn out Lincoln-Douglas, Presidential or Academic style debate. Rather than create yet another environment for posting opinions or sowing the seeds for epic battles over dogmatic philosophies, my goal here is to provide a framework, for anyone with an interest, to learn how to learn to ‘see’ the Price / Volume Relationship at work as shown through the fractal nature of all markets. In other words, this thread isn’t about me teaching people to trade, ‘calling’ trades or seeking converts to a new religious cult. This thread is about the individual trader developing the skills needed, and the knowledge required, to learn to trade based on what the market says, instead of what the trader believes (or I post). So, what can one expect from this thread? Over the next few posts, I plan to detail the fundamental building blocks used in order for a trader to thoroughly, correctly and consistently annotate a chart across three separate trading fractals. By learning to see the visual cues provided by Price and Volume (Trend Lines and Gaussians), a trader can develop the ability to see the Price / Volume Relationship at work. I expect a number of questions with respect to the need for me providing clarification on a number of posts moving forward. Everyone should feel free to post as frequently as necessary in order to completely comprehend the various aspects of The Price Volume Relationship as presented. I encourage active participation from those attempting to learn. In addition, everyone can expect to see plenty of information which flies in the face of conventional wisdom and long held belief systems. Contradicting conventional orthodoxy and religious dogma, when it comes to individual trader beliefs, often creates an almost visceral response from those who feel (for some unknown reason) threatened by the mere discussion of alternative viewpoints than exposed in the mainstream literature. Again, I have no desire to debate the validity of that which I use to trade on a daily basis. Anyone who feels they ‘know best’ or simply considers the information already presented devoid of value, should stop reading immediately. To reiterate, this thread will not teach you to trade. If you are looking for a canned set of rules for entry and exit, look elsewhere. However, this thread will teach you to learn how to teach yourself to trade using the only tools you’ll ever need – a chart and your own brain. Lastly, the market speaks on every single bar delivering its signals to the trader in a timely fashion – and well in advance of the next trend. It turns out; one need not know how long a particular trend will last. One only need know the signals for when a particular trend has come to an end. As all trends overlap, where one trend ends, the next trend begins. The basic principles involved in learning The Price / Volume Relationship require no more than a few paragraphs to articulate. The repeated and consistent application of those principles onto the market represents the bulk of the effort required of the individual. To Be Continued .... - Spydertrader

We live in a binary choice world. Volume leads Price - Always represents a true and accurate statement, or it doesn't. I've made a strong assertion (your words) which appears to directly contradict what you know to be true. In addition, my strong assertion appears to directly contradict both conventional wisdom and available scientific data. As such, one can arrive at a simple binary choice. Either, I have no idea what the hell I'm talking about, or maybe (just maybe), I've described something of value. As such, I encourage everyone to go and look for themselves because ultimately, the responsability for decision-making rests on the shoulders of the individual trader, and not with me. If there is an interest (and to avoid taking this thred too far off topic), perhaps, I'll start a thread this week containing the specific instructions required to learn to see the sequences about which I have repeatedly spoken. For those less patient, a Google search should provide enough information to get one started. - Spydertrader

Again, you miss the whole point. Nobody should remain 'satisified' with my statement. I encourge people to go take a look for themselves, rather than, rely on what others think, believe, post or do. One of us actually 'did the work' using Excel. One of us quoted the works of others. - Spydertrader

Attached, please find results which indicate otherwise ....

It's unsubstantiated to you. The Volume Sequences, to which I have repeatedly referred, signal the end of one trend and the beginning of another. Unless and until Volume completes these sequences, the current trend has not ended, and the next trend has yet to begin. When these Volume Sequences do complete, then (and only then) can one expect to see the end of one trend and the beginning of the next. Hence, Volume leads Price. - Spydertrader

I haven't posted an opinion. I have described how all markets operate. When asked to provide additional information, I have done so - in this and in other threads (both here and on ET). If you review your own posts, you'll see that you did not request additional information, you demanded I 'prove it.' Been there. Done that. Own the T-Shirt. If proof is what you desire, I'm confident someone can point you in the right direction. I have no problem pointing people in the right direction whereby someone interested in trading can learn, or to provide additional clarification as necessary. However, I have no desire to debate the validity of the statements made, nor do I see any benefit to doing so. It's a very simple process, really. Either, I am full of shit or I am not. Either Volume works as I described, or it doesn't. If you believe I represent the former, well then, placing me on ignore represents an efficient decision, and costs you nothing. Understand, I'm not asking for people to believe. I've merely suggested some might wish to go take a look at that which so many believe cannot exist. - Spydertrader

Volume leads Price. Always. These words do not aply to people or systems. Volume leads Price refers to the fundamental principles by which all markets operate. - Spydertrader

