Soultrader

Im having trouble understanding this. The TICK Delta will plot upticks versus downticks for each price bar? Now the smooth version will plot the average of this for the number of bars back? Wouldnt this be delaying volume data?

Hi walterw, Indeed it is a very interesting way to judge buyers and sellers. Very very useful in my opinion. I am definitely interested in taking this a step further and designing trading setups based on it. Alot of creative setups can be derived from this indicator. The thing I mentioned about the TTM and TICK Delta divergence is one thing I may start watching. Is it possible to combine the two and plot signals automatically on the charts?

Hi walterw, I imported the file and am testing around with it. What exactly does the smoothing factor do? Thanks

Quick Video explaining the use of TICK Delta and 2 fibonacci setups. CLICK HERE TO VIEW VIDEO Charts created by Tradestation Presented by Traders Laboratory

Hi DrEvil, I trade discretionary but I have rules for each trading setup. I dont use a backtesting software though. What I do is keep track of each setup on a spreadsheet everyday and keep up with the data. If I see some setups failing to work after a while, I will observe it and see how I can improve it. It would be pretty much impossible to backtest most of my setups as I rely heavily on internals and tape. I also like to think in terms of market concept such as asking Why or What. Soultrader

Chat seminar with Leroy Rushing, a former Excecutive Risk Manager for several Fortune 500 financial insitutions and a current day trader and trading mentor for Trading Everyday. Leroy: Today, I have been invited to review some trading concepts and ideas around Trading psychology and trading the morning open Leroy: I want to start with the trading the moring open and then apply the trading psychology as we go Soultrader: good to have you here Leroy Leroy: Thanks Leroy: For aggressive traders, the morning gaps are a great opportunity to look for trade setups that have created an imbalance in what some refer to as supply and demand Leroy: Lets look at one of my favorite high flyers, GOOG Leroy: http://www.traderslaboratory.com/Pictures/GOOG.jpg Leroy: One of the most important assests a good trader can have is a great trading library Leroy: Notice the small chart first. Post market after GOOG annouced earnings, there was a sell off Soultrader: bottom left? Leroy: bottom left Leroy: a 5 min chart started to present higher pivots in post market Leroy: GOOG continued to trend upwards and closed the post market near the prior days high (blue dash line) Leroy: Notice the pre market, there was a small pullback and 30 min before market open, GOOG rallies to new high Leroy: So now, lets look at the bigger chart. GOOG gaps up, immmediated starts selling off. After 2 consecutive down 5 min bars, GOOG retest the prior days low (orange dash line) Leroy: GOOG pulls back on a shall bounce and test the 20 MA Leroy: everyone following? Soultrader: yes Tingull: yes Blu-Ray: yes Leroy: I marked off the 15 min highs and lows (dashed light blue lines) Leroy: the first entry areas provides a little risky trade. but if your RR and share size are managed accordingly, no problem Soultrader: what was the criteria for the first entry before the test of the previous day low? Leroy: GOOG then crosses its 15 min low and prior days low and there is a nice profit (shaded red box) for 4+ points Leroy: Gap up, close gap, pull back on declining volume, (1) 5 min bar reversal Leroy: GOOG is now below the 20 and 200 MA Soultrader: ok thanks Leroy: after the first entry, GOOG provides a pull back during the duldroms again on low declining volume (see magenta lines) Leroy: A second entry occurs after, GOOG re-test its 15-minute low area, forms a lower high Leroy: Again, nice profit target area of 8+ points Leroy: So trading GOOG with good risk and money mgmt rules would have provided a trader with a days profits Leroy: everyone agree? budman: yup Blu-Ray: yes Soultrader: yes. do you always use the 15minute high/low as support and resistance? Tingull: yes Leroy: So if we look at the trading psychology here, traders were anticipating earning movement, which you see in post and pre market Leroy: Waiting to see once the market open, would have allowed more experienced traders to see who was being trapped Leroy: after the 15 min low is crossed, majority of the traders from pre market are on the wrong side of the trade