How to trade and/or invest profitably --- without the Bullsh*t

[tech/a]

** You say Momentum occurs when supply withdraws --YET-- If volume increases doesn't that mean that Supply is evident**

Yes most certainly
Supply appears at higher prices as it is withdrawn from higher prices---
demand often wont chase it.
If it does as it did in the Last bar on the chart it WILL re appear.( Supply in the form of volume)
More will be placed on offer from long term holders and short term speculators.

Balance--In-Balance---Balance---In-Balance.

Balance--no one wants to sell at these prices--no one wants to buy at these prices.
In-Balance---Happy to buy higher prices---Happy to sell at higher prices.

We need to be experts at reading In Balance for Potential AND Profit.

Is the picture Building?

 

[jbocker]

Is the picture Building?

The picture is building of how little I know. Thank you for taking the time to explain. The ticker is SPL Starpharma. I have been watching this stock (on fundamentals) for a few years now but not as a trader analyst (never trained in it). Your analysis certainly increases my interest (curiosity). I appreciate that good and bad news drives markets and I will try to update the chart with releases over that same period.
I might look at some of my other holdings and attempt some 'analysis' albeit it will be verrry crude.

 

[vharik831]

JB

I want to use your chart as an example.

For me its ALL about momentum. Im constantly looking for it.
I want to be able to see the potential in build up and I want to be
able to recognize it as soon as I can. (The potential anyway).
I can and do have false starts and Ill sacrifice a bit in doing so.

Ive marked up your chart with the important markers on the chart.
Then A chart of the Trades I would have taken if trading it based on
my own Discretionary Methodology.

Firstly to the buy and sell ladder.
I dont look at pre loaded depth as any indicator as to Demand OR Supply
OTHER than the open and Closing Auction.

The real action plays out at Market. Which answers Smurphies Question



I often do the same thing Bid 22 c Sell 28 c Ill place a bid at 23 c and often be filled.

But while doing this and trading it I'm forever looking at ways of minimizing risk.
Constantly shuffling Initial stops whether its rising OR falling (Only ever UP) with
my number one Goal to get to Break even (B/E) and when momentum bites
Shuffling Trailing stops to lock in profit.

More about this later as its its own topic.

I dont know what the ticker was JB but Id still be on it at the last Bar and be looking to
increase my position on that day.


View attachment 120403



Here is how I would trade and be trading this chart.

View attachment 120402

The Supply conundrum is Answered in the next post.

Hi Tech,

Thank you for sharing the knowledge.

Q on the second chart marked with potential trades - 1, 2 and 3, did not get filled. Do you leave the orders open for one day only? Also, if the second day has higher volume, but a small range bar, would you keep the order open for the next day as well, until you see a drop in volume?

I am a fully systematic trader, but this thread has been so interesting that I want to try these out now as a discretionary trader.

Thanks
Hari

 

[tech/a]

For me I want momentum to be proven
If my analysis anticipates momentum to the degree that I’ll place
a stop limit buy and it doesn’t trigger then I’ll remove the order and place the
stock on my watchlist. Every now and then I’ll get triggered only to see a close below my
stop limit order. I’ll then move my stop UP if it pulls back more than 50% of the previous bar I’ll
exit This is all to minimise risk and diminish accumulated risk ratios.

Trade management which I’ll also cover .

ive also traded a great deal systematically and have an opinion.
which I’ll share later.I know you’ll understand my comments.

 

[ducati916]

** You say Momentum occurs when supply withdraws --YET-- If volume increases doesn't that mean that Supply is evident**

Yes most certainly
Supply appears at higher prices as it is withdrawn from higher prices---
demand often wont chase it.
If it does as it did in the Last bar on the chart it WILL re appear.( Supply in the form of volume)
More will be placed on offer from long term holders and short term speculators.

Balance--In-Balance---Balance---In-Balance.

Balance--no one wants to sell at these prices--no one wants to buy at these prices.
In-Balance---Happy to buy higher prices---Happy to sell at higher prices.

We need to be experts at reading In Balance for Potential AND Profit.

Is the picture Building?

No not really.

Supply +/- is fixed. A company has a float of X shares. Yes they can fluctuate, new shares issued, old shares bought and placed as Treasury shares, but at any given point in time supply is fixed to the total shares on offer.

What is not fixed is demand. While demand is never infinite, neither is it fixed.

