# PPS Trading System by Curtis Arnold



## MRC & Co

Hi guys,

Have any of you guys read PPS (Pattern Probability System) Trading System by Curtis Arnold?  

I gather the book will simply be relating patterns to a trading plan which is easy enough to do alone.  Looking for price targets and support, resistance for entries and exits.

However, I believe it also looks into the "more reliable" patterns, which would be interesting in itself.

Anyone read this, is it worth it and any comments?

Reading "Mastering the Trade" currently, but looking to add this one to my pile if its worthwhile.

Cheers


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## tech/a

*Re: PPS Trading System*

Its pretty well all Radge does.
I'm sure he has a twist or two but it does form the basis of much of his work.

But as you well know its all about application.


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## MRC & Co

*Re: PPS Trading System*

I don't quiet get the post Tech.

Radge uses EW and a form of VSA right?  Using support/resistance/price targets as stops, exits etc.  

The main reason I am looking into this book is to check which of all the standard price patterns (H&S, double tops/bottoms, pennants, flags, wedges, triangles etc) are the most reliable, with vague probabilities if possible (along with reliability once taking recent trend activity and direction into account for each of the patterns of which this applies, i.e.  breakouts from descending trianges following a down or uptrend and their respective probabilities).  As I dont want to devote a lifetime studying such probabilities through observation myself.  Surely someone must have compiled these statistics over a historical study and printed them at some point.....Im hoping this book may detail at least some of the above.

Any help Wayne? 

Along with some other random insights usually contained within great books.


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## tech/a

*Re: PPS Trading System*



> I don't quiet get the post Tech.




Which part of 



> *Its pretty well all Radge does.*




Didnt you understand?


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## Sean K

*Re: PPS Trading System*

I can't see how discussing Radge specifically in relation to Arnold's book is relevant at all. What's the point?


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## dutchie

*Re: PPS Trading System*

G'day MRC & Co

Have a look at:

Encyclopedia of Chart Patterns
SECOND EDITION
Thomas N. Bulkowski

Cheers 

dutchie


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## tech/a

*Re: PPS Trading System*



kennas said:


> I can't see how discussing Radge specifically in relation to Arnold's book is relevant at all. What's the point?




This was the original question



> Anyone read this, is it worth it and any comments?




Radge is a Professional Trader,maybe I'm wrong but I'm of the opinion he is respected as such.

I know for a fact that the basis of much of his trading is around PPS.
So he's obviously read Arnold.
He's obviously successfully applying it.
He obviously thinks its worth it.



> Its pretty well all Radge does.




How you come to the conclusion that the above is a discussion about Radge I cant fathom.

Perhaps a comment like a professional trader I know--would have had more impact???
Get over this Radge thing---he's real--has posted here and believes PPS is powerful.
Where MRC and others go with that is their business.


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## Trembling Hand

*Re: PPS Trading System*



MRC & Co said:


> As I dont want to devote a lifetime studying such probabilities through observation myself.




Why not? Its the journey that counts not the destination. :


But as dutchie has said Encyclopedia of Chart Patterns is the book. IMO


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## Sean K

*Re: PPS Trading System*



tech/a said:


> Get over this Radge thing---he's real--has posted here and believes PPS is powerful.



Yes, lets. How about talking about the topic and the book mentioned.


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## RichKid

*Re: PPS Trading System*

Hi guys

Ok, let's try and discuss the book (published in 1995) and its contents. Also, google the author's name for completeness. He got into trouble over some trading system he'd promoted but that doesn't mean that his ideas aren't worth considering. 

I've read the book and it's a great book imo, although I haven't studied it as closely as I would like. I say that mainly because it has some excellent money management/position sizing ideas. The key is his integration of those ideas with the patterns he trades. They mesh very well. As I see it, he uses tight stops and high risk/reward ratios in strongly trending markets to capture fast, explosive moves.

Arnold has done some research into pattern reliability and risk/reward in certain markets, this is explained in the book. I also like his introduction to trading markets and risk management in general. I suppose we'll have to do the same for the markets we trade- he describes markets which he thinks are more liquid and transparent. He probably finds that his system, like most systems I presume, work more effectively in such environments. The use of small patterns (ie those occurring over relatively short time frames- see his criteria) to enter large trends is one of the key concepts. I also like the book because it has exercises that you can use to develop your pattern recognition skills. He writes in a clear style and doesn't try to make it more complex than it is.

Tech, you might liked to expand on the position sizing aspects of the book, or maybe the trend following side of it as I gather you have some experience in this area?

Bulkowski has an excellent site at http://thepatternsite.com , he concentrates more on traditional (larger) chart pattern stats whereas Arnold delves into a handful of tiny patterns. I think Radge calls these 'micro' patterns, I understand that he rates the book highly and found inspiration in Arnold's work. We can all adopt and fine tune the aspects of Arnold's thinking which appeal to us. Note that he has specific criteria for his system. It's based on discretion (judging patterns) so it is flexible.

I'm keen to hear from others who are familiar with his work or have opposing views.


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## tech/a

> Tech, you might liked to expand on the position sizing aspects of the book, or maybe the trend following side of it as I gather you have some experience in this area?




Zero actually.
Its not something I use in my trading.


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## RichKid

tech/a said:


> Zero actually.
> Its not something I use in my trading.




I thought you'd used the micro patterns in some of your discretionary speccy trades based on what you'd observed yourself and also learned from Radge about risk/reward. Radge, in turn, I presume, studied the PPS patterns and mm via Arnold. Traders building on the work of other traders. My mistake then? hmmmm, apologies.

PS. fwiw Radge does an excellent job of explaining Arnold's work but there is no substitute for reading it yourself, it's very easy to understand.


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## Nick Radge

MRC,
I read PPS in 1994, spend over 100 hours validating it and started trading it in 1995. In 1998 I created Reefcap which managed $12 mill based on what I learnt from that book. In 2000 I started with stocks and continue to do so today. In fact since turning off my trend following models in November it constitutes 90% of my trading.

As RichKid and TH have stated, you need to read it and then make it your own. There are no short cuts. I have made numerous changes but the concepts remain the same. Its like a golf coach. He can teach the about swing planes, weight transfer and alignment but then you need to do the work on the range.

Take a look at the Pacific Brands (PBG) chart which was a short yesterday - straight out of that book.


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## MRC & Co

Thanks for the replies guys.  

Some excellent stuff here.  I think I will get the Arnold book and the Bulkowski book.  However, why does he have a free website with chart pattern probabilities if he already has a book for sale on the same topic?  

Another question, does the book delve into EW patterns a bit?  Not simply traditional chart patterns (i.e.  H&S, triangles, double bottoms etc?).  

Nick, I have no doubt I need to make it my own.  Definately no short cuts.  However, I thought you used EW and volume? Not so much traditional/standard patterns (haven't signed upto your site yet as I am so busy reading my pile of books, but mark my words I will once I get through my books).  Also, with PBG, you mean broke out of a rectangle/trend channel?  

I will have to order these two books now.

Cheers


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## Pronto

Re Nick's comments. That's good enough for me. I have just ordered the book off Amazon...


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## RichKid

MRC & Co said:


> Thanks for the replies guys.
> 
> Some excellent stuff here.  I think I will get the Arnold book and the Bulkowski book.  However, why does he have a free website with chart pattern probabilities if he already has a book for sale on the same topic?
> 
> Another question, does the book delve into EW patterns a bit?  Not simply traditional chart patterns (i.e.  H&S, triangles, double bottoms etc?).
> 
> Nick, I have no doubt I need to make it my own.  Definately no short cuts.  However, I thought you used EW and volume? Not so much traditional/standard patterns (haven't signed upto your site yet as I am so busy reading my pile of books, but mark my words I will once I get through my books).  Also, with PBG, you mean broke out of a rectangle/trend channel?
> 
> I will have to order these two books now.
> 
> Cheers




Hi MRC
fyi there's a great thread  here on ASF on Nick's book 'Adaptive Analysis' which discusses some of the topics you mention above. This is a link to the book at ASF's bookshop, you can also find the Bulkowski books here: http://www.moneybags.com.au/default.asp?d=0&t=1&id=5017&c=0&a=74


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## MRC & Co

Thanks RichKid, will check it out.  

Great help!


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## RichKid

MRC & Co said:


> Thanks RichKid, will check it out.
> 
> Great help!




No problemo! Good luck with the research MRC. 

Feel free to post in the thread I mentioned above, as it's more on topic in that thread, Nick has replied many times in there. If the queries are about PPS then this thread is the one to post in.

<edit- fwiw, it looks like PPS will be celebrating its 20th anniversary next year>


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## MRC & Co

Will do.  Thanks.

Just one question, why does Bulkowski have a free website with chart pattern probabilities if he already has a book for sale on the same topic?

Is there a difference between the book and his website?  Or simply that the book is more in-depth?


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## nomore4s

MRC & Co said:


> Also, with PBG, you mean broke out of a rectangle/trend channel?



I would be guessing Nick is referring to the micro triangle it broke out of yesterday. Not 100% sure though as I haven't read the book.


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## MRC & Co

nomore4s said:


> I would be guessing Nick is referring to the micro triangle it broke out of yesterday. Not 100% sure though as I haven't read the book.




Yes, appears either the triangle or rectangle.  Either way, very simple and easy pattern play.  But like you, not sure if this is what he is referring too


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## Nick Radge

A symmetrical triangle it is.

Now take a look at OMH from about a week ago...



> very simple and easy pattern play...



Most trading is simple and easy. People just make it difficult because they don't understand what makes the money. This pattern certainly has no edge as it runs at about a 40% win rate, has done for years, but it still makes good money.


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## tech/a

> *People just make it difficult because they don't understand what makes the money*.




Ive highlighted this because most run off looking in books for patterns infact any analysis at all which has a high probability rate.

They want to see a statement saying that a FLAG for example has a 68% chance of running positively to its target price.
OR
An Elliott Wave 5 will be 100% of wave 1---73% of the time.
If something has a 40% or lower success rate its discarded.

Nothing needs to be discarded when you understand "What Makes The money"
Not only that but you can finally discard the search for the silver bullet and become an expert in your CHOSEN analysis.

Ala Motorway as an example.


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## MRC & Co

Nick Radge said:


> A symmetrical triangle it is.
> 
> Now take a look at OMH from about a week ago...
> 
> 
> Most trading is simple and easy. People just make it difficult because they don't understand what makes the money. This pattern certainly has no edge as it runs at about a 40% win rate, has done for years, but it still makes good money.




Another symmetrical traingle breakout but this time to the long side.  Nice work! 

Yes 40% win rate is still good considering your R/R will be robust.  Entry on shorter timeframes and stops back near the apex I would suspect......

I agree, keep it simple is my sig.  Hence why I am looking into the probabilities of basic and traditional chart patterns.  These, combined with support/resistance/floor pivots for stops/exits etc are what I am looking at.  Along with an oscillator for a basic idea of overbrought/oversold and a moving average for the basic trend and especially shooting stars and hammers for trend reversals (and add some sentiment indicators, seasonality and F/A into the frey).  Once I have this downpat whilst trading equities (except the floor pivots of course), I will look to move onto shorter timeframes into index futures.  Either the SPI, e-minis or both.  Oh and add gap theory to that, along with basic wave structure.  HH, LL and strong/weak trends.

I will go through and read that thread to get a better idea of the set-ups on your site.  Something like this would be of more interest to me than the EW set-ups (until I read my book on EW and get my head around more than just the basic rules and guidelines).  

Cheers, this thread will be an excellent help once I read the books, website provided and thread on Nicks book/techniques.


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## MRC & Co

tech/a said:


> Nothing needs to be discarded when you understand "What Makes The money"
> Not only that but you can finally discard the search for the silver bullet and become an expert in your CHOSEN analysis.
> 
> Ala Motorway as an example.




No doubt and I dont plan to discard anything until after my own use.  I just want probabilities as something to think about.  

I also agree, I have quiet a bit of what I use downpat now and am making pretty decent  for someone so young and new to the game, I beleive anyways.  Though I do want to try and smooth out my equity curve somewhat.

This is why I am trying to get a basic grip on most things, so I can pick and choose which I wish to use and master them.  No doubt, there are plenty of effective styles out there, I just want the one which suits my personality and psychology best.  Which I beleive I have pretty much found.  Intra-day futures trading and position trading equities.  Dont think scalping or longer term trend following are for me.  Writing covered calls on my small portion of bottom drawer stocks and perhaps naked puts in a market with a bullish bias.  In a market without a bias, just trending sideways, perhaps options credit spreads (once I get a firm grip on options, know the basics already).  Start with reading Waynes blog/book development, its really a firm understanding of all 5 greeks that I need to get my head around.  Only know two of them well at the moment.

Cheers, good rant, helps keep myself upto date with where I am upto.  ha ha.


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## Nick Radge

> ombined with support/resistance/floor pivots for stops/exits etc are what I am looking at. Along with an oscillator for a basic idea of overbrought/oversold and a moving average for the basic trend and especially shooting stars and hammers for trend reversals (and add some sentiment indicators, seasonality and F/A into the frey). Once I have this downpat whilst trading equities (except the floor pivots of course), I will look to move onto shorter timeframes into index futures. Either the SPI, e-minis or both. Oh and add gap theory to that, along with basic wave structure. HH, LL and strong/weak trends.




Take a look at PPX.

1. What do you see?
2. What is the trend?
3. How do you know that is the trend?

#3 is not a loaded question. Just tell me exactly what you see when you first look at the chart.

Now, think about the gumph you've written above and instead think about managing the trade so it creates a positive outcome.


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## MRC & Co

Nick Radge said:


> Take a look at PPX.
> 
> 1. What do you see?
> 2. What is the trend?
> 3. How do you know that is the trend?
> 
> #3 is not a loaded question. Just tell me exactly what you see when you first look at the chart.
> 
> Now, think about the gumph you've written above and instead think about managing the trade so it creates a positive outcome.




1)  I see price forming an ascending triangle, but looking to break downwards (or if using different points, you could say it has already broken downwards).  Also a trend over the past month which has broken out of a trend channel, to the downside.
2)  Trend is up in the short-term, but down in the longer term.  
3)  I would only trade this trend in the short-term once I see it either break one way.  More likely down I beleive.

Perhaps this is a wave 1?  Wave 2 forming now.  

Gumph?  I would of course not take all the above into account for each and every trade.  However, I beleive all are useful to use at their given times.


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## IFocus

Heres the chart for PPX


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## Kauri

Talking of triangles, one of the easiest mistakes to make is, when looking at past action, to draw the lines  capturing the break-out. Not referring to Nicks patterns at all as he obviously _posts them live as they unfold for his Chartist subscribers.._ (am I allowed to say that without incurring the wrath of ... )
I spent a year in all going back through the ASX stocks identifying patterns, and found that the only way to do it was by advancing through the charts one bar at a time... also that of all the indicators I tried only one gave me a better than even chance of picking the breakout direction...  
 All sounds a bit confusing, but the attached chart of the $US shows what I mean, the dotted line shows a valid pattern and subsequent b/o which proved to be a false break, the triangle developed further and eventually broke downside. Most people looking back at the history would not even see the dotted triangle, only the solid successfulll one..  I thunk..   

Cheers
..........Kauri


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## MRC & Co

Kauri said:


> I spent a year in all going back through the ASX stocks identifying patterns, and found that the only way to do it was by advancing through the charts one bar at a time...
> 
> also that of all the indicators I tried only one gave me a better than even chance of picking the breakout direction...
> 
> the dotted line shows a valid pattern and subsequent b/o which proved to be a false break, the triangle developed further and eventually broke downside. Most people looking back at the history would not even see the dotted triangle, only the solid successfulll one..  I thunk..
> 
> Cheers
> ..........Kauri




Great post Kauri!  I agree, I think I would have only seen the successfull triangle if I went back through that chart!  Never thought of it that way! Thanks!  

Which indicator do you use to help you determine the breakout direction?  I only add RSI (perhaps change to a stochastic to my chart) for some use (divergence) and to look for price action movements once in highly overbrought/oversold territory.  Without trading on this alone ever, just using to help with picking the direction of the breakout.

As far as the false breakout, at least you only loose the small stop, whereas you pick up the much larger gain from the true breakout.  I also read some traders use a certain % or # of bars, or at least wait until the breakout closes below the trendline to determine if the breakout is likely.  However, realise this can reduce your profits as you dont catch as much of the breakout.  Always one + for another -


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## Nick Radge

> Which indicator do you use to help you determine the breakout direction?




But that is the great secret and is usually only available to those willing to pay over $5,000.

Kauri makes a valid point which I feel differentiates PPS to standard TA. PPS makes a very defined pattern, as do Elliottians with their triangles. Patterns can morph from one to another. A triangle can morph into a flag for example.


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## Kauri

Nick Radge said:


> But that is the great secret and is usually only available to those willing to pay over $5,000.
> 
> .




  A packet of *"Best Bird"* bird seed would probably convince the proprietary owners   ..  
Cheers
...........Kauri 


PS.. 







> Which indicator do you use to help you determine the breakout direction




The trend leading into the pattern..  sorry it's not more complicated.. a real _holy grail_ should be wrapped in mystery and a touch of alchemy doesn't do any harm..


