Lesson 25

[Trader ???]

This is a new question. Lesson 25, video 1.4, screen 67, third paragraph: "on Thursday, our trader notes that nearby daily support drive the daily pldot off the weekly envelope bottom, and this signals possible daily trend reversal up, and off monthly envelope top." My Q.: I do not understand how trader determined that daily support was driving pldot, is it because it is attached to daily pldot in weekly support? If so, then support on Wednesday also strong because it was at daily envelope top to drive daily C wave. Plus, what happened to the short that was taken on Wednesday, was it a ping short and covered at the nearby support on the same day? H.B.

[pldot]

Yes, support on Wednesday was also strong. Support on Thursday was strong and we see a classic dot push, envelope turning up, valley formed, weekly and monthly dots moving higher, price above weekly and monthly dot....classic.

[Trader ???]

In lesson on exhausts, I read somewhere that when a block is expanded, it becomes exhaust. Is this true even IF prices do not go to further out? H.B.

[pldot]

Would not say so unless close is definitely beyond nearby. It is possible to have a block expansion that technically is there but is slight, and without much meaning. An exhaust is a more definite, significant, and remarkable move. Naturally this "could be" occurring when block expands.

[Trader ???]

I am going through Lesson 25 on swing trading. I understand that we are trading weekly highs and lows and trade it on daily. There are instances when we try to determine strength of weekly support vs resistance based upon it's location, monthly location and type of trading etc. In some of the examples that you cited in the lesson, I had difficulty understanding, e.g. in video clip 1.6. screem 88, bottom paragraph says "If monthly support is becoming strong, and if weekly support remains strong, then monthly nearby support is becoming strong." I don't know what is driving what, is monthly driving weekly or vice versa? So, I decide to look at monthly and yearly charts. Even though the only indicator that I have is pldot and lines, and no envelope, I can get an idea of quarterly and yearly directional bias, e.g., sometimes I notice that quarterly went to 5-9 down last month, so we anticipate quarterly to go down to quarterly pldot at a minimum - per theory. So, now I have a directional bias that all lower time frames can be anticipated to go down. That removes a lot of guess work. Do you think this is a valid approach instead of just picking weekly highs and lows based upon just monthly? H.B.

[pldot]

Yes, definitely. You're catching on, but this cannot be applied too mechanically, one needs to have a view of all timeframes because sometimes one coughs up more info than the other..... and even if you have a directional bias from the 2nd or 3rd HTP, which can be "extremely" helpful, you have to keep in mind that there can be counter-trend rallies against the HTP downward bias.....but they will generally be short-lived and not go too far. The quality of the info from the HTP has to be evaluated and considered.....e.g. a quarterly 5/9 is better than a quarterly envelope top in establishing a likely quarterly dot refresh upcoming.....

[Trader ???]

In Lesson 25, screen 111, I think video clip 1.5 or 1.6, in additon to the commentary, can we also says: "last week nearby support was broken and prices closed in further out and we anticipate current week's support to be strong because of the exhaust." I am just trying to see if my way of looking at charts is correct. I was trying to read this chart without looking at the commentary. H.B.

[pldot]

Yes, you could say that expectation, keeping in mind that it is this week's nearby holding that also plays a part in the exhaust. And further, when you think "exhaust" you should complete the phrase with ..."....into what?" as the HTP location into which price is exhausting is important. Here you have strong monthly support into which price exhausts.

[Trader ???]

I am on Lesson 25, video 1.9, screen 180. The trader has been long for last 2 weeks, and prices have been going against him for 2 weeks, whenever prices did not do what trader expected, he relied on next day's and next week's strength. Trader has to draw a line somewhere and get out. I know there is a lesson on stops which I have not done yet, but it appears that trader is trading without stops. H.B.

[pldot]

That is in fact Charlie's style. He hates stops. This is actually a statistically valid approach if the underlying concept is valid but it can be difficult psychologically, and oc course requires sufficient fund that one can properly play the added contracts as needed. Setting stops too close to avoid stress is one ot the bigger reasons why traders can lose money, strangely enough. A better way is to learn to handle/eliminate the emotions and place stops by structural reason and according to flow (support breaking, or no, or HTP support, etc.) The lesson on stops will give some more pointers on the topic. In the lesson here it is perhaps not pointed out sufficiently but ther are always good reasons why the trader does not bail when the move is against him/her....exhausts into logical places, closes not breaking support, etc.