joshdance

I don't think he's asking to see the details of how you take the trade, just something that would indicate that you actually take the trade. Would that benefit you? Not really, except that if you're looking for credibility then you have none really in terms of actually trading. Your analysis is great, but then again, so is any analysis done in hindsight. My charts of trades that I should have taken look beautiful too, and about 50% of them I actually see in real time but do not take for one reason or another (among them fear and any other number of emotions which get in the way of placing good trades). I've never seen you post a trade that you were going to take or actually said "I'm long at XYZ", only trades that you supposedly took or just analysis. In other words, anyone can post what you've posted and sound like an expert and not be a trader at all, only a hindsight analyst. I'm not saying you are full of crap, as I can't prove and don't really care one way or the other. But your method of trading and instrument are both particularly well-suited for posting a trade which you WILL take (trading the edges, which you know well before price gets there, and the indices which are slow enough). For example, over in the thread on Reading Charts in Real Time there are hundreds of posts by thales and others who post their trades before they are entered, and the good and bad results of those trades. Likewise, MM also posted a thread here where he took a couple of trades and posted his entries, stops, and exits, AHEAD OF TIME. I did not go through your "Ideas for struggling traders" thread, but in your other two main ones I found, I only found one post where you said you were in a trade with a downside target, and you happened to be short supposedly exactly when it reversed up here. Perhaps there are examples I have missed, but that's what I found. I have put levels on my chart and find that price hits them weeks later, but that doesn't mean that I actually took the trade. Again, you have great information, but this in and of itself does not really help people in actually trading, as every genius out there and vendor posts charts of what happened, and act like it's common sense--funny that they didn't have the common sense that it was going to happen before it actually did, or the conviction in their belief to post that chart of what was GOING to happen, instead of posting what DID happen. I would not care to post this normally, but you talk to others like you're coming down off of Mt. Olympus to speak with the mortals, saying things like this over and over. I just hate to see people getting talked down to from someone who has not shown that he can do any better.

Fair enough, I suppose I did imply that time-based charts have an advantage. Perhaps I came across as saying that your method is lacking something. But please understand that was not my intention. But you implied that using time-based charts is somehow "less advanced" than volume charts, as if the natural progression for all traders is to volume charts much in the way an infant by necessity grows into maturity. My point is that the path of progression of all traders may not pass through volume-chart-ville. Neither am I trying to instruct you in any way Logic. I agree you've earned the right to be defensive, but my point Logic is that I'm not attacking your creation. I said nothing inaccurate about volume-based charts, only that they omit the time variable. I keep a volume chart on my workspace for the very benefits you mention. I did say that time was valuable, and you may disagree with that, but it's only inaccurate in the context of your own trading. It's valuable to me and many others. At any rate, I certainly don't want to get into more of an argument than we already have here. I appreciate your contribution to the trading community in volume charts, and I will continue to use them in my trading, along with other tools which I subjectively feel are important. :-)

I'm sure the successful traders who "read" emotion (isn't that what trading is about after all?) who don't use volume bars would have issue with your first sentence above. Of course, I'm not talking about taking a trade based on the time of day--I'm talking about taking a trade with the information that a certain amount of activity has happened within a certain period of time, for example. I think most traders are able to identify consolidation on any chart type. For volume information, I have volume bars at the bottom of my chart, though liquidity is not nearly as important as price movement. Imbalance of buying and selling produces price movement, not the presence or absence of liquidity, as can be seen in the globex session for many instruments. You have "A solution" -- is it "THE ONLY solution"? You sound like someone defending an attack on your "baby," and that attack isn't coming from me, I assure you. As for me, I first traded in 2007, lost about $1K because I didn't know what I was doing, and then took some time off until last year, and now I'm trading, and still don't know shi*. I know nothing, and never have claimed such. Everything I say is solely my opinion. I have found over the years that in trading forums, people who claim to have all the answers, to know everything, and particularly those who are condescending to other traders, are 100% of the time bullshi**ers, and usually are selling something to boot. Do you always respond so defensively when others present a different view than yours?