Soultrader: so were the shorts being trapped premarket? Leroy: Only the professional really know, but my guess is that they ran it up in premarket to bring in the buyers, only to sell Soultrader: i see Leroy: see the volume in the first (2) 5 min bars, thats 1 million+ shares at $490+, a lot of hamburgers Leroy: Questions so far? Soultrader: so far so good here Tingull: sounds good Leroy: Far the less agressive traders, lets look at another stock Blu-Ray: Would you always take the trade of the break of the 15min low? Leroy: http://www.traderslaboratory.com/Pictures/GILD.jpg Leroy: Blu-Ray, I use several time based strategies, 5 min, 6 min, 15 min, 30 min and 60 min to look for morning momentum trade setups Blu-Ray: ok cheers Leroy: Because GOOG can provide good movement, I look for my daily profit targets in any stock or combination of stocks Leroy: So, if you have a little tally sheet, and you traded GOOG for a few points your up for the day so far Leroy: Let see if we can add to the tally sheet for a days profits Leroy: Here is another 15 min based trade setup that we can review. GILD gaps up strongly from the prior days close. Notice the prior days high far away Leroy: we can mark off our 15 min highs and lows. Notice the price action for GILD above the 20 and 200 MA Leroy: everyone with me so far? Tingull: yes Blu-Ray: yes MrPaul: sure nuff Soultrader: yes Leroy: notice the flag pattern again on declining volume after crossing above the 15 min high. We have a long entry signal which gives us a nice 1 point move Leroy: So if we add that profit to our tally sheet we should have a good days profit Leroy: Some traders use momentum indicators to buy and sell. Notice the shaded box on the stochastic Leroy: everyone see where I am? Soultrader: y rock: yep budman: yes Tingull: yea Leroy: The stochastic would not give an entry signal since it is indicating oversold. The RSI as an example, would have potential given a signal for the long entry, but more trade entry criteria would be probably needed to justify the trade Leroy: So lets look at the trading psychology of this trade. Leroy: Can anyone tell me if traders were shocked by the gap up? budmanyes budman: big time Win: yes the huge volume at the open LeroyGood catch Soultrader: wouldnt that indicate market orders before the open? Leroy: So, volume can be a good indication for how a trade can start to move in or against you Win: taking all offers that are out there to cover shorts Leroy: Gaps usually indicate a change in supply or demand Leroy: Good Win budman: trap Leroy: Some traders have a tendency to be either GREEDY or have ? Win: so in this case a lack of supply? Leroy: The prior chart on GOOG shows the emotional status of traders very good. What was the market direction like yesterday? Tingull: sideways Leroy: So when the market direction is trending and the gapping stock is also trending in the same direction, you are following the trend Win: so go with the gap? Leroy: Well, Win, there are several combinations of when stocks gap. Lets look back at GOOG for a minute Win: but the main indicator to focus on is volume. Leroy: Stock gaps up, if you went long, you took some serious heat, and could not get out without some pain potentially, right? Soultrader: yea Leroy: Notice GILD gaps up, sell off a little, you get the 3 bar reversal that starts to trap traders. GOOG traps traders on both sides Soultrader: what is a 3 bar reversal? Leroy: first bar on GILD is a topping tail, second bar is a small range bar, third bar engulfs prior bar Soultrader: ok Leroy: Those traders using a fade the gap strategy have their stops at the high of the day (70.50) Win: those 3 red bars in the bear flag Leroy: As soon as that area is breached, they start getting nervous. Thats selling on small volume, see the white declining line Win: hence the small increase in volume on the break of 70.50 Leroy: yes, in comparision to the prior volume, you got it. Today, we mention RACK, did anyone see that? Tingull: wasn't watching it unfortunately Soultrader: no MrPaul: nah i didn;t watch it realtime Leroy Leroy: Next time, Tingull Leroyhttp://www.traderslaboratory.com/Pictures/RACK-1.jpg Leroy: If you look at your daily charts, you will see that RACK was a bull trap. Hence, some trading strategies suggest get in immediately at the open Tingull: wow Tingull: that was an intense drop from 32ish. If you waited for a 5 min high and low stategy, you missed a big portion of the move, and