TheStrategyLab.com Price Action Trading Support Forum

Well,
here is today's price action.

I am still looking to identify the several configurations from Ch. 1, 2 & some 3.

At abt. 1000am we have :

- Volatility Breakout candle C1 : defined as closing above the most recent Reaction High (see chart attached)
- This C1 being part of a C2--V. Contr. --C1 configuration which authorizes C1 to be designated as a WRB-HG Zone.
- This C1-WRB-HG Zone, is quickly transformed (at 1015hrs) into a S/R Zone
- At 1105hrs, 'almost' a FVB set up configuration, except that it didn't meet one of the "must" conditions, that C2 must be a WRB ( taller body than its previous 3 candles).

In hindsight, this price action turned out to be a profitable 'Long Signal" , so perhaps in other sections of the full material, this configuration would have qualified as a trade signal, though not a this point, acc. to Ch. 1-3.

Other than that, it's worth noting that it met other FVB conditions:
- C2 and C1 are contiguous
- C2 entered the WRB-HG Zone AND closed INSIDE the zone
- C1 develops in opposite direction to C2 AND closes OUTSIDE the Zone
and at the close of C1 it would have been the Trade Signal, had all conditions been met.

From here on, there was hardly a WRB in an uptrending price movement, no significant volatility expansions until 4pm.

perhaps the upswing at abt. 4pm had to do with China willing to lend a 'hand' to Europe regarding Greece, and the appt. of Mmme. Lagarde to the IMF.

Are there any other trades that people took in the absence of WRBs after 1130hrs?
What level of 'stop lose' could be used in this C2|C1 FVB situation above, if it had qualified?
Just curious, what do people do while waiting long stretches for price action to meet the strict conditions of the FVB strategy?

Next step: I will continue identifying configurations and start doing some trades on Simulator.
As I look at price action, I am interested in verifying that I've understood the material acc. to my own editing/corrections.

Hi,

I don't know what price action definition you used from tutorial chapter 2 to qualify that WRB as a WRB Zone. Can you tell me what price action definition qualified that interval as a WRB Zone.

Also, you annotated on your chart the words "reaction high". There's only one price action definition in tutorial chapter 2 that involves reaction highs and that's the price action called strong continuation definition #1. I ask the above question because the breakout interval "must be" a WRB Hidden Gap. In contrast, on your chart it's only a WRB (not a WRB Hidden Gap). The reason it's not a WRB Hidden Gap is because the high price of the interval before the WRB is overlapping (sharing a price) with the low price of the interval after the WRB. That disqualifies it as a Hidden Gap.



There were several WRBs after 1130hrs. Thus, I think you meant WRB Hidden Gaps. On your chart, I see two WRB Hidden Gaps after 1130hrs but they do not qualify as a WRB Zone.

Had the c2/c1 on your chart qualified as a FVB trade signal, the general recommended stop/loss protection is the Open of the WRB Hidden Gap (will assume it was a valid WRB Zone). If that stop/loss is too big for you...you can lower the risk via lowering the position size or stay on the sidelines (no trades).

Most of the free users of the FVB strategy only have the FVB trade strategy. They would have had no trades today unless they used an advance trading technique I teach called 'sister trading'. It's one of the few concepts from the fee-base material that I'm willing to share with free users that don't have access to the fee-base material.

Sister Trading involves price correlation to another trading instrument. The correlation must be > 90%. Simply, the price actions look very similar. For example, ES/YM/NQ/TF have strong price correlations. Thus, if you're trading Emini TF and Emini ES has a valid trade signal while Emini TF does not...you can take the trade in Emini TF as if it did have a valid trade signal.

Further, lets continue to assume you're ONLY trading Emini TF futures. You should also have the charts of the Russell 2000 Index $RUT, IWM exchange traded fund along with Emini ES/NQ/YM for sister trading approach. Once again, such is an advance trading technique that's not recommended until you've master trading just Emini TF futures alone. After mastering Emini TF...you can then add correlation charts via the $RUT index and IWM etf. Then after mastering the price action of those charts as a source of trade signals for trading Emini TF futures...you can then add the Emini ES/NQ/YM charts.

Another source of additional FVB trade signals is to use more than one chart interval. For example, once you feel comfortable with using the 5min chart interval, you can add on your monitor other chart intervals like the 2min, 3min and 15min chart for day trading purposes. However, I don't recommend adding the 1min chart interval as a source of trade signals until you've master the use of using one of the other recommended day trading time frames (e.g. 2min, 3min, 5min or 15min). Next, if time charts doesn't suit your trading style...you can use continuous tick charts or volume base charts.

