You can read the transcript below or watch the recording of the Q&A session.
All right. So office hours for October 18th, yeah, just feel free to ask any questions.
What’s the, have, can you talk about maybe the Delta and the other one? That one? Yeah. Sure. these three in the middle are using, I think there’s like a generic bubble. hang on, let me just look up the name.
Yeah, so it’s called the it’s under statistics, bubbles that study, and then there’s a study underneath called internal stat. And you can basically feed it any data. Usually you want to feed it, some sort of internal kind of like that. the Niss is the advanced decline line Delta of course, you know what Delta is, and then the chemo of tick.
I’ll just bring over the cumulative ticks so that people know what it looks like. So this little chart, I never look at it throughout the day, but the idea is that you’re extrapolating the data from this chart and then just putting it into the bubble, the pieces that matter. And so you can glance at it throughout the day so that you can get a good idea of where the cumulative tickets and.
I’m guessing some folks probably don’t know what the cumulative tick is, but, the study also part of the custom studies just sums up the closing prices for the tick at every bar, essentially. I think here I have a 15 minute chart for the tick and this is just what I like. Some people like minute, five minutes, whatever.
I just happened to 15 minutes and then at every 15 minute bar closing, it gets the value. It adds it up and then it just keeps a cumulative sum. And in this case for this day, you can just eyeball it and see that most takes most bars closed negatively. So then that’s why, the, some is negative.
What is interesting? And I think this is where the edge is. I’ve seen this plenty of times is whenever it flips. It goes from negative to positive throughout the Bay. That is usually a pretty strong change in the market. And that’s why I added the functionality. So the, so that it can tell you, Hey, we were negative at some point in time.
Now it’s positive. Just so you know, in that usually I take as a, like a pretty strong sign of. Of things have changed in the market and they’ll likely continue in that direction now of course, depends with context and a bunch of other stuff. so if we look at Friday, if I were to glance over here, actually I think it’s wrong right now because the market’s closed.
So it would have never really said, was negative. It’s just happens to be that way because the market’s closed, but throughout the day, unfortunately, don’t have that much data showing right here. But I think. I scroll over to the left so you can see there’s the zero line right here. We popped positive for a little bit throughout the first 45 minutes of the day.
And then we went negative. there’s a setting, like there’s a threshold that you can set it to where, you don’t want it to pop positively for, like one tick and then go negative. And then for the rest of the day, it tells you that it was negative. that’s not really useful. There’s a setting for this internal staff bubble that, asks you what the minimum value is for it to tell you was negative was positive. I find this super helpful, and this is why I have, this is why all these three are here because, I like seeing these, of course, this is the breath. I can definitely go over the breath, but, if anybody wants, this is just the nicey and the NASDAQ breath.
And then the fields bubble is it’s available to everyone. So it’s there. I hard to explain, to be honest, but I’ll bring over this chart that has the settings. It doesn’t really matter the chart itself. So I’ll just bring over the configuration for this. So it’s called the market temperature bubble.
It’s also under the statistics bubbles. And it allows you to give it all of these different bubbles that I’ve created. So you can input them, here and it takes, like this value sub graph. For all of these have this Valley sub graph that you don’t see as a human, but this is how it can extract the data of, is this one positive, negative?
Is this one positive or negative? Is this one positive or negative? So goes through all of them that I have. And I have, a total of 10 of them, all these maybe 11, the rest of the ones are empty subgraphs or empty inputs, but it knows when to stop. So it stops at, at the last one in this case, probably 10.
And then it gets the value of all those 10 and then it does math. essentially it’s synthesizing the values from all of them. And then it gives you like an overall value. So you can get like a market temperature from all of these different internals. I do think it’s useful sometimes it’s just a matter of watching and see how it feels.
I think it’s, there still needs to be some work on it. That’s why I haven’t done a video of it. or really talked much about it because I don’t have many examples of one, like it really works, but I do keep an eye on it throughout the day, but that’s essentially how it works mechanically. I dunno if that helps you out Eric, or if you still have more questions, You’re muda if you can hear me, if not, I’m just gonna, Oh, my audio’s cutting out. Okay. Could be me find out. So hopefully that helps Eric. Let me know if it doesn’t. I can go into more depth as well.
