joshdance

I upload the image to a server, then copy that URL and paste it into the box on the attachments window ("upload file from a URL"), and then click upload. I can upload with a locally saved file, but not a remote file from a URL.

About another 1.25 or 1.75 above the current high, and we will hit the SPX high of 1270.58, hit last year, and highest high of last 3.5 years. Also it corresponds (no surprise to the low volume area of this TPO-based SPX profile. 02.27.2012-12.35.05 - joshtrader's library N, TL is telling me "Upload failed due to failure writing temporary file." when trying to upload an image from a URL. Do you get this too?

BH, I didn't say that at all. See below for more. I think it's this simple: it can be both. Look at the major lows from last year in the August time frame. Heavy accumulation, heavy volume. Again in October there is a final push lower, again on heavy volume but less than before. Heavy heavy market buying on that early October day in the afternoon that started the current bull market. Sure, there is a low tick and a high tick, and unlikely that that high or low has lots of volume transacted. But typically there will be an area around where there is high volume. But not always. Sometimes the buying or selling on the way up or down just dries up... currently it seems we may have a drying up of buying before a significant move down, or we could have a spike of distribution first. The point is that it's not just one way. Observation tells us there's more than one way. This is a whole other subject, but you're talking about a specific case--when a market is in balance. Even then, it's not so common to have a textbook bell curve. When the market is in balance in a particular range, awaiting information to determine the next direction, then yes, you will see this distribution.

I subscribe to the basic principle of auction market theory, namely that the market moves up and down in search of buyers and sellers; the job of a market is to involve as many buyers and sellers as possible, and it will move higher or lower to facilitate the most trade. This basically agrees with your idea. There is only one real way to identify liquidity, and that is in retrospect, using volume. The order book may give short-term clues, but what you see on the DOM is not liquidity. It's available or potential volume, but until the deal is done, those orders are not commitments. Volume is the only thing we can objectively look at and observe that at a particular price or over a particular period of time, there was an increase in activity, and thus we can conclude that there was liquidity available. But also consider that when directional movement of the market is clear, that not all pullbacks end with an increase in liquidity at the point of the turn. Sometimes we will see a sharp spike in activity near the turning point; other times we will see very little volume, and only when the original direction is resumed do we see activity pick up. So, it's not just to find liquidity (which would imply an increase in volume), but it can also be to recognize a lack of interest. Many reversal points consist of a big display of discovered liquidity (volume), followed one or two consecutive probes further with far less liquidity observed. From a practical point of view, many people use "support" and "resistance" to identify past areas of observed liquidity, to potentially indicate current and futures areas. Since many people watch this and buy and sell the same areas, it can be said that an observation of past liquidity can lead to potential identification of future liquidity; though of course, many reasons exist to enter the market and thus it can be said that anything can lead to an increase of available liquidity at any price. As I mentioned above, the only real way to determine it is to observe it first, allowing others whose size is observable in the market to engage in price discovery, and then follow them, never leading ourselves. I would love to hear others' thoughts on this, as it's at the heart of market movement.

efficiency, thank you for your reply. Sounds like you are talking about a swing trade, yes? Your prior two quotes seem contradictory, and this is part of my question regarding PoP. Taking the entire position off with because of "early indications of topping" would seem to contradict rule 2. Tops can't be predicted, and while I agree that volume and other indications may give us indications, the market is going in our favor, and you're suggesting on the one hand to press the advantage, and "once trending" to add. But you don't know when the trend is over until it's over. That's the nature of trend following--namely, that you will ALWAYS miss a top and a bottom. As we have seen since late December, a market can move up 12% on about as low volume as a market can have. Anyone who was long and took profits too early, may have seen early signs of topping, but they would have not let the market dictate their actions, thus they took themselves out early. That's part of my question/problem with PoP. "Take yourself out before the market proves you wrong" -- well, in the right context, for an established, successful, intuitive trader in the pit, that's possible. But otherwise, it can be dangerous I think. Yet, I see the practical wisdom of this at the same time--I was long today and added on the way up, only to find myself with a loser after adding too high; intuitively I saw that the push was not strong enough to continue, but I have been burned too many times trying to guess, so I held on and should have dumped it sooner. I suppose my point is this: what PoP says is absolutely the way to go: add to winners, and get out while you're ahead. However, the way he's able to do that is sheer experience. He talks about his uncanny ability to get out on the 3rd wave, just at the right time. That's because he's a good trader. I just don't think that that can be codified into a rule; as he intuitively knows WHEN to add, and WHEN to take his money and run. Reading about this will not help those trying to learn. It's like reading about a quarterback talking about being calm in a big game, and expecting to be able to do that from just reading it. Experience and innate ability are the keys. Don't you think so?

