PPS Trading System by Curtis Arnold

[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]

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]

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]

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]

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]

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]

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]

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]

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]

...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]

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]

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!!

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]

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]

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]

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.