Yeah. Just throw questions in the chat guys. And then I’ll just go through them. As I finished one. Move on to the next one.
cool. See you, John. Take care, man.
Tosca. That’s a very broad question. sometimes I’m in and out of trades in seconds. Sometimes I’ll hold for an hour or two, it just depends. It really just depends on my reason to get into the trade. I think. I didn’t trade much on Friday. I hate trading OPEX. I think I probably made like 200 bucks and that was it.
but I think a good example. for me, I, it just really depends on order flow. if I am looking to get long or if I think that, we’re going to. Go higher. I will put on the trade either right away or I’ll wait for a little bit of pullback and then get in if I’m a little bit more nervous about the trade and I’m not really sure I’ll put it in and just watch it like a Hawk and just get out for a scratch or just a few points where if you text whatever it is, I just don’t know how to answer that question.
It’s super broad. Okay. So using the recon tape, Signals. So I think a good example is just looking at the pinch, right? So I have the pinch overlaid, the reconstructed tape, as you guys can see here. And, I think what I’m mostly looking at if I’m going to get in or not, if there are buyers buying the pinch or if the pinch is just releasing, because price is floating up and maybe right through here, we have two good examples of both cases.
So I’m just going to zoom in here. So I’ll be looking at the tape about this size. I’m like zoomed in and I’ll see that there’s a bunch of sellers right here. We popped up and there’s this little buyer right here. I’m not sure what price that is. Oh, come on.
it actually looks like it’s a tiny little buyer. And the sub grip. It may be a little off, but anyways, so there’s a small buyer that could give me that may be enough for me to go along. So pinch releases, I go long somewhere in this candle and then, because there’s not larger buyers, my stop is going to be very tight.
I won’t put my stop. At this swing low, like the lowest low from like most recent low, which would be around 87 instead, I’ll just keep a really close eye on it. Maybe going with two or three contracts, take one off. As soon as, we go up a point, I’ll also be looking at, the liquidity above.
I don’t think this appeared at that time, if we start coming down, I already don’t feel great about this long. So I’ll just take. Take it as a loss little tiny loss. But in this other case where you see the buyers coming in before the pinch releases, that gives me a lot more confidence, especially since another pinch had already released before and it failed.
And that there’s likely going to be pinched around the corner. I said this before, that will work out. So you just wait for the next, just one, try again. And now even if got in, say up here, You know what I want to see once I’m in the trade is just price. Obviously not getting under this low right here.
second thing I want to see is buyers continue to buy and I’m pretty sure, I don’t know. I don’t know why the, this sub graph is off. Let me just, Oh, I think I know why, because this chart book that I’m using is a little old. and this is supposed to be yes,
yes. this looks right now. as you can see, the sub graph, shifted a little bit. So you see these buyers and then there’s more buyers coming in. no real sellers are coming in either, Besides this one right here, this 150 lot. but it hasn’t brought price lower, so you want to keep on seeing.
No sellers, lack of sellers and hopefully also more buyers. And we didn’t really see more buyers until we got up here, which arguably, that could be some stops. but then say you’re still holding through here. You see the liquidity come up, come in. seller couldn’t get through the liquidity. Now you’ve got to keep in your head that, okay.
There was some liquidity here. They probably got filled somewhere around here because they probably pushed it up and got filled. Cause they want to get filled. now this is your next line, right? Okay. And again, you want to see more buyers, so you want to see another little cluster like this, or, Larger buyers like this coming in and also price not getting lower.
So as you can see, price came down here, they defended, it came back up. and yeah, if it crossed down through here, maybe you’re down to a runner because he’s took some profit profits up here. This would just be your stop. And that’s essentially how I would see the market. Hopefully that helps.
But it’s this constant observation. Yup. Of course. capture data. Let’s see. So you prefer OSI or RSI average sub graph when using one in three minute divergences. I prefer average and I also use exponential. Let me bring over my one minute chart. That is a mess. so I never look at this chart really.
