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no trades today because today we had a labour day (day off) in my country so i went for a trip with my wife. from what i can see retrospectivelly now, today was another typical intermarket day for nasdaq futures. it surged on the stops of traders selling intermarket divergence.
one of the best signals for taking nq long was at 9:10 chicago time where we can see bigger clusters of trapped sellers reacting on quick price slide. they were exhausted at lower prices so the low of the bar the is the 100% entry point.
if i were sitting in from of the screen i would take this trade without a blink of an eye. no doubt about it. this is something absolutelly clear and visible
Normally i see you buy the low and sell the high against predictable retail sellers. This time you went with the short as price is going down from the open. This seems different from what you usually do. What makes going long in this situation stupid for retail traders? Thanks again
-Dan
nasdaq went low from the very open. it became undervalued (compared to other indexes). thus it offered a "hot opportunity" for buyers, who believed it should move up into the proper coralation with other indexes. they started buying but the price didnt move up. they were trapped.
i call them stupid because they are very predictible, and so their liquidity can be (and usually is) abused by someone who needs to open bigger side into sell side.
u know, if the market appears cheap, if the price is low and public traders start to think that "it should rise" i take short because i say NO to them - they are the losing mass. it wil not rise and it will slide agaist them. this was the case. the publicīs liquidity was abused to break to new daily lows
i mentioned today that i closed the trade on a "strong low" althought i wanted to hold the contract little bit further.
it appeared as a good decision becaue the market did not drop more, so here is litle bit more explanation what i meant with this term. strong low is something where i speculate that a trend comes to its end. when something seems to be a strong low, price should not move below (or if it does, it should be only for couple of ticks and reverse quickly - just like today).
there are couple of typical characteristic of a strong low
- volume gradation - volume should be higher that average, easily visible - when a volume is high, it means that the sellers and buyers were really fighting in that area and that a strong market auction took place. when a strong market auction takes place somewhere, and price reverses from there, the market should not go to that place again - the "winers and lossers" are already known so there is no point to test it again (today it did tested, but just for very little time and it reversed immediately)
- volatile bar the speed of the price movement is something quite interesting, because it often tempes reactive trader to jump into the trend, who are generally not allowed to take target. that means, price should not move lower.
- neutralisation of cumulative delta - this is something you can see with some time delay. but look at todays chart, from the open, there is very significantly negative delta, after that there is very significatnly positive delta. the market neutralised.
being able to recognize a stong low is uselfull for
- closing an opened trade (just lik i did today)
- oppening a reversal trade (after some time delay when it is more clear the market sentiment changes - today it was posible to take long from the bottom of a consolidation that appeared after the reveresal bar when it was quite clear that the sentiment is not bearish anymore. but these are trades i dont do really often. anyhow, it is a valid long scheme.)
- if a strong low is broken and price continues its way down, you can be quite agressive in jumping into trend because there is real power behind the movement down