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Dogpile

Taylor Trading Technique

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Hello WHY?,

 

Recognizing that my trading ignorance would fill silos: When you reference the dates and numbers below, is that the SPX? If so, I get my EOD data from TC2000 - so when I get home tonight, would I be able to look at the SPX and follow along?

 

Any chance you would consider picking an EOD stock or something like the QQQQ or SPY to occasionally discuss?

 

TIA

 

Gary

If you like name a individual stock or two in tc2000 you would like to track and/or the QQQQ and I will help in that area. I suggest get a decent price stock that has good volume and also out of curiosity pick a stock under 1.50 share (from .20 to 1.50) that has at least 100,000 shares on average (more is better) a day and doesnt trade in highly defined range, and we will track it

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WHY?,

 

if I use the 'look back at the last 10 days and the lowest low was the buy day' rule --- then today looks like the buy day. is this the kind of day you software adjusts for or are you sticking with idea that tomorrow you will only do a short since today was a sell day and therefore tomorrow would be a 'sell short' day?

 

dog

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<<What do you think dogpile have we bottomed on the S&P? Today is a taylor sell day.>>

 

lol. happily, I don't have to make that judgment --- I just take the set-ups as they come.

 

<<May I ask you where you would start and why?>>

 

well I was wrong on my count but I will tell you why I thought 10/11 was a day to look to short.

 

Because we had built a ton of volume at 1570 on 10/5. We tested up away from that on 10/9. 10/10 we build a lot more volume at 1570. 1570 had become a 'heavy' point and this price was high in the range. The gap up on 10/11 surprised me somewhat but given the volume profile and the fact that 4 of last 5 days traded 'low first, high last' -- I felt that it could be a bear trap. It was.

 

Taylor-wise, there were 2 low to high days and a violation of the 2nd high -- that is a short set-up in its own right. This was my thinking at the time. I was right on the bear trap and made decent money that day -- though only 5 or so points. This past Friday was a MUCH better day for me. The key to me is to just make money every day and occassionally you make that big win. 10/11 was not my big-win day, 10/19 was... just the way it goes.

Dogpile is it possible you are trying to use intraday volume info to help you determine if it is a B,S, or SS day? If so, then you could get caught on the cross currents of the day. Taylor is an EOD system that would use daily charts to make its decisions (if one uses charts at all). The intraday action at any one point would not determine what day of the cycle it is. That is determined by overall daily action as represented by a daily chart or just the numbers. All with an emphasis on the open, high. low close of THE day to determine the next day of the cycle. Each day that decision is already made BEFORE the market ever opens. The only thing intraday action is used for is for tape reading to fine tune the entry points within the main daily trend. But the main daily trend is already anticipated before the market opens.

 

Take today for instance, I mentioned in an earlier post that it was a Taylor sell day. With the previous weak condition of the market and the low close of 10-19 one would not expect an "ideal" sale day but a possible chance for BV. However, once it traded down and made the BV you would use intraday tape reading to decide if it had bottomed. If so ,you take a long position. In all fairness that would have been taken after the open this morning and not in pre market hours so one could have gotton in about 1499 or 1500 around 10.a.m. The rules on a BV state to sell the long position at or thru any penetration of the low of the previous buy day (in this case 10-19). By 10:30 you could have sold the longs at 1505 or should you have chosen to wait a little longer you could have sold the at 1515 or so. So you capture 5 pt or 15 points on the main part of the trend. You are out of the market for the day. The reason you don't hold that long for long or overnight is because the market is still weak. Showing a litte more strenght but still weak. BV are indications of weakness.

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<<Dogpile is it possible you are trying to use intraday volume info to help you determine if it is a B,S, or SS day?>>

 

I am not relating my volume analysis to a taylor day -- I am not a pure-taylor guy --- I am a hybrid -- I find things that 'speak' to me and use them. I use short-term set-ups that I feel have underlying 'concepts' -- like Taylors -- behind them. Thus, I think of Taylor for his concepts -- I think of Market Profile for its concepts etc.... I am just trading when the concepts I believe in align with my short-term set-ups.

 

I am here simply because I would like to learn Taylor better -- but I am a profitable trader without Taylor --- I would just like to understand True Taylor.

 

What I find is really sweet is when I learn something new and then sometimes that lines up with something else I know to be a profitable concept -- then you have more confidence to take that trade. That is what learning Taylor better could REALLY do for me.

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I am not relating my volume analysis to a taylor day
I thought you might relating intraday vol to the cycle because when I look at your post #63 you state you thought that 10-11 was a "for sure SS day". Then on your post #74 you mentioned "why" you thought that 10-11 was a day to short, that reason being the extreme vol around 1570 intrady on another previous day. So, I kind of put the two post together and thought you might be saying that the vol around 1570 on another day caused you to think that 10-11 was a for sure Short sell day.

 

Also, the pinball; isn't that Rascke's way or a modified Rascke way to rephase the cycle? Doesn't that operate on volume? Or have I totally misunderstand what pinball is about? It could be a way to get a clearer rephase???

