[snackly]

I am wondering about the technical end of this. For example, is it better to have a broker's tape feed that is never latent, such as InteractiveBrokers which gives approx 5 updates per second, or to have a feed like ZenFire which supposedly gives the full stream of ticks but can lead to bandwidth overload and latency?

I guess for Wyckoff the pure tick stream of quotes is not terribly important, its the time and sales that constitutes the tape, right? Does anyone know if the time and sales of any one broker is better than the other? Speaking mainly about CME Futures for the sake of argument?

Thx.

[sevensa]

Snackly

Can I kindly suggest to read up and study Wyckoff a little more? I don't mean it in a harsh way, but the questions you are asking about Wyckoff doesn't sound like you had read up on it yet. If you did, my apologies for my assumption, and I would suggest that you read the material again. Wyckoff is not just about reading time and sales.

Also, the question about if data speed is important, is not relevant to just Wyckoff. This is relevant to the time frame you are trading. If you are trading off daily bars, the datafeed speed is irrelevant. If you do scalping off 1 second bars, then it probably is. However, your question is not really a Wyckoff question, it is a time frame question.

[sevensa]

Originally Posted by snackly »

What's to stop dumb money from shorting the contracts after they've sold the ones they held to smart money, further depressing the value?

Nothing. This is why not everyone obtain unlimited wealth with trading and why you have to study price/volume at key points.

Am I still wrong in thinking that the Wyckoff method or supply and demand have more demonstrable at the material level with equity issues?

Yes.

On an side note. If you are not comfortably with any kind of method and don't believe it will "work", then don't try to use it. You need to find something you are comfortable with and works for you. You will waste your time and trading capital if you try to implement a method, you deep down never really trust, even though someone else is wildly successful with it and tell you it will "work" for your market.

[snackly]

Originally Posted by sevensa »

Nothing. This is why not everyone obtain unlimited wealth with trading and why you have to study price/volume at key points.



Yes.

On an side note. If you are not comfortably with any kind of method and don't believe it will "work", then don't try to use it. You need to find something you are comfortable with and works for you. You will waste your time and trading capital if you try to implement a method, you deep down never really trust, even though someone else is wildly successful with it and tell you it will "work" for your market.

Right, I'm not at the point where I don't trust it. In fact I am very much buying it. Please don't take my questions as a means to criticize it, I'm just looking to pose the devil's advocate type of question to see how much folks have thought this stuff out.

I appreciate the answer.

However I should point out that in the equities world, what would stop the dumb money from shorting after giving up all their shares to the accumulating smart money would of course be the lack of outstanding shares in the market. At least on a theoretical level Wyckoff works better in equities it would seem.

But it sounds like from the feedback that people feel it works just as well in futures, including FX futures? What's interesting though is that FX Futures should correlate 99% to the spot rate, correct? And the spot rate drives the future. So the accumulation of the FX futures contracts should coincide with the smarter understanding of the current and immediate direction of the spot rate, and therefore the lack of interest from smart money would probably have a profound effect on the ability for dumb retail FX traders to short a major pair and make it go down. It simply couldn't happen due to the imbalance.

Am I getting that all right?

[Bearbull]

Originally Posted by snackly »

So essentially the accumulators or smart money in the derivatives markets are buying the contracts at the low prices from the dumb money.

What's to stop dumb money from shorting the contracts after they've sold the ones they held to smart money, further depressing the value?

And thanks to all who replied, much appreciated!

Once again leave out all this Smart and Dumb money rubbish, KEEP IT SIMPLE focus and learn to gauge Buying and Selling pressure Via Price and Volume at Key levels , there is enough info freely available in the Wyckoff forum to enable you to carry that out if the required effort is made.

The alternative is to carry on , on the same path, even join the VSA club where they teach you to attach meaning to every single bar, where smart money or dumb money has entered and exited, hell if you might also pinpoint where the smartest money (Professional traders and VSA Experts and their disciples) came in, afterall they are able to track the smart money.

Choice is yours.

[Frank]

you are asking a question about why the structure works. there is an arbitrage mechanism here that makes it work and the mechanism is the expiration. Without a mechanism for arbitrage, then it wouldn't correlate 99%+

Closed-end funds do not have an arbitrage mechanism --- and so the funds trade at big disounts/premiums to their underlying net worth -- so there is significant 'tracking error'. If closed-end funds 'expired' at a specific date-- then you could arbitrage it.

Exchange Traded Funds do not have an expiration so they came up with a different structure for arbitrage. They created a third-party into the mix to create or redeem the ETF shares should they trade out of line with the underlying index. These third-parties can arbitrage this with a simple computer program and do it for risk-free profits.

[lote_tree]

So essentially the accumulators or smart money in the derivatives markets are buying the contracts at the low prices from the dumb money. At the point at which they've bought most of that they've effectively deprived the dumb money from selling further and from selling much of anything to each other both at the psychological level and at the material level since they've bought most of the contracts that dumb money had been holding? Hence at that point the price begins to rise as the smart money withholds their inventory?

I see that you're confusing the futures and cash market here. Remember, the price changes in the S&P 500 futures market is 98% governed by changes in the S&P 500 Index price. Obviously the price changes in the S&P 500 Index is governed by the buying and selling of company shares listed on the Index. The buying and selling of Futures contracts in the Futures market has minimal bearing on the futures price.

When referring to smart money or dumb money accumulating or distributing it's the action in the cash market where the big blocks of shares being swallowed up by the smart money that's important not so much the action in the futures market. However, the smart money will start buying futures contracts in anticipation of price rises once they have cleaned everyone out with most of the shares. That's where VSA and Wycoff can help with the Volume analysis part of the equation.

So the dumb money can short sell as many S&P 500 futures contracts as they want during the smart money share accumaltion phase in the cash market. The price of the futures contract will only go down if the cash market will allow it. At the end of the day it will be the buyers on the otherside of the Futures trade that will be making the big bucks!

And btw, I am talking about FX Futures although I suppose it shouldn't really matter.

It doesn't matter whether it's FX or anyother instrument. The basic principal remains the same. The movement of the GBP Futures, EUR Futures or JPY Futures price is goverened by the FX cash market.

[snackly]

Originally Posted by lote_tree »

I see that you're confusing the futures and cash market here. Remember, the price changes in the S&P 500 futures market is 98% governed by changes in the S&P 500 Index price. Obviously the price changes in the S&P 500 Index is governed by the buying and selling of company shares listed on the Index. The buying and selling of Futures contracts in the Futures market has minimal bearing on the futures price.

When referring to smart money or dumb money accumulating or distributing it's the action in the cash market where the big blocks of shares being swallowed up by the smart money that's important not so much the action in the futures market. However, the smart money will start buying futures contracts in anticipation of price rises once they have cleaned everyone out with most of the shares. That's where VSA and Wycoff can help with the Volume analysis part of the equation.

So the dumb money can short sell as many S&P 500 futures contracts as they want during the smart money share accumaltion phase in the cash market. The price of the futures contract will only go down if the cash market will allow it. At the end of the day it will be the buyers on the otherside of the Futures trade that will be making the big bucks!



It doesn't matter whether it's FX or anyother instrument. The basic principal remains the same. The movement of the GBP Futures, EUR Futures or JPY Futures price is goverened by the FX cash market.

THx!
I think that is the most salient point. That the volume on the futures does affect the price of the futures since its derived from the underlying.

But you're also saying that despite that the volume of the futures is indicative of the direction of the underlying in the immediate term and therefore indicative of the value of the contract.

Have I gotten that right?

It is then fair to say that informed traders are moving volumes of contracts based on their professional and informed views of what the underlying is doing?