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Market Flow


Pocketman [16:18:15] getting sneak preview here! ... Below the neckline you can see there was also a sell on my 30 SMA low moving average. ... – PowerPoint PPT presentation

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Title: Market Flow

Pocketman Futures Live LBR Presentation _at_Pocketm
an 161750gt Good Afternoon Gang!_at_Pocketman
161815gt getting sneak preview
here!_at_Pocketman 161823gt I want to start with
the first chart though!_at_Pocketman 161828gt
OK_at_Pocketman 161904gt I am going to go
through some of my setups_at_Pocketman 161914gt
and talk about some of the fund buying that I
look for on the close each day and how I set up
my closing plays._at_Pocketman 161932gt Some of
the tools that I use, are a series of moving
averages_at_Pocketman 161933gt such as the 30
SMA of the high, the 30 SMA of the low_at_Pocketman
161952gt(sma is simple moving average), the 10
SMA of the close_at_Pocketman 161959gt and the
20 EMA _at_Pocketman 162004gt I like the 3/10
oscillator to watch momentum and the
ADX_at_Pocketman 162010gt I use pattern
recognition_at_Pocketman 162018gt volume, and
market profile_at_Pocketman 162024gt those are
my main tools.
_at_Pocketman 162048gt The first thing that we
are looking at here is a basic 400 tick chart
(this is CQG). I use a 400 tick with a 3200 tick
when I trade. The area at the top here is a setup
of a retest of a spike. The slope of the 10
period simple moving average turns down there(
changes to a red color) there is also a sell div
on the 3/10 oscillator and a break below the 30
low SMA is the trigger. The 30 low SMA is the
thin red line. Once I have a Sell below the 30
SMA of the lows, my stop is placed two ticks
above the high of the 30-period SMA of the high.
At the bottom where if the slope turns up, I will
get out of my short however, I like to wait for a
violation of that 30 SMA of the highs before
looking at the long side for a buy signal.
This is a chart that shows a basic head and
shoulders. Below the neckline you can see there
was also a sell on my 30 SMA low moving average.
The slope of the 10 SMA is pointing down as well.
A pocket violation was another signal .( I will
elaborate on pockets later). When the trade was
over we hit the measured objective and the slope
of the 10SMA turn up after bouncing off the
breakout pocket, where the trend initially
started. We also had buy divergences on the 3/10
oscillator. I like to have conformation on all
four indexes for a major sell at least 3 out of
4! The next slide shows an example of all indexes
confirming at the same time on a H S breakout.
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In this case there is a H and S pattern across
all of these indexes
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    new.pngNew\scr-4 new.png