 

If you arent using your analysis of volume and relating it to Taylor I would encourage to try and do that. You might discover a better way to rephase Taylor. Angell had his way, Rascke hers, Taylor could have, if he wished. I built rephasing into mine. I just havent really found that much benefit, if any, to rephasing. Maybe Taylor knew that, therefore he did concern himself with it??? Look at it this way. Over a 10 day period we are talking of aprox 3 - 3 day cycles. Taylor method is short term trading anyway, unless you are using it to trend trade. A lower low made 4 months ago wouldnt affect the price action today in terms of short term trading..at least not that much. Me thinks that the most recent price action, say 10 to 15 days, within its context (accum, dist, markup, markdown) would have more to do with the pressures of the market that would affect say the next 2 to 3 days time frame. So, I really just wouldn't worry too much about a day that 3 months ago was a buy day but when I rephase today that same buy day 3 months ago is now a sell day. It really doesn't matter. What matters is the shorter time frame. That is probally why Taylor never cared to go back more than 10 days. Does this make any sense or have I just confused the issue even more?

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<<Does this make any sense or have I just confused the issue even more?>>

 

 

I didn't say anything about going back 3 months so I am not sure what you mean by this last post. I was just asking if you thought today might have been action consistent enough with a 'buy day' to change your thinking for tomorrow. You mentioned today was a sell day and therefore tomorrow would be a 'sell short day' in which longs are not consistent with Taylor. Again, I am just curious on how you interpreted todays action with how it relates for tomorrow. I may very well go long tomorrow -- or I may not -- I am just trying to understand any 'adjustments' made in how you are thinking about it.

 

Today worked out well. We moved below the previous day low and could therefore use the previous day low plus a bit more as a target. This was 1505+ on the S&P futures -- call it 1505-1510.

 

This was a nice target to have (1505+) because I had no other pivot to work with given the trend-down nature of Fridays action. There was no real zone to short into -- therefore I favored the long-side early. I had the Taylor method as a roadmap and we had 'upside range expansion off opening price' (a market profile concept) as confirmation of that bullish roadmap.

 

I did a long-side trade and made some money this morning. Then later did a short-side trade and made a lot on that one. I then stopped trading though I really could have tried another long as my oscillators were extended to downside just as we re-entered that high-volume 1505 congestion zone. In retrospect on the day, I am pleased but feel I did miss a good long on Russell this morning -- but that is ok.

 

For tomorrow, here would be the my guidelines:

 

If today were a buy day -- I would actually look to go long on the day after a buy day if we test down 'first.' An obvious spot would be a test down into the high-volume 1505 area -- looking for a morning reversal and a range expansion type of move up. If we test up first tomorrow and it was a buy day, then I will look to short, should price action favor that (ie, not something like strong upward range expansion off opening price on big volume). I don't really see an obvious high-volume zone right now to short into so this might be tricky. But Taylor could also do a short on a move above todays high tomorrow -- so that is a possibility.

 

If today were a sell day -- tomorrow would be a sell-short day and we would look to short above todays high. No longs on a sell short day so that would not be an option. This is what you (WHY?) called today -- a sell day -- making tomorrow a sell-short day. Will just have to see.

 

If today were a sell-short day, making tomorrow a buy-day -- then we could go long on a viloation of todays low or on a 'higher bottom'. We could also go short on a 'high made first' type of set-up where we violate todays high tomorrow.

------------

 

Here is the funny thing, even if you don't know how to count Taylor days -- you have a 2 in 3 chance of being consistent with Taylor if you just look to buy on a test lower (lower low or higher bottom). And you have a 3 in 3 chance of being consistent with Taylor if you look to short a test of a previous high -- since shorting is allowed on any of the 3 days. Thus, the only time you will be out of sync with Taylor is the time you are going long right into a sell short-day. Does that make sense? You don't really have to count days -- you just have to be a good short-term trader and follow those basic rules and you 'can' be right 5 out of 6 times... I say this only because I can honestly say I don't understand how Taylor is counting days yet. I can 'try' -- but I just can't get definititive answers about how you KNOW this or that day was what.

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I didn't say anything about going back 3 months so I am not sure what you mean by this last post
. The three months statement had absolutely nothing to do with anything you have said and I didn't mean it to come across that way. I was trying to get the point over that what is more important is the closer action and it wouldn't matter if rephasing changed an orginal Taylor buy day to say a sell day that happened 3 months ago, or even say 1 month ago. That is all.

 

I was just asking if you thought today might have been action consistent enough with a 'buy day' to change your thinking for tomorrow. You mentioned today was a sell day and therefore tomorrow would be a 'sell short day' in which longs are not consistent with Taylor. Again, I am just curious on how you interpreted todays action with how it relates for tomorrow. I may very well go long tomorrow -- or I may not -- I am just trying to understand any 'adjustments' made in how you are thinking about it.
Taylor would maintain that tomm 11-23 will be a Short sell day IF he had been trading this stock for say 4 or 5 weeks.