if you waited for a 15 min strategy the profit is almost none. Leroy: So using a little tally sheet everyday, you can try to add up your trade profits to reach your daily goal Leroy: A $17 stock with good share size and risk mgmt is a low risk trade for some traders, and it has good volume, right? Soultrader: yes Leroy: Everyone with me? Robert: y Tingull: yes MrPaul: yea Robert: intently Leroy: So lets list some criteria that can help with trading gaps. Look at the pre-market direction, like we did with GOOG Leroy: Look at the first 3 consecutive bars Leroy: Look at the price action direction using your favorite tools like Moving averages. See if the gap a compelling pattern, that traps some traders. Look for areas of support or resistance for targets and scaling in or out. Look for pivots to see if the stock is gapping above/below them Leroy: A nice little trick is to ask, are a lot of traders already profitable Soultrader: good point Tingull: breaking even all the time, with teeny bit on the profit side. Leroy: Profit taking. If so, they probably are thinking what? Leroy: When stocks fade the gap, look to see how much it retraces Win: ring cash register... LeroyWould you like to see another example? Soultrader: yes Robert: sure Win: if it fills all the way, that means they were taking profits with not many order to fill so they end up reducing their own profits by getting out Leroy: So what do you think so far? I will pull one from my library, hold on Win: and if that happens, there is a good chance the gap will act as a pivot and continue higher? Soultrader: win can you explain that? Tingull: good stuff Leroy: This next example is for the most agressive traders, its on a 2 min chart Leroy: http://www.traderslaboratory.com/Pictures/PPDI.jpg Leroy: It rallys to fill the gap. So, PPDI gaps down at the open Leroy: we get a 3 bar reversal at the prior days low. Price action is below the 20 and 200 MA Leroy: Once PPDI crosses below the 6 min low 35.60, notice how it pulls back and retest it. We get a second short entry Leroy: Using my little tally sheet, we get atleast 1 point (days money) Soultrader: you use a 15minute and 6min high/low? Leroy: I use a lot time based strategies Soultrader: ok Leroy: everyone still there? Leroy: We get the bottoming tail, and after waiting, we start getting higher lows and pivots for a trend reversal Tingull: kingking: yes Robert: y Leroy: So where I marked the higher pivots, could have been long trade signals for another days money, cha-ching Win: doesn't that bottoming tail with lower volume give clues, ie no more big selling Win: and a reversal may happen Leroy: After PPDI crosses back above its 6 min low, all the traders who went short and didn't cover or on the wrong side. Notice the flag pattern on declining volume? Soultrader: yes Win: oh yeah Leroy: After price action crosses above the upper resistance of the flag pattern, it also crosses back above the 200 MA, and another long entry is there if a trader wanted it Leroy: Any questions? Robert: I have so much to lean Leroy: So if we review some of the trades on the charts, we can see that if a trader is agressive there were some good opportunity for a days profit Robert: spelling is one Robert: learn Soultrader: hehe MrPaul: haha Leroy: Robert, it takes time Robert: true Robert: I was trading real but now I'm back to paper Leroy: Did the suggestions above help any? Leroy: If you can, look at ERTS today on a 5 min chart Soultrader: yes very Robert: gap up Leroy: http://www.traderslaboratory.com/Pictures/ERTS.jpg Leroy: Here is an example of a gap up and fill the gap type trade Leroy: Notice after the 15 min highs and lows, the lower high Robert: I would like to have gone from bar 6 up then 12 down Leroy: Again, with good risk and money mgmt, there is a days money Leroy: ERTS slowly sells off and crosses below the 15 min low 53.60 Leroy: Sometimes the reversal does not have strong volume behind it so you have to let it go, you win some, you lose some, Robert Leroy: Once you got the lower high, and the market is not trending upward, it tough for stocks to go up on their own Robert: How would you know to be watching ERTS? Or is that another lesson? Leroy: Thats usually referred to as relative strength Soultrader: yea lower highs , higher lows are powerful Leroy: ERTS was on my gap list this morning Robert Leroy: I review each stock and use those comments I mentioned above to see which one or more "potent" or have