I still have difficulty with the concept of the professional activity indicators. Without knowing the strategy of the players involved then how can we use the information to our advantage? The professional activity could quite easily be the result of a fund hedging or a long term trend algo taking a position on an hourly time frame in an opposing direction.
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I paid attention to this today and I think it's a double-edged sword.
Let's say price is going low and comes up on a MP level and stalls. The sine wave will, if the market is near the end of a down move, it will detect the stalling as an end of the move and the sine waves cross and you get a new up cycle. However price wasn't finished moving down, it was only stalling it. That's how you get sine crosses "early". This is what happened on the last failed long.
Really I'd like to wean myself off this sine wave indicator but when it works it works really well.
Excellent point. I'm sure that is happening, but it'd probably be happening throughout the day. When these indicators detect higher professional activity than usual, then I have to assume price is more attractive to them than usual and they're taking advantage of it.
For higher timeframes.. professionals don't trade off charts, that was in an earlier post and since no one disagreed I assume everyone agrees. So they're not entering on an hourly bar or whatever. They're entering at a specific price level. That price level can be determined in any number of ways, I gave an example in my post about this.
For hedgers.. I think if they were going short as a hedge they'd do it before a 50 tick slide. These guys are professionals after all.
Even if the theory may be difficult to accept, we then have to look at empirical evidence. I'm convinced that when these indicators signal blue bars it's often at turning points. I'm hoping my theory will hold up to the challenges of everyone here. Professionals aren't always right, sometimes they're early (as in my failed long) but overall I think the odds are much better if one takes these signals into account.