 

Today worked out well. We moved below the previous day low and could therefore use the previous day low plus a bit more as a target. This was 1505+ on the S&P futures -- call it 1505-1510.

 

This was a nice target to have (1505+) because I had no other pivot to work with given the trend-down nature of Fridays action. There was no real zone to short into -- therefore I favored the long-side early. I had the Taylor method as a roadmap and we had 'upside range expansion off opening price' (a market profile concept) as confirmation of that bullish roadmap.

 

I did a long-side trade and made some money this morning. Then later did a short-side trade and made a lot on that one. I then stopped trading though I really could have tried another long as my oscillators were extended to downside just as we re-entered that high-volume 1505 congestion zone. In retrospect on the day, I am pleased but feel I did miss a good long on Russell this morning -- but that is ok.

Great! Glad Taylor is perhaps helping you fine tune. Every bit helps!

 

For tomorrow, here would be the my guidelines:

 

If today were a buy day -- I would actually look to go long on the day after a buy day if we test down 'first.' An obvious spot would be a test down into the high-volume 1505 area -- looking for a morning reversal and a range expansion type of move up. If we test up first tomorrow and it was a buy day, then I will look to short, should price action favor that (ie, not something like strong upward range expansion off opening price on big volume). I don't really see an obvious high-volume zone right now to short into so this might be tricky. But Taylor could also do a short on a move above todays high tomorrow -- so that is a possibility.

Nothing wrong with that thinking! Actually, by rephasing via taylor 10 day deal and calling 10-23 a Taylor buy day you have just created two possible opportunities for yourself. A short (probable because of the high close today 10-22) and then cover and go long on decline IF made early in the session. However, I would take care on that long. We got a little strenght back in the market today but it is still an extremely weak market. I wouldn't ride any long up too far unless the intraday tape tomm shows alot of strenght coming back into the market. If you take a long position tomm and market is grudgingly going up and it is getting in the afternoon I wouldn't hold that long for selling on 10-24 (as would be normal) but I would cinch my profits before the day closed. A weak close on a buy day is not good news for a long position. As Taylor would say "cinch" your profits.

 

If today were a sell day -- tomorrow would be a sell-short day and we would look to short above todays high. No longs on a sell short day so that would not be an option. This is what you (WHY?) called today -- a sell day -- making tomorrow a sell-short day. Will just have to see.
Yep, you got it. I will stick with Taylor on this one and call it a SS day. If the market would have showed more strenght today 10-22 I might would rephase (using Taylors 10 day guideline or my software rephase) and see if it would change tomm to a buy day. If it did I would be giving myself 2 opportunities. But since the market was stronger than 10-19 but still weak I'll stick to my SS bias for 10-23.

 

If today were a sell-short day, making tomorrow a buy-day -- then we could go long on a viloation of todays low or on a 'higher bottom'. We could also go short on a 'high made first' type of set-up where we violate todays high tomorrow.
That is correct. But to make it more precise; To go long it must do so early in the session. You wouldn't want to go long if it made the low at the end of the session tomm 11-23 even if tomm is a buy day. Also to short tomm if you call it a buy day that opportunity must present itself early in the session. You would not short on a buy day high made last for you would be bucking the trend.

 

Here is the funny thing, even if you don't know how to count Taylor days -- you have a 2 in 3 chance of being consistent with Taylor if you just look to buy on a test lower (lower low or higher bottom). And you have a 3 in 3 chance of being consistent with Taylor if you look to short a test of a previous high. Thus, the only time you will be out of sync with Taylor is the time you are going long right into a sell short-day. Does that make sense? You don't really have to count days -- you just have to be a good short-term trader and follow those basic rules and you 'can' be right 5 out of 6 times... I say this only because I can honestly say I don't understand how Taylor is counting days yet. I can 'try' -- but I just can't get definititive answers about how you KNOW this or that day was what.
Interesting eh??

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If you like name a individual stock or two in tc2000 you would like to track and/or the QQQQ and I will help in that area. I suggest get a decent price stock that has good volume and also out of curiosity pick a stock under 1.50 share (from .20 to 1.50) that has at least 100,000 shares on average (more is better) a day and doesnt trade in highly defined range, and we will track it

 

Hello WHY?

 

Thank you very much! A suggestion or two from me for the larger picks would be the QQQQ, CAT or GE. I like your idea for a small priced pick. First, I ran a scan for all stocks in the universe having a price between $.20 and $1.50 with a 30 days simple moving average of volume over 100,000. That scan provided about 120 stocks. So, I increased the volume to 500,000 and that provided the following:

 

ASTM CMGI CNXT CPST CRGN DVW ENCY GNTA IMH INPC INSM MCZ MGRM

MOVI NGEN NWD ONT OPTV POTP PTN QTWW REV SNUS TOA TXCC VG ZHNE

 

If you don’t mind, perhaps you could take a peek at a few of these and pick the one you think would be a good candidate. You would have a much better eye for this than me.

 

Most kind of you sir. Thanks and take care,

 

Gary

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Hello WHY?

