'No indicators' revisited

[china white]

Thursday 3rd of June

Do u know what today's action was? A replay of the war btwn germans and russians in WWII I will have to be calling germans the bulls and russians the bears - pls no comment on that! :cheesy:

let us try to analyse it.

A - miniscule tick size drops in price r met with volume spikes. Not incredibly high levels of volume - but remember AT THAT TIME there was no way to see what the closing volume levels wud be. Clear spikes meaning short covering on tick size advance of the sellers. What is to follow? The invasion of the bulls (germans) into russia (bears).

B - parabolic explosion of volume with a significan move in price (June 1941 ) 4 points in 8 minutes. Not the speed of the Superman but a steady advance of bulls up to Smolensk (August 1941).

C - 10:34 and 10:36 bars - look how at the peak of the offensive (buying volume) germans have to stop to pull up supplies and russians manage to close 10:36 bar lower than10:34 bar on sharply lower volume. The battle of Smolensk unfolds where russians regain surprisingly much. One problem for Stalin tho - he again starts getting nasty volume spikes on miniscule tick size advances (german tanks fully reloaded and refuelled and cover shorts). And since russians themselves have not got too much to bring it down, we get a cup sort of bottom with a logical development:

D - 2 battles of Moscow. NOW VERY IMPORTANT THING - LONGS FROM YESTERDAY (aka 6 Siberian divisions arriving to Moscow by 11:08 new york time ). Why r they so important? they want to close flat, this gap closure is their golden chance to do so. LOOK AT 11:38 bar - on a stellar volume of 7,000 futures in 2 min exchanging hands what does ES do? goes up 1 point on that bar and recoils 0.5 pts straight back. LONGS R JUMPING OUT! "Panzer SS" is not yet defeated but firmly stopped by the Siberians :cheesy:

E and F - the battle of Stalingrad (1942-43). Look at E - yes the bulls got further into the russian territory, but another point up is happily picked up by remaining longs to unwind their positions. They even do so in the middle of lunchtime! E volume may not seem to significant, but let us run some math here. In the 2nd offensive on Moscow (last part of line D) 19,000 futs exchanged hands over 10 minutes, on E (in the middle of lunch time!!!) 13,500 futs were exchanged over 8 minutes. This is not a joke - this is germans getting really grilled on the streets of Stalingrad! Remaining longs r selling their positions, they do not have enough bids in the middle of lunchtime, they know that, they work clips, small fish is rushing in thinking they r buying into another leg up, they r atually buying the bottom! Voila - quite high volume levels for any lunchtime. Not clear yet whats gonna happen next? Look at F - Hitler sends 4 Panzer divisions from the Caucasus to break Stalingrad blockade - u get volume spikes on their microscopic advances - the russians r selling every uptick!

G - the loss of 1123 - which acted as strong support and clear 1123 sup/res resolution - was perhaps THE MOST IMPORTANT single event of the day. Russians r clearly staging a full scale offensive - on increasing volume. H&S target met. Now what? The war is not over yet.

H - what the russians call the battle of Kursk arch and the germans call Panzer battle at Prokhorovka. What's important about that? Look at H - very decent steady volume (by then volume yardstick of the day) - loads of fighting with bulls taking 40-50 minutes to regain the territory they lost in 6 minutes previously! The culmination is selling volume spike I - the proper battle at Prokhorovka.

I - important thing here - compare D-E and G-I. Seemingly similar aren't they, in reverse of course? I is only marginally lower than culmination of G, just like E is only marginally higher than culmination of D. SO WHY E IS LONG CLOSING WHILE I IS GENUINE SHORTS? Just look at price-volume dynamics btwn D-E and G-I, especially keeping in mind that heavy fighting along line H.

J and K - u may still have doubts, but a feeble german counter-offensive (J) on decreasing volume explodes into a parabolic genuine shorting on K. Shorts do not have enough bids, that is why price travels so far south. Russians smash every single german along a great distance from Kursk to Berlin (top of line K) on the top selling volume of the day.

