Timeframes and capital

The type of fish question eludes to an assessment of who the opponents are
and who are you swimming with. This week is a great snapshot of a price/value area
where multiple players are involved. If you chart the 3 monthly profile we are at the
top edge of profile. Such areas bring together multiple timeframes. More so then the balance areas. 1st those who are long at the these levels. And by that I mean not just the index but via different instruments or underlying stocks. Ultimately the S&P or Dow is simply an index isnt it?

I have friends, family, and my own portfolio that is long from these levels. How would these institutions behave, will they cover longs, and what about those short. And those who are long from the lows. We can have no idea until the players put their bets on. To some extent thats what volume and orderflow provides and so far it is unimpressive in the s&p index.

If we do open outside the range and trade back in range, orderflow at those levels might provide a clue - both for shorts and longs . But these trades need to there when the price hits it - expect fast rejection or lifting of offers. But the reason I brought this topic up is to highlight the perspective of timeframes.

At edges like this, I think it is a big mistake to trade just a fast chart. Simply because these are high risk and high reward areas. A lot of big fish will be involved whether they like it or not when the market attempts or rejects an important price level.
One big thing I like to look for is whether there is solid evidence of statistically higher, broad based buying. The lack thereof would result in a consolidation back into range initiated by desperate profit taking. The other significant factor is the location and size of the stop. Small stops are inherently at a big disadvantage at the extremes and those setups are better not played.

What kind of fish are you

It was humbling to learn about accounts of some readers. And, i am quite surprised by the perception of some new traders of what trading really is. Whether stock, futures or forex, I think majority of traders starting out in the field start out wrong. Perhaps thanks to a lot of marketing and sales by gurus selling chatrooms and training and seminars. Some of these gurus have a seminar announcement/sales everyday. I think it is most important to figure out first what kind of fish we are. The most common new trader is out in the high seas with sophisticated software in a 15 foot boat competing with the commercial trawlers. I think just setting this perspective is extremely helpful in the decision whether to set sail on any morning. But does anyone actually teach this? I think the answer is no.

Houston..... do you read

Checking back after a radio silence. There are so many things to update. I have communicated with some of you on the things that are developing that I would like to share at some point. I am still looking for help from a programmer/math guy for some custom analysis. My terminology for this thingie I want to develop is - Boundary Condition Money Velocity. It sounds very complicated - but is a simple concept. Trust me. However the variables and historical data involved is pretty involved. I promise I will explain in a later post.

End of B period

There a lot of paper buying today. 50K positive delta on the big size lots. We do need to hold this vwap area within this area. Lot of volatility and risk of getting chopped. We havent seen any strength until today after the break down of the 1140 area. Still a very weak market in the near term.