'No indicators' revisited

[Glenn]

"rdstagg who was the only person to mention a target,"

Did you miss my post Richard ? 2 targets, ~56 and ~54
What happened after your exit ?
Glenn

 

[Mr. Charts]

Sorry Glenn. You did indeed.
The low on the day was 57.70, just a few cents below my exit.
Richard

 

[SOCRATES]

Thank you very much to everyone who ventured a judgement and explained their reasons.
There are many pieces to the jigsaw of the markets, it is a multifactorial dynamic environment where, imho, no one factor can be relied upon all the time.
There are various patterns which I have found over the years to be very reliable in differing situations and market types.
There are no TA “indicators” which are anything but intermittently useful, again depending on market type.
Reading the tape, momentum, level 2, chart analysis, price and volume, my own patterns as Rob alluded to, all are integrated to read MARKET SENTIMENT.
In my experience more than two factors need to come together to create a high probability trade. Any contrary factors must be assessed objectively.

My trade was a short within a second or two of the screen shot.

NONE of the following first factors in itself is a tradable signal, they are merely “edges” which added together become significant.

It is true that higher highs and higher lows are forming and the 2 emas used have crossed and this suggests a possible rise, but that is very weak as my pattern knowledge and experience tells me that is unreliable in this type of negative situation.

The price had reached the resistance of the immediately preceding pivot low, so any over shoot was unlikely to be more than 5-10 c. This set the MAXIMUM loss on the trade. I say that because very often I do not wait for a stop level to be hit before exiting a trade. If the evidence is that a move is going against me I will sometimes exit straight away and not necessarily wait for a trailing stop or stop loss to be hit.
This partly depends on momentum.
Why should I stay in a trade that is going against me? Would I enter at that point, if not why remain in? I am in this business to keep my wife and three children comfortable, NOT to want to be proved “right”. It is about being CONSISTENTLY PROFITABLE, not “right”. I have eradicated my ego from my trading, since ego is your worst enemy.
This self control and change takes a little time and effort…..as Socrates suggests.

Looking at level 2 and time and sales, there was nothing VERY significant, BUT the four market participants on the ask side had all moved DOWN in their last change.
No clues were available from axe behaviour.
Now this might have been transitory, but remember the situation is multifactorial and dynamic and I had been intermittently watching this stock for several minutes and had seen sellers coming in a few times as the price rose - as can be seen on the chart.
Actual size on the bid and ask sides is sometimes significant but not usually.
Players are there to outwit the unwary and untrained. Do you really expect them to telegraph their intentions to you?!

Now we get to the crux of the matter.
THE major factor.

This has already been described PERFECTLY by Socrates:

“This does not look right for a strong stock. If this stock was a strong stock it would have rocketed upwards from the bottom but his has not happened. There is no sign of serious buying at the bottom, yet it is tentatively supported and allowed to trickle upwards, why ? It does not display characteristics you would expect to see in conditions of stock shortage.Yet in the second last bar there is activity. If this activity were serious buying the last bar would be up. well up, but it is not. Looking at the background this second last bar may be buying to close shorts. And the last few bars have very narrow spreads and curling over.
Short ! But with a tight stop above. My reason is that the weakness in the background does not seem to have been decisively resolved, in addition current price development is narrow with a reluctance to lift,
in addition the volume is declining, and in its present position this little top is lower than the previous one.
I am not making a bearish case for it, I am going on gut feeling. Short, definitely.

The other detail that fascinates me is the fact that throughout all this market action there is serious activity on up bars, in a falling market. These up bars are quite distinctive, there is no attempt to hide a willingness to sell into rises to trap weak holders again and again, shameless it is, so on balance it is still short, BUT, I say a tight stop because I have seen situations like this one in which the herd can be stimulated into buying so that the market is lifted to trap them and then plop ! Down it goes!”

Thank you, Socrates, for saving me a lot of explanatory time and effort with my slow two finger typing ;-))

Of course, price and volume behaviour is absolutely crucial.
I wouldn’t have posted on this thread at all if the essence of this trade wasn’t price and volume, not indicators.

