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Learning to trade the ES using volume profiling


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Learning to trade the ES using volume profiling

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  #31 (permalink)
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  #32 (permalink)
Legendary Market Wizard
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Profiler, look at a 5-10 minute chart and zoom out a bit. Where do you see sellers active?



It's not at 96.25--it's at 98 or slightly higher. So why would sellers start accepting a lower price, particularly in this super strong market? 95s are the upper VPOC area, but in a balanced market for the past 2 days, it simply has been more the midpoint and the most actively traded price--but it has generally not been a favorable place to initiate trade--that has been more in the low 90s and high 90s. In other words, 95/96 may be a fair price, but it's not the favorable price for good trade location. So in your hypothesis, just because we open below a fair price, really means nothing about whether that fair price will be a good place to expect a bounce.

Here is the relevant portion of my trading plan for this scenario today:



So while 96 may be important, the chart has shown no reason to really sell below that, yet. If sellers start becoming active lower, then it's a different ball game.

I also wrote this to remind myself of where we are:


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  #33 (permalink)
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Profiler View Post
Ideally I would like to spoos to open around 1493, push up to the 1495.75 MC vpoc and get rejected then travel lower down to the 1486.75 CHVN for a bounce up to 1490.25.


josh View Post
Here is the relevant portion of my trading plan for this scenario today:

If sellers start becoming active lower, then it's a different ball game.

I also wrote this to remind myself of where we are:




Hi guys, I'm not an ES trader but I do trade with VP, MP and VWAP. IMO, trading is an art not a science.

I've had this taped to my daily check list folder so long it's almost unreadable.

Don't wait for it to happen
Don't even want it to happen
Just watch what does happen

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  #34 (permalink)
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good call @josh, you prolly have a few more coins in your pocket after today while i have a few less (so far). i appreciate your comments, they are opening my eyes, keep them coming!

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  #35 (permalink)
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good call @josh, you prolly have a few more coins in your pocket after today while i have a few less (so far). i appreciate your comments, they are opening my eyes, keep them coming!

I did get the long at 93.50. But I did not sell the 97s/98s, as I was just too damned afraid to do so. I did not buy back at the 95 either, as a break out of balance as has happened today was not in my playbook. My play was to buy at the low, sell at the high (but only if it was VERY clearly a short which I did not see today), and then play the long side on a break up, short side on a break down, so my only buy now will be on a retest of the 98 area. Market clearly establishing value up here, but I am not willing to pay up this much. So I will only buy on a retest of previous value, down to 97.

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  #36 (permalink)
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@josh- im working a 98.25 long as well. whats going to determine whether you buy 98 or 97?

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  #37 (permalink)
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@josh- im working a 98.25 long as well. whats going to determine whether you buy 98 or 97?

Ideally it would be a sharp move down then another push or two lower, each time with less volume participation, a flattening delta, and a TICK divergence would be the icing. Also, just a general tape read to determine whether sellers have grown some balls or whether it's the usual. If that happens at 98s, I'll be a buyer there, but at that price I would prefer to see some buying response first before entering. I will almost do a blind buy at 97.25 if the above conditions look halfway decent. I do not need to see the market actually trade higher at that price before getting in, because responsive buying is all but guaranteed, and my stop will be tight even if I am wrong about that.

In my humble read of things, this market has already broken out and accepted higher prices, so anything lower than 99.25 will be at a discount at this point (funny how perception can change in a few hours isn't it?). FOMC, GDP, ADP payrolls all tomorrow, with China data Thursday night, and the big NFP on Friday, all reasons for people to perhaps preposition long and defend that position. Just thoughts and maybe totally wrong, and ultimately secondary to what we actually see, but it's still supporting data that can either be considered or ignored.

By the way, 99.25 is being well supported here and a buy here might well produce a good result. But it's just a personal choice to wait for a discount; that may lead to missing out on gains, and that is something anyone making that choice must accept.

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  #38 (permalink)
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So here is the current picture:



At this point, a move below 99.25 would indicate that the market auctioned higher for buyers, did not find enough, and could not find enough buyers at previously accepted prices (1500), and thus has to auction even lower. This move up out of acceptance, and back all the way through it, if it happens, needs to be approached with caution. If this happens, I would want to see very clear evidence of buyers found on the auction down towards 98, if it were to make it that far. Otherwise, we may have a strong responsive burst of selling which I do not want to step in front of. This is where I am right now. I am more willing to buy higher at this point (99.50 or so), but again, need to see buyers first because a move down to 1500 and lower means the auction higher did not bring in enough buyers.

This type of activity can be tough to play. Sometimes I miss out by not jumping in higher; sometimes it pays off very well. We can't always get it "right," so we have to make a logical decision and be okay with that decision and the risks it entails, whatever the outcome.

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  #39 (permalink)
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@josh-
yeah they didnt want to take it below that 99.25 CLVN/previous 2 days hi or whatever reason it was. 98 is now mid/IBHI/LVN so nice confluence there.

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  #40 (permalink)
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1. Sold 1496.5 1 tick ahead of pClose/2 ticks ahead of nvpoc on 2.25 pt move up. Breadth -29 and tick +184. Stopped after 6 min and .25 MF.

2. Sold 1495.5 mid on 2.5 pt move. Tick +50 and breadth -44. Stopped after 4 mins and .25 MF. Stupid trade, no edge, vpoc 2 ticks below then shifted to entry.






Recap
Spoos opened OAIR below value and responsive buyers immediately stepped in and took it to previous VAH where responsive sellers stepped in and auctioned it back down to lows aided by poor consumer confidence. Sellers have one good sell off in them per day it seems and after that they stepped aside as buyers went to work and spoos finally broke through 1500 level in a very trend-up type day. Price closed just a few ticks off highs. Vpoc moved higher and value area overlapped higher. Volume I guess was good at 1.26 mill, relatively speaking. Very pronounced LVNs at 1501 and 1498.25 left on the profile. That 1499.25/1498 area seems likely to be a key level in the days ahead.

My trading today was horrible. I definitely had a sell side bias (even though we are in a serious uptrend) and I front ran an nvpoc/prior settlement price by 2 ticks which is something I never do but I was anxious to get in. I got stopped at the then HOD. Then I sold a bounce to mid even though it had all the makings of the previous bounces off lows this market has been making in the morning. And the rest of the day I couldn't find a long set up since only 1.5/1.75 pt pullbacks were all that was offered. Feeling like I just have no clue what is going on...

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