Following the tracks of lions
Organized markets are fascinating and, although they can earn
fortunes, many people who are attracted by their promises, just
plucked.Those who have unraveled their secrets and get to win again
and again are very special people. They know something that others
unknown. They have a plan and execute it mechanically, a plan that
leads them to win the price increase or lower, there is good news
or bad, in one sector or another.
Understand that not all participants in a regulated market are
equal. On one side are institutional investors, banks, insurance
companies, large corporations who want to hedge their positions in
the future and ensure that their business will not be affected by
fluctuations in the economy. In this group we call Market Maker
(builders of markets, market makers) because their positions move
the quoted prices of the underlying. Often they make very large
operations and can withstand movements against because they are
covered (hedge) with options. For example, a car manufacturer that
is making a forecast on steel you will need to produce their cars
in the coming year and whose commercial success can not depend on
fluctuations in prices. He knows that if the price of raw materials
rises, it will have a profit margin too small or you can enter
losses. To avoid that possibility covers price with futures
contracts on those commodities. On the other side of the equation
is the seller Steel does not know if in the next year will increase
the demand for your product or not, and It is also eager to ensure
the trading price to cover costs and make a commercial benefit.Then
there is the great uninformed mass entering the market without
knowledge, without tools, with little money and a lot of
emotionality and are plucked again and again. When no more juice to
squeeze into their accounts are left by the wayside and while
licking the wounds are relieved by other fans who will be the next
to pay the piper, and so again and again. In this group we call
weak hands or lambs. This is the case of your friend Paco, who once
bought Endesa and won 25% (because everything up in that time) and
thereafter it has lost a lot of money (but that tells you not only
you talk about the operation that took Endesa). It is also the case
with your bank manager who got to buy stocks of a few builders and
now their savings pulverized (although it thinking that while not
sell does not lose). This is also true of your friend Marisa who
got the money a fund that had recommended his bank manager and
increasingly worth less (but as his "adviser", the bank manager,
says that while no band does not lose, remains confident everything
recovers before truly need to dip into that money. Another group is
the strong hands, or lions. These are professional traders who know
what they do, whichThey have lots of money and a lot of knowledge
and are organized into powerful unions. Usuallyable to manipulate
the media to entrap lambs and catch them to-toe. Recently,
television, press and radio spoke so alarmist about the price of
oil and He said that soon could reach more than $ 200 a barrel.
Right after this news the price He began to descend to pass worth
less than $ 100, why? Because so many Lions move contracts can not
enter or exit a market without. If they did move prices quote
against him. To prevent the price moves against you buy with bad
news (When all lambs are sold) and sold with the good news (when
all Lambs are buying). Often these are launching the news
themselves, sometimes only leverage the real news.These three
groups of participants fourth is added: independent traders are
those who areable to read what they are doing lions and position in
the market in the same direction without knowingnecessarily why. If
the Lions are getting short on oil (ie, they are selling
contractswhy expect the price to fall) they do the same. They may
not know what is behind thatposition, but know that the lions are
going to get it right most of the time and that they should go
withthey.Luckily for independent traders, the movements of the
lions are relatively easy to read.
Given the nature of its operations it is very difficult to get
work without leaving obvious traces of what they are doing. Why
it's so important to learn to read their movements.If the Lions are
buying it is because the price will go up. No matter the reason. If
you want to succeed you have to go with them, so you'll buy too.
When selling your Lions will sell well.
My suggestion is that you focus on learning to identify what
they are doing these groups of traderssyndicated, you understand
how they manipulate the market and as orchestrate their operations.
Then, with thisknowledge, you posicionars in the same direction.
They spent more time here than you have more money,more resources
and more information. If these fortunes have succeeded they are
because they know something you do not know welldo not argue with
them, on the contrary, limit yourself to find out what they are
doing and then do like them.
This also means you have to forget what you tell the news. This
news is for lambs,not for you. This part is very complicated
because the media are very powerful andinfluence is very large, but
you have to learn to think for yourself and not listen to what
comes out in themeans.
To follow the tracks left by the strong hands is necessary to
interpret some basic elements: the volume, range (spread), and
closure.
