Understanding how the markets really work

The Emini over the course of a session.

A lot of information in this.

RT, this's making of great thread. Thx
BTW What is vacuum area?

Hello there.
Thread is inteersted as there is just price and volume.


I don't like the website which looks like scam, and i am not interested in any products as i see its price 97 , they all says to me the same ,but, if here will be interested information - i am ready to read something new HERE and only HERE.

And also i see this thread quite the same as VSA - Volume spread analys.

Looking to see some interested info.

Best,
Tom,

If You will look in google for Mr.Perry WRB - You will seee what is vacuum area, as its very the same as WRB - wide range bar method.

Just check.

Best,
Tom

I know the WRB concept well. The Vacuum concept is slightly different - for a number of reasons.

I will expand on this very soon.

That's fair enough Tom.

I hope you will learn from this thread also. Cheers.

James I pm'd you bud

What about the information in the orderbook...??

Don't you need to see that too in order to make sense of this information?

Not for how we look at it.

We're looking to see what has been traded and where.

Where are traders likely to be long or short and if enough of them are going to be trapped in a position that is going against them.

The order-book is much more applicable to slower markets; such as interest-rates.

Cant wait to learn something

Best,
Tom

Some recent analysis of the Emini - you'll definitely learn something
good from this... (it's long, but I'm confident you will learn a lot)


Analysis of price action and volume for the emini for 2010-04-19.
This analysis is of a 2-hour period of the emini on a 3-min chart.
While not a comprehensive breakdown-analysis, we cover the basics
of general day trading.


First point to note is the psychological number of 1185.00. Price hits
this number and finds resistance there three times before dropping.
You should note here that each time price reaches the 1185.00 level
the volume is less than the time before.


The first approach to 1185.00 (1') has the highest volume... the next
approach (2') has lower volume... and the 3rd approach (3') has the
lowest volume.


Price breaks the rising-trendline that was forming and drops (A) -
buyers then come in - absorbing all the selling. Price then rallies
strongly to make another attempt on the 1185.00 level.


Price breaks the 1185.00 level on volume greater than the previous
attempts at (1), (2) and (3). This is our heads-up. Price does not
follow through right away with momentum.


The next bar after the high-volume bar that breaks the 1185.00 level
is a narrow-range down-bar on low-volume. The key here for this bar
is low-volume. There is no interest from sellers in taking it lower - in
other words, the break is likely to follow-through.


And sure enough, it does. The traders who shorted each time the
emini reached the 1185.00 level are now being force out of their
positions as the market goes against them. So not only are traders
jumping on the momentum-move as price breaks the 1185.00 level -
traders who shorted previously are also fuelling the rally.


This was a very basic breakdown of the emini S&P 500 future during
the open-outcry session. Simple price action and volume analysis to
watch the order-flow of the emini contract. Observing what traders
are doing - where the amateurs are getting in - and how the
professionals are taking advantage of this.

That nice, read it also on WEB :}

Waiting for some new :}

B,
Tom

A little of todays' action on the Emini... (5-min chart)


We get 3 bounces just below the 1205.00 level (1', 2' and 3'); traders
shorting each time the price comes back up.

But, for each seller, there MUST be a buyer; each time the market rallies,
a number of traders will be looking for a break above the previous high
and psychological number (***5.00).

These traders will be looking for a break-out to take a position - and some
of them will be pre-empting it - trying to get on the [potential] move for
"less" risk.

On the fourth attempt the market finally breaks the 1205.00 level (A).
Traders start to jump on board, going long, hoping for a momentum-move.
The rise above 1205.00 is also fuelled by the traders who shorted at 1',
2' and 3' taking a loss and buying back their shorts.

But check the volume, or more specifically, the ratio of Ask-Volume to
Bid-Volume. Traders were buying and buying - but it was all being
absorbed - the pros sitting with sell-orders on the Ask.

Eventually the buyers run out of steam and the market drifts down - the
sellers overwhelmed the buyers.


[ NOTE: Someone asked earlier in the thread about paying attention to
the order-book. Watching the above unfold in real-time gave an example
of where the order-book can be helpful.

The market didn't fall quickly from point (A); it initially drifted down,
with a few hundred contracts on average on each the Bid and Ask.
Then *flash*... 4000+ contracts on the Bid... then pulled... a few
seconds later *flash flash*... the 4000+ contracts on the Bid again...
a few more seconds pass and the ladder flutters as it drops 4 ticks
almost instantly.

As we already identified the buyers exhausted and the market weak -
watching the ladder here was great confirmation. ]


Now, bar (B) would typically be a sign of the markets' reluctance to
go lower - a relatively narrow-range bar on extremely low volume.