When price runs, it is not a lack of supply (as by definition supply is fixed) it is an increase in demand at the marginal price that increases. So many systems/algorithms/discretionary/etc are triggered by a changing (volatile) price.

Only in commodities can you have a fluctuating supply: bad harvest, no wheat, prices increase on reduced supply. If that is coupled to an increased demand for wheat, then prices tend to explode.

jog on
duc

 

[tech/a]

Happy to disagree duc.

In fact I dont expect you or quite a few others to agree.

The way I look at the no Bullsh*t approach is vastly different to many. Fantastic.
Simplicity
Going in my direction I want to have an indication that its going to happen or
continue.
Stalling or reversing I want to have an indication that its going to happen or going to continue.
Manage Risk
Increase R/R

Works for me .

I look at it from purely a supply perspective.
And no I dont want to debate it.

 

[vharik831]

Hi Tech,

I made an attempt to create a watchlist (attached) using the new found knowledge!
While scanning through the charts, i found an interesting chart, as attached. I have put the comments on the charts.

My question is specifically related to the first large volume breakout, which failed. I don't see any issues in taking that trade.
Just wanted to see how you analyze the chart and if I am on the right track.





Regards,
Hari

 

[tech/a]

Hari

I would have only traded the First High Volume bar shown.
It failed but would have given a small loss. One of those that trigger then
collapse from Heavy supply. The loss would have been less than my initial Risk.
Due to the Trade management rules I use.

 

[vharik831]

Hari

I would have only traded the First High Volume bar shown.
It failed but would have given a small loss. One of those that trigger then
collapse from Heavy supply. The loss would have been less than my initial Risk.
Due to the Trade management rules I use.

Great. Thanks. Any reasons for not trading the second high volume bar? Is it due to the increasing volume and falling price preceding the high volume bar?

 

[tech/a]

If there is a testing of a high or low (if short) in Daily timeframes I wait for that test.
Unless there is a glaring cause.
Not so strict in 15 min timeframes.

 

[tech/a]

If there is a testing of a high or low (if short) in Daily timeframes I wait for that test.
Unless there is a glaring cause.
Not so strict in 15 min timeframes.

My reasoning is that there will be those trapped in the initial breakout trade who will sell
as close as they can yo their cost price. This over head resistance isn't evident in the first
instance of any breakout of volume or Price range.
The deeper the pull back the more this tends to be an issue.
Will watch KAU and see how it pans.

As I type it is 48.5c with high volume so supply is evident whether it will withdraw as the high of 53.5c
is tested is yet to be seen.-- It often does.
If it blasts through and closes above then that would indicate supply is not flooding in at these levels.
Likely to be an inside day tomorrow.

 

[frugal.rock]

Likely to be an inside day tomorrow.

Can you please explain that term?

Have heard you and @barney use that term, but I take it it's nothing to do with the weather forecast and I thought others following might like to know as well.
Thanks

 

[Wilham]

Can you please explain that term?

Have heard you and @barney use that term, but I take it it's nothing to do with the weather forecast and I thought others following might like to know as well.
Thanks

Hey frugal, I think they are referring to this.

 

[frugal.rock]

Thanks @Wilham
Didn't know it was an official term... now that's the 2nd thing I have learnt today. On a roll

 

[Wilham]

Thanks @Wilham
Didn't know it was an official term... now that's the 2nd thing I have learnt today. On a roll

? Careful, I've heard 3 new things can be dangerous

 

[Beaches]

No not really.

Supply +/- is fixed. A company has a float of X shares. Yes they can fluctuate, new shares issued, old shares bought and placed as Treasury shares, but at any given point in time supply is fixed to the total shares on offer.

What is not fixed is demand. While demand is never infinite, neither is it fixed.

When price runs, it is not a lack of supply (as by definition supply is fixed) it is an increase in demand at the marginal price that increases. So many systems/algorithms/discretionary/etc are triggered by a changing (volatile) price.

Only in commodities can you have a fluctuating supply: bad harvest, no wheat, prices increase on reduced supply. If that is coupled to an increased demand for wheat, then prices tend to explode.

jog on
duc

Happy to disagree duc.

In fact I dont expect you or quite a few others to agree.

