CanOz
Home runs feel good, but base hits pay bills!
- Joined
- 11 July 2006
- Posts
- 11,543
- Reactions
- 519
Its been quite while since i started to incorporate VP into my sim trading after i learned how to read the order flow in the DOM. To recap, i went down this path after encouragement from TH to try and trade the bigger moves instead of scalping one or four ticks all day long and working for the broker. He didn't suggest VP, and to my knowledge he doesn't consciously use it...
VP gives me a way to structure the market and the references to value areas and price acceptance / rejection really resonate well with me. I can relate to auction market theory and its clear to me that this is what is going on in the market, any FREE market in fact. This is the entire purpose of a market is to get agreement on price so as to facilitate consistent transactions and clear inventory, fulfilling the needs of both the buyer and seller.
I should add that i have not paid for any training on VP other than 1 webinar by FT71 ($20). Everything else i have found on YT, and other places on the internet. There is allot of good quality information on VP freely available...
VP also helped me to put together a daily trade plan. Although it cannot be exact, as we wait for certain cues after the market opens and establishes an 'initial balance area'. Basically we look to sell levels above current value and buy levels below current value. We don't trade in value but use it as a target area instead. Generally we plan our day by looking for areas where price has been accepted (High Volume), and rejected (Low Volume) in the recent past. These become our levels to trade off of. Once our value area for the day is established, we then look for moves away from value into our trade levels.
Indicators - the only true indicator i use is the VWAP. This and the first standard deviation serve as our moving value area and we only use this as a guide of where NOT to trade. We want price outside of this range to take trades at. I use a volume balance chart so i can see if the order balance is supporting a momentum move or not, If not then i could have a chance for a trade IF its at one of my levels, outside of my value area. Also, I use the change in cumulative bid/ask (delta), in order to see if the flow of order to one side or the other is continuing or not.
Then, i use the DOM, as well as a volume ladder to see when the orders peak or bottom out and sellers/buyers are discovered again. It here where we can decide whether or not to hit the big or offer and get into the market. We then can use the value area as a target, while keeping a runner on for a bigger move.
Typically trends begin outside of value, where there are buyer or sellers that aggressively disagree with the current price and snap up allot of volume, as its seen as a 'bargain'. This can typically start a new trend, or finish an old trend. Trends also get started and continued with the entrance of a participant from another time frame with deep pockets. They can shift the balance in the market and drive prices continually in one direction for longer periods.
The index futures markets are typically mean reverting, bracketing range bound for the majority of time. VP and this style of trading suits this well to me and this style of interpreting the markets information is very well suited to discretionary index day trading.
All of this said, success in a real account will be a little elusive for me until i establish the discipline to take only the trades that my plan and the market give me, and i can recover from a 'normal' loss and get on the horse again quickly. Losing trades happen no matter how good the setup may be. This side of the game is the most difficult for me. Still, this has been the most rewarding experience since my interest in trading took me on this road 7 years ago.
I will post the visual tools i use later on so people can see what i see and how i can make my trade decisions.
Most of what i learned freely on how to use VP to establish a trade plan came from many good videos by Kam Dhadwar from L2ST. I haven't joined his trade room and probably won't be for a while as i will take a break from this and start work again at a large Chinese Food business. He trades the DAX as well as the US markets so that has me interested and i think a month i the trade room would be worthwhile.
Enjoy the weekend folks!
CanOz
VP gives me a way to structure the market and the references to value areas and price acceptance / rejection really resonate well with me. I can relate to auction market theory and its clear to me that this is what is going on in the market, any FREE market in fact. This is the entire purpose of a market is to get agreement on price so as to facilitate consistent transactions and clear inventory, fulfilling the needs of both the buyer and seller.
I should add that i have not paid for any training on VP other than 1 webinar by FT71 ($20). Everything else i have found on YT, and other places on the internet. There is allot of good quality information on VP freely available...
VP also helped me to put together a daily trade plan. Although it cannot be exact, as we wait for certain cues after the market opens and establishes an 'initial balance area'. Basically we look to sell levels above current value and buy levels below current value. We don't trade in value but use it as a target area instead. Generally we plan our day by looking for areas where price has been accepted (High Volume), and rejected (Low Volume) in the recent past. These become our levels to trade off of. Once our value area for the day is established, we then look for moves away from value into our trade levels.
Indicators - the only true indicator i use is the VWAP. This and the first standard deviation serve as our moving value area and we only use this as a guide of where NOT to trade. We want price outside of this range to take trades at. I use a volume balance chart so i can see if the order balance is supporting a momentum move or not, If not then i could have a chance for a trade IF its at one of my levels, outside of my value area. Also, I use the change in cumulative bid/ask (delta), in order to see if the flow of order to one side or the other is continuing or not.
Then, i use the DOM, as well as a volume ladder to see when the orders peak or bottom out and sellers/buyers are discovered again. It here where we can decide whether or not to hit the big or offer and get into the market. We then can use the value area as a target, while keeping a runner on for a bigger move.
Typically trends begin outside of value, where there are buyer or sellers that aggressively disagree with the current price and snap up allot of volume, as its seen as a 'bargain'. This can typically start a new trend, or finish an old trend. Trends also get started and continued with the entrance of a participant from another time frame with deep pockets. They can shift the balance in the market and drive prices continually in one direction for longer periods.
The index futures markets are typically mean reverting, bracketing range bound for the majority of time. VP and this style of trading suits this well to me and this style of interpreting the markets information is very well suited to discretionary index day trading.
All of this said, success in a real account will be a little elusive for me until i establish the discipline to take only the trades that my plan and the market give me, and i can recover from a 'normal' loss and get on the horse again quickly. Losing trades happen no matter how good the setup may be. This side of the game is the most difficult for me. Still, this has been the most rewarding experience since my interest in trading took me on this road 7 years ago.
I will post the visual tools i use later on so people can see what i see and how i can make my trade decisions.
Most of what i learned freely on how to use VP to establish a trade plan came from many good videos by Kam Dhadwar from L2ST. I haven't joined his trade room and probably won't be for a while as i will take a break from this and start work again at a large Chinese Food business. He trades the DAX as well as the US markets so that has me interested and i think a month i the trade room would be worthwhile.
Enjoy the weekend folks!
CanOz
. I enter three times, getting stopped out on the first two before i picked the right entry. I'm using the HSI order flow to judge the pressure, not the mini. 
