Yes.....but if the market sells off again, then we will have to work through the buyers of the 4/28/09 pivot low area first before we can get down to the next zone in the low 830's from 4/23/09.
Most certainly agree with you on that. When you enter a trade, do you have any expectation as to, how large of a target you can obtain? Do you simply look towards the other end's resting inventory and assume that the area will make for a good target (e.g., large scaleout there) and leave a small runner besides?
I just take a lot of shots with the signals I use in zones that I feel are more optimal. I do prefer to "play the edges" and on running profile days I can have several really good extended trades. Most of the time my first scale out target is at +5 points.....next target is usually at +10 points. Occasionally I will adjust this for variables like news, lower volatility, or price stuck in range consolidation.......I stay flexible with targets as needed. Also, I blend intraday with multi-day position trades frequently, so that is a whole other story.
Ok... here goes a long shot. I hope this makes sense. I found a random spot on the chart from recently, just to use as an example of a net long zone. Please tell me if this is correct. 1. At 12:32pst on Fri, price bounced off the 866.75 level and the CD indicated some strong initiated buying (about 5K shares between the price of 866.75 and 869.25). I understand that 5K shares is quite a small zone. It's for the purpose of example only. 2. Price rotates around, ABOVE THE ZONE, with some selling, but never actually penetrates back into the zone to neutralize the net long inventory. 3. Price continues higher on more buying. 4. Is it safe to say that there is a net long zone of about 5K shares held between 866.75 and 869.25? If so, that area won't be neutralized until at least 5K shares are sold specifically within that zone? In that case, you can watch the CD when that zone is entered and trade according to how the CD reacts? Edit: I have no clue why each of my annotations end with an 879 number. Please disregard that.
What do you calculate the net long resting inventory to be at this area? Each sub-tic on the left Y axis (showing prices) is about 4k contracts. D.
good morning SoCalTrader619, I no longer use cum delta, I only watch price at s&r bands because price behavior is the net output of the contracts traded ... in other words, watch the price to trade the price. I did not discard cum delta lightly as I felt it was telling me additional news, but that was because I was also following T&S. One day, in order to make things clearer, I normalised cum delta and ran it against normalised price on a 0-100 scale. That was my turning point and it opened the door of learning further as to the relationship between price and volume. Cum delta includes all volume as you know, It absorbs MO's (market orders) and resting orders without distinction and yet only MO's move price. Also, if you have ever run a 1 tic range chart against bid-ask volume, you will clearly see the effects of the assumption that "longs trade at the ask" can have. The bulk of the contracts are traded via a small percentage of strikes, made even smaller when you consider that many of the strikes are multi split trades. We don't know why people enter strikes, the reasons are varied and quite frankly we do not need to know ....we only know the net effect on price. These people behind the big trades have more knowledge and firepower than we do, but their actions become obvious if you watch T&S and price for long enough. Someone ran a thread about "what is your edge" a while ago and there was a great deal of spirited response. Frankly, if we are not making constant profits in line with a good solid plan then eventually we will run our account dry. And so constant profitability is our edge, and we achieve it only through risk management ... which rather makes the word "edge" slightly superfluous. Back to cum delta. It is my belief that it contains short comings and when watched, distracts a Trader from fully absorbing the net effect of volume upon price. Price needs to be read in it's context like music, not one bar at a time. In other words, if price is the outcome of all types of acceptable entries, then focus solely upon price. In favour of cum delta, I would add that it helped me more fully understand price behaviour which in my opinion holds the key to risk management. I view it as a step in a journey. regards f9
ES traders have no idea what is coming next. They are at a point where they lost their orientation. For the men who know better, it may be time to start the slaugther of the herd.
Hey AMT. Thanks for input. I've been attempting to dissect and make an objective use of your method or parts of it (unsuccessfully so far) since your older HnS thread. Simple question (for the benefit of all readers, especially me, me, me, me, me): Would you categorize your trading method more as : a-Almost 100% objective (i.e. I hope I can make a machine do what I do, while I fly my plane and collect profits once a day or once a week, eventually. And I'm sure a gifted programmer can code a machine to do what I do, even if I can't code it myself now). b-Subjective-Intuitive (There is no way anybody can make a machine do what I do using my discretion and experience accumulated over thousands of hours of screentime watching price and volume action). c-A little of both. (say 60-40). Thanks. JW