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## Kauri

a couple of flag patterns on the skip 5min... I would and did trade the first, but have lost interest in the second.. as a flag that is... as it has climbed back up the pole too far., for mine.. but as Nick points out, it could quite easily do a KD Lang and morph from one pattern to another.. (triangle??)
Cheers
..........Kauri


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## MRC & Co

Kauri said:


> The trend leading into the pattern..  sorry it's not more complicated.. a real _holy grail_ should be wrapped in mystery and a touch of alchemy doesn't do any harm..




LOL, true!  How did that second flag turn out Kauri?

Cheers


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## Kauri

MRC & Co said:


> LOL, true! How did that second flag turn out Kauri?
> 
> Cheers




 Pretty much as expected.. luckily for me..   
Cheers
............Kauri


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## MRC & Co

ha ha, excellent call!  

There is that experience coming into play!  

I will be there one day


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## Kauri

MRC & Co said:


> ha ha, excellent call!
> 
> There is that experience coming into play!
> 
> I will be there one day




 a flag is ...  dependant on who you read... a pause for breath, a consolidation, an exchange from weak to strong,.. et al ad infinitum...
 for mine I'm not too concerned about explaining it... (probably because I can't   )... but visually when it climbs (or inversley drops ) too much it looks more like a wet sheet hung out to dry as opposed to a flag...
  By the way Bulkowskis book in my opinion has little relevance as it is mainly of very long term patterns, and tends to make too much of a science out of trading them, complete with all sorts of tables and figures and shotgun charts. I was in Freo today and saw it in the Public Library.. might be the way to check it out before parting with what for me is an overpriced book.   
Cheers
...........Kauri


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## MRC & Co

Kauri said:


> but visually when it climbs (or inversley drops ) too much it looks more like a wet sheet hung out to dry as opposed to a flag...
> 
> By the way Bulkowskis book in my opinion has little relevance as it is mainly of very long term patterns
> 
> I was in Freo today and saw it in the Public Library.. might be the way to check it out before parting with what for me is an overpriced book.
> Cheers
> ...........Kauri




LOL, yeh, I can see where you are coming from in that analysis.  Bit too long for a "pause" for breath.

Interesting on Bulkowskis book, I am more looking for short-term patterns, so sounds like Arnolds book may be the way to go.

I will try check out Bulkowskis book in a library here.  Website may be of use in the meantime........

Cheers


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## theasxgorilla

Cool thread guys.

And now for the 64 gazillion dollar question...can this stuff be coded?  Of not entirely, at least into a scan.  We know that even the little old ASX can be a big universe of stocks to keep abreast of.

Disclaimer: I haven't read the book.

ASX.G


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## Kauri

theasxgorilla said:


> Cool thread guys.
> 
> And now for the 64 gazillion dollar question...can this stuff be coded? Of not entirely, at least into a scan. We know that even the little old ASX can be a big universe of stocks to keep abreast of.
> 
> Disclaimer: I haven't read the book.
> 
> ASX.G




   all sorts of people have made a lot of money selling pattern recognition software, mind you a lot of people have made money selling prime (under) waterfront land in Queensland...  the only scam I have found usefull unfortunately depends a lot on the eyeball... 
  Cheers
...........Kauri


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## MRC & Co

Kauri said:


> the only scam I have found usefull unfortunately depends a lot on the eyeball...




ha ha ha, some of this stuff cracks me up!   Keep up the good work!


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## Nick Radge

ASXG,
I had PPS coded up as a scan back in 2000 or so. I don't use it as its just not good enough. I also bought cpFinder several years ago and again, its just not up to the job. The best computer is the one between your ears.

Even though I focus on 1000 charts I don't need to eyeball them everyday. Patterns take time to develop. As they start I slip them into a folder so I can keep a closer watch each day. 

I wouldn't bother with Bullkowski's book. Its all on his web site. Just concentrate on the higher scoring patterns, like the high tight flag, but also be cognizant that he uses a longer term outcome (many many months) whereas I'm only interested in the next few weeks. 

Another site is Dan Zanger www.chartpattern.com 

What you need to grasp though is the 'secret' is not in the pattern. The pattern is simply a comfortable way to participate in the market.


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## IFocus

Kauri said:


> a couple of flag patterns on the skip 5min... I would and did trade the first, but have lost interest in the second.. as a flag that is... as it has climbed back up the pole too far., for mine.. but as Nick points out, it could quite easily do a KD Lang and morph from one pattern to another.. (triangle??)
> Cheers
> ..........Kauri




The SPI this morning false break then on with the show.......


.


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## MRC & Co

Nick Radge said:


> ASXG,
> I had PPS coded up as a scan back in 2000 or so. I don't use it as its just not good enough. I also bought cpFinder several years ago and again, its just not up to the job. The best computer is the one between your ears.
> 
> Even though I focus on 1000 charts I don't need to eyeball them everyday. Patterns take time to develop. As they start I slip them into a folder so I can keep a closer watch each day.
> 
> I wouldn't bother with Bullkowski's book. Its all on his web site. Just concentrate on the higher scoring patterns, like the high tight flag, but also be cognizant that he uses a longer term outcome (many many months) whereas I'm only interested in the next few weeks.
> 
> Another site is Dan Zanger www.chartpattern.com
> 
> What you need to grasp though is the 'secret' is not in the pattern. The pattern is simply a comfortable way to participate in the market.




Great insights, thanks for that Nick.  I will be using the folder idea and thanks for answering the question on Bulkowskis book in relation to his website.  Wondered why nobody had answered.  As Im more after the short-term patterns, days/weeks, I will check out PSS thoroughly instead.  

Cheers

Time to order and add it along with adaptive analysis to my pile!


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## Kauri

A yen flag on the hourly that I traded, with a 5 min flag mid way down the 60 min descent that I traded, and the last one on the 5 min that doesn't look right that I have stayed out of.. for better or worse.. as it is dropping nicely as I ramble on..   
Cheers
...........Kauri


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## motorway

If the absolute value of the supply curve  is greater than that of the demand curve. The result is a dampened fluctuation in
price 

If the absolute value of the demand curve is
greater than that of the supply curve. The result is an expanding oscillation in price.


(Demand and Supply curves rotating)

BUT it is the response THEN that matters
In the context of the trend and position


Does demand and supply SHIFT in response

( Demand and Supply curves SHIFTING )

The pattern does not "work"

What it does is ask a Question

The response ... The answer is what works


http://chart-patterns.technicalanalysis.org.uk/Levy71.pdf

motorway


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## motorway

> COBWEB THEORY
> AND TRADING PATTERNS
> A point about technical analysis that tends to
> be under appreciated is that any price/time
> relationship may work for a while but is likely
> to break down eventually.
> 
> A realistic objective
> is to expect cobweb theory to work for a while,
> then reach a point of transition where it breaks
> down.
> 
> At that point some new price/time relationship
> takes over, reflecting a change in the
> most representative paradigm of price behavior.
> 
> 
> Traditional trading patterns are often periods
> when the tenets of linear cobweb theory
> apply, and on their confirmations, some new
> price/time relationships come into effect.





"some new
price/time relationships *(CAN)* come into effect"


Trend , position , ....test ( the asking of a question )... response

confirmation or negation


"an almost unerring guide to the technical position of the market."


motorway


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## Kauri

Pattern and vol-wise a pitcher launches a thousand words... although the vol structure doesn't exactly tie in with some vol system guidelines it nearly always seems to be this way with the patterns I pick up.. in fact I look for it.. I thunk.
Cheers
..........Kauri


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## BBand

Hi MRC,
Interesting to note that you use the RSI, this is my favourite indicator (I'm a simple fella - it works for me)

Andrew Cardwell has done a lot of research into the use of the RSI, and one of the main outcomes being that it does not work between 0 -100 as is commonly promoted - this is an obsolete interpretation and does not work in todays markets.

The RSI works between 40 -80 for a bull market and 20 - 60 for a bear market
Price is trending up when the RSI is above 65
Price is trending down when the RSI is below 35
Between 40 -60 price is going sideways

Constance Brown and John Hayden have published variations of Cardwells work

I think you will appreciate the Constance Brown book- Technical Analysis for the Trading Professional - McGRAW HILL (I am ploughing my way through this book just now - so much info)

PS If you want to catch the breakout to a trend, one way of doing this is just scan for RSI value crossing above 65 or crossing below 35 - or derivations of it if you want to identify stocks still in a congestion phase.

How you "utilise" the RSI is up to you - it can be used in all market conditions. 

Hope this is of interest. I have been using the above interpretation of the RSI for a few years now and the Constance Brown book is "adding the icing to the cake"

Peter


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## Timmy

Hi BBand - thanks for the heads up on the research.  Is that a 14-period RSI or some other parameter for the cross 65 or 35 observation?  And is that for daily charts or intra-day charts (and if so what periods?)  Sorry if too many questions...


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## BBand

Hi Timmy,
I personnally use a 9 period RSI although Constance Brown uses a 14 period - she uses this primarily because it corelates to her method of price targets using the RSI.

I do not bother too much with price targets, so I do not see the need to change from the 9 period which I have been using, I just take what the market offers

I trade breakouts - they either work or they don't. My stop is basically my entry - so my R/R is pretty good

The RSI settings are consistent across all timeframes, as is the above 'theory"

Check it out - draw coloured lines across your RSI trace at the levels shown above, and do some backchecking. (best if you have a training mode on your software so that you do not know the future bars from the that which you are looking at)

The above works for me, its the exit that decides if or not you have a winner, please check to make sure your interpretation works for you.

The RSI can be a complete trading system if you so desire - or it can be used with Elliot wave for the longer term trade(not my cup of tea)

Peter


----------



## wayneL

BBand said:


> The RSI works between 40 -80 for a bull market and 20 - 60 for a bear market
> Price is trending up when the RSI is above 65
> Price is trending down when the RSI is below 35
> Between 40 -60 price is going sideways




Howz about dynamically adjusting OB and OS lines (just for fun).


----------



## BBand

Now aren't you a clever dick!

Peter


----------



## MRC & Co

Thanks for the info Peter.

Good to see changes between bull and bear markets.

So to get this straight, referring to this quote:  _" If you want to catch the breakout to a trend, one way of doing this is just scan for RSI value crossing above 65 or crossing below 35"_ - you would go long after the RSI crosses over 65 and short once below 35?  

Must say, I only usually use the 70/30 rule.  So once it moves above 70, I would watch for price action to indicate a pullback and vice-versa.

Now those dynamic OS & OB lines are great!  Getting good at your programming ey Wayne!

However, I only use RSI very loosly.  Like sentiment indicators, to get an idea of potential turnings points in the market.  I will also want to see price action, along with a break through support/resistance.  Never tried trading solely through the use of RSI or any indicator/MA for that matter.  Always read not too, but hey, if it works for you!


----------



## tech/a

Kauri said:


> Pattern and vol-wise a pitcher launches a thousand words... although the vol structure doesn't exactly tie in with some vol system guidelines it nearly always seems to be this way with the patterns I pick up.. in fact I look for it.. I thunk.
> Cheers
> ..........Kauri




Kauri.

Your chart and volume is one of the clearest you'll see.
The chart was like a book to read and would have been very profitable.

Have a look at the way volume tapers off on the down moves and the up moves.
Effort to sell AND to buy dries up.
When it does what happens---price reverses.


----------



## Nick Radge

As RSI is based on price, then RSI must come _after_ price. An RSI calculated from price. RSI therefore lags price. What RSI is doing for BBand is confirming his conjecture about trend direction. But price will do this _before_ the RSI shows it which means if you follow price you will _ahead_ of the RSI. 

Motorway,
I have been trading these patterns since 1995. I have spent countless hours, and I mean many 1000's, trying to filter patterns. My extensive research suggests its all random, but random makes money consistently. I will dismiss the supply/demand logic (because I have tested it) and its no better than anything else. I freely admit, my imagination and interpretation is limited, but I would be happy to prove you right. You have put forward a broad generalization against my 15-years of trading. I am more than happy for you to cure my randomness (although there is nothing wrong with randomness) to increase my P&L. 

How about I put forward all my patterns and you tell me which one's to take basis your supply/demand logic. After 100 samples we'll compare notes?

Anyone see what I see in PEM?


----------



## Kauri

Maybe a coily forming on the 5 Min yen??  one to watch anyways... 



> Kauri.
> 
> Your chart and volume is one of the clearest you'll see.
> The chart was like a book to read and would have been very profitable.
> 
> Have a look at the way volume tapers off on the down moves and the up moves.
> Effort to sell AND to buy dries up.
> When it does what happens---price reverses.




  With you 100% Tech,,   
Cheers
...........Kauri


----------



## MRC & Co

Coily?  Is that another word for a triangle?  

I see price is about to break one way or the other on PEM......

A positive divergence between price and RSI also.


----------



## tech/a

Dont know what you see but here is what I see.

Im looking long.


----------



## doctorj

Kauri said:


> Maybe a coily forming on the 5 Min yen??



Popped its head out only to be smacked back down for the moment...


----------



## motorway

> Motorway,
> I have been trading these patterns since 1995. I have spent countless hours, and I mean many 1000's, trying to filter patterns. My extensive research suggests its all random, but random makes money consistently. I will dismiss the supply/demand logic (because I have tested it) and its no better than anything else. I freely admit, my imagination and interpretation is limited, but I would be happy to prove you right. You have put forward a broad generalization against my 15-years of trading. I am more than happy for you to cure my randomness (although there is nothing wrong with randomness) to increase my P&L.
> 
> How about I put forward all my patterns and you tell me which one's to take basis your supply/demand logic. After 100 samples we'll compare notes?




What are we disagreeing about?

I see two patterns, price oscillations can narrow or expand

They taken without any other context can be continuation, reversal or exhaustion........As you say random

To get one of those  two patterns... There must be some change in demand and supply

eg some demand must be met to stop a down move 

a good example in the thread is the PBG example

But this volume only produces a sideways move..

So the volume temporarily stops, but does not start

I don't see there is a significant disagreement

Price narrows or expands ( two basic patterns )

without other context, what results is random 

I see it as important to try and keep visualizing
demand and supply dynamics and to keep asking what is happening to demand and supply



> You have put forward a broad generalization against my 15-years of trading.




What was that? Are you saying that we need 1000 names for the shapes of dampening and expanding price patterns ?

I see basic Two patterns
They can be rising or falling
in uptrend's or downtrends etc

I see them as reflecting temporary changes in demand and supply dynamics.

and I did not see my post as any comment on your 15 years of trading.

It was a comment on patterns.

MRC & Co started an open thread didn't he?

motorway


----------



## RichKid

Nick Radge said:


> But that is the great secret and is usually only available to those willing to pay over $5,000.
> 
> Kauri makes a valid point which I feel differentiates PPS to standard TA. PPS makes a very defined pattern, as do Elliottians with their triangles. Patterns can morph from one to another. A triangle can morph into a flag for example.




That's a great point about points of differentiation, I found that important (and initially irksome) in comparing traditional triangles to EW. 

In terms of numbering the internal swings of triangles there seem to be different ways to do it. PPS has very specific criteria for defining a triangle and positioning stops and entries. 

For example, we may number the first swing against the prevailing trend as number one. Eitherway, we all know how to draw the geometric patterns, having consistent rules is the key. 

In EW a wave 2 can never be a triangle, despite Elliott toying with the idea in his early work. W4 is expected to be a triangle or similar sideways consolidation, hence a zig zag is unexpected. I have no stats for these. 

So we must be internally consistent with the theory rather than just mixing and matching different methods without understanding the reason why certain rules exist in particular systems.

Nick and motorway, let's go easy on each other please and stay on topic, it's about the PPS system book. Robust discussion is fine, but please demonstrate the relevance of the posts to the topic for the benefit of less experienced traders if you could please. Or you can start a different thread on risk/reward, volume, patterns and randomness. Thanks gents!


----------



## Nick Radge

My apologies Motorway. It just seemed a long way to explain a simple concept.

People who over read a market situation are often looking for a way to miss rather than make a successful trade.

Its more important to be decisive about a trade than correct.

If you understand the concept of skewing the numbers then its then just a matter of taking a decisive glance at the chart to know the trade.


----------



## MichaelD

Nick Radge said:


> I have been trading these patterns since 1995. I have spent countless hours, and I mean many 1000's, trying to filter patterns. My extensive research suggests its all random, but random makes money consistently.
> 
> Anyone see what I see in PEM?




Shhh - this fact could destroy one of the few profitable ways of making money from the market for those that can't trade. 

I'll nibble at PEM. It seems to have finally stopped going down. That's all I see.


----------



## CFD

RichKid said:


> Nick and motorway, ~~ Or you can start a different thread on risk/reward, volume, patterns and randomness. Thanks gents!




Now these two admired and respected guys on randomness - that would be interesting. If anyone has the book Fooled by Randomness, I would be interested in your thoughts.


----------



## IFocus

Nick Radge said:


> I have been trading these patterns since 1995. I have spent countless hours, and I mean many 1000's, trying to filter patterns. My extensive research suggests its all random, but random makes money consistently.




Nick  I have found my results dramatically skewed by market conditions when trading patterns or more particularly continuation patterns.

I know you don't filter using sectors and understand your reasoning so with filtering based on market conditions be classed as a random situation.

Is the random part being more to do with the judgment of market conditions or the coming market conditions or cycles?

Or is it all random and the pattern is just permission to enter a trend?


----------



## motorway

> It just seemed a long way to explain a simple concept.