Just volume, same thing you see on any other chart--was just pointing out the absorption that N talked about. BTW, I did not check the thread during the day today but we were about 65 - 75% of 20d median volume all day long. Right now at the close we are only 1.1M contracts traded. 6.00 range.

Even though futures traded during 2 hours of the regular RTH session on Monday, equities did not and I would think that for the purposes of your weekly open, that you would consider that to be Tuesday's 62.50 RTH open.

Tom, check this out, it's rolling 60 second volume with delta on top. (TL not letting me upload a pic right now) 02.24.2012-14.52.58 - joshtrader's library

This week and Friday of last week really developed the 59s. In those four days (not counting Monday this week) we have 3 VPOCs right next to each other in 59.25, 59.50, and 59.75. Particularly yesterday the value really built up there before it moved higher. I would not be surprised to see 59s again today before moving up, if the market is to move up today.

You can't calculate it with 100% accuracy without transaction (tick) data. You could estimate by evenly distributing the volume over the whole bar and perhaps weighting the closing price a bit. But since you seem to be using spot for ex the volume information you have is not accurate already, so that's two levels of inaccuracy. A better option IMO would be to forget volume and use time at price instead. At least this way it's accurate. You might find that it's just as good or better anyway.

Hi all, Not at my computer screen today so doing this remotely with no real good tools here to work with, but it seems that value built lower yesterday. At 64 there is a cluster of volume that should fail if we are to go further down. I am targeting 49.50 for an initial downside minor support but real support probably won't kick in until 35 or so. If we break 64 and hold above it, up up it goes as it has been. Just my

Well, the market doesn't really care about what chart you use; it's doing its thing regardless of what method of presentation you choose. What matters is whether you can successfully trade from it. I don't use time-based charts much these days, so it's hard for me to really say whether the 15 minute will be suitable for you. You should just look at some different presentation methods and see what speaks to you. Good luck and keep us posted. Yes, but you said that the reason 95% fail is that they don't stick to their plans. My thought is that part of the 95% do in fact have a plan, and do stick to it solidly, but that does not make them successful because their system/plan/model/whatever stinks. Many "systems" out there are just braindead, and are not based on a solid premise, or have been designed to free the trader from thinking. Having a model of the markets that is logical stands a better chance of allowing one to profit from it, whereas a plan to buy above the high of XYZ every time is bound to fail over time. Just my as always.

Yes this isn't a lot of time, but it's a good start. I'm guessing the charts you watch are real time, it looks like a pretty neat site. I'm sure you know this, but watching the market and trading the market are quite different ball games. I think you are going about it the right way though: observing first. I respectfully but strongly disagree. This is what's promoted out there in vendor-land: that it's all about having a plan and sticking to it.. Well, I agree that discipline is 100% essential, as is sticking to a plan of some kind, and that not doing this will result in total failure. BUT it takes more than discipline and a plan, IMO. Some plans simply stink, and following them to the letter are just going to guarantee failure. Many plans will be superb, but IMO these are probably going to be based on your own experience in the market, formulating theories about how the market moves, and then trying to take advantage of that information. There are many plans or systems that are sold for $200 and virtually guarantee wealth. Do you think that these plans, if followed with perfect discipline, will really achieve good results? Well, that depends a lot on how you define a range, and what your time frame in consideration is. Markets trend a lot if you consider intraday activity. It may be within the context of a larger period's range, but markets must move to some degree, or there is no market. There is a tradeable intraday trend probably 16-17 days out of every 20.