what I like to call "shock" value. Leroy: I usually have gap list of up to 30+ stocks Rober: tah, the trusty gap list Robert: ...and review all of them before market I guess Leroy: When traders go "ouch", you hope to be on the other side of their trades, from a trading psychology, these are some of the best trades you can make Leroy: http://www.traderslaboratory.com/Pictures/gaplist.jpg Robert: How many of these gaps would you play in a morning? Leroy: Robert, here was my gaplist today Leroy: I have 7 monitors, and several trading accounts that I load with strategies, everyday Leroy: everyone still there? Tingull: yes Leroy: Any question before we rap things up? Win: yes MrPaul: here. but good stuff Leroy MrPaul: in depth Robert: I have a million questions but I know you have to go. Thank you for helping us! Soultrader: yes great stuff Win: now does this gap play apply to index futures where there are more "informed" players or do the general rules apply as well? Leroy: No robert, I am available Robert: Come back Leroy: I have found that the rules work on anything, they need to be backtested, and adjusted Soultrader: yes i am interested as well for index futures... i never quite applied time based strategies on the index futs Leroy: For those interested, I posted an article on Trading Psychology from my website in the forum under Articles Robert: OK then, is the gap list available on you site? Robert: Noted Win: great, will take a look, always trying to find head stuff to improve upon what I already understand Leroy: I don't post trades to my website, but what I do is mentor traders on how to create the watchlist and gap list and we walk thru in detail how to build their strategies Robert: Gotcha, more one on on mentoring Leroy: There are numerous variations of the strategies for trading the open, I presented on a couple here. I will work with soultrader to comeback an do some more. Leroy: Robert, I will do one more Soultrader: Thank you for your time Leroy. Greatly appreciated Robert: Win: thanks Leroy MrPaul: indeed Leroy: I will post one more example, give me a minute Soultrader: ok MrPaul: thanks Leroy Leroy: Here we go guys, one for the big guns Leroy: http://www.traderslaboratory.com/Pictures/GS.jpg Leroy: Here is an example of a 30 minute strategy Wingoldman sachs Leroy: Notice how the stock gaps up. We mark our 30 minute highs and lows. It crosses below the prior day high (blue dash line) on a weak pullback. It then crosses below the 30 minute low and consolidates there near the prior days high area Leroy: Everyone with me? sniper: yep Robert: y LeroySee the lower highs forming? Robert: y Soultrader: y Leroy: We can start trading at the 30 minute lows with a marker lot (small lot of couple hundred shares or less) to manage the risk if we like Leroy: As the volume continues to decline as the price action is increasing we get a D---------- ? Robert: On the morning gap, does it usually have a pullback and then a continuation? Soultrader: ivergence Leroy: good. We can then take the lower highs as entry signals and once GS crosses below the ascending support, we get 2+ point sell off for a days money Win: damn I suck at fill in the blank games :p Iwas gonna say a weak rally Leroy: Notice the pull back to the 200 MA and then continuation of sell off Soultrader: y Robert: The down side is like throwing a paper airplane. It goes down, then glides up, then down, then up again, then falls. Win: yes Leroy: There are several trading styles that we reviewed today, so any questions? Robert: It just lets me know I need to study some more. Soultrader: sounds good Leroy. Thank you Leroy: Notice GS sold off and trended towards the prior days low and crossed it and found some short term support Robert: I guess these are gapping on news? Leroy: Thank you all. I hope this was helpful to some of you, and I enjoyed the chat. I will coordinate the next chat with Soultrader so we can look at a few more trades and different trading styles such as swing trading. Leroy: Any comments or feedback is greatly appreciated. Robert: Sounds great! I'll be there. Win: thanks MrPaul: cool kingking: thanks! Soultrader: Thank you very much Leroy Leroy: I can be reached at leroyrushing@tradingeveryday.com if some has questions or commnets. Thanks Robert: How about you did a good job! Soultrader: Thanks for putting this together for us. Great stuff! Leroy: Robert, you rubbed off on me! (smile) questions or comments budman: Thanks Leroy.