The way I look at the no Bullsh*t approach is vastly different to many. Fantastic.
Simplicity
Going in my direction I want to have an indication that its going to happen or
continue.
Stalling or reversing I want to have an indication that its going to happen or going to continue.
Manage Risk
Increase R/R

Works for me .

I look at it from purely a supply perspective.
And no I dont want to debate it.

I'm not sure that Duc and Tech are disagreeing except in the use of the word 'Supply' and what it reffers to.

This is my understanding of what each is referring to when they use the word 'Supply'.

It appears Duc is referring to the overall shares available to be traded in a company. He is correct in saying this does not increase or decrease outside of additional shares being issued as in a cap raise

Conversly, Tech's use of the work Supply is referring to the amount of shares being offered for sale by willing sellers at any given time. Which will fluctuate all the time.

As an example;
Company XYZ may have 1,000,000 share that are able to be traded. This is the overall supply Duc is referring to and wont change.
Of those 1mil shares, many will be tied up in escrow, institutions, long term holders, directors and the like that generally are not offering them for sale. These shares will often be held through thick and thin regardless of what the share price does.

So from the 1mil shares available to be tradedin XYZ, lets say 400k maybe tied as mentioned above up and not generally offerd to the market.

The other $600k are the shares that are treaded from time to time by all sorts of holders. This is the suppply that Tech is reffering to when he talks about the amount of supply. The 600k that will get traded from time to time. The fluctuating supply he is referring to is how much of that 600k is curently being offered for sale at the current price, and as the price decreases or increases.

I welcome Duc or Tech to correct me if my assumption is wrong.

 

[barney]

? Careful, I've heard 3 new things can be dangerous

Learning 3 is ok ..... If you smoke or drink 3 however, normal safety standards may be compromised!

ps Just for the record, I don't smoke anything! ... Don't want people assuming I'm a weed head?

pps Interesting Thread as always @tech/a

 

[frugal.rock]

---

A different Supply...sorry, off topic

 

[barney]

I'm not sure that Duc and Tech are disagreeing except in the use of the word 'Supply' and what it reffers to.
I welcome Duc or Tech to correct me if my assumption is wrong.

Hi @Beaches Appreciate your suggestion as I was contemplating adding my 1.5 cents worth (2 cents less GST etc.) to try and create some of (what I would expect would be) fantastic banter between the lads!?

Supply and Demand in the Market Depth ... What a topic!!

Anyway, I know @tech/a said "not up for debate" (on this thread), so in respect of that, perhaps Tech or @ducati916 (or even I) may be happy to initiate a separate Thread, where the slings and arrows of outrageous S and D can be debated ad infinitum??

Or not????

 

[tech/a]

I'm not sure that Duc and Tech are disagreeing except in the use of the word 'Supply' and what it reffers to.

This is my understanding of what each is referring to when they use the word 'Supply'.

It appears Duc is referring to the overall shares available to be traded in a company. He is correct in saying this does not increase or decrease outside of additional shares being issued as in a cap raise

Conversly, Tech's use of the work Supply is referring to the amount of shares being offered for sale by willing sellers at any given time. Which will fluctuate all the time.

As an example;
Company XYZ may have 1,000,000 share that are able to be traded. This is the overall supply Duc is referring to and wont change.
Of those 1mil shares, many will be tied up in escrow, institutions, long term holders, directors and the like that generally are not offering them for sale. These shares will often be held through thick and thin regardless of what the share price does.

So from the 1mil shares available to be tradedin XYZ, lets say 400k maybe tied as mentioned above up and not generally offerd to the market.

The other $600k are the shares that are treaded from time to time by all sorts of holders. This is the suppply that Tech is reffering to when he talks about the amount of supply. The 600k that will get traded from time to time. The fluctuating supply he is referring to is how much of that 600k is curently being offered for sale at the current price, and as the price decreases or increases.

I welcome Duc or Tech to correct me if my assumption is wrong.

I get it and I think most also get it. Thanks Beaches.

Im attempting to keep this thread free of complication.
Complication is what the Snake oil salesmen excel in.
If its not complicated then its too good to be true.

I have a lot of time for Duc but know he loves debate.
He knows exactly what I mean.
That's NOT what this thread is about.
Its how I've been long term profitable and how you can too.

I want to remove all of that stuff you DON'T NEED TO KNOW
Its ok if you want to delve into it but you DON'T NEED TO KNOW
90% of Bullsh*t out there.