suby

Just saw this Lets take the Nasdaq and the largest 10 weights for example When your talking about the spreads, are you talking about when the weightings get out of line from the index?

To mean to be the bad guy but these are all "obvious" qualitative factors that dosn;t require much thinking. oil = scarce China and India = growing like crazy However, theres more than those 2 things that determine the true price of oil, therefore it is very niave to load up on oil stocks on your premise

Uexkuell, interesting! The question is, where is someone grabbing their news from. I'm guessing that this is purely a discretionary form of trading and would be impossible to model through predictive analytics?

Siuya, Thank you for the insight. A light bulb seriously just went off in my head reading what you wrote... Essentially one is attempting to front run the market by trading at those hours correct? When basing a decision on entering a trade like that... Are you going off of the global economic calender and looking for price distortions in a specific market? or are you simply reading bloomberg or the bbc before the european open?

Steve, Thanks for the input. Why do the high probability set ups occur during the night? I think last night is a perfect example of this when the market began to rally when the european session opened. I don't know why... but I would love to know the cause and the effect of this.

having troubles extracting from my think or swim charts...

DB how long have you been trading for and where did you develop your methodology from?/What other traders do you view as mentors to yourself?

Goodoboy, How do you define your parameters for support and resistance. I was wondering if you could provide an example with how you define S/R throughout the week and how you would go about slicing a trade from that

DB pheonix thank you for posting this. Sorry for the tardy reply. I have revisited this thread and am a little confused with one thing. Your addressing 50% reactions/retracements. In regards to this paragraph: "The day before, price opened to 80, fell to 68, and retraced 50%, after which it fell back and tried to rally again, all the way back to 80, where it retraced 50%. It then rallied 7pts, to 81, then retraced much more than 50%, leading to a 20pt decline." how is 80 to 68 a 50% retracement? I apolgozie for being naive...

Bluehorseshoe, I appreciate the advice, i looked through Jeff Swansos articles on the site, smart man. He mainly focuses on individualistic systems towards the indices. Lately i've been throwing in a lot of secondary variables into my trading. I.e. Stocks vs Bonds or Stocks vs the Vix. Do you ever look at intermarket relations in your trading?

Some say the success to succesful trading is money management (i.e. as long as your winners beat your losers thats great). Every trader says you need to find a strategy or system that jives with your personality. Sure, also great Real money is made from being able to identify regime changes. Theres a reason why the majority of "daytraders" go broke. Why beacause there trading noise. I want to open up this thread to regime changing.Its in technical analysis since that probably what the majority of people use here to help them identify their trends; however, indicators are secondary variables. I look forward to hearing back to the community on their inputs about regime changing. I'm trying to learn more about this. If anyone has any recommended books/resources, i'd love to learn Suby

In other words, the CFTC report is a joke... I appreciate this

I'm not sure who takes a look at this data that is published every friday; however, in regards to the index's it always shows a dramatic disconnect between the dealers and asset managers. The dealers always have short positions and the asset managers are always long. Why is this? What kind of information can someone extrapolate from this numbers?

Thanks for this Mitsubishi. I must admit, I am a tape reader at heart but I really hate staring behind the monitors for the entire session. It creates clouded thinking because of uncertainty. All of my successful trades have come from a considerable amount of backtesting and research

I see that theres been some discussion here lately about how you should stop being a home run hitter and go for 1 and 2 points... If you look at the daily range on any of the contracts (indices specifically) why not try to be a home run hitter!? I diverged a bit but I wanted to pretty much open up this thread to people who are making a decent living off of trading a couple contracts a week. Can it be done? Whats your weapon of choice? How do you approach it? I personally like to trade the NQ and I really can't stand all this talk about going for 1 or 2 points. I don't believe markets are random but I do believe that with the advent of HFT, your really flipping a coin in this dya and age when your scalping - Hence why the average retail trader's edge is not in scalping but in attempting to hit home runs, or swinging for that matter. I look forward to hearing from the community

