Analysis of the volume is less effective in the market of commodity futures. Specification and characteristics of trade applications. Limited contract validity
At first glance, this mapping is not entirely clear, but everything will become clear if they decompose the decision-making process into two components: the situation is actually an analysis of the situation and the choice of applications. For a successful game on the Exchange, the ability to choose the right time to enter the market and exit from it is tremendous, especially with futures transactions, where the "lever effect) is so high. After all, you can correctly guess the tendency, but still lose money. A relatively small amount of collateral (usually less than 10%) leads to the fact that even minor price fluctuations in an undesirable direction for you can displace you from the market, and the result will lead to partial or complete loss of mortgage. For comparison, when playing a stock exchange, a trader that feels that the market goes against him can take the expectant position in the hope that sooner or later and on his street there will be a holiday. The trader holds its shares, that is, from the trader, he turns into an investor.
In the commodity market, alas, it is impossible. For futures transactions, the principle of "buy and hold" is absolutely not acceptable. Therefore, if you return to our two components, in the phase analysis. "You can use a technical, and a fundamental approach to obtain a true forecast. As for the choice of time, determining the points of entry into the market and exit from it, then a purely technical approach is required. Thus, it is considered those steps to make a trader before taking market commitments, we can once again make sure that at a certain stage it is a technical approach to absolutely not replace, even if in the early stages and a fundamental analysis was applied.
Flexibility and adaptive capabilities of technical analysis
One of the strengths of the technical analysis is undoubtedly. What can be used for almost any means of trading and in any time interval. There is no such area in stock and commodity exchange operations, where techniques were not used.
We were talking about commodity markets, the technical analyst, thanks to its graphics, can track the situation on any number of markets, which cannot be said about fundamentalists. The latter, as a rule, use such a number of different data for their forecasts, which is simply forced to specialize in some one market or market markets: for example, on cereals, on metals, etc. The advantages of broad specialization are obvious.
First of all, any market has periods of surge of activity and periods of lethargy, periods of pronounced trends and periods of uncertainty. The technical analyst freely can concentrate all its attention and strength in those markets where price trends are clearly traced, and all the others should be neglected. In other words, he maximizes the advantages of the rotational nature of the market, and in practice it is expressed by the rotation of attention and, of course, funds. At various periods of time, those or other markets suddenly begin to "bore", the prices of them form clear trends, and then the activity fades, the market becomes sluggish, the price dynamics is uncertain. But at some other market at that moment, a flash of activity begins. And the technical analyst in a similar situation is freedom of choice, which cannot be said about fundamentalists, the narrow specialization of which at some particular market or group of markets simply deprives them of the possibility of maneuver. Even if the fundamental analyst will decide to switch to anything else, this maneuver will require much more time and effort from it.
Another advantage of technical analysts is "Wide Review". And in fact, following all markets at once, they have a clear picture of what both happens in commodity markets. This allows them to avoid peculiar "storm", which can be the result of specialization on some one group of markets. In addition, most futures markets are closely connected between themselves, the same economic factors affect them. Consequently, the dynamics of prices in one market or group of markets may be the key to the randion of where a completely different market or a group of markets will go in the future.
Technical analysis in relation to various trading means
The principles of graphic analysis are applicable to stock, and on commodity markets. Actually, initially a technical analysis was used on the stock exchange, and several later came to the commodity. But since appeared urgent transactions on stock indexes (Stock Index Futures), the border between stock and commodity markets is becoming more and more ghostly. Technical principles also apply for analysis international stock markets INTERNATIONAL STOCK MARKETS) (see Fig. 1.2).
Fig. 1.2 International stock markets
Over the past ten years have become extremely popular financial futures including interest rates and world currencies. They have proven to be excellent objects for graphic analysis.
Principles of technical analysis can successfully find use in operations with options and spredes.Since price prediction is one of the factors that is necessarily taken into account by Hedger, the use of technical principles when heading It has undeniable advantages.
