Trading stocks on unsual volumes
- Thread starter DayTrade001
- Start date
Getting the PVT trading down and making the iterative refinements as infomation and technology has come along has been quite a process.
I used an approach where I grouped the refinements according to three levels.
Levels could define importance in several ways and they also define utilty and the time when the utility exists.
There are many many people who do things other ways and some people are experts at criticism from various vantage points.
The humor, then, in trading is pervasive and depending upon how distorted a view a person has a consequence of failure or just being mediocre, humor has other names.
All of the indicator defaults were defined before the PC came along, it turns out. What was the effect of the PC? It caused the data from the markets to be different in a couple of ways. So far books do not explain this. Some forums do occassionally address snipets of this.
Old defaults cause "bridging" in modern data of the post PC era. I posted on this about the time email was being replaced by early web forums. Web Q and A's came a few years later (Chris Lott, et al)
In ET most thread starters are still using the prePC defaults unknowingly.
What is the point of using an indicator based on price that leads volume which leads price? The point is to use existing maths to deal with an opportunity to make more money.
I needed a sentiment indicator and I am using one that relates to the close of a period of time when the market operating point has a high noise to signal ratio.
So I chose one whose normal signals are not in effect and used it for an entirely different use than that which the normal signals give.
This is ball park discussion rather than batting practice. Occassionally it is worth the effort to provide such and worth the effort for others to consume.
DU for a stock is a time when the disagreement on price is at a max. Owners and potential buyers are at opposite positions in terms of everything and including price as well. This is the most extreme market operating point that there is.
What is market sentiment at this time? It is extreme and it is in two parts. The two parts cannot be reconciled either.
The minority control price but the majority control sentiment. The market controls liquidity and when there is no liquidity there is no control of sentiment nor price.
So I look at an indicator that is not working to provide its normal signals based upon the market being in operation with a given liquidity, price control and sentiment control.
Long ago I made intermediate traders put a tape over this part of the indicator in order that they could not take readings in this indicator over those range of values the indicator produced.. I was killing the "freak out" syndrome at the time.
This leading indicator on the table now, effectively uncovers the place where an initial new sentiment offers a "warning".
As I lead up to putting 17 leading indicators into a trader's quiver, he notices he has a compartment in the quiver for "warning" type arrows.
It is not easy to deal with what I suggest because all of it is from a different paradigm than the reader is forcing himself to continue to use. We speak two different languages and he is not biligual as am I. I do not speak his language because it is a disservice to him ultimately.
The formula of the indicator contains the analysis element that I am looking for. Since the data that will be applied to it is asleep largely, I look to how much data I want and when I want it, to be able to make it as loud as possible in the statement I want to get out of it.
I need to not smooth because I want loudness.
In the DU which also has low volatility, we get to see the extreme impact that small changes have just before DU comes to an end.
The 5, 2, 3 comes from all of the above. And the signal comes from a non conventional place for the use of the indicator normally.
I am detecting the frontrunnners of the minority who are beginning to contol price at a time when the majority's feelings about sentiment are becoming leass and less ambivalent.
We are about three steps away from price breakout where the minority will really MAKE the majority take unwantd actions to get the deal that they want.
First a measure of sentiment "changing" is made on the STOCH 5, 2, 3. This is a day ahead. Then a measure of volume is taken as DU becomes FRV which sets the scene for price BO within an hour or so. Both happen counting from the beginning of the first day of taking ownership for longs. (unloading for shorts).
So the "price" you are talking about is one price for you and it is two separate prices for me. I have a noise oriented sentiment price indicator and a making money price indicator. Price is price for most people. My first price is to be sure I am a frontrunner so I am in at the time the herd makes the second price make money for me.
In 2007, we are going to take people on up from intermediate to expert. The financial change goes from 2 1/2% long term daily profit average to 5% to about 15%.
This ball park chat is the why behind one of the indicators. It is one that precedes the "unusual volume".
Why Qcharts named the indicator it built "unusual" volume is just one of those things.
It is very difficult to get platforms to do anything more than beginner stuff since that is where the point of sale for thme exists at this point.
If anyone got to go to the expo they saw a "quant" explaining his favs coded in wealth lab script. (Altucher).
Near the end, I asked him if he ever did anything with other than price. I was thinking of Parker, Carter, Senters, letto , anderson, farmer, et al.... "Naw" he said and he turned to the performance list where his QQQ Crash was at or near the top......
Here we are talking being in the markets everyday and doing the job of having 100% of a person's capital performing 100% of the time as a consequence of a stream of leading indicators and warnings all of which preceed the trade. This is a different paradigm than the conventional orthodoxy. we lift the limitations of that and go to a paradigm for pool extraction.
Yes, and there is a little reluctance on the owner's parts who are being nudged by majority showing up due to the extreme quiet as they (minority) consider leaving the position.
I was wondering if we are still in the realm of multi day position trading of the natural cycle or are we shortening the cycle lengths and looking for the initial peel out(1-3 day hold).
