Tuesday 19 January 2016

Seeing Orderflow Change to Sell where I Expected It.

As I have said so many times - Context Rules. The pix below shows the bigger picture first: The market traded a swing down and then retraced - our typical pullback in the direction of the trend. While we used to just use the CCI to track this we can now use orderflow. The indicator is the Logik Volume Wand which creates the Volume Profile of the swing. There is also the VWAP there. The second pic is a close-up of where the trade triggers. As I said, there was a swing down and then a retracement. The retracement went to the POC of the swing and right below the VWAP - VWAP is the average value of the swing. The red arrow shows orderflow changing from buy to SELL and this is the trigger.

The context is very important as orderflow changes direction often and often without follow through. What is different here is that the context says that if the orderflow changes direction at the POC or VWAP then there is a good enough probability that there will be a big enough move in the direction of the change. The next piece is the trade management: stops and targets. This last piece of the trade is a very big part of being CP.


5 comments:

  1. Do you use 2 charts per market? One normal range bar chart for larger context and one volume imbalance footprint chart to see inside the bar?

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    1. Its just one chart. 1 click changes the VI into candles in a blink. Technology is great!

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  2. jenrique42

    me gustaria saber en donde se encuentra la publicacion de su libro aunque solo sea en formato PDF
    al final lo va a publicar usted o no ?

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  3. interested in Logik Wand Volume v Market Delta - can Md not do this? rgds, Joe

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    1. It can do the VPs very well and you can use the VAH and VAL and POC but I haven't tried adding the VWAP to just one VP over, say, 10 bars. Talk to support at MD as they may have a way to do this.

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