Technical analysis in relation to various time segments
Another strong side of the technical analysis is the possibility of its use on any length of time. And it doesn't matter, if you play fluctuations within one day of bidding, when every tick is important, or analyzed the medium-term trend, in any case you use the same principles. Sometimes it is expressed that the technical analysis is effective only for short-term forecasting. In fact, it is not. Someone mistakenly believes that for long-term forecasts, a fundamental analysis is more suitable, and the fet of technical factors is only a short-term analysis in order to determine the moments of entry and exit from the market. But, as practice shows, the use of weekly and monthly graphs covering the market dynamics over several years, for long-term forecasting it turns out to be extremely fruitful.
It is important to fully understand the basic principles of technical analysis to feel the flexibility and freedom of maneuver, which they provide analyst, allowing him to be equally successful to apply them to analyze any means of trading and on any time cut.
Economic forecasting
Sometimes many of us tend to consider technical analysis under a very specific angle of view: as something used to predict prices and trade in the stock and futures markets. But after all, with the same success, the principles of technical analysis can also find themselves and wider use, for example, in the field of economic forecasts. Until now, this scope of use of technical analysis was not too popular.
Technical analysis has proven its effectiveness in predicting the development of financial markets. But do these predictions have any value in the macroeconomic context? A few years ago, the newspaper "Wall Street Jornal" published an article under the title "A sharp jump of prices for bonds - this is the best leading indicator of periods of decline and lifting in the economy." The basic idea of \u200b\u200bthe article was that the prices for bonds with the striking clarity fix the coming changes and the economy. The article contains the following statement:
"The bond market as a leading indicator exceeds not only the stock market, but also any widely known advanced indicators used by the US Government."
What is important? First of all, we note the mention of the stock market. The Standard & Poor index "S 500 is one of the twelve most common advanced economic indicators to which the United States Trade Department is focused. The author of the article refers to the data of the National Bureau of Economic Research in Cambridge, Massachusetts, according to which the stock market is the best of twelve output indicators. The fact is that there are futures contracts both on bonds and on the Standard & Poor index "S 500. Since both and other contracts perfectly succumb to technical analysis, it means that we are not engaged in anything else. As economic forecasting, conscious or not. The most vivid example of this is a powerful tendency to raise the course in the markets of bonds and stock indexes, which in the summer of 1982 announced the end of the deepest and most prolonged economic downturn since the Second World War. This signal remained almost unnoticed by the majority of economists.
The New York Coffee Exchange, Sugar and Coco (CSCE) offered to make futures contracts for four economic index, including the index of the number of residential buildings (Housing Starts) and consumer price index (Consume! Price Index for Wage Earners). The introduction of a new futures contract for the futures price index of commodity markets (Commodity Research Bureau Futures price Index) is expected. This index was used for a long time as a barometer, registering "pressure" of inflation. But, in fact, it can be used much wider. In the article in the "Commodity Yearbook" Yearbook for 1984 ("Commodity Year Book"; Commodity Research Bureau, Inc.) The relationship between the CRB index and all other economic indicators on the example of the analysis of four business cycles, starting from 1970 (see Fig . 1.3).
Fig. 1.3 The graph shows a clear relationship between the SRV futures index (solid line) and an industrial production index (dotted line).
For example, it indicates that the CRB index values \u200b\u200bare closely related to the dynamics of the industrial production index, in the sense that the futures price index, as a rule, anticipates the change in the values \u200b\u200bof the second index. The article states: "The obvious relationship between the values \u200b\u200bof the CRB index and industrial production index indicates the effectiveness of the CRB index as a broad economic indicator." (Stephen Coke, "CRB futures price index - Consumer basket from 27 items of goods, which in the near future can be the subject of futures contracts," p. 4). From myself, I can only add that we draw graphs and analyze the dynamics of the CRB index for another year, and always with constant success.
Thus, it becomes quite obvious that the value of technical analysis as a means of forecasting far goes beyond the determination of the direction in which the price is moving on gold or, say, on soybeans. However, it should also be noted that the advantages of a technical approach in the field of analysis of macroeconomic trends have not yet been studied. The futures contract for the price index for consumer goods (CPI-W), introduced on the coffee, sugar and cocoa exchange (CSC), became the first swallow among such contracts for economic indices are used to analyze the stock market. It is definitely difficult to answer here. The basis of its principles are the same, but there is a number of significant differences. Principles of technical analysis initially began to be applied precisely in the stock market and only later came to the market. Many basic tools - for example, column graphics, digital graphics, price models, trading volume, trend lines, moving averages, oscillators are used and there. Therefore, it is not so important where you first encountered these concepts: in the stock market or on the commodity. It will be easy to restructure. However, there are a number of common differences that are associated, rather, with the nature of the stock and commodity futures markets, rather than with the tools that the analyst uses.
