joshdance

In your scenario if the delta was very high over that period of time, say, cumulatively higher than it was when price was at the same point last time, would you expect that the strength of the move would be higher, or lower? For CD divergences, I've seen people say that if the delta doesn't return as far as price does, then it's a divergence and means there are still "short holders", for example. I've also heard that the other divergence, that the delta has overextended itself in relation to price, can mean that a reversal is impending due to this "overextension" ... I just hear so many different interpretations that it gets to be a toss up, IMO. Even volume, as much as I have found it useful, really only tells you the amount, and the volume being relatively less or more sometimes may mean nothing, even on a daily basis--maybe fewer people are trading because they're on vacation, or on lunch, or whatever... the bottom line is that prices move because of an imbalance of volume at that time, and only the price bar indicates that imbalance. That being said, I do think volume especially, and even delta, can give some information--the question is, will that information be a helpful addition, or a distraction from what price itself is saying? Can someone post an example of a chart showing how cumulative delta can be useful in making a trading decision?

The way I've been trading the last two weeks, a coin flip will improve my edge. In all seriousness, the coin toss is a really bad idea for *long term* success, I think.

Negotiator, thanks for your comments. That's the beauty, we all have different tools. What may wind up being a bit of a distraction to me may be a tool for you!

Nice job MM. I am one of those who feels the need to stand by if I don't get in to the low tick, BUT I am starting to change my perspective. In oil today, for example, I was looking for longs, but missed the initial move up even though there was clear evidence to go long at 10:15ET (near retest of previous day's high after moving up in Globex, duh). I thought a reversal was going to happen at 110.85, but after we broke through I waited for a retest of the 85 and while I didn't quite have the cajones to enter the trade, I was at least looking for longs, not shorts. That's improvement, in my book, and in my theoretical paper trade, my target is 114.00. At this point that trade would be in the money over 100 ticks and I'd have my stop tight enough where I would likely get stopped out (111.79), BUT it would have been a good entry and a good trade so far. Thanks for allowing me to see your perspective.. while I want a good entry, often times what I think is "chasing" is really just jumping on the train for what could be a long long ride. If the move is to be 800 ticks, as we've seen happen in 2 days with crude, then jumping in after 100 or 200 or even 400 ticks is jumping in relatively early. If you think about when oil was valued at $40 a barrel, then buying anywhere up here is buying "at the top" ... BUT, if the top is to be $150 a barrel, which is completely realistic even before the summer is over, then buying at this "top" is in fact a bargain!

Forgive my lack of understanding, but from my understanding, you can't buy at the bid. You can place a limit buy at the bid and you can get filled but a buy market order, one which actually fills a resting sell limit order, must do so at the asking price. Is what you're suggesting to do the same as the traditional cumulative delta except instead of bid/ask volume use up/down tick? Let's say the bid is 100 and the ask is 101. An uptick can't go from 101 to 100, only from 100 to 101, or from 101 to something higher. So, I'm not sure how to count an uptick at the bid and an uptick at the ask. Obviously I'm not quite sure what you mean still, I apologize and wonder if you can clarify further. By the way, I want to hear anything that has validity, even if it flies in the face of what I currently believe! I am here to learn!

Just curious, what made you choose 12425 for what I assume was your TP level?

What I'm saying is basically that personally, in my humble and newbie opinion, measuring the cumulative delta over a period of time yields no useful information that can be used as a real edge in a trading situation. That's for ME of course, and others will undoubtedly find their situation different. Just as fibonacci traders will find some use in their lines which sometimes work and sometimes don't. Ultimately, no trading tool is infallible, but at least support and resistance are accepted by enough traders that it provides some logical process to work from. If you could expound on this I would be most grateful, as I'm not quite sure what you mean.

110.85, see my last post, the red line has been a key level several times in april.

Here is a 60m chart from this morning at 11:30, I was expecting a move lower after the test of 110.85. Next chart is current chart after price has broken up above, with what I think will be the ultimate target of 114, and the final chart is the 5m view showing the nice reversal bar. The 110.85 ish line I drew last night before going to bed, as it's clear resistance twice (well, last time on 4/17 didn't quite make it there), and it was the breakout point on end of day 4/7. Once we broke above 111 around midday today, I expected the 110.85 level to hold. This afternoon price danced around it and dipped below it once down to .70, but within a few minutes it was back up above. After a late shakeout move down near the close of the pit, it rallied back up. That last move down was my last opportunity to get in at .85, but as I said I am not confident enough in my analysis as I am quite the beginner.

My bias was long today, though I did not take any trades as I'm still gaining confidence using 15m and above bars. My plan was to buy after the 13:30 bar today which bounced off the key .85 level, on a retest near .85, actually a bit earlier at the 13:20 5m bar reversal ... would have been an excellent trade at least at this point, targeting 114 IMO, though it did get hit enough times to make me nervous.

Yes, I simply mean that larger traders who want to disguise their orders and not negatively affect their average price of entry will likely not just use one type of order, but rather mix it up, sometimes using market orders in small chunks, other times limit orders. As a result, a group who is accumulating may themselves produce a net zero delta by market buying 100 shares, and limit buying 100 shares, giving a net delta of 0. Thus, the intent of the trader and the identification of the group cannot be known just by observing bid/ask (IMO, can't be known, period, and doesn't matter that much anyway). Either way, a positive delta over a period of time only means one thing anyway: there was more volume traded at the offer than at the bid. Period, nothing else. Price can still decline when this happens IF there were few passive buyers, for example. Price is the only true reflection of buyer/seller imbalance. Delta measures aggressive buyer volume versus aggressive seller volume. But it does not take into account imbalance due to fluctuations in passive buyers and sellers. It's the same reason a high volume bar can either mean exhaustion or continuation, or why price can move up on low volume for a number of weeks or months--it's not the total volume that matters, it's the imbalance at that time. Hence, the only way to see the real buying and selling pressure is to look at the price bars.