In a session either an underlying quoted on an organized market
price will probably vary throughout the day. Imagine that you are
organizing a party in your home and want to offer your guests a
chocolate. You'll a supermarket and head to the area of sweets. You
see that on the lower shelves are 10 boxes 1 chocolates and
shopping all. When you leave the supermarket, the manager realizes
that the chocolates were sold 1 and all ... He wonders whether it
be that they are too cheap ... so change the price to 1.5 and put
another 10 store boxes. You arrive home and your partner makes you
notice that you have not bought enough candy for all guests, so we
invite you to return to the supermarket for more boxes. There are
other stores but are far from where you live so you decide to
return with the hope that there is more in store chocolates and you
can complete your purchase. When you arrive look relieved that the
shelf is stocked with chocolates again. After you repair the price
and you realize that it has increased. Grumble but just buying
other 10 boxes to a higher price. The manager realizes that the
shelf of chocolates is empty again ... confirming that his theory
was certain: he was selling too cheap. Resets the shelf with 10
boxes and this time the price increases to 2 . If 1.5 are gone
perhaps to do2 . After the party your guests are so surprised by
the taste of those chocolates that do not stop insisting on your
success and exquisite good taste. You, flattered, you offer to send
them a chocolate to each of them the next day. You go to the
supermarket for the third time. You go to the area of sweets and
you see the shelving chocolates is again replaced. To your
surprise, the price is now 2 . You seem very expensive, but You
want to look good with your guests so the shopping alike.This
analogy can help you understand why raise the price of an
underlying asset (a share, a contract on raw materials, ...).
If you look at a daily time frame, we see what has made the
price in one day. In that periodsee what maximum rate and minimum
contribution what we have achieved and the trading range.We can
make a graph with a vertical bar running from the maximum price
reached to the minimum price.
We have agreed that the period we analyzed was daily. If I make
this representation for a week,I have five vertical bars that tell
me the price of the underlying range that is under consideration.In
this range you want to add useful information: closing price. That
is, at what price ended the trading of an underlying in a given
period.
Basically I want to see if the price has closed at the upper
third of the range, in the middle third or bottom third.
If you closed in the upper third what I'm seeing is that at the
end of the period (a day in our example)the price has fluctuated
throughout the range, but the bulls have won. If you closed the
thirdhalf say it is not clear who won. If you closed in the lower
third I will say that they have wonbassists.If I analyze daily
prices for a week, I can see if the end of a particular day is
higher or lower than the previous day. I can also see if the
maximum contributions are higher than the previous maximum or
minimum prices are lower than the previous minimum.The graphical
representation of the market price of an underlying in which there
is a range from theup to that day to the minimum and indicates the
closing price with a dash to the right, it is knownslang technical
analysts as HLC bar, the acronym of High (H), Low (low), Close
(Close).
All this is informative if I want to follow in the footsteps of
lions. Finally there is another fundamental element: the volume,
indicating the activity that has occurred in a given period.
The number of contracts or shares to be exchanged in a given
period is very significant,
especially compared to the contracts traded in the previous days
(or whatever period is to analyze).This is because the lions, when
they do take positions very loud because they have to remove the
"totality" of the demand or supply floating (exhaust all chocolate
boxes off the shelf) to move a market.What we will see what makes
the trading range in a given period, where the end of the period,
and what volume has been compared with the previous 5 periods.
With this information we can identify traces left by lions.
Note: Make sure you understand what I have tried to share. If
you have questions let me know with a post. To hunt lions is
important that these concepts are clearly established.
Well, you know what price range, you know where the end and you
have identified the volume of that period, with these elements you
can keep track of what the lions.
He understands that the strong hands move many contracts. If
you, me, your friends and your acquaintances did one afternoon
trading of these, even if we were to take the same decisions to buy
or sell, with our respective accounts we would not move the market
would continue its course indifferent to our decisions. Not so with
the lions, and they have very large accounts with which they can
influence the price.
In fact, if you want to position themselves in a market they
have to be very cautious and operate a certain way, or will the
price move against him.Imagine that you buy chocolates, and
whenever there are ten boxes on a shelf end, the owner of reset but
will raise the price. If you have to buy many boxes will you buy
first the cheaper and more expensive the past.
You want cheap get them all ... how did you do?