Logic, The CVB charts you created are great, and in eliminating the time variable, they do smooth the view of price on the chart. Traders may trade contracts which we measure in volume, but do you really think time is an insignificant variable? Do you think 50K contracts traded over 5 minutes indicates a different market sentiment than 50K contracts traded over 15 minutes, given some "normal" number? The market is people--people are by nature time-oriented. Because humans pay attention to time, then so does the market, and you eliminate this valuable piece of information unless you add it to a volume chart with an indicator, much in the way most people use a volume indicator with time-based charts. You can almost feel in the price action when market participants are getting ansy because of a trading range that has lasted all morning that they are ready to get out of. A sharp reversal that happens quickly indicates a different sentiment than one which takes a while to develop. A breakout that stalls (measured in time) may be saying more by what it's NOT doing than what it is doing. A volume-based chart does not show this dynamic. Volume charts are great at filtering if you find the time not helpful, but if you're used to a time chart, then the filtering is automatic, no chart help required. Some go with range charts, some volume, some time, and so on. Each has its advantages. Many prefer range charts and would say that volume and time charts both contain noise, and that the range charts show only what is important: price MOVEMENT, regardless of time or volume. Volume is only useful in relative terms anyway, though in my trading I have found it to be a necessary component of my chart. I personally prefer to use both time and volume when making trading decisions. In my opinion they are both important! I'll drink to that!

That would be great sdoma.

Certain brokers may choose to compress or filter ticks, but this is a broker issue, not a CME issue. I have no good source to deny this happens, but I have seen no authoritative source that says it does happen, so I would assume that CME reports a big stop getting executed as a market order the same way they would report anything else, namely that if you see a 100 lot print, there was a market order that was at least, but perhaps more than, 100 lots executed, but not less than 100.

He trades notes and bonds, and recommends them for tape reading. But don't count on reading a PDF and watching an hour long video of one or two days worth of trades to really show you anything. I've seen it myself and wouldn't pay for it, but that's just me. I'm not sure what your intent with order flow / tape reading is, but it's what good traders have been doing for many years and is nothing new, though the "footprint" and all that stuff is the new buzz. Why not learn how the markets move and use the tape in conjunction with what you're already comfortable with as a way to see momentum, time entries, etc.? Just watching the tape from scratch may not accomplish what you are looking for. As for orders being reported, more important than anything else IMO is the speed and momentum of the tape, rather than large orders. I can't speak for other instruments, but on oil, speed of the tape can be very important. Large orders may be placed, especially on something huge like ES, can be for varying reasons and have nothing to do with where price goes next.

Are you sure about this? I don't think this is the case. The CME reports (for certain instruments at least including ES) one tick as one transaction, so I don't think the above would show as one transaction.

Well, "delta" just means "difference" or "change" in math terms, so really the bid/ask volume difference guys just commandeered exclusive use of the term ;-) Seems like I've heard that word before somewhere else... an airline, or a letter, or... ah nevermind. :rofl:

Thanks so much heretoday--just the kind of visual this thread needs! Below are my thoughts. On pretty much the entire data series, the two are very closely correlated, almost perfectly. The only difference is the scale (in other words, the oscillations for the order book delta are much more often than the CD), but if you changed the scale on the CD it would overlay almost exactly with the other. So to say that CD is rising when order book delta is rising, and vice versa is, well, pretty much all the time. This is only logical, as when CD goes positive, there must be the the matching offers in the books to provide the liquidity for these market orders reflected in the CD. Basically, the graph looks like it's showing the same thing twice, again the only difference of consequence being the absolute values only. Further, using only price, the area where you mark as "met by buyers" is a second lower high in what appears to be, if this were the right edge, as a trend reversal. In other words, price is pretty much showing that it's met by buyers by the fact that it's rising. Further, adding volume gives some clues as to the validity of what price is doing--exhaustion volume at the peak, followed by lower volume on moves down. The one place I find the bottom pane of the chart interesting is around 14:25 -- CD appears to have an upward slope and the order book shows more bids than offers, the only real divergence in the two I can find. Perhaps this divergence indicates that aggressive buyers and passive buyers are strong in number, and that a move up is more likely than ever. These are my thoughts on your chart. If you would care to explain how you might use the information presented on the chart to some advantage I would love to hear your thoughts. Thanks again for taking the time to post this!

