Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

AgeKay

Your Thoughts on TradeMaven 3-2-1 Approach

Which of the "rules" has merit?  

42 members have voted

  1. 1. Which of the "rules" has merit?

    • Rule #1: low volume = S/R
    • Rule #2: high volume = attractors
    • Rule #3: MoMs
    • None


Recommended Posts

This thread is about this thread on EliteTrader. TradeMaven Group is obviously trying to market their software/chat room/brokerage there (in which in am not interested in the least), but I am only interested in discussing the ideas outlines in that thread, specifically how past volume distributions might show you potential support/resistance points and when you should enter or stay out of the trade. I know there are a lot of experienced traders on this forum and that's why I am asking for your opinion. Do you think that the statements (their "rules") made in that thread are valid? Do you personally use them or some derivation of them in your trading?

 

Their basic "rules" are these:

 

Rule #1: In commercial or hedge markets, low volume numbers are support and resistance – they stop activity – and should be traded as such.

[...]

Rule #2: High Volume areas represent value and are attractors. They serve as support and resistance the first time touched only. If not immediately rejected, you can expect to trade around the high volume numbers for one to two hours. Here’s why: It’s where new moves start. New moves come out of the middle. The way the market confirms this is through the retest – it’ll retest a breakout. If it holds, more people will come in and trade.

[...]

Rule #3: Don’t fade Moves out of the Middle (MoMs). New moves start when the market has come into balance, off the Balance Point, Point of Control, or Mode.

 

I can see why rule #1 might be true, because there isn't going to be much volume past a prior high/low since this is where price turned around and did not trade much. But I don't know about rule #2 & #3. I guess you can only verify it by having looked at this data for some time.

 

I am grateful for any shared insights!

Share this post


Link to post
Share on other sites

They are interesting rules. But, the rules do not seem to have any practical application before the fact. In other words, I do not think you can create real time trading rules around them that will give you a favorable risk /reward. If the rules don’t do that, then what is the point?

 

Anyone can look at a yesterday’s market profile and say you should have done this or that.

Share this post


Link to post
Share on other sites

Actually the volume distribution shown on the right is based on volume of past last year, so I do not understand why you think this could not be applied in real-time since this information is available bevor the trading session has even started. Could you please elaborate? I might be missing something...

Share this post


Link to post
Share on other sites

I think rule 1 makes no sense at all. From what I seen and read with PV it's the opposite. How is low vol. going to stop a thing? I have seen there thread. It's look fancy with their prop. bar and stuff, that's about it.

Share this post


Link to post
Share on other sites

High volume often signifies "acceptance" of a price or range of prices by market participants. By acceptance we mean that the majority of market participants find value there.

 

Low volume signifies rejection of a price or range of prices. By rejection we mean that participants believe that price or range of prices does not represent fair value.

 

The concept of "time at price" is an important part of the concept of value. In Market Profile terms, if a lot of time is spent at or around a particular price, that means that participants accept that price (or prices) as representing fair value. Conversely if very little time is spent at a price, it signifies rejection of that price (or prices).

 

I think the best advice I can give is to suggest that readers buy James Dalton's book "Mind Over Markets" and check out the complete concept. A lot of good professionals use this approach.

 

Best of luck

 

Steve

Share this post


Link to post
Share on other sites

First of all, thanks for chiming in Steve. Your kind of response is what I was hoping for.

 

The concept of "time at price" is an important part of the concept of value. In Market Profile terms, if a lot of time is spent at or around a particular price, that means that participants accept that price (or prices) as representing fair value. Conversely if very little time is spent at a price, it signifies rejection of that price (or prices).

 

I think the best advice I can give is to suggest that readers buy James Dalton's book "Mind Over Markets" and check out the complete concept. A lot of good professionals use this approach.

 

Regarding the quoted piece, I've read all the MP boooks, but I could not confirm the validity of the concept of "time at price". For example in European markets like the Dow Jones Euro Stoxx (FESX) you will see that during lunch hour and especially in the last 2 hours price might not move that much and thus stay for a long time at certain prices, but that's not because the participants accept that price, it's because most participants have gone to lunch or home. You can see this because there is usually a lot less volume, the sum of the volume from 17:30 to 18:00 is most days as much as during 18:00 and 22:00 o'clock, that's 30 min vs. 4 hours.

Share this post


Link to post
Share on other sites
Actually the volume distribution shown on the right is based on volume of past last year, so I do not understand why you think this could not be applied in real-time since this information is available bevor the trading session has even started. Could you please elaborate? I might be missing something...