Price structure
The price structure on the commodity futures market is much more complicated than in the stock. Each product is quoted in strictly defined settlement units. For example, in the grain markets, these are cents for the bushel, in the markets of livestock - the costs for the pound, gold and silver goes in dollars per ounce, and interest rates in basic paragraphs. The trader must examine the details of the contracts on each market: what stock exchange operations are being carried out, as one or another product is listed, what are the maximum and minimum price changes and what they are equal in monetary terms.
Limited contract validity
Unlike shares, futures contracts have a limited validity period. For example, the term of March 1985 futures contract for long-term treasury obligations expires in March 1985. Usually the futures contract "lives" about one and a half years. Thus, simultaneously on the market there are several contracts for the same product, but with various months of execution. The trader should know what contract he should trade, and what is not worth it (this will be discussed ahead). The limited validity period of futures will create some problems for long-term price forecasting. There is a need to create new charts every time the bidding for old contracts cease to be held. Graphs of expired contracts are not needed. They make the schedules of new contracts with their technical indicators. This permanent rotation greatly complicates the functioning of our original "library" of current graphs. The use of the computer also does not make it easier for tasks, since the constant updating of databases as the expiration of old contracts occurs requires additional time and means.
Less collateral
This item is the most significant difference between promotions and commodity futures. Any futures contracts require deposit. Typically, the amount of collateral does not exceed 10% of the cost of the contract. The result of this is the "lever effect" (leverage), due to which relatively small price fluctuations in one or another direction can significantly influence the state of the account that the trader is managed. Therefore, on futures you can quickly earn or lose large amounts of money. Due to the fact that the amount of the collateral that exhibits the trader does not exceed 10% of the cost of the contract, the price change by 10% in one direction or another will lead to the fact that the trader or will get one hundred percent profit, or lose its money. Everything can happen very quickly: Immediately after breakfast, you open the position, and even before lunch, learn the result. Due to the effect of the lever leading to the fact that even minor price fluctuations are gaining great importance, the futures market looks more volatile and unstable than it really is. After all, when someone tells you that he "flew" on futures, do not forget that he flew no more than 10%.
From the point of view of technical analysis, the high effect of the lever makes you pay special attention to the correct calculation of the actions time. For the futures market, it is much more important than the stock. The ability to accurately determine the input and exit moment is necessary for success in the futures market. However, it is much more difficult to do than to analyze the market. Therefore, technical methods are completely indispensable for successful trading futures.
Time interval is much shorter
Due to the high effect of the lever and the need to closely monitor its market positions, the trader on the commodity futures market works with sufficiently short time segments. Analytics of the stock market is interested in the long-term prospect of market development, the trader of the futures market so far does not look. If the first can argue about where the market moves in three months or six months later, the second concerns, where prices will be in the next week, tomorrow or even today, in the second half of the day. For such an analysis, the subtlest tools "melee" are needed, which technical analysts of the stock market may not suspect. Take for example moving averages. The stock market is most often used by the average sliding for a period of 30 weeks, or 200 days. In the commodity market, the duration of this period usually does not exceed 40 days. The following combination of medium sliding is very popular for futures: 4, 9 and 18 days.
Large dependency on the right time selection
For futures operations, the ability to accurately choose the time to enter the market and exit from which is of paramount importance. If you managed to correctly determine the direction of the market - this is just half anteen, because the error when entering the market in one day, and sometimes in a few minutes can lead to losing. There is no dispute, it's a shame if you have not guessed the direction of the market. However, lose, even in spite of the right forecast, is insulting doubly. And it often happens on the futures market. Without a doubt, the choice of time is the prerogative of technical analysis, since the fundamental indicators are sufficiently stable and do not change daily.
