Month: February 2011
As an intra day trader, you have to keep an eye out for the volatility index.
A lot of people always think about the VIX as fear which is actually a skewed definition, though technically correct. The actual effect of the VIX is on the trading range for the day.
This is commonly referred to as the ATR or the average trading range.
Take a look :
I have smoothed the ATR with a 20 point moving average to give approximate values.
The chart of the Nifty projects an average trading range of 111 at current prices.This is way up from the 60 since last September.
There is additional movement to negotiate for the intra day player and he has to be careful in setting his stops and targets, as what worked for him maybe in sept may not work for him today.
The Bank Nifty’s ATR is at 289 up from the 160 in sept last year.
By far, the most toughest place to make money in the markets is through intra day trading.
Relationship managers from brokerages would tell you how their phone diaries and email addresses need an updation every month, as clients drop off in many cases never to return to the markets again.
At Vtrender we understand the pressures of intra day trading, which is why we have worked on a system which will give you consistent results irrespective of the movement of prices on your screen.
You need to know only two things if you want to trade successfully intra-day :
a) Know the Trend
b) Know your reference levels.
The charts which we use to trade everyday have the best trend indicators as well as the best reference points, the industry uses today.
Take a look :
The points marked in blue are the reference points and the points marked in orange is the reaction of Order Flow ( Trend Indicator) at these points.
Point 1 ( Blue ) : 5264 given as a ref level even in the chat room here and was the low of the day till the afternoon news broke.We booked overnight shorts here.
Point 2 (Blue ) : POC- we noticed the market’s reluctance to move above this level and waited for OF to confirm the red.
Point 3 ( Blue) : VAL- Notice OF going red again sending a clear message that sellers want action.
Point 4 ( blue ) : 5224 another HVN where we covered shorts and waited for the OF signal.
In The Bank Nifty :
Notice the high of the day is Value Area High and the Low of the day is another Important reference level. Notice how VWAP ( Orange Line ) helps to arrest the trend at numerous times during the day.
You do not need anymore. Trading is actually a simple job. It’s information converted to knowledge which yield successful trades.
You have to have the right information though….
As you know there is more noise than ever before in the Intra-day Time Frame.
One of the major reasons, why traders lose money is because they are constantly trading on the opinion of others.
Between the TV analyst calling for a bull run, the newspaper predicting a wipe-out and your friendly blog asking you to “stay with the trend”, you always are at a loss to take a correct decision on your trade.
What is sad to note, is that no one is willing to pass a basic eduction on trading the markets.
At Vtrender it’s been our endeavor to teach as many people as we possibly can, auction market theory principles, which help define the role of buyers and sellers in the market.
We like to know market structure and market development through the lens of the Auction Market process. We like to see favorable risk to reward trades in any instrument (stocks, bonds, futures, commodities — this methodology is robust). We like to interpret stock market internals, dynamic market relationships and most importantly – when to trade and when NOT to trade. Whether you favor short term intraday trades or longer term swing trades these same strategies apply.
This seminar is free (on Invitation basis) to all and will be held on Saturday 11.00 am to 12.15 pm.
This webinar should be a cornerstone for any serious student of auction market principles/Market Profile. We will address how to approach trading in the intraday timeframe and specifically how to “avoid the noise”. Myths and magic regarding “Market Profile” are popping up all over the place and with our experience with these concepts, we will expose the myths and magic in addition to showing what is valid and how it can be traded.
To receive an invite, send us an email to firstname.lastname@example.org.
The bid-ask process of the market is described as an auction. The purpose of an auction is to facilitate trade. The auction results in the formation of the value area which the buyers and the sellers agree as the fairest price for the day. As the auction moves away from the value area, buyers and sellers change their definition of value. If higher prices are agreed in the auction, value is supposed to move higher and consequently the market moves up. The market will auction as high as it needs to in order to find sellers or as low as it needs to in order to motivate buyers to see it as .
The rest of this page has now moved to – https://www.vtrender.com/what-is-the-market-profile/
You will find an elaborate explanation at the same place on all important MarketProfile concepts
Often a lot of people trading on Market profile use the clarity for sound intra day trade management.
We are one of those…
But there is a lot of benefits from stepping back and looking at the larger picture of the market, particularly at areas of congestion or at important reference levels such as the one we are at now.
So let’ s look at what profile tells us :
Here’s a monthly bar of the Nifty spot (taken 7/02/11).
There are references marked on the chart :
1) Point 1 is the excess low for the new uptrend from 2008.It’s a long term excess low.
2) Excess high marked the end of the earlier auction.
3) is another excess high from early 2011 and late 2010.
4) 4964 represents the fairest price for the move from point 1 to point 3.
5) is the breakout from this level in mid 2010
6) a one time frame market resulted from this breakout.
7) Did not take out the excess high from 2.
Let’s look at the weekly bar of the Nifty spot now (taken 7/02/11) :
1) represents the top of the break out zone from 2010. We are currently revisiting this area.
2) val from the breakout. Mkt stalled here 3 times during the up and the subsequent down move.
3) poc level. was revisited two times from the top.
4) vah level. A move above this formed congestion because of the earlier excess.
Nifty daily bar (taken 7/02/11)
1) taken from the preceding monthly chart. Note the balance zone right above it on the left. We formed a similar one on the right.
2) taken from the weekly chart.
3) again taken from the weekly chart
4) again taken from the weekly chart
5) one time frame control from 6200 levels at the top.
6) the balance zone near the POC created excess at the top and broke to the downside.
This morning the market is hesitating at the top of the bracket zone. Longer time frame sellers still in control of the market.
A break below would bring 5263, 5028, 4989 on the lower side.
On the weekly scale 5620 and 5720 will offer more resistance to an up move.
No long term view can be held till the previous excess at 6200 gets cleared.
We will keep reverting back to this chart for future reference.
Here are the OrderFlow charts for SBI and Reliance futures.
Over the week, we did some tweaking with our code and the final result is produced below.
An adamant pixels/bar in the platform prevents me from displaying more data than this on screen.
It was interesting to note that the sell-off from 5560 levels was matched in all the 4 orderflow charts yesterday.
Earlier this morning the market tried to auction unsuccessfully over the region of the 3 day balance profile.
The move failed and the rejection was even swifter playing out part one of the two likely scenarios mentioned yesterday
As the market groped around the 5476-5487 area to watch mentioned, we saw an OF continuing to be dominantly red, indicating that longs would have to be aggressive in nature at that point.
A probe back to VAL was rejected subsequently and the markets are currently at 5444 down a 100 points from value area high.