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Nice call. Neg, these order flow patterns I trade off can change rapidly... perhaps the RP bill passing concerned some investors. On many days they do tend to get into a routine but that hasn't happened today...

 

There were also sellers iniating shorts from 38.... As we seen, my initial exit was poor but was indicative of the higher risk. The LQ providers eventually got overrun. This happens quickly in bearish markets but can take forever in normal markets.

 

Again these are just narratives.. whats important is the pattern. Maybe, there were long traders like me expecting to challenge 40 and when they didn't see it they bailed.

 

Also remember institutions aren't the only game... there are other people playing other games. The equities bots are very important for trading index futures. I believe in this case, we had institutions short from 38.. LQ providers and some long institutions at 36.50 and then equities bots executing into the 36.50. The equities bots turned the game in this case, imo.

Edited by Predictor

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  TheNegotiator said:
Yes pretty much if you are talking about the area I have highlighted on the chart:-

 

attachment.php?attachmentid=30135&stc=1&d=1343241646

 

Yes, thanks. what does the IBL 1330.50 mean?

 

Just from looking at your chart, it appears that sellers shorted from the 1340.25 area and then start covering those shorts at the 1326.50 area. Even though its low volume that area means something. Just thinking outloud to myself.

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You have to understand that the futures are made of stocks. The value of the stocks determine value of futures. If the stocks and futures get too far out of line then bots or computers will buy/sell futures. I do not use premium or anything like that but I track equities to know what will happen in futures. Everything is arbed against everything these days. Single market analysis has a use but only using price doesn't provide enough of an edge in most cases. I track order flow in futures and the action in other markets.

 

If one observes buying at tops and selling at bottoms, the'yd be a fool to attribute this to the institions which are known to sit LIMIT. Most institutions define a range where they want to do business... i.e selling at limit and then sometimes at market if they don't execute 100%. But if one does observe buying at tops and selling at bottoms. This contra folow activity is caused by equities bots, imo, running into institutions. Sometimes they overrun institutions... sometimes they are stopped by the institutions. These institutions like to operate in the futures. They are old school.... buy low/sell high guys.

 

Keep in mind everything is a simplificiation.... if the equities are getting hit then the LQ providers who arb against equities will have to pull bids too. Most trading is algorithmic. Another factor is that funds who hold baskets of stocks will hedge in the futures... this is another activity that will keep them in line. As a fund sees their value dropping, they go into the futures to short as hedge.

 

  goodoboy said:
What does equities bots mean?
Edited by Predictor

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  goodoboy said:
Yes, thanks. what does the IBL 1330.50 mean?

 

Just from looking at your chart, it appears that sellers shorted from the 1340.25 area and then start covering those shorts at the 1326.50 area. Even though its low volume that area means something. Just thinking outloud to myself.

 

IBL = initial balance low. The initial balance is generally the first hour of trading. The idea is that a lot of OTF (other time frame = big longer term players) will execute within the first hour of trade. So it's a useful reference for the day. It doesn't always work in fairness. But when it does it does. It's pretty obvious when it's more likely to work as the intraday profile lines up. i.e. the IBH/IBL remain low volume areas.

 

Low volume means that price is not seen as fair there. So either it's likely to reject fairly quickly and reverse or it might run through quickly and not trade lots of volume again. Obviously this depends on context. Just because there is a high or low volume area it doesn't mean that automatically it will always precipitate one of the mentioned responses.

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  Predictor said:
You have to understand that the futures are made of stocks. The value of the stocks determine value of futures.

 

And to be fully correct, the opposite is true as well: futures determine the value of the composite basket of stocks in the index.

 

By the way, you may use "specialized tools" but one does not really need to. My tools are "normal" but very effective. Moreover, I very lightly use profiles these days but I still think that in the right hands they can be valuable. Just because you didn't have success in using them does not mean that they are useless.

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I use volume profiles extensively.. I just don't use market profile theory. I only found its use when I completely detached it from what I read and thought I knew. Exactly, this is why I eluded to the interplay between the various component forces.

 

Someone asked why I picked up using the volume profile. The reason was that I read about it, obviously many futures traders used it and it was promoted by prominent teachers in the field. I agree that specialized tools aren't required for taking longer term trades. I anticipated the market hundreds of times without ever even using volume. But, for trading/competing intraday on a regular basis, I disagree.. but it depends on the type of trading sure.

 

One can trade from pure price action but the opportunities are fewer... btw there is nothing special about volume profile... one read everything that can be read in volume profile from price chart only. I developed a method to do this... in fact one can read more. I may write an article on some of these ideas in the future. Most probably don't understand the VP except those who really studied it.. away from books and such.

 

Of course, market profile is no different then candlesticks or any other charting/graphing method. This was why I had a problem at first. I thought it was something more. I may use candlesticks and another trader may use candlesticks.. tells nothing about the strategy we are using.

 

  joshdance said:
And to be fully correct, the opposite is true as well: futures determine the value of the composite basket of stocks in the index.

 

By the way, you may use "specialized tools" but one does not really need to. My tools are "normal" but very effective. Moreover, I very lightly use profiles these days but I still think that in the right hands they can be valuable. Just because you didn't have success in using them does not mean that they are useless.

Edited by Predictor

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  Predictor said:
I agree that specialized tools aren't required for taking longer term trades. I anticipated the market hundreds of times without ever even using volume. But, for trading/competing intraday on a regular basis, I disagree.. but it depends on the type of trading sure.

 

Specialized tools aren't required for taking short term trades either. You can disagree with that, but I'm proof that on an intraday basis, one can compete and do well; if you want specifics on performance I can post those as well. My trades are a few minutes to a few hours.

