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Stating The Obvious and The Quest For Wisdom

  • #961
  • Mar 21, 2010 2:43am Mar 21, 2010 2:43am
Quoting Darkstar
You pretty much nailed the concept here Marsh. Once the outcome is certain, it would be priced into the market within seconds. People like fool would make certain of that. You have to get in before the orders hit the market (orderflow 101) and in this case that means accepting a certain level of risk.
Darkstar,

Do you have a working model you use for entry? If so what does it look like? I know you have mentioned the chart indicating that the market wanted to turn up, is that, combined with your outlook on Greece what caused you to enter long. Are you using more advanced orderflow based micro oriented stratagies to enter, or was it that rounded bottom? Sorry, some loaded questions there.

I've use volume, PA, time and sales, ect to enter my trades. I really like the setups where there is a combination of all these tools telling me the same thing. Ussually a low risk entry with a tight stop is pretty attainable. Anyways, I'm curious what your thinking is when it comes time to lay down your cash.
  • #962
  • Edited 8:18am Mar 21, 2010 3:44am | Edited 8:18am
I am of the belief that not all prices are created equal. Certain prices simply spawn more orderflow than others. High prices if prices have been rapidly rising and low prices if price has been falling. The key is to not be intense about predicting which prices the market will use, but to get a rough idea and then just wait it out. The market loves the round, obvious numbers. We could speculate why this is true all day long, but I think they simply bring a sense of finality to moves in price. Human beings are logical, and starting/ending moves in 50-100 pip intervals is pretty common according to my own observations.

This doesn't mean I blindly enter at round numbers, even if there is a big, nice looking pin bar or other arbitrary PA setup. Some PA should just be avoided all together. Take the PA setup that occurred the other night when that barrier was snuffed out. If not for DS, I would not have known what was going on there, and I would have avoided that PA setup anyways. Why? Because it was of really no interest to the broad market. How do I know this? The money never came in to make it yell at me. This also confirms that this was exactly what DS said it was. The low volume move that it was tells me it was some special mission of mkt participants, and not at all the start of a speculative move.

Volume, used thoughtfully, can be your ultimate tool. This is not VSA that I'm talking about. VSA is good stuff, but so are IB's and pinbars and fibs ect.. If you don't have some idea what the market is thinking then all of those tools will kill you rather quickly. That's why all the technical tools are so loved and hated at the same time. I believe sentiment is the name of the game. This is why I call this type of trading the antisystem.

As we all know and have been talking about, EU has fallen 1K pips lately and has now found support. I'm not long just because of that support, but because I don't think Greece will fail (sentiment), The market just looks like it wants to retrace (experience, TA), but most of all, the MONEY came in at the lows price made. The money has not come in just once, but several times as buy support both via bids and lots of action on the ask side of the market at lows of this range. The open interest is not THAT helpful right now either. A lot of those shorts probably entered higher up the price ladder and just have a bearish outlook altogether and are hoping for a 1.25 print or lower in the months to come and they're simply holding for the long haul. The change we've seen in OI is helpful though. The net change this week was supportive of the long side. There are lots of tools to gauge sentiment.

I'll let this be just a start for now. I feel like the thread is kind of stuck at the moment. Plus, I want DS's feedback on this stuff.

I'm going to attach a chart with some stuff circled and underlined. You guys can figure out what’s going on if you really want to. There is a lot there if you'll stare at it for a while. Why did I leave that massive pin bar uncircled?

I will say one more time, this is not a system, I don't want the thread to turn into a short term setup type of thing. The entries are naturally found in the short term, but I think you get my point. I think highlighting real-time examples in the short term will be a good exercise, but lets not make trading it the focus. As I've said, it's all about a safe entry.

I know I've left a lot unsaid here, but I have to get going for now. I hope you're all enjoying your weekends.
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  • #963
  • Mar 21, 2010 3:47am Mar 21, 2010 3:47am
Quoting Scotty B
I am of the beleif that not all prices are created equal. Certain prices simply spawn more orderflow than others. High prices if prices have been rapidly rising and low prices if price has been falling. The key is to not be intense about predicting which prices the market will use, but to get a rough idea and then just wait it out. The market loves the round, obvious numbers. We could speculate why this is true all day long, but I think they simply bring a sense of finality to moves in price. Human beings are logical, and starting/ending moves in...