Much more information exists in a Chart Volume Pane than simply the 'height' of a specific Volume Bar. The slope of the changes in Volume changes over time. The Peaks and Troughs of Volume change over time. These represent just two examples of items which exist within the Volume Pane. Other information (such as the sequences mentioned previously) exist there as well. I simply suggest some might find value in making an attempt to look at Volume from a different point of view. Volume leads Price because unless and until the sequences of Volume complete, the trend cannot change. The largest (slowest) fractal cannot complete its sequences unless and until the smallest (fastest) fractals complete their sequences. Volume provides the signal indicating when each fractal completes, and as such, provides the signal required to see when one trend has ended and another trend has started. DB brings up a valid point about vocabulary and common definitions. When I use the term 'fractal' I do not refer to 'time frame' (e.g. 5 min, 30 min, daily, etc.). Instead, I use the following definition: (n) fractal (mathematics) a geometric pattern that is repeated at every scale When I refer to Volume, I mean any information gleaned from a Chart Volume Pane as it pertains to the various Volume bars and not exclusively the absolute Values of each bar. Good trading to you all. - Spydertrader

People remain free to read my posts or not, find value in my words or not, learn something, or not. I subscribe to no religion, philosophy or school of thought when it comes to trading. I simply trade using the principles of the Price Volume Relationship, and I have done so full time, as my only source of income, for the last five years. In other words, being called a name by an annonymous username on an Internet Web Site doesn't come close to offending me. Besides, this thread isn't about me, what methods I trade, or what I did on ET. It's about Volume. I'm sure the OP would want it to stay on topic, so why don't we all try to have some respect for the OP and stay focused. - Spydertrader

First off, no need to apply any sort of 'Gap Rule' to the open. Gaps do not exist. Simply 'mentally' slide the market open to the prior day close, and the market sequences continue where they ended. Second, without Volume, Price does not exist. In other words, unless and until a trade takes place, Price doesn't hit the tape. That trade represents Volume. In addition, the sequences of Volume must complete before the current trend (measured on whatever fractal one desires) reaches completion. Hence, Volume leads Price. Always. - Spydertrader

"Height of Volume Bars" represents only one possible relationship shown on the chart with Respect to the Volume Bars. By first understanding the fractal nature of the market, and then, applying that understanding onto one's chart, the trader can readily see the same sequences repeat - over and over again. - Spydertrader

Sure thing. Let's start by taking a look at today's (6-22) S & P 500 E-Mini (The ES) using a five minute chart. Thinking fractally, we want to locate the Volume Sequences which the market displays all day, every day in every market. By describing these Volume Sequences using Volume Color (Black for Up and Red for Down), a trader should expect to see R 2 R 2 B 2 R (for a down trend) and B 2 B 2 R 2 B for an Up Trend. Again, thinking fractally, the market should provide these sequences on each and every trading fractal. An example of a very fast fractal: An example of a slightly less fast fractal: An example of a slow fractal: An example of the slowest fractal: As you can see, irrespective of the chosen fractal, the market provides the same exact sequences. Combine these fractals, and a trader can 'see' that which must complete. Learning to thoroughly and properly 'contain' Price and Volume in order to more easily see these sequences represents the first step toward profitability. HTH. - Spydertrader

Clearly, a relationship exists between both Price and Volume. Those who disagree simply have yet to see that which exists right in front of their nose. By understanding how all markets exhibit a fractal nature, one can take the first steps required to see the Price / Volume Relationship in action - irrespective of market and / or time frame used to trade. For example, using the ES 5 minute chart, and only making decisions and taking action at the close of a 5 minute bar, the market provides crystal clear information as to where Price sits with respect to the Volume Sequences which require completion. By 'containing' Price within these Volume Sequences, the market reveals its trends across three seperate fractals each day - every day. Volume leads Price. Always. - Spydertrader

If Volume Bar > Volume Bar.1 then bar color = blue, else bar color = red

Congrats on reaching this milestone. - Spydertrader

Do I trade Rollover days? Sure do. No reason not to. Absolute levels of Volume may differ from one contract to the next, but the Volume Sequences exist irrespective of the number of market participants. As such, rollover day represents a day no different than any other. - Spydertrader

I rated it five Stars in order to improve your average. - Spydertrader

See this post. - Spydertrader

Additional Gaussian information to go with the Trend Line information posted above. See Attached. - Spydertrader forestgaussians.pdf

No need to place the cart before the horse. In my previous post, I anticipated your question about context (continuation or change), and provided advice indicating what one needs to do before learning about context. In other words, Volume leads Price. HTH. - Spydertrader

In a similar fashion to the Sym Pennant, either RTL's represent correct annotation depending on whether or not the market has provided a signal for continuation or change (context). Until the time comes to learn about context, learn to annotate your charts in conjection with the gaussians attached to volume. In such a fashion, the market provides the answers needed. - Spydertrader

The Pink Line shows where to place the Right Trend Line. - Spydertrader

Start by learning to thoroughly and correctly annotate a chart. - Spydertrader

From the Bottom Up, the colored lines in the Volume Pane represent different 'Pace Levels' (ranges) of Volume. VDU, Dry Up, Slow, Medium, Fast, Extraordinary. The 'Blue P' represents Peak Volume. - Spydertrader