L - do u think that spike in volume is short covering? No it is final battle of Berlin. It is shorts, russian bears all over, it is just there is no more room to travel (end of day - AngloAmericans on the River Elb :cheesy: )

 

[neil]

Maybe (2) are re-test bars and that is where you would enter

 

[china white]

harryp - i apologise if i intruded any sensitive matters by my comparison.

it was done for the purposes of visual illustration.

sincere apologies if anyone for whatever reason got offended. no pun intended.

 

[china white]

lads/lasses i suggest we stop bickering and concentrate on trading. pls whip me if i made any mistakes regarding trading interpretations. pls also excuse me if anyone finds references to WWII offensive. I can assure u i had direct relatives in my family fighting and suffering on both sides and i wud be the last person to make any sort of fun of those grim events. My only intention was to draw a visual similarity that is easier for everyone to see.

 

[china white]

pls be assured that i will not mention any nationalities or wars ever in my posts again. it is an excellent and professional thread and i will do everything to keep it that way. my apologies to moderators and everyone really for what my post seems to be causing.

 

[SOCRATES]

pls be assured that i will not mention any nationalities or wars ever in my posts again. it is an excellent and professional thread and i will do everything to keep it that way. my apologies to moderators and everyone really for what my post seems to be causing.

No China, off with his head !

 

[Quercus]

An interesting point about entry, which I guess just comes down to your risk tolerance. The first entry point is more often than not closer to the realistic stop level, so therefore the risk is less. It is obviously nice to enter on the pullback, and even nicer if it pulls back to the same level and gives the same risk, more often than not I see this risk being larger in points terms but maybe not in "feel" as the price action is different on the pullback when compared to the more rapid breakout price action at point one.
As you can see I'm unsure about this myself, and I often miss both entries as I try and keep my risk to 1.5pts or less. This means that I have to leave numerous entries due to the risk level, but I guess the trade off is discipline practice! :cheesy:
What is wrong with taking the first and quitting for 1.5-2.5pts, and then re-entering at point two? Or is this being too greedy?
Also what do contributors think about my risk tolerance level at 1.5pts? I know China used to use this for scalping, and I believe 3pts for other trades, I get the impression you may be doing less and less scalping now that you're "darksiding" more M8! :cheesy: All comments welcome - please!
We won't go into my fear of holding any more at this stage, as that's another kettle of trout!
Cheers
Q

 

[ChartMan]

I think it's like every thing- experience counts for a lot. If you know your trade is a "safe" entry, your stop should be minimal to protect you from the market "going against you". If you're less sure, you need a wider stop and a lower stake.... If you get into a winning position and you want to capture the maximum probable move , you need to have a trailing stop of 2-2.25 . That's cross correlated from the Daily Dow . I don't know how one deals with the more "spikey" ES...

 

[SOCRATES]

Dear Quercus and ChartMan,
in my view you are both correct and may I add a significant point you have both missed.
The object of the excercise is for us to do our best to get it consistently right.
Therefore it does not matter if moves are missed as a consequence of over caution.
Being over cautious is actually is a plus. It is not an inability. The opposite is an inability.
Being over cautious is good because it cultivates a mindset in which risk as an ingredient of
trading can be given more consideration. As a result of being calm you are able to
put your attention on it more clearly and that is also a bonus. If you are flustered you cannot effectively
put your attention on anything. The idea of having very tight stops in conjunction with being very selective
you will also find to be correctly compatible. This is because the ability to activate the stops is not
impaired, as it would be were you flustered.

 

[darktone]

"Dear Quercus and ChartMan,
in my view you are both correct and may I add a significant point you have both missed.
The object of the excercise is for us to do our best to get it consistently right.
Therefore it does not matter if moves are missed as a consequence of over caution.
Being over cautious is actually is a plus. It is not an inability. The opposite is an inability.
Being over cautious is good because it cultivates a mindset in which risk as an ingredient of
trading can be given more consideration. As a result of being calm you are able to
put your attention on it more clearly and that is also a bonus. If you are flustered you cannot effectively
put your attention on anything. The idea of having very tight stops in conjunction with being very selective
you will also find to be correctly compatible. This is because the ability to activate the stops is not
impaired, as it would be were you flustered.
__________________
SOCRATES "

Although it pains greatly ..i totally agree.