Oh...Pay particular attention to the prices where stong flows came in on the example chart.
  • #964
  • Mar 21, 2010 3:56am Mar 21, 2010 3:56am
Quoting Scotty B
I
...
There is a lot there if you'll stare at it for a while. Why did I leave that massive pin bar uncircled? ...
the volume (/flows/activity) was too low for your taste.
  • #965
  • Mar 21, 2010 4:54am Mar 21, 2010 4:54am
Quoting Scotty B
I'll let this be just a start for now. I feel like the thread is kind of stuck at the moment. Plus, I want DS's feedback on this stuff.

I'm going to attach a chart with some stuff circled and underlined. You guys can figure out whats going on if you really want to. There is a lot there if you'll stare at it for a while. Why did I leave that massive pin bar uncircled?

.
When I came across the VSA thread I got curious about volumes a few months back and I had the initial thought that pinbars would have the highest volume. As I looked at different charts I saw that pinbars rarely if ever have the highest volumes, but little higher or equal to other bars seemed the norm. I guess the 'stopping volume' / 'heavy volume' comes in before/after pinbars are printed. I've found that to be a little curious (not that it changes anything for me as far as PA setups go. I'll take a good pinbar in a good place any day of the week.)
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #966
  • Mar 21, 2010 4:59am Mar 21, 2010 4:59am
Quoting LasVahGoose
When I came across the VSA thread I got curious about volumes a few months back and I had the initial thought that pinbars would have the highest volume. As I looked at different charts I saw that pinbars rarely if ever have the highest volumes, but little higher or equal to other bars seemed the norm. I guess the 'stopping volume' / 'heavy volume' comes in before/after pinbars are printed. I've found that to be a little curious (not that it changes anything for me as far as PA setups go. I'll take a good pinbar in a good place any day of the week.)...
Yeah, that's a good observation, but sometimes the entry is really veiled. It's not really about pin bars, I know you're not making it that, but I could see some folks getting confused. To me it's all about how volume affects price in certain sweet spots. If everything lines up, take the trade. The thing about these entries is that they are somewhat safer because you have the market on your side..Or you are on their side..
  • #967
  • Mar 21, 2010 5:18am Mar 21, 2010 5:18am
One more note...What I presented is actually the Fred Flinstone version of orderflow analysis. There are other more extreme and complicated micro techniques that the more sophisticated among us use. I'm sure DS can testify to this end.
  • #968
  • Mar 21, 2010 5:22am Mar 21, 2010 5:22am
is Greece still the dominant subject for the E/U or are other issues getting more important like detoriating economics in Europe and better news from the US and an interest rise in the near future?
if that is the case, good news out of Greece might not bring about a major upward recovery of the euro.
  • #969
  • Mar 21, 2010 5:29am Mar 21, 2010 5:29am
Quoting yonnie
is Greece still the dominant subject for the E/U or are other issues getting more important like detoriating economics in Europe and better news from the US and an interest rise in the near future?
if that is the case, good news out of Greece might not bring about a major upward recovery of the euro.
We're not really anticipating a 'major upward recovery' just a decent retrace. DS has mentioned the 1.42 figure, which would not sureprise me at all, but it will be interesting to see what the market does with 1.4-1.405 if it does infact retrace. I still see 1.25 or lower this year, I just don't see the downtrend resuming yet. Could it? Sure, but I wouldn't enter short just yet.
  • #970
  • Mar 21, 2010 8:04am Mar 21, 2010 8:04am
I agree with that "I wouldn't enter short just yet" but then again I would not enter long either in a downtrend that began 3 months and 1500 pips higher - until price tells me to.

So price is opening tonight at 1.3529 barring a humungous gap up (or down) and it might go to at least 1.42xx but I am missing the boat by not entering before it is too late and everyone knows the "news"?

