Cumulative Delta shows a lot of selling but price is not corresponding with similar drop in price.
Is not my type of trading in these sorts of positions but I expect price to break higher if (and that is IF) large buyers come into the market.
which just means market sell orders > market buy orders? to me, that doesnt mean much, even in conjunction with other factors.
being a cynic i wld expect (but dont know) there are algos, big participants (hedge funds etc) mixing up their mkt v limit orders, not necessarily purposely to screw up the delta graph, but that wld be a by product?
i need to look into footprint/vol delta etc more, not read enough on it.
The following user says Thank You to rosho01 for this post:
Yeah is the difference between market buy/sell orders-so if a red bar on CD then more sellers than buyers by the amount indicated.
You're dead on, it's a snapshot of one part of the market as limit orders represent a huge (and hidden) driver so I don't use it as gospel. As I said in my post where I explain what I look for, I only use it to judge where large amounts of traders are trapped.
If you don't use it in your trading and are successful without it then I'd leave it alone, no point muddying the waters!
The thinking behind my comment r.e. lots of selling on cd without a drop in price shows the 'potentisal' (but only that) for the following scenario:
1) lots of sell market orders vs buys and price hasn't moved. Shows the existence of limit orders holding the price up. So if large buyers come in, the sell market orders are exhausted and will not act as a brake on prices moving higher.
2) The sell market orders have eaten through the limit orders that have been propping the market up. If there is a concerted effort to the downside once again then prices should move dwon quickly.
As such it's dangerous to use it to open trades before the big guns have showed their hand. It provides (for me at least) a context for the move.
Here's what's going on right now (see chart). More selling. Price holding? Who will win?
The following 2 users say Thank You to Keab for this post:
In terms of trapped traders, the CD does provide an alternative view for the quick move down yesterday from 157.81 that (if I remember correctly) was to do with traders selling off as yields broke a 5 week low.
The CD shows something different (along with higher volume-will explain) and a different reason for this move.
I didn't spot this yesterday as I have my charts set to 500 ticks. It's good for spotting some things but harder to spot others-the trade yesterday was a glaring sell on the 5min but it was not as obvious on the 500tick so now have them side by side.
The chart shows 3 things (starting from the price at the top): A sharp move higher. This was accompanied by a strong spurt in CD. This was accompanied by a big spike in volume-clearly the majority of people are buying between 81-88.
Price then moves lower and beats the 81 area. Some traders will still be trapped, so when price returns to the 81 area then that's when I get interested as they will be selling to exit their position. This creates the initial move, and then traders like me jump on board to accelerate the move. That was a big moment for me, wondering why Support/Resistance exists-what is happening in the market to make it Support and Resistance? And the fact is that a lot of the big boys clearly don't trade with stops! They close their positions to as much to par/breakeven as they can when they;ve been proved wrong and price has moved against them. Otherwise-why else is price reacting like it does? People just hitting buy and sell because they are told that they are support and resistance? That's not a market/trading/supply and demand reason to move the market/provide liquidity etcetc.
Safe to say there has been b*gger all happening today for me on the Bund. It happens sometimes, but the day isn't over. And I get paid to wait!
Hope that clarifies things but like I said, you pick your levels very well, so if you're consistent with that then there's no point filling your head with an extra tool/bit of analysis.
In fact, having said that I apologise for this post if it muddies the waters and will happily delete. Just a bit bored waiting around for something to happen...
The following user says Thank You to Keab for this post:
Post away as long as it includes a chart and sensible analysis then wld be gd to get some more contributors with slighty diff methods. Now if you turned up with a chart with 15 indicators and a cumulonimbus candlestick pattern entry signal we may need to chat .
Your explanation makes sense, will respond later, got stuff on. I may be done for the day, not at screens for another hour.
Positives: patience up to an extent, & when pulled the trigger was confident, even when it retraced (though had to leave my pc).
Negatives: made a mistake whilst trying to job a few ticks & cost me over 30% of my day - stop scalping? missed one good trade set up. cld be more aggressive with smaller size but have had losing first trade last 3 days....torn.
overall am confident with my methods, despite a few mistakes.
have a gd evening all.
(dont have access to my logs, can post tmrw if anyone asks/cares)