Cause I don’t really trade the RSI divergences on the one minute, even though they often work out right there. They’re great trades. I just like them more on the one cage, just because I’m more, I’m looking at that chart lot more, but you can see that divergent sister here, though, the arrows for the people who are not familiar with it.
And I just don’t look at this chart because I have so much stuff getting computed from this one minute chart that then gets overlayed to a bunch of other charts that. It’s just too overwhelming for me. So I just don’t even look at it. So the RSI here first let’s look the RSI. So RSI right here, I use exponential and these are just the setting.
So 14 three, which I’m pretty sure the default values with last. And then, for the RSI divergence.
I am using the RSI average
and that’s essentially my requirements for it. And that’s how I have it set up in my 1000 tree chart as well.
And I don’t use it on the three minute chart. I don’t even have a three minute chart.
Have one minute, five minute one and that’s it on the 32nd chart, but that’s just for the opening 32nd range.
Cool. Sounds good. All right. Let’s see. Trader nine, have you tried using the pinch and divergence indicators on longer term timeframes for our daily, weekly larger trader trade candles for multiple day swing trades? That’s just not my training style, but I do know that Jibo. Does look at the pinch on those larger timeframes.
I do look at a four hour chart. I forgot to mention that one, but I don’t have the pinch on it. I just have the 20th of May on my four hour and the ATR. So no pinch, it works on every timeframe. It’s just not, I’m very short term looking at the order flow short term in and out of trades. most of my trades last no longer than 30 minutes.
Sometimes I do have longer trades than that, but it’s just throughout the day. So I just won’t do it. my option trades, which I stopped doing about two weeks ago. So no options for me until after the election, it’s just been wild. Then I was getting chopped up. So decided not to do any more options until that election passes.
But those are mostly based off of,
I don’t know how to explain this simply, but I have algorithms that are looking at the tape four options. This is something that I just have access to. So that’s what I take the trades off. So I see large trades. Short term trades for the spy or the QS. And if I see those consecutively coming in, I’ll follow them.
And I just have that as a large, but that’s the only swing trading that I’ll do everything else that I do is just futures short term. Like I mentioned,
But Jibo does use it on the one, on the day and maybe four hour. I’m not sure. And he loves it. he’s if you want to really position yourself longterm, where if you’re looking to add to your, investment portfolio, then that’s a great way to see it.
I have a question for you guys. So I was talking to some of my buddies that I trade with and I wasn’t talking to them. Then they start asking me. One of them was like, Hey, what does it really mean for the tape to be reconstructed? And, I trade with these guys every day. There we talk about the tape all the time.
In fact, one of them was like one of the first users of the tape and really picked it up very quickly. And he was the one that asked me. He’s Hey, What does it really mean for the tape to be reconstructed? Of course, I explained it to them and did my best way to explain to it, but it really got me thinking that maybe people don’t really understand what that means.
What does it mean for the tape to reconstruct it? They don’t understand like how it works and how it’s better than the regular tape. so I guess my question to you, to all of you is this a video that I should make of what is the reconstructed
people understand that?
Yeah, it’s definitely easier for humans to see it, to see the balls. Yeah, I’ll make a video, then I’ll need to think of how to present the information. Maybe I’ll use like a Google spreadsheet or something
because people need to understand the mechanics of how it’s different from the reg, because it’s actually very different from the regular tape. I can go into depth in explaining, a lot of people have their tape, the regular tape, and they have it filtered to large orders. But that is actually like a very deceiving thing to look at, even though, sometimes it works, sometimes it doesn’t, but it’s actually, it gives you other information that I don’t think many people are looking at.
like you see like a 400 lot fill. That means that there was a large buyer. Who probably threw a larger market order than just 400 lots. And then there was a passive seller that had us sitting limit order off 400 lots, but they want to get filled. And now they have that in their book, in their account, as I’m filled at this price, we’re 400 lots.
