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Studying the Reasons for Price Reversal around Liquidity Pools
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Studying the Reasons for Price Reversal around Liquidity Pools

  #11 (permalink)
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vvhg View Post
Have a look at Wyckoff. Looks like a spring...
Also it could be classified simply as a failed breakout, you see it quite often in ranges.

vvhg

Yes vvhg, it does looks like a spring from the Wyckoff and VSA stuff. I personally do not have any understanding of VSA as I have never studied it, but I saw that other guys mentioned it as a Spring, on his blog. I am quoting the post by Mr. R.S.Iyer -


Quoting 
That is what Wyckoff called as "Spring". You get detailed analysis of Springs and Upthrusts in Wyckoff Trading Course. It is an excellent place to initiate trade with tight stop loss.

Ofcourse one must be aware of different types of springs, the importance of their location in the trend etc. If you are interested go through Wyckoff trading course

Upthrust is just the opposite of spring.

David Weiss, veteran Wyckoff trader, says one can make a living by trading springs and upthrusts alone.

Hope this helps
R. S. Iyer


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  #12 (permalink)
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ab456 View Post
Let us assume that this "classical transfer of funds from one group to another" happened in 3 red bars which are just below that blue horizontal line. While most others were selling, "This Smart Group" was on the buying side. Now how would this thing reflect in the Delta or any other tools. Is there some way to properly quantify it, so that we can then create some Alerts etc. which will hint us about a similar opportunity being created in real time.

In delta you will see lots of red, and much larger than usual volume. Nicely enough, the initial bar (the pinbar as you refer to it) has about 2x volume more than the bar which forms the low itself (indicating less selling interest on the probe lower). My guess would be very red delta on the pinbar, then on the low bar a bit more mixed, with still negative delta.

So, be aware of volume. But don't assume that you buy this automatically, unless you want to get steamrolled on a regular basis. This game is only won by those who have the capital to actually make it work. So the volume is a nice heads up, and then if you are looking to buy you will notice that the market only spends 4 minutes below this support line you have drawn, and then those willing to put capital towards a long hold it above your support line. This is the time to enter. It's the classic tradeoff -- you want to know where the low will be. But you don't have any objective confidence it was the low until after it has proven to be the low. Guessing the low and the high for taking on risk (entering trades, not exiting) is a loser's game. No one likes to hear this, and many people say they are good at this, but they have a selective memory and remember the 1 out of 5 times they get it right.

Said another way, let those with the money take the risk transfer--they can afford it. Make them prove to you they are serious about supporting your trade idea. Make them show you they will work on your behalf. What this means to you may be different from what it means to you, but the premise is still the same. Then join them.

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  #13 (permalink)
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ab456 View Post
Thanks Fadi, looks like a nice setup, the way you have explained it.
Do you take such trades just based on the Candle Formations alone or you pay attention to some other conditions / indicator values, as well.

And any comment regarding the frequency of such setups on your favorite instruments GC, CL, 6E, ZB.
Have you noticed this kind of phenomenon happening more often in one particular instrument, compared with others, or does it look like to be a common pattern in most of them ?

Thanks for your input.

Hi there
This setup has worked on all instruments, futures, stocks and forex alike.
It also works for me on both sides (long/short) you just need to inverse the logic of course.

Take any instrument you want, and check back the historical chart, I am sure you can derive statistics out of it, I've never calculated any occurrence probability, and have no interest in doing so, sorry.

Either way, the failure rate of this technique is around 20% to 30% so just keep that in mind if you wish to try and trade it.
The best success rate, is when you see an extended move, three or more wide bars for example followed immediately by the bottoming tail and on relatively high volume.
At the close of that candle in the shape of a tail, I usually place my buy order at a retrace of 50% or more of that same tail.

If you are watching ZB on the daily chart, today's candle could qualify as a bottoming tail somehow if we close at the bell at 146 or above. Not the best tails, but could work. I however usually favour long tails, real long tails and the higher the volume the better...