 

I'm not saying I'm always in tune with the market; a couple of recent days I had larger intraday drawdowns than I'm comfortable with, and today I found the market a bit challenge to get in sync with during the first hour. But I look at the order book, the tape, simple highs and lows, and volume as a function of time. Using these for the "now", and adding the occasional profile, but mostly price alone for market structure, I have what I need. Most people, particularly vendors, reject the notion that simple tools combined with intense amounts of work on one's self, can bring improved results and consistent success. But, it has worked for me.

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Josh, first I think you took this the wrong way. I am speaking about my personal experience, and also trying to provide some information for struggling traders --- of course, not on a platter. Based on what you're saying, we probably use similar types of methods for our day trading. Let me be clear, if you're happy with your information and your results then certainly you should continue to do that.

 

However, let me also be clear that if I were using traditional time/sales, DOM, single market price based charts, Fibs, etc (all stuff that most try to use) that I would be at a significant disadvantage which would translate into fewer opportunities, larger risk per trade, less confidence, and lower probability trades.

 

I am primarily a tape reader and a discretionary trader -- with a few additional systems I developed that I trade. I believe that you attended my free tape reading webinar (hosted by TradersLab) where I shared how I was able to successfully read the orderflow using a very simple technique that I invented and nothing more then a price quote. I still use similar techniques. But, today I use specialized software that gives me a greater insight into the dynamics of the market, allows me to control my risk to a greater degree, and allows me to take a much finer grained and intimate view of the market. Having said that, I still have to execute and pull the trigger. My techniques were developed over many years and intensive, intensive training, and I've never even suggested that software alone could produce success.

 

Also, I'm sure that many traders here would be very appreciative if you share your calls in real-time, analysis, etc.

Edited by Predictor

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  goodoboy said:
long 1350.25 from the pivot of 1350 as support. Target is 1354, stop 3pts. buying on pull back with the trend.

 

Out ES at 1356.25. After I saw the bulls was targeting the 1354 area the volume profile sent yesterday (thank you for that chart), i waited patiently. The next area was a gap fill on 1356, so just took it off there.

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  goodoboy said:
Out ES at 1356.25. After I saw the bulls was targeting the 1354 area the volume profile sent yesterday (thank you for that chart), i waited patiently. The next area was a gap fill on 1356, so just took it off there.

 

Gap fill? Depending on your interpretation of 'gap' fill, it would be 57.00/58.75. Unless of course you're talking about testing a low volume area(which really is 57 anyway)?

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  TheNegotiator said:
You like those pivots huh?

 

Well, I notice the buyers and sellers responds at the pivots. The price either goes up or down at these levels. So I like to treat these pivots as support and resistance levels for targets and buys.

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  TheNegotiator said:
Gap fill? Depending on your interpretation of 'gap' fill, it would be 57.00/58.75. Unless of course you're talking about testing a low volume area(which really is 57 anyway)?

 

Yes, thats right. I was looking at the 61.8% retrace from last week high to this week low as well. Its in the 1356-1358 area as well.

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Okay so after the failure at 57, target of the top of the balance area was quite clear. It's not quite turned properly yet but it could easily. Not to say it will. The point is that using the auction over the last 3 days gave a very clear indication of market intent after its failure to break 57.

 

attachment.php?attachmentid=30149&stc=1&d=1343317300

2012-07-26_2.thumb.jpg.9ce91d016190ea0d3ec6aa4a4dce635d.jpg

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If it starts to develop below the upper balance extreme (48.75) it could either just slide lower, or test the extreme again before deciding to move lower or move higher again. Just to but this into context, current range is much lower than last three days. This could mean we will see range extension. However, the pattern has been over the last few weeks that we get a few big days then some much smaller ones dotted in between.

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Took at long at 1349.50 after 1347.50 area held and the 15 min Slow Stochastic gave buy signal. 2.25 stop. Target is 1354 to see if the buyers can take out this level and test the gap again.

 

Reasons 1. in a uptrend 2. 15 min slowstoch just crossed 3. support at 47.50 4. morning star on 15 min at the 47.50 area.

Edited by goodoboy

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  goodoboy said:
Took at long at 1349.50 after 1347.50 area held and the 15 min Slow Stochastic gave buy signal. 2.25 stop. Target is 1354 to see if the buyers can take out this level and test the gap again.

 

I exit too early and took 2.5pts. I should have waited for retest of 1354 atleast.

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  Predictor said:
Also, I'm sure that many traders here would be very appreciative if you share your calls in real-time, analysis, etc.

 

I understand what you're saying.

 

Regarding this quote above, I have shared numerous real time calls previously, and lately no one has paid particular attention when I have posted things real time so I just have no interest in doing so.

 

I post many more trades real time in the BMT forum, in a particular thread there, but out of respect for TL won't post links, but you can go see two short trades I posted real time this morning from 56 and 55. I post probably 5 or 6 trades a week in real time on that thread, and often comment with analysis, for what little that may be worth. I find it difficult to post real time trades in more than one forum, so if you're really interested please check that thread out.

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  joshdance said:
I understand what you're saying.

 

Regarding this quote above, I have shared numerous real time calls previously, and lately no one has paid particular attention when I have posted things real time so I just have no interest in doing so.

 

I post many more trades real time in the BMT forum, in a particular thread there, but out of respect for TL won't post links, but you can go see two short trades I posted real time this morning from 56 and 55. I post probably 5 or 6 trades a week in real time on that thread, and often comment with analysis, for what little that may be worth. I find it difficult to post real time trades in more than one forum, so if you're really interested please check that thread out.

 

I don't think it's the case that people aren't paying attention. I think it's very interesting, but perhaps there's a better place for them in the forum. Maybe the Traders Log would be better?

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