Other contributors making good points were ollie who saw it was all there and rdstagg who was the only person to mention a target, but thank you to everyone who had the guts to post.

I am not saying anyone is right or wrong, they have different interpretations – that’s what makes a market.
It’s not about being right or wrong, it’s about being consistently profitable.

Talking of gut feeling, as Socrates did, leads me to suggest that perhaps such “gut feeling” is the product of knowing what you are doing, training, thinking, seeing all the factors in a free form way without preconceived views, experience and so on all being processed by your brain both at and also beneath the conscious level.


The risk was 5-10c, as I said. The reward “target” was the low of the day, 36c below at 57.81

So what happened in this trade?

It moved 8c against me, but reading level2 and T&S and thus SENTIMENT I could see the buying was anaemic – thin and weak – with market participants happy to sell to those buyers who were probably shorts covering for all the reasons given by those who said they would go long.

It then rolled over as I expected and as Socrates predicted.
I would expect no less from you, sir ;-))


Now the attached screen shot shows my point of exit, 3c better than my target for a 39c profit.

Would anyone care to say why I exited and why?

Richard

I would have exited because the price is in line with the previous bottom and stopped motoring south, it is running out of momentum and running out of volumetric impulse,
there you have it in 30 seconds flat . Howzat ?

 

[TheBramble]

The risk was 5-10c, as I said. The reward “target” was the low of the day, 36c below at 57.81
[...]
Now the attached screen shot shows my point of exit, 3c better than my target for a 39c profit.

Would anyone care to say why I exited and why?

Because you hit your target.

 

[TheBramble]

There is no transaction recorded because the trade does not take place but it creates an effect, which is what is being discussed.

So the simple withdrawal of a large number of contracts/shares on the (say) Ask, even if well away from the inside, will cause an interpretation of sudden lack of supply and thus an increase in price? Am I understanding this correctly?

 

[Glenn]

Sorry Glenn. You did indeed.
The low on the day was 57.70, just a few cents below my exit.
Richard

OK - I don't remember it being a day trade. Is that how you work ?
Be interested in what happened subsequently ?
Glenn

 

[SOCRATES]

Referring to the above, 3 seconds to size it up and 27 to type it and correct and post, look at the time stamps ~ both within the 05:09 minute. This is instantaneous conditional reflex. This is what darksiding is all about. If you start to mess around with indicators and nonsense you cannot develop this killer edge.

 

[qaza]

A gold star for you SOCRATES !

 

[growltiger]

So the simple withdrawal of a large number of contracts/shares on the (say) Ask, even if well away from the inside, will cause an interpretation of sudden lack of supply and thus an increase in price? Am I understanding this correctly?

Yes, that was the source of the question. It has been happening several times per session. It is OK if you see the monster bid; you play against it. But if you are reading the chart - in the spirit of what goes on here - you get imploded (in Socrates's word).

 

[growltiger]

But what do you do when the spoof orders are filled by the spoofers ?

How do you analyse this ?

Generally, they don't get filled at all. Although it has been complained that the spoofers are taking both sides of the trade (which is definitely illegal) this has been rebutted by them and accepted by the exchanges that they don't.

 

[SOCRATES]

So the simple withdrawal of a large number of contracts/shares on the (say) Ask, even if well away from the inside, will cause an interpretation of sudden lack of supply and thus an increase in price? Am I understanding this correctly?

No, Bramble, you are interpreting this at a mechanical level,
this is not at a mechanical level,
it is at an inuitive level,
and is the result of the rapid detection of a change in intent,
which is an abstract concept,
and that is why the most approximate way of descibing it is intuitive,
but it is not really, it is Biomind Capability on Turbocharge.

 

[SOCRATES]

You remember how in an earlier post I mentioned requirements:~
I listed the requirement you must be an accomplished visual mathematician
and you must have very developed biomind faculties.
You must be able to weld these two together as a blend for starters
in abstraction,
before you can even begin.

