Thursday, 11 February 2010

Could You have Taken these Trades?

This is the second of today's posts. More on the theme of delta divergence.

Below are the charts showing two DD trades - "Outside In" trades. I have included both the candle version and the Volume Footprint version as I have had a number of questions about it.


The two trades are the same but different. The same in that each have a new swing low with a green VB. So prices made a new swing low but the bar ended up with a positive delta.

Looking at context, the first trade was at the Keltner and near a Profile low that took out the IB by just one tick. CCI momentum was turning. Price was a lower low. This was a very hard trade to take. I have taken the smoothing off the CVD for these screenshots to show the raw data. Under the usual inside out setups, the entry for this trade was 13 bars later and 3.50 points higher.

The second trade looks similar. But the context is different. We are far from the Keltner and miles from any Profile support. I entered this trade 10 bars later as the context just didn't fit.

What additional information did I get from the volume footprint that a candle chart did not show? Probably just enough to get me into the trade. The bar that made the new low developed with the open less than the close so was a green candle. Buying at the offer came in as the range bar developed upwards with more volume in the top half of the bar than the bottom. Also, my exit stop would have been wayyyyyyyy outside the Keltner when it was not very steep downwards.

Hard to quantify all this as "rules". It's a picture I look at (Kiki did NOT take the trade) and process the information. It's a very hard trade to get right. What is important and where shall I place the emphasis? Without a higher low the risk is much greater. These outside in trades are tougher as I said.


  1. The second trade that you entered 10 bars later, what was it here that you did not like about the bar before it cross the ema, I believe this would be the 5th bar from the divergence bar.

  2. Could you possibly give a blowup view (zoom in) of the entry bars ... I would like to see their construction a little closer on one of those trades.

    BTW... what is your target ... the other side of the Keltner Channel?

    Is the crossover of the 6CCI over the 45 a pre-requisite?

  3. Anon, the EMA is a S&R for me.
    bakrob99, first target is 2 points and then I manage. Other side of Keltner is always a scale out point and I look for an end to the move and close out 100% if I think its there.