TheNegotiator

I lean towards close to open because that is what I have found works better. I am also aware of the range gap and if in a particular case, the range gap provides a much closer test, then I'll be looking at that first. If you look at the stats of session(RTH close to RTH open) then you generally see that the greater the gap the less likely it will close (obviously ). But also if you look at what has happened overnight and whether there has been any rejection in a move in the direction of the current gap, then that can give you more confidence in a gap close. Also there is often a test of one direction or the other before the stronger attempt of direction (gap close or continuation) is attempted. In short, like everything, it depends.

yes, or at least variable approaches to the same strategy.

Firstly, I would like to say that this is not a new concept, but we all would do well to remind ourselves of it or if you’re unaware of it, take some time to contemplate and understand it. The fundamentals the market are price, time and volume. But these are the just the ‘container’ for what the market is and the market is an auction. All markets are auctions of some kind. Participants buy or sell ‘looking’ for fair price. Once this happens prices stay within this area of fair price until new information about supply/demand, the economy, monetary policy, specific companies and generally anything which affects participants’ perception of fair price, becomes available. Then perception of fair price and therefore value becomes a motivational factor for participants and the previous balance between buyers and sellers is lost. Prices then move to find ‘new’ prices to trade until a new fair price can be agreed upon and new value established. This process repeats itself over and over and over again. In essence markets go from:- BALANCE - TESTING BALANCE - IMBALANCE in a continuous loop. To understand which phase your particular market is currently auctioning in and to identify important prices which define the auction, you need but a few simple ideas. 1) Is the market moving in one direction or is it constantly moving back and forth between recently traded prices? Despite this being a simple idea, not giving it due care and attention may lead to you go for big trades in balance and trying to fade (trade against the prevailing trend) the market when it is imbalanced. 2) Excess determines auction extremes. This is where price has moved so far that participants believe currently levels are unfair and so move swiftly to take them back to an acceptable area. Excess is useful to watch to as a gauge of change in current activity and as a reference for any retesting of the current phase. 3) Volume or time spent in an area is indicative of where participants have been most willing to do business and therefore is a gauge of value. This isn’t meant to be a pro-volume/market profile thread, although I do use profiles to easily depict the level of trading activity at different prices. If you have another way you prefer then that’s fine too. As a simple look at auction principles these are the things you need to be aware of. If I’ve missed anything you feel to be really important and fundamental, then please do point it out. Finally, just to say that auctions work on whichever timeframe you look at. So if you are a swing trader or a ust trader, using simple but important auction principles as the backbone of your method can be highly beneficial imho.

Steve, time affecting the shifts is perhaps an interesting thought which is worth exploring although just to be absolutely clear, VPOC does refer to the volume point of control. Despite the amount of time spent in an area often influencing the level of volume traded there, I wouldn't go so far as to say the relationship is always linear. Either way I do like the idea of mechanical aspects of the market being made visible by charting techniques. An idea which is something I'd like to explore is simply that the shift in VPOC and its bearing on the rest of the session, has a direct relationship to pre-established balance and specific levels of importance. Also, the level of 'value' development around the VPOC in consistency of distribution of volume and total volume. Any thoughts?

Gosu, the thing is that telling someone that they aren't very good (basically):- is not only conjecture, but it is also likely to somewhat rile them whether or not it was designed to do so. This thread is not about that in any way shape or form. This thread is egoless as much as it can be and it is intended to discuss markets and help explain to others what may be helpful to you personally. This is something which it broadly is, I hope and I would definitely include you within this bracket. Josh, however someone wishes to approach their particular market is up to them and if it works for them then all the better. There is definitely "more than one way to skin a cat" and I note that you were pointing out that the method in question is just not for you personally. The fact is that it's usually more about the trader than the method anyway. However, I am always interested in methods others use to trade as at the very least, isn't it prudent to see how your competitors might trade? Gosu, personally I think it would actually be quite a beneficial thing if you are happy to do so, to really briefly outline what it is you do and the basic terminology. You could start a thread in the TA section and link it into your signature so that anyone reading your posts can access a really quick and easy reference if they lose you at all. I'd suggest this for anyone's method actually and will do it myself during this week. That way information we post can be as useful as possible to as many people as possible. Finally, let's get back to business of trading these darn markets! That's what we're here for right?