 

Thank you very much! A suggestion or two from me for the larger picks would be the QQQQ, CAT or GE. I like your idea for a small priced pick. First, I ran a scan for all stocks in the universe having a price between $.20 and $1.50 with a 30 days simple moving average of volume over 100,000. That scan provided about 120 stocks. So, I increased the volume to 500,000 and that provided the following:

 

ASTM CMGI CNXT CPST CRGN DVW ENCY GNTA IMH INPC INSM MCZ MGRM

MOVI NGEN NWD ONT OPTV POTP PTN QTWW REV SNUS TOA TXCC VG ZHNE

 

If you don’t mind, perhaps you could take a peek at a few of these and pick the one you think would be a good candidate. You would have a much better eye for this than me.

 

Most kind of you sir. Thanks and take care,

 

Gary

Do you know how to create a watch list in TC 2000? If so you can be a help to me and save me some time. Create a watch list and call it Taylor. Put in all the stocks in your list above. Next export this to a file. Here is how I need you to export it from within Tc2000.

 

Exporting Stock Data to a file T2000

 

Download end of day data from wordens 40 minutes or and hour after the market closes. Select the Taylor watch list that has the stocks you put in there (this is very important as you only want the data for these stocks to be exported not on all 10,000 stocks). Next click on Databank at top then "export to text". Again verify that the "List to Export" now says "Export Taylor". Next instructions are VERY important. Follow them exactly. You should only have to do the following data field setup onetime not each day. You have clicked on "Export to Text" and you are at the export screen and have made sure that the list to export is the "Export Taylor list" Now to set up the data fields. Under "Available Data Fields" one by one select the below data fields and click the "add" button. You will have to do this for each field one by one. Select ONLY these fields and make sure they appear in ORDER in the right side of the screen: open, high, low, close, volume, symbol, company name, exchange, and the last field called Date YYYYMMDD. DO NOT select any other of the field options. Next click on "single file" and in the blank space type in this name for it: taylor.txt

 

Next select 40 days for the amount of data, then select the drive and directory where you plan to export it. Send it to a place you can readily find it such as C: or desktop. Next select "descending". Click on export. In just a few seconds it will export 40 days of data for all the stocks in your Taylor watch list. Email this file as an attachment to me. I am sending my email address to you via private mail. This is what I need you to do each day 1 hour after market closes (to give worden time to uodate all the data). Logon and update worden. Then export that tayor watchlist each day and send it to me. That will save me alot of time. Let me know of you can do this.

 

Thanks

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Just sent it.

 

Do you know how to create a watch list in TC 2000? If so you can be a help to me and save me some time. Create a watch list and call it Taylor. Put in all the stocks in your list above. Next export this to a file. Here is how I need you to export it from within Tc2000.

 

Exporting Stock Data to a file T2000

 

Download end of day data from wordens 40 minutes or and hour after the market closes. Select the Taylor watch list that has the stocks you put in there (this is very important as you only want the data for these stocks to be exported not on all 10,000 stocks). Next click on Databank at top then "export to text". Again verify that the "List to Export" now says "Export Taylor". Next instructions are VERY important. Follow them exactly. You should only have to do the following data field setup onetime not each day. You have clicked on "Export to Text" and you are at the export screen and have made sure that the list to export is the "Export Taylor list" Now to set up the data fields. Under "Available Data Fields" one by one select the below data fields and click the "add" button. You will have to do this for each field one by one. Select ONLY these fields and make sure they appear in ORDER in the right side of the screen: open, high, low, close, volume, symbol, company name, exchange, and the last field called Date YYYYMMDD. DO NOT select any other of the field options. Next click on "single file" and in the blank space type in this name for it: taylor.txt

 

Next select 40 days for the amount of data, then select the drive and directory where you plan to export it. Send it to a place you can readily find it such as C: or desktop. Next select "descending". Click on export. In just a few seconds it will export 40 days of data for all the stocks in your Taylor watch list. Email this file as an attachment to me. I am sending my email address to you via private mail. This is what I need you to do each day 1 hour after market closes (to give worden time to uodate all the data). Logon and update worden. Then export that tayor watchlist each day and send it to me. That will save me alot of time. Let me know of you can do this.

 

Thanks

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For 10-23

CRGN is an SS day - short at or near 1.00 - 1.02 if opens normal cover around .96

 

GNTA - Sell day - if it trades under 1.05 by noon go long on a bv when it bottoms. Sell long same day on any rally thru 1.05 to 1.08.

 

IMH - SS day - short near 1.06 /1.07 if it makes it there grudgingly by 11:30. If it starts up fast early in session hold off and short at a higher point. This stock can do that. Otherwise, do nothing on this one. No longs. Cover on any decline the same day.

 

MCZ - Buy Day - short on any penetration of 1.18 early in session but watch tape! Cover on any decline to around 1.09 to 1.10. iF it does all this by 12:00 then take a long postion around 1.08 /1.09 after covering your short. Watch the tape on this one.

 

 

Will send some more later. Gotta sleep.

