Spydertrader's Jack Hershey Equities Journal II

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Try this at home:

Open up a chart with just volume.

Scroll the chart off the screen vertically.

Try to recreate the price by just looking at the volume. (just use colored bars of the same volatility at first - then try to nail the volatility too)

Compare your chart to the actual chart.
 
Quote from BA_Trader:

Try this at home:

Open up a chart with just volume.

Scroll the chart off the screen vertically.

Try to recreate the price by just looking at the volume. (just use colored bars of the same volatility at first - then try to nail the volatility too)

Compare your chart to the actual chart.
More...


HA :eek:

Very very very cool, you got to love this thread. :D
 
Mak,

It would be enlightening to hear you go on farther! Perhaps you could comment/work in the statements below from Scientist?

Picked this up from a post by scientist a while ago:"One very powerful way of reading near-neutral volume is to read the depth levels. If the ask cumulative (sellers) is extremely heavy, then chances are very high the market will in fact go up. Many people don't understand this, but this is actually the market reality. Lots of ask pressure = bullish energy. Lots of bid pressure = bearish energy. This is a major trading wisdom to understand. This is because markets and exchanges chase the path of the highest volume - Not that of the best price. Price only matters to small traders - But essentially price discovery is about find the path of the highest volume - always. So if there's lots of selling volume, the market will go up. Have a look at the bid/ask tomorrow. This happens all day long. There are still dreamers out there who think when the cum bid is heavy price must go up! LOL! "
 
Bigmoose,

I think the Scientist had the opposite view. He seemed to think that price would follow the size. If the BBid is the heavy side that's the way the market will go. (I was just reveiwing the same post)

Opposite the view here that the minority is in control.

Regards EZ
 
Quote from bigmoose:

It would be enlightening to hear you go on farther! Perhaps you could comment/work in the statements below from Scientist?
More...

Place a brick on your kitchen floor. Now, dump a glass of water near the brick. Which way does the water flow?

I provide the above analogy only to illustrate a point.

Take a look at a DOM ladder for ES. Note the various levels of volume on each subsequent tic in price. Note the changes as they occur. Would everyone agree that price cannot move beyond a certain level until all volume at that level finds a way off (hit or pulled)? As long as volume sits on that level (or better yet, as long as some trader or groups of traders continue to add volume to that price level) price cannot advance beyond that point. Price cannot fill contracts sitting at 1428.50 as long as contracts exist (or until all contracts have been filled or pulled) from 1428.25 when the bid ask sits at 1428.00 x 1428.25.

Now at certain times during the day (most notably at known support / resistance areas) a huge difference (super large DOM imbalance) materializes. Some have named this phenomenon a 'wall' - similar to the brick on the kitchen floor. This phenomenon does not require the differentiation of subtle principles of DOM levels, but rather, appears as if an elephant has walked between you and your computer monitor.

When this phenomenon presents itself, one need look no further than Time and Sales to determine if 1. contracts are pulled or remain in place or 2. sufficient new (and large) size has moved in to demolish the wall. If neither of these two events occur, then rest assured, price will move in the direction of least resistance (fewer contracts total).

For those that have witnessed this phenomenon first hand, there remains no reason to debate. They have seen with their own eyes how the market operates. Perhaps they will choose to comment at their leisure.

- Spydertrader
 
Quote from Aurum:

Perhaps I'm not correctly understanding where you are at. It appears to me that you have the identification of a FTT down fairly well, but once you enter from a FTT signal, you are stop managing the trade correctly. From your comment "if price does not proceed in the desired direction after entry" it sounds like you are looking for only one (perhaps two) possibility after the FTT.

A FTT has three possible conclusions - BO, FBO, or FTT. Prepare for each accordingly (anticipate what they would look like volume and price wise) and execute appropriately as it unfolds.

Of course, take everything I say with a grain of salt - I am no expert at ID'ing the FTT's on the futures. I just recognize some of your comments as my own internal dialog.

HTH
More...

Glad you mentioned this. I missed something somewhere between trading from FTT to FTT and the BO, FTT, FBO. What do you mean by conclusion? My initial thought is the conclusion of a FTT is a traverse to the other side of the channel. Are you meaning after you see the FTT, it could fail or something right now - or the move is until the next FBO, FTT or BO.

If after the FTT in an uptrend, the trend resumes it was just a dip, hitch or stall. If it breaks down out of the uptrend tape, then it was a BO. I don't see where the FBO comes in, unless it immediately follows the BO here. This is in the context of the next few bars after an apparent FTT, not after the end of the next traverse.

Hope this was clear and someone can straighten me out.

Thanks - EZ
 
Thanks Ezzy and Spyder. As always appreciate the clarifications. I have had a note in my records to seek insight on scientists post above for a while....

Sometimes folks write in a shorthand style, that a newcomer won't pick up on, but an "old friend" will understand at a glance... things like a large lot at ask, and a large lot going off at ask mean different things...
 
Quote from bigmoose:

Mak,

It would be enlightening to hear you go on farther! Perhaps you could comment/work in the statements below from Scientist?

Picked this up from a post by scientist a while ago:"One very powerful way of reading near-neutral volume is to read the depth levels. If the ask cumulative (sellers) is extremely heavy, then chances are very high the market will in fact go up. Many people don't understand this, but this is actually the market reality. Lots of ask pressure = bullish energy. Lots of bid pressure = bearish energy. This is a major trading wisdom to understand. This is because markets and exchanges chase the path of the highest volume - Not that of the best price. Price only matters to small traders - But essentially price discovery is about find the path of the highest volume - always. So if there's lots of selling volume, the market will go up. Have a look at the bid/ask tomorrow. This happens all day long. There are still dreamers out there who think when the cum bid is heavy price must go up! LOL! "
More...

I am not sure Scientist is correct (unless he is only talking about break-outs). That does not mean he is wrong, just that I perhaps don't fully understand what he wrote. (Funnily enough, this quote of his was so startling to me the first time I read it that I printed it out and pasted it in my log book to ponder on.)

I see lots on the DOM as 'resistance' that has to be overcome if price is to advance one way or the other. Sometimes it helps you see the big S and R lines - everyone is lined up waiting. When the resistance is overcome, you see a break-out which Scientist describes.

I'm looking forward to learning more of the DOMs subtleties, but mostly it gives me eyestrain and excuses not to act.

The problem with the DOM is you cannot see the other side. How many orders will be triggered in the direction of price movement?
 
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