Wednesday, August 27, 2008

A thousand Qin Dynasty Warriors

The S&P 500 emini contract opened today slightly above value. It goes on to test POC and you will see the response in the order flow. The significance of the 1268 area? weekly poc, monthly level, daily level. The daily profile below looks to me like Qin dynasty soldiers with their spears pointed forward at the 1268 level.

This is a setup where you buy the levels. Price opens above POC and Value combined with the information that we have gathered from the market so far. A high probalility trade.
I don't strictly buy the levels via resting limits. I use orderflow and buyers commitment at those levels before I enter. I sometimes pay a price for that by getting a fill that is a few ticks higher.
Nothing wrong with resting orders - just depends on your risk manangement plan.

Now here's why I made a market comment days ago. Crude jumped $3. That has been a significant thing ain't it. But what happened today? Why did we not dump 10 points? That is why I said in my earlier post that market is never the same. More importantly, the players are never the same. We think visually that patterns are repetitive, not quite that simple.

We had two dominant flow attempts that was bought up before 7:00 PST. In fact by the 7:00 bar, the dominant flow prior had reversed in the favor of the market structure. The buy of the POC area was a great trade on this bar and if you trade lots of contracts, scaling that out the rest of the day is a good strategy. I was out in the 78 area. I reentered in the D period on a smaller size which I ended up scratching for a few ticks loss and reentered again in the E period at VWAP which was a good run. We should not expect much out of a low volume market. In fact that brings me to the next post.

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