Limited use of medium market indicators when analyzing commodity futures
When analyzing the stock market, the movement of such average market indicators, as the Dow-Jones index and the Standard & Poor index "S 500, is enjoyed; in fact, it is a starting point for the technical analysis of the stock market. The business market is different. Here also "There are a number of indices, with the help of which the general direction of price movement in the commodity market is determined, for example, the CRB futures price index. The dynamics of these indexes are closely studied and is taken into account when drawing up forecasts. However, in its value for analyzing the market, commodity indices are not comparable to stock.
Limited use of extension technical indicators in commodity markets
General Technical Indicators, such as New Highs-New Lows Index Indicators (New Highs-New Lows Index), ADVANCE-DECLINE LINE curve, short-term sales percentage (Short-Interest Ratio), have a colossal proportion in forecasting in stock The market, but in the commodity market, they practically did not find applications. It cannot be said that these indicators cannot be used at all on futures markets. Since the number of futures markets is steadily growing, specialists may someday there may be wider indicators of the market movement, but so far they are almost not used.
Special technical instruments
Most technical tools were originally created for the stock market. Therefore, in the commodity market, where they came later, they are sometimes used somewhat differently. For example, price models on charts of product futures are not always formed as fully as on graph charts, moving averages are much shorter in length, traditional items of digital graphics are very rarely used. Due to the fact that information about changes in prices during the day to obtain is much more difficult, only "traders on the floor" use intraday items. We will still concern these and many other differences in the following chapters.
And finally, there is another cardinal difference between the stock and futures markets. Technical analysis in the stock market in a much greater degree relies on the use psychological indicators (Sentiment Indicators) and analysis money movements (How of Funds Analysis). Psychological indicators reflect the behavior of various groups of market participants: single traders, mutual funds, professionals working directly in the trading room of the Exchange. It is attached to those psychological indicators that show the overall "mood" of the market: bull or bearish. The analyst here comes from the principle that the majority or crowd is always mistaken. Analysis of cash flow deals with cash positions of various groups, such as mutual funds or major institutional investors. In this case, the analyst argues as follows: the more cash position, the more funds can be used to purchase shares. Although these forms of stock market analysis are not paramount, often technical analysts rely on them more than traditional market analysis tools.
Technical analysis of futures markets, from my point of view, is the most pure price analysis form. Of course, he allows the use of the "from the opposite" method, but the main stop is still done on the analysis of trends and on the use of traditional technical indicators.
At the heart of the success of trade on the stock exchange lies financially accurate calculation and competent analysis, and not an accident. For operations in the Futures Market on the RTS Index, such tools are used as price schedules and volumes of transactions, as well as a table with quotation volumes.
The price schedule and volumes of RTS futures trafficking, used since December 2013, as the main tool for determining the real market situation. The basis of the calculation is also taken by the actual fluctuation of the cost of oil.
Futures on the RTS index is directly depending on the MICEX-RTS exchange rates, half of whose shares are distributed among Russian issuers. In this regard, in addition to the RTS table, the MICEX price schedule is assumed as the main tool for managing trading.
The graph reflecting the price value and sales ratio of the dollar to the ruble is denoted as Si. It was noted inversely proportional to the cost of futures in relation to the RTS index. In case of falling Si futures, the RTS futures growth is noted on this number of units. Analysis of SI futures is carried out on the basis of these graphics of the International Section MICEX. This relationship is substantiated by the dependence of the Russian raw material economy from the dollar.
In addition to the charts for conducting trading, the trader will need a glass of applications, meaning a trading drive, and tables, with which control over trading operations. To build the chart, you will also need the characteristics of client accounts, the content of applications and a table with a reflection of indicators of all transactions.
Trade of currency futures on the MICEX is identical to the exchange of monetary signs in banking offices. When the course is waited for the course of the course, you should sell currency, with a smooth or sharp increase in its value - to buy time.
