Hinges and Springboards

[firewalker99]

Is anyone posting on these forums capable of teaching us how to find the right side of resolution before the hinges /sringboards are resolved? doesn't that seem a bit late entry as I would like to be able to get in on right side of move before the move occurs once I get up to speed? excuse my novice questions please....

A good question, and I hope others will give us an idea about their thoughts. I for one will admit that I have no high probabibility take on what will happen, but for me hinges often signal a strong continuation signal in an uptrending market.

The hinge itself is an area of indecision... a pause where traders need to find new equilibruim... each attempt to push higher fails by sellers who come in earlier than before, each attempt to breach lower fails equally because buyers are coming in earlier then they used to; thus creating a shallow range converging to a point where something must happen, some energy needs released.

 

[rainman2]

It just amazes me that people always want to be right about what's going to happen, when an edge doesn't necessarily mean you have to be right all the time, let alone more than half of the time.

Why call people out when you haven't been provoked. "to each his own" as they say. Catching a falling knife or buying in the middle of a hinge is fantastic if its making you money, but don't hide behind backtesting when questioned.

There are many different profitable ways to trade. Open your mind to those different ways. At least think in terms of HYBRID.

 

[ymonly]

could you define what "hybrid" means as relating to intraday emini trading? Thanks...

 

[firewalker99]

Why call people out when you haven't been provoked. "to each his own" as they say. Catching a falling knife or buying in the middle of a hinge is fantastic if its making you money, but don't hide behind backtesting when questioned.

There are many different profitable ways to trade. Open your mind to those different ways. At least think in terms of HYBRID.

I am not "calling people out", I have been posting live trades and charts with annotations which have little if nothing to do with backtesting. The rather vague "open your mind" cliche doesn't help any of us. If you have "a different way" to show, by all means, I'll be very interested.

 

[dcraig1]

Is anyone posting on these forums capable of teaching us how to find the right side of resolution before the hinges /sringboards are resolved? doesn't that seem a bit late entry as I would like to be able to get in on right side of move before the move occurs once I get up to speed? excuse my novice questions please....

OK, I'll have a shot at this. The best clues are in the order flow and market delta. It is my firm belief that very few people posting on these forums pay sufficient attention to the the order book in stock index futures. There is price and volume which shows what has happened, and much is made of this. But the book is largely ignored and too often dismissed with remarks about flipping, spoofing and whatever. But the book is the single source of data that actually leads the market - the trick is to interpret it - something I could never do by staring at a price ladder DOM. All the available software tools are, IMHO, inadequate.

Leaving aside the rant, I'll get to the point. Attached is a chart of todays DAX - each bar 200 contracts wide. We can see in the premarket price is stuck in a range of 8-10 points just above 6900. Call it a hinge or whatever.

On the candlestick plot, horizontal lines are various MP levels, pivot points, and the previous day's VWAP. The blue bands are the current day's market profile developing upper and lower value areas, the black band is the VWAP.

The second from top plot is a smoothed representation of the ratio of contracts at ask in the book to total number of contracts in the book (5 levels on each side using an IB data feed).

The third from top plot is something like a MarketDelta footprint plot, but each price level is coloured by an algorithm that combines book data and the difference of contracts traded at bid and contracts traded at ask.

The bottom plot shows contracts traded at ask minus contracts traded at bid.

There certainly seems to be a good hint here as to which way the market will break which it did right on the opening of the cash market.

Lots of other useful stuff on this chart too. Notice how the down move is terminated when the order book delta manages to get above the half way point (0.5).

The order book shows the supply half of the supply/demand pair. Volume and in particular the at bid/at ask delta shows the demand. As the downmove begins the supply of longs (contracts offered in the book) dries up - the participants are not offering because they think price is going to fall - if they want to sell, they are submitting marketable orders and these are not visible in the book. The supply of shorts (bids) exceeds that of longs. But the demand for shorts exceeds supply for a period and the price falls. As demand for shorts is finally exhausted, the supply of shorts reduces and supply of longs starts to increase. Why ? Because the markets exist to facilitate trade. Markets move towards liquidity. This pattern plays out over and over again.

 

[dcraig1]

A couple of further points on the above chart:

1. The OrderBookDelta plot (2nd from top) looks like an oscillator but it isn't. Oscillators by their nature attempt to impose cycles on a price time series - which as we know does not in general exist.

2. In a trending market except in perhaps the most extreme cases, when the orderbookdelta crosses the 0.5 threshold the trend is finished - at least temporarily. It is the best trend continuation tool I've seen.

 

[firewalker99]

A good question, and I hope others will give us an idea about their thoughts. I for one will admit that I have no high probabibility take on what will happen, but for me hinges often signal a strong continuation signal in an uptrending market.

.

