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Hi Peter, first of all, thank you very much for Jigsaw and more importantly for the manual/documentation that comes along with it. If I hadn't bought your software and read the manual, I would be far behind in my trading than I am right now.
I saw this question and your answer and I thought I might have something to contribute here. I dont use Jigsaw anymore (reasons that have nothing to do with the awesomeness of the product) so I do not know much about the swing meter and this post might be completely irrelevant therefore. But I am hoping it would help.
I came to a similar conclusion after watching the D&S on Jigsaw that if somehow the "Iceberg factor" (for lack of a better expression) could be accumulated on a "rolling" basis, it might be helpful to gauge where the "factor" turns in favor of either the continuation of a move during a pullback or a reversal. Also, for me, it had to be visual rather than numerical.
I am a programmer myself and I use TradeStation so since I had easy access via its API to the cumulative delta, I programmed my own version of the "Iceberg factor" and it looks something like this. This is yesterday's CL 500 volume chart and although I dont trade like this, I drew the developing support/resistance lines based on prior swing points to demonstrate my point.
It is really helpful for thinner markets like CL especially on rotational/range bound days like yesterday. I compute the cumulative delta on a rolling basis and when its rate of increase/decrease goes over a user specified threshold, display a dot identifying more than normal buy orders lifting offers in an upmove and vice-versa suggesting an accumulation or absorption of orders. When this happens at prior swing points or touches of trend lines in a move, it could be a useful tool as a confirmation for entry.
Just my 2 cents. I hope I understood the context of the conversation here correctly.
One of my favorite trades is trading the retest of an area. - the "second mouse gets the cheese" concept.
I had observed that exhaustion 5 and 15 minute bars were often retested at some point up the wick
before a leg reversal, forming double tops or "tweezer" formations. This trade works best at SR price seams,
of course, but I never knew WHY.... Also, where to place the limit order was guess work and a constant
source of frustration to see a PB come within 2 or 3 ticks of my order, only to hammer back and fly off without
me. (The beauty of this trade - almost instantly in the green)
Now, with the Jigsaw DOM's volume profile bit, I can see exactly where to place the order. It's simply supply
and demand. Price will typically retest where the supply drops off after a volume "spike" or "cliff"
I used to think these pull backs were random. Not anymore.
I will never trade without Volume Profile and Order Flow again.
Trading a pure naked chart without volume / order flow cues is gambling at best.
Scalping the bounces off these areas is actually quite easy now. The only thing in question, 75% of the time, is how far will it bounce, 4 ticks or 40 ...
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... and did I mention the Jigsaw support ? - stellar ..
Hi tderrick,
Thanks for your observation. Of cause all the knots very visible at Jigsaw DOM.. Perhaps I did not understood you correctly, but perhaps its easier to see such levels at footprint. What do you think?
Perhaps you have some specific examples of exhaustion 5 and 15 minute bars for some instruments, of cause...
I have been a huge fan of Jigsaw and could not trade without it, not to mention how good Peter is in terms of support,webinars, etc..
Now with regards with Cumulative delta, I have to admit I have never seen the use of it other than at extreme times (I.e, huge delta on one side with a price not moving or going the opposite way), and I must say I can't quite see how a delta between Buy/Sell when there is just as many buyers as sellers on each side can be representative if anything but an aggressive stance from one side or another at a given level. Adding the fact that by comparing Buy and Sell we are comparing 2 different prices, I can't get my head round to making much sense of this, but would love to hear more about it if some of you can use CD to their advantage.
Big fan of Jigsaw myself. Learnt a lot from the software and documentation. I will never forget what the sheep do
Not sure if this is the right forum to discuss my take on the usage of cumulative delta so I would just point you to a page in my journal which comes closest to discussing in more detail what I was talking about. This post discusses the theory that later materialized into the dots plotting on my chart:
I dont use tape or DOM in the traditional sense but I try to get a sense of when the orders are getting absorbed more and getting "collected" more than they are pushing price. In other words, I am looking at one form of the cumulative delta or …
There will be a Live AMA session on Wednesday, May 28th @ 12:00 PM ET.
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