 

[TheBramble]

No, Bramble, you are interpreting this at a mechanical level,
this is not at a mechanical level,
it is at an inuitive level,
and is the result of the rapid detection of a change in intent,
which is an abstract concept,
and that is why the most approximate way of descibing it is intuitive,
but it is not really, it is Biomind Capability on Turbocharge.

I understand that is how you are experiencing this Socrates, seeing what you see and reacting the way you do.

My question is really asking about the vast majority who react in an interpretive way, who do operate at a mechanical level. I presume the ones who spoof and move the markets operate at precisely this level? If I thought the majority of BIG players operate on "Biomind Capability on Turbocharge" I would pack up and go home.

So yes, it is a request for comprehension of the purely mechanical aspects of this phenomena.

A large bid/ask size is generally going to be interpreted by all except the rank beginner for exactly what it is. So why would it have any impact on seasoned market players?

And even if this were not the case, removing a large size from the bid (for a change), why would that cause a perception of sudden lack of demand and a drop in price? In principle it could, but in reality, at the depth the spoof order was at, all the levels above right up to the inside remain intact (I presume) so no major impact on 'actual' inside bid.

So what purely mechanical aspect of market behaviour causes the 'actual' price to be manipulated by the placing and removal of large spoof orders away from the inside?

 

[SOCRATES]

I understand that is how you are experiencing this Socrates, seeing what you see and reacting the way you do.

My question is really asking about the vast majority who react in an interpretive way, who do operate at a mechanical level. I presume the ones who spoof and move the markets operate at precisely this level? If I thought the majority of BIG players operate on "Biomind Capability on Turbocharge" I would pack up and go home.

Bramble, this is why I have been making huge efforts to raise the awareness of the audience on a separate thread. This is why I keep saying this is a war for profits played on a virtual battlefield, and not some silly little game anybody can play just because they went to university, obtained a degree, went back and got another degree and so on because it has little to do with academic learning. It has very little to do either with the ability of the aspirant to acquire the PC, the datafeed, the software of his or her choice, the execution platform,
and the account and a whole raft of books on the subject, magazines, and all the other information ad nauseum.This is why there are very few people who can do this. It is not that everyone is prevented from knowing some big secret. It is that they prevent themselves.
The great majority do not recognise this because as I have explained before their own life experiences are formative. This prevents them from progressing and then they get frustrated and take it out on everyone else. I myself do not see it as difficult. But anyone who is able to admit they cannot keep up with this ongoing multifaceted virtual numerical crossword type of puzzle at the highest level ought not to aspire and settle for something simpler. But they do not, instead they persist with clumsy attempts to automate what is not automateable.
And they argue, and I am fed up with it.

So yes, it is a request for comprehension of the purely mechanical aspects of this phenomena.

See above.

A large bid/ask size is generally going to be interpreted by all except the rank beginner for exactly what it is. So why would it have any impact on seasoned market players?

See above.

And even if this were not the case, removing a large size from the bid (for a change), why would that cause a perception of sudden lack of demand and a drop in price? In principle it could, but in reality, at the depth the spoof order was at, all the levels above right up to the inside remain intact (I presume) so no major impact on 'actual' inside bid.

So what purely mechanical aspect of market behaviour causes the 'actual' price to be manipulated by the placing and removal of large spoof orders away from the inside?

If you remove the bid from a two way price, it means no buy orders are accepted.
This indicates there is "no floor" . It does not matter what the ceiling is. If there is no floor,
there is no floor because there isn't. We come back to the question of what is an opinion against a view, what is the nature of acceptance against an attempt at forcing, and that can never work, sorry.

 

[barjon]

Just to show why I've just renewed my subscription to the herd!!

At 57.77 with a fairly long down bar, closing on its low, below the previous low and with lowish volume I would have taken the view that demand had shrunk right away with sellers needing to offer down. Thus I would have been expecting a further down bar, but I would have dropped my stop to this bars high. Like my sense of direction my intuition's probably 180 degrees out.