Say there is a gap of 100 pips today or a large range bar during the week once the announcement breaks. What did I miss in a potential 700 pips move? Basic math tells me 1/7th of the move.

I am sure if it is positive and there is a upward move I will look silly to most. Well guess why it is so hard to make money in trading when you have to use contrarian thinking and go against the crowd. The crowd isn't always wrong.

But more times than not they are.
  • #971
  • Mar 21, 2010 8:41am Mar 21, 2010 8:41am
Quoting SunTrader
I agree with that "I wouldn't enter short just yet" but then again I would not enter long either in a downtrend that began 3 months and 1500 pips higher - until price tells me to.

So price is opening tonight at 1.3529 barring a humungous gap up (or down) and it might go to at least 1.42xx but I am missing the boat by not entering before it is too late and everyone knows the "news"?

Say there is a gap of 100 pips today or a large range bar during the week once the announcement breaks. What did I miss in a potential 700 pips move? Basic math...
Actually Sun, the crowd is net short. I respect the fact that you're sticking to your guns and waiting. I say that doing what you know to work is the wise thing.

Price, IMO, will work if you're a darn good analyst, but to me it's not enough. Don't forget that price is just a product of liquidity supply and consumption. The more you can look down the road ahead of the market the better.

Now this thought is a little bit out there, but I think it makes sense. Have you ever watched the trail left behind a jet as it goes across the sky? The part of that long white cloud is always bright and clearly visible right behind the jet but as you trace it back to where the jet was a minute or two ago it is starting to fade and disappear. I beleive this is relevant to the price chart as well. The further you go back in time, the less relevant the price action is to current market conditions. I bring this up to counter your point about the market falling 1500 pips. I think one needs to be careful about how much you let old price distort your perceptions about current reality. Some of it IS very important, but a lot of it is done and over with.
  • #972
  • Mar 21, 2010 8:53am Mar 21, 2010 8:53am
Hi Folks !

With great interest I'm following this thread and especially Scotties
and Darkstars valuable posts

I followed Darkstars thread "Oh sweet liquidity" some years ago which
has been removed from FF (Guess why....)

He claimed for himself that its possible to trade without looking at charts.

I grasped his concept and trade regarding the IFR market news.

Sometimes the targets are hit to the pip... but its not a read and go !!

DS mentioned its really like to have your personal money tree...

Maybe you could shed some more light on this stuff....

By the way to place really big amounts of cash into the market there must
be always a search and go to so called liquidity points....

So DS is right that one has to place his bet before the outcome unfolds...

Kind regards and happy trading

Bernhard
  • #973
  • Mar 21, 2010 8:57am Mar 21, 2010 8:57am
Quoting Scotty B
............. careful about how much you let old price distort your perceptions about current reality. Some of it IS very important, but a lot of it is done and over with.
So when the market bounces off previous support (or resistance) from months or years ago it is just mere coincidence?
  • #974
  • Mar 21, 2010 9:11am Mar 21, 2010 9:11am
Quoting SunTrader
So when the market bounces off previous support (or resistance) from months or years ago it is just mere coincidence?
Sort of. Don't forget, I am coming from the orderflow point of view. S/R to me is just a place that happens to get noticed enough that it becomes a point that reverses flow. Not all S/R points of old are used though. If all of them were used religiously and consistently you'd have a point. You really don't need S/R if you're entering with OF as your guide. This is true because OF is a lagging way to trade. It's lagging because you enter following other money. Speculative interest cushions your position.

How many times has price initially bounced off of what you think is going to be significant S/R just to breeze right through it? There is much better information to trade with than old pricing.
  • #975
  • Mar 21, 2010 9:21am Mar 21, 2010 9:21am
Quoting behof
Hi Folks !

With great interest I'm following this thread and especially Scotties
and Darkstars valuable posts

I followed Darkstars thread "Oh sweet liquidity" some years ago which
has been removed from FF (Guess why....)

He claimed for himself that its possible to trade without looking at charts.