It depends on whether you want to get past the basic question of what

and attempt to address how and why..

eg



> I'll nibble at PEM. It seems to have finally stopped going down. That's all I see.




so do we buy it sell it or do nothing ?



> It seems to have finally stopped going down.




How did it do that... Is there anything we can see that would tell us something of the how ?

Did the flow of supply slow ?
Did urgent demand emerge ?

If you use a random number generator as an entry mechanism

Maybe those questions do not matter
If you are trying to recognize eg accumulation 
they do.



> I will dismiss the supply/demand logic (because I have tested it)




whether urgent demand emerges or supply holds back
in itself is not what is effective ...
It is more what is the then response that matters..

Supply can temporarily dry up after a large fall
But that does not mean that I would designate
the dampening price pattern as a buy..

There is always to some extent a flow of supply
But there is no flow of demand in the same sense.



> its then just a matter of taking a decisive glance at the chart to know the trade.




Some are at various stages of the journey .
Some might never get or even conceive of asking how
let alone why.

But if they do they might want to do more ( at least at first ) just glance at a chart...



> I have been trading these patterns since 1995. I have spent countless hours, and I mean many 1000's, trying to filter patterns.




Something that dissolves all the appearances of price patterns
( leaves behind the 1000 names ) 

is P&F....You are left with  trend and reversal... flow and congestion

dampening and expanding...



motorway


----------



## tech/a

M/W

All very good.We can analyse our brains out but unless one knows how best to apply that analysis and manage it all we are doing is circular hypothesising.

Trading consistently profitably goes way beyond asking why and finding the how.
Even Wyckoff/VSA/P&F analysis or a combination of all wont guarentee that if read correctly (At the time) a profitable trade will follow.

The real how comes from correct application combined with sound trade management.

You can be the best analyst in the world in whatever discipline you choose and still be god awful at the art of trading.


----------



## MichaelD

motorway said:


> so do we buy it sell it or do nothing ?
> 
> How did it do that... Is there anything we can see that would tell us something of the how ?
> 
> Did the flow of supply slow ?
> Did urgent demand emerge ?



The price of PEM is going nowhere. Not up. Not down.

Ultimately I don't know why. Ultimately I don't care why.

I can speculate for the purposes of entertainment that there is accumulation going on at around the 1.00 mark (so the accumulator will not let the price rise until they have finished accumulating), but it is my belief that pontificating on the reasons for the price going nowhere or speculating on accumulation/distribution does not improve my expectancy.

Put simply, at this time I would not enter a trade in PEM in either direction. If I were to bet on where PEM is going for entertainment, I'd bet on a breakout in due course.


----------



## RichKid

Guys, please make your posts relevant to the topic or some of the last few posts will be sheared off into a new thread- you can continue your discussion there, it's too good to ignore. 

All this talk of risk and randomness and application of theory is fine but please compare it to Curtis Arnold's view of risk management and pattern trading to pay some respect to the thread title. We are bound to see some good ideas emerge if we spend time on this comparison in a disciplined manner. 

If you just want simple pattern recognition examples there are threads of that nature here on ASF already, even Nick has some examples of trading with volume and price patterns somewhere on ASF- use our magic search tool.


----------



## motorway

I would do nothing too.



> Ultimately I don't know why.




Because demand is not overcoming supply.



> If I were to bet on where PEM is going for entertainment, I'd bet on a breakout in due course.




I wouldn't.. at best I could say that there is adjustment to a price level
( a market at the price has emerged )

But then I would not bet for entertainment

This is how I would draw the trend lines
They reveal two patterns

In first I would say supply  withdrew .

That is what made the pattern
But the flow of supply quickly resumed
and overcame the demand 

( that was the response the pattern broke down )


motorway


----------



## RichKid

Nice chart MW, thx:

fwiw I see a solid downtrend in place with strong momentum, large spaces between the swing highs/lows. Dropping like a rock. 

A minor double top appeared in the downtrend which tested resistance at $2, the response was to keep going down, still too much supply. 

A small triangle or flag (depends on how it pans out) appears in this bear trend most recently as a possible continuation pattern with volume dropping typically (eg buyers retreating to lower levels). BUT I also note a reduction in the angle of descent as shown by the lower trend line- signs of a loss of momentum? but that doesn't mean the trend is over. I can't see any reason to trade this anyway but short once the lower boundary of the pattern is broken, simple TA? 

I will guess that Arnold would have recommended this setup- once his basic pattern recognition criteria are met and the trade is triggered it's just a matter of money and trade management. If you're wrong you're stopped out, if not you can protect your profits.


----------



## It's Snake Pliskin

CFD said:


> Now these two admired and respected guys on randomness - that would be interesting. If anyone has the book Fooled by Randomness, I would be interested in your thoughts.




Mr CFD,

I enjoyed that book immensely. He seems a rare breed indeed. 

But back to the book inquestion as has been stipulated we talk about, I haven't read it but may just out of curiosity. I seem to pickup one little thing even from rubbish books. I am curious why it hasn't been republished for a while now. Any thoughts out there?


----------



## Nick Radge

Snake,
Arnold got into some trouble by the authorities for false advertising. I think he was banned from the industry and therefore suggest the publisher would deem a republish as a waste of time. The book is well worth the read regardless of his dubious dealing. If you want a real laugh, get the video.

MichaelD, 
How can you look at 12-months of price data and say price is going nowhere?

Focus,


> Or is it all random and the pattern is just permission to enter a trend



Exactly correct. It is nothing more than permission to enter a trend. A comfort factor. Its a pattern that replicates. Its a pattern that is common. Its a pattern that has defined right/wrong boundaries. Its a pattern that offers a low risk trade. Without comfort you will not be able to participate and you will never have a foundation from which to work from.

My comment earlier on was about being decisive. Again, using a golfing analogy (seeing as the Masters in on), we don't see Tiger analyze each and every shot to the nth degree. He's done the hard work on the range. When he plays, he walks up to the ball, looks at the lie, the distance, the breeze, sets up and hits. That's it.

Same with trading.

We've done the hard work prior to placing a trade by doing backtesting and appreciating risk/reward, position sizing and all the other aspects required to achieve positive expectancy.

To the trade itself. 

We have a severe downtrend.
We have a congestion pattern.
We expect a break to the downside.

Place the trade.
Manage the outcome.


----------



## wayneL

Nick Radge said:


> Exactly correct. It is nothing more than permission to enter a trend. A comfort factor. Its a pattern that replicates. Its a pattern that is common. *Its a pattern that has defined right/wrong boundaries.* Its a pattern that offers a low risk trade. Without comfort you will be able to participate and you will never have a foundation from which to work from.



I like what you said there. 

This is a point I've tried to talk to people about on the subject of TA in general. Usually I'm having trouble pronouncing my own name :alcohol: by the point people start talking about trading. I'll have to memorize that.


----------



## MichaelD

Nick Radge said:


> How can you look at 12-months of price data and say price is going nowhere?




 I should have expanded that by saying it is going nowhere *at the moment *after a 12 month downtrend. I could have called it possibly forming a Weinstein Stage I base after a Stage IV decline, ready for a breakout to the upside, but there are many names and interpretations for this same pattern.

The $1,000,000 question is - what happens next.



Nick Radge said:


> We have a severe downtrend.
> We have a congestion pattern.
> We expect a break to the downside.
> 
> Place the trade.
> Manage the outcome.



From the above - do you mean open the position now in anticipation of continuation of a downtrend or do you mean await confirmation of the setup by a breakdown and then enter?


----------



## Timmy

Nick Radge said:


> This pattern certainly has no edge as it runs at about a 40% win rate, has done for years, but it still makes good money.




Bringing up a post from earlier on, and a question please,* 

All else being equal, if a pattern has a 40% win rate wouldn't counter-trading it give a 60% win rate?  All else being equal would this not improve expectancy?





_

*Warning: question may be stupid._


----------



## Sean K

Timmy said:


> Bringing up a post from earlier on, and a question please,*
> 
> *Warning: question may be stupid.



  

whaahahahahaha! 

No idea myself, but appreciate the approach! Cheers!


----------



## tech/a

I'm pretty sure Nick would /will say trade the pattern.
Everything else has no bearing on "This" particular method of trading.

Set the Buy after the break--not before then manage the trade.
Not with other analysis but with pure price action.

How does Arnold work the trade?


----------



## Nick Radge

> All else being equal, if a pattern has a 40% win rate wouldn't counter-trading it give a 60% win rate? All else being equal would this not improve expectancy?




All else aren't equal though. Expectancy has more significant inputs than win rate. Counter trend trading changes one of those inputs significantly enough to make that connection mute.

As for trading the patterns, you simply allow price to tell you what its going to do. I highly recommend reading the book.


----------



## MRC & Co

Some fantastic stuff there Nick!

The point that grabbed me, was the part Wayne highlighted.  

*Its a pattern that has defined right/wrong boundaries* - exactly what you need in order to manage the trade!  Thus, you know where to place your stop (know when your wrong), and if your right, let profits run.  Then the exit becomes the important part.  Does Arnold talk about exits in the book?  

Well I will read it for myself when I get around to it.


----------



## sleepy

MRC & Co said:


> Then the exit becomes the important part.  Does Arnold talk about exits in the book?




Yes there is a chapter on Exits and in it he also discusses TWO rules that will allow you to move your stop to break-even, thus reducing your risk to zero.

Only 7 pages long but invaluable in my opinion.



MRC & Co said:


> Place the trade.
> Manage the outcome.




As Nick keeps reminding us its all about 'focusing on the losing trades', as the winning trades take care of themselves.

sleepy


----------



## MRC & Co

sleepy said:


> Yes there is a chapter on Exits and in it he also discusses TWO rules that will allow you to move your stop to break-even, thus reducing your risk to zero.
> 
> Only 7 pages long but invaluable in my opinion.




Thx sleepy.  I'm sure 7 pages include well and truly enough technicals on exits.  

Cheers

Oh and good questions IFocus.


----------



## Boggo

Nick Radge said:


> Take a look at PPX.
> 
> 1. What do you see?
> 2. What is the trend?
> 3. How do you know that is the trend?
> 
> #3 is not a loaded question. Just tell me exactly what you see when you first look at the chart.





My  worth on PPX @ Sunday 13/04/08.
(The US on Friday night may have an overriding influence on all of this)

1. Possible completion of wave 4
2. Trend is up
3. Close on 13/03 was above downtrend wave 4 high of 04/02/08

Pivot high on 08/04 = $2.95
Pivot low on  26/03 = $2.07
Diff is                   = $0.88

0.88 * 0.618 = $0.54
0.88 * 1.000 = $0.88

Most recent low 10/04/08 = $2.62
Initial target ($2.62 + $0.54) = $3.16.
Wave 5 target ($2.62 + $0.88) = $3.50.

Summary...
Go long at $2.81 with a stop at $2.61
or
be patient and go long at $2.96.


Mike


----------



## MRC & Co

Anybody know where to get the book from?

I ordered Adaptive Analysis from the ASF bookshop, but could not find PPS anywhere.  Amazon is all sold out and don't know if they are going to get in any new stock of the book!


----------



## sleepy

I bought mine 2nd hand/used off amazon

http://www.amazon.com/gp/offer-list...olp_1?ie=UTF8&s=gateway&qid=1208361830&sr=8-1
http://www.amazon.co.uk/gp/offer-li...olp_1?ie=UTF8&s=gateway&qid=1208361830&sr=8-1

sleepy


----------



## MRC & Co

sleepy said:


> I bought mine 2nd hand/used off amazon
> 
> http://www.amazon.com/gp/offer-list...olp_1?ie=UTF8&s=gateway&qid=1208361830&sr=8-1
> http://www.amazon.co.uk/gp/offer-li...olp_1?ie=UTF8&s=gateway&qid=1208361830&sr=8-1
> 
> sleepy




Sweet, wonder why it told me all were sold out before.........

Ah well, cheers mate.


----------



## It's Snake Pliskin

Nick Radge said:


> Snake,
> Arnold got into some trouble by the authorities for false advertising. I think he was banned from the industry and therefore suggest the publisher would deem a republish as a waste of time. The book is well worth the read regardless of his dubious dealing. If you want a real laugh, get the video.




Thanks for that info Nick.


----------



## Nick Radge

Here is one straight out of the PPS textbook:







I took my leave late today:


----------



## Mike Trader

I am probably way to late with this post but as far as I can remember Curtis Arnolds system is right 50% of the time and it only works that consistantly on commodities-not on indexes or stocks-if my memory serves me correctly( read it about 8 years ago)


----------



## Nick Radge

I'd suggest it works at about the 41% - 43% rate and it works perfectly well on any market and in any time frame.


----------



## Mike Trader

I'm sure your right Nick,I have never  researched it in depth.


----------



## Barndat

sleepy said:


> I bought mine 2nd hand/used off amazon
> 
> http://www.amazon.com/gp/offer-list...olp_1?ie=UTF8&s=gateway&qid=1208361830&sr=8-1
> http://www.amazon.co.uk/gp/offer-li...olp_1?ie=UTF8&s=gateway&qid=1208361830&sr=8-1
> 
> sleepy




Sleepy can I ask, did u get the Disk that's included when u bought the book from Amazon..??
I bought the last second-hand copy available to Australia but it came without the disk. I was wondering what the disk was, instructional or the PPS program or what..??

Thanks..


----------



## bunyip

I've owned the PPS book for more than 10 years and I'd rate it a very good book. 
Curtis Arnold's core pattern is the symmetrical triangle. These are good patterns to trade and are very profitable when traded in the direction of the trend. 

The limitations of symmetrical triangles are.......
1... They don't occur all that often in each stock (although you get quite a few if you follow enough stocks)
2... They're difficult to scan for....a distinct disadvantage if you're trying to find them among a large number of stocks.
3....They mostly occur after the trend has been under way for some time. Usually there are various other patterns that would have given you a far more timely entry than the symmetrical triangle.

In the PBG chart, for example, long before the triangle showed up there were various other patterns that would have put you into the downtrend and had you harvesting good dollars on the short side. This does not in any way detract from the validity of the triangle as an entry signal when it eventually showed up.

Another good pattern outlined by Curtis is double tops and double bottoms. What's interesting is that he uses them as trend continuation patterns, not trend reversal patterns.
We've all seen someone give examples of a double top calling the end of an uptrend, and giving a signal to go short once price falls below the trough between the two tops.
And we seen examples of double bottoms calling the end of a downtrend, and giving a signal to go long once price climbs above the peak between the two bottoms. 

Curtis did extensive testing that showed double tops/bottoms to be unreliable when used in this manner. Instead, he looks for double bottoms that occur during uptrends, and double tops that occur during downtrends. 

Example......
A stock or market is uptrending, then starts selling off....a counter-trend retracement. After a few days the selloff ends and the uptrend resumes, creating a trough within the uptrend. 
Several days or maybe a week or two later, another selloff. This second retracement goes to the same or very similar level as the first retracement, then the uptrend resumes.
Now you have a double bottom within an uptrend.....a valid buy signal.

The mirror image of this pattern is a double top occuring during a downtrend. A downtrending stock or market rallies temporarily before resuming it's downtrend. A bit further down the track, along comes another temporary rallies that ends at the same or similar level as the first rally. Now you have a double top within a downtrend...a valid short entry signal.

I've found this pattern to be fairly rare, but when it shows up I'll trade it without hesitation, due to it's reliability.


----------



## Barndat

Bunyip, Thanks for the info. I still don't know about the disk that is suppose to comes with the book. Did you receive it and if so what does it contain..??

Thanks


----------



## bingk6

Barndat said:


> Bunyip, Thanks for the info. I still don't know about the disk that is suppose to comes with the book. Did you receive it and if so what does it contain..??
> 
> Thanks





Barndat,

I also got a copy of the book from amazon, cost me a small fortune, and it did not come with the disk


----------



## bunyip

Barndat said:


> Bunyip, Thanks for the info. I still don't know about the disk that is suppose to comes with the book. Did you receive it and if so what does it contain..??
> 
> Thanks




I got the disc but for some reason I could never open it . Presumably it just gives examples of the PPS software in action.


----------



## Nick Radge

The book was the precursor to his PPS software so the disk was an example of how that worked. It was an old ugly program (probably good for those days). I doubt computers these days could run that type of disk anymore anyway.

This was the program that led to his eventual downfall because of the false claims he made during its marketing.

I had the triangle patterns as per his book coded into TradeStation for me back in 1999 or so.


----------



## Barndat

Thanks for that info Nick, I won't lie in bed wondering what I may have missed out on by not getting the disk with the book now.
Cheers..


----------



## sleepy

I did get a disk ... but never looked at what was on it as it was on a Floppy disc which my laptop cant read.

sleepy


----------



## bunyip

MRC & Co said:


> Along with an oscillator for a basic idea of overbrought/oversold and a moving average for the basic trend and especially shooting stars and hammers for trend reversals




Hammers and Shooting Stars are unreliable as trend reversal signals. That's not to say that you can't find examples of a trend reversing after the appearance of one of these candles. But they're far more reliable when used as trend continuation patterns.

Examples.......

1. A downtrending market rallies as buyers pile in and push prices up.
But the upward push soon fizzles out, and a Shooting Star shows up. The long upper tail of the Shooting Star shows where the buyers have been flushed out and higher prices have been rejected. The low close of the SS shows that the bears are back in control. 
The downtrend is about to resume.