Thanks for the comments John. Even in this big time frame I think to draw conclusions on cumulative delta is to make assumptions about who's placing what type of order, and I think that is at best a guess. People design these systems to systematically enter orders over periods of time, in different sized chunks, using different types of orders, and sure, sometimes it will look like it will work, but overall my personal (worthless to most) opinion is that it's a crap shoot. I actually mostly trade oil. Do you follow oil, and if so, do you find a 15 minute chart to be superior? It's certainly "calmer" than a 5/1/tick type of setup. I currently have 1/5/15/60/240 on my screen to get various perspectives on the picture, with a small tick chart for timing, which is probably too granular in your view. What are your thoughts?

But Negotiator, I will say this (just forgot to mention this earlier) .. on crude oil on 4/12 the other day, I didn't have CD up at the time but upon examining it later, there was massive market order buying into that down move... But again, you can draw any one of several conflicting conclusions from that: 1) Aggressive buyers were buying lots of inventory from limit sellers, and they will continue to buy, thus moving price up. 2) There were very few passive (limit) buyers in relation to passive (limit) sellers, so the sellers have built up a large short inventory and will soon take the market lower. 3) and on, and on... There's no way to know if that market buying near the bottom was profit taking or "inventory buildup" ... sometimes when there's a huge divergence like this, price will drop, other times it will rise. The only thing that mattered after this huge divergence was: which group of aggressive participants will now overwhelm the opposing, passive, side and take the market in their direction? From where price "landed," at a retest of a trendline drawn from two highs on the daily time frame, and after a 1200+ drop in two days, price was due for at least some kind of move up, and that was without having any knowledge of bid/ask delta. That's always the question: okay, so X happened--what is likely to happen NOW? Oscillators work sometimes when price is more cyclical, but fail when the market decides that they will just keep buying or selling. Same with CD--there's nothing stopping the current dynamic from continuing except that in the present moment, a shift in supply and demand happens and the market takes a turn. In the above case, market buyers could continue to buy away, but if their more passive limit buying counterparts are relatively few compared to the number of market sellers (who still are not as numerous as the market buyers) and the passive sellers are strong, then price will continue to fall, delta divergence and all. Of course, an argument can be made that any indicator, like a buying tail on a 1 minute candle, really has no bearing on what is about to happen, and that we are all just placing trades on what is likely to happen.

I do, and I have, and I have found it to be about as useful in finding divergences as price-based oscillators. Sometimes it works, sometimes it doesn't. Sometimes the delta is higher, sometimes it's lower... conclusions drawn from that information cannot be relied upon consistently, from my brief experience looking at it on the charts.

What is the "pre-Google effect" Tams?

Right now it's at 1310 or so, and the daily pivot is 1311 .. you may get fished at 11.5 right before a move lower (which looks impending before the day is over) but for your sake i hope it will turn south at or before the pivot so your stop remains intact.

Thanks john, got it.

Thanks Negotiator .. johnw, what is "MO" .. (momentum?). How true that these things can't just be taken as mechanical signals, that's definitely not what I want anyway.. just a way to add a bit more objectivity to my analysis. Have a look at this chart and see the delta associated... thoughts? In real time today when this happened, I thought the third bar would be the one to short if I were going to go against the strong movement because of what I saw in the volume, though I was not confident enough to take the trade. The first bar with the arrow says to me "we're getting tired" .. the second says "one more try" from the bulls (note the higher delta on this bar, indicating they still have the momentum). The last one says that the bears finally have enough on their side to push it down even if just for a bit, with the lessened positive delta compared to the first two bars, and the close near the lows. What do you think of my analysis?

I am looking for practical ways to correlate principles of VSA and bid/ask volume in my trading. So, in VSA a wide spread down bar with high volume after a period of trending can show exhaustion of the trend, and weakness, correct? If, in a down trend, we get a wide spread down bar on high volume, and indeed there is weakness, according to the principles of VSA, wouldn't we typically expect to see a large negative delta, that is, more market sellers hitting the bid, to indicate passive buyers beginning to accumulate for a move up?

Looking forward to your ES comments MM.

Not quite real time, but I didn't have an opportunity to post this last night. I took this trade and went to bed. Then, got up to check it. Big mistake. I closed it out at breakeven after I saw a little double top form about 7 ticks above the entry point. Ninja was set to move the stop to breakeven+1 when the first target was reached, which would have been stopped out before the 2nd target was hit. I kind of expected this, but thought I would give it a try. Another lesson learned--SET IT AND FORGET IT! ...

Thank you STO, that part is quite clear to see--what I'm talking about is, if price returns there, where might a good potential support level be. I have 6100 marked as it's a round number and the first big 30 minute bar originated there. But the whole range of that area is effectively 6076 to 6160, quite a large range.

I'd like some feedback on my levels for the pound from any who would be willing to comment. Particularly around 1.6100, there's a lot of wiggle room there--any thoughts on these?

Beautiful breakout pullback ... doesn't get any prettier than this. I was not at the screen and this was not in real time but I had thought this might happen earlier when my long didn't work out... Had I been here it would have been very tempting.

UPDATE to AUD trade: Stop hit, -6 ticks on 2 contracts. It had gone in the money 8 ticks twice, and i was quite tempted to take the profit and be done with it the second time up, but it looked like it might have legs that time, so I held. I suppose I can rejoice that I was not panicked and exited because of fear. I'm more focused on execution than P/L right now. It very well could have gone on to hit my target, and still may do so even now I suppose....