I grasped his concept and trade regarding the IFR market news.

Sometimes the targets are hit to the pip... but its not a read and go !!

DS mentioned its really like to have your personal money tree...

Maybe you could shed some more light on...
Hey B,

You're right, this is a hot topic, but it's becoming much more common. Give it a few more years and you'll find it right alongside the other schools of thought IMO. The only problem is that the bars of entry are a little higher then most people want to deal with. Lots of boring reading and thinking is involved. It's so much easier just to graduate from the school of babypips and voila, you're a 'trader.'
  • #976
  • Mar 21, 2010 9:36am Mar 21, 2010 9:36am
Quoting Scotty B
Sort of. Don't forget, I am coming from the orderflow point of view. S/R to me is just a place that happens to get noticed enough that it becomes a point that reverses flow. Not all S/R points of old are used though. If all of them were used religiously and consistently you'd have a point. You really don't need S/R if you're entering with OF as your guide. This is true because OF is a lagging way to trade. It's lagging because you enter following other money. Speculative interest cushions your position.
hmm, if you're referring to COT then yes but remember, there are "on time" trading opps too based on OF, imo.

Quoting Scotty B
How many times has price initially bounced off of what you think is going to be significant S/R just to breeze right through it? There is much better information to trade with than old pricing.
nicely put. Don't get me wrong, TA is 'flawless' if you look at the historical charts (you'll always find an excuse of WHY the market turned here or there TA vise). The real question is 'which one will hold'.
  • #977
  • Mar 21, 2010 9:41am Mar 21, 2010 9:41am
Quoting Scotty B
Sort of. Don't forget, I am coming from the orderflow point of view.
Well there is counseling for that sort of affliction. Just a stupid joke.

Doesn't news/order flow trading sort of work and sort of not work.

EU monthly chart 1) a near triple bottom during '00, '01, '02. 2) a double top in '08 3) a double bottom in late '08, early '09.

I used monthly rather weekly/daily/intraday because there are far too many other examples to go through them all on shorter timeframes. Are there times when they fail? Of course just like any trading technique. That is why there is such a thing as a stop loss.
  • #978
  • Mar 21, 2010 9:47am Mar 21, 2010 9:47am
Quoting lumesh
hmm, if you're referring to COT then yes but remember, there are "on time" trading opps too based on OF, imo.
Even the lowest latency, crazy micro based OF trade is inherently lagging. This is true because you don't trade until meaningful orders happen.
  • #979
  • Mar 21, 2010 9:59am Mar 21, 2010 9:59am
Quoting Scotty B
Hey B,

You're right, this is a hot topic, but it's becoming much more common. Give it a few more years and you'll find it right alongside the other schools of thought IMO. The only problem is that the bars of entry are a little higher then most people want to deal with. Lots of boring reading and thinking is involved. It's so much easier just to graduate from the school of babypips and voila, you're a 'trader.'
So far it's pretty much been the microstructure stuff (Osler, Harris etc.) that have been the "suggested reading" for the subject, Scotty?

Suggested "macro" reads - or just follow the news?

Thanks!


Wishing DS good luck on the upcoming book!
  • #980
  • Mar 21, 2010 10:01am Mar 21, 2010 10:01am
Quoting SunTrader
Well there is counseling for that sort of affliction. Just a stupid joke.

Doesn't news/order flow trading sort of work and sort of not work.

EU monthly chart 1) a near triple bottom during '00, '01, '02. 2) a double top in '08 3) a double bottom in late '08, early '09.

I used monthly rather weekly/daily/intraday because there are far too many other examples to go through them all on shorter timeframes. Are there times when they fail? Of course just like any trading technique. That is why there is such a thing as a stop loss.
This thread contains kind of a macro fundie/OF smoothie. The OF required for entry is already known, but the future flow that we are making educated guesses about is unknown. Thats the challenge of looking to get in the market and stay in for a while.

I'm not trying to deny that S/R can't be profitable, I hope that's not what it sounds like. All the power to you if it's making you consistent profit.
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