Real Time Price Action- Clue to Puzzle?

[DbPhoenix]

Getting back to the chart posted in #24, it appears that we are going to work this zone for a little while longer since the bulk of the activity is between 1740 and 1830, with the midpoint at 1785. So we focus on possible levels of S/R within this zone. 1750, 60, and 70 were confirmed, and 40 was important again. So this provides us with levels of interest going forward.

[zeon]

	Quote:	DbPhoenix
	Getting back to the chart posted in #24, it appears that we are going to work this zone for a little while longer since the bulk of the activity is between 1740 and 1830, with the midpoint at 1785. So we focus on possible levels of S/R within this zone. 1750, 60, and 70 were confirmed, and 40 was important again. So this provides us with levels of interest going forward.

Sorry if I missed this elsewhere, but does the colour coding has a special meaning? I understand that the thickness of the lines represent major and minor support, so the red lines are minor and the magenta and cyan line is major (correct me if I'm wrong). Does cyan always represent support and magenta resistance? And if so, is blue always the colour you use to identify the midpoint? Perhaps a short chart legend is in place.

[AgeKay]

	Quote:	smwinc
	Price action is "it". Everything else is secondary. Sounds simple, but its ridiculous how often it's forgotten. PPM - Price Pays Me. A rally on weak volume with no interest from buyers that hits resistance left right and center is STILL a rally that pays you if you were long, and gives you a loss if you were short. Studying anything - VSA, tape reading, etc. - needs to be referenced in context to which MARKET we are talking about. When you read the tape, you are analysing what other traders have DONE. When you study the depth of market, you are studying what you THINK traders are ABOUT to do.

Man, you are sooo right about these points. So many people are caught up in technical analysis (of which 99% is myth, stupid conclusions and wrong interpretation) that they can't see the simple truths of trading. Great post!

	Quote:	smwinc
	The DAX has every man and his dog trading it - retail guys across Europe and America, big funds, automatic trading, the lot. In my opinion, it is a very good candidate for reading price action. I like to know my S&R levels, and then "live in the depth" of that market, and glance at the chart occassionally.

I disagree, if you want to trade the DAX, look at what the Dow Jones Euro Stoxx 50 is doing since the DAX is following it "tick by tick" (each tick in the Dow Jones Euro Stoxx 50 moves the DAX by 4 - ticks on average - 0.1 seconds later). Just watch the DOM of both side by side and you'll see it.

[AgeKay]

	Quote:	DbPhoenix
	Consider, Sledge, that price is continuous, as is volume (that is, trading activity). Therefore, there is no "close", at least until everybody goes home and turns out the lights. What we perceive as a close is merely a function of whatever bar interval (time, range, constant volume, etc) we choose to display the movement of price and is entirely irrelevant to that flow. What matters more are the ebb and flow and their character: pace, extent, range, etc. To better see this ebb and flow, you may want to use an even smaller interval. A tick chart may look like flies circling over poop, but something like a 5-second chart will enable you to see this ebb and flow without being distracted by the OHLC. Once you become attuned to this, you'll detect the flow even in an hourly or daily or weekly chart. Some will object, of course, that whatever goes on in these teeny tiny timeframes is "noise" and is irrelevant to the larger, more "important" moves, but this is akin to saying that ocean currents are noise and irrelevant to the larger, more important moves. It all starts somewhere, and the trader who is attuned to these seemingly insignificant changes in price movement is going to be virtually shockproof when price suddenly starts hellbent in some new direction. Db

I absolute agree with each and every word in this post.

Time periods (with the exception of the open to close of a trading day) are completely arbitrary. Imagine the time on your computer being off by just a second or your data feed lagging by a second, all of your chart patterns and indicators might give you completely different values even though the actual trading that took place has not changed at all.

I've also found that there is no noise in the market. I could even say that longer term price movements are more random than short term price changes since long term price movements are just a function of all this 'noise' in the short-term. Each trade is significant and can change all trades following it (like the bufferfly effect). Imagine one contract changing the best/bid ask price because there is only 1 contract left in the limit order book on one side. This price change could trigger buy/selling by other traders which could trigger even more orders. All of the sudden, the market is going down/up hard while you're still waiting for your bar to close.

[tune]

I vividly remember the first time I had a multiple tick chart line running side by side with live 5 minute candles. I was amazed to see this little world working away inside. All the same things were there, just much smaller. Like an intraday chart is to a daily.

[erierambler]

Pre day snapshot that I look at.....
erie

[smwinc]

	Quote:	AgeKay
	I disagree, if you want to trade the DAX, look at what the Dow Jones Euro Stoxx 50 is doing since the DAX is following it "tick by tick" (each tick in the Dow Jones Euro Stoxx 50 moves the DAX by 4 - ticks on average - 0.1 seconds later). Just watch the DOM of both side by side and you'll see it.

Correct, sorry I should have been more specific. The difficulty with the DAX following the ESTX50 is that many people are too slow to implement it. I trade through a fixed leased line to the Eurex, but I'm still never going to be faster than a local.

Anyone trading out of Europe is looking at around 300 millisecond delay on a good fast connection through TT.

Worse, if you're a retail trader trading through your own internet PC at home with any common broker, you literally will be trying to hit prices that are no longer there.

I execute through TT, and have ladders for ESTX50, DAX, Bund, EUR futures / Pound Futures, S&P and the FTSE.

Something a little different, but I watch thinner (closed) markets like the night Nikkei. If a move is a fundamental 'shift' in the direction, you'll see the bids/offers flow into closed Asian markets as they are arbed up/down.

When it's just locals in the DAX running stops, it's unlikely you will see any confirmation from other less-related markets.

SMW

[DbPhoenix]

	Quote:	zeon
	Sorry if I missed this elsewhere, but does the colour coding has a special meaning? I understand that the thickness of the lines represent major and minor support, so the red lines are minor and the magenta and cyan line is major (correct me if I'm wrong). Does cyan always represent support and magenta resistance? And if so, is blue always the colour you use to identify the midpoint? Perhaps a short chart legend is in place.

The blue is support/demand and the pink is resistance/supply. The red is tentative. Dashed is even more tentative. So you figured it all out without me.

This is what I use in my book and in the other stuff I write, but it is essentially for me. I'd like to have some sort of Dr Seuss blue and pink intermittent dashed line for those lines that can't decide what they want to be when they grow up. And lines come and go and get adjusted as price sniffs around looking for trades. But that's RT trading.

[zeon]

	Quote:	erierambler
	Pre day snapshot that I look at..... erie

Erierambler, it's not really clear what I'm looking at. What market is that?

[DbPhoenix]

	Quote:	Nvesta81
	You know, as arbitrary as it may be I find that S/R normally finds itself pretty much spot on with classic daily pivot formula on the YM. Previous lows and highs on the chart barely seem to affect price action. Or maybe it's just me... shrug.

The pivots do seem to "work", but they are so far off the actual turning points that they can be used only as a guide. I suppose they are most useful for those who have no idea how to located S/R. What I'd suggest for those who want to learn, though, is to plot the points, then extend those lines to the left to find those levels that have been repeatedly tested, then focus on those levels themselves, using pivot points as training wheels.