But the sale of currency reserves on the stock exchange has a number of benefits:
The main characteristic of stock trading is the possibility of reservation of the currency before the start of operations for the future period. If the trader is interested in the growth of the American dollar's course, then he should acquire futures for this currency. With the growth of its values, the trader will receive compensation - remuneration, since trading is carried out on the basis of speculation and exchange. The ruble index is directly dependent on the level of sales of Russian oil. When "coming down" prices for the natural resource is likely to reduce the course of the currency of the Russian Federation to the corresponding value.
Principles of Construction Graphics Couple Dollar-Ruble
One of the most popular futures on stock trading is the RTS index. The indicator is characterized by low fees and commissions listed by brokers representing the interests of traders on the Forts.
Trade in a pair of dollar-ruble trade, as an indicator of the development of the Russian economy, along with the cost of oil reserves, because in the international arena, the Russian currency is not interested in a wide range of a bidder.
If we compare the work of currency futures and stock indexes on world trading, it is possible to determine that trading in the equivalent of currencies occur with the most flexible financial indicators. They are easy to carry out trading operations within the day.
When building a futures schedule, it is important to identify the difference between the maximum and minimal value on the trading schedule in the day session.
To determine the limits, historical indicators are taken into account. The more distance between them, the better the possibility for movement within the 5-minute schedule. At the same time, the risks remain at an acceptable level, and the level of profit can reach high indicators. Follow the change in the price of the currency is much easier than stock indicators. The trajectory of their change is much clearer, especially for beginner traders. The time characteristics for trading on the currency are much more efficient, since the RTS index may remain unchanged for a long time, which will lead to the absence of means of means. In the case of currency futures on the dollar-ruble, during this time there may be several drops and sharp increase in sales course, which guarantees the receipt of high remuneration.
The currency schedule is available online on the Moscow Exchange website. Update indicators occurs with a delay of 10 minutes on all types of browsers. In order to track the course of trading in real time, the installation of a special CFD program reflecting the dynamics of futures movement is necessary. When working with this provision, the futures for trade in the dollar-ruble is broadcast without restrictions. The system also has a demonstration of the difference between the basic and derivative futures shown in the maintenance of the positions of the dynamics of assets. Thus, the first tool for organizing sales in currency options is characterized.
Influence of the graphics of the dollar-ruble from the course of oil sales
When falling oil quotes, the value of the ruble sharply goes to a decrease.
When building a schedule, a significant impact has a course of sale of Russian oil, which determines the importance of local currency in world markets. The cost of oil is determined by the news. For example, on the eve of the collapse of black gold occurred due to news about sending a resource from Iran to the United States.
Currency oscillation when selling gold
Bidding on the currency directly dependes in addition to oscillations of the cost of oil from the sale course of gold. A simple example is the subject of the contract is measured in grams and ounces of gold. Its value is determined in American dollars for each ounce contained in the ingot.
The minimum price change is taken at $ 0.1, with a guaranteeing provision of 5% of 
The cost of the contract for the sale of gold.
At the time of the trading, the accepted dollar rate / ruble - 1 / 35.50. The transaction is carried out at bidding for 835 points. Thus, the open position will be 29,642 rubles, based on the calculation of 835 * 35.5. Go - 5% from 29642 in the amount of 1482 rubles.
If the price of gold, like oil, changes to several positions, presumably, the step becomes 880. Thus, the level will rise to 45 points and will be 1598 rubles, based on the calculation of 45 * 35.5 rubles. The specified value is purchased when hesing the price of gold.
The dependence of the currency schedule on the trading example of Sberbank shares
For the stock exchange great importance plays the risk of Marin Coll, that is, the achievement of the minimum value. You can explain this situation on a simple example.
When buying 100 shares of Sberbank, their cost was set by 90 rubles. For the action, that is, in the aggregate of 9000 rubles. During trading, the price of Sberbank shares has decreased to 5.5%, reaching 85 rubles. This loss has become equal to 500 rubles.
The value of the warranty (GO), established, for example, in the amount of 15% of transactions with Sberbank securities transactions. When trading on this technology, its size will be 1350 rubles, obtained by formula 9000 * 0.15. Thus, costs will be equal to 37% at a loss of 500 rubles.
When falling the cost of futures on an indicator of more than 7%, Margin Call is declared, since money for subsequent trading remains half less. Futures for sale with such trade shares of Sberbank is carried out forced by a broker.