In a nutshell, buy when it's going up and sell it when it's going down, when one side is more dominant than the other; when neither side is dominant, be flat. This is too general to be called a strategy, but it's at the root of everything it takes to make a profit. Put a similar way but with a slightly different intention, don't be short when the market is clearly going up, and vice versa. Perhaps I conditioned myself early on from constant exposure to the words "strategy" and "system" to dislike the connotation that they evoke. I have a methodology, which implies an approach to the market, rather than a strategy, which implies things like always waiting 135 minutes from the open, and then buying one tick above it, and this kind of thing. Which again, may work very well for some period of time, for some people. In the end what's most important is that we find something that works FOR US, not for someone else. Trading is very personal, which is why I present my views but always with the caveat that I'm never trying to change people's minds, only present them with other perspectives, just as I appreciate them presenting me with different views than my own. I use points of reference like the weekly highs and lows, prior day highs and lows, I use quite a bit of volume profiling, and I use volume, along with of course the market's price itself. And all together they serve as tools for my approach to discerning the market's immediate intention. All of those things give context to what the market is currently doing, and that's what separates my approach from one like an opening range breakout approach found in the article. Neither is better or worse, but they are quite different. One heavily considers the past, whereas the other places a rather limited need to know about what happened in the past. Your approach on the surface sounds very logical. This is only an observation, but it sounds like you have not really traded much before, or maybe more accurately, it sounds like you have not put in a lot of time in the chair sitting and watching. Am I right or not? Good ideas, yes, 95% lose, so fade them, so fade the breakout when it fails, etc... Did you also consider that those 95% (I have no idea if this is accurate or not and it's not important really) probably also do exactly what you're doing--namely, look for a strategy, back test it, and take every trade that presents itself? Do some candlestick study, money management, etc..? Maybe it's true, maybe not, just a thought. I know many who have no plan at all, and that's not a good thing of course. Out of curiosity, what are you ideas for determining market sentiment, since you mentioned it? I am pretty straightforward and I hope you know that I have the utmost respect for you or any trader's thoughts, strategies, and approach to the market. Differences of opinion and approaches are what make us unique, and able to have an interchange of useful ideas from all sides.

I think it starts with a premise, an idea. From there, see if the idea holds water. Probably the best free solution for you is ninjatrader, though I have not used it for back testing. Elliott wave is not science; it is a way of viewing market movement, and is as subjective as the next thing. It is not objective, thus many people can identify different waves (and so many of them seem to do so well in hindsight, imagine that). Thus, no science there. I think you are being a little tongue in cheek so I'll leave it at that. What the guy did in his guide to back testing was more of a scientific approach, and his method is without subjectivity; the trade triggers, or it doesn't; no gray area. THAT is science. And because it is, the market does not allow it to be profitable long term. Of course there are patterns, but they cannot be objectively, programmatically, profited from forever. Maybe even for a few years, but the market will not allow risk-free profit (meaning that a system will always make profit). I would suspect that even for colo, super fast HFT type systems, who have a clear advantage of speed, that there are new systems developed which take advantage of the already super fast stuff and slowly but surely remove the edge there too.

Why don't you post a chart of a time you have been trapped, or something that looks similar?

darklost, 1) You should just post a link to the youtube site since the videos are too small to observe in the small window 2) The numbers are very hard to see at this resolution. 3) If you want people to look at something, you need to specify exactly the place in the video to watch (like, say "3:50" for 3 minutes, 50 seconds into the video) -- this way we can jump to it and look at it, instead of having to figure out where it's at.

