Price Acceptance / Value

[starview 10]

Tom, I really appreciate your views and explainations. I think your reasoning is right on. I am sure it takes years of trading to develop that thought process. THANK YOU

[khamore1 10]

To Josh and MM

 

It's simply a matter of perspective, and it really goes to the heart of why I started this thread.

 

MM is simply saying that a price where the most trade occurs means maximum disagreement, IF the definition of high trade activity is indeed disagreement. I buy from you, you sell to me. We disagree with each other, else we would both be buying, or both be selling, from someone else. MM is seeing a trade as, by nature, a disagreement as to value. That's where MM is coming from I'm sure.

 

MM is slick and always rocking the boat ;-)

 

Unfortunately my instructor did not answer me yet but I have a reasonable answer for both of you.

First Josh

This analysis is only valid for the ES emini: A. most of the volume in the emini is not directional it comes from hedging against another index or a commodity B. it comes from computer X going against computer Y to gain one or two ticks there is nothing to suggest agreement or disagreement it might be both, as I said before one might see the glass half full the other half empty.

 

MM: Think it through. It can't be both agreement and disagreement. When price spends a lot of time at a price, possibly creating a POC or HVN, there is lot of disagreement on price. Price moves when there is a lot of agreement on price. Price sits when there is a lot of disagreement on price. Price moves when there is an absence of one or the other.

 

My answer to you

I absolutely disagree with you even though your argument makes a lot of sense but it shows lack of understanding how the market works

A. It is a fact; the only people who can move the market to a vertical development (up or down) are the “Big Money” in other words Goldman sucks and Merrill Lynch el…..

 

When they decided for a move they are going against thousands and thousands of the retail traders you will argue that there is agreement in the price otherwise why would the retail trader will “buy “

 

Or “sell” their position the answer to this is when the Meryll making an offer the retail traders can’t refuse…. Otherwise they will be lynched hence come the word Meryll Lynch

 

If someone put a gun to your head and says: give me your position you can hardly call it an “AGREEMENT”

This is also the reason why 95% of traders including me lose in the market,

 

MM if you see the market as the Goldman’s congratulations to you, you mastered the market but you have to understand that thousand out there gave their position against their will and markets move up or down when there is NOT a agreement

Edited January 22, 2012 by khamore1

[joshdance 10]

khamore, can you please delete and repost your post, this time quoting the correct parts? I can't tell what you wrote apart from what MM and I wrote. Please use the quote tag, as I do not wish to be misquoted.

[joshdance 10]

  khamore1 said:

A. It is a fact; the only people who can move the market to a vertical development (up or down) are the “Big Money” in other words Goldman sucks and Merrill Lynch el…..

 

When they decided for a move they are going against thousands and thousands of the retail traders you will argue that there is agreement in the price otherwise why would the retail trader will “buy “

 

It is a "fact" huh? Prove it. And they are going against thousands and thousands of retail traders? Prove it.

 

I don't fundamentally disagree with you, but it kind of irks me when someone incoherently posts broad, sweeping generalizations with no facts, and claims it as truth.

[MightyMouse 12]

  khamore1 said:

To Josh and MM

 

It's simply a matter of perspective, and it really goes to the heart of why I started this thread.

 

MM is simply saying that a price where the most trade occurs means maximum disagreement, IF the definition of high trade activity is indeed disagreement. I buy from you, you sell to me. We disagree with each other, else we would both be buying, or both be selling, from someone else. MM is seeing a trade as, by nature, a disagreement as to value. That's where MM is coming from I'm sure.

 

MM is slick and always rocking the boat ;-)

 

Unfortunately my instructor did not answer me yet but I have a reasonable answer for both of you.

First Josh

This analysis is only valid for the ES emini: A. most of the volume in the emini is not directional it comes from hedging against another index or a commodity B. it comes from computer X going against computer Y to gain one or two ticks there is nothing to suggest agreement or disagreement it might be both, as I said before one might see the glass half full the other half empty.

