Is Market Delta a MUST ???

[kiwi_trader]

Both price and volume can be real time indicators (ignoring delay from exchange to pc, pc to eye, and your brain's processing).

So can the CCI because the indicator moves directly with close.

Lagging is caused by smoothing not by indicators. All forms of smoothing (see a macd, stoch, or ma) delay turning points because thats how smoothing works. Real time is jagged and noisy.

Interpretation of price and volume can give you a (statistical) leading indicator if you detect accumulation or distribution say.

On the OP's topic. MD is not a must. Nor is volume. Price alone provides more than enough information for profitable trading.

 

[Bearbelly]

I have been doing the trial on MD out of curiousity but I have a problem with theory. The assumption is that more volume going off at the bid is selling pressure and vice versa but we all know that for each buyer there is a seller so a lot of volume at the bid also means that there are a lot of people willing to buy there so how do you know who is really the more aggressive?

 

[frugi]

In that particular instance, i.e volume at the bid, sellers are more aggressive because they are paying the buyer's chosen price. An aggressive buyer would be hitting the ask, not waiting to be hit. Not that this dry distinction necessarily tells us anything useful.

For what it's worth (half a Korean won) I've found cumulative bid/ask volume split into two sizes (e.g <10/>10 lots for YM) to be of limited use ... e.g divergence with price or between size groups gives a heads up >50% of the time ... so probably better than random ... but like any crude indicator it has to be evaluated in a wider context. Pros will use limit and market orders at different times, so one can't always say, for instance, look the ask delta is really heavy therefore that is confirming the move, as the pros might at that point be offloading and reversing with limit orders in the opposite direction into a cornucopia of stops, while at other times they might indeed be the ones eating the ask with market orders. Different tools for different context innit. One day I may understand.

 

[anarcho]

Quote from Bearbelly:

I have been doing the trial on MD out of curiousity but I have a problem with theory. The assumption is that more volume going off at the bid is selling pressure and vice versa but we all know that for each buyer there is a seller so a lot of volume at the bid also means that there are a lot of people willing to buy there so how do you know who is really the more aggressive?

You use the info MD gives you to help you make decisions, not to make the decisions for you. If you see that there are large sellers hitting the bid yet the market won't go down then that info is useful. Maybe the larger sellers get angry and continue smashing the bid until they win or maybe they give up and the market climbs up. The bottom of the candles (I guess they are not technically candles but thats what I will call them) will almost always have negative deltas and the tops will be positive, but you get to see the size of the deltas and the totals for each time frame and price. If you only want to see what the big boys are doing you can filter out any print below a certain contract size. Anyways, it is just a tool to try and help make the market more transparent but it not some magic indicator that can make decisions for you.

 

[Bearbelly]

thank you for your interesting replies. more to think about

 

[notouch]

Quote from anarcho:

You use the info MD gives you to help you make decisions, not to make the decisions for you. If you see that there are large sellers hitting the bid yet the market won't go down then that info is useful. Maybe the larger sellers get angry and continue smashing the bid until they win or maybe they give up and the market climbs up. The bottom of the candles (I guess they are not technically candles but thats what I will call them) will almost always have negative deltas and the tops will be positive, but you get to see the size of the deltas and the totals for each time frame and price. If you only want to see what the big boys are doing you can filter out any print below a certain contract size. Anyways, it is just a tool to try and help make the market more transparent but it not some magic indicator that can make decisions for you.

As Blowfish pointed out, the "big boys" might be accumulating passively on the bid yet all you would see would be a large negative delta (indicating a strong down trend apparently in the eyes of the MarketDelta tutorials and some blogs). I think the volume delta can be useful but not in the simplistic way that many suggest.

 

[anarcho]

Quote from notouch:

As Blowfish pointed out, the "big boys" might be accumulating passively on the bid yet all you would see would be a large negative delta (indicating a strong down trend apparently in the eyes of the MarketDelta tutorials and some blogs). I think the volume delta can be useful but not in the simplistic way that many suggest.

Yes that is true, but if you see a bunch of large negative deltas and the market is not being pushed lower then you can assume there are some large buyers bidding. But it is a good point that the deltas don't show the whole story, you can't look at their value and base your whole trade on it. Also, people trade for so many reasons that you never know their intentions. Maybe some big prints are just people hedging other positions. So all the deltas you get from MD are relative.

 

[subq]

Just FYI, IRT now has true volume bars.

Now that it does I am interested in why true volume bars are so important.

Does anyone have any threads or URLs on them?

 

[MACD]

I have tried this software as a subscriber for about 8 months and it really is worthless. MD does not provide you with useful information that will improve your trading. It is supposed to give you clear information as to the "selling or buying pressure" present on each bar. The footprint charts will not show you this with any dependable clarity. Even Trevors seminars are not clear as to how to Make Money with this expensive software.

 

[whitster]

marketdelta is "ok" at best

i have an ELD for tradestation that does essentially the same thing - but for free

free is better

i *do* pay attention to bid/ask pressure. it acts as a decision support structure.

but one does not need marketdelta to have/use that info

i *did* get a tradestation account (i also have IB and AMTD accounts) in order to take advantage of real tick data, which *is* necessary for bid vs. ask analysis.

IB is great, but the aggregated tick data makes it useless as a marketdelta feed or to analyze bid/ask pressure

i look at bid/ask analysis much like i look at marketprofile. neither are trading systems. both help me as decision support sources.

they provide information. information is good