heres a normal market profile rotation for 1 day,the wide spot{nip} is the mean,the market searches for buyers or sellers ,when it meets an unusual or above average vol amount,it usually means they found a buyer or seller,in the meantime it rotates up and down while searching,the big players have more size to put on and take off and carry the most risk due to size,the spots where they decide to get in/out are where the the largest volume happens
A simple price action approach
- Thread starter metal
- Start date
it does the same rotation day to day ,the nips are the spots where it spent the most time at one price,when it gets there as in yesterdays down move, half the folks who spent time making that nip were sellers,when it got back to break even for them ,they covered ,stopping the selloff, when it bounces off that nip,if it holds,the L above is a ledge where a large order held the price up or down,there is one immediately below also,the C is cleavage and if you just use the area between the two wide horizontal lines and compare it to the daily chart posted previously,that cleavage area would represent the bottom of the 30 minute 1 day chart,just referring to the shape,as xspurt mentioned earlier,recognizing shapes and patterns, those nips by the way are areas where you will find s/r that sometimes are not in line with the tl lines,that is what crazy a was talking about for predicting supp/res..its all there 1a,and i know you like to keep it simple,the volume,the trendlines,the market profile areas,{they,big money, are the vol,tl, and mp}those are where the big money is most worried about risk and profit,they are too big to daytrade or micromanage,so they are aware of supp res and where the mrkt might turn against their position
OK let's take this step by step. The annotations allowed you to see two things: How volume breathes with the market meaning at peaks and troughs it tends to fade or climax. Secondly if you look at cumulative volume you can see clumps of mostly red bars and green bars but the reds have more weight.
When I said you were playing with a weak hand and the market wanted down, this is terminology used in volume reading and not a personal opinion. The idea is to identify the strong hands from the weak hands and play with the big boys. The overall weighting was down.
It's much more involved than your...
Volume increasing + price pattern x = ???
Volume increasing + price pattern y = ???
Volume increasing + price pattern n... = ???
If it interests you I suggest you go through the threads on ET about volume because there are many different approaches and you have to discover which style has meaning for you. It will take weeks to discover that and then many months to see how to make it work. It's not easy or everyone would be using it and saying how powerful it is.
So if I seem non specific it's because I would derail this thread talking about volume when it is a tool and not a panacea. Metal started this thread about channels and they are extremely powerful irrespective of how they are used, but again you only get out what you put in and there can be visual or mental blocks that make it meaningless to some traders. However the biggest problem I have found is lack of structured research.
All the things that don't work for you work for me but that doesn't matter as you have something that works. However if you are asking what can you add to improve your profits that really works and isn't guru speak - all of them do. You just need to find traders who demonstrate it working.
There is one final issue that can be the biggest problem and that is incorporating any of these ideas into your trading style. Essentially you break the rules applicable to PA and volume because you use a style of money management as a trading tool. It might be a real mind bender to try to adopt strict PA rules when you are accustomed to more of a freestyle.
Imo the first thing I think would help your style and be easily incorporated is understanding swing timing so you don't mix up daily trends with weekly trends. Play about with a Zig Zag indicator. Then consider how these swings are readable in PA (after a few hundred pages of PA thread reading and a few months practice this should start to make sense).
Can you see why the weekly chart is at a critical level today? How the strong hands bought the market bottom, sold heavily midway up the rise and the next leg up was all on falling volume? The trend lines were drawn many weeks before PA reached this top and both the top and reaction were suggested in advance.
All of the techniques discussed here work in any time frame. It's exactly the same in a chart of seconds as it is in a monthly chart. So on the daily Spy I wished you luck on your long (and meant it) but said the trend was down and the strong hands were shorting it. You might have been right and me wrong because regardless of how good a technique is, it can never be right all of the time.
All it requires is time and a helluva lot of hard work to make it easy to see.
just mighty curious, just how do you use these two charts to trade live pls?
Let's make this very simple and go back to 4 charts I posted earlier. Can you understand the signals here (attached chart), because this as straight forward as it gets? Most on ET will not understand the offer the market is making because they don't know how to read PA and there is no shame if that is where you are at as we all started there.
If you can read these clear signals then going back to the two charts you are asking about will make more sense. The weekly chart is another clear PA signal and is coming off a proven trend line also making up a large price pattern with a well known expectancy. It was this pattern and expectancy that motivated me to post the simple TA thread (that so profoundly impacted ET). The entry is a simple PA signal in any time frame (you can see the daily signal is a screamer).
