[Tams]

Originally Posted by forrestang »

Forgive me as I'm still a bit new to this, but when i say down bar, I just simply mean a bar that closes lower than the previous close.

And I was thinking we'd want to see a 'no demand' bar after a buying climax, where you'd have a slight probe above the climax to see if there are still anymore buyers present before the distribution phase is over.

And 'No Demand' bars occur on upbars correct?

I might be thinking waaay too much into that buying climax and what a good entry is? it's possible the reason that didn't work for me yesterday was because the move up was for real, and there was no resistance over head.

Actually, the highest resistance level I have is 939.00, and typically i'd want to see a climax occur around a resistance level, and I didn't have any annotated as we've reached new levels......as far as the data I have is concerned.

you then have to ask yourself which is the way you want to go...

1. I want to Short because the buying has dried up.

2. I want to Short because people are selling.

[forrestang]

Originally Posted by Tams »

you then have to ask yourself which is the way you want to go...

1. I want to Short because the buying has dried up.

2. I want to Short because people are selling.

Ok, I get you.

This short was because I was thinking buying had dried up.

Is my logic correct for thinking buying had dried up? How would you confirm that selling was occurring?

[Tams]

a close below previous bar's close does not necessarily mean a "Down" trend has been established.

it is a "down" close in relation to 5 minutes ago.

it is still an "up" price in relation to previous bar's LOW,
or median price.

[forrestang]

Originally Posted by Eiger »

The most important question to ask for this trade which will answer your question about whether or not it was a "good short" is this question: What was the background? Forrestang, can you show us what the background conditions were prior to this trade?

Eiger

The background is something I'm not akin to understanding yet, as this was relatively early and there was nothing that stood out to me.

Similiarly with the second pic I posted of what happened today, I'm not sure of what the background is telling me if anything?

Forrest

[Tams]

Originally Posted by forrestang »

Ok, I get you.
This short was because I was thinking buying had dried up.
Is my logic correct for thinking buying had dried up? How would you confirm that selling was occurring?

I always tell people:

Don't be a hero,

you don't have to be the first to sell a top,
or the first to buy a bottom.

[forrestang]

Originally Posted by Tams »

I always tell people:

Don't be a hero,

you don't have to be the first to sell a top,
or the first to buy a bottom.

Is trying to pick tops/bottoms something that comes with looking at VSA? I don't want to think along those lines as I always hear it's not possible to do consistently.

[Tams]

Originally Posted by forrestang »

Is trying to pick tops/bottoms something that comes with looking at VSA? I don't want to think along those lines as I always hear it's not possible to do consistently.

There are ways to pick Top/Bottom.
It is possible; I know people who do it consistently.
But you must employ the finer "Tools" to read the market at the finer level.
You also need a deeper understanding of the auction process that is happening behind the scene.

Picking Top/Bottom can be intense; not everybody wants to trade at that intensity.


.

[Eiger]

Originally Posted by forrestang »

The background is something I'm not akin to understanding yet, as this was relatively early and there was nothing that stood out to me.

Similiarly with the second pic I posted of what happened today, I'm not sure of what the background is telling me if anything?

Forrest

Well, you are missing the key piece if you don't understand the background. Focusing only on the last few bars will only cause you to contribute your trading account to the market paticipants who do understand the background. At the point you took a short, they would have been happy to buy it from you. VSA is all about understanding the background first, then applying the VSA signals.

The attached chart is a 60-minute chart of the ES. It shows data going back into late April. You can see there was an uptrend that stalled on May 7 & 8. the uptrend had been in place since March 9 and, by anyone's standards, has been a strong trend, moving about 35% off the bottom.

Throughout May, the market has been in a trading range. There had been no indication of significant supply coming into the market. Instead, the market held the gains it made off the March lows quite well. We discussed this on the VSA III thread last week. Overall, the market has been bullish and remains so.

Friday afternoon, the market began to rally on good volume and wide spread, but stalled at the top of the range and at the May 7 highs. On Monday morning, the market rallied further pushing some 21 points above Friday's close by 10:30 AM. The Friday - Monday rally is seen at A. This is known in VSA as Pushing Through Supply. It is a vigorous move up and out of a trading range, the top of which is a supply or resistance area. It signals that higher prices can be expected. What you thought was a buying climax is the one exception to the high volume rule in VSA. You would only know that this exception was occuring by looking at the background first.

So, looking at the background first would answer your question about whether or not this was a good short. The answer is no, because the background was exceptionally bullish.

Hope this is helpful,

Eiger