There are many unique ways of looking at volume
or market data distribution. We will analyze the
different tools that I use to determine my
decisions. You can see that I have the same 30
SMA of the highs and lows on this chart (CQG) and
the 10 SMA of the close which is colored green or
red according to the slope. On this chart we have
a coil which is price overlap or sideways
distribution and a value to where the market is
comfortable trading at that time. Where I have
the V's shown those are small pockets. Let me
touch on pockets here. Pockets tend to have a
nice V shape to them. They are formed in an area
where the market was rejected and reversed in the
opposite direction. Usually these areas have good
reason for the reversal therefore a retest of the
Pocket would be hard to break. Pockets can often
be a place to look for support or resistance for
an entry or exit. A pocket catches your change
until you put a hole in! The next chart I will
go over more Pockets again.
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Often Pockets tend to fit in to each other in a
trending market. In this example you can see how
they fit together on the way down.P3 retested
and fit into P1. P5 fit into P3.P6 barely made it
into P5 showing weakness and breaking a double
Pocket or bottom to startan accelerated move
down. Then a series of pockets began to form a
coil until there was a further violation of the
Pockets and then rotating out of the coil. There
are many other ways to spot a coil as we all know
that a low ADX will help you also identify that
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This chart is an example of a trade at the end of
the day a- 230 (CST)300(ET). This was where I
called a trade in the room based on spotting the
institutional buying of funds. Let me take a few
minutes and explain this reason for the last half
hour move that you sometimes will see me call.
When I was on the trading floor I did execution
for various long and short SP funds like the
Rydex institutional funds. They do their buying
after 230 (CST) (or selling ) as well as other
funds do to shore up there positions. They use
the futures to hedge and have usually have a
300(CT)400(ET) price mark to meet for the
customer. Based on the way to know if the funds
are coming in besides watching the volume is to
understand how the orders are being generated in
a fund. If there is a big up day and we stayed
above the opening range for over 75 of the time,
there is a high probability there would be big
funds coming in the last half hour. Orders will
come in all day until the last half hour. These
funds will figure how many contracts need to be
entered to hedge this position. There are some
fake outs right before the last half hour so be
careful. I need a technical reason to get in
first and then I watch the volume to see if it is
growing in the right direction.. There are many
ways I watch the volume and data. I will show you
4 more examples of the same day and time using
PhotonTrader. This is Example 1.
Example 2.This is using Pockets, trend lines and
moving averages to pick the breakout before
looking at volume.
Example 3.This example shows the volume at
each price on every five minute bar using my
PhotonTrader chart. The yellow numbers represent
the highest volume on that bar and the white
numbers are the lowest volume. You can see the
rotation of volume this way.
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Example 4. This is just a 5 minute bar with
volume profiles next to it so you get a better
visual picture of the same trade.
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Example 5.Here is the way the same breakout
using Market Profile. This is a PhotonTrader
Market Profile chart expanded out profile next to
the regular MP. Along the side and bottom you can
see volume bars. This gives me a better idea of
what is happening to the volume and data as we
rotate out of the value area. So there are five
examples how I identify my end of the day call.
These charts always come in handy all day long to
see when new highs and lows are being made if
there is potential to follow through or not by
watching the volume, momentum, rotation of value
and tails.
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This Example is a snap shot of my PhotonTrader
chart and execution setup. In this slide I got
long when we made new highs out of a coil with
volume confirming. It was the middle of the day
so you need to be careful of volume and momentum.
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The next 4 slide examples A-D show another end of
the day trade. When I called this trade in the
room it was a buy the last half hour
230CT/330ET and we are exit was at
300(CT)400(ET).I wanted to give you an other
Example of late day fund buying. This day we were
up all day. We broke out of a ascending triangle
or coil to the upside followed with volume.
Volume increased all the way as funds lifted the
offers. Example (A)
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Example (B)Here you can see the breakout at
127700 starting at 230CT/300ET. Im using
PhotonTrader with a 5 min volume at price here to
watch thevolume build. I also have my time and
sales filter set to see 50 contracts and higher.
I have set to show 2 seconds and then it will
refresh the window. I will go over this filter
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Example (C)You can see as the trade progresses
higher it is backed by volume. This kind of
volume can only be supported with the help of
institutional or fund buying. We rallied to
128400 by 300CT/400ET. That is usually the end
of the push and when they stop.
  • ..\Desktop\Screen New\chat 14.png

Example (D)This is the same trade using the
PhotonTrader Market Profile chart expanded out
with volume. Noticed volume dried up at
300CT/400ET. Thehigh was in and the pressure
was off ( the Party was over).
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This is an example of the market depth and
time/sales filter on PhotonTrader that I use.
On the top you see the regular market depth
that shows the bids on the right and the offers
on the left. Below is a feature I designed so
that I can see what is actually trading. I can
filter to a contract size that I feel would be
big enough to make a difference in the market
direction. I set my filter on 50 contracts or
higher. It will show trades taking place on the
bid or the offer that exceed 50 contracts. If it
is red in this case all those trades were real
trades on the offer which would tell me the
market should trade up to the next price. When
I was on the CME floor and in the SP pit trading
if we were making new highs and I can hear myself
biding I knew I was wrong. So lets say we were
making new highs and the market filter didnt
show much buying on the offer we can assume there
might be a buying tail soon to follow. Now lets
take the other scenario (like the example below)
if we were making new highs and there was
substantial size buying of the offers you can
expect expansion of those highs. Another words if
you go to a party and you show up and no one is
there the PARTY IS OVER. These slides are just
some of the tools I use along with all of the LBR
tools and technical's that I follow. If you have
any questions you can private me on the Chat or
send me an email at Good
Luck with you trading!
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