2. An uptrending market sells off as profit takers bail out. The selloff proves to be only temporary, and a Hammer shows up. The long lower tail and the high close of the Hammer show where the sellers have been flushed out and the buyers are piling back in to take advantage of the cheaper prices. 
The bulls have regained control and the uptrend is about to resume.

The above examples are one of the strategies I use to trade Forex from end of day charts. It's a simple system and very profitable.

Hammers and Shooting Stars can add additional reliability to the patterns used in the PPS system. When found within a triangle, they increase the probability of the triangle breaking out in the direction of the trend.

Similarly, when a Hammer forms the second bottom of a double bottom within an uptrend, it increases the likelihood of the uptrend resuming. 

When a Shooting Star forms the second top of a double top within a downtrend, it increases the probability of the downtrend resuming strongly.


----------



## WaySolid

A link to a free Curtis Arnold seminar with notes. 
http://tinyurl.com/6j52g6

Apologies if linked to before.

Excellent site there btw, a nice free resource for previews to their pay section.


----------



## MRC & Co

bunyip said:


> Hammers and Shooting Stars are unreliable as trend reversal signals. That's not to say that you can't find examples of a trend reversing after the appearance of one of these candles. But they're far more reliable when used as trend continuation patterns.




Yes, they can also be used in this fashion.  

Sometimes I will use them after only a several bar move.  Not neccissarily a reversal of a larger trend.

But of a larger term trend, a shooting star or a hammer on large exhautive volume, are not unreliable IMO.  But it HAS to be paired with that large volume.  If the tail hits a resistance or support or closes a previous gap, I will take them without second thought.


----------



## mazzatelli1000

bunyip said:


> Hammers and Shooting Stars are unreliable as trend reversal signals. That's not to say that you can't find examples of a trend reversing after the appearance of one of these candles. But they're far more reliable when used as trend continuation patterns.




The appearance of Hammers often only signal that the preceding trend has stopped and taking a rest - whether it will continue, or reverse is left to be seen.

So I agree alone as a reversal signal is unreliable


----------



## tech/a

> but a number setting up on the short side now:




You know this how?


----------



## bunyip

Someone was asking if PPS works across different markets. 
I've used it for trading commodity Futures like Soybeans, Corn, Cotton, Lean Hogs, options on US stocks, CFD's on ASX and US stocks, and also to trade Indexes. 
These days it's one of my Forex trading strategies.
And I've used it across a variety of timeframes, daily, weekly and intraday.
The chart below shows a classic PPS setup in the Forex market.

Note the Hammers at Points 2 & 4.....when candle bottom reversal patterns appear at the bottom of a triangle they add even more weight to the probability of an upside breakout.


----------



## julius

tech/a said:


> You know this how?




Tech - think Nick means a number of trades setting up on the short side...could be wrong of course.


----------



## tech/a

julius said:


> Tech - think Nick means a number of trades setting up on the short side...could be wrong of course.





I also think thats what he means.
How does/did he discover this?


----------



## MRC & Co

tech/a said:


> I also think thats what he means.
> How does/did he discover this?




lol, tech, I think both Julius and Nick are stating a number of PPS style (Power set-up) trades setting up on the short side now.  

Nothing to do with traders setting up on the short side on BOL inparticular.


----------



## tech/a

Oh.
Thanks for that I was madly looking for a reason to sell my only profitable trade at the moment--BOL.


----------



## bunyip

tech/a said:


> Oh.
> Thanks for that I was madly looking for a reason to sell my only profitable trade at the moment--BOL.




I'm curious...why would you be looking for a reason to sell a profitable stock that's still uptrending? Why not just trail your stop with the aim staying in for the duration of its trend?


----------



## tech/a

Radge said in his post about BOL



> but a number setting up on the short side now:




I incorrectly thought his comments were related specifically to the trade on BOL.

Thanks for your trading hints.
After 14 yrs in this game I'm always looking for fresh ideas.


----------



## bunyip

This Forex chart shows another of the patterns from Curtis Arnolds PPS trading system.
Curtis developed his PPS (Pattern Probability System) after reading some of the classic texts on technical analysis, and questioning the truth of some of the claims being made about the various chart patterns.
He conducted extensive testing to prove or disprove the validity of these claims.
One of his findings was that Double Tops were most reliable when used as downtrend continuation patterns, rather than as uptrend reversal patterns. 

Although Double Tops during downtrends are less common than triangles during downtrends, they're nevertheless good patterns that are frequently followed by powerful moves in the direction of the trend.


----------



## MRC & Co

Not sure if you have read "Adaptive Analysis" yet Bunyip, but if not, as Nick is a big fan of PPS, he shows set-ups along similar lines.

Micro double bottoms/tops as trend continuation patterns.  

Thanks for the charts and examples.


----------



## bunyip

MRC & Co said:


> Not sure if you have read "Adaptive Analysis" yet Bunyip, but if not, as Nick is a big fan of PPS, he shows set-ups along similar lines.
> 
> Micro double bottoms/tops as trend continuation patterns.
> 
> Thanks for the charts and examples.





No MRC.....'Adaptive Analysis' is not among the 50 odd books trading books in my library.

The good thing about these patterns is that they appear in every market and in every timeframe. So no matter which market/s you choose to trade, you have a simple and profitable trading system available to pull consistent profits from that market.

You can look at charts going back to near the turn of the last century and every year in between - stocks, futures or whatever - and you'll see these very same patterns staring out at you. The price movements that cause them are caused by human nature, and human nature never changes. Therefore we can be assured of having a continued supply of these patterns right throughout our trading lives.

I'm always perplexed by people who say the markets are changing, and you have to change with them by constantly adapting your trading system and having a dozen different strategies to use in different market conditions. 
What nonsense....my trading strategies have remained pretty much unchanged for 10 years and in that time we've seen a variety of market conditions from bearish to bullish to flat. I've never yet seen market conditions in which I was starved of profitable trading opportunities.
If you can find a trend you can find a profitable trading opportunity........and even during flat market there are always stocks that trend. _Always._
Better still, if you go a market like Forex there's rarely a time when you _don't _have some currencies trending strongly.


----------



## It's Snake Pliskin

bunyip said:


> No MRC.....'Adaptive Analysis' is not among the 50 odd books trading books in my library.
> 
> The good thing about these patterns is that they appear in every market and in every timeframe. So no matter which market/s you choose to trade, you have a simple and profitable trading system available to pull consistent profits from that market.
> 
> You can look at charts going back to near the turn of the last century and every year in between - stocks, futures or whatever - and you'll see these very same patterns staring out at you. The price movements that cause them are caused by human nature, and human nature never changes. Therefore we can be assured of having a continued supply of these patterns right throughout our trading lives.
> 
> I'm always perplexed by people who say the markets are changing, and you have to change with them by constantly adapting your trading system and having a dozen different strategies to use in different market conditions.
> What nonsense....my trading strategies have remained pretty much unchanged for 10 years and in that time we've seen a variety of market conditions from bearish to bullish to flat. I've never yet seen market conditions in which I was starved of profitable trading opportunities.
> If you can find a trend you can find a profitable trading opportunity........and even during flat market there are always stocks that trend. _Always._
> Better still, if you go a market like Forex there's rarely a time when you _don't _have some currencies trending strongly.




Hi Bunyip,

Thanks for the PPS information. I have tried to get that book without any luck. So bit by bit I get some information here and there. 

Cheers.


----------



## bunyip

It's Snake Pliskin said:


> Hi Bunyip,
> 
> Thanks for the PPS information. I have tried to get that book without any luck. So bit by bit I get some information here and there.
> 
> Cheers.




No problem Snake - pleased to help.
Bought my PPS book from traderslibrary.com ten years ago. Just visisted their website and it says the book is not available. Maybe it's gone out of print.


----------



## lesm

It's Snake Pliskin said:


> Thanks for the PPS information. I have tried to get that book without any luck. So bit by bit I get some information here and there.
> 
> Cheers.




Hi snake,

There are two used copies available on Amazon.

Cheers.


----------



## MRC & Co

bunyip said:


> Better still, if you go a market like Forex there's rarely a time when you _don't _have some currencies trending strongly.




Yeh, this seems to be a recurring theme I am hearing.  I don't trade FOREX myself, but every single trader seems to talk about how well it responds to traditional T/A set-ups.  

Snake, I have found it impossible to land PPS too.  I saw 2nd hand copies on Amazon, but none ship to Australia.  I even messaged some of the people asking if they could do a deal and I would pay for shipment, no reply from any of them, ha ha.  

I will get my hands on it one day.  For now, I will have to learn from threads like this and examples like Bunyip and Nick provide. 

Bunyip, does Arnold also look at adding candle signals to these micro-patters such as you do yourself?  And how often do you find confluence between candle reversal signals and micro traditional patterns?


----------



## bunyip

MRC & Co said:


> Yeh, this seems to be a recurring theme I am hearing.  I don't trade FOREX myself, but every single trader seems to talk about how well it responds to traditional T/A set-ups.
> 
> Snake, I have found it impossible to land PPS too.  I saw 2nd hand copies on Amazon, but none ship to Australia.  I even messaged some of the people asking if they could do a deal and I would pay for shipment, no reply from any of them, ha ha.
> 
> I will get my hands on it one day.  For now, I will have to learn from threads like this and examples like Bunyip and Nick provide.
> 
> Bunyip, does Arnold also look at adding candle signals to these micro-patters such as you do yourself?  And how often do you find confluence between candle reversal signals and micro traditional patterns?




Yep, Forex seems to be tailor made for technical analysis. And it puts in the sort of trends that traders dream about.
Not only that, but the sheer size of the Forex market makes it very difficult to manipulate. There are many other benefits of this great market, but I'm somewhat off topic so maybe I'll talk more about it over on one of the Forex threads.

I'm not sure Curtis A had even heard of Japanese Candlestick charts when he wrote the PPS book......he never once mentioned them.

Hard to quantify how often candle reversal signals accompany the PPS patterns...but it's quite a common occurrence.

The chart below shows a Descending Triangle in a downtrending Forex pair.
I like this pattern as a short entry signal in Forex and I've had some nice trades from it. 
But interestingly, Curtis Arnold doesn't seem too keen on this pattern in the commodity futures markets in which he tested it.


----------



## Trembling Hand

bunyip said:


> Yep, Forex seems to be tailor made for technical analysis. And it puts in the sort of trends that traders dream about.
> Not only that, but the *sheer size of the Forex market makes it very difficult to manipulate.*



 I never understand that rubbish. It just seems like another bucket shop line to pull in the naive punters.

I mean all markets are moved when buyers or sellers become imbalanced. The trick is to be on the right side of that. Weather the move is "manipulation" or not, what does it matter?


----------



## bunyip

Trembling Hand said:


> I never understand that rubbish. It just seems like another bucket shop line to pull in the naive punters.
> 
> I mean all markets are moved when buyers or sellers become imbalanced. The trick is to be on the right side of that. Weather the move is "manipulation" or not, what does it matter?




If you don't understand it then perhaps you're being premature in labelling it as rubbish.
An ex-broker once told me about a practice that goes on in the stockmarket. A large institutional client wants to quit its holding in a stock, but doesn't like the current price. So it asks its broker to plug the stock. The broker slaps a buy recommendation on the stock and sends it to thousands of clients via newsletter or daily market alert or whatever. Many of them pile into the stock and push the price up. The institutional client promptly bails out, causing the stock to suddenly head south. 
There was a recent example in a US stock that was heading downhill, then jumped 13% in one day when a broking firm put a buy recommendation on it. 
The jump was promptly followed by a fall that wiped out the gain in just two days.

I can see all sorts of ways to manipulate stock prices. The stockmarket is made up of thousands of individual companies. Good or bad news about a company, whether true or fabricated, can cause the stock price of that company to make wild and unexpected directional changes.
The different structure of the Forex market gives it a degree of immunity from this sort of thing.

For every buyer there's a seller. The imbalance you talk of is an imbalance between supply and demand, not between buyers and sellers.  Supply/demand imbalance causes price movement in any market. And the trick is to be on the right side of that imbalance. 
Some markets tend to remain in a state of imbalance for extended periods, resulting in sustained trends in one direction. It's pretty easy for a trader to get on the right side of the imbalance in this situation, and stay there for the duration of the trend. These are the easiest markets to trade, and the Forex market is one of them.
Some markets, such as individual stocks, tend to switch balance far more often due to the large number of factors that can alter public perception about a stock.
Sometimes that public perception can be deliberately manipulated. 
But whether manipulated or not, it's a fact that supply/demand imbalance in stocks tends to shift around more often than it does in currencies. The more shifts you get in supply/demand imbalance, the choppier the market and the harder it is to trade.


----------



## MRC & Co

bunyip said:


> For every buyer there's a seller. The imbalance you talk of is an imbalance between supply and demand, not between buyers and sellers.  Supply/demand imbalance causes price movement in any market. And the trick is to be on the right side of that imbalance.




Thanks for the info Bunyip.

What do you mean by this part?  Sellers and buyers are supply and demand, right?  

I think that is THs point, that even if the broker puts up a buy recommendation, you can still spot the large institution offloading into that demand through VSA and therefore, be on the right side of the imbalance.  

I can see your point though on why FOREX runs better than stocks, and therefore, better for breakout plays such as these.  Though, perhaps stocks or index futures are better for fade plays?  Pivots/support/resistance, with a stop and reversal of the fade on the other side of the fade area shoiuld the set-up fail.


----------



## Trembling Hand

bunyip said:


> The more shifts you get in supply/demand imbalance, the choppier the market and the harder it is to trade.




LOL

Well there you go. One man's trash is another man's treasure.


----------



## bunyip

MRC & Co said:


> Thanks for the info Bunyip.
> 
> What do you mean by this part?  Sellers and buyers are supply and demand, right?
> 
> I think that is THs point, that even if the broker puts up a buy recommendation, you can still spot the large institution offloading into that demand through VSA and therefore, be on the right side of the imbalance.
> 
> I can see your point though on why FOREX runs better than stocks, and therefore, better for breakout plays such as these.  Though, perhaps stocks or index futures are better for fade plays?  Pivots/support/resistance, with a stop and reversal of the fade on the other side of the fade area shoiuld the set-up fail.




No, you can't necessarily be on the right side of the imbalance. You may very well find yourself on the wrong side if you're short in a stock that suddenly takes a hefty jump because a broker gives it a buy recommendation. Or because it was manipulated for any other reason. Chances are you'll be stopped out.
How about small cap stocks that might only trade a few thousand dollars worth a day? These stocks are notoriously choppy and easily manipulated. Try getting yourself on the right side of the supply/demand imbalance, when that imbalance swings wildly in a choppy stock. You can be on the right side today and the wrong side tomorrow. 

Now compare this to the Forex market. No amount of ramping or rumour or fanciful reporting or corporate deception or missed earnings or attempted manipulation will have any effect on the massive currency markets. No silly little rumour, whether genuine or fabricated, is going to cause wild swings in currencies.
Therefore currencies tend to exhibit smoother trending characteristics and more predictable patterns than just about every other market, and as such, are one of the easiest markets for putting yourself on the right side of supply/demand imbalance, and keeping yourself there.
Which brings me back to the PPS system.....putting you on the right side of the imbalance is what PPS does very well. That's one of the reasons I find it to be a good and profitable system.

On the buyer/seller supply/demand issue.......Sellers are not sellers until they actually sell something. Buyers are buyers only when they buy something. Every time a stock changes hands, the transaction involves a buyer and a seller.  The number of buyers and sellers is equal. The number of stocks bought and sold is equal by definition.
But supply and demand are never equal....there's always an imbalance, however small or large.
The buyers represent demand and the sellers represent supply. If there's a huge number of people wanting to buy a particular stock, but not many people willing to sell it, the wannabe buyers have to offer increasingly higher prices to entice sellers to do business.
Demand is greater than supply, therefore prices are pushed strongly upward.....an uptrend.

Sometimes supply is greater than demand....lots of people wanting to sell, but not many willing buyers. The sellers wishing to entice the buyers to do business with them have no choice but to accept increasingly lower prices. Hence a downtrend forms. 

Put yourself on the right side of these trends - these supply/demand imbalances - and you have a good chance of a profitable trade IF the imbalance continues. It's a lot easier to do it in relatively stable markets like Forex that's large enough not to be easily moved by rumours or deception or manipulation.  

As for fade plays......Each to his own...I don't use them and I don't know much about them. I've never found any reason to deviate from a trend following approach. And the easiest way to get aboard a trend is to trade continuation patterns. 
If you can find a trend, (and you always can), you can find a potentially profitable trade. Rare is the trend that goes from start to finish without giving you at least a couple of good entry setups.
Look at any market.....the big money is in the big trends. I want to be where the big money is. How about you?


----------



## MRC & Co

Ok, I see what you are saying about supply and demand and buyers and sellers.  Basically the difference between the DOM and T&S.  

I personally, think you need to add volume to PPS set-ups if your really to give yourself the best chance of being on the right side of imbalance (after all, this is what causes the imbalance).

I don't trade small caps.  But a broker buy recommendation, followed by a large insitution offloading, will show up generally with a long tail or a tight spread on large volume.  Both, an indication to exit your position.  EOD, of course, always harder than intraday.  

If you catch the big money exiting, then fade plays from resistance work.  If you catch the big money entering, then you can fade a support.  You don't just have to use it for trending systems.  But each to his own.  But if your trading intrday, a trend following system will make you nothing on choppy days........perhaps.


