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How does one measure PRESSURE to the upside or downside?
What exactly could PRESSURE be defined as and is there a way to measure it. Like is it price or is it volume or what is it? Also how does one know that the PRESSURE is about to burst. What has to happen to get a clue. Any help would be appreciated.
Can you help answer these questions from other members on NexusFi?
Personally I would define pressure as trades @bid vs. trades @ask. But there are probably numerous other definitions.
Maybe THIS post can be of help...
For knowing when the pressure is about to burst you need a crystal ball...jokes aside, I found that I developed some kind of feel for it by watching markets for countless hours, obviously I do not match the accuracy of a crystal ball
There are many interrelated ways to get a feeling for future direction. Can you gather a few indications which when combine point to a probable outcome?
If pressure is the price movement determined by majority rule of orders placed after manipulation: what are driving forces behind price movement you can try and gauge?
Order flow?, patterns?, fundamental calls?, profiles? any other edge you can observe to see levels?
The aspects you judge depend on your method / objectives / availability - most importantly timeframe held and risk allowed.
Does digging around day after day for a good fundamental stock opportunity offer a more realistic means of growth than being on the right side of a short term trade over and over and over?
Warren Buffet made the joke: "we only need one good idea a year!"
It took me a while to realize how funny it was - as when you aren't moving massive funds all you need is one good pick a year to grow ;-) Can you balance?
Can comparing different markets and / or different stocks in the same sector shed light on current trends that may point to expected movement?
Has anything worked in the past? Could watching various webinars styles make something click? Can you piggyback the trades of someone who tends to be successful - it they make sence to you for that trade? Can you take the other end of the trade of someone who is generally unsuccessful like a forex broker ?
my platform doesn't provide bid vs ask data, so the closest calculation/study concept that defines pressure for me is DMI .. where the "DI+" expresses how much the bulls are "pushing" to take the high higher, while the "DI-" expresses how much the bears are pushing to take the low lower.. both expressed as ratio of the ATR .. when one of these directional indexes crosses over the other, you get a move in favor of the force behind it. if that move is supported by strong volume that has been accumulating in the same direction (fuel), it's probably a stronger move.. when that DI crosses a certain threshold (some use 20, some use less or more) you get a more sustained move of price.. that basically shows me that one of the two camps is now in control of the action.
I would say that if a lot of trades are happening in the form of upticks, then that would represent an upside pressure in that particular stock and vice verse.
I use a William Blau's Tick Volume Indicator, described in his book Momentum, Direction, and Divergence (Wiley). Fortunately, a very competent version of this was coded for MetaTrader 4 (I trade Forex) and is available here: Tick Volume Indicator v2 - MQL4 Code Base
As with any indicator, you'll need to play around with the settings to find those that work best for you. Currently, I use 8,8,3 on my 5-minute charts, and it is very helpful. Combined with some sort of support & resistance tool, such as pivots, it can be the basis of a good method.
Thanks Scratchman, I use Ninja Trader but your indicator sounds something of interest.
Do you know if it is available for Ninja. Or maybe one of our fellow members can convert it into Ninja.
Sorry, Hector, I don't know of a NinjaTrader version, and I couldn't find one, which surprises me. Perhaps someone on this forum will be inspired to create one.