 

Sure it's available. No question, but, then, given the information, how you develop real time trading rules that offer a favorable risk/reward using the 3-2-1 approach? If you can't figure out a way to trade it so that your gains are larger than your losses, what is the point?

 

Bottom line, why should you pay these people for this info?

 

Also, I think that there are no net distinctions between commercial or hedge markets and non commercial or hedge markets. MP works with every market. I trade many different markets using MP. Each market has a different "personality", but MP is equally applicable. You can certainly prefer to trade one market over the other and defend your decision with religious fervor, but that doesn't make one better than the other for everyone else.

Share this post


Link to post
Share on other sites

Mighty, thank you for your response.

 

Bottom line, why should you pay these people for this info?

 

I don't think you should either. I said in my initial post that I am not interested in their software/chat room/brokerage. I just read that thread and found their ideas interesting and that's why I wanted to hear feedback from other traders on it.

Share this post


Link to post
Share on other sites

slight deviation from the topic. Their software uses eSignal data and eSignal doesn't provide Tick data for one year. How they generate Volume at price data for one year? They must have some algorithm to generate Volume at Price data using Minute/daily data. The point is that the cumulative volume histogram on their charts is not based on true Tick data.

Share this post


Link to post
Share on other sites

I believe Trademaven addressed this point in their ET thread and they emulate tick/volume histograms using 1 minute bars. Not a perfect solution, but should be close, especially over larger cumlulative timeframes.

 

slight deviation from the topic. Their software uses eSignal data and eSignal doesn't provide Tick data for one year. How they generate Volume at price data for one year? They must have some algorithm to generate Volume at Price data using Minute/daily data. The point is that the cumulative volume histogram on their charts is not based on true Tick data.

Share this post


Link to post
Share on other sites
I believe Trademaven addressed this point in their ET thread and they emulate tick/volume histograms using 1 minute bars. Not a perfect solution, but should be close, especially over larger cumlulative timeframes.

 

slight deviation from the topic. Their software uses eSignal data and eSignal doesn't provide Tick data for one year. How they generate Volume at price data for one year? They must have some algorithm to generate Volume at Price data using Minute/daily data. The point is that the cumulative volume histogram on their charts is not based on true Tick data.

 

One more reason not to buy their software. I am currently developing a program that will display this kind of information since I have to make sure this is implemented correctly using actual volume of each trade.

Share this post


Link to post
Share on other sites

I guess the problem is fining a data source that provides not only historical data for trades but of bid ask changes as well. These will need to be time stamped correctly too. You can assume that volume on an uptick is likely to be at the ask but that is an approximation too is it not?

Share this post


Link to post
Share on other sites
Guest forsearch
I guess the problem is fining a data source that provides not only historical data for trades but of bid ask changes as well. These will need to be time stamped correctly too. You can assume that volume on an uptick is likely to be at the ask but that is an approximation too is it not?

 

It is indeed. I think Sierra Charts has historical data with bid ask changes, or at the very least you can save the data from a real time feed yourself.

 

More info here: http://www.sierrachart.com/index.php?file=doc_DataSourceSettings.html

Share this post


Link to post
Share on other sites

I think this is no problem since you can buy tick data directly from the exchange, at least this is the case for CME Group and Eurex, which is always time stamped correctly. I don't see what you need the inside market for to create the volume distribution. Even if you don't have that information, using up-ticks for trades at the ask and down-ticks for the trades at bid is a very very accurate approximation.

 

Blowfish, what is your general opinion on this volume analysis?

Share this post


Link to post
Share on other sites

Blowfish, what is your general opinion on this volume analysis?

 

Well it clearly adds another dimension of data. But despite looking at it on and off for I guess a couple of years (or maybe more) I have not really found a satisfactory way to integrate it into my trading. I wonder if it's a forest and trees scenario? This is fairly much tree type information, sometimes looking at less produces better results. I also wonder whether often you can get pretty similar information just looking at pure volume.

 

I still remain open minded to the idea that I might be able to use this type of information to provide a better read than simple volume however.

 

On the subject of Tradmaven I think it's a good illustration on how a sponsor can run a thread in a professional manner. It's one of the few at ET that I follow.

Share this post


Link to post
Share on other sites

BlowFish, thanks for your comment.

I have one more question: What do you mean by 'pure volume' or 'simple volume'? Do you mean the volume histogram that is shown on the bottom on bar/candle charts where there is a volume bar for each bar/candle or do you mean volume per trade that is shown time & sales?