Here is the oscillator version of the Volume Delta created by Walterw. It shows the flow of the Volume Delta very nicely. If you like them oscillators and price divergences, this one is for you. All credits go out to Walterw for creating this indicator. Screenshot is attached. VOLUME DELTA OSC.ELD

This is an interesting indicator created by Walterw. The Volume Delta plots the number up volume (green) and number of down volume (red) with the larger of the two always on top. This is a very useful visual tool to judge buyers vs sellers per bar. All credits go out to Walterw for the TICK Delta. Also check out the oscillator version of this indicator. Screenshots are attached. VOLUME DELTA.ELD

I completely agree. Thanks, I will post this up.

Thanks for this Blu-Ray. Great work!

If you want to be safe, try joining around 9-9:30am and just keep yourself signed into the chat room.

Just a quick reminder for Feb. 2nd 2007. We will be having a special guest via the chat room. Leroy Rushing will be joining us to dicuss Trading Psychology and How to play the opening gap. Leroy Rushing is a former Executive Risk Manager for several Fortune 500 financial institutions and is currently a full-time day trader and trading mentor. More information can be found at his website at Home. Seats are limited to 25 people due to the chat room system. So please try to get in early if you are interested. Thanks

Here's an interesting study I started today. This idea was derived by taking a look at Walterw's Tick Delta indicator. The Heikin Ashii Trend indicator is a useful indicator to see the bigger trend of a price move. Heikin Ashii Trend If the 5th bar of the last 5 bars closes above the 50% line of the previous 5 bar average, it stays the same color. If the 5th bar closes below the the 50% average it changes color. Here's what I have in mind. I want to add a delta divergence into this concept by applying Walterw's Tick Delta. Whenever there is a color divergence between the Heikin Ashii and TICK Delta, I want a dot or arrow to be plotted above or below the price bar. So if the Heikin Ashii is blue but the TICK delta shows more sellers, a dot/arrow will be plotted. If a Heikin Ashii is red but the TICK delta shows more buyers, a dot/arrow will be plotted. The reason for this is to spot for divergences and be prepared for a reversal. It is based for a rangebound market and may come in handy at S&R levels, double bottoms/tops, etc... Take a look at the chart below and let me know if this can be of any use. Thanks

For those who want a similar setup as my YM workspace, I have attached the .tsw file here. First install the three .eld files: TICK DELTA.ELD, TTMTREND.ELD, and SOULTRADERPIVOTS.ELD. Screenshot below: Soultraders Workspace.rar

Hello starfill, Could you elaborate on this? How would you use this information into your trading? Thanks

Here you go wsam29, The top one is the TICK Delta Oscillator and the lower one is the Tick Delta Indicator.

I use the following times: 6:15pm - 4:00pm. For TS, I just take the values straight from the daily charts. However, I use a 9:30am Eastern open for my gap charts.

Wow walterw!!! Great stuff. I dont understand why this indicator is not considered stock for TS. Is it okay if I post this up in the indicator forum? Thanks

Thank you very much for this Blue-Ray. Would it be okay if you posted this up in the indicator forum as well? Alot of traders can benefit from this indicator.

Thank you Blu-Ray, Wow.... this makes my life alot easier now. Excellent indicator. I tried the one walter posted earlier but I must say I like your better due to simplicity and visibility. Where did you find this indicator? Did you make this yourself? Thanks James

How about adding a 32 inch monitor two your current two monitors? I use 4 at the moment but thinking of adding a 32inch screen.

How many do you use now?

Here is a very interesting indicator created by WayneChem from the TS forums. Thanks to walterw for posting this up in our forums. Indicator description: apparent stacked vertical bars with up ticks (green) and down ticks (red) with the larger of the two always on top. volume moving average (yellow line) mid-point of total volume (white dot) It is an interesting tool to spot reversal or to analyze volume at key price levels. Works great with pivot points. Screenshot is attached. TTM TICK.ELD

Hi Blu-Ray, Now thats another interesting one... would you mind sharing it? Thats actually a better way to plot the ask and bid volume. Thanks

Hi Brian, Good to have you on board. Alot of the info here are based on short term trading strategies. Hopefully you will find them useful as well. Any SEO tips for this site? :p James