This is the same problem we have to solve the lions. They can
not buy no more. They need to orchestrate a ploy to buy an
underlying rise to believe that price increase without doing their
own shopping.We go back to the supermarket. What you do is build
with discretion. You buy 5 boxes and leave the other 5shelf. At
night the manager to replace puts five more chocolates. The next
day buy 4 boxes andlet the remaining 6. By not exhausting the
entire rack, the manager does not raise the price. Three or four
dayspurchases after seven more boxes, then buy 5, then 4, then 8,
then 6 ... You're doing well if you do not eliminate thesupply all
you have on the shelf. This way you get the price remains.
Or you can do something else ... more perverse, but very
effective. Imagine you have the power to influence the media. You
could publish a story about the wickedness of chocolates. If
clogged arteries causing terrible diseases if fat in a way never
seen before, that if they contain a suspicious component having
entered the country illegally ...
What if comenzase to circulate this information? What do you
think would the super manager? If I had a large stock and would
like to get it over, possibly price would fall. Maybe you make a
serious cut to try to get rid of their stock ... and who would be
buying these discounted chocolates? You.
So think the lions.
What will you do to identify one of its clearest traces will
be:1. Find a market that will make new lows. This is easy to see,
this is the lowest price at which an underlying has traded in a
given period of time is less than the previous price, and that less
than before.2. Search bar, in this bear market closing in the upper
third.3. This bar has to be extremely high and superior to the
individual volume of the above three bars volume.Behold the mark of
the lions. Why ?, because the lions will try to buy in bear
markets, ie enter when prices are falling, thus their price will
not buy against. Most likely in the period in which start buying
will slow the fall in the price and take the upper end of the
range. Its purchase volume is so high that it will be higher than
that of the three previous bars.
I hang this picture to illustrate what we are analyzing
graphically.
This is a screenshot of a graph 5 'mini SP 500, this means that
each green bar represents the price action of that index over a
range of 5'.
The numbers on the right indicate the market price of that
index.
The lower bars of green and red colors indicate the volume.
Higher up, the more volume.
HLC are bars, ie each bar shows the trading range between the
maximum and minimum for that period, and the closing price.
When bar five minutes we see in each bar is the highest price at
which it traded the index at the top of the bar, the minimum price
at the bottom, intermediate prices between the maximum and minimum
for each bar and the closing price, which is represented by a dash
to the right.The bar is surrounded in red come from a market that
has been making new lows, the first condition we put on our
analysis shows a volume above the average (yellow line at the
bottom of the graph) and above the last 3 bars, and closes in the
upper third.This is the mark of lions have to buy in a falling
market (which makes new lows) not put the price against too soon;
when they do show a lot of activity, so the volume is so high, and
when loaded contracts the market starts to turn because they have
absorbed the floating supply, hence the closure in the upper
third.
Is there clear it?
The concept that we are studying, is valid in different time
frames? ...
For a truly powerful approach I would ask you so, that is, I
want to be able to read just as well a graph of 144ticks, one of
three minutes, one 60 minutes one day ...
And the answer is YES! This concept can be seen in any
chart.
The penultimate bar in this graph (on the right side)
corresponds to movement of the index last Friday.
In it you will see rather Candlestick HLC bar, mounted a long,
long ride. If they are red it is that theclosing price was lower
than the opening price of the bar. If they are green is that in
that periodwhile the price closed above the opening price (we'll
talk about it later candles).It is daily bar (for those who are
wondering), ie, each bar represents the price of Dow Jones for a
day.The volume indicator showed impressive levels of transactions
(higher than any day in recent years), and close far from the
minimum that could only indicate one thing: somebody was buying in
bulk.
So effectively was Monday stock markets around the world hit a
major rebound.
How do we identify strong hands?
Are there any indicators that can advise me to be useful?
Because it seems to me that if the big investors enter the
market slowly to do "noise" and leave the same way, it is very easy
to confuse with small investors.
So how is it done?
Well, I send you greetings and thanks.
A.
Very good reflection.First, the strong hands are not all equal.
Some operate in a time frame ... and others in another. ThisIt
means you can find lions operating in graphics 3 'and move one 500
contractstacada ... and you can find lions operating on daily
charts and use 10,000 or more contracts.
