Conscious trading. Speculative trading

[Mikhail Mercantilist]

Trading. Answering questions about trading and about (post 6)

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Q: Futures volume is not informative and misleading.
An interesting discussion, so what should ordinary traders do for us)

Michael (Mercantilist)
A: Setting limits on the best bid/offer, as well as lower/higher best bid/offer, is a normal market process. Limit orders are a static order, a dynamic market one. We ordinary traders need to treat this as a normal process, because it is a normal one. I think there is no difference if the deal is executed on a limit iceberg order or a regular one. Anticipating, "iceberg orders use big money to not glow", then you need to track these places as strong levels, I will say that big money in the form of iceberg orders also lose. At one time there were developments in this direction, whoever uses it can also confirm how an iceberg is pierced and large injections of volume. Anticipating, "you also use big infusions of volume", yes, I use both the surge and the volume fade. Even without delving into it, you can see how the price unfolds both when the volume fades and when the volume increases, so it is logical to use these two models. The market has 2 phases and this is not a flat/trend, but a correction/momentum, and in one phase the volume goes down, in the other it goes up. Therefore, if you wait only for a large volume, again, large is a relative concept, then being in a different phase, this volume may not be correctly interpreted. In general, there is no "only large volume, only small volume, only buys, only sells, only ..." on the market. The market is opposites that do not exclude each other, but rather complement, forming a whole.
What are the reasons to consider the volume not informative? It turns out that the transactions that took place on the future did not affect the price dynamics, the price moves due to .... I don’t know what to substitute instead of dots. Perhaps the formula by which it is calculated, right?)
But what about the proof of the price shift when making a trade? I will give an example that completely destroys all this theory about the formula, basic, not informative, it can be applied even with 1 contract. Between best bid/offer at least 1 tick, spread. At the moment, let's say, the best bid is 4237.25, the best offer is 4237.50. The price of flippers, which is called the last one, is currently at 4237.25. I make a purchase on the market with 1 contract. At the same time, the price will shift to 4237.50, regardless of how many limit contracts, contracts at this price, at least 1, at least 1000. The price will shift because my counterparty in the form of a limit seller is at a price of 4237.50. And no market maker permission, no formula, no price of the underlying asset can make this price shift impossible. This is understood by every practicing trader who has made transactions in the real market using a market order to enter. And now, I close my purchase on the market. What will the price do? It will shift to 4237.25, since the best bid did not shift when I bought, so the best bid in the form of a buy limit order is matched with my market sell order.
Now imagine that the position of collective purchases is 20K contracts and the price shift is 20 ticks. What happens if these buyers close using a market order, be it a stop order?
This example is rough, it does not prove that the price will definitely move by 20 ticks, since the limit liquidity may change, but it proves that the volume is informative, since if it entered the market and influenced the price dynamics, then it cannot disappear without having an impact.
Let's abstract from the market and take a hammer as a tool, which can be used to hammer nails, for example. You say that they cannot hammer nails, because when you hammered, you didn’t succeed, for a number of reasons, and you don’t understand at all how it is possible to do this with such a tool. It is difficult to imagine such a situation, having experience, practice and understanding of the principle of operation of this tool, right? And those who do not have experience, understanding, may well admit that the hammer is not the right tool. So volume is the same tool. Someone ignores the price, believing that it is not informative and misleading, but the phases of the moon provide answers to all questions and this is a real case, not irony.
Therefore, only practice and study of real processes can bring you closer to understanding, and by limiting yourself in this, you can stay at the level that the price of the instrument is formed based on the formula, the phases of the moon, and other things. Maybe it is so, I agree that mathematicians, astrologers are not upset, but the final price maker is the buyer / seller and the relative amount of volume, its analysis plays an important role.

 

[Mikhail Mercantilist]

Trading. Answering questions about trading and about (post 7)
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Q: Can higher volumes be non-stops?

Michael (Mercantilist)
A: Yes, they can. In terms of the market, one cannot be categorical. Therefore, if I am wrong in my interpretation of these volumes (feet) and present them as an entry/exit of a buyer/seller, and this is an axiom, there is no other way, then in fact it does not change anything. If the volume is for buying, the price will be driven up, if for selling - down. If closing, then after this volume, again, someone opening deals will move the price.

Q: "If the volume is to buy, the price will be driven up; if it is to sell, it will be driven down" Mmmm... but what about the correction ..? First, the same correction, and then continued buying / selling?

Michael (Mercantilist)
A: Correction is also buy/sell. Therefore, everything is taken into account and correct. Remove the word stop, in relation to the volume and evaluate it from the position of the buyer / seller. Where the effort is, the price will go there after the volume. And the continuation in the direction of the volume (the end of the correction) will be at the expense of those who did not close the loss and will exit.
There is an infusion of volume, its beginning is a fading volume, and its ending is a surge of volume. Above or below this beginning, depending on the direction of the volume, there are levels. If, after the volume, the price fixes above the beginning and the level that is above this beginning, then the volume pushes up. If the volume is directed down and there is no fixation, then it continues to push down. With ascending vice versa. If it fixes below the beginning and the level below, then it works down. There are nuances, but in general the principle is this.

Q: Is there a reversal without a burst of volume?

Michael (Mercantilist)
A: Yes, it happens when the price goes to the area of the stops, in the direction of the momentum, but there are no such stops. This means that the one whom we considered strong and capable of taking money cannot do this, at least at the moment. Accordingly, the fading of the volume serves as a signal for a deal, but in certain places.
Correction begins when there is a force capable, at the moment, to move the price in the opposite direction to the impulse. To see the beginning, you need to see the effort of the buyer / seller, depending on the direction of the momentum.
There are always volumes. Either they increase or they decrease. If the price moves against the direction of the impulse, then this is a correction.
There is volume in any price movement, but in a corrective movement, the volume is less compared to the impulse volume.

