Whether or not it's understandable depends on when one reads it. If it's read at the beginning of the journey, it can be pretty thick. A few months later and it makes a lot more sense. Plus there's the fact that one can eliminate at least half of it unless he wants to draw his own charts, maintain position sheets, and learn P&F. If one did nothing but re-read Section 7 once a week, his results would immediately improve.
Funny you say that I've read the "important" sections again two weekends ago and I've retained and learned much more this time around then the first two times i've gone through it. Almost like the first two times if someone gave me a written test I could get an A on the test, but if I had to apply what was learned I couldn't. This time going through the sections was a completely different level of understanding. I am going to add the study of Wyckoff into my plans. Maybe once a month or once every other week.
As posted by DB: "So who's got the upper hand? Who's in charge? It's generally believed -- why I don't know, gurus and books probably -- that when price falls, sellers have the upper hand. When price rises, buyers do. But it is the exact opposite that is the case. Traders are looking for trades, preferably profitable trades. That's pretty much the point of all this. They're not fighting each other. They're not at war. How can one complete a transaction with somebody with whom he's fighting? So when price prints at lower and lower levels, it is buyers who are in charge because they are declining to pay what sellers are or had been asking and are instead insisting that sellers lower their prices. If sellers have to lower their price in order to complete a transaction, this is winning? On the other hand, if buyers are opening up their wallets and saying "here" to the sellers who are asking higher and higher prices, who's winning and who's being played? I suspect this is what buyers have in mind during those last few bars. They're willing to pay what sellers are asking but only if sellers are willing to offer a better price. At the same time, they're suspicious. If they were gung-ho, they'd be willing to pay whatever sellers asked, which would drive price higher, perhaps even to a new high, in which case everybody would win, at least until the music stopped. But that's for another time. Sellers, then, are willing to take less for what they have in stock. Buyers are willing to take what sellers have but only at lower prices, though they're not throwing everything they can get their hands on into their shopping carts. Looks to me, then, that buyers, while willing to trade, suspect that they are about to get screwed. And since the professionals sold what they had on the way up (though buyers probably don't know this), there is very little support under this dance floor in case somebody fires a shot and stampedes the cattle." Putting my thoughts to paper, I think I understand the concept now. Thinking of an auction. I have a rare piece of art work that I am auctioning (selling). The initial price is x. The auctioneer then ASKS for a higher price, do I hear x+1. If there is great interest the auctioneer will continue to ask for a higher price until there is no more interest and it's sold to the man in the big green hat. At that point the person that bought the art work we'll call him Larry now owns the art work and wants to try to sell it to an art gallery for a higher price. When Larry walks into the gallery and it is speculated that the art is fake and the gallery does not want to pay what Larry is asking. Larry can not find a buyer at his price so he then lowers it and continues to do so until he finds someone interested. Mike then steps in and buys the art work at a steal because he found out the art work actually is real. Mike brings the art work to the next auction and the cycle continues. The difference is as traders we can profit as prices move up or down and I suppose amateurs or those that don't know what they are doing often times get screwed just like Larry.
After 12 hours of study and replay yesterday I decided to just have some fun today and see what happens with the concepts and theory that I have learned. First I will post the context of what I was looking at. This was the info I was working with and based a plan off of just that. Attached is a 15 min chart of the context. Don't mind all the lines the key here is the physical prices the lines represent. In terms of context I'll start from right to left where price sits at 2833.75 which is basically right in the middle of 2854.50 and 2814. Price sits at the middle point after the supply line of the shorter term trend channel was broken (not drawn) and after price tested the midpoint of the previous trading range btw 2838 and 2816. Testing the midpoint of the trading range also makes a higher low which showed strength as trades were being made at higher prices and traders did not need to move price to the lower end of the range to find trades. The plan for the day was to see what happened as price approached 2842 - 2844.75 or see what happens around 2826. Those were prices I was interested in. Once I checked out the one min chart
After 12 hours of study and replay yesterday I decided to just have some fun today and see what happens with the concepts and theory that I have learned. First I will post the context of what I was looking at. This was the info I was working with and based a plan off of just that. Attached is a 15 min chart of the context. Don't mind all the lines the key here is the physical prices the lines represent. In terms of context I'll start from right to left where price sits at 2833.75 which is basically right in the middle of 2854.50 and 2814. Price sits at the middle point after the supply line of the shorter term trend channel was broken (not drawn) and after price tested the midpoint of the previous trading range btw 2838 and 2816. Testing the midpoint of the trading range also makes a higher low which showed strength as trades were being made at higher prices and traders did not need to move price to the lower end of the range to find trades. The plan for the day was to see what happened as price approached 2842 - 2844.75 or