Quote from easyrider:
Jack
The part I was interested in was the last part of the statement:
"volume indicating a long".
How can volume in an area of congestion clue you as to which way it is going to break?
It can't and it doesn't, ever.
You look elsewhere at the DOM and the leading indicator of smart money.
market is in congestion as an operating point. We keep our eyes peeeled. Gancing here and there for what will end the congestion. Our list contains a lot of things and, also, they are arranged in sequences of micro events. We also look for spurious stuff that wrecks what is going on.
For just a moment, put yourself to my left and slightly behind me. if i am catching a ride back from the tundra or rtic circle or just whitehorse in the Yukon. I usually get to strap into a five way behind the pilot. I an yukon Jack up in the territoies and first nations. Okay i made you sit in a place for a second.
Relax and I will keep saying things to you for you to look at and make decisions. You see four screens where the left two are your specific business, because your account is there. You can run the keyboard and I can edge you away from it if I want. I will write you a chack if I screw up your account.
You will grow to understand the whole nine yards.
we are in congestion so we both know the market cycles between up and down half cycles. If the congestion is wide enough (think very narrow with Jack Hershey picking up the tab) we are in the market always on the right side of the market.
Most people get their pants taken off by whipsaws. I posted in the DAX thread about three concentric spheres. Scientist set up another thread because I was talking about ES as an example.
The three items (spheres) are what provide the sequences of items. Volume picking up is not the first item. So when it picks up the trend is already determined by leading indicators of price. Volume is also a leading indicator of price.
I speak cheerfully in a continuous assessment of four parts of the making money process. Data gathering, analysis decision making and action. the most common action i take is "hold". thereare no exceptions for me and no lapses as I get input (data gathering). It is a tattoo that goes ad nauseum.
I have mental processes that are not impeded in any manner. I have a heart rate of 55 and I can monitor it by listening to it. You cannot do that. I can purposefully change the mental loop I am using and I can change the rep rate of the loop I am using. The market to me is a play box filled with sand and toys.
All trades are telegraphed in advance. There are no surprises in the markets. There are very very very smart people trading in the market and our job is to trade ahead of this set of people.
The key sequence I addressed in the three spheres stuff in DAX thread was how to stay ahead fo the very smart people.
First the market comes out of neutral. The cash index moves about and the futures indexes preceed these movements although the cashmarket prevails in the place where the market is in value.. That is the pace and rhythm of the market. The offset of the pair has a neutral value every day.
Sidebar. For an exercise, try noting what % of the market players know and use each of the points I make here. Start now for convenience by just using the above paragraph. Number each one. Statistically speaking, we are already in a minute group.
After the offest is no longer neutral we are in a trend start uop but cash price has not moved yet as a rule. We check to see if the change in offset is sustained. The two actions so far are both "hold" or, if sidelined, "wait".
Once a change is sustained, we have a "squeese" or a "stretch". i causally ask my trainee, if he wants to entry or reverse.
Next we assess the DOM and continue to make sure the squ/str is maintained. Bbid/Bask is the top row and we watch the change wheter the squ/str is confirmed. we sidle over to volume and tab the prorata valuse that have been occurring. We glance at the price bar and see if the activity is at the squ/str end of the bar.
we have about five hold/wait decisions during this process.
All is slo mo for us compared to the market actions. We are running mental cycles at 12 times the snapshot rate of IB and we know if the snapshoots are regular or not; we know the offset of qcharts to IB by a DOM/ T&S comparison.
I read IB as time passes as well. rate of news reading is about 1400wpm. (Vertical fixations instead of "being a reading typewriter) My comprehension is not off the mark usually. I restart paragraphs until I have the topic clear and I automatically dance through alliedcollateral material. I use gates eye exercise glasses daily and my prescriptions are set to 68cm so I can roate through the screens that are arrayed 68 cm's out from the axis of my seat.
By the time the sustained squ/str, the DOM is cycling at a "start trend values", the volume is pinwheeling,and the action is at the corrolated end of the bar, anyone can punch the preset T on IB workstation to act to enter the trend.
"wait" is over. "hold" becomes a reversal, meaning act to enter new trend.
Beginners and intermediates on their own use the MACD, STOCs, volume and price. the above is beginner in the context o f"smart money" monitoring. The nice part of it is being able to push the risk issues right down to the floor.
I used poor shorthand in the sentence you focused upon. I hope in the above essay, you have seen how the "offset" is a leading indicator along with the DOM and the prorata volume compared to price trending beginnings.
Once in the trade you monitor it's continuation. you look at it continuing with the same stasis. Time advances and end effects show up and /or flaws appear. You orient to optimizing profits as the risk of remaining in the profit making trend continues.
Smart money is a resource you have that is of very great utility..
Since the information is free I figure what I get out of it is up to me. What difference does it make what his motives are? If you see a dollar on the sidewalk, you bend over and pick it up.