 

[Mikhail Mercantilist]

Trading. Answering questions about trading and about (post 8)

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Q: About the feet. Wait, we always watch the level?

Michael (Mercantilist)

A: Stops may not always be behind the level. Many of those who put a stop, convert it into a boo or trail the stop, as they were taught. Therefore, we do not necessarily expect a surge in volume behind the level. Yes, initially they concentrate there, but in the future they begin to move it.

By video. It cannot be categorically stated that stops should be only behind the level. How do we place them ourselves? With a margin, and suddenly a false breakdown, right? These are already experienced. Stops work where they are. That's what I decided for myself. If you conduct a survey in a group, then there are many options for exhibiting them. But they can be grouped into 2 main groups. 1. For extremum, +— 1 tick. 2. Some standard value, taking into account volatility, so as not to run into a false breakdown. It's more experienced. This is where they work from where they are located.

I think that it does not matter whose feet they are, to whom they belong. It doesn't matter what name or title the participant whose stops have worked has.

The main thing is to understand who is losing money and who is earning, respectively, after the last balance. At what not their names and status should be interesting, but the buyer or seller. After all, you must admit that there is no difference whether the fund lost money in this transaction or there is some name, the main thing is who he was as a participant, seller or buyer. And already from this information, further reasoning is built.

Here)) it is knowing who is losing, you need not to adjoin them. Or if you joined, then understand where you need to turn around in order to get out before they lose. And again, only from the position of the buyer / seller.

Also discussed earlier. To the left, it is always there, but this is not even the question, traders, fearing that the price might go against it, move it to the boo, trailing the stop. I met such recommendations, maybe I used it myself? As a result, there is no level as such, but the stop was moved. As a result, they work where they are. It doesn't matter if they're at the level or already moved.

You limit yourself to only those levels. Yes, they exist, and traders place stops for them, but...

1. It is for these levels, + - 1 tick in particular, that beginners put stops. Reasons that would not be much

lose right? What emotions? Fear!

2. More experienced and beaten by the market understand that this is stupidity, because there is a false breakdown, you need to proceed from volatility so that prices do not break the stop by "random wandering". Right? Accordingly, the stop will be at some remote distance from the level.

3. These are traders for whom trading is a business. Day after day they do the same things. At the same time, the stop for them is a business cost, an expense. That is, they know in advance how much they can lose in % of their trade if they are wrong. And the levels for them, for placing stops, do not play a role. Only how much they can lose and how much they can have from this transaction.

So, if you take into account all these groups of traders, and, accordingly, stops, then in the end you need to expect stops not at levels, but expect them as the event itself, if it exists, that is, stops. Otherwise, binding only to the level or %, we are limited in the visualization of processes.

And all this is not abstract, each of us can recognize ourselves in some of these points. Figuratively, if you put a stop behind the level, then it will work after it, and if you take into account the volatility, give the price backlash, then the stop will already be at a distance from the level. Which one doesn't matter. It is important that it worked and the analysis is built from this.

If the price went down and at the same time a sufficient volume came out, then the seller earned, and the one who sold him gave the money. Then buyers and sellers began new battles and the buyer pushes the price up, strengthens his position. Is he able to shift the seller's money into his pocket? Let's look at the volume. So if you do not let buyers make money, then the opposite is to make money for sellers. Well, if we are "parasites", which we are, because we ourselves cannot move the price, then we can only integrate, then to one, then to the other.

 

[Mikhail Mercantilist]

Trading. Answering questions about trading and about (post 9)
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Q: Previously, level 2 would have been used instead of level 1 - ie. the lower price limit between the penultimate volume infusion start point and the last volume infusion end point. And now, it turns out, you use that local minimum, closer to the center between impulses? And if the last volume had been significantly lower, would it have been the same as it is now, or is it still the same as before? And, accordingly, would change the position of the center line.
Michael (Mercantilist)
A: About the center line, what is the essence of it? It's boo buyers, right? Where is the beginning and end of buyers before the last impulse? Average between them? Here are the arguments. Linear, as the drawing will not work, there must be logic behind each line. The question is why do we take this or that level? If the boundaries, then for this purpose, if the average, then for another. What are the boundaries for? There may be feet behind or near them. Accordingly, when the price goes beyond them, we expect an event.
If there are stops - one model and reaction, if not - another. Medium, there may be an exit to zero for those who have not yet lost, but are ready to close, because they understand that they were wrong and correct it.
You see technically these levels. You need to explain them to yourself.
By the way, if the last impulse was above the low, somewhere in the middle, would you consider the low on it? Hardly. Do not limit yourself to lines, they will come by themselves, start from what is happening on the chart and what you are going to do.

Q: What is a level?
Michael (Mercantilist)
A: For me, the level, or rather a limited area, since the activity of buyers / sellers is concentrated in a certain range, because there is no one buyer and one seller, but there is a series of purchases / sales, or collective actions - this is the place where either there are conditions for opening transactions by participants, or for closing transactions. All this causes the price to move. That is, the level is the place where there should be activity, both for a breakdown and for a rebound, activity in meaning and in fact.

 

[Mikhail Mercantilist]

I no longer support the topic, due to the creation of my own platform - a forum where all the necessary information about the trading method is concentrated and practicing traders who use this method are involved. All relevant information is now there.