Second, the fact of being different in its temporary operational
leaves different fingerprints. If a lion operates in a graph
233ticks for example will move the market upon entering and causing
them to draw out the familiar figures of exhaustion but very short
term ... their goals are probably getting a few points in intraday
trading.
Furthermore lions operating in newspapers (or higher) graphics
will be positioned along the entire session and see graphics above
figures also as exhaustion.This is the magic fractal: what you see
on a small scale ... it is the same as seen on a large scale. The
game is being able to read what is happening on a large scale and
then enter the scale operes (probably less) in favor of those
movements.Third, the fact that enter and exit slowly not go
unnoticed most of the time because the move passing many contracts
is reflected both by the volume, for the accumulation and
distribution areas (which are commonly used strategy to buy and
sell their positions at the best price possible). You will see that
there are spikes in volume and areas of accumulation and
distribution in any timeframe ... it reflects that there are strong
hands operating in different frames (often removing the dam to each
other, and sometimes completely synchronized).
I recommend two things:1. Learn to read the volume.2. Learn to
interpret the combination of: a number of senior timeframes that
you use to operate, Figures of exhaustion to be formed, identifying
areas of support or resistance.
How do you think the lions and how they act, and how you should
start thinking to defend their attacks and go with them rather than
against them?
Here are some thoughts for you to see how will the move:
In point 1 amateur or amateur, from now on "A", you see that the
price has moved decisively and thinks "this movement escapes me,
threw me and entered before I go to the moon. There's a lot money,
if only I had bought a little earlier. "Professional, from now on
"P", has bought before the break, in an area overlapping with
theexpectation of position along with its hundreds of contracts (or
thousands). Something that will gradually, asWe analyze. (See below
full strength hides a hidden weakness and every weakness a
strength...).Just when the A has entered the market the price is
braked ... and turns. The A enters the zone of "heat" which has a
position against. A loose some position a little before reaching 2
because they can no longer put up with the pressure.
2 are buying P. price falls and approaches that move to buy the
A. Your purchases slow the fall in the same way that their lack of
involvement in one did not allow the price to continue to rise
(lack of demand).
A look at the starting price of 2, and just after he left, moves
upward again and goes to 3. As soon given the Breakout, ie, at the
time the price breaks above the high of point 1, the A enters
buying.3 and just after the A has purchased the price is braked by
lack of professional demand. Again the A-toe has entered. Under its
terms the market was about to run away again so he threw ... I do
not understand is because the price again for just as he has
bought.The P-3 has made some profit by selling some of the
contracts it bought in 2. He does not want the price to escape
beyond 3 why can not buy everything I wanted, so I will not
participate and expect the price to return to the accumulation
area. Maybe in 3 sell some contracts.
In 4 amateur's inside from point 3, is hoping that the price
continue to the upside, and who bought in the A 1 and maintaining
the stops under point 2 are glad to see the movement in April. ..
Unfortunately, your celebration is short again why the price is not
professional demand and falling to 5.
In May many who bought A 1 in 3 or they have closed their long
with a loss. These sales (when a person closes a long position
makes selling) are absorbed by the professionals who are
accumulating in these areas.A price which escapes to 6,
professionals stop buying and the price is braked but to see
thatand again as large green candle casting. They do not want to
stay out of a market that could escape.The price moves sideways to
7 where there is very little involvement with the consequent
desperation andemotional investment they are in from 1 to 3 and
from their positions are still innegative.
When the price reaches 8 A that were still many in the market
loose their positions because they do not want or can not take much
"heat".These positions selling A are purchased by P bearing the
price above 7. There are not buying and they see that the price
makes up more than 7 just when they had decided to leave, come back
to buy the Breakout in September.In 9 for entering the A ... but
leave the P. Without the support of professionals the price is not
going anywhere. Some P even sell some positions they had bought in
8 with the idea of returning to buy cheaper when the price again
between accumulation zone.
The price back to 10 and the path loss are all that remained to
point 1, and 3, and those who entered in 9. On the other hand, when
the price exceeds the minimum 10 point 8 some to fall short
thinking that the market collapses.
