[Omrudra]

Originally Posted by Eiger »

Another fundemental error i see is traders don't do the work neccessary like reading and studying the basic VSA text (emphasis added):

"Position traders (trading a longer time frame than an inter-day trader would feel comfortable with) may only keep daily and weekly charts, regarding hourly charts of little help in their trading. Conversely, inter-day traders mostly stick to hourly or shorter time frames, rarely looking at the larger picture. Both attitudes are counterproductive. Inter-day charts are useful to position traders as they often highlight indications of strength or weakness marking the day as a bullish or bearish day, which then gives a very strong indication on which way the market is likely to go. In turn, inter-day traders can benefit significantly from the wider picture offered by daily or weekly charts. They are often too close to the market. Once you have a working knowledge of the underlying principle of volume spread analysis, it is surprisingly easy to see them at work in any time frame. You should never try to read the market looking at one day's action in isolation. Always read the market phase-by-phase and then read the latest day's action into the phase." (T. Williams, The Undeclared Secrets that Drive the Stock Market, pg 52)

This is a tough and unforgiving business. The path has been laid out for anyone to follow, but you must follow it. Otherwise, the odds of succeeding are appallingly thin.

Eiger

Hi,

I might have been guilty of that exactly. Point noted. Rereading all the basics as I write.

Thanks

Omrudra

[Eiger]

We all have been guilty of it. I re-read Tom Williams's book all the time, along with the other materials from TG and Wyckoff I have noted earlier. I constantly refer back to these resources. It's just part of the process. Each time I do, it serves as a refresher. Often, I see something in a different way or with a different insight as it relates to current markets. This is so helpful, I can't even begin to tell you. The fundementals are as crucial as they are vital. I think we are fortunate to have the resources we do. It is just up to us to understand them, apply them, and make them a seamless part of our trading. And that takes enourmous effort, which few are really willing to commit to.

Eiger

[CandleWhisperer]

Funny how things work sometime.

Take a look at the chart on the left. It is a 30 min chart. Note it was taken yesterday (Sunday night/Monday). What we have is a large WRB that appeared as trading began on Sunday. This created a nice Volatility breakout pattern and a WRB Supply/Demand Resistance Zone. Which I now term Supply/Demand Delta Zone. Anyway, Price moves down from that point.

Skip forward to today (Tuesday). Price made a large move down on Monday and then began to move back up. At this point we do expect price to move up and back into the Delta Zone. Moreover, we would like to see signs of strength or weakness within this zone to initiate positions.

While the zone is created in one timeframe, it has an effect on smaller timeframes as well. Now, look at the chart on the right. Price moves up towards the bottom of the Delta Zone. Price enters and then we see a Test before it moves back into the Zone and higher. Note that the Test is not within the zone so we would not be going long on anticipation of a move to the upper end of the zone. We then see volume drop off and we get an up narrow up bar on volume less than the previous two bars: No Demand. This No Demand bar is also a churn bar. That is, the range, while narrower than the previous bar, is high for the actual amount of volume on that range. This is like a squat and further evidence of weakness (selling) on this candle.

Just another way to see the influence of higher timeframes on your trading frame.