The daily SPY chart to the right of the weekly Dow chart was a signal setting up in what I had already described as a down trend with the strong hands in volume wanting to take it further down. This daily SPY chart is a bit more complex as you really need to compare the gappy SPY with other sister markets to get a clearer picture of what is happening.
There is a daily candle signal warning of a reversal at the top of the trend line - do you recognize this warning signal? So you have a down channel with a selling candle signal and a volume downtrend in a setting of lower highs and lows.
If these are not clear then you need to learn candle signals and then PA. There are excellent threads on both in ET. These signals combine very well with volume but there are few volume readers on ET despite there being several great threads on volume.
On the attached chart the signals are on the 2 min through to the hourly and daily so in answer as to how to trade it live, go back over what I have suggested, combine these techniques and take the signal in your chosen time frame.
For me to go into more detail would require a bunch of threads on Candle Signals, PA Trading, Volume Reading, S&R, Trend Lines, Channels, Trading Price Patterns, Multiple Time Frame Trading and Indicators etc. all of which are already on ET.
While I have a bunch of advanced stuff of my own creation, this is really old hat stuff that is well known and freely available on the net. No guru magic dust needed.
hey xspurt = expert <correct?>
thx for taking the time to respond trying to explain in more details. the more you explain, it appears it raises more questions in my mind.
you are definitely in trend with most paid trading room guru in terms of drawing almost close to perfection trendlines on daily chart.... but then the daily chart can not be used to trade on the daily basis.
However you may be the rare exception in that you draw the trendlines on your daily chart, and you also use your daily chart to trade everyday, do you?
on another point, referring to your daily chart again, prior to or immediately after may 2, what do you expect traders who might be interested in your methodology to do?
from may 2 to may 15, for a period of 2 wks, there is no trendline drawing possibility according to your daily chart now, is that correct or not? or if trendlines are drawn, some would be going different directions, showing going long; would they or would they not, pls?
in terms of reality, with the exception of long term holders; how many traders would be patient enough to wait for 2 or more weeks before placing the next order, it will be the longest 2 wks in the life of any trader, won't it, pls?
but then i truly appreciate the trendlines drawn on your daily chart, it does help traders to see the uncertainty of price fluctuation from day to day, and then after awaiting two, three, four weeks, the trendlines can be connected and drawn.... just to show the highs and lows of that particular product....
even with such beauty, would a chartist be able to draw such a perfect trendline using prior 4 wks price action/analysis.... to confirm that the uptrend is now dead and is heading south....?
just a divergent thought ok? just trying to gather some private thought in reference to how i can use them to enhance my bottom line.
my posted questions are more to stimulate my own thinking. it is not intended to put you on the spot or anything like that ok?
not too many profitable real time traders are willing to spend their limited time helping others to understand and to trade even with more success and profitability.
thx a heap, xspurt. beautiful charts. <me no chart expert>
Sorry, I just don't quite know what to say. I take it you didn't read what I have posted.
If you can't use a daily chart to trade on a daily basis, what else can you use? Do you mean you can't use a daily chart to trade on an intraday basis? If that's what you are suggesting, go back and look at the charts.
Do I use a daily chart for intraday signals? Sure! And for many reasons. Every multiple time frame trader does. To not do so would be a massive error.
What do I expect traders interested in my method to do? I have not explained my method. Instead all I have offered is a few ideas that might help others. So perhaps some will dig deeper and learn more on any aspect that interests them.
Do I expect traders to wait weeks before placing orders and have it be the longest 2 weeks of their lives. First, I have no expectancy for others. Second, I take it you can't understand I was showing intraday signals down to 2 mins and saying the same rules apply even below 1 minute?
would a chartist be able to draw such a perfect trend line using prior 4 wks price action/analysis....? Again, is there any point in me replying when you have not made the effort to look at the charts I have posted months before the top mapping out both the trend lines and possible PA moves well in advance?
I need some time to scratch my head for a bit!
i must take this sunday evening to pick your brain a little, alright?
yes, did look at your post and charts. already looked at your 4 charts, not once but a few times before asking you questions. it is just that maybe i am just too thick and old.... lol
thx for explaining a little further though, xspurt.
what i am wondering a little more is....
bothering you to pls show how, if you would, to draw trendlines on your posted 2m chart....?
yes, depending on what market would give me, sometimes i stayed on cl for no more than 4 sec before flattening for profit, which is not the norm definitely. most often though, it would take minutes to, certainly not hour, to t1 and t2; beyond that my recognition would fade into oblivious infinity.... lol
xspurt, great guy, appreciate your explanation and am awaiting your tl on your 2m chart, K? luving it and thx again.