In point 10 the P are buying all sales of slow action A. With
the fall and turn it overto the market. The A that have sold in 8
see that the price is not falling and crossing their fingers to get
outBE.
The price will be 11 and by the way are many like it had sold in
August.
Suddenly there is a rapid movement that leads the price of 11-12
and thereby makes a new high above 9 and above 3. The maximum break
is identified by the A as an opportunity and rush to buy just the
maximum. In 12 P that have driven the price to new territory they
are going short selling positions and thus hinder the entry of A to
be trapped above all and with the market move against it.
In 12 professionals have identified a place where to enter
to-toe, loose their positions creating a bull trap that will leave
many at a loss. In addition they do in the time that publishes news
and a very fast movement.
From the point 12 the price falls rapidly to the point 13. This
is the minimum of the day. With the fall of A who entered long at
12, or 9 or 1 or 3, they have to drop their long positions or loss
are why it seems that the market collapses against him. They endure
some heat but when the price exceeds the minimum 10 fear seizes
them.
Some A when the price exceeds the minimum 10 fall short. It
seems that this move indicates bad news short selling well ... but
the price slows in 13 ...All sales that have made the A are covered
by P at 13, and being the market in a fall in panic, can quickly
buy the remaining positions were looking for, so that A is left out
with a loss and P have completed their accumulation phase.
How do we know? It tells us the volume 14 is much higher than
any other bar. Thisvolume spike indicates professional activity
because they are the ones who have the purchasing powerenough to
move these amounts. Furthermore we see that the price closes at 15,
away from theminimum.
The only way the price is close to 15 who have purchased the
fall. Then we see extreme volume corresponds to purchases 14 P.
The A's have been left trapped and eventually the money has been
transferred from their accounts to accountsP.
P have been positioning accumulating contracts in an interesting
area. Everything is ready for the price to skyrocket as seen in the
picture below ... P Winners, losers of A, as in life itself
In this play there are 100 pips of course so do your numbers
;-)
Every stronghold hides a weakness, any weakness a strength
Says the Tao Te Ching.
You have an account of $ 3 million and are operating in the
futures market. Want to position in the market around the 100 level
why estimates that there will be an upward movement to 150.You want
to take positions to 1,000 contracts. Experience, privileged
information, tech, knowledge about the markets and the size of your
own work, your strengths are.But you also know that you can not buy
1,000 contracts in a row. Why can not you buy first the 100, and
after 110, then at 120, 130 and end your own purchase order would
bring the price above 150. By averaging your positions you would
stay on the market with an entry very poor on a level that you
would be hard to leave. This is your weakness.How to fix that? How
an institutional trader will enter the market without moving the
price against you?
Only you can do it step by step, quietly, slowly, with modest
positions. You can not enter a purchase order too big.When the
expectation is bullish, ideally an initial bearish movement. That
way if the price pass from 100-90 you could buy in the fall and may
stop the price around 100 ...
Will you wait for the market to fall? It could be that I did
not, so you might want to create a price drop. If you movieses the
market below 100 you do skip stops those who have entered long
waiting for an upward movement. These people come into losses and
would have to close their long. Close the long run means sales
orders and that would bring the price down.
So what can you do? Create a quick downward movement for these
people jump from their positions and come with a host of contracts
to slow this decline.
Note: For a lion can come to buy, sell first.
Maybe you can sell 200 contracts to 100 and get the price falls
to 90 and buy 300 contracts 90. With your move you have positioned
100 laps. 200 shorts you wore least 300 long, are 100 long.
Possibly if you buy a frenzy tacada 300 falling and bring the price
up slightly, suppose that to the level of 100.
You're in the market with 100 contracts but attention, you want
to buy 1,000 so your taking positions has not just begun. How do
you go from there so you can put the other 900contratos?Easy, you
have to sell 200 contracts and buy when the price falls 300. This
way you will bein more than 100 contracts in addition to the first
100 and will give you 20% of your positions.Not interested in the
price and that any movement upward escape from level 100 will be
defendedwith a sale contract on your part that curbed. If you sell
400 300 will buy again, alwaysshort and long lengths that you sell
what you do in large blocks for the price scare tradersless
experienced or weaker positions (which usually means using fewer
resourceseconomic and therefore less able to support a movement
against).