Price Action - Seriously

[Liquid validity]

I think you are both right (DT & SanMig) depending on the instruments liquidity.
Liquid markets are very hard to influence in that fashion and pretty rare (sterling Soros as a notable example).

Illiquid markets are much more susceptible to bear raids in particular, especially when they are populated by nervy PI's with transparent stops, seen it quite a few times on AIM.
The best example I can think of right now is RKH last year.

For me Liquidity is the core reason that validates both your arguments.
$30K on ES won't even touch the sides, but it will move and influence other trades with a penny stock...

Oh BTW DT good thread

 

[DionysusToast]

Right - bedtime and an interesting bit of action on the SPY today.

Mostly interesting because it shows a reversal and the subsequent attempts of people to sell it back down before getting run over.

This is the type of action I wanted to catch on the other 2 trades posted here. It's a different entry so please ignore the entry point - just look at the 3 failed attempts at selling it down and the reaction as those sellers saw it coming back up.

Now - at some point you'd think that the retail sellers would be burnt enough to stop trying to sell the thing down. I know for me, if I am trying to catch a reversal and I miss it a few times, the moment I decide not to do it again, it reverses perfectly.

Those rapid moves back up when the selling finishes is quite telling, isn't it? I am sure a lot of us here know exactly how those guys felt as it moved back up against them.

I am sure we've also all been guilty of seeing the moves down, waiting a bit to confirm it really is moving down and then shorting the last tick down before it reversed and moved back up.

There's a lot written about 'trade what you can see' - but if you can see it's reversed and everyone else can see it reversed - doesn't that make it too late to get in? Wouldn't we be better off if we just left those ones alone?

 

[forker]

I stumbled on this thread expecting HC on the receiving end of a new poop hole. Instead, to my surprise, it turns out to be like one of those unexpected favourites.. DT, I know in the past we have bumped heads but I have to say I was wrong about you. Nice one.... By the way I think L2 and L3 tend to be losers because it's like taking sheep to the slaughter house.... What's the term, ah yes Easy money for the Market makers..

 

[megamuel]

The pullback shouldn't be too deep.

How deep is too deep? 40%, 50%, 60%.....? Which I guess leads to the question - what is the minimum you would like to see something pull back? I know there is no 'correct' answer to this but what is your opinion?

Also, how important is level 2 for you? Do you think you could trade without it? I'm guessing you could trade this way without it, it just helps you get in a bit sooner? Does you/anyone know if there is a free trial for level 2 available anywhere? I've never even seen a level 2 screen.

Good thread DT - Thanks and feel free to throw in some pictures of you in stupid costumes for lulz!

Sam.

 

[DionysusToast]

I would say that 70% and above is quite deep - but it depends how it gets there.

If the retrace is big but happens in just a few minutes, an explosive move down, then I'd let it go very deep because the chance of it moving back up is much higher then. If it took a more gradual move down, I'd be less inclined to take a deeper pullback.

Level 2 is a good tool for me and it is an additional dimension. Still it can't be used without Time & Sales in my opinion because the 2 give you intent and actuality. Small bids, lots of sells is quite telling. Big bids few sells is also. Still - mostly what I get from it is a feel of when something is running out of steam which you could probably get from the charts.

What you wouldn't get from the charts would have been yesterdays 10,000 contracts across just 2 levels of bid on the ES at the low which did not move out of the way when sellers (albeit tentative) hit it.

Still - if you look ath this chart (ignore the block trade spike). Think about when you'd get in and out using HHs, HLs, LL, LHs and trend lines for instance. You'd probably enter and exit a lot later than those chart markers.

I still haven't shown my carrot yet,either...

If I had to choose between L2 and the DOM, I'd choose the DOM - it's same thing with a much better UI in my opinion. DOM does have less info but a lot of the additional info on L2 is only useful a very small amount of the time.

You'd need to use in conjunction with Time & Sales. Probably a good place to start is Ninjas Partner page, find a broker, ask for a free trial and you'll have 30-90 days of free platform and live futures data. 6E & ES are good examples of thicker contracts. NQ & YM are thinner contracts, you'll see straight away how different they are and you'd probably need to study one type of market first. Maybe someone like Dash can point you in the direction of the slower interest rate futures.

This stuff works IF you have an idea where you want to enter anyway, otherwise you'll be looking at it all day and jumping at shadows with it. Of course, you could scalp with it, in which case you will need to stare all day. There's a $40 ebook called "NO BS Day trading" that will give you a primer, it comes with videos too.

