SLAyers' Notes

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dbphoenix

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Aug 24, 2003
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#1
Contrary to a commonly-held belief among beginning traders, journals are records of journeys. They may include charts, or not. They may eventually include trades, but that comes later. Or should, if trades are included at all. But they needn't be. Logging trades is the purpose of a trading log, not necessarily a trading journal.

My original thread (see my signature) explained the gist of the SLA/AMT rather quickly. And while questions and comments have been welcome (and sincere questions and comments will be continue to be welcome), nothing is gained by going on and on and on about it, particularly when a thread becomes so long that nobody wants to read it and the repetition begins. And when the signal-to-noise ratio begins to shift toward the noise end of the spectrum, coincident with the arrival of those who have no interest in the SLA, much less an understanding of it, it's time to focus on those who possess such an interest and seek such understanding.

I posted the following to the original thread. It should be self-explanatory to those who've read the material, much less my book, but that doesn't mean that there are no questions to be asked nor nothing to be discussed. Those who are interested in participating are welcome to contact me to have their names put on the list of those who have access (shades of Studio 54).

********************

From the attic:

If one understands that price and its movement are independent of however we choose to display them, then he pretty much has it. To me, this is a given, but there are those to whom the concept of the continuous flow of price makes no sense. They will see the market very differently.

(Coincidentally, those who do not grasp the continuous nature of price flow often also consider displays in smaller bar intervals to be "noise", i.e., meaningless, random, irrelevant.)

Whether one displays price in time bars, tick bars, range bars, constant volume bars, point & figure, dots, lines, histograms or musical notes is of no concern to price. As long as something is being traded, it's going to do what it's going to do, even if one chooses not to "print" it at all. Finding reasonable and objective explanations of each of these options can be problematic since those who offer the explanations often feel as though whichever option they've selected provides the answer they've been looking for, and if only everyone chose the same option, everything would be clear and everyone's problems would be over. Would that it were so easy.

One must remember that the more obvious the movement, however it is displayed, the more people there are who will see it. Therefore, if one trades EOD using daily bars, he's going to have an awful lot of company. Everybody sees that. Everybody. But if he's trading 5-second bars, not so much. Therefore, he's more likely to take quick profits because the trading crowd he hangs around with is generally not in this for the long haul.

However, if he locates a point where all these waves intersect, he can use that 5-second chart to enter a position and have the combined forces of everyone who's looking at a daily chart and hourly and 15m and so forth behind him, providing the confidence he may need to give the trade a little bit of room, a little bit of time to "ripen", rather than be shaken out of what will be a very profitable trade by a momentary twitch that plays only a small part in the grander scheme of things.
 

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superfly

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May 13, 2005
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#2
providing the confidence he may need to give the trade a little bit of room, a little bit of time to "ripen", rather than be shaken out of what will be a very profitable trade by a momentary twitch that plays only a small part in the grander scheme of things.
Looking at the setup I have one question db, do you yourself use volume in any way [charting, t&s etc] prior to, during or right after entry to monitor follow through or lack of that? regards
 
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dbphoenix

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Aug 24, 2003
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#3
If you mean volume bars, no. I used to, but they were more a distraction than anything and were useful only at extremes anyway.

I do however pay attention to activity. It's impossible not to, unless one isn't watching the price move. And activity is all that volume is, so there's no special reason to put it into bar form, much less those color-coded ones.
 

dbphoenix

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#4
Trading is not "here's a trade from this morning" or "here's a trade from yesterday" or even "here's a trade from a minute ago". Trading is "it's 09:46; what do I do at 09:47?" or "price is at 146.25; what do I do if it hits 146.50?" All you have when you're ready to begin is what came before. One hopes that you know where support and resistance lie. Maybe you have a supply or demand line that looks dependable. But the uppermost questions in your mind are (a) what now? and (b) what do I plan to do about it? Couldawouldashoulda has its place, but the step into trading the right edge (Here There Be Dragons) is a high and often insurmountable one.

At its simplest, the purpose of prep is to anticipate those levels at which trading opportunities are most likely to occur during the next trading session. If one finds during review that he got the levels correct, great. That's an important task to complete. If he didn't get them correct, then he must go back and figure out why so that he can work toward an ever-closer approximation of accuracy in the future. But the emphasis is on the future, the next session, not the past.

Beyond that, one can look at how he traded at the levels he anticipated. Even if he nailed the levels, there remain the strategies and tactics to be employed to take advantage of the preliminary work he's done. In other words, one can be dead accurate on the levels but remain flat if he doesn't know what to do with them. If you're happy with the trades you're taking at the levels you've anticipated, there's no need to go further. If you aren't, see the pdf uploaded to this post, particularly the section on Auction Market Theory, p. 15.

The first step, then, is to gain accuracy in locating these levels.

