Post

More from @Luckshuryy

Luckshury

@Luckshuryy

Mar 9

open interest (simplified):

a thread 🧵

open interest vs price:

price ↑ with positive OI: New longs pushing price up
price ↑ with negative OI: Shorts getting squeezed

price ↓ with positive OI: New shorts pushing price up
price ↓ with negative OI: Longs getting squeezed

when new positions, whether long or short, drive price, they add the dynamic that if pushed offside, price can squeeze in the opposite direction.

example - new shorts pushing price ↓

early positions:

positions opening too early, can be a good reason for trend continuation, hence I will not fade a move prematurely if oi rises too quickly.

when new positions open too eagerly it creates new stops either above or below the continuation pivot.

example ↓

Read 7 tweets

Luckshury

@Luckshuryy

Feb 28

Auction Market Theory (simplified)

a thread 🧵

what is auction market theory:

a concept (not a strategy) which discusses how buyers and sellers interact within the market.

using a combination of:

- price
- volume
- time

we can determine which state of auction the market is in, either balance or imbalance.

balance:

where price has found acceptance, and where buyers and sellers are willing to trade within a fair value range.

fair value can be identified as the value area, where the majority of transactions have been occurring (68%).

deviations outside of the VA can be viewed as a premium/discounts to the current fair value price.

in a balanced (efficient market) you will tend to see:

- slower price action
- thicker books

Read 7 tweets

Luckshury

@Luckshuryy

Feb 21

delta: a clear understanding

a thread 🧵

what is delta:

in trading "delta" is the difference between the sells & buys.

there are 2 common ways to watch delta:

1) traditional bottom row indicator which tells you the delta on a per candle/time basis. (like the cover image)

2) footprint chart which shows a per price view & time view of delta. meaning you can view at which time the delta came in & which price.

Identifying delta per price I find to be more valuable.

positive delta - more market buyers
negative delta- more market sellers

example ↓

when to look at delta:

- resting liquidity
- high volume nodes
- point of controls
- other horizontal s/r levels

upon price breaking range high/lows there has the potential to be excess delta left behind for false breaks.

example ↓

Read 7 tweets

Luckshury

@Luckshuryy

Feb 14

orderblocks (simplified)

a thread 🧵

what are orderblocks:

- the last up/sideways movement before an illiquid down move
- the last down/sideways movement before an illiquid up move.

illiquid typically can just mean a strong one time-framing move where there are no pullbacks.

example ↓

how orderblocks work (theory):

orderblocks are where there has been a clear sign of significant previous market activity, meaning a revisitation of this area could act as a stop gap.

for example:

the last down move before a significant up move is being revisited.

there are multiple reasons for price to react from this:

- offside shorts from this zone → closing positions at breakeven
- any new longs who entered here → defending their existing position

these zones are primed with liquidity (thicker books), allowing for larger players coming into the market to increase the chance they get orders filled.

example ↓

Read 6 tweets

Luckshury

@Luckshuryy

Jan 20

trapped traders: a clear understanding

a thread 🧵

what are trapped traders?

when new positions enter and are placed in an offside position, they will naturally want to close, squeezing the market in the opposite direction.

this natural outburst of breakout traders being caught offside can be a great reason to look for a reversal.

example ↓

identifying trapped traders:

requires an understanding of open interest and delta, as open interest will categorically tell you if the majority of positions entering are new ones.

open interest increasing = new positions
open interest decreasing = positions closing

positive delta = longs
negative delta = shorts

breakout traders only appear when there's an increase in open interest; otherwise, most positions you see will be closing.

1) identify the candle in which new positions have largely entered
2) identify a level in which those new positions would be offside
3) trade in the direction of the new positions unwinding

example ↓

Read 6 tweets

Luckshury

@Luckshuryy

Jan 10

forming a daily bias:

(stats included)

a thread 🧵

candle formations:

engulfing candles - I look for a candle to wick below the previous candle and close at least beyond the 50% mark the previous candle (bullish engulfing).

I find this to be as effective as waiting for the entire previous candle to be engulfed.

the following day will be biased towards the direction of the previous day engulfing candle.

shooting star - my favourite daily formation, these often result in better entries to much larger moves, failure to extend above/below previous day and end up mean reverting.

example ↓

one time-framing:

the most basic thing I always check for - an aggressively trending move.

daily timeframe, for a bullish example - is the daily candle printing 3 or more consecutive daily highs in a row whilst not wicking below previous day.

yes = I will only follow that direction for the remainder of the day should i take any trades.

no = move to next step

Its a simple and effective way to not get caught offside against an aggressively trending market.

example ↓

Read 7 tweets

Share this page!

Enter URL or ID to Unroll

Luckshury

Try unrolling a thread yourself!

More from @Luckshuryy

Luckshury

Luckshury

Luckshury

Luckshury

Luckshury

Luckshury

Did Thread Reader help you today?

Don't want to be a Premium member but still want to support us?

Send Email!