^^ This right there to really be honest with you. I feel redundant with my words but essentially price drivers are based on fundamental factors. Without fundamental factors prices wouldn't move. Take something like homebuilders... Ultimately someone could start their analysis by analyzing home sales from realtors (both new and used) then determine how much of that is from the new, then look into the amount of lumber needed in the lumber futures, and essentially build signals from that process. Yes that is more of a long term approach; however, to really break this down, one must understand how ETF rebalance each and every day. I know for a fact that ETF rebalancing gives a lot of information to a trader going into the close or one who is even looking to make a swing trade that will last a few days in the equity markets but theres a lot more moving parts than just seeing which ETF is buying more or selling more of the isolated sector/stock at hand. This is essentially what the goal is to tackle with this thread. To determine the exact order of things for a the short term trader to develop a framework and make trades intra and interday

Thanks for this, I just wanted to clarify... After this you can or can't start to trade on your own judgement as opposed to using indicators?

Siuya, Funny you should mention sector rotation because that is essentially what started this line of thinking.... When one trades in the index universe of the Nasdaq and the S&P, things really don't move all that much in the short term due to everything more or less being correlated to their corresponding sectors and the overall indices. Ofcourse there is flow of funds from the portfolio managers in and out of one set of stock into others, as well as flow of funds from the retailers who still buy and hold. I totally agree with colonel on his thought process with macro correlations. The model goes something like this. Monitor the leading macro correlations, i.e. currencies, bonds, and indices. Determine which leading macro correlations effect different stocks and sectors. Then trade in accordance to these moves while portfolio managers are still scratching their heads thinking what to do. The question is.... what moves what in all honesty

Colonel, I'd argue that your the resident correlation trader on TL which is a great thing. Interesting to hear that you don't think that the NQ is the easiest to trade... but even more interesting to hear your opinion on how the ES and Treasuries effect the NQ. For the record I don't trade only the NQ, I trade everything thing; however, after realizing how everything is correlated in order to be succesful in this game its important for one to be systematic. A large portion of my models are based on volatility correlation to indices but I take it your line of thinking for one to trade the nasdaq would follow NQ <->ES <-> Treasuries. Would you argue that the begining of a move that would filter through into the NQ would essential start in the Treasuries? In today's markets how fast do participants essentially react to moves in one market that would create a domino effect in the other?

Tupapa, Why do you never look at correlations? Could you please provide an example of how you look at Supply and Demand when you are analyzing a trade in a stock/futures/currency ?

Given that this is the technical analysis section of TL and arguably the most visited section of the entire forum, I thought it would only make sense to start a thread pertaining to Price Drivers, specifically in regards to stocks. It doesn't take a genius to realize that everything is correlated to each other in one way or another; however, the real question lies in lead lag relationship. Lead lag relationships is essentially the key to all the dineros. Given how this is going to be directed towards stocks, I look forward in hearing back your opinions and analysis. I will kick start the thread by displaying some thought in regards to the Nasdaq. For anyone who trades the NQ... Apple is the key indicator as well as the 9 other largest weightings in the composite. If one was to analyze NQ's chart and AAPLs chart one would ponder why the NQ never followed... However, the answer lyes in the fact that the flow of funds went from AAPL to other large weightings in the Nasdaq which in turn balanced the index and prevented the index from diving when apple dove. I'd argue that the Nasdaq is considerable easier to trade to do its vulnerability to apple and other 9 leading weightings which in turn kind of makes the NQ a great place for any beginner to start trading indexes. I look forward to hearing back from the community on your intelligent responses and analysis pertaining to Price Drivers Suby

Thanks for this, i'll take a look at his blog! is he pretty on point?

I wouldn't trade a stock in isolation, period. All things are correlated to one another. The real money is in determining leads and lags. How would you determine leads and lags for your chosen basket... By performing a backtest. Could you share with us what stocks are currently in your basket? Happy to see your looking into this!

Rare to see someone say "Cointegration" on this board. Happy to see it How do you calculate Cointegration Tommaso ? or do you just trade the spreads according to the ETF as the peg?

I was wondering if anyone here can snipe algorithmic patterns in the markets either from a discretionary standpoint or from a mechanical one (i.e. through data mining and other techniques...) I would love to hear from anyone who has any experience or opinion with this! Suby