 

MM: Think it through. It can't be both agreement and disagreement. When price spends a lot of time at a price, possibly creating a POC or HVN, there is lot of disagreement on price. Price moves when there is a lot of agreement on price. Price sits when there is a lot of disagreement on price. Price moves when there is an absence of one or the other.

 

My answer to you

I absolutely disagree with you even though your argument makes a lot of sense but it shows lack of understanding how the market works

A. It is a fact; the only people who can move the market to a vertical development (up or down) are the “Big Money” in other words Goldman sucks and Merrill Lynch el…..

 

When they decided for a move they are going against thousands and thousands of the retail traders you will argue that there is agreement in the price otherwise why would the retail trader will “buy “

 

Or “sell” their position the answer to this is when the Meryll making an offer the retail traders can’t refuse…. Otherwise they will be lynched hence come the word Meryll Lynch

 

If someone put a gun to your head and says: give me your position you can hardly call it an “AGREEMENT”

This is also the reason why 95% of traders including me lose in the market,

 

MM if you see the market as the Goldman’s congratulations to you, you mastered the market but you have to understand that thousand out there gave their position against their will and markets move up or down when there is NOT a agreement

 

Sorry, I do not agree that Goldman or Merrill as controlling the market direction in the sense that they take a position and make it go the way they want it to go. As a Goldman trader, your access to their deep pockets is extremely limited. In fact your job is to protect their deep pockets and not put them at risk. I think the concept of collusive manipulation is a bit over the top. Goldman and other investment banking firms exist on the generation of fees from market making operations, money management, investment banking, etc. They seek to do so on a market neutral basis. A trader at Goldman or Merrill has a much different set of objectives than does an independent trader. They cannot do what you think you would do if you were in a controlling position in the market.

 

They do trade with inside info, gray area inside information, and other privileged information that is not generally available to the public. The positions they take may or may not impact the market you are trading. But they are not luring you in and taking your money. That you really need to think through.

[khamore1 10]

Josh,

I received my information from my instructor, he has more than 30 years experience in trading.

There are references in this site going back to the year 2005 about his knowledge integrity and quality of information; if you want PM I will send you more information about him

Having said that

 

How can I prove the information I posted is true? I can’t

Supposedly it is true how someone like me can prove it to you if it is right or wrong?

Either you buy it or don’t

[SunTrader 10]

I'm not paranoid.

 

"They" are out to get me and my money.

[joshdance 10]

After this brief detour, let's try to get the conversation back on track.

[MightyMouse 12]

  khamore1 said:

Josh,

I received my information from my instructor, he has more than 30 years experience in trading.

There are references in this site going back to the year 2005 about his knowledge integrity and quality of information; if you want PM I will send you more information about him

Having said that

 

How can I prove the information I posted is true? I can’t

Supposedly it is true how someone like me can prove it to you if it is right or wrong?

Either you buy it or don’t

 

Wow, it is comforting to know that your guru instructor confirmed the information.

 

Those who can, trade. Those who can't trade, teach.

[MightyMouse 12]

  SunTrader said:

I'm not paranoid.

 

"They" are out to get me and my money.

 

Shield yourself with tinfoil. They won't be able to read your mind.

 

Sorry to the rest. Life sucks without a little fun here and there.

[roztom 10]

Goldman and other Big Guns:

 

If you consider from MP lingo the market movers are called Other Time Frame (OTF)Traders.. These are the guys who actually cause change in market direction... or trend moves in the market.. The level of their activity in the market is what creates the range...

 

In MP this is called (RE) Range Extension... Once I observe this activity, just one of the sign posts of activity, I will try to initially align myself in that direction... (with other supporting tools)

 

What I do: I will use the profile and good old charts and the kitchen sink to find a location/retracement to position "with" the OTF.. If they wanted it earlier then there is a probability they will want it again... If they do want it how far will it go in the direction of the initial RE? How far will it rotate back against the initial impulse? Don't know..but the profile does let me look to see where it might be, based on the volume or urgency that price moved away. However, when I take one of these trades and align with the OTF, I also look at where stops would build on the other side. I want fuel to be there for my trade. I want to scale out along the way as it rotates up to test potentially the current HOD.. What is the fuel for it? Short covering/New buying... So I target stops on the other side, HOD and other targets beyond: Naked VPOC's, CHVN/CLVN, Previous untested cCloses, Value Area, Previous Highs, etc. if there is other supporting structure...