Share this post


Link to post
Share on other sites

on your ques about low volume and higher vol,pete stodlemier said if you sell a sweater(assuming you own a sweater store) at $30 and you sell out in one day,then you raise the price,eventually your selling 1 sweater a week for $150 so you lower the price til they start selling again,supply and demand,so on your mp chart where there is 1 letter at the top ,they only sold one sweater. You can see this with the chart,i don't know that you need volume indicators to confirm it.

Share this post


Link to post
Share on other sites

the nip on the chart represents where the most buyers and sellers were in agreement on price,the previous days untested nips show where most of them got short or long and would be anxious to get flat without a loss

Share this post


Link to post
Share on other sites
on your ques about low volume and higher vol,pete stodlemier said if you sell a sweater(assuming you own a sweater store) at $30 and you sell out in one day,then you raise the price,eventually your selling 1 sweater a week for $150 so you lower the price til they start selling again,supply and demand,so on your mp chart where there is 1 letter at the top ,they only sold one sweater. You can see this with the chart,i don't know that you need volume indicators to confirm it.

 

I never really like steidlemeyers examples in his books. They make sense when you read them, but they don't make much sense in the futures markets. The margin requirement does not change when the price goes up (unlike sweaters), so the actual prices of a futures contract does not matter to anyone. When you enter a trade, do you care that it's now so much more 'expensive' since it is 100 points higher than last week? No, you don't. The only people that care are those that have a position in that market because they are account is currently up or down based on that price change. Volume can show you where traders entered their position. Ammo, gave a great example in the previous post how you can interpret that volume.

 

Another difference is that when you buy a sweater in a store, you don't have to sell it back to the store, but in the futures markets you do (eventually).

Share this post


Link to post
Share on other sites

Actually the MP chart is a proxy for volume PS has said as much (though please don't ask me to try and find the quote!). The assumption is that if price only stays at a level for one TPO that the volume transacted at that level is likely to be lighter than if it remained at that level longer. Also the sweater analogy is a about volume@price (over a sample time of a week).

 

Ignore me I am just being picky :)

Share this post


Link to post
Share on other sites
Actually the MP chart is a proxy for volume PS has said as much (though please don't ask me to try and find the quote!). The assumption is that if price only stays at a level for one TPO that the volume transacted at that level is likely to be lighter than if it remained at that level longer.

 

BlowFish, I am glad you mention this. I always wondered why MP traders don't use volume@price instead of MP since it is more accurate since time@price was only used as approximation because they did not have real-time volume information when the "father's of MP" created it. And the MP approximation for volume falls short when there are times of constantly low volume like the last 4 hours of trading in the European markets. Or do you think time@price has another significance?

 

Also the sweater analogy is a about volume@price (over a sample time of a week).

 