So now there’s another larger player on the other side. And I don’t know if people really make that connection. Whenever they’re looking at those large trades on their tape. I think it, I think that’s the more important information is that there’s another large player. Excuse me, player sitting there quietly.
Yeah. I’ll try and make a video tonight. I think it will be super helpful for people then on how it works.
Cool guys. any other questions that you guys may have?
Any other studies?
what have I found to be the difference between using the one K and five K pinches with the reconstructed tape
trader nine? they’re just the different timeframes, right? But I think for me the way to use them, and this is how I explained it on my video. Is that you want to L you want to look at the shortest timeframe to enter into your trade. And this is just one type of trading, right? You could, you can use this, the shortest term timeframe of a thousand K all the time.
Never look at the 5,000 K, but if you’re using both of them, you want to use the 1000 for your entry, and then you just want to look at the 5,000 and then maybe another larger timeframe. Because the 1000, K’s the one that’s going to fire the earliest, which is going to give you the best entry for your trade.
And now when you put that together with the reconstructed tape, we go back to the example that I was talking about, where you had, you want to see those buyers stepping in. even if we look at this. Pinch that release right here. There’s a ton of trades right through here. And that’s why the background is super long.
But if you really think about it, it’s only 15 minutes, especially through this part right here. It’s only one minute, all of this trading, but it’s at the closing hour of the day. It’s probably not the best example, but you can see there’s a giant cell order right here. And then the pinch releases, there’s a low relief, but there’s just no way I’m getting in long.
On this release, just absolutely no way. If anything, it’s a great opportunity to get short. So if we go back to the example earlier, even this one could be a good one, even though it didn’t work out, but this one over here, it might’ve been a different one, but it doesn’t matter. This one looks good.
You want to see these buyers stepping in, ideally at the very low and then the pincher leases. And then you want to get at that’s your trade. In this case, the pinch also released right here, but it was a failed pinch, but what happened right before sellers few buyers, right through here, you could have gotten in, but you know that your risk is higher versus when you see the larger buyers right before you, that they’ll likely keep on buying.
and even for this one, you could look further back and see this other buyer right here. But when you start looking at the sizes, hang on. I think I have this set to log. Okay. So if you look at the sizes right here, even though it’s a larger ball, once we look at the actual value, it’s only 50, more lots than this cell right here in this one right here.
And then this one right here, all of these happened before this pinch release. So do you really want to get in long. To me the most recent information is what matters the most. Even though you can see this stuff right here and right here, these two cells are the most recent,
which tends to work better. Trader nine. I don’t know. I don’t know which one tends to work better. I think I trade, I have the 1000 trade pinch on this chart because I want to see more pinches. I want to trade more often. So that for me is more valuable and that’s just what I use. I know I’m also aware of where the 5,000 trade chart is.
And if both of them are pinching, that’s going to give us an even better release. But you also, still, you want to see the buyers there, right? That’s what’s really gonna make a good trade buyer, which is the latest piece of information, the pinch releases. And you get basically a no risk trade right through here.
Alright. Market just opened. See what’s happening.
some small buyers eager to buy.
Into the, this is interesting to me. Little flat top.
The bop, bot, and they finally broke through. You can see it happening again right here. That’s an iceberg order. So there’s an iceberg order right there. And you can see them trying right here. And right here finally broke through. Now that’s your next line in the sand is right here. You don’t want to be long on over it.
Are you, sorry? You don’t want to be long under it and you don’t want to be short above it.
And that’s how I trade. I like find these new levels that the market’s creating right away. And then, that there’s a seller positioned right there that absorbed all of these orders right here and right here.
You look at this other tape, you potentially could argue that, this a hundred lot buyer is the same a hundred law buyer right here. They could have an average price of around 72, which is right here. So maybe they’ll look to defend this area here in a moment.
It’s a story, right? I think, I don’t say that enough is that watching the tape is you’re reading the story that the market’s telling you
got back up here to seven to three half with the seller. Let’s see what happens.
So now, there’s a level right here, 73 half, and then there’s a, so there’s a seller right there. And then there’s a buyer right here at 72. this is all short term stuff, right? So you don’t want to. Remember for the rest of the night that, the 73 half for 72 are levels forever.