The article you referenced is precisely a "set and forget" type of approach. You are not supposed to add discretion with this type of approach. No need to watch charts with this. You could always do a hybrid method of a mechanical signal as a guide, and then your discretion to actually trade. There are NOT scientific patterns that the markets have followed since the "beginning of time." The market does not offer a scientifically-based approach that performs consistently (such would be relatively risk-free, a no-no for the market) for all eternity. The article you reference develops a system that back tests well for a year and a half, but fast forward 8 years from when it was written and I'll bet it has consistently lost money recently. I suppose you could stop at a max drawdown and have made some good money though. But it is not forever. The article was very solid by the way. Quite rare to find a methodical approach like that in an article on back testing. From your first post on this thread it seems you are using metatrader. It does not, to my knowledge, offer any real tools for back testing. MT is sort of the "Yugo" of trading software. It's cheap, and you have charts, but other than that, it's very barebones and not particularly known as a platform that a serious trader will use. Tradestation, Ninjatrader, Investor R/T, and many others will have a pretty robust set of tools for backtesting. Ninjatrader is free to use without live trades, but you will have to get data. You will find a few data providers out there who provide a trial. This may be a good start for you.

Sometimes those orders are filled, but sometimes they are pulled and there is a vacuum of liquidity which causes the market to move quickly. Certainly if an entity wants to accumulate long contracts, it can place the orders lower than the market, and then sell towards its own orders (the resting liquidity) in an effort to induce others to sell, thereby achieving price improvement on an existing or new position. Then again, an entity could be very eager to be filled and could be buying at the market towards higher resting liquidity in hopes of the market continuing in that direction (possibly taking the other side of the entity described in the prior paragraph's scenario). Then again, these are just two possible scenarios. There are no doubt many motivations and reasons for things we observe in the market that are simply beyond our ability to make sense of, as different market players may have very different goals (some wanting to secure a tick, others hedging against another position and not really caring or wanting the market to go their way, and so on).

My advice is to not waste your time back testing at all. The article referenced above on dailyfx, while a good guide, shows the main problem with back testing -- "Where would you place your stop?" "Where would you look to take profits?" Even the primary point of 'stop when you find a trade that meets your criteria.' Do you think you will actually do what you do in a back testing environment? Back testing ignores context, news reports, unscheduled news releases, the bigger picture, the mood of the market that day or week or month, and other things, but perhaps most of all market momentum. If you think you can see all of these things by looking at static charts you are deluding yourself. Either that, or you have been trading for long enough that you recognize certain things and thus dint need to worry about back testing at all. Back testing is simply another attempt to shortcut one's way to profitability. Sure, we all want to cut our learning time to some degree, but by removing time from the trading equation, back testing removes the part that's actually the hardest -- sitting there in a trade, or waiting for a trade. There is benefit in looking at past charts and drawing conclusions, but this bar by bar or mechanical back testing simply is not representative of what trading is like. This will.go against much of what is said on this subject and as always, it's simply my view and you may find your experience different. I suppose much of what we spend our time on in trading g turns out to be fruitless, but it's in the doing and rejecting that we find the gems.

These are only orders and are easily added and removed. Some people claim to trade off the DOM but in my opinion it is a waste of time.

A trend is a trend, and fading the S&P will kill a trader just as fast as anything else. People say that the S&P is more of a mean reverting instrument but fading is generally a losing strategy regardless of what's being traded.

Interesting that you say that--I closed my short for the very reason that it kept pounding on 55 but could not get through (was watching a 200V or 500V at the time). Granted, not tons of contracts, but 55.25 took quite a few, and 55 need not be traded heavily for a rejection--that's the concept behind a LVN being a point of rejection anyway, right? Either way, it was pretty clear that sellers tried, and then when I saw buying enter around 11:15 I knew I wanted to be flat. Speaking of that-- some of you guys talk about LVNs and you use them as potential market testing points. On the profile for this week or since 2/3 or even the yearly profile so far (anything current, not considering past data), you will see that 53.75 is the lowest vol. price in this upper distribution, except of course the ones at the very top. The local POC of this area is 55, which is yesterday's VPOC. The market stopped at 55, and did not make it to 53.75 -- any thoughts on this Would you be looking for 53.75 to trade if you're looking at the profile? Would love to hear thoughts on LVN vs. HVN as s/r.

N, I looked but can't find it -- you referred to a "weak low" recently and in your chart just now. How do you define this again?

Not a reason to initiate a long yet for me, but order flow shift here at 11:18am -- enough buying to close my short, got a little over 2 points per contract on this. The VPOC from yesterday hit to the tick, from here it's too drifty to tell for me, so I'll just watch.