 

MM: I can't say what percentage of the time the profile works..it always works for me.. whether the trade is succesful is not dependent on the profile just like Fib's trades are not successful because of a 50% retracement. Profile just compliments other market generated information.

 

I think we can agree to disagree on the value of the information generated by MP. The difference is how valuable that information is and where it fits into the overall picture to develop a successful trade plan.

 

If someone uses MP and they are more successful with it than without - then that is the point isn't it? If it doesn't work for an individual then that is ok too. There are so many tools I have studied like so many readers of this thread and discarded in over 30 years of this that I can't remember... The 30 yr is only relevant relating to the time I have spent living/breathing this business and the opportunity I've had to try to find tools that work for myself... It will never stop...I am always looking to maintain or increase my edge...

 

MM: You did mention 30% MP succes I think, and that could not be any different than EW or other tools..that things can work on a random basis. I might be wrong..if you were referencing my comment I said it was about 30% of my process.. Of course, my trade is not dependent on MP, I do trade the open at times before the daily profile develops but I know where the areas of interest are.. I also know when not to participate and wait for the market to come to me... the profile helps me see this. How many times can you look at a market and know with high certainty that the market "could" rotate to a specfifc area and you can position with a couple ticks? If you were going to take a trade and all other tools per your trade plan aligned wouldn't you? That's the point right?

 

One thing I want to empasize for readers, IMHO MP is NOT a mechanical process... While it has structure and black/white definitions, it is not a system. No Holy Grail..not the answer to the secret sauce.. It is almost always shades of gray and subject to interpretation.. Speed of movement... , when stops are hit how fast does it come back in the direction of the trend.. What does it mean when it rotates against the day trend and can't even 1 tic the previous 30 min bar...? Buyers were aggressive..it is very nuance driven..BTW that would also be a Double Bottom on your bar chart, etc... many similarities..not really different..you'd recognize that without the profile - the interpretation is the issue and also the implimentation, IMHO. The volume aspect is the key for me.. VOLUME is the edge for me.. (IMHO)

 

Should readers invest in learning this tool?

 

If you can learn the tool and integrate it successfully it "may" give you an edge over those who can't/don't. It provides a depth of market generated information and in this business we have to fight to find an edge and to keep it..

 

There are many good videos on this topic on the site..It is a good place to get a general understanding of the concepts and other threads that are helpful also..

 

Regards,

 

Tom

Edited January 22, 2012 by roztom

[MightyMouse 12]

  roztom said:

Goldman and other Big Guns:

 

If you consider from MP lingo the market movers are called Other Time Frame (OTF)Traders.. These are the guys who actually cause change in market direction... or trend moves in the market.. The level of their activity in the market is what creates the range...

 

In MP this is called (RE) Range Extension... Once I observe this activity, just one of the sign posts of activity, I will try to initially align myself in that direction... (with other supporting tools)

 

What I do: I will use the profile and good old charts and the kitchen sink to find a location/retracement to position "with" the OTF.. If they wanted it earlier then there is a probability they will want it again... If they do want it how far will it go in the direction of the initial RE? How far will it rotate back against the initial impulse? Don't know..but the profile does let me look to see where it might be, based on the volume or urgency that price moved away. However, when I take one of these trades and align with the OTF, I also look at where stops would build on the other side. I want fuel to be there for my trade. I want to scale out along the way as it rotates up to test potentially the current HOD.. What is the fuel for it? Short covering/New buying... So I target stops on the other side, HOD and other targets beyond: Naked VPOC's, CHVN/CLVN, Previous untested cCloses, Value Area, Previous Highs, etc. if there is other supporting structure...

 

MM: I can't say what percentage of the time the profile works..it always works for me.. whether the trade is succesful is not dependent on the profile just like Fib's trades are not successful because of a 50% retracement. Profile just compliments other market generated information.

