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Smart money volume - a great example
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Smart money volume - a great example

  #21 (permalink)
Market Wizard
virginia
 
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trend is down.

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Smart money volume - a great example-neg-trend.png  
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  #22 (permalink)
Trade with the flow
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cory View Post
trend is down.

One could tell the trend is down without the volume bin indicator. And if you apply the above/below 0 to the original chart in the first post you could only conclude "the trend is up". Not very useful.

In studying the first chart, you can see that the large traders missed a turn by a long time. They kept shorting while the market was moving higher. Eventually they gave in and started buying.

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  #23 (permalink)
 Vendor: www.innovative-trading-solutions-online.com 
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Hi,

I want to share some thoughts on volume.

Please do not take this personally. if you disagree, say so.

I had studied volume for a little while and it is my personal belief that traders of all sizes that place their trades at the current bid and ask may not be as smart as some traders.

I believe the "smart traders" place their orders, based on their criteria, above and below the market, and wait for the market to come to them.

I have seen 1000 contract traders jump into the market and loose 100,000 dollars in just a few minutes. I have seen this happen over and over again.

Contrary to what EOT says, being a large trader does not make you a smart trader.

I can post screen shots to prove this.



Question, is this indicator showing only the trades placed at bid and ask?



Thanks,

RJay

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  #24 (permalink)
Trade with the flow
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RJay View Post
Please do not take this personally. if you disagree, say so.
I had studied volume for a little while and it is my personal belief that traders of all sizes that place their trades at the current bid and ask may not be as smart as some traders.

I believe the "smart traders" place their orders, based on their criteria, above and below the market, and wait for the market to come to them.

I totally agree with you and your experience is similar. For one thing there is the question fo timeframe. A 1000 lot trader could be trading on a weekly chart and price could have just hit his limit (as you explained, they could have that order there already).

Second thing is motive. Commercial traders use the futures to hedge their portfolios.

From what I observed, different trader groups were "right" at different times. The question is what is right? for a swing trader right might be totally different than a day trader which might be different than a scalper. For my purposes, I go for 2-4 pts on ES with trades lasting 5-30 minutes. I found no one group consistently did best for me. It's easy to pick out examples where one group is "right" but often on the same chart there are cases where this group was "wrong".

Overall I now just use total volume. large volume traders get more weight but there are fewer of them so in the end I think it evens out. A lot of times I think it's the traders trading 10-20 contracts who are smart. They're not beginners and they're not hedging big portfolios. It seems to be the right threshold for a successful trader. But that's just my observation, I only followed this for about 2 weeks before I moved on.

One other thing that could be interesting: I wrote an indicator to show what % of volume each trade group is responsible for. That shows who is participating in the market. For example if the market is going up but large traders are not participating then it's suspect. I thought it'd be useful but I couldn't really make much of it so I ended up just focusing on the tools I have. But if anyone wants to comment on this idea I'd love to get feedback on it.

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  #25 (permalink)
Elite Member
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Quoting 
A lot of times I think it's the traders trading 10-20 contracts who are smart. They're not beginners and they're not hedging big portfolios. It seems to be the right threshold for a successful trader.

Interesting, as I was looking at the 50 + trades for the same reason, which is why I wanted to see how it worked on the 1 range chart.

Intuitively, this sort of volume study should provide a tradeable edge, however having watched it for several sessions, there does not appear to be a consistent signal that you could reliably use as part of a trading decision.

I'm moving away from it too.

David

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  #26 (permalink)
 Vendor: www.innovative-trading-solutions-online.com 
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Leave no stone unturned.

I think I can reproduce these indicators based on the description.

Created by Camtasia Studio 6

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  #27 (permalink)
Trade with the flow
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RJay View Post
Leave no stone unturned.

I think I can reproduce these indicators based on the description.

Created by Camtasia Studio 6

I just watched the video. Thank you for sharing. Most of my trading is based on volume so I'm very interested in this approach. His indicator idea seems pretty simple, I was thinking I could probably figure it out too. There are some very talented programmers here, I'm sure we could come up with something. I know how to program for Ninjatrader but I have no idea how to do bid/ask stuff.

I'm curious if you joined his program? $2000 is too expensive for me. Not too long ago I signed up for one of these I dropped out after a month cause there was not much there.

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  #28 (permalink)
 Vendor: www.innovative-trading-solutions-online.com 
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cunparis View Post
I just watched the video. Thank you for sharing. Most of my trading is based on volume so I'm very interested in this approach. His indicator idea seems pretty simple, I was thinking I could probably figure it out too. There are some very talented programmers here, I'm sure we could come up with something. I know how to program for Ninjatrader but I have no idea how to do bid/ask stuff.

I'm curious if you joined his program? $2000 is too expensive for me. Not too long ago I signed up for one of these I dropped out after a month cause there was not much there.


cunparis,

When I saw his price, I laughed. Maybe I'm in the wrong business.

I plan to strip the level II info from the jdStats indicator. A formula I saw in some code on NT's forum should do the final conversion.

I just don't know how many of the bid/ask levels were used to compile the data.

The volume side should not be any problem.

Of course, if a real programmer were to this project on, I would be OK with that too.

RJay

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  #29 (permalink)
Trade with the flow
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RJay View Post
When I saw his price, I laughed. Maybe I'm in the wrong business.

I did a bit of googling on him. Seems he has created new websites several times, each time abandoning the old one and its customers. In the past he had a book or dvd for sale for $100-$200. They say the DVD isn't bad but it's 29 minutes long. A short DVD is a bit disappointing when that's not stated clearly upfront (he makes it look like a 4 hour trading course). He uses some kind of hi-low technique where you keep a buy stop above the last high in a declining market. The idea is to get it on a trend reversal. They said that wouldn't work by itself but he has additional filters/indicators. This new bid/ask pressure thing seems to be a new thing and so he creates a new site. Only this time it's $2000! "to reserve your seat". Yes it is humorous.

Everytime I see something for $1000+ it turns out to be uninteresting. Once bitten twice shy..

My opinion now is his example was cherry picked, but I think it's worth investigating it to see if there's anything there. I'll look at it this weekend.

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  #30 (permalink)
Elite Member
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Cunparis,

tried to modify the contract numbers in the indicator source code but could find the right lines. Please let me know to do this. Thx!

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