see what happens around 2826. Those were prices I was interested in. Once I checked out the one min chart price was trading above 2842 and formed a hinge for about the first 15 minutes of the day. The plan was to enter the first retracement after the break of the hinge keeping an eye out for 2854.40. Entry was at 2848.75 and exit was at 2849.75. I was giving price room to retrace to the 50% mark. So thats why I exited there with re-entry if the supply line breaks or a rapid rejection of 50% was see. Exiting on the first demand line break at 2851.75 would have yielded a couple more points and may have been a smarter exit given that the extreme of the 15 min chart was hit. The goal however was to give price room. Moving on the re-entry was triggered at 2851.75 which is funny because that's where the first exit could have been. I held on to this trade because the supply line was broken and a higher low was made. Albeit by a tick but a higher low nonetheless. The two point risk or so was worth it to hang in. The plan thereafter was just to exit on the first demand line break because I did not have any further context. Had I not exited the first entry holding on where that second exit was would have been a heck of a lot easier and in hindsight although the demand line was broken there was no real reason to exit based on the price movement that was observed. While that few minutes of sideways movement was going on I was contemplating placing an entry at 2858 but I was avoiding trading the breakout. Looking at that couldawouldashoulda entering at 2858 would have been a higher high and the stride of price would have increased showing strength. Wasn't in the plan so I didn't trade it. Again this was just for fun and a feel like I learned a bunch about having a plan and the being patient to wait for the price one is interested in. Seeing the action of this past Friday also made me realize how important it is to be patient because the trades based off AMT are almost easier to make, easier to manage, and yield far better results. Instead of SLAing in the middle of nowhere mechanically with little regard to context like I was 3 months ago. Also looking at the 20 point trading range to the far left of the 4/29/13 chart that I posted, when I looked at the 1 min chart I studied the action of price at those prices and it was interesting to see how little risk there was vs. the potential reward. If we are at one extreme we "expect" price to move to the other end of the range (eventually) so a risk of 2 points for a potential of 20 seems pretty good to me. With no experience on even reading price you could lose 7 or 8 times and win once and still be positive. Not very positive but not be negative. being able to read the price at those areas obviously would increase the chances of being right or actually decrease the chances of you being wrong that many times. I feel like I am making great progress in all of this. Any and all comments and criticisms are welcomed.
Without going into the details of what you did, this is a good example of the point I've been trying to make about being flexible in the application of AMT and the SLA. If one is practically paralyzed by fear, then, yes, the more mechanical, the better. But mechanical is not an essential characteristic. Once one has developed a sensitivity to the flow and the back-and-forth of price movement, the lines are of secondary importance. At some point, they can be abandoned altogether. If they are abandoned too soon, the trader will know it real fast.
Something I also found interesting that I wanted to add was the behavior of price at 2842.50 at 9:37 or so. 2842.50 was the price at which the demand line was being upheld. Price would come down to that point and rapidly move away and it did that quite a few times, don't remember how many, but in real time I was keeping tabs on it. For shits and giggles I was going to put an order in at that price with a stop at 2841 which is the price I would have wanted to have been out at if I was wrong. Was thinking in terms of danger points. Being that my hypothesis was to get to 2854 ish based off the 15min chart, the stride of price was being upheld, and I was seeing rapid rejection I was figuring risking a point and a half was nothing if price moved to 2841. Not saying I would base a strategy off of something like that, but while I was watching in real time it definitely triggered some thoughts in my mind. Also as you pointed out I do find the lines to be of secondary importance at this point. In fact any time I start to draw them in It starts to distract me so I've stopped drawing them altogether. I do acknowledge the stride of price however and the supply and demand lines just help to confirm what I am seeing in price movement.
Hey DB what do you think about this as a hindsight observation that could have helped in the trading day I posted from the 15min chart? If for example the 15min chart I posted was all one had to go by could a trend channel be started between 14, 54, and 22? Thinking this could have given me another price area to look at and maybe leaned a little more towards taking the cws at 2858. Also to be noted I see how trading multiple contracts can really be beneficial. One really could have held on to at least a contract all the way up without much difficulty after 50% of the first upward stride was tested from the breakout of the hinge. 50% of each upward stride thereafter wasn't really tested until the top and there was no real move toward 54 which correlates to a price we were interested in via AMT and was a break of the high of the day/last swing high. My focus has been more on the numbers more than anything else. I always ask myself what's the price and say it sometimes out loud, sometimes in my head. It may sound weird but it has been helping a lot.
In a word, yes. But. You can rationalize plotting all sorts of lines. But you've seen the charts where there are so many lines that price can't help but hit something. Then you're left with the task of figuring out what matters and what doesn't. I suggest you keep it as simple as possible in order to keep your focus on the price, rather than on the relationship between the price and a line.