However, we identified the market as weak, and so this is a warning
for us! (note: had we identified the market as strong - bar (B) would
be of great interest to us for a potential trigger long).

We end up in chop for a while.


Hope you have learned a something from this post. The next post will
detailed what happened a little after this.

I'll start getting some forex-based material up on here soon.

I've had some great feedback and will make some posts that are closer to the instruments the majority of traders here are trading.

Cheers.

Emini S&P 500, 3-min chart.

In the chart we can see point (A) from the chart a couple
of posts previously.

The market ranged for a while after a climax of buying at
(A). The market then started to rally steadily again. We
can see that price was 'capped' for the prior 4 bars
before the highlighted bar (B).

Bar (B) is where the market finally made new highs
(for the day). Many traders are hoping for a follow-through
and possible momentum-move higher and were buying
significantly.

The volume tells us that the number of traders lifting
the Offer compared to hitting the Bid was 8823 to 5045
respectively. Nearly twice as many buyers as sellers...

...yet price not only never continued higher - it closed
BELOW where it opened. Sellers are sitting on the Offer
with contracts to sell.

The market ranges for a short while before making
another attempt at new highs at bar (C). As with bar (B)
the numbers of buyers-lifting-Offers to sellers-hitting-Bids
is 6002 to 3596. Again, buyers are in full-force...

...but sellers a absorbing everything that is bought.


So we have many buyers that have bought at (A), (B) and
(C). There were less and less buyers (as evident from
the reduced volume each time) - showing a decrease in
the interest/ability of buyers to take the market higher.
In other words, the sellers were overwhelming the buyers.

The sellers eventually win-out after bar (C) and the
market starts to fall. Remember that the buyers from (A),
(B) and (C) will start to show a loss as the market falls
and start selling to get out. This further add to the
downward momentum - a chain reaction of selling.

There is a lot more in that chart that highlighted - but
we're keeping it simple and effective!

Hope you learned something from this.

Will probably post some European markets soon as well - there is a lot of interest from you on that.

DAX, Bund, ... that kind thing.

Hi, I bought the book, really informative not too much content in it, but it's very well written and informative, I will have to read it again about ten times more to get the hang of it. I would like to ask a couple of thing:

1)There's any free charting platform that shows separate bid/ask volume?
(ninjatrader have a sort of indicator but it sucks...)
2) could you post at the end of the day examples of what happened on the sep 500 future with possible entry point? The information provided is great but i feel like I need more examples to compare with my own analysis

Hi ttteee, I am most pleased you have found value in your purchase. Thank you.

Yes, I agree there is not huge amounts of written content, we spent considerable time trying to keep each concept as brief as possible and focus on the chart examples.

I am not sure of charting packages for free unfortunately. But, most of the concepts can be implemented fine with ordinary volume and watching the market in real-time.

Will try and get some S&P up soon.

p.s. you are spot-on about having to re-read 10 times - you will notice new things each time you read it - and start to see the different concepts inter-relate.

Emini from Monday...


(A) - Initial Range formed.

(B) - New highs and break of IR. Sellers absorbing all buying.

(C) - Buyers take another push, further highs, but sellers continue to absorb all buying.

(D) - Market attempts to push higher again; but very low volume indicates lack of interest - No Buyers.

[ 2nd chart:

New lows for session as market breaks low of IR.

Significant volume exchanged before market starts to turn.

(D') - After coming back into IR market attempts to go lower, but no interest evident by volume - No Sellers there.]

Fairly obvious absorption occurring on the IR-high level.

Forex Trading Strategies - 3 Things You MUST Know Before Trading (1 of 2)


In this article You will learn some key things you must know if you are
to trade Forex. Whether you plan to trade using discretion following
a method or design a system from the ground up.


Rather than tell you the usual stuff you hear about Forex, like how it
is a 24-hour market etc, we're going to give you some insights that will
help your trading right now.


You may have heard that currencies trend more than other markets --
they do. But what does this mean? Well, first of all, they trend more on
all time-frames; minutely, hourly, daily, weekly, monthly, yearly.
Essentially, there is less chance of a currency pair chopping around
compared to other markets (such as index futures).


You can best swing the odds in your trading favour by trading WITH
the trend instead of trying to fade it. Now here is a very tangible piece
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Forex market.


The move is sometimes large and sometimes less so - but usually there
is some sort of move that you can jump on. Currencies are fairly
consistent in this regard.


When is this move likely to occur? Well, this brings us onto our second
piece of information...