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just my 2 cents:

 

individual stocks are loaded with 'chaos' in the short-run. I think you are better off sticking to liquid ETFs that don't have futures contracts attached to them. The ones I have been studying are EEM (emerging markets ETF trading 10-20 million shares per day) and XLF (the financial ETF which has been trading 60 million shares per day). The Brazil Index (EWZ) is also very active. XLE, the energy ETF, is very active but I just don't like the way it trades.

 

with ETF's, you will never have to worry too much about some individual stock rumor that will cause the instrument to drop -5 or -10 or -20% out of nowhere. just my opinion.

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XLE, the energy ETF, is very active but I just don't like the way it trades.

 

.

 

If you like to trade classical patterns, XLE has many clearly cut patterns on an intraday basis. I find it has less shakeouts probably due the fact it is driven by both equity and oil prices.

Sector ETFs as whole are good candidates for Taylor type of analysis

" Sector rotation = Big money manipulation."

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yah, sweet move off the violation of previous day high.

 

1505 is high-volume zone so no more shorting for me if/when it goes near there.

As Tayor would say it "penetrated" the previous days high and made the objective! If it hits 1505 area you looking to go long or call it a day?

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no, looking long potentially before 1505 -- just no more shorting if it goes that low.
Are you doing multiple shorting? Shorting intraday rallies ...covering on declines as it moves down?

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Just an update on the pennies trading taylor style

 

CRGN made target for shorting at 1.00. Wait for the decline to .97 or .96. Try to capt .03 anyway. It is hard to find a broker that will let you short stocks under 5.00 share but I am doing this so folks can see how taylor works on the pennies.

 

GNTA - No play today. Did not make a BV early

 

IMH - Short at 1.06 out .99 10,000 shares X .07 $700.00 or 5000 shares X .07 = 350.00. Not bad to make this on a penny stock. You just borrowed it for a couple of hours or so.

 

MCZ - short at 1.17 waiting to cover around 1.10 to 1.12.

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<<Are you doing multiple shorting? Shorting intraday rallies ...covering on declines as it moves down?>>

 

well, I only do a few trades a day...

 

I play:

1) the FIRST pullback in what I think is a new move

2) a good 'a-b-c' corrective pattern if the original move appears to have residual momentum

3) I fade moves when my oscillators are extended as we enter a 'high-volume' zone.

 

Those are my basic trades. Across ES, YM, NQ, ER2... a few trades set-up every day. I do miss some and that is frustrating.

 

Basically, I am just trying to do what everyone else is -- synchronize 2 timeframes. For you, it seems to be the Taylor/3-day type of timeframe with a 'micro-timeframe' -- you call it 'the tape' -- but same thing.

 

For me this is:

 

1) A Daily/Taylor type of timeframe with a very short-term timeframe (like you)

or

2) A very short-timeframe with an intermediate timeframe like a 15-min chart

or

3) A breakout from an area of known 'balance' - this is when daily and 15-min charts are both indicating the same thing --- both are 'coiled up' and ready for a directional move.

 

Some trades I will just play for a few points. Other trades I will scalp off some of it early and get a free ride for a bigger move.

 

I have opened a second futures account to try to trade some things with 'higher timeframe' hold -- more like trade just small size and look for the next 20-40 pt move on something like RUS.... not there yet though.

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OK, I am revealing my trade secret here:

(1) If prices stay above VWAP most of the day = Buy Day

(2) If prices oscillates above and below VWAP most of the day = Sell Day

(3) If prices stay below VWAP most of the day = Sell Short Day

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<<OK, I am revealing my trade secret here:>>

 

lol, there are no secrets -- just valid concepts.

 

here is my secret:

 

if todays VWAP > yesterdays VWAP, a big correction is a potential buy.

 

if todays VWAP < yesterdays VWAP, look for hard down - ie, downside range expansion off opening price... also look for 'low made first'

 

thus,

VWAP > VWAP[1] is most consistent with a 'sell day' (buy on weakness)

VWAP < VWAP[1] might be a 'buy day' if 'low made first'

 

most important:

be careful if 'range expansion off opening price'

and

be very wary of 'high made first' :)

and

err on the side of bullishness -- the market most of the time goes up -- or it drops quickly

if its not dropping quickly, odds are its going to go up soon.

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example of a 'set-up':

 

this is trying to enter for a move down on a 'high made first' day. The market has corrected UP on a 15-min timeframe with A-B-C type of 'structure'