To use futures or CFD graphics based on the indicators of concluded contracts in dollars and rubles, it is necessary to introduce the name of the relevant futures to the trading characteristics of the market. The name of the tickers can be different from the usual, however, the list of futures and CFDs with the accepted trading indicators are always placed under the schedule in a special table.
Analysis of volume indicators is not as effective in commodity futures markets, as in the stock market. First, it is related to the delay in futures transactions for one day. Secondly, in futures commodity markets, there is a very, in my opinion, an inconvenient practice of analyzing individual contracts based on the total volume indicators, instead of using the actual values \u200b\u200bof the volume separately for each contract. True, it should be recognized that the use of such a method has good reasons. But what should I do when on the same commodity market on the same day the price of closing on some contracts increased, and on others dropped? Days when price change during the trading session reaches maximum permissible valuealso create additional difficulties for interpretation. If trading is stopped in connection with the exceeding the deviation limit from the quotation price of the previous day with price increases, then the volume indicator on this day is usually quite low. The fact is that the excess of the limit is a sign of the forces of the market; The number of buyers has so exceeded the number of sellers that prices have reached the maximum permissible ceiling, and in such cases the trade is suspended. In accordance with the classical principles of interpretation, a small amount of market revitalization testifies to bearish tendencies. The low volume indicator recorded in the days of exceeding the deviation limit, contradicts this rule and can distort the OBV indicators.
In addition, the futures markets do not have the so-called growth rate indicators used in the analysis of stock indexes, as well as data on the number of shares, the transactions on which were concluded with minimal growth (UPTICK) and minimal reduction (DOWNTICK) prices. This very useful information is not available to the participant in the commodity futures market. However, even if there are some restrictions, the analysis of the volume in the futures market may be very fruitful. We strongly advise the reader to closely monitor this important indicator of market development.
Interpretation of open interest
Methods of interpretation of open interest and volume are almost no different. Nevertheless, on some features of interpretation of open interest indicators should be stopped in more detail.
1. If in terms of rising prices, the value of total open interest exceeds the seasonal indicator (averaged value, which is calculated for the period of five years), there is an influx of new funds on the market, reflecting the greater activity of buyers (bullish sign).
2. However, if there is an increase in prices on the market, and open interest falls below its average seasonal significance, market revival is due mainly by coating short positions(The owners of unprofitable short positions are forced to close them). Therefore, there is an outflow of money from the market.This is a bear sign, because after covering short positions, the upward trend is most likely "exhausted."
3. If, with a decrease in prices, open interest increases to values \u200b\u200boverlapping the average seasonal, the market has an influx of new money - a process reflecting the growth of new short sales.This indicates a confident continuation of a downward trend and is considered a bear a sign.
4. Finally, the overall interest rate can decrease compared with the average seasonal against the background of the total fall in prices. The fall in prices in this case is caused by confusion in the ranks of traders forced to eliminate their long positions.It is believed that this is a sign of the forces of the market, indicating the imminent end of the downward trend. The fall in prices will end as soon as most traders who played an increase will close their unprofitable long positions, which will appear in a noticeable decline in open interest.
Let's bring a brief summary:
1. Growing open interest at an upward trend is a bull sign.
2. Reducing open interest at an upward trend is a bear sign.
3. Growth of open interest with a descending trend - annoyance sign.
4. Reducing open interest with a downward trend - a bull sign.
The role of open interest in analyzing other market situations
In addition to the above, an analysis of open interest may be very fruitful in the following market situations:
1. Upon completion of large-scale movements in the market, when an open interest grew throughout the process of development of the trend, aligning open interest indicators or their decline prevents a possible fracture(See Fig. 7.11).
2. A high open interest indicator recorded on top of the market can be considered a bearish sign, subject to a sharp drop in prices. This means that all new long positions opened at the outcome of the upstream trend have become unprofitable. Their forced elimination will put pressure on prices, until open interest decreases to a large extent. As an example, consider the following situation. For some time prices grew in the market. For the previous month, a rather tangible increase in open interest was also observed. It is necessary to recall that each new contract adds one long and one short position to the market. Suddenly, the price began to fall sharply and dropped below the minimum indicator recorded for the previous month. Each long position, opened this month, was unprofitable.