When you are looking for an entry (for what ever reason and however you do that) i think you should have a set criteria. the important points for me are 1) number of pips at risk. 2) size relative to account. Youre entry should be governed from where your stop will be placed, a possible trade will exist or it wont, thats it.. Anything else for me is (what if / but if i had / maybe if i changed that) and usually takes me down the unpleasant road of overtrading

all IMHO

 

[Finirama]

Thanks to all that answered and interesting to note the different points of view.

So this time here are charts with entries and stops.

I've based the first entry on point 1, i.e. after first reversal bar. I've marked the stop 1 point below the low. This allows enough margin for possible failed retest include 0.5 point spread.

I've based the 2nd entry, i.e. point 2, as a pyramid trade. With this entry, i've marked the stop as the as the last high.

As mentioned earlier, the conception is that 2 is the safer trade. Though, if you compare the the risk profile of both it is interesting to note that there is not much in it - 0.5 to 1point.

Based on this and with the intention of maximising profit while minimising risk, would it not be better to

1) enter @ 1, with stop 1 point below/above last low/high
2) pyramid at 2, while moving stop to last high/low
3) move stop to breakeven once the move is confirmed, i.e. high higher or lower low made


?????

 

[Rognvald]

China - Thursday 3rd June

Thx for your lucid explanation of yesterday's action. I think I understood most of it .

What I did find difficult was the "SO WHY E IS LONG CLOSING WHILE I IS GENUINE SHORTS? Just look at price-volume dynamics btwn D-E and G-I, especially keeping in mind heavy fighting along line H"

Could u amplify plse?

Thanks for your time

 

[china white]

Friday 4th June (part 1)

firstly many thx for your comments! much appreciated!

very quickly here - i will post more later.

i am enclosing 5 min charts of the broader mrkt and Intel, as well as today's intraday 2 min chart of Intel. These charts provide IMO crucial information at today's gap up which shaped most of the session's trading.

Look at broader market. The investor longs r still happily long. Shorter term big money longs jumped out of their long positions on Thursday at the gap closure essentially flat. However, shorts from yesterday at today's gap up were clearly faced with the necessity to cover AT A LOSS!

now look at INTC. Even stronger picture. Shorts r still less in numbers than longs (compare undepinning volume - square "surfaes" under volume bars on the way up and down), but there r many more shorts than in the broad mrkt. Big longs r still flat at least (if not in the money) but the shorts R REALLY GRILLED at today's gap up. Not marginally line with the broader mrkt, but VERY MUCH SO!

This situation at today's open determined imo how the session was going to evolve.

Now look at intraday INTC 2 min chart. What's the highese volume bar of the day? Why did it happen at 11:50 on miniscule price reaction? 2nd thing to bear in mind - look at cumulative up volume from 12:10 to 13:30 (for the time being, do so on ITC chart, I will discuss same picture later on ES chart), and cumulative down volume on the dip down (14:10) which wiped off all the previous advance on the price. Down volume is a small fraction of the up volume, yet the price recoiled back to where it was. What is it spelling for late afternoon action?

 

[china white]

Quercus - I now use natural stop losses from previous Highs and Lows. if u get stopped u know the price pattern is changing. No more volatility based stop losses

 

[china white]

Rognvald - look at the top - 30 min down, 40 min up - perfect cup. Now look at that battle of Kursk we discussed - bulls take 40 minutes to re-gain the territory lost in just 6-8 inutes on significant volume (heavy fighting), which they lose straight away again within 10-12 minutes. That IS the difference

 

[Finirama]

Pyramiding using Mutliple Time Frames

Just picking up from my last point on pyramiding.

Does anybody out there actually pyramid on daytrades?

If so, wot techniques do they use?