It's a big process, must be taken slowly to prevent information overload and to help develop discipline while using the FVB strategy. Yet, if managed properly and you can handle the monitoring multiple charts in stressful trading conditions...you'll consistently be busy trading when using only one trade strategy. Also, as a reminder, the FVB strategy is intentionally presented with ONLY one c2/c1 confirmation signal variation as a way to prevent information overload (to slow things down) even though there are other confirmation signal variations as I mentioned as a reply to your other message post (e.g. confirmation H signal).

Regardless to sister trading or using multiple time frames, after you've mastered the FVB strategy, you can then create your own price action definitions that fade volatility breakouts (WRB Zones). That's one of the primary purpose of the FVB strategy with WRB Analysis...to teach you how to merge these concepts together in creating a trade strategy of your own. Simply, many of the free users have added their own personal touches as a "fade price action" of volatility breakouts although I'm not allowed to share their details because these are discussions occurring within their own private threads here at the TSL Support Forum.

Therefore, as a reminder, it's stated in the WRB Analysis Tutorials that I can create a private thread here for your eyes only if you want to have private conversations about your own trade signal strategies you create from the WRB Analysis or FVB trade strategy. Currently, there's about eight active private threads and each trader are using their own personal FVB trade strategy or personal swing point/strong continuation price action definitions via adding more c2/c1 variations to the FVB strategy and more swing point/strong continuation price action definitions that correlates to their trading style.

Last of all, it's OK to have trading days where there were no trade signals. In fact, any trader I see that has a strong urge to trade when there's no valid trade signals...that's a trader that will not have good discipline when trading in real trading conditions with real money. What do you do when there's no trade signals...continue watching the price action to learn.

Best Regards,
M.A. Perry
http://www.thestrategylab.com

Hi,
thanks for the generous response, considering this is the no-fee section.
on your questions:
a) I had designated V1 (sorry, I mislabeled them C1 &C2) as a Zone, thinking in compliance with Strong Cont. #2 and its rule exception on pg. 40, Chap-2:

" Only one of the WRBs (V1 or V2) is required to be a WRB Hidden Gap. Thus, both can be a WRB-Hidden Gap or just one of them. "

so V1 is not a HG. I designated it as a Zone as I thought it would be transformed into S/R zone sooner.
However, I realize I could have picked V2 as the true WRB-HG to define the Zone.

So point well taken, thanks.

b) Reaction High.


Well, it seemed to quality as Hidden Gap according with the illustration on Pg-18, Chap-1; candles #4 and #13 show price overlap (see attachment).
However, I take it from your observation that there should be no overlap at all of bodies nor shadows in order to qualify as a WRB-HG.
This is important as it's one of the pillars of your method.

many thanks,
cap10

Hi,

The Hidden Gap area is determine only via the interval before the WRB and only via the interval after the WRB. Thus, only a total of two intervals determine if a WRB has a Hidden Gap...the interval before the WRB and the interval after the WRB.

Thus, the chart attachment you reference (copied) from the WRB Analysis study guide is correct...the WRB Hidden GAP shown does not have the interval before and after the WRB with overlapping price action. Therefore, I see a problem with your identification of a WRB Hidden GAP because in your chart your prior chart where you labeled c2 and c1 intervals as a possible v2/v1...only the c1 is a WRB (not a WRB Hidden GAP) and the c2 is not a WRB.

I'll post an annotated chart of your chart with my WRB and WRB Hidden Gap analysis to ensure I haven't confused you with the above commentary (see attachment). I've annotated the interval before the WRB as B and the interval after the WRB as A as the only intervals that determines if a WRB gets transformed into a WRB Hidden Gap.



Now take a look at the same chart below and its a lot different because I've removed the WRB Hidden Gaps so that you can see that the A and B intervals do not share any price ticks. Simply, if you move the B interval to the right and then move the A interval to the left so that they occupy the space of the erased WRB Hidden Gap interval in the below chart attachment...the B interval and A interval will touch each other (share price ticks). Thus, the intervals that I've erased from your chart represents the Hidden Gap price area. Further, it's your choice if you want to only use the body area of the Hidden Gap as the WRB Zone (if the interval qualifies as a WRB Zone) or the entire range (high to low) of the interval as the WRB Zone (if the interval qualifies as a WRB Zone).



As a reminder, although your most recent question doesn't involve the FVB trade signal strategy, you should not attempt to learn both the WRB Analysis Tutorial chapters 1, 2 & 3 at the same time as you're learning the FVB strategy. Instead, you must first master the WRB Analysis Tutorials and then learn the FVB strategy to prevent misunderstandings in the FVB strategy because such can result in failing to be able to 'adapt" the strategy along with not being able to design your own strategies based upon concepts from the FVB strategy.

Best Regards,
M.A. Perry

Hi,
You didn't confuse me at all, to the contrary, thanks for the clarification and illustrations.
...and on practicing material on Chapters 1-3, point taken.
thanks,
cap10