Forced elimination of these long positions put pressure on prices - until all of them were eliminated. It also worsens the fact that forced sales often take a natural character and, as prices continue to fall, cause the sale of other long positions, thereby lower prices are lower and lower. A vivid example of such a phenomenon is the situation that has developed by the end of the eighties. At this time, the rise in prices in the commodity markets reached the limit and changed to a five-year decline period. In some markets, by this time, open interest indicators reached unprecedented values \u200b\u200bfor a long history, which undoubtedly contributed to the price collapse. Summing up in the example we given, we can say that an unusually high open interest rate fixed on the bull market serves as a hazard signal.(See Fig. 7.12).
Fig. 7. Pa In this example, open interest growth confirms the revival of the market. Pay attention to the equalization of open interest at the end of February - the signal that the market may have achieved the top. Indeed, from this point on the price began to fall sharply.
Fig. 7.11B A sharp turn of sugar prices up is also reflected on the zones of volume and open interest. Pay attention to a sharp decline in these indicators immediately in front of the sharp rise in the market in July. An increase in volume and open interest in July means a significant shift in the market sentiment - from the bear to bull, confirming that the market probably achieved a turning point and will now grow.
3. If an open interest rate increases significantly during a stagnant consolidation or when prices are moving within the "market corridor", the subsequent movement of prices after the breakthrough will be quite significant. Everything is logical. The market is in indecision; To say, in which direction they will go to freedom of prices, no one can. However, the growth of open interest indicates that many traders begin to open positions, anticipating the market breakthrough. When this happens, many of them, unfortunately, will understand that they were not on the other side of the market (go back to example in Fig. 7.5, which illustrates a similar situation in the silver market).
Fig. 7.12. An example shows the classic situation of how a very high magnitude of open interest can become a bearish factor if the fall in prices begins. For two weeks, prices fell by 2 dollars. All long positions, open since the end of August, have become unprofitable. Prices decreased until these positions were eliminated. Please note that this was followed by a sharp drop in open interest.
Suppose that within three months the price was moving within the "market corridor", and the indicator of open interest jumped during this time for ten thousand contracts. This means that there were ten thousand new short positions and ten thousand long. Then prices escaped from the corridor up and the market reached the new maximum indicators for three months. Consequently, every short position (and all, we will remind, ten thousand), open for the three preceding month, is unprofitable. The excitement begins; Traders feverishly cover their short positions, strengthening, thereby pressing pressure on the bottom, which, in turn, strengthens its panic on the market. The price movement remains strength until all or most of the short positions are compensated by long positions opened during the period of the special forces of the market. If the breakthrough was sent downwards, then a diametrically opposite situation would have formed on the market, that is, panic would cover long position holders and so on.
In the event of a new trend immediately after breaking on the market, a panic always occurs, which is created by traders trying to eliminate their loss positions. Their actions involuntarily enhance the emerging tendency. Why more traders were caught by surprise (and this is determined by a high indicator of open interest), the greater the excitement reigns in the market immediately after sudden unwanted turning of prices. However, for other market participants (more experienced or lucky who made the right choice) the emerging situation, on the contrary, is very favorable. With your actions, they also squeeze the resulting tendency using unrealized profits on the existing positions on the opening of new ones (such a situation makes thinking; every new contract that makes an amendment in an open interest indicator means that someone has committed a mistake). It becomes clear why an increase in open interest in the period of price within the "commercial (or market) ^ corridor", moreover, in the course of the formation of any price model - leads to an increase in the potential of the subsequentprice movements.
4. Increasing an open interest rate at the time of completion of the price model can serve as another confirmation of the direction of the direction of the trend. So, the breakthrough of the line "neck" model "Head and shoulders", formed in the field of market base, is more convincing, if it occurs with increasing open interest and volume. In this case, it is necessary to exhibit certain caution. Since traders who are in a loss, after receipt of the initial trend signal, give the market development additional impetus, open interest in the event of a new trend sometimes slightly decreases . Such a minor initial drop in open interest may mislead some analysts. The output here is one - to attach too much importance to short-term changes in open interest should not.