Anybody who read this yesterday, would have had no trouble taking the profits today. Up 60 points already...

 

[rainman2]

Here's a chart of a hinge and a springboard. Obviously the hinge worked out well but can anybody tell me the proper way of trading the spring? If you go long on ther break price quickly reverses and if you waited and went short on the break, price also reverses back into the springboard price zone. In realtime, what should I look for to avoid this whipsaw?

Also, db(if your still following this thread) can you explain volume by price? Is it something new that I should look more closely at? Is s/r better defined by volume by price?

 

[firewalker99]

Here's a chart of a hinge and a springboard. Obviously the hinge worked out well but can anybody tell me the proper way of trading the spring? If you go long on ther break price quickly reverses and if you waited and went short on the break, price also reverses back into the springboard price zone. In realtime, what should I look for to avoid this whipsaw?

I don't know what a sensible stop size would be on this instrument, so I can't tell for sure, but...
if you wanted to short the springboard, you could have done so by in two ways: shorting before anything happened from the upper red line. I'm pretty sure my stop would not have been hit, because if you look right before the springboard price travels up to 62.95 (something like that). My stop would have been something higher than that, but not at a round number, so perhaps at 63.05.

The other way is shorting when the lower red line broke, but that didn't happen before we broke the upside.

Suppose I wanted to go long, then I either would have bought in the springboard near the lower red line, or I would have gone long on the breakout with a very short stop in case price would travel back in the range. It could even be a stop&reverse, depending on your strategy.

Anyway, this is my view and as you said yourself it isn't THE way, it is A way.
Good luck in your trading.

 

[ymonly]

is a stop and reverse the same as "fakeout"....that is what always gets me...i jump in like it is going to leave me behind t hen it does...in opposite direction as i panicked i n the wrong way....is it my weak mind?

 

[ymonly]

Or My Inability To Id The Entry Point That Is The Best Entry Point...very Best Of All...the Springboard/hinge Is It... It Is Just Before Big Move....learn That And U Have It All....

 

[bracke]

Is anyone posting on these forums capable of teaching us how to find the right side of resolution before the hinges /sringboards are resolved? doesn't that seem a bit late entry as I would like to be able to get in on right side of move before the move occurs once I get up to speed? excuse my novice questions please....

I think that's what mr marcus wanted to do.

Regards

bracke

 

[bracke]

rainman,
Your first pattern is a hinge but your second pattern is not a springboard. The hinge and springboard are basically the same thing. I hope my previous posts did not confuse you. Lower highs, higher lows, volume drop off. (symmetrical triange).

erie

erie

I don't know if rainman is confused but I am.

I have looked at post 1 by dbp and the springboard on his chart appears very similar to that shown on rainmans.

1 If rainmans is not a springboard, what is it?

2 Is dbp's a springboard?

3 How do the two differ?

Regards

bracke

 

[bracke]

On that chart, there doesn't seem to be any previous support around 100, there's just been a serious downplunge (uptrend broken I assume), and the volume is decreasing. I would either short from 110 or short if it breaks 95.

firewalker

You mention shorting but would you trade long if sp broke above 110?

Regards

bracke

 

[ymonly]

no offense intended but what if volume drops off and then picks back up as price continues in the direction when volumes lowered.........cna the volume be low and price still move in up or down direction....if we believe no or weak volume no move...and is volume less lagging than a all ma indicator lines....

 

[firewalker99]

firewalker

You mention shorting but would you trade long if sp broke above 110?

Regards

bracke

Well, I would not go long on a break higher, if I wanted to go long I would do so from 100.
But that's my style, I don't like trading breaks, I prefer fading them...
If it would break higher then 110 I could still enter on a retracement...

 

[ymonly]

it is not rocket science...it is chop or run...triangles consolidations etc are all same....chop...then comes run..or chop all day...then it was not hinge or springboard but still chop...OR WE CAN call it hinge or spbd...as we please it is only run or chop...i use a very accurate mechanical system that disallows thinking by me..only reading signal entry point or seeing rather....i can't call trades or i break the rule....no thinking allowed....no volume eneeded...i like candles okay......quite well ...no oscillators allowed...no time frames or tv watching and no other markets needed as system can't see the TV....or tell time..and it doesn't care what other markets are doing only the run it is reading for me.......sufficient .bar size is all that is required to produce decent chop or run.....if volume cause that it is irrelevant as system reflects strength and weakness and filters what i designed it to......

 

[ymonly]

mean t to say instaead of tim e frames i meant times of day

 

[ymonly]

what is done deal...the only doen done deal is about 95% of those who pull the trigger lose..that is proven confirmed absolute done deal....and most of those are not individuals, but work for corporations, someone who can afford to lose a s they win...

 

[ymonly]

come out buzz wherever u are?