----------



## bunyip

MRC & Co said:


> Ok, I see what you are saying about supply and demand and buyers and sellers.  Basically the difference between the DOM and T&S.
> 
> I personally, think you need to add volume to PPS set-ups if your really to give yourself the best chance of being on the right side of imbalance (after all, this is what causes the imbalance).
> 
> I don't trade small caps.  But a broker buy recommendation, followed by a large insitution offloading, will show up generally with a long tail or a tight spread on large volume.  Both, an indication to exit your position.  EOD, of course, always harder than intraday.
> 
> If you catch the big money exiting, then fade plays from resistance work.  If you catch the big money entering, then you can fade a support.  You don't just have to use it for trending systems.  But each to his own.  But if your trading intrday, a trend following system will make you nothing on choppy days........perhaps.






Intraday trading?.....Been there done that....life is too short! 
My trading activities from daily charts take about 15 minutes a day - a long day would be half an hour......leaves me plenty of time to do have a lifestyle outside of trading.
But if you like intraday trading and you can make money from it...why not!

If you ever decide to have a crack at the Forex market you'll have to do without volume analysis.......no volume figures are available for Forex.


----------



## Trembling Hand

bunyip said:


> If you ever decide to have a crack at the Forex market you'll have to do without volume analysis.......no volume figures are available for Forex.




Only if you trade the Bucket shops.

FX volume is available for FUTs.


----------



## bates

bunyip said:


> Intraday trading?.....Been there done that....life is too short!
> My trading activities from daily charts take about 15 minutes a day - a long day would be half an hour......leaves me plenty of time to do have a lifestyle outside of trading.
> But if you like intraday trading and you can make money from it...why not!
> 
> If you ever decide to have a crack at the Forex market you'll have to do without volume analysis.......no volume figures are available for Forex.




Hi Bunyip,

How do you screen for the setups by eye or software? I guess if you are just trading Forex scanning each pair could be done in 15 mins a little more difficult to do with say the ASX 200.


----------



## bunyip

Trembling Hand said:


> Only if you trade the Bucket shops.
> 
> FX volume is available for FUTs.





LOL......Guess I'll just continue trading the 'bucket shops' then.......I'm doing OK.


----------



## bunyip

bates said:


> Hi Bunyip,
> 
> How do you screen for the setups by eye or software? I guess if you are just trading Forex scanning each pair could be done in 15 mins a little more difficult to do with say the ASX 200.





Not 15 minutes for each pair - 15 minutes for ten pairs......that includes placing orders and adjusting stops on existing positions etc. 
The actual eyeballing of 10 pairs to find the setups takes only five minutes or so. With a bit of practice you become so familiar with the setups that you can spot them in just a few seconds of looking at a chart.
Scanning for the setups would save me virtually no time at all.


----------



## bunyip

For what it's worth.....
Here are a couple of extracts from the chapter on trend identification in Curtis Arnold's PPS Trading System book. 
He refers to commodity trading but his comments are relevant to any market.

_I cannot overstate the importance of the underlying trend in commodity trading. When asked for trading wisdom, the greatest legendary traders from Jesse Livermore through Richard Dennis, would simply reply: *"The trend is your friend", or "Don't fight the tape".*
And you were expecting something complex and profound? Could commodity trading really be that simple? The answer is yes. In my opinion you're half way home when you're trading is based on this simple yet profound truth._

The PPS system uses two Simple moving averages (SMA)  to identify the trend. 

Downtrend.....18 SMA falling, 40 SMA flat or falling.
Uptrend...18 SMA rising, 40 SMA flat or rising.

Here's another extract from the book...

_We know the first tenet of successful trading: trade with the trend.
But what exactly is a trend? Because there are many ways to define a trend, there is no right answer. All that is important though, is that we choose one definition, and then trade accordingly. In other words, we never enter a trade unless, by our definition, a trend does exist.
Unlike trend lines, which can be subjectively drawn, moving averages are not only a simple way to define the trend, but offer the added benefit of being totally objective._


----------



## It's Snake Pliskin

lesm said:


> Hi snake,
> 
> There are two used copies available on Amazon.
> 
> Cheers.




Thanks Lesm. I tried getting through Amazon Japan as they had it on their site but they couldn't get it for me

Mrc, I understand what you must be feeling.

Cheers..


----------



## Nick Radge

Here is one I picked up last night (CHD.NYSE). According to Arnold these symmetrical triangles have an 86% chance of breaking with the trend. Here we have the 4-internal swing points, the two ma's pointing higher, at 52-week highs as well as very good volume traits. My experience is that declining volume during the pattern tends to lead to a breakout whereas expanding volume during the pattern tends to lead to a failure. 







We'll follow this trade using the PPS method over the coming day and see what transpires...

_This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision._


----------



## tech/a

> My experience is that declining volume during the pattern tends to lead to a breakout whereas expanding volume during the pattern tends to lead to a failure.




Have you found that to be the case with both bullish and bearish patterns?


----------



## Nick Radge

An update on the open CHD trade which stands in a small profit at the moment. PPS states that after 4-days the stop should be moved to breakeven so today being the 4th day we'll amend that tonight. The chart shows a poor close so no harm done if we get stopped.





_This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision._


----------



## brty

Hi,

Nick, That figure that Arnold uses..



> According to Arnold these symmetrical triangles have an 86% chance of breaking with the trend.




is not accurate according to T. Bulkowski, who has a figure of 54% (Pg 752 in the Encyclopedia of Chart Patterns).

Have you done any statistical analysis of this on our market as methinks it may vary over time.

brty


----------



## Nick Radge

Bulkowski is using more classic triangles that may take many months to form. Arnold is using small tight triangles that take from 6 - 12 days to form. I'd say a better comparison from Bulkowski's work is the High Tight Flag:

http://thepatternsite.com/htf.html


----------



## bunyip

sleepy said:


> Yes there is a chapter on Exits and in it he also discusses TWO rules that will allow you to move your stop to break-even, thus reducing your risk to zero.
> 
> Only 7 pages long but invaluable in my opinion.
> 
> 
> 
> As Nick keeps reminding us its all about 'focusing on the losing trades', as the winning trades take care of themselves.
> 
> sleepy




Donald Trump puts it like this.....'Look after the downside - the upside will look after itself'.


----------



## Nick Radge

The CHD trade remains intact with the stop at breakeven.

Here is another of the patterns called the continuation Head & Shoulders. He says its rare in commodities but they're quite prevalent in US stocks. I was able to get some positive slippage on this one last night. We'll watch how it transpires.







_
This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision._


----------



## brty

Hi Nick,

I asked you a couple of weeks ago....



> Have you done any statistical analysis of this on our market as methinks it may vary over time.




Your reply was about how Arnold used shorter time frame triangles.

I've just had a re-read of the PPS book and found on page 45....



> When I did the original research in 1987, I required the symmetrical triangles to be at least 10 days and no more than 50 days long



.

He then stated that he "gravitated toward smaller, more compact patterns".

The 86.4% that broke in the direction of the trend, is in the "Notes from the research" 

The compact triangles may not have the same results, I saw no mention of it. However his original research which does include the same type of symmetrical triangle length as Bulkowski, has vastly different results. I would presume that it is because the research periods were different. Plus Arnold was looking at Commodities while Bulkowski was looking at stocks.

This again begs the question, Have you, or for that matter anyone else, done this type of research on Australian stocks, before applying it to Australian stocks??

brty


----------



## Nick Radge

I don't have a raw set of stats on 'what percentage break in the direction of the trend' or how the trade stats mount up according to his specific techniques. I have never used the 'apex' as a stop point but the 'traders trick' entry. This offers somewhat different stats. Using the 'traders trick' entry enables you to have a b/even stop in place (usually) if the triangle reverses at the old high. As a guide, winners are around the 38% mark, losers around 30% and b/even trades taking up the balance. The b/even quantity will depend on how tight you manage the stop. Arnold uses 2x R but using 1x can be more beneficial in my view, albeit causes some frustration at times.


----------



## bunyip

MRC & Co said:


> Great post Kauri!  I agree, I think I would have only seen the successfull triangle if I went back through that chart!  Never thought of it that way! Thanks!
> 
> Which indicator do you use to help you determine the breakout direction?  I only add RSI (perhaps change to a stochastic to my chart) for some use (divergence) and to look for price action movements once in highly overbrought/oversold territory.  Without trading on this alone ever, just using to help with picking the direction of the breakout.
> 
> As far as the false breakout, at least you only loose the small stop, whereas you pick up the much larger gain from the true breakout.  I also read some traders use a certain % or # of bars, or at least wait until the breakout closes below the trendline to determine if the breakout is likely.  However, realise this can reduce your profits as you dont catch as much of the breakout.  Always one + for another -




Triangles, rectangles, flags, pennants, dual inside days etc...all of them are pausing patterns whose most reliable use is to indicate when an established trend is about to resume.
No need for Stochastic or RSI or any other indicator to help you determine the breakout direction. 
The direction of the trend preceding the pattern will tell you the breakout direction.

If an uptrend precedes the pattern, then the uptrend is likely to resume once price breaks above the pattern. 
If a downtrend precedes the pattern, then the downtrend is likely to resume once price breaks below the pattern.


----------



## MRC & Co

bunyip said:


> Triangles, rectangles, flags, pennants, dual inside days etc...all of them are pausing patterns whose most reliable use is to indicate when an established trend is about to resume.
> No need for Stochastic or RSI or any other indicator to help you determine the breakout direction.
> The direction of the trend preceding the pattern will tell you the breakout direction.
> 
> If an uptrend precedes the pattern, then the uptrend is likely to resume once price breaks above the pattern.
> If a downtrend precedes the pattern, then the downtrend is likely to resume once price breaks below the pattern.




I actually find RSI divergence on double tops/bottoms on daily charts very helpful, when coupled with volume.  

If riding a trend, not using RSI in the traditional sense, but if an uptrend, and RSI is overbought, once it crosses back from overbought territory, can give an indication the trend is coming to an end.

Same as these patterns with distribution or accumulation.

Don't use any of the indicators for scalping though, only when trying to ride longer trends, and only RSI.


----------



## Trembling Hand

MRC & Co said:


> Don't use any of the indicators for scalping though, only when trying to ride longer trends, and only RSI.




Just out of interest that wouldn't be because a certain BIG boy looking over your shoulder would frown upon you if you had too many squiggly lines on your charts would it?


----------



## MRC & Co

Trembling Hand said:


> Just out of interest that wouldn't be because a certain BIG boy looking over your shoulder would frown upon you if you had too many squiggly lines on your charts would it?




ha ha, na, the big boys encourage us little minnows to use whatever we see fit, if we can make it work or if it will simply just add to our conviction.  

I actually tried using RSI for quite some time, but it was terrible for me!


----------



## tech/a

> The direction of the trend preceding the pattern will tell you the breakout direction.
> 
> If an uptrend precedes the pattern, then the uptrend is likely to resume once price breaks above the pattern.
> If a downtrend precedes the pattern, then the downtrend is likely to resume once price breaks below the pattern.




Think you can be much more accurate than indicators by watching the testing,Range and volume within each bar in the pattern---whatever that pattern be..


----------



## professor_frink

MRC & Co said:


> ha ha, na, the big boys encourage us little minnows to use whatever we see fit, if we can make it work or if it will simply just add to our conviction.
> 
> I actually tried using RSI for quite some time, but it was terrible for me!




yeah I stuck an RSI on my intraday charts when I first made the shift to daytrading, quite like it for EOD trading so thought it might be worth a look. Think it lasted about 2 or 3 sessions before it was banished forever


----------



## MRC & Co

professor_frink said:


> yeah I stuck an RSI on my intraday charts when I first made the shift to daytrading, quite like it for EOD trading so thought it might be worth a look. Think it lasted about 2 or 3 sessions before it was banished forever




ha ha, exact same, though I stuck with it for about 20 sessions!


----------



## bunyip

MRC & Co said:


> I actually find RSI divergence on double tops/bottoms on daily charts very helpful, when coupled with volume.
> 
> If riding a trend, not using RSI in the traditional sense, but if an uptrend, and RSI is overbought, once it crosses back from overbought territory, can give an indication the trend is coming to an end.
> 
> Same as these patterns with distribution or accumulation.
> 
> Don't use any of the indicators for scalping though, only when trying to ride longer trends, and only RSI.




My experience with uptrending markets is that they make frequent temporary retracements during the life of the uptrend. These retracements show a brief loss of uptrend momentum, and momentum indicators like RSI will react to this by crossing down from overbought territory. 
Then they'll cross back up into overbought again when/if the retracement ends and the uptrend resumes.
By falling down from the overbought zone during the retracements, RSI and Stochastic etc are alerting you to a potential buying opportunity, rather than signalling the probable end of the trend.
The best use I've found for indicators like RSI is to take their buy signals during uptrends, but ignore their sell signals. And take their sell signals during downtrends, but ignore their buy signals.
But these days I don't use indicators at all. I find them unnecessary. Rather than scan for RSI buy signals during uptrends, I scan for one or two consecutive lower closes during uptrends. This alerts me to when an uptrending stock or market is in the process of making a retracement against the trend.....a potential buying opportunity.
Also, I use chart patterns such as those outlined in the PPS system.
And during downtrends, I simply use the mirror image of the above to find opportunities to go short, or buy put options.


----------



## MRC & Co

bunyip said:


> These retracements show a brief loss of uptrend momentum, and momentum indicators like RSI will react to this by crossing down from overbought territory.
> Then they'll *cross back up into overbought again when/if* the retracement ends and the uptrend resumes.




Yes, so this signals it may be time to exit, trend may be finished.

As you say, when/if the trend resumes (break of a new downward trendline), then one could trade the next swing up.  

I would personally rather just take portions of a trend, as opposed to trying to take the entire thing and give wider stops.

Though I must say, even my odd trade off daily charts these days, are more just feel and price action.  

Everything, really comes down to your exact entries and exits and finding what works with those and in which timeframes IMO.  Throw in a bit of MM and not much else matters.


----------



## bunyip

tech/a said:


> Think you can be much more accurate than indicators by watching the testing,Range and volume within each bar in the pattern---whatever that pattern be..




More accurate than indicators? Indicators are based on price and are only reacting to what price is doing. The setting of an indicator governs how quickly or slowly it reacts to changes in price action. RSI on a setting of 30 will react too slowly to give accurate signals. Change the RSI setting to 2 and the indicator may now be too reactive to give reliable signals.
Watch the price or watch the indicator is the choice of the individual, as is the setting used for the indicator. I spent years experimenting with and using indicators.  These days I find it simpler just to watch price.

Range of the bars.....yes, I take note of the ranges to some extent, but it goes without saying that the ranges will tend to be smallish during consolidation patterns like Rectangles and Triangles, particularly when we're talking about those short-lived, micro patterns that are the core of the PPS system. This is particularly true in the case of triangles, where price movement becomes increasingly constricted and congested as it moves in an ever-tightening range towards the apex of the triangle.

Volume....I never look at it. I don't look at it during the formation of the pattern, and I consider it a complete waste of time monitoring volume on the breakout from the pattern. 
The breakouts from those tight consolidation patterns can be fast and furious, and I want to be in the trade the moment they start to happen.
Once the pattern forms I place my entry order just outside the pattern to catch the breakout as it occurs. This allows me to nail the bulk of the very large moves that sometimes occur on the actual breakout bar. I'm not interested in waiting until the end of the breakout bar, then checking the volume of that bar to help me decide whether or not to enter on the following bar. That's a sure way to miss out on the big breakout bar move.
The perfect place to buy a stock or market or call option is right at the beginning of a powerful upward move.
The perfect place to short a stock or market or buy a put option is right at the beginning of a powerful downward move.
This can be achieved by placing your entry order just outside the pattern so as to catch the breakout move as soon as it begins.


----------



## tech/a

bunyip said:


> More accurate than indicators? Indicators are based on price and are only reacting to what price is doing. The setting of an indicator governs how quickly or slowly it reacts to changes in price action. RSI on a setting of 30 will react too slowly to give accurate signals. Change the RSI setting to 2 and the indicator may now be too reactive to give reliable signals.
> Watch the price or watch the indicator is the choice of the individual, as is the setting used for the indicator. I spent years experimenting with and using indicators.  These days I find it simpler just to watch price.




So we agree then



> Range of the bars.....yes, I take note of the ranges to some extent, but it goes without saying that the ranges will tend to be smallish during consolidation patterns like Rectangles and Triangles, particularly when we're talking about those short-lived, micro patterns that are the core of the PPS system. This is particularly true in the case of triangles, where price movement becomes increasingly constricted and congested as it moves in an ever-tightening range towards the apex of the triangle.




True and this is why the Volume component is very important. Is it supply or accumulation volume---you can tell you know!



> Volume....I never look at it. I don't look at it during the formation of the pattern,




Something then which you may consider along with the "Position of the pattern within the life of the current and immidate past moves.



> and I consider it a complete waste of time monitoring volume on the breakout from the pattern.




Why?
You can tell a great deal infact you can often see if the breakout is possibly false.



> The breakouts from those tight consolidation patterns can be fast and furious, and I want to be in the trade the moment they start to happen.
> Once the pattern forms I place my entry order just outside the pattern to catch the breakout as it occurs. This allows me to nail the bulk of the very large moves that sometimes occur on the actual breakout bar. I'm not interested in waiting until the end of the breakout bar, then checking the volume of that bar to help me decide whether or not to enter on the following bar.