 

see chart

5aa70e14404a1_Oct23RUSabc.thumb.png.d6966334be896a6ca208b7002e771287.png

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    • TPO chart shows important zones (levels) like POC, singles, value area). With Volume profiles we'll get information about volume distribution https://www.quantower.com/blog/tpo-profile-chart-and-trading-on-bitmex https://www.quantower.com/blog/trade-with-alpaca-markets-via-quantower#tpo-profile-chart-got-more-features-and-improvements also, we're discussing trading with TPO chart, VWAp, Volume profiles in Quantower Futures Trading group https://t.me/quantower_futures
    • Date : 23rd January 2020. How To Improve Your Trading Mindset 23rd January 2020.Our Head Market Analyst, Stuart, explains how to improve your Trading Mindset. Understand the importance of emotional control and discipline through an unmissable Q&A session.Always trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Bitcoin: Upcoming Halving And What To Expect Bitcoin’s upcoming halving will be one of the most followed crypto-related occasions in the year 2020. Thousands of cryptocurrency enthusiasts will be observing the markets eagerly to witness what effect this year’s halving will have on the cryptocurrency. Many believe that the occasion would have a positive effect on BTC’s price as has been observed in the past. On the other hand, some are expecting the price to drop dramatically after the occasion. Whatever the result may be, it is apparent that this occasion will be a defining juncture for Bitcoin. In this review, we breakdown what the Bitcoin halving is all about, some effects of this occasion, historic occurrences, and what to anticipate from this year’s halving occurrence. Bitcoin was built on a system that mandates regular halving (also known as Halvenings) to sustain its value. The halvings are programmed to happen every 4 years. Already, Bitcoin has witnessed two halving processes, the first in 2012, and the other in 2016. The next halving process is scheduled for the 20th of May 2020. Bitcoin’s Value Preserving Strategy Bitcoin runs on a deflationary economic model which ensures that over time, lesser and lesser Bitcoin tokens will be created until finally, the creation of new Bitcoin tokens will end. BTC’s total supply is capped at 21 million, meaning that it is impossible to have more than that exact number of Bitcoin token in circulation at any point in time. It has been estimated that the very last Bitcoin token will be mined in the year 2140. Bitcoin’s deflationary model predisposes it to scarcity which increases in demand, thereby causing its value to increase as well. This model is different from traditional fiat which is based on an inflationary model, this means that banks can instruct for the printing of more banknotes at will. This is not an ideal practice per se as a boost in the volume of banknotes in circulation could result in the devaluation of that currency. Bitcoin’s “Block Reward” System New Bitcoin tokens are pumped into the market through a popular process known as cryptocurrency “mining”. Bitcoin miners get rewarded with a Bitcoin “block” allotment every time they successfully solve transactions. The blocks are allotted by the Bitcoin algorithm. The block rewarding process happens every ten minutes. So in fact, ten minutes from this moment, new Bitcoin tokens will be created. Mining is not an easy process. It requires a certain level of expertise, specific hardware, and a serious quantity of electricity. After the inception of Bitcoin, the first mining reward was fifty Bitcoin. This meant that every ten minutes, a Bitcoin miner received fifty Bitcoin tokens for solving transactions. That number has since been halved, twice, and is now at 12.5 Bitcoin token per block reward. By May this year, the halving will bring that figure down to 6.25 Bitcoin token per block reward. This feature has been pre-programmed into Bitcoin’s system. What This Could Mean for Mining Lesser block rewards are not the only reason Bitcoin is scarce. It has gotten significantly harder to mine Bitcoin and receive rewards. This is because mining is now more difficult as more miners are entering the system thereby increasing competition. Consequently, an increase in competition means miners require more sophisticated tools to solve cryptographic Algos. Over the years, miners have created what is known as “mining pools” to better handle the rising competition of mining. Mining pools are a network of miners, collectively working towards achieving block rewards. Block rewards in mining pools are distributed according to the percentage of effort put into earning a block. Improved Stock-To-Flow Ratio Halvings have several profitable impacts on Bitcoin. One such effect is that it boosts the Stock-To-Flow ratio of Bitcoin. A commodity’s STF ratio is calculated by dividing the quantity of the asset held in reserves, by the quantity manufactured in a year. The greater the STF ratio, the lesser the annual inflation on that asset. Commodities like gold possess a very impressive STF ratio as its available quantity is limited. Presently, Bitcoin has a significantly lesser STF ratio, unlike gold. Regardless, more halving occasions will boost the Bitcoin’s STF ratio. It is even believed that someday, Bitcoin will surpass gold in the STF ratio rating and will be an even better store of value. This is probably why Bitcoin is dubbed “digital gold”. After-Effects of Previous Halvenings 2012’s Halving The first Bitcoin halving happened on the 28th of November. On that day, the cryptocurrency recorded a 6.5% trade range. Regardless, to the surprise of many, the price remained at a consolidated state months after the occasion. This was partly because Bitcoin was still in its infancy and so, not many people were engaged with it. Also, media coverage at the time was not what it is today, which means many people were not informed of what was going on. Based on the information on Bitcoin’s BNC Liquid Index, the price of BTC attained a high of about $32 on the 8th of June 2011. The price of BTC never broke above the $32 mark until the 28th of February 2013 (4 months later), where price witnessed a climb to $260 after which a drop was experienced and the price stayed below that level for several months. Fast forward to the 30th of November 2013 (close to a year after the 2012 halving), Bitcoin rallied dramatically and peaked at $1,167, which was a whopping 9,686% increase from the initial price of $11 on halving. 