 

I think we can agree to disagree on the value of the information generated by MP. The difference is how valuable that information is and where it fits into the overall picture to develop a successful trade plan.

 

If someone uses MP and they are more successful with it than without - then that is the point isn't it? If it doesn't work for an individual then that is ok too. There are so many tools I have studied like so many readers of this thread and discarded in over 30 years of this that I can't remember... The 30 yr is only relevant relating to the time I have spent living/breathing this business and the opportunity I've had to try to find tools that work for myself... It will never stop...I am always looking to maintain or increase my edge...

 

MM: You did mention 30% MP succes I think, and that could not be any different than EW or other tools..that things can work on a random basis. I might be wrong..if you were referencing my comment I said it was about 30% of my process.. Of course, my trade is not dependent on MP, I do trade the open at times before the daily profile develops but I know where the areas of interest are.. I also know when not to participate and wait for the market to come to me... the profile helps me see this. How many times can you look at a market and know with high certainty that the market "could" rotate to a specfifc area and you can position with a couple ticks? If you were going to take a trade and all other tools per your trade plan aligned wouldn't you? That's the point right?

 

One thing I want to empasize for readers, IMHO MP is NOT a mechanical process... While it has structure and black/white definitions, it is not a system. No Holy Grail..not the answer to the secret sauce.. It is almost always shades of gray and subject to interpretation.. Speed of movement... , when stops are hit how fast does it come back in the direction of the trend.. What does it mean when it rotates against the day trend and can't even 1 tic the previous 30 min bar...? Buyers were aggressive..it is very nuance driven..BTW that would also be a Double Bottom on your bar chart, etc... many similarities..not really different..you'd recognize that without the profile - the interpretation is the issue and also the implimentation, IMHO. The volume aspect is the key for me.. VOLUME is the edge for me.. (IMHO)

 

Should readers invest in learning this tool?

 

If you can learn the tool and integrate it successfully it "may" give you an edge over those who can't/don't. It provides a depth of market generated information and in this business we have to fight to find an edge and to keep it..

 

There are many good videos on this topic on the site..It is a good place to get a general understanding of the concepts and other threads that are helpful also..

 

Regards,

 

Tom

 

Anything that over time helps you minimize losses and helps you stay in winners is a good tool or method.

 

I took the Dalton course webinars early on and was certain that he had no Idea of what he was talking about. I rationalized the price I paid as a donation to an old man. If anyone else listened to these webinars, they will recall him locating 1 tick gaps in the s&p and suggesting that traders would move the market 15 to 20 points because they hated to leave that gap unfilled. It was laughable. needless to say, I couldn't take a trade because there was an unfilled 1 tick gap.

 

He wouldn't to a trade idea to consider before the following week, but was glad to share the incredible trade he took after the fact. He is like so many of the vendors we have come to know and love. Keep in mind that he wrote the book, MoM and he couldn't explain market action using MP that went beyond mysticism..

 

To use MP value as a provy for market value is to accept that when the majority believes that the market is worth more, then it is worth more. I have had a tough time accepting that and do not have the trust and confidence I need to have to fearlessly take a trade and use the concept of, say, rising MP value as a basis.

 

Once again, I am stating why I could not use or trust MP, not why everyone should not trust it or use it. If it helps you make sense of the market then you are a great deal of the way there.

 

I learned that nothing is going to tell me before the fact that I am right about a trade until I take the trade. I know I have the wind in my sails when I see enough green and I am likely making a mistake with direction or magnitude or both when I see red.

[roztom 10]

  MightyMouse said:

Anything that over time helps you minimize losses and helps you stay in winners is a good tool or method.

 

I took the Dalton course webinars early on and was certain that he had no Idea of what he was talking about. I rationalized the price I paid as a donation to an old man. If anyone else listened to these webinars, they will recall him locating 1 tick gaps in the s&p and suggesting that traders would move the market 15 to 20 points because they hated to leave that gap unfilled. It was laughable. needless to say, I couldn't take a trade because there was an unfilled 1 tick gap.

 

He wouldn't to a trade idea to consider before the following week, but was glad to share the incredible trade he took after the fact. He is like so many of the vendors we have come to know and love. Keep in mind that he wrote the book, MoM and he couldn't explain market action using MP that went beyond mysticism..