As you have probably gathered i flick between the 5 and 10 min charts to trade.

I checked the longer time frame today for any confirmation and it proved very useful, especially on the short side.

I certainly wouldn't have considered shorting today at 1,127, but cross checking against the 45 min chart it would have been a valid trade/or pyramid.

I've posted the both the 5 min (marked with both trades) and 45 min chart over the last 3 days for cross reference.

Any comments welcome.

China,

U'r volume analysis has been like the Brazil vs Argentina game yesterday.....top class.

 

[Finirama]

Apologies, the 45 entry on todays chart should be higher at 1,127.

Enjoy your weekend.

Fin

 

[china white]

Friday 4th june

classic

8:00 in the morning (well before the econ numbers) and the mrkt is already up 5 pts. Longs r not worried as they were given plenty of chances to close theit positions on Thursday flat. Shorts from yesterday however r already sweating .

Numbers r taken well by the mrkt. The shorts see they have a BIG problem. What can they do? Cover short buying whatever there is in the thin air of the after-hours market. Look at A - does it look like pre-market volume? it is quite heavy really.

However the supply in that thin air is still very limited. Therefore on reduced volume (2nd spike of A at 08;46) price travels so sharply north.

B - volume is constant and quite healthy. Shorts r using every downtick to cover. Covering is so intense that the pullback stops short of even 38.2% retracement of the gap up open.

C - shorts who waited too long now have to cover at even higher levels of price. However, the volume is decreasing (3 decreasing tops, last one at about 11:12). What is it telling us? The market is running out of shorts! By 11:12 the supply of shorts running for cover is obviously drying up. Volume down on price not moving further north.

So what's the overall pic? The market is largely flat into the lunch. IMPORTANT BIT IS THAT SHORTS R NOT HAPPY - THEY COVERED AT A LOSS!!!

And if u r not convinced yet - look at Intel at 11:50. Cash operators who r still short say damn it and massively cover into the lunch. Look at INTC volume spike on a small uptick in price at that time.

Now - what wud u expect in these circumstances? Genuine Bulls stage an offensive D. Nice long maribozu closing at the top with 8,000 futs exchanging hand in 2 minutes.

E - nice rarification of air creating an opportunity for the 2nd wave of buyers. There is one problem though - there is no 2nd echelon How do we know that? Look at the end of E line - that is where u'd expect the new bulls to jump into this rare air. HOWEVER FOR FULL 90 MINUTES (12:40-14:10) the bulls r not taking their chances!!!

What happens next is no magic - pure human nature Imagine u burst into the enemy lines on your tank, covered 20 miles in fighting, ran out of diesel and ammo and stopped waiting for infantry and supplies. U expect them to be there in 30-40 mins max - and after 90 mins there r still no signs of them! EVEN IF THERE IS NO ENEMY IN FRONT OF U (asks in our case) U R VERY LIKELY TO TURN BACK, RNT U?

Quickest longs who bought at 12:30 sell their long exposure bringing the price down to where the offensive started - 1124.

NOW REALLY IMPORTANT BIT that explains late action. Look at cumulative down volume round 14:10 and cumulative up volume after 12:30. The former is 1/4 of the latter! However the price is back to 1124 (where it started) since that 1/4 of the longs were selling into the empty air with no bids.

Whats gonna happen with the other 3/4 of participating longs? they no longer have the luxury of selling at a profit or flat. Voila - they ship it out in the last 20 min where they can - at a small loss.

Note also a bear mousetrap at about 15:15.

Good w/e to u all!

 

[Rognvald]

China
Battle of Kursk - got it now - the desperate but very uneven struggle - trying to plug holes in the dyke.

Friday 4th - excellently argued & detailed analysis with plenty of proof - esp 12.30 & 14.00 moves & justification of later day action

I have a detailed question on your chart construction and have pm'd u on this. Hope u don't mind

Thanx

 

[rustic1]

China White

Where is the best place to look at the ongoing daily volume for the Dow?

Thanks

Kathy