Personally, I think the PVT is the best approach for everyone to start with.
as soon as capital is doubled doing the EOD level after coming home from the job, then pulll the money and put it back into the family plan and family needs that were postponed by shifting capital to beginning trading.
Then repeat the path that was doen with the initial capital using profits only.
As a person progresses using the EOD, he gets to a place where capital being compounded and skill improvement put him in a place where the equity curve crosses the job earnings curve.
As time passes the equities curve does get to be a multiple of the job curve.
By then the x over trading is on the table and it is possible to understand that the tradeoff of having a job is important to complete the decisions on.
when day trading starts, the 30 min chart is in use and a shift happens in efficiency and effectiveness (20% or more on timing alone)
The eight doublings are underway in earnest. and the equity curve is running @ 5% by now.
To add tools to PVT means that cycle compression is in effect as a practise. Seeing the trades per year go from 40 to 60 as a starter is a factor. This is a one day compression and really jacks up the slope of the equity curve.
If a person is capturing the NTRI type trade by now, he is in before gap ups. This is like being able to have 3 day holds (another day shorter on the hold) and pulling 30% total over the three days.
When you go above 60 cycles per year and 30% per cycle, you are getting ready for really setting the foundation for stepping up to the best level of PVT. 3 day cyles give you an annual trading cycle values set in the 80 range.
To go to a value above 10 to 15% a day and be able to anticipate gap ups consistently is a case of enhancing the pre open prep and the issues that are handled take place two days before the BO gap up.
This is not an ordinary ET level of conversation when we get to that level at this point in time. Fall of 2007, we will get this done in the journal. In the meantime I am getting the commercial platforms up to speed to handle what is coming up.
It will be daily rocket trading in PVT. The final compression of cycles where we pick off being in a trade just before the following day gap up and we get out of the rocket to set up the next rocket at the end of a day. It is going on now since we decided to do anuallized prints at the end of 2007 when the journals are finally completed in ET. We were rejected as moderators in ET and the flack level is still so prevalent.
Doing trading more and more optimally is a progression over time that requires a mind that works. It is not building rules but, certainly a rules set makes it possible to reduce everything to mechanical (more than one veersion of each) as you see is being done by those who know enough to be able to code properly. Most never will get it. I can dictate to craig at worden but his software is not of a scope to take the dictation. Programming languages have to be souped up at this point to get into the higher levels of trading effectiveness and efficiency. this is difficult for language creators to understand and most of the time the APL groups (developers) are not being influenced by programmers who know markets.
Posting here of back testing this stuff are only hitting 600% a year so far. There always has been an order of magnitude discrepancy and that will continue.
So the PVT ultimately become a full time traader tool where equities are rotated through the template at a rate that is nearly dialy (250 cycles per year) and the profit is in the 15% plus range daily.
This is a limiting condition for shares traded. They peak at 100,000 per play and then they drop off as the cycle gets to pre gap up. This cap of 3 million per stream is unsettling when compared to the corresponding universe.
The universe selection process when we get to cycle compression gets more precise to achieve a greater breadth of listings in the universe. At lower performance levels when a person has a job, we make it easy to do the trading since time available is dear.
Later when the person is full time we turn up the volumes on both prep and making money.
When peak expert trading is attained several multimillion dolar streams are rolling and there are parallel streams added after a while.
At some point capital capacity is reached and capital is sent in two directions: To SCT and to sector rotation. I posted the optimum on SCT at three levels of SCT using the record of 2006. There the weekly sweep of capital ranges from 100k to 400k per week. This goes to the sector rotation which is slow and huge in capital application. Position duration is 4 to 6 weeks and the money velocity is at a low 4% per week. Unlimited capital may be applied.
We are going to "flow" people through this set of opportunities. Four reference books will cache the substantive stuff. Webs will be used for Xfer and available archives of the prints of performance of each method will be made accessable. For the most part, the people have already been filtered unlike like what is done on American Idol. The electing out electronically is more like it.
thanks for the detailed reply. There are a lot of things to look forward too. 
I am from Beijing,China.In 1998, I began to buy and sell A Shares in China.
According to my experience, when the trading volume becomes unusually big at a high price at the top of a share,it indicates that the institution(we call it banker) is selling stocks to escape,then I sell all, too.
If volumes turn to be large at the bottom at a relatively low price,I begin to buy,indicating that the banker is buying stocks and the price will rise soon considerably.
Charlie
According to my experience, when the trading volume becomes unusually big at a high price at the top of a share,it indicates that the institution(we call it banker) is selling stocks to escape,then I sell all, too.
If volumes turn to be large at the bottom at a relatively low price,I begin to buy,indicating that the banker is buying stocks and the price will rise soon considerably.
Charlie
A question popped into my head about something i read a while ago and I was hoping you would clarify it. In an older post it said the time 1:15pm with the daily institutional reports will allow one to really cream the market.
Is using daily reports an iterative refinement used in cojunction with the unusual vol or is this a seperate strategy? thanks.
Is using daily reports an iterative refinement used in cojunction with the unusual vol or is this a seperate strategy? thanks.