Not sure if the mods will remove the link - but here it is: http://www.nobsdaytrading.com/

PS - Please do not think I am buying bottoms and selling tops all day without a care in the world. The above trade worked out very well. In both entry and exit, I saw what I like to see. very often I do not. Please don't think I have a magic bullet or that there is such a thing based on my posts. If there is a magic bullet, I sure haven't seen it.

 

[DionysusToast]

yes I endorse removing title as well, I keep clicking on it expecting lulz coz iz got no memory innit

edit: what's wrong with being a naked ape?

Well - I am mortified that you'd keep opening this thread expecting lulz. I shall have it renamed at once...

Can I recommend you change your board name to ZX81?

I stumbled on this thread expecting HC on the receiving end of a new poop hole.

So a sort of internet colostomy?

Instead, to my surprise, it turns out to be like one of those unexpected favourites.. DT, I know in the past we have bumped heads but I have to say I was wrong about you. Nice one.... By the way I think L2 and L3 tend to be losers because it's like taking sheep to the slaughter house.... What's the term, ah yes Easy money for the Market makers..

Thanks. I still think though - that these 'stop runs' (not my term) would occur anyway without market makers.

I also think that 'confluence' would make it more likely for the stops to be hit than if there was less confluence. I think that the more (retail) traders that jump in, the more likely it is that stops will be hit. If you think about what a stop is and equate it to buying/selling activity in real life, you might see why it'd become a natural attractant.

Sometimes I see fairly big move before the stop run and I was never comfortable with the idea that an MM managed to move the price that far to run a few stops.

 

[robster970]

You can play S/R on ES from yesterday's high/low providing that:

a) You realise that the initial reversal is likely to be contra-trend and you need to bail PDQ on weakness.

b) You take a view on how the reversal formed (weak, drifting, low volume or strong purposeful action and subsequent reaction, high volume or somewhere in between these 2 extremes)

c) If you want to fade the initial reversal that you get a good enough 'confirmation' to take the pro-trend position.

d) You realise that your +ve expectation for this method is all about exits and nothing to do with entry. All S/R gives you is a good 50/50 distribution of entry direction IMO.

Incidentally, you can get chewed up around a level in either direction - if this happens, pack up for the day and go sailing/play golf/watch p0rn

 

[BlackBison]

Very interesting analysis earlier on the T1, T2, T3 chart.

Pretty amusing that I agree with your decision to buy T1 but not T2 or T3 (that is exactly the sort of trade I take as my bread and butter), but I disagree with most of your reasoning given in that post and the one below.

You asked why is T1 better? My answer: because I have observed it makes money over time in a clean tradable way where as the other two generally don't. You mentioned something like this earlier in the thread, but then started to get too clever with your explanations imo.

My targets are also different to yours (usually much closer) when I trade a setup like this. I am not sure why you have T2 as a target if you do not think it is a high probability turning point area and not good enough for a short. Then again you probably hit larger winners than me (much higher R) but with a lower win rate, so perhaps over time you make more money. More than one way to skin a cat as they say.

 

[rathcoole_exile]

go sailing/play golf/watch p0rn

or if you're in Pattaya, do all 3 at the same time

 

[TheBramble]

or if you're in Pattaya, do all 3 at the same time

I've been to Pattaya and tried that. I fell of the deck and lost my balls.

 

[rathcoole_exile]

yep, I think it's only about 2,000 dollars for the chop isn't it ?
plus more, of course, for the bolt-on boobs.

but i have to say, Tony, you're looking HOT nowadays !!!!

 

[robster970]

or if you're in Pattaya, do all 3 at the same time

The mind boggles

Won't trying to do all 3 put you off your stroke?

 

[TheBramble]

Won't trying to do all 3 put you off your stroke?

Which one?

 

[TheBramble]

Awwww shiiiiit.....

I've just realised what this thread is. I hadn't realised the title had been changed.

Sorry D-T. Gobbing off like a garrulous Gibbon.

 

[DionysusToast]

I see that a vendor has decided to use this thread to point people to his site/advertise himself.

We can now do one of 2 things:

1 - remove the post
2 - close the thread

Any thoughts?

 

[TheBramble]

Who do you mean? I would have thought the mods would have taken care of that as a matter of course.

 

[DionysusToast]

Post #68 - I have requested thread closure if this is considered too much like censorship for T2W.

 

[TheBramble]

Be a shame to close one of the few threads that actually discuss trading.

 

[robster970]

+1 - just remove the post Pete - your thread isn't it?

 

[counter_violent]

I see that a vendor has decided to use this thread to point people to his site/advertise himself.

We can now do one of 2 things:

1 - remove the post
2 - close the thread

Any thoughts?

I went for option 3.
Edit post and you can rebuke his argument if so desired