They’re just temporary levels. And then, you just move on and find new ones. So right now the buyers are winning
and that’s fine. there’s just no reason to be short under, above 73 half.
looks like maybe another iceberg right there.
So cool trade here, which is, it’s a little risky, but you can go in with a large, whatever is large for you, amount of lots, and you essentially sell. 74 75, but you have to be quick, like you would have sold it. When I start talking and then you take profits like two or three ticks.
So on that little pullback, you take most of your profits and maybe you leave a runner. Okay. In, maybe we got back up here, you potentially reload do the same thing a few times, and this will break eventually, but sometimes. It won’t break until we rotate back to 72, the buyer that was right here will defend their position and then bring it back up.
I don’t even know if people are paying attention. I may just be talking here.
Yeah. Ask Joe, all the questions.
that’s two quick little shorts, right? I’ll try again. I bet. Now it breaks through it. I mean it doesn’t the ice, the iceberg order. Won’t hold forever. And now what I would be looking at is to get long rather than short. So now you get long, you close your runner, get long, and then you put some limit orders bite above it.
And again, you take a few texts, maybe leave a runner, but now 75 is going to be the line in the sand once it breaks. And a lot of the times what will happen is it’ll break it’ll maybe push up a point or two, come back down through 75. And then the two things that could potentially happen is they keep on selling through.
So now you’re looking at 70 to see what happens around that area or the buyer defense or all the buyers that bought right there, defense 75, sometimes what can happen. And this happened, Thursday. There was like a big iceberg order. It broke through, rotated up, came back down to whatever level it was, did a tiny little sweep. They got a bunch of stops and then boosted it back through that level. And then it just kept going up. It was a very interesting, set up.
I don’t, and I’m not going to find it. It’s going to take me forever to find it. I’m just going to waste people’s time.
Let’s just see what happens here.
And one day I want to build something to auto detect these eyes for boarders. In the meantime, you just have to keep an eye on it yourself.
Okay. So now we broke.
And you have that like quick boost up and sometimes it just depends. Sometimes it’s super quick and that’s why I like to have the limit orders right above it. And this happens all the time. So it’s like free, it’s essentially free money. You see the iceberg order at some point in time, you want to flip and go long to break it.
You just put your limit orders. You take profits, maybe leave a runner, and then you’re done. And that’s a lot of my trading, to be honest, it’s these little short edges in the market that I’ve found that are almost guarantees like these iceberg orders work out most of the time, sometimes they don’t and we will rotate down, like I said, eight points.
And if you want to take the heat, you can otherwise you just have your stop and then you’ll try again. if price comes back up.
Very few times. Does it just go the other way? Forever and never breaks, but you need to be ready and have your stop.
so far they’re defending 75,
do iceberg orders regularly correspond to resting limit orders at those same price levels.
Correspond to resting limit orders. iceberg orders are many limit orders. The way that it works is say you’re a big institution or a big player, And you want to sell a thousand lots, but you don’t want to just throw in a thousand law order into the market. So that people can see the liquidity there.
Like you can see in my, this liquidity map through here, there’s a bunch of orders up here. There’s a bunch of liquidity right. Way up here. and then, some down here at 56, which has been there since Friday, so that’s interesting. you don’t want to be seen, right? That’s the point of the iceberg order is that you don’t know how deep the iceberg order is.
You’ll feed the program. How many orders do you want it to fill for you? So you’ll, Sierra chart may not have this feature. I don’t think it does, but you’ll say, okay. Type in a thousand lots sell at 75 and what the program will do. It’ll notice that as you’re getting filled. So first it’ll maybe throw a hundred lots into that 75 price level.
As 50 lots get filled out of that hundred, it’ll refill it with another 50. And I’ll keep on doing that until the thousand lots that you put in get fully filled. And that’s, that’s as simple as it gets for the iceberg order. So it is resting orders on the book.
Yeah, CT. it’s just the little edges that you can be super confident that they’ll workout over and over. And you can just go in with size, make enough money for the day. And then you know, that’s essentially what then allows me for the rest of the day. Sometimes not every day, but it allows me to be, Give other trades more time to work out.