Successful people will do what unsuccessful people won't or can't do!
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  #14 (permalink)
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Fadi View Post
Hi there
This setup has worked on all instruments, futures, stocks and forex alike.
It also works for me on both sides (long/short) you just need to inverse the logic of course.

Take any instrument you want, and check back the historical chart, I am sure you can derive statistics out of it, I've never calculated any occurrence probability, and have no interest in doing so, sorry.

Either way, the failure rate of this technique is around 20% to 30% so just keep that in mind if you wish to try and trade it.
The best success rate, is when you see an extended move, three or more wide bars for example followed immediately by the bottoming tail and on relatively high volume.
At the close of that candle in the shape of a tail, I usually place my buy order at a retrace of 50% or more of that same tail.

If you are watching ZB on the daily chart, today's candle could qualify as a bottoming tail somehow if we close at the bell at 146 or above. Not the best tails, but could work. I however usually favour long tails, real long tails and the higher the volume the better...

Thanks a lot Fadi. I was just looking for such brief explanation only, no exact statistics etc. needed.
So it does looks like a pattern which occurs quite often, and is not a "once in a month" kind of setup.

And yes, I completely agree, the longer tail and heavier volume would be an added bonus.

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  #15 (permalink)
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josh View Post
In delta you will see lots of red, and much larger than usual volume. Nicely enough, the initial bar (the pinbar as you refer to it) has about 2x volume more than the bar which forms the low itself (indicating less selling interest on the probe lower). My guess would be very red delta on the pinbar, then on the low bar a bit more mixed, with still negative delta.

So, be aware of volume. But don't assume that you buy this automatically, unless you want to get steamrolled on a regular basis. This game is only won by those who have the capital to actually make it work. So the volume is a nice heads up, and then if you are looking to buy you will notice that the market only spends 4 minutes below this support line you have drawn, and then those willing to put capital towards a long hold it above your support line. This is the time to enter. It's the classic tradeoff -- you want to know where the low will be. But you don't have any objective confidence it was the low until after it has proven to be the low. Guessing the low and the high for taking on risk (entering trades, not exiting) is a loser's game. No one likes to hear this, and many people say they are good at this, but they have a selective memory and remember the 1 out of 5 times they get it right.

Said another way, let those with the money take the risk transfer--they can afford it. Make them prove to you they are serious about supporting your trade idea. Make them show you they will work on your behalf. What this means to you may be different from what it means to you, but the premise is still the same. Then join them.

Excellent points josh.
Please correct me if I am wrong. You are saying that instead of jumping the gun, one should wait for the confirmation in this type of a scenario. Once the price finds a minor support above the point where "the transfer of funds from one group to another" has happened. Then one could take the trade but not before that.

I will comment on the delta part later on, as I remember I did some similar work earlier, I am trying to locate those files.

Thanks again

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  #16 (permalink)
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To edit the title:

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Click Go Advanced.

At top it says "Title:", change the title there and save.

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  #17 (permalink)
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Big Mike View Post
To edit the title:

Go to post #1.

Click Edit.

Click Go Advanced.

At top it says "Title:", change the title there and save.

Mike

Mike I followed the above process exactly, but that just changes the title of the first post, rather then changing the thread title itself. Maybe that changing the thread title is not allowed after some time limit etc. but I am not sure.

Thanks

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  #18 (permalink)
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I changed it to match.

Mike

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  #19 (permalink)
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Hi @ab456
I spotted a beautiful bottoming tail on the ZN future contracts - daily chart.
I will be buying that contract in fact at a retrace around 131'095 if we reach there.
It will be a swing trade for me, onto two to three days if not more...

Just a heads up!

Cheers
Fadi

Successful people will do what unsuccessful people won't or can't do!

Last edited by Fadi; January 5th, 2013 at 01:01 PM.
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  #20 (permalink)
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This Topic seems really interesting.
Is there anywhere that we can find more info on this?
Books? Sites?

Thanks

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