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How Important Are Trade Flow and Block Trading #'s when Daytrading?

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I was shown a site (Avafin.com) that keeps track of Trade Flows and Block Trades.

 

Now what I don't get is on a day like today there were the following:

 

SPY Total Trade flow

1.19 buy/sell ratio

$2.58 billion in positive cash flow

 

SPY Total Block Trades

2.21 buy/sell ratio

$1.06 billion in positive cash flow

 

Yet the market got slaughtered, in particular the SPY. How could there be such a negative impact when the inflows and block trading were green all day long? I'm trying to figure out how to apply information from that site correctly. I've long heard to follow the block trading, but obviously it can't be viewed in a telephone booth.

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I was shown a site (Avafin.com) that keeps track of Trade Flows and Block Trades.

 

Now what I don't get is on a day like today there were the following:

 

SPY Total Trade flow

1.19 buy/sell ratio

$2.58 billion in positive cash flow

 

SPY Total Block Trades

2.21 buy/sell ratio

$1.06 billion in positive cash flow

 

Yet the market got slaughtered, in particular the SPY. How could there be such a negative impact when the inflows and block trading were green all day long? I'm trying to figure out how to apply information from that site correctly. I've long heard to follow the block trading, but obviously it can't be viewed in a telephone booth.

 

Watch it for a while to be able to draw conclusions of its usefulness.

 

I could be that the net was a result of bottom fishing, stealth hedging of options or futures, or short covering.

 

In order to use it you have to know what to expect next if it is either a, b, or c.

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As with most things in this business, what matters is whether or not you have the skills and the experience to make use of the data.

 

For Blocks, you want to know the VWAP at time of execution. Would also be helpful to know which block "house" did the transaction, and whether it was an "aggressive" or "passive" transaction...most block transactions are consummated at a consolidated price that takes VWAP into consideration....you also want to know if the buyer/seller holds the position (which is customary) or do they abandon it minutes later at little or no profit, just to soak up liquidity...For example an aggressive buy at or below VWAP means that someone (usually an "informed" participant) believes the market is moving up in the near future. That "informed participant" is usually not the owner of the original block, but person handling the block trade on behalf of the "house" (the block execution firm). "Just watching it" for a while will do you no good (sorry MM) unless you have some context from which you can draw conclusions..

 

In other words you need to do some research...fortunately the info is available...once again I don't have time to put on a seminar but you can start with ZeroHedge and move forward from there as you see fit....when doing that research be aware that articles/citations pre 2005 will be of limited use to you as they usually don't take HFT into consideration.

 

Good luck

Edited by steve46

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