 

To use MP value as a provy for market value is to accept that when the majority believes that the market is worth more, then it is worth more. I have had a tough time accepting that and do not have the trust and confidence I need to have to fearlessly take a trade and use the concept of, say, rising MP value as a basis.

 

Once again, I am stating why I could not use or trust MP, not why everyone should not trust it or use it. If it helps you make sense of the market then you are a great deal of the way there.

 

I learned that nothing is going to tell me before the fact that I am right about a trade until I take the trade. I know I have the wind in my sails when I see enough green and I am likely making a mistake with direction or magnitude or both when I see red.

 

 

I understand what you mean... I guess that is a traditional take on it... Some of the concepts that are part of the MP dogma are non-starters for me also..By now you can probably see I picked and choose the parts of it that work for me... It's not an all or nothing tool...

 

As far as Dalton goes, I have never read his book though MOM has been recommended as a good resource..

 

Agree about the wind in your sails...successful trading is a mutidimensional puzzle... need that wind..

 

Regards,

 

Tom

[joshdance 10]

Regarding value...

 

There are several measures that people use to determine value over some period of time:

 

• POC / VPOC
  
• VWAP / TWAP
  
• Close-weighted pivot point (H+L+C / 3)
  
• Closing price
  
• Moving average
  

 

Can you think of any more, and which ones are important to you?

[SunTrader 10]

  joshdance said:

Regarding value...

 

There are several measures that people use to determine value over some period of time:

 

 

Can you think of any more, and which ones are important to you?

A no-brainer when looking at markets other than 24 hour variety the most important price is the Opening.

[joshdance 10]

  SunTrader said:

A no-brainer when looking at markets other than 24 hour variety the most important price is the Opening.

 

Good one. I typically think of the closing price of the regular session as important, and then in the morning when the regular session begins I evaluate the opening price in relation to the prior close (high, and low, etc.). I suppose I did not really think of the opening price itself as a measure of value. But, it is marked on my chart at the 9:30am equities open so I do find it very important.

 

I would like to hear your thoughts on why you feel it is THE most important price (and if you consider it the most important measure of value); some examples of openings and how you view them would be a very valuable contribution to our discussion.

[SunTrader 10]

  joshdance said:

...... I would like to hear your thoughts on why you feel it is THE most important price (and if you consider it the most important measure of value); some examples of openings and how you view them would be a very valuable contribution to our discussion.

The opening is most important in my mind because markets have time to account for overnight or over weekend news. The close can be manipulated more so just like end of month and end of quarter and end of year window dressing.

 

The open is put up or shut up.

 

And also using the open for end of day analysis of the close, I always compare the close to the open. In other words did the market close higher or lower than the open and not whether or not it closed higher or lower than yesterday's close.

 

Yesterday's close is far less important in relation to today's open or close.

[ckait 10]

I think personally the most important thing on a sunday night is the last open and the last close. That is the last beer you open and the last one you finish!!!! Cheers.

[joshdance 10]

  SunTrader said:

The opening is most important in my mind because markets have time to account for overnight or over weekend news. The close can be manipulated more so just like end of month and end of quarter and end of year window dressing.

 

The open is put up or shut up.

 

And also using the open for end of day analysis of the close, I always compare the close to the open. In other words did the market close higher or lower than the open and not whether or not it closed higher or lower than yesterday's close.

 

I see your perspective. But in the global market we trade, don't you think that the open, as defined by the equities open at 9:30am ET, can be manipulated just as much as the close? I mean, how hard is it to push the indexes around at 9:00 or 9:15? Pretty easy for those with the desire to do so, IMO.

 

The only true "open" IMO is the Sunday globex open, when you consider that there's actually a significant trading halt of 48 hours. And even then, those who put in the orders can create the open to be wherever they want, as the matching algo of the open at the exchange will pretty much create the opening tick where the most volume will be traded.