2016’s Halving On the 9th of July 2016, the second halving, the price peaked at $664 but did not maintain that uptrend instead fell to $626 on the same day. Subsequently, the price continued on that downward trajectory for about three months. However, things started looking up for Bitcoin from the 27th of October 2016 when price closed above the previous halving’s high of $664. Bitcoin later proceeded to smash its last all-time high of $1,167 on the 23rd of February 2017. This spike started the famous bull rally of 2017 through 2018, which witnessed a peak at $20,000 sometime in December 2017. 2016’s halving shot Bitcoin’s price from $664 to $20,000 which was a growth of 2,912%. Possible Outcomes of this Year’s Halving? In the crypto sector, the Bitcoin halving is undoubtedly among the most talked-about and anticipated occasions of the year. Presently, there are mixed expectations as to what the outcome of the 2020 halving may be. Many in the crypto sector are very optimistic and believe that, just as in the past, the price will soar dramatically either before or after the occasion. Creator of Kraken, Jesse Powell expects the price of Bitcoin to rise close to $100k or 1 million after the halving. The CTO of Morgan Creek Digital Assets also shares the belief of Jesse and expects Bitcoin to reach the $100,000 mark by 2021. He says that scarcity is a driving force for the demand of any commodity. He explains that the 2020 halving will cause Bitcoin to be more scarce. Other crypto players believe that this year’s occasion will not have a similar trajectory with past occasions and would, instead, mar the price of Bitcoin. Another possible scenario that has been observed over time is the “buy and dump” case. This scenario usually plays out when there is a highly anticipated occurrence. It works exceptionally well when the upcoming occasion is sure to have a quantifiable effect on supply and demand dynamics. The price of the asset in question experiences a huge spike just days or a few weeks to the main event. This transpires because investors stock up on the asset towards the event. After the event, however, the price of the said asset drops significantly. This kind of activity has transpired frequently in the cryptocurrency space. One such occasion was the Bitcoin futures trading releases for the CBOE and CME. Just a few days to the CME’s release, the price of Bitcoin rallied from $6,400 and peaked close to its all-time high of $20,000 in a day. Not surprisingly, the price dropped considerably in the period that followed those releases. Furthermore, some cryptocurrency experts believe that the aftermath of the halving has already been priced in. It has been observed that demand is “missing” in the Bitcoin market, this could be a clear indication that the halving has been priced in. Usually, months before a halving, a boost in demand and price of Bitcoin is always noticeable. This time, however, no increase can be observed in neither of the stated areas. In this case, it could lead to a lateral trading period which might be a good thing for traders. At the moment, Bitcoin is still struggling to break above the $7,200 mark and there are no signs of a reversal happening soon. Whatever the result may be one thing is for sure, the price of Bitcoin is set to experience drastic changes this year.   Source: https://learn2.trade 
    • Your All-Round Guide To Security Token Offerings Security token offerings (STOs) are one of the most revered investment options in the crypto space at the moment. It has even been termed the “future of fundraising”. But what exactly are STOs and what is the rave all about? This article aims to break down STOs, what it is all about, and how it can be beneficial to you. What Exactly is a Security Token Offering? STOs, simply put, provide a means of tokenizing fungible financial assets such as stocks, bonds, and REITs, and introduces the tokens to the public through regulated channels. STOs are a lot like ICOs as they generally involve the same processes. However, the differentiating factor between STOs and ICOs is in the tokens being sold. With ICOs, the tokens are usually non-descriptive and could range from anything digital currencies to utility tokens. With STOs however, the token is a “security”, meaning that it is exchangeable and possesses a set monetary value. Breakdown of Security Tokens Security tokens function as digital versions of the assets they represent. Here’s a list of some popular security token representations: 1- Capital markets: Firms can convert their shares into tokens, allowing investors to own parts of the firm. In some cases, owners of tokens receive dividends and can execute votes on the affairs of the firm. 2- Equity funds: Equity funds can also tokenize their shares for sale. 3- Commodities: Commodities like gold, natural gas, coffee can be tokenized. 4- Real estate: The equity of this asset class can be tokenized, much like how REITs function. STOs do not change the underlying securities, instead, it makes these assets more readily accessible on a digital platform. Unlike other digital assets, security tokens can only be traded on certain regulated exchanges. Some exchanges require interested investors to meet some set qualifications. Advantages of STOs STOs are formulated with regulatory-compliance in mind, unlike ordinary token sales. Security tokens provide its owners with several legally binding rights. Some security tokens even bestow its owners with rights to dividends or other defined streams of income. Security tokens are also beneficial to their issuers. From the onset, the entities issuing the tokens are aware that their tokens are being purchased by accredited and verified investors and so, they don’t have to worry about the credibility of their investors. Other advantages of STOs include: 1- It is adequately regulated: Entities issuing security tokens must operate under the guidance of designated regulatory agencies in the region like SECs and FTCs. 2- You can rest assured that STOs won’t falter in the future: Unlike ICOs that cannot be guaranteed, STOs are sure to always deliver because it is properly regulated. 3- STOs offer great convenience: Procuring security tokens is easy, straightforward, and stress-free. All you need to do is to adhere to the STO requirement in your jurisdiction and you’re good to go. 4- It can be programmed: Security tokens are programmable and can be facilitated by smart contracts. 