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).