I was talking to, wow. Let’s see if I can bring this up.
Okay. I was talking to one of my buddies and he was saying, Eric, I don’t know if he’s talking about doing this challenge himself or why exactly. But, he’s essentially, we start with 600 bucks. And then. Your first trade. I think he’s this work you’re risking 200 bucks. So this is a third of your account.
And then you make 50% profit on those, on that third. And then you do that again. So you have two wins of the same amount of profit percentage. And then you account for like maybe one of your trades being a loss. So now you turned your, you made a hundred bucks in your first trade, you made another a hundred bucks in your second trade, and then you lost a hundred bucks and your third trade.
So by the end of the day, you made a hundred bucks or you added to your beginning, it’s confusing the spreadsheet. but if you essentially do that every single day, just look for. Two good trades with the chance of losing on one of them. And then you try again, you can turn $600 into whatever this is down here, 11,000 over 20 days.
So under basically a month, when yeah, it’s just about consistency and finding, stop. Stop looking for trades and just find ones that you’re very confident that will work out. I really love it. It gives a good perspective. Once you put it down on a spreadsheet,
A trader nine. That’s also a very broad question. I, it just depends. It just depends. some of the trades that I would follow, because again, I’m following, larger money. They were for. A month out or two weeks out. Sometimes they’re very short term trades. So they’re like same week expiration, sometimes same day expiration.
Those are the ones that I liked the most and being out there they’re just riskier. I wouldn’t even say that I went on them. Okay. Maybe it’s just like 50, 50, but it’s just about finding the right, when you’re winning with options, at least you’re getting many multiples of your money. and I also like complicated strategies like back ratios and turning, naked options into verticals, and then turning them into butterflies, as the trade keeps going your way so that you can lock in, certain amount of money.
I used to trade options before I started trading futures. I learned a lot of the option strategies.
All right. I don’t know if there’s any other questions. I don’t see anybody typing. If you do have any other questions, start typing so that we can, I’m really curious to see if they’ll defend the 75 so far. They’re defending this level right here. Not really seeing many seller step in.
There’s just a few little sells right at the very top, right through here, maybe profit taking. but the bowls are trying again, see if they break to the next level. What will be interesting is once they get up to this liquidity to see what happens once they get to 80, we’ll probably have a little bit of a pullback, maybe get back down to 75, see what happens there.
And it’s just that it’s just observing what the story is that the market’s telling you.
I really liked this new chart book with the liquidity. It’s been super helpful.
Nice. Yeah. there’s very few times a least, corner in any S there’s very few times that you see aggressive buys at the very bottom. We did see it once last week and it almost caught me off guard because I was like, this just doesn’t happen. Typically at the very bottom, like really large orders.
usually they’ll happen once. prices started moving up and they want to keep moving price up. So I think seeing that is a huge, it’s like great alpha, super aggressive buyer that wants to turn the market around right now.
Yeah, I think trading theory or Bitcoins probably. it’s just maybe a lot clearer. I have no idea, but so far what I’ve seen from all the stuff that you’ve put out, it seems a lot cleaner. There’s less games, maybe less players, harder for them to hide. I’m not sure. Yep. Yeah. I think the same thing occurs with NASDAQ.
Like I think some days are really clear. maybe Friday wasn’t put again, Friday was OPEX. Thursday was the day leading to OPEX. I hate OPEX. It’s just a wash of a day. It’s no work. But other times, I think on cue really gives great signals in terms of what will continue to happen when yes.
We’ll just be all over the place. It’s a lot harder read with a yes.
All right, guys. thank you for joining. If you guys have any more questions again, we’ll do this every Sunday until. There’s very few people showing up and then we’ll do it, twice a month. But so far it seems good. if I’m spending 30 to 45 minutes, it feels like it was a good session. Answered a lot of questions.
Probably people learn a lot. so I’ll continue doing it. Thanks for showing up and enjoy trading tonight. I’ll see you guys.