Anatomy of A Market Drive

AlphaReveal allows the trader to take a peak underneath the hood and get a look inside the market. There are two basic trades: reversions and price drives otherwise known as breakouts. Price charts can help determine the mode of the market. But, they're inherently lagged. AlphaReveal allows the trader to SEE INSIDE the market and thus get a more complete understanding of whether traders are selling or buying a new low or high. This ability to SEE the INTERNAL market dynamics is a tremendous advantage.

The summary stats on the Volume Inventory Tracker (V.I.T) is one of the best tools to watch when the market may be making a drive or break lower. The summary stats show the total volume that has been executed since the last reset and the imbalance in buying and buying. This statistic can be invaluable in weighing if the market will be likely to make a drive from a new low or make a reversion. For example, if the ratio of buy orders to sell orders increases as the market touches a new high then this is a good sign the market may drive higher. Likewise, if the absolute number of short orders increases as the market touches a new low then that's a good sign the market can drive lower. Conversely, if the dominant balance starts to decline then that's a good sign that shorter term market dynamics are in play and the market may make reverse.

For a complete example, look at the following setup:

1. The market is near the low of the range and at a relative high (overbought).

2. There is an imbalance of market sell orders to buy orders as seen in the summary stats on the V.I.T.

3. The market is testing the low of the recent range. And this net imbalance isn't decreasing much or is testing new highs.

4. Strong buying can be seen in the PressureVolumeTM display that is unable to tick the market higher.

5. Go short when the order flow reverses and limit orders are pulled underneath the market.

We'll have a video up of this soon! Thanks.

Monday, February 25, 2013 12:24:00 PM Categories: education


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Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.