[DbPhoenix]

Originally Posted by zeon »

Back to square zero today Somehow I can't help feeling that sometimes the market is after me. I traded a shooting star on higher volume and shorted at the next bar. I got taken out by the high, next I noticed price goingin the right direction. Typically.

Second trade was long after capitulation on support. Again I entered on the next bar according to plan, but got taken out by the exact low! My plan says to put the stop at the low of the capitulation bar. Normally price starts to move higher almost immediately or if it doesn't, it usually stays above the close of that bar. But now we dropped down and then spiked up again?? What the hell is going on? For sure this was a typical VSA-setup, not?

You probably don't want to hear this, but you are less likely to trade this successfully without context than you are with (the Joe Ross people regularly encounter the same problem).

All systems (and I use the term broadly) provide a piece of the puzzle. None of them are all-encompassing. With regard to your example, if you try to trade this without regard to S/R, then you will likely make a misstep. Or several. Or many.

Therefore, I suggest that you take what makes sense in VSA and add what makes sense in the other primary "trading by price" approaches and create something that is more catholic, preferably with as little jargon and as few catch phrases as possible.

[DbPhoenix]

Originally Posted by rsi »

Db,
Can you provide some chart examples for explaining capitulation? Commentary as to how to look out for capitulation, how it proceeds, what to look for in capitulation etc. would be icing on the cake.
Thanks in advance and regards

Traditionally, capitulation is defined as the final vomiting, when perma-bulls finally throw in the towel. However, as a concept, one can also use it many times a day for every instance in which bulls allow bears to take the lead and sell with little or no resistance from the bulls, until that point where the bears are done. Which is one reason why I find the term "capitulation" to be of less practical value to me than the process outlined -- and also detailed -- by Wyckoff.

Therefore, I suggest that one look at the context, which is what you suggested at the outset, and follow the before, during, and after in order to know what to do next. A capitulation is too often looked at as an event. But bottoming is not an event. It's a process.

[zeon]

Originally Posted by DbPhoenix »

You probably don't want to hear this, but you are less likely to trade this successfully without context than you are with (the Joe Ross people regularly encounter the same problem).

All systems (and I use the term broadly) provide a piece of the puzzle. None of them are all-encompassing. With regard to your example, if you try to trade this without regard to S/R, then you will likely make a misstep. Or several. Or many.

Therefore, I suggest that you take what makes sense in VSA and add what makes sense in the other primary "trading by price" approaches and create something that is more catholic, preferably with as little jargon and as few catch phrases as possible.

I take it by context you are refering to important S/R levels. But that's what I do. For example, today the long trade was on possible capitulation off support. I drew a line there because the overnight action was particulary interesting since price went sideways there for a reasonable amount of time. And price reacted heavily, as I noticed by the bar closing all the way off the lows on extreme volume. What else - in real time - was there to identify that this was not capitulation (because price is now a lot lower)?

[DbPhoenix]

Originally Posted by zeon »

I take it by context you are refering to important S/R levels. But that's what I do. For example, today the long trade was on possible capitulation off support. I drew a line there because the overnight action was particulary interesting since price went sideways there for a reasonable amount of time. And price reacted heavily, as I noticed by the bar closing all the way off the lows on extreme volume. What else - in real time - was there to identify that this was not capitulation (because price is now a lot lower)?

Not sure what you mean by "overnight action" unless you're referring to the ES. But the ES didn't trade at that level overnight (it would help if you were to include dates and prices in your charts for reference).

In any case, you're pinning all your hopes on a single bar that may or may not be reacting to S/R, assuming that you plotted S/R correctly. Once you're in, you set your stop and, for the most part, stop reading. Thus you're either exiting at the wrong time, like Friday, or you're not exiting at the right time.

As for the "capitulation", you are, as I said in a previous post, focusing on an event rather than a process. Since VSA is based -- more or less -- on Wyckoff, I suppose I would not be out of line to suggest that you consider W's scenario: preliminary support, selling climax, automatic or technical rally, test (or retest, whatever), eventual upmove, though the last may take a while. That, at least in part, is the context, not just one bar.

Incidentally, if you are in fact trading the SPY, you're being very smart. Smarter than practically anybody I've worked with since the tracking ETFs were first offered.

[zeon]

Originally Posted by DbPhoenix »

Incidentally, if you are in fact trading the SPY, you're being very smart. Smarter than practically anybody I've worked with since the tracking ETFs were first offered.

I'm afraid I'm going to have to disappoint you on this one... I do take trades on the SPY but I don't "daytrade" the tracker because that would require a minimum of 25k by US law and I am not prepared to risk that much money. But the SPY is the equivalent of the SPX and being a big fan of bigcharts I tend to use it as a proxy because the first provides volume while the latter does not.

Taking into consideration that I've been trading for almost 5 years but have yet to become consistent (although I do make profits from time to time) I doubt I'll be smarter than anybody you've worked with, sir

Thanks for the replies so far, I'll have a look at the end of the day and remember to annotate the date to my charts. Good suggestion.

[DbPhoenix]

Originally Posted by zeon »

I'm afraid I'm going to have to disappoint you on this one... I do take trades on the SPY but I don't "daytrade" the tracker because that would require a minimum of 25k by US law and I am not prepared to risk that much money. But the SPY is the equivalent of the SPX and being a big fan of bigcharts I tend to use it as a proxy because the first provides volume while the latter does not.

Actually, the monetary risk would be far less, but the other points I tried to make still apply.

[habi]

Originally Posted by zeon »

Back to square zero today Somehow I can't help feeling that sometimes the market is after me. I traded a shooting star on higher volume and shorted at the next bar. I got taken out by the high, next I noticed price goingin the right direction. Typically.

Second trade was long after capitulation on support. Again I entered on the next bar according to plan, but got taken out by the exact low! My plan says to put the stop at the low of the capitulation bar. Normally price starts to move higher almost immediately or if it doesn't, it usually stays above the close of that bar. But now we dropped down and then spiked up again?? What the hell is going on? For sure this was a typical VSA-setup, not?

Why do you use a bar chart on which you see just the high/low/close and make decisions based on candlesticks?

If I'm correct, you classify candle 1 as a shooting star, but it wasn't. The next two bars have a lower shadow, followed soon by a doji. Your first trade was on the green up bar, which closed near the high. Before you don't see the next bar, it looks not really weak exept the low volume on this bar. Weakness came in in the next bar (3) with the highest volume since the open. And weakness again came in, when price entered in the range of the long upper shadow on bar 3.

Second trade: Bar 4 (upper shadow seems not correct) is the first really sign of strenght with the highest volume since the open. All bars before closed near the low, I don't see much strenght here. I see often, that prices goes below the first sign of strenght an vis versa.

Look at bar 5. After the high volume bar 4, prices startet to rise just little below. On bar 5 we see already a sign of weakness because it closed in the middlewith a long upper shadow and with high volume. Bar 6 is an upthrust imho.

Maybe it's worth to have a look on bar 7 on the left. It closed below the previous pivot low on higher volume. The upthrust was within the range of this bar.

[zeon]

Originally Posted by habi »

Why do you use a bar chart on which you see just the high/low/close and make decisions based on candlesticks?

I'm sorry if my posts sound confusing. I mentioned 'shooting stars' because that's the only term I'm familiar with to label that kind of action. I'm not aware of any specific names that exists in 'bar theory'. Thanks for your chart, will analyze things when the market closes. Just watching price now trying to understand whether or not what is happening now is the true selling climax.