I was also talking about volume@price when I showed that the sweater analogy is non-sense and the time period does not matter since still only those traders care that have an open position.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • TDUP ThredUp stock, watch for a top of range breakout above 2.94 at https://stockconsultant.com/?TDUP
    • TDUP ThredUp stock, watch for a top of range breakout above 2.94 at https://stockconsultant.com/?TDUP
    • NFLX Netflix stock watch, local support and resistance areas at 838.12 and 880.5 at https://stockconsultant.com/?NFLX
    • Date: 8th April 2025.   Markets Rebound Cautiously as US-China Tariff Tensions Deepen     Global markets staged a tentative recovery on Tuesday following a wave of volatility sparked by escalating trade tensions between the United States and China. The Asia-Pacific region showed signs of stability after a chaotic start to the week—though some pockets remained under pressure. Taiwan’s Taiex dropped 4.4%, dragged lower by losses in tech heavyweight TSMC. The world’s largest chipmaker fell another 4% on Tuesday and has now slumped 13.5% since April 2, when US President Donald Trump first unveiled what he called ‘Liberation Day’ tariffs.   However, broader sentiment across the region turned more positive, with several markets rebounding sharply after Monday’s dramatic sell-offs. Japan’s Nikkei 225 surged over 6% in early trading, rebounding from an 18-month low. South Korea’s Kospi rose marginally, and Australia’s ASX 200 gained 1.9%, driven by strength in mining stocks. Hong Kong’s Hang Seng rose 1.6%, though still far from recovering from Monday’s 13.2% crash—its worst day since the 1997 Asian financial crisis. China’s Shanghai Composite added 0.9%.   In Europe, DAX and FTSE 100 are up more than 1% in opening trade. EU Commission President von der Leyen repeated yesterday that the EU had offered reciprocal zero tariffs on manufactured goods previously and continues to stand by that offer. Others are also trying again to talk to Trump to get some sort of agreement that limits the impact.   Much of the rally appeared to be driven by dip-buying, as well as hopes that the intensifying trade war could still be defused through negotiations.   China Strikes Back: ‘We Will Fight to the End’   Tensions reached a boiling point after Trump threatened to impose an additional 50% tariff on all Chinese imports unless Beijing rolled back its retaliatory measures by April 8. ‘If China does not withdraw its 34% increase above their already long-term trading abuses by tomorrow... the United States will impose additional tariffs on China of 50%,’ Trump declared on social media.   If implemented, the new tariffs would bring total US duties on Chinese goods to a staggering 124%, factoring in the existing 20%, the 34% recently announced, and the proposed 50%.   In response, China’s Ministry of Commerce issued a stern warning, stating: ‘The US threat to escalate tariffs is a mistake on top of a mistake... If the US insists on its own way, China will fight to the end.’ The ministry also called for equal and respectful dialogue, though signs of compromise on either side remain scarce.   Beijing acted quickly to contain a market fallout. State funds intervened to support equities, and the People’s Bank of China set the yuan fixing at its weakest level since September 2023 to boost export competitiveness. Additionally, five-year interest rate swaps in China fell to their lowest levels since 2020, indicating potential for further monetary easing.   Trump Talks Tough on EU Too   Trump’s hardline approach extended beyond China. Speaking at a press conference, he rejected the European Union’s offer to eliminate tariffs on cars and industrial goods, accusing the bloc of ‘being very bad to us.’ He insisted that Europe would need to source its energy from the US, claiming the US could ‘knock off $350 billion in one week.’   The EU, meanwhile, backed away from a proposed 50% retaliatory tariff on American whiskey, opting instead for 25% duties on selected US goods in response to Trump’s steel and aluminium tariffs.     Volatile Wall Street Adds to the Drama   Wall Street experienced wild swings on Monday as investors processed the rapidly evolving trade conflict. The S&P 500 briefly fell 4.7% before rebounding 3.4%, nearly erasing its losses in what could have been its biggest one-day jump in years—if it had held. The Dow Jones Industrial Average sank by as much as 1,700 points early in the day but later climbed nearly 900 points before closing 349 points lower, down 0.9%. The Nasdaq ended up 0.1%.   The brief rally was fueled by a false rumour that Trump was considering a 90-day pause on tariffs—rumours that the White House quickly labelled ‘fake news.’ The market's sharp reaction underscored how desperate investors are for any sign that tensions might ease.   Oil Markets in Focus: Goldman Sachs Revises Forecasts   Crude prices also reflected the uncertainty, with US crude briefly dipping below $60 per barrel for the first time since 2021. As of early Tuesday, Brent crude was trading at $64.72, while WTI hovered around $61.26.   Goldman Sachs, in a note dated April 7, lowered its average price forecasts for Brent and WTI through 2025 and 2026, citing mounting recession risks and the potential for higher-than-expected supply from OPEC+.       Under a base-case scenario where the US avoids a recession and tariffs are reduced significantly before the April 9 implementation date, Goldman sees Brent at $62 per barrel and WTI at $58 by December 2025. These figures fall further to $55 and $51, respectively, by the end of 2026. This outlook also assumes moderate output increases from eight OPEC+ countries, with incremental boosts of 130,000–140,000 barrels per day in June and July.   However, should the US slip into a typical recession and OPEC production aligns with the bank’s baseline assumptions, Brent could retreat to $58 by the end of this year and to $50 by December 2026.   In a more bearish scenario involving a global GDP slowdown and no change to OPEC+ output levels, Brent prices might fall to $54 by year-end and $45 by late 2026. The most extreme projection—based on a simultaneous economic downturn and a full reversal of OPEC+ production cuts—would see Brent plunge to below $40 per barrel by the end of 2026.   Goldman noted that oil prices could outperform forecasts significantly if there was a dramatic shift in tariff policy and a surprise in global demand recovery.   Cautious Optimism, But Warnings Persist   With both Washington and Beijing showing no signs of backing down, markets are likely to remain volatile in the days ahead. Investors now turn their attention to upcoming trade meetings and policy decisions, hoping for clarity in what has become one of the most unpredictable trading environments in recent years.   Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Andria Pichidi HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • CVNA Carvana stock watch, rebound to 166.56 support area at https://stockconsultant.com/?CVNA
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.