5- Automated dividend disbursement and voting: Some security tokens are structured to send dividends automatically through smart contracts. Also, some security tokens provide the bearer with exclusive voting rights in the affairs of the entity offering the tokens. 6- It is a globally accessible investment vehicle: Investors across the globe can procure security tokens regardless of their location. 7- It is not susceptible to manipulation: Considering the mode of operation STOs are run by, big players cannot manipulate its movements. 8- STOs are very liquid: It is a very promising investment option as it has an impressive liquidity quality and can be traded easily. With benefits like these, STOs are for sure transforming the fundamentals of the financial sphere. Disadvantages of STOs As with every other form of investment, security tokens has its limitations and shortcomings. Some of these limits are: 1- It is considerably more costly than utility tokens: STOs, unlike ICOs, hosts many organizations in their fundraising campaigns. Also, regulatory fees are not cheap which makes it more capital-intensive to host STOs. 2- Investor Qualifications: Countries like the US have certain qualifications an investor has to scale before becoming eligible to engage STOs. According to the SEC to be an “Accredited investor”, you must have an annual income rate of $200k and above or a minimum of $1 million in the bank. 3- Specific trading conditions: STOs can only be traded on certain designated exchanges. Also, these tokens are time-bound meaning that you are allowed to trade these tokens between investors for a set period after the STO. The Howey Test Usually, tokens are said to be securities, by law, when they pass certain thresholds. One such way to identify a security instrument is by applying the “Howey Test”. But first, let’s look at a piece of quick background information on how the Howey test came to be. In 1944, a citrus plantation called the Howey company of Florida leased out a large portion of its land to several investors in a bid to raise funds for much-needed developments. The buyers of the land were not skilled or versed in citrus farming in any way and decided instead to just be “speculators” and let the experts do their jobs. The lease was made on the premise that profits would be generated for the investors by the lessor. Not long after the business transaction the Howey company was sanctioned and accused by the United States SEC of failing to register the sale with the authority. The SEC maintained that the company was dealing with unregistered security. Howey denied the claims however, assuring that what it offered wasn’t a security. After much debate, the case ended up in the Supreme Court, which later ruled in favor of the SEC that Howey’s land leasing were undoubtedly securities. It remarked that investors were purchasing land mainly because they saw an opportunity to make a profit off the deal. Howey was then ordered to register the sale. This was the story of the enactment of the Howey test. Today, per the Howey test, anything is deemed to be a security if it satisfies the following criteria: 1- The investment included money. 2- The investment was made on an enterprise. 3- Profit will be made from the efforts of the providers of the investment. The Howey test has become a stronghold name in the crypto space. In 2017 and 2018 (during the “Heydey boom”), many ICO providers were completely consumed with scaling the Howey test as it was a major determinant used in ascertaining the legality of an ICO by the SEC. Failure to pass the test meant the offering was illegal and was sanctioned by the authorities. Some ICOs even advertised their tokens as investment instruments that had no value, describing their tokens as “utilities” used only for interactions on the platform. The Inception of STOs The very first STO was released by Blockchain Capital on the 10th of April 2017. The release pooled about $10 million in one day. Several STOs have been released following the first event including tZero, Sharespost, Aspen Coin, Quadrant Biosciences, and many more. STOs have since gained widespread acceptance and relevance in today’s market. Understanding the Distinction Between Security Tokens and Tokenized Security Confusing security token for tokenized securities is a common trap that people fall into. The main distinction between the two is that the former is usually a recently issued token that functions on a distributed ledger system while the latter is just a digital manifestation of pre-existing financial instruments. Apart from similarities in appearance and nomenclature, security tokens have absolutely nothing in common with tokenized securities. What Entities are Involved in an STO Issuance? Assuming a business entity plans on issuing security tokens as an embodiment of equity in its establishment, the next necessary step for that business would be to involve certain players and follow certain directives. It has to formally contact an issuance platform to serve as a medium for issuing the tokens. Popular issuance platforms include Polymath and Harbor, which consist of service providers like custodians, broker-dealers, and legal entities to carry out secure processes. Who Can Invest in STOs? STOs are available to the general public for the taking, regardless of location. However, as mentioned previously, the US has certain rules guiding STO investments. In the US, it is mandatory to be an “accredited investor” before you can invest in this instrument. An accredited investor is an individual with an annual cash flow of $200k and above for at least 2 years or a net worth of $1 million and above. More nations are starting to adopt the United States’ classification method and have begun restricting certain classes from investing in STOs. It is advisable to always research on the STO rules and regulations of the jurisdiction you’re planning on investing with. Final Word STOs provide businesses with the prospect of raising funds in an easy and regulated setting. It gives both investors and issuers a good deal of benefits, while also ensuring insurances against fraudulent or malicious practices, unlike ICOs. Issuers are not limited to any industry, they can vary from several sectors including real estate, VC firms, and small and medium enterprises. Moving forward, we will likely witness prominent firms venture into the STOs.   Source: https://learn2.trade 
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