It has taken me a year to compose this question and I still have a hard time putting it into words. My focus is S&P futures and 2-30 min holds for 5-10 points. The logic for a lot of strategies (serious and unserious) revolves around "trapped traders" and "higher timeframe participants". Many use variants of auction market theory to build narrative around movements. By now I have seen enough of the e-mini to believe that there is value in these views. But to be comfortable developing my trading around the concepts there are some things I need no understand better. In every trade someone else is taking the opposite side. I understand that you often trade against market makers with very short-term strategies but that means that the one making the opposite bet canīt be more than a few ticks away, right? I am also confused around the concept of how larger or "higher timeframe participants" enter, exit and effect the market. Many are convinced that retail traders canīt move the pin but still they base strategies around trapped traders. An attempt at a question:
1. How can I guess if someone is taking profit, being stopped out, adding or taking on new positions, and exploit this kowledge, especially considering that someone else takes the opposite side at all prices?
I canīt piece it together... If anyone experienced understands my confusion, please help or point me in the direction of a thread/book or other information that may shed some light!
Can you help answer these questions from other members on futures io?
that the one making the opposite bet canīt be more than a few ticks away, right?
Should be but depends on the volume and the price action. An example is the volatility of an anticipated economic report, 0830 EST, 1000EST, or a Fed Chairman speech. The main point you have to worry about is where you may enter a market order trade and at what price it is filled. Experience will tell you whether to limit enter or market order enter. Practice trade and have 6 consecutive positive weeks trading where you are positive for each week before trading any real money. Traders can have a trailing exit stop above or below a preceding large bar, 5 minute candle stick chart for your type trading. Read some of my other posts for some beginner information.
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Here is an example (Friday's 5 minute eMini chart) of what I look for. Wide range (range > ATR(10)) trend (H-L range > 62% of H-L range) bar. Actually find them in TradeStation chart window but do other further analysis in this software - Dynamic Trader - as well as prefer its white background. Anyway failures are when a red WR trend candle overlaps a WR green candle and vice versa. The crowd, whoever they are, are trapped and it usually creates a quick explosive reaction. Two others long and one short were there on Friday, though short was late in the trading session so it didn't give much return.
All these questions and concepts are discussed in detail every single day when Rose is presenting in Al Brooks' webinars. She is in the room 3-4 days a week. There are 2 Discords that I recommend - Brooks Trading Course and Price Action Rose. These are FREE! However Al's webinars are not, and that is where the magic happens.
Before Rose, I would not have had a clue about what you were even asking. I can't thank Rose enough for the knowledge I have gained through her.
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@Jmang: that means that I disregard very short term traders when analyzing directional moves.
@Trend Trader: I like to just keep on trading but I really want to understand the logic behind my trades which I hope will give long term conviction.
@SunTrader: Yeah it seems possible that stops accumulate around congestion zones and creates a push when they cover. Then all the way up limit sellers close longs or accumulate short positions while market orders are opening new longs. But wouldnīt taht be assuming that daytraders with similar trading strategy and outlook dominate the market, or do I understand this incorrectly?
@sunshnpeg: I will follow your recommendation. I stopped looking into Al Brooks because I felt that he built a very detailed and confident narrative around the bars assuming that everyone was a 5-min daytrader. I probably didnīt go deep enough.
Which direction is the market headed, how far will it go? Average the daily (@ES.D Trade Station) range for the last 3 days. It is best not to chart and trade with the same brokerage. News drives the markets, the trend is your friend.
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