Does this work? Why?

M

MagicMike

I've posted before about dark pool data, but this is a bit different. I signed up for a trial of squeezemetrics.com (used it once before but it changed a lot) after spending some time trading this ("DIX", stands for dark index). Okay, maybe not "trading"... I've been using this to sell puts on the index so it's low risk and I would have been doing it anyway. I'm just scaling my positions accordingly.

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Click to see the DIX. <-- Lol.

Anyway, when the blue line is higher, it's more bullish. Lower is more neutral-bearish. And it looks like it's predictive, so I looked more into the site and they do this for individual stocks too. So I looked at a bunch and traded a bearish vertical spread on BAC becuase I saw this.

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Get the idea? Apparently, the line being lower means there's more selling in dark pools. Can anyone wxplain what this means? There are lots of traders on here so assume this is not totally unheard of.

I'm planning on keeping up with this, so I'll update. Going to treade a few more spreads and see how it works. So far it's really interesting though. Would like feedback.
 
Hmmm I see that when the blue line is higher it's more bearish (on your first graph)
On the second graph, the first black circle you made has a higher DXI and the market went down...
 
wintergasp said:
Hmmm I see that when the blue line is higher it's more bearish (on your first graph)
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Wat? Yeah. The point is to buy when blue line is high.

wintergasp said:
On the second graph, the first black circle you made has a higher DXI and the market went down...
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What do you mean it went down? I'm talking shorter term trades here and I would have made a good deal of coin on that one just like the last black circle where my BAC spread returned 100% when it went down.

Anyone else? Apparently this is new to yall. I'm gona keep up with this, more spreads. I'll post what I find.
 
Short-term retailers tend to be even more short-term than trading on EOD-data (yes, momentum/swing). For these people, buying into commercial buying climax (retail selling climax) is out of the question due to tight stop-losses and high-risk trades. Then the rule could be to look for entries after a DIX peak and bullish confirmation from trending price action. Same can be used for volume climaxes. Of course, this will be later and higher loss, but seems retail traders want that so.

Anyways, good find! Not perfect, but makes sense. Probably just a matter of time before it stops working. Would love to find a Yahoo-ticker for something like this.

I have a few such forward-looking correlation pairs, but they stop working after some time and is open to interpretation for the future. So I just use'em to boost some self-confidence during drawdowns.

If this works, we maybe in for an acceleration through 2017. This could blindside alot of people as well.
 
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Simples said:
Short-term retailers tend to be even more short-term than trading on EOD-data. For these people, buying into commercial buying climax (retail selling climax) is out of the question due to tight stop-losses and high-risk trades. Then the rule could be to look for entries after a DIX peak and bullish confirmation from trending price action. Same can be used for volume climaxes. Of course, this will be later and higher loss, but seems retail traders want that so.
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Okay, so most retail folks are "swing-trading" on momentum? That makes sense. Just not my cup o tea. I guess most folks would consider this trying to catch falling knives.

Simples said:
Anyways, good find! Not perfect, but makes sense. Probably just a matter of time before it stops working.
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Like anything right? I'll milk it till then!
 
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Also, JCP. I think this has worked for my strategy, but I picked BAC to short instead. Both would have worked (JCP would have been better actually). Shoulda done JCP... though i was quite happy with the BAC trade.

Since I need to add some long delta to my tradres I'm going to go long FE tomorrow with an option spread (Simples, this is a good example of me catching falling knives... let's see if it works).

And yeah... thinking about it... I don't see why this couldn't help someone doing a more momentum-y strategy though I don't think that's for me.
 
So..this is interesting...what is the actual signal then ? How do we get into the trade ?
No question, this looks promising.
 
syswizard said:
So..this is interesting...what is the actual signal then ? How do we get into the trade ?
No question, this looks promising.
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Um, so I don't want to pretent to be the expert (reason I was trying to get feedback) but the blue line is called DPI (dark pool indicator) and it measures the ratio of the dark blue (buying) to the light blue ( selling) volume in dark pools.

Their Short explanation --> https://squeezemetrics.com/monitor/docs#dpi

The basics idea is that when there's lots of dark buying then price will tend to go up in a bit. What they're saying is that this is indicative of information asymmetry. Which makes a lot of sense to me... this is the sort fo thing I like to build trades on... and yeah, it looks promising.
 
Buy1Sell2 said:
Call out trades in real time with stops. We will analyze and let you know.
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Ok cool. I don't know the first thing about BLMN but its dark pool chart looks pretty sexy. I'll pick up a bullish spread tomorrow. Will give deets and update on P/L. Trading at $17.10 at today close so probably getting in somewhere around there. Wish me luck.
 
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