Thanks blowfish--as you know, if it were this easy, of course, then it would cease to work very quickly once a few people found out :-) Of course we can look at our charts and find many cases where these divergences work, and others where they don't. And as with anything, context is king and anyone looking for a "buy when this divergence happens" will be disappointed--particularly in realtime. Divergences can lead to more divergences, and to more, and more... how many is enough to take the trade? Thus are the pitfalls with divergences... two things can diverge further than one thinks.

I use a 1 minute chart for entry, 5 for "2 day" view, and have 15m, 60m, and 240m up for larger views, I just showed the 60m because it gives a nice view of the last couple of weeks.

Perhaps it's too long gone, but I would love to revive this thread again :-) Any takers? Here's my current chart setup on the 60m. My plan was to long 111, but with the big drop down with heavy momentum and going all the way down 30 ticks below the area on my chart, I was a little bit afraid to go long after we came back above 111. I tried a short as the pictures show, but was fished before the move down... tested yesterday's high to the tick, and I was unsure of the direction at that point.

Nice job again MM, congrats on a good trade and showing how you managed it. Now can you get the heck off of ES and start a CL thread?!? j/k ;-)

I have found back testing price action to be very difficult, as you must go bar by bar, and try to objectively read the action. The difference is also, that you don't see the price moving in real time, you don't know HOW the bar formed, you don't know how fast and where the volume came in the bar, tape speed, other markets at the time, etc. All those factors make objectively back testing price action only quite difficult. Some more mechanical methods may be more well-suited for accurate back testing. This is of course only my opinion and others may have had more success than me. I am great back testing in hindsight, but in real time, and with real money, it's a whole different ball game.

Blowfish, can you share the source of these studies? I would love to read them and learn more.

You posted this at 11:45 and around 12:15 a nice move down happened on CL. I assume that's what you meant? Good job! Good job with your trade management here as well MM. Any reason you can think of for the timing on these moves? Any other times of day you pay attention to on CL?

It's in many software packages, usually called "delta" or some type of "bid ask" study.

No worries Ingot, I enjoy your posts on the forum and didn't want you to think I had a particular "side" for things like this.. I'm just here to learn

Perhaps you should quote the person who asked me, as I was simply giving an answer to his question. I belong to no group, and I'm sure either would be fine. The free material available online is sufficient IMO. I have no horse in this race.

Nial was originally a member of the J16 group, then he went to do his own thing, without the blessing of Jim I might add (thread over on FF where they both tell their side), thus to my knowledge they have very similar methodologies. As Jim as stated before, he took his ideas from Martin Pring and others, so as they say, "nothing new under the sun."

So from the above, it sounds like you are taking the basic approach of fading the direction of delta. You are going with the passive buyers or sellers in either situation. Correct?

For practice only you mean? In doing so, are you shifting the focus on managing the trade, instead of the entry--is that the purpose of this?

Thanks KTTC-- although I realize it's a per-situation decision, could you post a chart or some type of visual to describe how you might have (or actually did, even better) trade a specific situation so I can get an idea as to what the CD is telling you? Just hearing someone talk through their logic in an actual situation would probably do wonders for my understanding of this.

After reading your scenarios above MM, I could not conclude based on your statements that a negative or positive delta would have much influence in your decision-making. You said above that "delta..will be finding a new level", but I could not find you saying that your bias on price would change one way or the other by having the delta information. At least not in the example you described--I realize there may be other examples in which this is not the case. If I seem like I'm poo-poo-ing on delta, I'm really not. I just would like to see examples of how it can be used in real time, not hindsight, to give helpful input to a trading decision. The earlier example I cited, the down day recently on oil where delta began turning up like crazy as we neared the 106 level, would perhaps be one example of how it could give you some confirmation that the move down is slowing. But, not until the next day did that level become enough of a support to move up, AND this could be discerned on its own by (1) the large area of consolidation and volume build-up, (2) the huge volume on the move down followed by the inability to push lower.