fulcrum trader is not an institutional trader, nor a professional trader... last I looked up his real name on the CFTC site, he holds no registrations of any kind, nor has ever... let us all remember that his understanding of inventory is really nothing more than that, his understanding... and though he might be right given his success to certain extend, he can also be wrong... so one should always take anyting anyone puts out there with caution... and before we get into a flame war... anyone that really has an edge never gives it out.. so with that I should put to rest all arguments about CVD being a true edge (at from no risk trading perspective, which is what an edge truly means)
to the OP...
Private Banker, IMO is correct, there isnt really any commonality across institutional traders at all at times.. perhaps depends on what research they all subscribe to or what kind of information they have access to... for the most part any TA at a bank/firm will use the main levels for trend, but they will all use their own prop models to influence their point of views and as such positions in the market... usually that is published daily before market open or even the night before..
as an example, here is the highlight for a weekly TA analysis that came out on June 6, 2011 for a FID desk at an institution.. note that I changed a few of the numbers just in case..
* Chart of the week: The S&P 500 price action of last week not only leaves the market weighing on our key price support at 1294, but the completion of a bearish "outside range" week and break of the 64-day and 14-week averages suggest this support may now finally be set to break
* Russell 2000 top intact as small caps continue to threaten to underperform
* A Base for the US10s30s Bond Curve? above 125bps would confirm
* 2s10s bonds have achieved our 276.6bps target. stand aside for now.
* The 10yr US/Germany Bond spread has maintained its top and we look for the trend of US outperformance to continue towards -34/35bps.
* EURUSD bear risk negated to aim back to the 4844 peak, but 5250 remains a formidable barrier.
* AUDUSD defends support to eye key 1050 barrier, risk of bull break to 1700...
and then from the details page, an excerpt for the chart of the week...
"below 1294 should finally confirm the completion of a wedge reversal, turning the trend lower for a serious decline to test 1240/30 initially - the low for the year from March, 200-day average and 38.2% retracement of the 2010/2011 rally. Whilst we would expect this to hold at first, should weakness extend, this can target the 64-day average at 1200 next." A break above 1350/60 would reassert upward bias."
if you dont have access to research from an institution, I would recommend you look at GRI's research.. it is priced right and provides you with a better perspective than any forum site out there for the most part..
here is what the research for monday the 27th says about Eurodollar and T-Notes...btw, some FCM's do give you access to institutional level research... but there are very few and they do require a sizeable account... for example, I know that if you are with MBFCC you can get access to their proprietary research as well as a few other sources... but their account min is $100K.. you get the idea.
of course, this is all my opinion, dont follow any of it... figure out your own mind and then follow that..
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Based on your reasoning, the only way for the holy grail that is institutional levels to be valid is for people like you not to use it. Once you have access to them, it becomes worthless, but until you get your hands on it, it is giving professional traders an edge.
Catch 22 ftw.
<--- Yossarian taking flight
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I do not know Fulcrum trader nor have i followed his teaching. However if i understand your reasoning, a person that holds a registration is more worthy of our trust.
Again, if i read you correctly, what this member cjbooth from futures.io (formerly BMT) did in his teaching thread here is bullshit since he considers he is revealing part of his trading edge.
BTW, your 'at from no risk trading perspective' is called a Job with a fixed income. IMO, the best definition of what a trading edge really means for the rest of us has been written in an article by Brian Hoffman in his winning argument, it goes like this :
You MUST be able to FEEL and ACT based on your CONVICTION. You must be able to PRESS HARD when you know you are right and STICK WITH your trades when they push against you. Either you are going to get pushed out or your opponent is. Successful trading is about engagement with the other traders. You get a random hand each time. Whoever plays the hand the best wins. The player with the best hand is not always going to be the winner.
Last edited by trendisyourfriend; June 26th, 2011 at 10:04 AM.
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This post has been selected as an answer to the original posters question
I don't know if "gamed" is a term specific to something, but markets definately are gamed in the conventional sense of the word. There are essentially two processes going on most of the time in the market - firstly searching for liquidity from the commercial and other less-price sensitive participants. Without these orders coming in, there is no pool of profits for the professional traders to compete for. Then, the other activity is basically the sadism of the markets taking shape.With only so many opportunities available, competition for a slice of the action is very fierce indeed (I am often dumbfounded at how much other people underestimate the level of competitivity in the markets - 80% of the money goes to 20% of the traders, and so on...).
Given that there is a finite amounf of money on the table, is is absolutely natural for professional traders to bluff and counter-bluff each other, take out poorly positioned stops, and minimise participation before rewarding those who have traded the scenario well.
Everyone is looking at the same levels.
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Spoke to a pro trader the other week and was impressed with how he sets up his daily trading strategy. He mainly uses his own proprietary models based on momentum and the prior days price action. Each trade is initiated with a wide stop on a market on open order and then the stop is moved in if price moves in his favour. Each trade has profit targets at varying levels (am not sure how these are derived) and if/when momentum stalls, the position is closed.
What most impressed me was how matter of fact the approach was and how he articulated his methodology (without giving it away unfortunately!!!).
On a side note, I'd be under the impression that 'retail traders' and where they place their stops hold negligible interest to institutional traders as the former make up a small % of the overall volume.
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Thanks for responses. No, none of the above. However, there are some levels of equilibrium (in different time frames) where the supply and demand (S/D) are basically equal. Any pull away, up or down, from these levels create an imbalance which will tend to bring back the S/D to those level.
For example, here is an application of knowing these levels for trading the news, despite the fact that many traders avoid trading the news due to volatility: Let's consider the crude oil inventory report comes out at 7:30 AM on Wednesday. The volatility peaks in either direction and a few minutes later the price retraces back to the equilibrium level that existed before the report (very seldom it takes off in one direction without retracing). Then, depending on the new data from the report and the new S/D the market will move in that direction. These levels are the ideal place to enter a new trending market and avoid the initial volatility on news release.
Just curious, if 'the big money' have access to such points of equilibrium based on data that may not be available to the average retail trader. These levels are most likely based on total volume and volume imbalance. No wonder that the 'professionals"' are in love with the VWAP indicators.
just a note about retail stops - it's not only retail stops, but weak hands in general. And more generally, high-ticking or low-ticking is more in order to paint a false picture and generally fuck everyone around, it's not solely about the resting orders.
the only proprietary information that sell side institutions have is knowledge of the orders they are working for clients. They also have feedback from their sales guys about how their customers are feeling, and the less savvy customers will let their positions be known to the desk. All that, in reality, gives the desk information that they can use to enhance their P&L.
Aditionally, "VWAP" is not necesarrily loved by "professionals" more than anything else. VWAP is/was used as a benchmark for measuring the value added of a sell-side trader by the buy side institutions, not as such as a dynamic support or resistance level.
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