I certainly agree,but would it be benificial to have an idea wether you should be going long or short (If the vehical being traded can be traded both ways)
Reversals in continuation patterns can be more volitile and more profitable than those which comply. I'm not suggesting waiting for the breakout bar either.



> That's a sure way to miss out on the big breakout bar move.
> The perfect place to buy a stock or market or call option is right at the beginning of a powerful upward move.
> The perfect place to short a stock or market or buy a put option is right at the beginning of a powerful downward move.
> This can be achieved by placing your entry order just outside the pattern so as to catch the breakout move as soon as it begins.




Dont disagree.
But you can add to your analysis as I have suggested.
You have "Presumed" I mean waiting for the breakout.
Not so much more can be seen within the pattern.
Throw me a couple prior to their move. If your interested.


----------



## bunyip

MRC & Co said:


> Yes, so this signals it may be time to exit, trend may be finished.
> 
> As you say, when/if the trend resumes (break of a new downward trendline), then one could trade the next swing up.
> 
> I would personally rather just take portions of a trend, as opposed to trying to take the entire thing and give wider stops.
> 
> Though I must say, even my odd trade off daily charts these days, are more just feel and price action.
> 
> Everything, really comes down to your exact entries and exits and finding what works with those and in which timeframes IMO.  Throw in a bit of MM and not much else matters.




Yes, the trend _*may*_ be finished when a retracement causes RSI to move out of the overbought zone, but in most cases the retracement will be temporary and the trend will have further to run. 

A longer term trend trader will argue that the big money is in the big trends, and the way to extract maximum profit from those big trends is to use the various retracements to pyramid his position. This is sound thinking.

A short term swing trader will argue against sitting through the retracements - he'll be in favour of taking small regular bites out of the trend before a retracement starts to erode his profits. This is also sound thinking.

Both methods work. Horses for courses.


----------



## MRC & Co

bunyip said:


> A longer term trend trader will argue that the big money is in the big trends, and the way to extract maximum profit from those big trends is to use the various retracements to pyramid his position. This is sound thinking.
> 
> A short term swing trader will argue against sitting through the retracements - he'll be in favour of taking small regular bites out of the trend before a retracement starts to erode his profits. This is also sound thinking.
> 
> Both methods work. Horses for courses.




Exactly my point.

Catching longer-term trends is not my style, that's all. 

With tighter stops, you can load up a lot more, and while you may not catch as much of the trend as far as price is concerned, your leverage can be increased dramatically. Buying the bottom of a box in an uptrend, rather than the breakout point etc.......


----------



## tech/a

MRC & Co said:


> Exactly my point.
> 
> Catching longer-term trends is not my style, that's all.
> 
> With tighter stops, you can load up a lot more, and while you may not catch as much of the trend as far as price is concerned, your leverage can be increased dramatically. Buying the bottom of a box in an uptrend, rather than the breakout point etc.......




All good points---

Would there be a reason why you'd buy at the bottom of one Darvas setup and not another or would you buy everyone?
Can you identify the most likely bar to buy in the box at its bottom that would give you a better probability.
Are there some boxes youd avoid and why?


----------



## MRC & Co

tech/a said:


> All good points---
> 
> Would there be a reason why you'd buy at the bottom of one Darvas setup and not another or would you buy everyone?
> Can you identify the most likely bar to buy in the box at its bottom that would give you a better probability.
> Are there some boxes youd avoid and why?




To be honest, it's complete and utter discretion.  

Most of the time, it may just be a feel.  

If I am going to buy the bottom of the box, I will want it established already.  If it's testing the bottom of the box for the 3rd time, or perhaps even just the second time to establish the box parameters, and price grinds to a halt at the bottom, with little selling pressure coming in, or even if the bottom of the box is being defended by strong buying.  Other times, I will just place a buy order at the bottom and try to be flicked in, if however, price actually legitimately comes down towards my limit order and looks like there are some decent sellers, then I will remove it.  Other times though, I will wait for a false break out the bottom (get all the bulls out) and try buy that false break when it grinds to a halt (this is the hard part though, if I bought the bottom, I will usually be covering at the false break out, whereas this is where I should be buying, which throws you entirely out of your rythem).  

Thing is, as it's all intraday, you don't get caught by the same kind of gaps, and risk is further reduced.


----------



## tech/a

MRC

That where I think VSA can help.
Regardless of timeframe (to say 3 min in VERY liquid markets). Illiquid markets cannot be read with any accuracy.{Mind you a bar which is an outlier trading Millions of stock not normally seen can be read in lower timeframes.}

I see it all the time in many many patterns and in the lower time frames you do see a great deal of Box type support/resistance type patterns.

There are very often tell tale signs which will place you on the right side of a trade.During and even after your set in a position.

The key is in.
Where the consolidation is within the timeframe traded relative to trend.
The really high volume bars
The really low volume bars
The testing of highs and lows in the range.
The range of the bars
The position of the close.

The Key to continuation is 
Where the breakout is within the timeframe traded relative to trend.
The Range of the bar
The volume of the next few bars
The way price/volume reacts to highs and any lows on pull backs in the next few bars.

As an example and NOT a trick or cocky question interested in your comments and others on this chart.
Click on chart to expand.

Id use an intraday example but the R/T software is at the office ---can do so on Monday.


----------



## lindsayf

I will have a go..... it is a low volume test of a support level (previous resistance level)...I expect it to fail ie go up.  Or alternatively, it is a low volume retracement again, likely to reverse.  My current sim trading on the ES would suggest that I am likely to be wrong.

I am v interested in VSA.  Are there any good readable/practical books or home study courses available that people are aware of?

cheers


----------



## Trembling Hand

I would prefer to be short this set up but not from the entry on the next bar.
Better entry would of been 1/2 way into second last bar. That is my coin toss.


----------



## Trembling Hand

lindsayf said:


> My current sim trading on the ES would suggest that I am likely to be wrong.
> 
> I am v interested in VSA.  Are there any good readable/practical books or home study courses available that people are aware of?
> 
> cheers




I wonder about the use of VSA in index Futs? especially short intraday trades. Considering that many a big Vol trade are arbs and hedges. Then you have the casinos of Asia like the SPI & HSI where anything goes including crossing your own trade .

Not to mention the month of increasing volumes come Futs roll. Could end up jumping at the wrong shadows.


----------



## mazzatelli1000

lindsayf said:


> I will have a go..... it is a low volume test of a support level (previous resistance level)...I expect it to fail ie go up.  Or alternatively, it is a low volume retracement again, likely to reverse.  My current sim trading on the ES would suggest that I am likely to be wrong.
> 
> I am v interested in VSA.  Are there any good readable/practical books or home study courses available that people are aware of?
> 
> cheers




Hey lindsay.

Do a search of Volume Spread Analysis - tech/a has posted a pdf file from Traderguider people for you to read.
Also a poster by the name of tcoates has also posted some VSA code for Amibroker if your interested

Also I have found VSA more useful for stocks than ES


----------



## tech/a

T/H Ive watched plenty of live Vids on Futures trading using VSA by people much more advanced than I.
Watched a live trade over a couple of Hrs by Sebastian Manby trading the UK pound a few eeks ago.In that time he picked up 400 pips.
I'll se if I can get a copy if interested hes as boring as the Village People but knows how to apply his stuff.
There are quite a few on You Tube amongst the advertising hype run by Gavin Holmes also a nice guy but can become a little boring in the Advertorials!

Anyway some more on this chart.
What would we be looking for to confirm that the Breakout (Which ever way it goes) would be likely to continue rather than reverse?


----------



## MRC & Co

Trembling Hand said:


> I would prefer to be short this set up but not from the entry on the next bar.




Agreed.

Distribution seen on the long tail previously.  I would not really call it a continuation box after a tail like that.  Lots of low closes within the box and the push to the higher edge was so on very light volume.  

Also, looks like a bit of a wedge pattern, other than the long tail which saw the distribution.  Trend strength winding to a close perhaps.  

The final two bars you added are showing a push to breakout, but tight ranges and met by supply.  It's in a battle now and to breakout, you would want to see a real push from the buyers.

Though this is completely irrelevent to scalping.  Many times, I would just take a few ticks WITHIN the box, scalping the range, if it breaks out, then more luck to me!


----------



## tech/a

> Though this is completely irrelevent to scalping. Many times, I would just take a few ticks WITHIN the box, scalping the range, if it breaks out, then more luck to me



how would you ever trade a breakout then.
To make a profit within the box youd be buying or selling the high or low not holding it for a breakout!
Sounds good in theory but in practice--it aint as it seems!


----------



## MRC & Co

tech/a said:


> how would you ever trade a breakout then.
> To make a profit within the box youd be buying or selling the high or low not holding it for a breakout!
> Sounds good in theory but in practice--it aint as it seems!




No, sometimes I will hold it further if it feels right.  But will generally feed my lots to the breakout traders if it comes, and get back in on a pullback once again after the breakout.  

It's hard to explain, completely depends on the price action within those candles.  Which you cannot see from that static chart.


----------



## Trembling Hand

tech/a said:


> how would you ever trade a breakout then.
> To make a profit within the box youd be buying or selling the high or low not holding it for a breakout!
> Sounds good in theory but in practice--it aint as it seems!




Absolutely not the case. that's exactly why you watch the dom. Buy a hand full on lows feed them out at the other side. If the order book thins out or volume gets chewed through hold and add or if your are short flip and push. That's why Some traders trade very short time frames. 

These set ups (scalps) are not an explicit set of rules but rather implicit, subconscious mode where decisions are made and made very quickly. Mostly without reference to a chart or completion of a bar. The same way you react when driving a car and something unexpected happens (a breakout of sorts) You just act. Think later. 

That's why I said I would like to of got short up higher. I could take a little profit the other side and move stop to BE. If it comes back flip etc.

Which what Mr C is talking about here,


MRC & Co said:


> It's hard to explain, completely depends on the price action within those candles.  Which you cannot see from that static chart.




Acting on implicit knowledge


----------



## Trembling Hand

tech/a said:


> T/H Ive watched plenty of live Vids on Futures trading using VSA by people much more advanced than I.
> Watched a live trade over a couple of Hrs by Sebastian Manby trading the UK pound a few eeks ago.In that time he picked up 400 pips.



 Yeah but that's not what I'm talking about. Things like the SPI are full of games. Arbs, option bots, Crosses all kind of crap that aren't directional trades. The HSI is even worst.




tech/a said:


> Anyway some more on this chart.
> What would we be looking for to confirm that the Breakout (Which ever way it goes) would be likely to continue rather than reverse?



 Still be getting short. But have the flip hot key armed


----------



## Cartman

tech/a said:


> MRC
> 
> That where I think VSA can help.
> Regardless of timeframe (to say 3 min in VERY liquid markets). Illiquid markets cannot be read with any accuracy.{Mind you a bar which is an outlier trading Millions of stock not normally seen can be read in lower timeframes.}
> 
> I see it all the time in many many patterns and in the lower time frames you do see a great deal of Box type support/resistance type patterns.
> 
> There are very often tell tale signs which will place you on the right side of a trade.During and even after your set in a position.
> 
> The key is in.
> Where the consolidation is within the timeframe traded relative to trend.
> The really high volume bars
> The really low volume bars
> The testing of highs and lows in the range.
> The range of the bars
> The position of the close.
> 
> The Key to continuation is
> Where the breakout is within the timeframe traded relative to trend.
> The Range of the bar
> The volume of the next few bars
> The way price/volume reacts to highs and any lows on pull backs in the next few bars.
> 
> As an example and NOT a trick or cocky question interested in your comments and others on this chart.
> Click on chart to expand.
> 
> Id use an intraday example but the R/T software is at the office ---can do so on Monday.




ok just got in from being out all arvo --- had a quick look at the chart uv posted Tech -- didnt even look at the volume and dont know whether its a stock/index/fx or whatever and to be honest that would make a difference to the way id approach it --- but based purely on the chart pattern i would be looking for a retest of the last high on waning momentum then hope for a spike high  on solid volume --- then short the crap out of it !! ---

if the momentum was still rising into the retest of the last high ---all bets are off/ no trade --   

definitely not a short yet unless it spikes lower on higher volume and then retests a lower high --- then id short the crap out of it again


----------



## biggles

HI Tech, I would have said a sell on your first chart, closing on the lows and volume increasing but now , with the couple of other bars added it looks like a buy , we still have narrow ranges which I don't like,( but could be someone is accumulating ) but are closing in the top half. Also the sellers didn't take it down  after those  2 weak bars...so BUY ?


----------



## Cartman

ps i havent read the whole thread but is the chart a 'daily'?   and knowing the instrument traded would make a big difference to the way u approach it --- the position of the shorter term cycle in relation to the major trend also cannot be assessed properly so in essence the whole exercise is a guessing game ---- toss a coin !!  

my guess if it was FX would be a very short term buy  followed by a spike high followed by a possible short at the top of the spike ---- if its a stock or index who knows ??   pretty pointless exercise really.


----------



## tech/a

Before I go out.

The two bars clearly are buyers absorbing supply the bars are being capped at the low end with buying.We have strong buying back in the chart (Very strong in march) very low volume early in the consolidation and the increase in volume in the last 4 bars with no movement in the pattern.

So we see buyers gap past the high of the pattern successfully stopping further supply as they will now hold.
Obviously a testing of the high would be the next stop---or is it?
What tells us this is likely/unlikely? From the last 2 bars.

So would we be looking at a test of the high OR a reversal--why?

*T/H* you may well be able to be correct with DOM I don't know--have never looked.Just know like you feel comfortable with DOM trading I am comfortable with VSA its now like second nature.Not 100% accurate but much better than 50/50

*Cartman*
No its not a pointless exercise to give you the chart would then make it pointless.
With practice you can read EVERY bar in conjunction with the last 3 bars.Sure initially more chart would be nice but clearly its not currently in a down trend!

The question is how is it going to react out of the congestion zone surely we don't need 6 months of price action to answer that question?
I'm happy to continue further with comments if thought practical.

Remember WEAKNESS is found in VERY HIGH VOLUME up bars and STRENGTH in VERY HIGH VOLUME down bars
More tomorrow.
If you want to read more bars.


----------



## Cartman

tech/a said:


> Cartman
> No its not a pointless exercise to give you the chart would then make it pointless.
> With practice you can read EVERY bar in conjunction with the last 3 bars.Sure initially more chart would be nice but clearly its not currently in a down trend!




Techno, its NOT a pointless exercise IF we know the instrument we are trading AND if we know whether its a daily chart or a 1 second chart for eg ---- otherwise it IS a pointless exercise !!  cause we are all guessing within UNDEFINED parameters  

but i like the yr idea though 

ps we'll talk more when u get home !!


----------



## tech/a

Cartman.
I have seen VSA used on many instruments and its principals hold true to every one of them.
As different as they appear to be.
I do note however that the pros tend to trade Currencies and Indexes.
Certainly FX and E minis.
But more when I get back gotta go---coming she who must be obeyed!!


----------



## MRC & Co

biggles said:


> HI Tech, I would have said a sell on your first chart, closing on the lows and volume increasing but now , with the couple of other bars added it looks like a buy




Exactly.

And this is my problem with daily charts, now your stop is even wider, as you would have paid that gap to get in AFTER the breakout.    

My guess now would be a close of that gap before a continuation higher.


----------



## Trembling Hand

Well I'm stopped out with a 3 R loss after thinking I was trading intraday 

Time to take my bat and little swing ball and go back to the beach for some twilight cricket and a lot more :drink:


----------



## lindsayf

"Remember WEAKNESS is found in VERY HIGH VOLUME up bars and STRENGTH in VERY HIGH VOLUME down bars
More tomorrow.
If you want to read more bars."

weakness/strength..what kind?  do you mean buyer/demand strength?  This is an idea I struggle with...will read that book...cheers


----------



## sails

lindsayf said:


> "Remember WEAKNESS is found in VERY HIGH VOLUME up bars and STRENGTH in VERY HIGH VOLUME down bars
> More tomorrow.
> If you want to read more bars."
> 
> weakness/strength..what kind?  do you mean buyer/demand strength?  This is an idea I struggle with...will read that book...cheers




"Weakness" in this context can usually be substituted with "sellers"
- and substitute "buyers" for the word "strength".


----------



## It's Snake Pliskin

tech/a said:


> *What would we be looking for* to confirm that the Breakout (Which ever way it goes) would be likely to continue rather than reverse?




...the character of the stock, currency, whatever, before anything else.


----------



## It's Snake Pliskin

tech/a said:


> Before I go out.
> 
> The two bars clearly are buyers absorbing supply the bars are being capped at the low end with buying.We have strong buying back in the chart (Very strong in march) very low volume early in the consolidation and the increase in volume in the last 4 bars with no movement in the pattern.
> 
> So we see buyers gap past the high of the pattern successfully stopping further supply as they will now hold.
> Obviously a testing of the high would be the next stop---or is it?
> What tells us this is likely/unlikely? From the last 2 bars.
> 
> So would we be looking at a test of the high OR a reversal--why?
> 
> *T/H* you may well be able to be correct with DOM I don't know--have never looked.Just know like you feel comfortable with DOM trading I am comfortable with VSA its now like second nature.Not 100% accurate but much better than 50/50
> 
> *Cartman*
> No its not a pointless exercise to give you the chart would then make it pointless.
> With practice you can read EVERY bar in conjunction with the last 3 bars.Sure initially more chart would be nice but clearly its not currently in a down trend!
> 
> The question is how is it going to react out of the congestion zone surely we don't need 6 months of price action to answer that question?
> I'm happy to continue further with comments if thought practical.
> 
> Remember WEAKNESS is found in VERY HIGH VOLUME up bars and STRENGTH in VERY HIGH VOLUME down bars
> More tomorrow.
> If you want to read more bars.