Trading can be a lonely game. Especially when you are trading on your own. Moreover, the lack of accountability to others, for many traders is a particularly difficult hurdle to overcome particularly in the early days and before consistent profitability is reached. Not only can a trader be less compelled to do what they really know they should, but also they're more likely to convince themselves that highly questionable tactics are reasonable in the pursuit of profits or evasion of loses. Just ask Jérôme Kerviel once of Soc Gen, or Nick Leeson of the now non-existent Barings Bank. Hell, if Nick can bring down Britain's oldest investment bank, a retail trader is more than capable of bringing down their relatively tiny account right? Once that objectivity is lost and trading the 'right' way is thrown out the window, it's a slippery slope to dollar zero hour. The harder the trader fights, the worse it can get. No accountability to anyone but yourself and your broker- who in most cases won't give a monkey's unless you get a margin call. It is my opinion that it is every right minded trader's duty to ensure a reasonable amount of accountability. My question to you is, how do you do this?

I wanted to provide you with some reference points but to make it clear, we are quite news driven right now so ACH. Main things to watch out for today are the release of Mich Conf just before 10am ET, how financials behave after the JPM news and obviously any news flow from Europe. Don't get yourself in a hole on Friday.

Thought I'd start a thread for people to post games and the like from the net for when trading just sucks! Please keep it clean I'll start with one I found today. Classic game free online through browser. wolfenstein3d

As much as the reasons behind market moves do interest me, I think there is a danger of over-complicating things and losing sight of what is really important - reading market activity and properly executing a well conceived plan. Does a soldier need to know why he's going into battle? The fact is that we spent the session in the upper half of the 2-day balance which came after several days of moving lower. Considering that we couldn't didn't take the 2-day high out by more than 3 ticks, it was in my mind a pretty reasonable thing to expect a flush. Whether it was triggered by the JPM reports, contrarian asian players or anything else, it was what it was.

freestockcharts.com - very nice free browser based quotes finviz.com - great heat map visualizations for all kinds of products

So far, day has been contained by volume leading towards 65/66.50 area and near to yesterday's VPOC. Suggests that despite everything else, there is some balance of opinion up here at least temporarily.

Looking some more, 56.00 probably quite uncoincidentally, is the VVAH (Volume Value Area High) of the Tues/Weds 2-day balance.

Didn't get to the 56 area (yet ) on first swing below 60. Small range so far and not too much going on. IB is only 4.50pts so far (although 15mins left for that to extend). Anyway, this is what I was looking at 56 area for:-

Looking for test of 56 area IF overnight vpoc @60.00 is taken out.

NQ breaking lower on open may hamper ES attempts higher.

Figures due in just over 10mins then Bernanke speaking @9:30am ET. I expect European news flow aswell today. Yesterday had some really nice clear trade opportunities and had nice movement to boot. I can't say what my outlook will be by open as there's potentially lots of trading/chance for news/eco releases between now and then. However, the test of 40.25 and subsequent buying makes me feel we want to test the volume development highlighted on the chart (on right in purple). As always ACH.

Well done buddy! (nice to see you posting again today btw )

I think it's a decent trade. Test of 53.00 useful then 54.25. I suspect that we will test 60 later but ACH. That's also not saying how we get there either so just make sure you manage your position properly!!! If we can't make new highs then I'd think at the very least we'd want to retest the open.

I think you need to act decisively, but impatience can cost dearly. Gotta look at IBH area for possible continuation. No, I was just asking you how easy to use it was and how quickly you can do annotations. This Greenshot I use is decent but there are a few things which don't work as they should Btw, snagit now has video too. I don't know if that includes old users or whether you'd have to do a paid upgrade.

Absolutely. On the other hand... We could have just rejected prior "value" from the lower development. If we have, then I'd look for test of higher value. i.e. at least 65.00. After we test we could know more.

I noticed this after I'd done the first chart:- The tight set of candles moving higher just says to me there was some sort of large order being executed here. Btw Josh, do you still you Jing/Snagit? If you do, how quickly can you knock out an annotated chart?

Here is a chart from rth open through to the test lower showing what you might have done and thought about. Today really does demonstrate why incorporating some kind of scaling strategy is very useful.

Okay that was my primary target area just met @1340.25. It may or may not go further, in which case we'd be looking at 36.50/35.75 area. It did kinda feel like they may have been hammering for stops there but as there were a few levels close together, they didn't get much.

That Nasdaq just ain't playin' ball right now!

Yeah you can say that again! Felt like a complete fix up to me rather than genuine buying. But hey, that speculation (and that is speculation)