In stocks there are market makers & specialists. They are the smart money. Their advantage is they can see the order book and they know where all stops are and where all big orders are. They will work to drive prices to these big orders.
In futures it's a level playing field and there are no market makers. But the smart money "know" where the stops are and the big orders. Also since ES follows the cash market they are watching that as well.
Your analysis is very good and I think looking for HVC & LV on a tick chart lets one see inside some of the 5min bars to see what's going on. Trading around HVC is always a good bet because you have a low risk. If you're wrong then just reverse. Always good to trade with the pro's.
Not sure if this is useful, but I am trying combining a 15 minute trading chart to take entries, with a 15 minute auto-strat chart to identify the 2-Line signals on the ES with a vertical yellow line and an audio signal.
Picture shows and example - note the times are Australian EST (15 hours in front of US EST).
I use 500/4500 for my tick charts, and 5min / 15min for minute charts for ES.
For Euro I like 5min, and for CL I'm experimenting with 20 range, 3min, will try 1m-2m as well.
Just experiment a lot there is no best timeframe. In fact the timeframe should be mainly determined by your risk parameters. I go to a lower timeframe on CL for example because the risk on 5min is too high. just don't go so low that you see mostly noise, but even that's ok if you learn to see through it. The 500 tick is very noisey but I'm not looking at bar patterns on that level.
I think you would like my cycle thread in the VIP section. Worth the donation IMHO.
I've not forgot about you, just got yesterday bug in Vista (boot time increased 5 times from usual 15-20 seconds) and whole day had been "making love" with that. Still don't have cleared that Even thought to make overclock as "my response" to Vista
I saw I wrote some just great things, discussion about which I will with pleasure join later on today.
But, can not stand to not reply at least in 2 words
Good analysis ! With one remark, sometimes S/R passed without any stop at full steam, I think the key answer is where smart money exactly enter market and where they just "support" move in direction they need. I think we will find out that finally
I'm not big fun of LBR, but still remember some things which advised she and her team, so volume, even big one on opining tells a lot, in particular how much buyers/sellers we have today and how active they want to be it's "set the tone of the day" so I used to watch that and I think it's usefully, because it's certain volume benchmark for whole day, that's why I suggested to keep that in calculations. It's clear that smart money operate 24h, but we shall keep in mind also those smart money which operates just RTH as well as retailers.
100 % agree with you that smart money before they enter/exit market will make certain "counter waves" which will "cover" their enter/exit.
I still think that this is one of the reason why volume so huge on important tops and lows because, say about lows, smart money start selling, retailers see market go down start selling, but then smart money start buying, while retailers still sell, that's why move down stops and reverses and volume so huge. The question still is to see when they start enter/exit they positions. I've learnt that in a lot of cases we, retailers, see wrong picture of the market, i.e. where we think start money exit, they actually already entering market again, but in another direction we think.
Timeframe, I think that one of the important questions, because if we can find "right timeframe" to watch "market breadth", i.e. where and when money enter/exit market we could be able to "see market"
P.s. and I also really interested to find "market consensus areas" , i.e. areas where all market participants agree with each other and market can go only in one direction and at full speed.
I glad to see we are moving further.
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Great chart annotations.
I've heard COT is available to pros on daily basis (don't remember if not even on realtime basis, but still remember they see all orders in DOM and their exact kind)
Now the question, who to use info on chart correctly.
COT is available to everyone on a weekly basis, every Friday afternoon. The report is Wed-Tuesday so it comes out "late" but really it's on a long term perspective. Since it's weekly I mainly use it for a directional bias.
It's not easy to interpret at all. I've been using it for 1.5 years now including analyzing the report myself, importing it into Tradestation, writing custom indicators and systems based on the COT data. It takes a long time.
To profit you want to trade near the blue bars which represent HVC. Drop down to a lower timeframe (from 5min to 1min for example) and look for an entry based on price. A 1-2-3 pattern, breakout from a pullback, breakout of consolidation, trendline break, whatever works for you. Set a tight stop (that's the advantage of trading with the pros) and take profits on quickly, let a runner run if you want to go for a home run.