PLEASE WATCH THE VIDEO FOR CONTEXT. It is long for a reason, as I discuss the various input factors that result in the conclusion, in this case, to go SHORT MNQZ23. Down below I will discuss the 5 (well really 6, but two of them are simply the same indication of price action) needed to make a decision to trade. All of this is developed on a 15-MINUTE BAR CHART.
What is NOT included in this video but will be discussed in another post is precisely WHERE I will enter and WHERE I will place my exit to the trade.
That will come shortly, lets just deal with the principles of seeing how price and various views of volume create an entry signal.
Here are the marked up charts and promised in the video:
Chart 1: The threshold price for which penetration can lead to a move down. To confirm it (something I will post in another session of “Setting Up The Trade”, some reasonable measure of penetration is needed. That will be discussed at that time.
Chart 2: Price momentum begins to fall with the moving average crossover ABOVE THE PRICE SPREAD that measures price direction.
Chart 3: The price potential of the short trade as shown by the lack of commercial holding in the volume profile (in purple, where there is little and black where there is none basically).
Chart 4: Lagging price/volume momentum as expressed by the ratio calculation provided by the platform builder.
Chart 5: Raw net volume (red meaning short, blue meaning long) is aggressively net short above the 50-period (12.5 hour) moving average of volume.
Chart 6: Binary price/volume indicator ( a fairly complex front-weighted measure of price and volume that I developed) shows itself to be falling (bearish) in the bar before trade entry. That is confirmed in the bar where the trade was entered.
All of that can be witnessed in real time. The only thing I cannot do is video it effectively because 1) I work two screens and 2) inevitably having the video recording in frame prevents me from operating the direct order management system effectively. Even though I have TradingView, it is still hard to cram it all into one space. I prefer to have two screens to spread out the data.
The trades are all set using bracket orders with sell stops and buy stops and limit buys or limit sells respectively to reduce the potential for price slippage.
I will figure out a way to do it eventually, even if it means a rewound summary of a trade.
I will get into more of the trade dynamics in another session of “Setting Up The Trade”. If you have questions, leave them in the comments and I will answer them as soon as I can! Thanks for supporting this Substack blog.