Tech/A,
Any reason why you don't use the open on your bars?


----------



## tech/a

*Snake*.
VSA has no need for the open in its analysis its where the close is on a bar (Its range) which is of importance not where it opens. the charts I am posting here are Advanced Get charts which show the open (I cant remove it as I can with tradeguider) the reason I'm using these charts is that the Paint shop function is far superior for labelling the charts that T/G--(It doesn't have this function!).



> ..the character of the stock, currency, whatever, before anything else.



This is a common argument.One which I too would have argued.However whatever your trading is being traded by players much bigger than you and I combined---they and not US move whatever it is you are trading. By necessity they enter on weakness and exit on strength and this is where we can take advantage of knowing where they do. Ive only traded stock but have seen many many trades live by those much more experienced than I. Never have I seen in depth consideration of the "character" of the instrument. Where the bar is in relation to past history certainly has its place but there is no consideration with regard to any cycle or timeline.

Not that you couldn't or even shouldn't use it in consideration of your trade.
David Blundell who heads up Australia's Tradeguider operation and Nick Radge--who doesn't both have applied VSA in conjunction with Elliott wave analysis and with great success. Ive seen David use it with E/W on 3 min charts.

Many traders use other analysis with VSA (human nature again!) but those pro exponents simply use VSA alone. 

There is one caveat on the use of VSA (And I would argue is true of every form of technical analysis regardless of type of analysis being used) and that is liquidity.
If there isn't enough in the time frame being analysed to give range and volume---then the analysis cannot be successfully applied.



> weakness/strength..what kind? do you mean buyer/demand strength? This is an idea I struggle with.




*Lindsay*
Sails has got it.
Weakness is Sellers/Supply
Strength is Buyers/Demand.
Anything you trade will only move forward or down with 
(1) Supply
or
(2) Lack of supply.
This is why instruments fall/rise on lighter volume,if bullish then supply has either diminished or evaporated. If Bearish then supply is greater than demand.
An instrument will not rise in anytime frame if Supply exceeds demand and it wont fall if Supply disappears.

The hardest thing for exponents to get their head around is that SUPPLY is the driver NOT demand. There is on every bar a story as to where supply is in the battle.
(1) Its still swamping demand
(2) Its being arrested by demand
(3) Its either being swamped by demand or been withdrawn or absorbed.

Each bar and in particular groups of bars will tell the story. The pros's use a maximum of 3 bars in any time frame to evaluate the battle. So this bar in conjunction with the last 2 bars.

They will either show
(1) Testing of demand or supply.
(2) Supply overcoming demand.
(3) Demand overcoming supply or supply being withdrawn or exhausted.

*T/H*



> Well I'm stopped out with a 3 R loss after thinking I was trading intraday




Time Frame has no bearing on the analysis it will and does show the Supply/Demand battle (Given liquidity) from Monthly bars to 1 min bars (Ive seen traded on currencies). No different----the battle goes on inside a Monthly bar on a weekly chart (5 bars) just as it does inside a Daily bar on a 1 min chart (360 bars).

You ll see this---in ALL time frames.

_
(1) Testing of demand or supply.
(2) Supply overcoming demand.
(3) Demand overcoming supply or supply being withdrawn or exhausted._

I'll post some intraday charts if you like.

So what bearing does this have on the topic of PPS?
I think a great deal.
Used in conjunction with patterns VSA can be a valuable tool in increasing success rate in trading ANY pattern in any time frame.


----------



## Trembling Hand

tech/a said:


> *T/H*
> Time Frame has no bearing on the analysis it will and does show the Supply/Demand battle (Given liquidity) from Monthly bars to 1 min bars (Ive seen traded on currencies). No different----the battle goes on inside a Monthly bar on a weekly chart (5 bars) just as it does inside a Daily bar on a 1 min chart (360 bars).
> 
> You ll see this---in ALL time frames.
> 
> _
> (1) Testing of demand or supply.
> (2) Supply overcoming demand.
> (3) Demand overcoming supply or supply being withdrawn or exhausted._
> 
> I'll post some intraday charts if you like.




Tech I was just pointing out, more to myself maybe, that its not wise to trade EOD the way I would trade intra. The gaps will blow out my normally very small stops. Like it did for this trade. That's all.

So my comment wasn't about the validity of any analysis but the application.


----------



## Cartman

tech/a said:


> So would we be looking at a test of the high OR a reversal--why?




Tech,  why not??   

your stock has recently had a healthy run up --- momentum slowed and the stock dropped off its highs b4 continuing higher and is  now in a consolidation phase off the last spike high --

if that were FX the next spike high/test on slowing momentum would be a classic short sell for me ---

BUT this is prob a stock so it could just consolidate and move higher ---- momentum is the key for me --- VSA is great -- no arguments there but momentum usually tells u what the relevence of the volume is anyway

i agree with Snake that each instruments characteristics are v important ----- this kind of stuff makes for good brain food though


----------



## Cartman

for every argument there is an equal and opposite argument 

chart but not dissimilar in all respects to yr chart Tech ---- looks like a healthy up trend --- consolidation etc --- would we jump on ??


----------



## tech/a

Trembling Hand said:


> Tech I was just pointing out, more to myself maybe, that its not wise to trade EOD the way I would trade intra. The gaps will blow out my normally very small stops. Like it did for this trade. That's all.




T/H you are quite correct in that intraday charts wont give you gaps as the trading is seemless. Of course you get gaps on open!

One thing I would like your comment on with regard to your scapling and shorter term use of VSA. Something I have been pondering.

Correct me if I'm wrong.
But from what I can gather you use your expertise in reading the Market depth with the view of anticipating short term in balances with supply and demand.
Your aim is to get in front of the herd and take advantage of any move getting both (possibly) in and out before the herd can react.
Nothing wrong with that.
However your making a judgement based upon experience as to where the main players are directing the market *BEFORE* or perhaps during their play for control of direction. 

What has me pondering is that the extent of the play by those who can trade with enough volume cannot be seen *CLEARLY* until after they have become participants(If buyers) or exited participation (if sellers). They must either be IN the market or OUT of the market before it (The market) can be free to move over any length of time in a direction governed by supply (Existance of or removal of supply).

This cannot possibly be clear in DOM or in 1 or more bars using VSA.
A large player/s may well be scaling in or out of a market over a single day or even multiple days. Clarity is only assured when they leave (Often to be replaced by others with different agendas,possibly influenced by the resultant balance/in balance in supply and demand created by the participant who has either entered or exited the market).

My view is both of us are attempting to read that in balance/balance.
You by anticipation me by cause and effect.

I _*currently*_ would argue that anticipation suits scalping as you need to be highly reactive in judgement where as singular bar interpretation of the battle of Supply and demand may well hold a particular bias true for a longer period.

Thoughts?


----------



## tech/a

Cartman said:


> for every argument there is an equal and opposite argument
> 
> chart but not dissimilar in all respects to yr chart Tech ---- looks like a healthy up trend --- consolidation etc --- would we jump on ??




*Cartman *can you show me the last say 20 bars and volume of the those bars.
The bias is long however the price action of the more current bars will show very clearly the participants struggle on supply and demand.

Can you just zoom in and give me volume I need to se range---where the high/low and closes are on each bar and the volume associated with each bar.

Thanks.


----------



## motorway

Nick Radge said:


> As RSI is based on price, then RSI must come _after_ price. An RSI calculated from price. RSI therefore lags price. What RSI is doing for BBand is confirming his conjecture about trend direction. But price will do this _before_ the RSI shows it which means if you follow price you will _ahead_ of the RSI.
> 
> Motorway,
> I have been trading these patterns since 1995. I have spent countless hours, and I mean many 1000's, trying to filter patterns. My extensive research suggests its all random, but random makes money consistently. *I will dismiss the supply/demand logic (because I have tested it) and its no better than anything else.* I freely admit, my imagination and interpretation is limited, but I would be happy to prove you right. You have put forward a broad generalization against my 15-years of trading. I am more than happy for you to cure my randomness (although there is nothing wrong with randomness) to increase my P&L.
> 
> How about I put forward all my patterns and you tell me which one's to take basis your supply/demand logic. After 100 samples we'll compare notes?
> 
> Anyone see what I see in PEM?




Has he changed his mind ?

motorway


----------



## Cartman

tech/a said:


> I _*currently*_ would argue that anticipation suits scalping as you need to be highly reactive in judgement where as singular bar interpretation of the battle of Supply and demand may well hold a particular bias true for a longer period.
> 
> Thoughts?




i agree with that --- the kind of spikes im currently forward testing generally have high volume attached and what happens during/just after the high vol 'bar' IS important --- so VSA is part of the application process of whether to take a trade or not even though i dont consciously think too much about it ----- TH is in a totally different league altogether though  (i still cant make reserve grade in his side


----------



## Cartman

tech/a said:


> *
> Can you just zoom in and give me volume I need to se range---where the high/low and closes are on each bar and the volume associated with each bar.
> 
> Thanks.*



*

hope this loads up ok so u can see it ---- 

ps the chart was not meant to be a 'loaded question' to try and trap u either tech ---   prob my point is more about the application of VSA has different characteristics on different time frames and is relative to the instrument being traded*


----------



## tech/a

motorway said:


> Has he changed his mind ?
> 
> motorway




I would like to take up Nicks challenge on that. Must admit I had read that post but had not 'Seen" the highlighted passage. Thinking back it does explain a few things.

To add a little more.

VSA in any timeframe has a life of 3 bars after the bar being analysed so it is very possible that changes in long term (be that 4-10 bars or more) can be seen just as Elliott in that the analysis "appears" to alter randomly as do Elliott counts to some.
Further it is possible to be trading a 3 min chart short while the current bar in a daily chart is long---both may end up correct!


----------



## Trembling Hand

Tech LOL. I was just going to PM you about this. I think we are trying to gauge basically the same thing.

But the starting point was going to be this,

Just to be clear I do not take signals from what is sitting in the depth. It is 90% of the time rubbish. 

BUT, what I am looking for seems to be very much what you are looking for in VSA. *the Demand v Supply*. After all everything that is on your chart happens in the DOM plus I get some extra info. Who is hitting who. Who is absorbing who. Yes what ever happens in the last 10 sec has no guarantee that it will continue on. But there is definitely patterns to order flow and they seem to be very similar to the patterns that you are looking for in VSA.

In your chart, if that was an intra, the two high volume bars before the break would have buyers hitting '@ market' but the sellers refreshing just as quick. Along with that the shorts would probably be stuffing the order book higher as a pathetic attempt to defend their positions (in futs every long has a short). The order book below is probably thin but you can actually SEE the break coming. There comes a time when the shorts are exhausted at that level and very quickly the price moves higher easily taking any new supply. POP you have a breakout. They both show on the chart as a breakout and in the DOM. but the DOM watcher gets the extra info of seeing a couple of secs before the break that the previous strong supply is no longer being refreshed.
That the supply demand has shifted. It very common on the SPI and HSI and even the supper thick ES the spoofs disappear in a split second. The shorts are trapped and the new longs want in, you can SEE the demand and lack of supply.

I'm not saying that its a superior way to analysis the market, in fact it seems like a very similar way to analysis the market but like everything its a long way from 100%. Just like everything else.

On another note Index futs 70% of transactions are of an intraday/swing nature (that's a guess but looking at the change in open interest you can see that note much is held for long)

As far as the limitation on being able to project info from DOM v 1 to 3 bars. As always it depends. But that's why we use stops. I just don't think we are looking for all that much diff info here.

I might start another thread with some vids of moves playing out in the SPI to show you the patterns I look for. (Oh completely off topic but if you are an active trader and you can't use the DOM for favourable executions you are going to be down 20 to 50 tics per day!! That's a huge diff and a big reason why 80% of futs get executed through a DOM)


----------



## tech/a

*Cartman *

I'm happy for you to try and "trap me" and indeed succeed.If you succeed often enough I may well take Nick's view. Currently I dont share it!

I will read the chart as I see it.

The very last bar partly seen on the shot is very important but firstly.
counting back from the last fully seen bar.
(13) hidden selling in this high volume up bar not evident until the next bar which is down
(12) Strong selling the low of 13 will be tested as will the high of 12
(11,10) Supply being halted by demand close to a double bottom on those bars
(9) The low of 13 is tested and supply dries up.Price rises. Good bar to go long
(8,7) Pause as both these bars have light volume and narrow ranges indicating a lack of supply. (But what about demand isnt that lacking?) One of the hardest things to get my head around. Supply will either dominate or dry up its supply which will determine rise or fall.
(6) Increase in volume closing on the high---supply is waning
(5) Test of 12 closing well below high Supply has returned --- Would be looking at long position.
(4) Another test and this fails spectacularly on higher volume-- long would be closed.This high will be tested.
(3) Sellers emerge but stop---seeing a rise from the low--volume lighter
(2) Rise on light volume little supply
(1) Prices rise again on fair volume closing on highs--the test of 4 now about to happen.

Summary
It appears the 1.43 ish area is an area where supply currently keeps appearing.
Until this is either absorbed or withdrawn price will not move forward.
The next few bars are important as it will show again the reaction to these highs which encourage supply to emerge.
To go short we need to see some very high volume exhaustion of buyers
Spike up possibly
To go long we need to see some evidence of exhaustion of sellers-- high volume bar resisting lower auction.

Next bars please.


----------



## tech/a

*T/H.*

Thanks for the reply.
I kinda follow you but its like taking instructions on a counter punch offensive from a boxer on ice!!! ( only kidding my humor!!) need to see what you see even fleetingly-- to better understand and as I have never watched DOM of the Futs I'm in the ring blind---getting knocked about!

Was going to add this.
14 yrs ago I started my interest in technical trading.
I couldnt type.(some would argue I still cant!).
Forums were a great wealth of info but I had to type as I couldn't keep my finger shut---er mouth.
Now 14 yrs later and 1000s of posts and my 2 fingers glide across the keyboard no longer pausing to find the key.

*So what??*

The mind is amazing it has taught itself to see the visible without telling me about it.
Same goes for me and you and Frank D and Radge and Motorway and Sebastion and countless others who *SEE* without question what our minds interpret in nano seconds. After 1000s of charts and trades and experience* its just there!*
Regardless of what analysis you use.
For each it maybe different but for each we just* SEE IT*.


----------



## sails

Trembling Hand said:


> ...As far as the limitation on being able to project info from DOM v 1 to 3 bars. As always it depends. But that's why we use stops. I just don't think we are looking for all that much diff info here.
> 
> I might start another thread with some vids of moves playing out in the SPI to show you the patterns I look for. (Oh completely off topic but if you are an active trader and you can't use the DOM for favourable executions you are going to be down 20 to 50 tics per day!! That's a huge diff and a big reason why 80% of futs get executed through a DOM)




TH, do you know if DOM works as well with some of the top blue chip stocks as it does with the SPI?  I'm thinking of the likes of BHP, big 4 banks which would affect SPI movement.


----------



## Cartman

Trembling Hand said:


> I might start another thread with some vids of moves playing out in the SPI to show you the patterns I look for.  DOM)




if u havent already please do that TH --- u will have a captive audience 


Tech your an. is good --- (it is a 5 min chart so people know)  -- next three bars ---- nothing really changed other than yr correct assumption that the previous high is being tested --- chart for the record --- third test of that area in less than an hour ---- looks pivotable --- BUT

on a daily chart that would be a test of the short term high over *10 days* (in a *strong uptrend*) --- are we happy to consider shorts more readily because its a 5 min chart and how far would our stop be trailing behind if it were a daily chart ----   ps that could be a trick question Tech lol ----

not questions directed at u personally  just qu in general re the way we might approach diff time frames.


----------



## Trembling Hand

tech/a said:


> The mind is amazing it has taught itself to see the visible without telling me about it.
> Same goes for me and you and Frank D and Radge and Motorway and Sebastion and countless others who *SEE* without question what our minds interpret in nano seconds. After 1000s of charts and trades and experience* its just there!*
> Regardless of what analysis you use.
> For each it maybe different but for each we just* SEE IT*.




Yep tech that's what I was banging on about a couple of post ago about explicit/implicit knowledge. As to that a very interesting article about how the unconscious brain is the best one 



> *Our unconscious brain makes the best decisions possible*
> 
> "A lot of the early work in this field was on conscious decision making, but most of the decisions you make aren't based on conscious reasoning," says Pouget. "You don't consciously decide to stop at a red light or steer around an obstacle in the road. Once we started looking at the decisions our brains make without our knowledge, we found that they almost always reach the right decision, given the information they had to work with."




And another reason why weekend stock courses and the next great thing will fail more often than not. You need lots of time to internalize any pattern. research keeps on showing min 10,000 hours!!



sails said:


> TH, do you know if DOM works as well with some of the top blue chip stocks as it does with the SPI?  I'm thinking of the likes of BHP, big 4 banks which would affect SPI movement.



