Tuesday, 12 December 2017

What are "THEY" Doing?

Reading this blog and if you've done any of my training or mentoring sessions there's one prominent thought that I have tried to ingrain in everyone when they are trading.  Always ask yourself: "What are THEY Doing". The "THEY" of course is the balance of the market. This is the nett order flow. Its also sometimes questioned as "who's in charge".

This is the very basis of trading. Everything I do, every mark on my charts, every thought in my head is designed to answer that question. Once I have that answer I know, on the probabilities but not absolutely, what should happen next. But I have to keep on asking myself that question as every tick unfolds so I know when to get out if I'm in or when to get in if I'm out.

The above is a Crude chart of 3333 contracts. The reds are the deltas of sells and the greens are the deltas of buys and the width describes the relative volume traded at that price.

This chart has no bells and whistles, no zimmer frame, nothing to take your attention away from what THEY are doing. Trading the right edge of the chart requires a lot of practice and observation. Adding a couple of indicators helps in the early stages but perhaps they become a hindrance as time goes on. The jury is still out on that.

But rest assured, the only thing that counts in trading is knowing what THEY are doing!

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