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TinGull

Following Auction Theory

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When the auctioneer is trying to sell Elvis's last peanut butter and banana sandwich and starts the bidding at 12270 dollars, there's a little interest, yea? Right..just a little. It gets bid up to about 12300 dollars, and then no one is interested in it at that point. Why? Too expensive for their taste buds. Then, when people aren't interested at that point...the other bidders think to themselves, "eh...that really just doesn't look tasty anymore. No one else wants it, why should I?".

 

So the bidding goes down, and down, and down to find some buyers. Any takers at 12266? That was valuable at yesterdays auction for some Elvis toast spread with honey! A few people want to get in on it, but then...interest really dries up. No volume at those higher prices. Overvalued at the moment. So, the auctioneer sends his price lower to see if anyone is gonna be a taker. Eventually it gets so dirt cheap, that someone says "FINE! I'll take it just to not hear your voice anymore!!".

 

This is what happened on the YM today. Notice in the blue circle that volume dried up. There was about half the volume in that 5min bar with the red dot than there was in the prior bar. Buyers are no long interested in this contract. So...price auctions lower.

 

Price is simply an advertisement for the contract. A lot of people will get too caught up in the price of something...priced closed at the lows, closed at the highs...That doesn't matter! What was the perceived value of that contract for the day? For the hour? While price may be king, value is the Kings constituents who can overthrow him so they choose.

YMDiv_07.thumb.png.b0c4d5eb390ad4cbd917ffd1669c6c78.png

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Tingull : could that be called a "volume surge" or a "buying climax" ?... I am curios what are the dots about ? you know its my crazy programing adiction jejejej.... cheers Walter.

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Yes, we would call that a buying climax. While the bar closes on its high with high volume, the next bar is down. If that bar did represent demand then the next bar should not be down. Thus, Professional Money must of been selling into the buying (supply swamping demand).

 

The close is one way we gage "what has been done on x amount of volume". I don't know if you can be so quick to dismiss it. Moreover, and from a non-VSA point of view, the close is the last agreed upon price for that time period. So it is important. Remember, the market exists to find that point where there is a disagreement of value and an agreement on price.

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Yes, we would call that a buying climax. While the bar closes on its high with high volume, the next bar is down. If that bar did represent demand then the next bar should not be down. Thus, Professional Money must of been selling into the buying (supply swamping demand).

 

The close is one way we gage "what has been done on x amount of volume". I don't know if you can be so quick to dismiss it. Moreover, and from a non-VSA point of view, the close is the last agreed upon price for that time period. So it is important. Remember, the market exists to find that point where there is a disagreement of value and an agreement on price.

 

Very interesting comment on the close. Would you say the bigger the timeframe the more significant the closing price per bar? For example: comparing a 1min bar to a 5min bar.

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PivotP put it in a good way. And walterw...thats what you coded for Soultrader, I just had it coded for InvestorRT :)

 

Great Tingull ¡¡ it certainly looks good on IRT too, question : are you still looking on does inside bars breaks ? cheers Walter.

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