 

[qaza]

If you remove the bid from a two way price, it means no buy orders are accepted.
This indicates there is "no floor" . It does not matter what the ceiling is. If there is no floor,
there is no floor because there isn't. We come back to the question of what is an opinion against a view, what is the nature of acceptance against an attempt at forcing, and that can never work, sorry.

But when looking at DOM or level 2 [ which is what we are talking about ] the floor becomes the next level down.

Removing a bid or offer in these circumstances makes little difference to the market

 

[Mr. Charts]

The Bramble,
No, not because my target was hit. I might have a reasonable target but I don't try to impose that on the market - that would be inappropriate. The market might well have continued down going well beyond my target so that approach would have deprived me of additional profits.
Had it failed to reach my "target" I would have exited when the balance of probabilities told me it was not going to the previous low of the day.
It was a volume blow off.

Howzat Socrates ;-)
Spot on.
Of course.

Plus my personal way of reading level 2 told me buyers were coming in there and then and in the coming seconds and minutes.

I shall now leave this thread to the dark siders ;-)
QED
Richard

 

[DaveJB]

Well,
a significant part of my brain was telling me that disagreeing with Socrates would prove a bad idea, and here I lie, trussed and looking with alarm at a bowl of Sage & Onion....
I'm interested in one difference here - I went long, but had no strong feelings (indecisive I called it, and a fair number of others long and short said similar) - to me it was far from an obvious play, much too 50:50 to go for either caseI thought... what interests me is that others found the short case more obvious than I did.
I really don't want to make a rule out of this, but if I did (playing Devil's Egg Nog as I like to call this) then it'd be along the lines of 'if you can't decide, it'll probably keep going with the overall trend... but I won't, as I know I'm not allowed to make simplistic rules up. Bothering me more is the feeling that my subconcious will store this, and go short next time when it won' be appropriate because rules can't sort this out - there are too many factors to make the solution an algorithm. On the plus side are two points: (1) I wouldn't have traded this as it looked (imo) like the market was neither fish nor fowl, and (2) I have no ego in this, I got it wrong, mea culpa!
Socrates dear chap, would a lobotomy help? <g> I promised to join in, look what happens when I do!
Dave

 

[Quercus]

In reference to GILD.
This is a definite exit, in line with a price target of the previous low.
However, why not exit half (500), and move a protective stop to the top of the largest down bar and let the other half run?
Cheers
Q

 

[SOCRATES]

But when looking at DOM or level 2 [ which is what we are talking about ] the floor becomes the next level down.

Removing a bid or offer in these circumstances makes little difference to the market

It does three things:~

It baffles and alarms people who do not understand.
It creates a two way implication.
It may be used as a vehicle to indicate possible intent.

But you have to choose. You are not obligated to act.
When you act, YOU are responsible for your action.

Let us pursue this further:~

This puts people who are not prepared for scenarios that are brutal in their yes / no outcomes that in large measure are unexpected to the unaware, unprepared etc., as I have said before, into unfamiliar territory because not only does it deal with tactical decisions dependent upon conditions of uncertainty but also the result is irrevocable.

The inability that the great majority have in dealing with this is too much for their humanistic formation to deal with. Consequently, the natural response is to try to take refuge, in some way, somehow, in some measure, in something that will relieve them from having to face this acute discomfort. Of course they are going to gravitate naturally to some ideal. The ideal that is the easiest for them to embrace is that of some gizmo that will exonerate them from facing it. Hence the proliferation of indicators. This is why there are very few real darksiders and many indicator followers.

Darksiders are an opposite type of breed. Darksiders enjoy the challenge and meet it.
This is rather like the people who are tornado hunters and chasers who try to get as close as possible to tornadoes to film them and photograph and record wind speeds and so on,
against the people who view all this on screen in their living rooms. Both parties are interested, but form different postures. The first are in it, the second are at it. That is the difference.