 The thing is from time to time one will pull/lead the other. But what ends up on a chart goes on in a DOM or to use another word the ticker so if you spend enough time on it I believe you will find patterns that you can trade. Though the transaction cost (brokerage/spread) of ASX stocks are a lot higher than futs which make short term a bit harder.


----------



## tech/a

*Cartman*

Bar(8) from right is being tested to the low side by bar
(7)
Bar (5) Again sees supply
(4) and (3) see supply being absorbed but no real winner.
Bar (2) is still seeing supply being absorbed.
Bar 1 is a little different we now see an up move to test the previous high moving through the zone of where supply has been coming in on LIGHT VOLUME.
Indicating that Supply has either dried up OR its waiting for higher prices.
The test is right now the next bar will tell if there is still supply or if it has moved on. Short you'd place a stop a few ticks above the high.
Long---well there has been no evidence* YET *that you'd be looking long in this consolidation.
We'Ve had our long play and patience is now required.
Short on the high now is the best scenario given the VSA to date.

Next few bars please.

I look for 2 things initially on any chart pattern.
Really *HIGH* volume bars and Really* LOW* volume bars.
Their range,where they are in terms of testing give great insight.

*T/H* I'm disappointed you have removed your (my) Trader description!!


----------



## It's Snake Pliskin

tech/a said:


> *Snake*.
> VSA has *no need for the open* in its analysis its where the close is on a bar (Its range) which is of importance not where it opens. the charts I am posting here are Advanced Get charts which show the open (I cant remove it as I can with tradeguider) the reason I'm using these charts is that the Paint shop function is far superior for labelling the charts that T/G--(It doesn't have this function!).
> 
> 
> This is a common argument.One which I too would have argued.However whatever your trading is being traded by players much bigger than you and I combined---they and not US move whatever it is you are trading. By necessity they enter on weakness and exit on strength and this is where we can take advantage of knowing where they do. Ive only traded stock but have seen many many trades live by those much more experienced than I. *Never have I seen in depth consideration of the "character" of the instrument*. Where the bar is in relation to past history certainly has its place but there is no consideration with regard to any cycle or timeline.
> 
> Not that you couldn't or even shouldn't use it in consideration of your trade.
> David Blundell who heads up Australia's Tradeguider operation and Nick Radge--who doesn't both have applied VSA in conjunction with Elliott wave analysis and with great success. Ive seen David use it with E/W on 3 min charts.
> 
> Many traders use other analysis with VSA (human nature again!) but those pro exponents simply use VSA alone.
> 
> There is one caveat on the use of VSA (And I would argue is true of every form of technical analysis regardless of type of analysis being used) and that is liquidity.
> If there isn't enough in the time frame being analysed to give range and volume---then the analysis cannot be successfully applied.




*Tech/a*,
The open reveals a lot to consider. But it may form another paradigm to consider.

The character is important because it can lead to suspect action which draws attention. I won't get into why the software does what it does.


----------



## MRC & Co

Trembling Hand said:


> On another note Index futs 70% of transactions are of an intraday
> 
> That's a huge diff and a big reason why 80% of futs get executed through a DOM)




Just some stats on that, I know one intraday company, moves upto (perhaps over some days?) 30% of the SPI alone and nearly 100% of that is intraday.

TT moves 50% of all global volume worldwide, and this is all through DOM, so agree 100% TH.


----------



## tech/a

It's Snake Pliskin said:


> *Tech/a*,
> The open reveals a lot to consider. But it may form another paradigm to consider.




To you and others it may but to VSA it has no value.



> The character is important because it can lead to suspect action which draws attention. I won't get into why the software does what it does.




I agree and I use Elliott in conjunction with my analysis (if daily).
Don't use it other than a cursory wave count if obvious on other lower time frames.


----------



## It's Snake Pliskin

tech/a said:


> To you and others it may but to VSA it has no value.



Exactly, which is why I used other paradigm. But why look at things alone?


----------



## MRC & Co

Trembling Hand said:


> I might start another thread with some vids of moves playing out in the SPI to show you the patterns I look for. (Oh completely off topic but if you are an active trader and you can't use the DOM for favourable executions you are going to be down 20 to 50 tics per day!! That's a huge diff and a big reason why 80% of futs get executed through a DOM)




Good stuff, and where is that thread on how to catch outliers?


----------



## Cartman

Cartman said:


> just qu in general re the way we might approach diff time frames.





just for the point of the exercise and anyone that may have been interested the following 4 hrs of the chart posted earlier -----  it was an FX chart on a much lower time frame than Tech's chart --   FX charts behave totally different to stock charts  which was all i was trying to point out

Tech prob no point following this one any further cause id kinda played my hand early with my pre-assumptions on your chart ---  lol 

your analysis was v good and works for u because u r consistent in the way u apply it ---- lesson for all of us there !!


----------



## tech/a

It's Snake Pliskin said:


> Exactly, which is why I used other paradigm. But why look at things alone?




Because you can.

You can trade VSA as a single stand alone method.
You can trade Elliott as a single stand alone method
You can trade as T/H does as a single stand alone method.
You can trade as Frank D does as a single stand alone method.
You can trade patterns as a stand alone method

Why do we feel more comforatable adding more analysis?
I'm not offering VSA up as the ducks guts just as food for thought to perhaps
to be able to with added confidence determine direction and life of the trade.

Care to share your "Other paradigm"?



> Good stuff, and where is that thread on how to catch outliers?




*MRC*

And about time you got off my case as well.
I'm here to add to discussion and encourage thought not massage ego.
It takes a lot of time to contribute ---and I do it for Zip.
Instead of running around in the shadows of good traders(T/H's best mate) how about some ORIGINAL input into threads of your own.


----------



## tech/a

> FX charts behave totally different to stock charts which was all i was trying to point out




*Rubbish.*

Give me as many as you like and TRY and trick me.

_You want them to behave differently truth is they dont!_
I just proved that.Youd have got most of that down move.

I wont get them all 100% correct but I'll bet I'll produce a profit.
Provided there is enough liquidity and range in the timeframe being traded you'll be suprised how FX behaves even more to VSA principals than Stock charts.

Bigger players and bigger money!!

Supply and Demand and how you can read it ----- doesnt alter regardless of instrument.


----------



## Cartman

tech/a said:


> Because you can.
> 
> You can trade VSA as a single stand alone method.
> .



 you could


tech/a said:


> You can trade Elliott as a single stand alone method




you could --- but i wouldnt



tech/a said:


> You can trade as T/H does as a single stand alone method.




you could but i CANT 



tech/a said:


> *MRC*
> 
> And about time you got off my case as well.
> I'm here to add to discussion and encourage thought not massage ego.
> It takes a lot of time to contribute ---and I do it for Zip.
> Instead of running around in the shadows of good traders(T/H's best mate) how about some ORIGINAL input into threads of your own.




i mighta missed something there --- was Mirc having a go at u Tech?? --- that may have been misconstrued  cause i find Mirc pretty helpful and up front --- im sure he will let us know


----------



## Cartman

tech/a said:


> *Rubbish.*
> 
> Give me as many as you like and TRY and trick me.
> 
> _You want them to behave differently truth is they dont!_
> I just proved that.Youd have got most of that down move.
> 
> I wont get them all 100% correct but I'll bet I'll produce a profit.
> Provided there is enough liquidity and range in the timeframe being traded you'll be suprised how FX behaves even more to VSA principals than Stock charts.
> 
> Bigger players and bigger money!!
> 
> Supply and Demand and how you can read it ----- doesnt alter regardless of instrument.




   big change of sentiment in the last two posts Tech -- i was under the impression this thread was providing some interesting pov's --- ive done nothing but listen to what uve put forward and taken it on board ---

im not interested in tricking anyone --- i just found the discussion interesting cause we look at things in different time scales


----------



## sails

Trembling Hand said:


> ... The thing is from time to time one will pull/lead the other. But what ends up on a chart goes on in a DOM or to use another word the ticker so if you spend enough time on it I believe you will find patterns that you can trade. Though the transaction cost (brokerage/spread) of ASX stocks are a lot higher than futs which make short term a bit harder.




Thanks TH - looks like it's worthwhile to spend more screen time with DOM running.  
A thread on DOM sounds good to me - would follow with interest


----------



## MRC & Co

tech/a said:


> *MRC*
> 
> And about time you got off my case as well.
> I'm here to add to discussion and encourage thought not massage ego.
> It takes a lot of time to contribute ---and I do it for Zip.
> Instead of running around in the shadows of good traders(T/H's best mate) how about some ORIGINAL input into threads of your own.






You are a true idiot.

There are guys who have traded for only a year or so and I would GUARANTEE make a packet more than you do tech, so take the stick out of your azz.

TH said he was going to start a thread on outliers (in your outlier thread), I haven't seen it yet, that was my point.  Making you paranoid there are a few ice users around here mate?


----------



## Cartman

tech/a said:


> *Rubbish.*
> 
> Bigger players and bigger money!!




excue me??? --- but that is exactly what VSA is all about --- deep pockets moving the market --- 




tech/a said:


> *Rubbish.*
> 
> Supply and Demand and how you can read it ----- doesnt alter regardless of instrument.




You are right about stocks  --- but show me a regular FX trader (ie not a deep pockets trader ) who trades break outs and who runs regular style stop losses in his system --- and ill show u a 'regular' guy who is probably struggling to pay off his mortgage --- if u get my drift --

FX trades differently to stocks !!!!  sorry but i disagree with u on this one


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## MRC & Co

Cartman said:


> big change of sentiment in the last two posts Tech -- i was under the impression this thread was providing some interesting pov's --- ive done nothing but listen to what uve put forward and taken it on board ---




Exactly Cartman.


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## tech/a

Cartman said:


> excue me??? --- but that is exactly what VSA is all about --- deep pockets moving the market ---
> 
> 
> 
> 
> You are right about stocks  --- but show me a regular FX trader (ie not a deep pockets trader ) who trades break outs and who runs regular style stop losses in his system --- and ill show u a 'regular' guy who is probably struggling to pay off his mortgage --- if u get my drift --
> 
> FX trades differently to stocks !!!!  sorry but i disagree with u on this one




Cartman trading VSA isnt about trading breakouts.
Are you then implying that unless your trading DOM like T/H you cant turn a profit in FX?

My posts here have been to attempt to identify a way of governing direction out of a consolidation move.
Your further 4 hrs of chart has only cemented in me the possibility that I/You/anyone with a bit of technical nous could have caught the majority of that move.
Looks pretty uniform to me!

As MrC has a problem with me I have a problem with MR agreeable.
Fine its an issue I'll not bring onto the boards if I can help it.


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## MRC & Co

tech/a said:


> As MrC has a problem with me I have a problem with MR agreeable.
> Fine its an issue I'll not bring onto the boards if I can help it.




Where do I have a problem with you?  Show me how I started this problem you state............

If anything, the opposite.

I use the same method as TH, the same method as 50 traders I see daily use, that is why I agree with him.  

Now get back in the shadows of Radge!


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## tech/a

> If anything, the opposite.




Thats probably true then.
I'm happy to discuss PM if you want (personally dont think its worth the energy)
But will keep it off the boards.
If a Mod can just delete the rubbish.


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## Cartman

tech/a said:


> Your further 4 hrs of chart has only cemented in me the possibility that I/You/anyone with a bit of technical nous could have caught the majority of that move.
> Looks pretty uniform to me!





i agree Tech  that is y i posted the chart cause i didnt want to waste your time with the obvious --------- i stated yr analysis was v good to the point that was completed --- pretty much spot on actually  

the only point i was trying to make was (not to you) to everyone, that time frames traded in will (and should) alter our perception of the data our brain is being fed

i personally found your original daily chart too lacking in content for me to make an 'ENTRY' judgement on -- whereas my 5 min FX chart was a little easier to get a handle on --- if u get my drift

ps i dont use 5 min charts to enter off either ---- 1 second charts are where i see the most valuable entry criteria  --- unless u r a DOM reader (which im not) ---

anyway lets go forward cause the thread has a bit of meat on it 

PS Tech   that mention of Outliers that seemed to annoy you was a genuine question to TH from Mirc i think ???  -- didnt TH mention giving some of HIS examples etc etc ---- perhaps u misconstrued that because of the original outliers thread on which u had a large input ---- just trying to sort out what looks like a mis understanding ??


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## CanOz

motorway said:


> Has he changed his mind ?
> 
> motorway




 I believe Nick is on AL MWay.

Maybe he'll put this as top priority when he comes back

Cheers,


CanOz


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## tech/a

> Tech that mention of Outliers that seemed to annoy you was a genuine question to TH from Mirc i think ??




Yep* my mistake.*
Obviously on Ice.
My apologies mirc


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## MRC & Co

No problems.


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## BBand

PPS Trading

The best way that I have found trading micro patterns (any timeframe):

1)  If you have entered on an order to catch the breakout - if the next bar does not follow through - EXIT!! and seriously consider taking the trade in the opposite direction to the original.

2)  I would then swing trade the position, i.e. at each retracement.
a low commission broker comes in very useful here.

My aim would be to not give back profits.

I have found VSA to be useful, but not a requirement

Peter


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## weird

BBand said:


> PPS Trading
> 
> The best way that I have found trading micro patterns (any timeframe):
> 
> 1)  If you have entered on an order to catch the breakout - if the next bar does not follow through - EXIT!! and seriously consider taking the trade in the opposite direction to the original.




That's an interesting point, most literature will support that the best breakouts will occur with a burst out on massive volume and never look back - and I don't disagree. If you are able to monitor this while it is occurring, perhaps quite an advantage there ... I can think of at least 2 traders that look for this.

Perhaps micro patterns which are based on support and resistance differ, and I am not refuting they don't ... however if based on EOD, looking at the possible behavior of next day, based on previous single bar patterns or even 2 bars patterns ... it is perhaps best described as random.

I did some research today on stocks using single and two day patterns , based on where a close fell within the range (H and L) of an up day, with the likelihood of the following day being an up day (also with increased volume on the prior day as well) ...  the results were pretty much random except for a small bias, where the close was higher in the range, which may be contrary to what most people think, it was slightly more likely to end in a down day ... perhaps a small overbought condition.

Anyhow, there are many benefits of micro-patterns , more than being just right. Although I do agree that the best single setups probably occur in realtime of a breakout with massive volume allowing for additional confirmation, and that never look back ...   unfortunately as an EOD trader I'm not there watching it, and unable to make a decision based on this.


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## weird

This is a graphical representation of a 200 MA of % of  all  stocks within the ASX 100, followed by a higher close, with the prior close being higher than the previous, and volume higher than its 250 day average, and within different percentiles of the range (H-L), compared to the same conditions however regardless of the position of the following day close.

percent10gain means it was within the bottom  0 - 10 %, and percent100gain means it was within the top 90-100 % of the days range. Ignore the values shown on the left , see the overall graph. Anyhow, the point was is that there is a great deal of randomness.


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## BBand

Hi Dave,
My preference is EOD

If there is no follow through on the next bar following the "breakout" - then it is highly probable that the "professionals" knowing where the breakout orders lie i.e. just above/below resistance/support,hit them and thus give them better entries for the true direction of the breakout move.

Sometimes its best to trade the 1st pullback - much safer - and a higher probability trade.

The drawback being you will miss the good trades that "never look back"

Peter


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## It's Snake Pliskin

tech/a said:


> Because you can.
> You can trade VSA as a single stand alone method.
> You can trade Elliott as a single stand alone method
> You can trade as T/H does as a single stand alone method.
> You can trade as Frank D does as a single stand alone method.
> You can trade patterns as a stand alone method
> Why do we feel more comforatable adding more analysis?
> I'm not offering VSA up as the ducks guts just as food for thought to perhaps
> to be able to with added confidence determine direction and life of the trade.
> Care to share your "Other paradigm"?




Tech/a,
Not on your case here. I am aware of what you have stated in the above.

Yes it insn't about being right or wrong, just mitigation of risk and magnification of profits. If I choose to use a few filters at a time and not just rely on one thing then that is not over analysis. VSA, SA, or open or close it is all relevant. Knowing how to use it is another thing, though. 

Later,
Snake


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## Nick Radge

My comments on VSA relate only to the core PPS patterns. Its difficult to change one's mind after trading 1000's of them...

VSA is appropriate in other area's.


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## bunyip

tech/a said:


> So we agree then
> 
> 
> 
> True and this is why the Volume component is very important. Is it supply or accumulation volume---you can tell you know!
> 
> 
> 
> Something then which you may consider along with the "Position of the pattern within the life of the current and immidate past moves.
> 
> 
> 
> Why?
> You can tell a great deal infact you can often see if the breakout is possibly false.
> 
> 
> 
> I certainly agree,but would it be benificial to have an idea wether you should be going long or short (If the vehical being traded can be traded both ways)
> Reversals in continuation patterns can be more volitile and more profitable than those which comply. I'm not suggesting waiting for the breakout bar either.
> 
> 
> 
> Dont disagree.
> But you can add to your analysis as I have suggested.
> You have "Presumed" I mean waiting for the breakout.
> Not so much more can be seen within the pattern.
> Throw me a couple prior to their move. If your interested.




Re you points above.....I'm fully conversant with volume analysis, having studied it in depth over a number of years.
My view is that volume is of no additional benefit when trading the micro patterns of the PPS system.
This view, incidentally, is shared by Nick, whom both you and I hold in high regard.


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