The second step is to determine what one will do if and when price reaches these levels, i.e., go short here, go long there, stop and reverse at this or that level.

The third step is to do it.

The fourth step is to review the trades and determine what went right and what went wrong so that the following session's trading can be more focused, more relaxed, and, one hopes, more profitable. Without the review, one is more or less running in place.

Therefore, if you're shaky on step one, work on step one and leave the rest for now. Do you know how to locate these levels? If not, as stated above, see the aforementioned pdf. Are you locating them accurately? If not, then review what you did the previous day and show in a new chart where you were right and where you went wrong, then plot the anticipated levels or zones for the following session.
 

superfly

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#5
The first step, then, is to gain accuracy in locating these levels.

the range on p17:
is excluding the unsuccessful single penetrations of High and low of the range
your standard annotation rule, if so what is the advantage?

regards
 
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May 31, 2014
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#6
[QUOTE

At its simplest, the purpose of prep is to anticipate those levels at which trading opportunities are most likely to occur during the next trading session. If one finds during review that he got the levels correct, great. That's an important task to complete. If he didn't get them correct, then he must go back and figure out why so that he can work toward an ever-closer approximation of accuracy in the future. But the emphasis is on the future, the next session, not the past.

...

Therefore, if you're shaky on step one, work on step one and leave the rest for now. Do you know how to locate these levels? If not, as stated above, see the aforementioned pdf. Are you locating them accurately? If not, then review what you did the previous day and show in a new chart where you were right and where you went wrong, then plot the anticipated levels or zones for the following session.[/QUOTE]

This for me was a bit like the missing piece. I don't think I realised why I was doing what I have been trying to do but it seems so obvious now its a little embarrassing.

Step one: identify the levels at which trading opportunities are most likely to occur in the next session.

Thanks
 

dbphoenix

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Aug 24, 2003
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#7
The first step, then, is to gain accuracy in locating these levels.

the range on p17:
is excluding the unsuccessful single penetrations of High and low of the range
your standard annotation rule, if so what is the advantage?

regards
What is the advantage of what?
 

dbphoenix

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Aug 24, 2003
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#9
The lines are there to draw attention to the fact of the range, i.e., that there is no trend. Their exact placement is not particularly important. What matters more is how far traders are willing to go away from the mean and still make trades. In a range, buyers consistently -- though not without exception -- decline to pay the ask at a given level or in a given zone just as sellers decline to lower it at a given level or zone; hence price travels back and forth. But the rudder is the mean, not the "limits" of the range, which can vary bar by bar (or, more accurately, wave by wave). This is why range limits (and trendlines and moving averages and Fib levels and indicators in general) can't provide support or resistance. Support and resistance are dynamic and continuously changing. Therefore one must focus on what traders are doing -- how they're behaving -- as they approach and re-approach these levels. If one can't do this, either because he's following multiple instruments or he's not watching the price movement at all, then he needs to switch to a larger bar interval such as the 15m or the hourly and adopt a more mechanical approach, such as that illustrated in the pdf.
 

superfly

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#13
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Gring0

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Aug 31, 2015
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#17
Here's what I was looking at. The rectangle was added to add context to the SL. There's been a lot of up and down maneuvering lately. The better entries have been arriving at hours more suitable for those in the East or for those who belong to the house of Dracula. The moves though have been strong.

Here we have a demand line breach and a retracement in play.

Gringo
 

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Oct 1, 2015
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#18
Here's what I was looking at. The rectangle was added to add context to the SL. There's been a lot of up and down maneuvering lately. The better entries have been arriving at hours more suitable for those in the East or for those who belong to the house of Dracula. The moves though have been strong.

Here we have a demand line breach and a retracement in play.

Gringo
Not sure if my hinge is legit or not but the apex lines up with the DL of your rectangle. Either way that is obviously support/resistance , at least it was this morning.
 

dbphoenix

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Aug 24, 2003
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#19
The tryptych that I posted just before the open was intended to illustrate what I call a "cusp", or an "inflection point", i.e., a point or level at which one can expect things to happen. Not necessarily drama, but potential trading opportunities. It also re-emphasizes the importance of reading a chart from left to right.

It begins with the tail end of the 10mo chart I posted several weeks ago. After the failure in July and the rally in August, price finds R at the SL a couple of weeks ago. When it reverses from there, one can then find the halfway level (the blue line). If price can reverse off this level, you have a long. If not, another short (if one exited the short he already had; if in a short, a failure to get through this level would confirm holding that short for the time being.)

We know now, of course, that this level was tested at the open and price fell 60pts. But the chart was posted before this test and decline occurred.
 
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Oct 1, 2015
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#20
On the 5 minute chart I see 5 opportunities to buy/add positions this morning on the move up with one being a hinge. I see 2 opportunities on the 15 minute chart. Is that an accurate assessment per SLA?
 
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