 

So given that manipulation is easy to achieve, we must consider manipulation as something that exists, but not be concerned with "true value" or "real value" but rather just consider what is, IMO. The open is no less prone to being "altered" than anything else in my view. Would love to hear your view, whether agreement or dissenting. Thanks to all by the way for a lively discussion here!

[joshdance 10]

Actually ST, as I think about this a little more before heading off to bed, perhaps I might state it this way: as far as regular trading hours (9:30 - 4:00 or 4:15 for futures) goes, the opening price at 9:30am is significant only in its relation to the prior closing price (not the prior opening price). And the closing price at 4:00 (or 4:15 for futures) is only significant in relation to the morning's opening price (not the prior close).

 

This gives us a metric for determining how traders in the Asian and European markets saw value as we consider the open in relation to yesterday's close, and at the end of the US session, we can glean whether the US market saw value increase or decrease: a close higher or lower than the morning open.

 

This is kind of rough, and again, given the continuum of markets and varying of times of economic releases, it's not so exact, but perhaps this is a good working model for establishing value. Love to hear your thoughts.

[joshdance 10]

The overnight action in the ES is a good case relevant to this discussion.

 

We have basically selling, and more selling. You can see the delta (top pane of second picture) is very net short. And the profile (navy/purple) for the overnight session is very positively skewed (meaning the bulk of the volume is towards the bottom). And the gray profile picture shows the area of support at 1305 breached with volume starting to build below it.

 

The market will likely open around yesterday's low or lower, about 6 points below yesterday's close and yesterday's open.

 

What does this mean? Is value being established below the 1305 support? Will it punch back above? Or does this heavy concentration of activity in this 5 point range indicate that a move up is imminent?

 

Well, for me at this moment, 9:12am, I would not want to be long in this area. The general order flow and sentiment is clearly short, and I would not want to be fighting that. However, it can change in a heartbeat, and we must be alert for that. There is obviously no answer to "what happens next" but if we wait and see, monitor the sentiment of the market, we can have a good idea. But I think based on the fact that we are trading where we are, at the open we will find more sellers, and we must be ready to be with whoever is in control at the moment!

[roztom 10]

JOsh/: I certainly agree..

 

Yesterday 1.23.12 my upside number was ES 1317.50... when we failed off of there it set up 1302.50..hit in GBX and below, near-term 1298.75 CLVN and 1297.00 NVPOC Area as downside targets... I am going to favor short side but will go with the flow...

 

Good Trading,

 

Tom

[joshdance 10]

Well, after pushing to 01.50, the market changed to long mode about 15 mins after the open. It broke up into yesterday's range, breaking above 05. I bought 05 on the pullback to it, and now it's consolidating, fighting over this range. Hopefully it will break back up, and I will be looking for 10.50 or so given the last picture posted above. I am willing to lose a point here to find out if I'm on the right side or not. We'll know soon whether the activity earlier was acceptance or not

[joshdance 10]

  joshdance said:

Well, after pushing to 01.50, the market changed to long mode about 15 mins after the open. It broke up into yesterday's range, breaking above 05. I bought 05 on the pullback to it, and now it's consolidating, fighting over this range. Hopefully it will break back up, and I will be looking for 10.50 or so given the last picture posted above. I am willing to lose a point here to find out if I'm on the right side or not. We'll know soon whether the activity earlier was acceptance or not

 

I got out flat at 05 just now guys, after it failed to break 06.75 twice ... will look to see what happens next and try to go with the flow!

[roztom 10]

  joshdance said:

I got out flat at 05 just now guys, after it failed to break 06.75 twice ... will look to see what happens next and try to go with the flow!

 

LOL: You got the jump on me... I got long at 1305.50, scaled 1 @ 07.00 & targeting 1310.00... stop B/E

 

The 1307.00 Target was based on a CLVN @ 1307.50 and the 1310.00 target is based on a CHVN @ 1310.50 and the low of yesterdays closing range...

 

The key for me is how the market behaves in these areas... Also I had a short view coming in but couldn't get setup for it... so I just go with the flow...

 

This happens to me so often I take my own expectations as medium probability - I just watch how the market behaves, Delta, etc... and wear a helmet..

 

Regards,

 

Tom