Brief conclusions
Let's summarize, briefly reminding the reader the main features of the price analysis, volume and open interest.
1. For forecasting purposes only totalvolume and open interest indicators.
2. For open interest indicators, a seasonal amendment should be made.
3. An increase in volume and open interest indicates that the current trend is likely to continue.
4. Reducing the volume and open interest shows that the trend may be coming to an end.
5. The volume precedes price - in the sense that the change in pressure on the market by buyers and vendors is usually reflected in the volume, and then at prices.
6. To more accurately determine the direction of pressure of the volume, the ovail indicator of its modification can be used.
7. With an upward trend, an unexpected alignment or a decrease in open interest warns of a possible change in the trend.
8. An overly high indicator of open interest, recorded on top of the market, is dangerous - it can strengthen the pressure on falling prices.
9. A significant increase in open interest during the consolidation of the market enhances the subsequent movement of prices after a breakthrough.
10. An increase in open interest and volume confirms the completion of price models, as well as other graphic signals indicating the beginning of a new trend.
Flowers and sales climax
We have not been referred to another important feature of the market, often manifested in the moments of achieving the latest exemal values. We are talking about the so-called flying (blowoffs) and culmination of sales (SELLING CLIMAXES) -Products, respectively, in the fields of the vertices and base market. Under flyingunderstand the situation when a sudden revival of prices begins on the market after a long period of sustainable growth, accompanied by large
jump trading activity and a significant decrease in open interest. For culmination of salesduring the long period of price reduction, a sharp collapse of the market is followed against the background of the growth of transactions and reducing open interest (see Fig. 7.13).
In each of two cases, attention should be paid to the behavior of two indicators - volume (sharp growth) and open interest (sharp decline). The combination of these two signs after a protracted price movement suggests that large-scale liquidation of positions occurs on the market. As a rule, this is a warning signal for impending, often sharp change trends.
"Report on the commitments of traders"
Consideration of open interest will not be complete if we do not touch the so-called "Report on the commitments of traders" (Commitments of traders report) and the possibilities of its use in forecasting. The report is published by commissions on commercial futures trading (CFTC) of the eleventh number of each month and reflects statistics on open interest at the end of the previous month. In this report, figurative interests are divided into three categories representing the main participants in the market in the degree and nature of their work: "Large hedgers", "large speculators", "small traders".When a trader begins to conclude enough large transactions, the sizes of which correspond to the level to be taken into account, the data on its activities should be provided to the Commission. Then these data are used in the compilation of special statistical calculations in open interest - for categories of large hedge and traders. Summary of the amount of indicators for two categories from the total value of open interest can be calculated for small traders.
When analyzing this data proceed from the fact that large traders represent the so-called "smart money". It is believed that small traders are less informed and not so experienced in conclusion of transactions as large. Further, it is assumed that with the acquisition of experience, small traders go into the ranks of large. It is also believed that a major trader who made mistakes immediately returns to the discharge of small.
Fig. /. (3 Example of helet. Pay attention to a significant increase in the volume in the final phase of the upstream trend, as well as (very significant!) That the sharp decline in open interest began a week before the price of the vertices of the market. Open interest decline after a sharp rise in prices is a bearish Sign.
Such an analysis has long been carried out by technical analysts in the securities markets. As it is customary, specialists in securities know the market perfectly and always take faithful solutions. Therefore, their activities carefully observe. And, on the contrary, random players (that is, non-specialists who are sometimes called "teapots") almost always evaluate the situation in the market wrong.
Studies conducted on futures markets show that from three categories of market participants, the most accurate solutions are made by major hedges. Then go large speculators and completed small traders group (see Fig. 7.14).
The best way to use statistical data is easy to imitate the actions of "smart money" (that is, successful traders) and try to avoid what they make less successful colleagues. In fig. 7.14 An example of the "report on the obligations of traders" is presented, which publishes the SLE agency. Please note that the table is vertically divided into three general columns - respectively, with three categories of market participants. Each of the total columns is divided, in turn, by four narrow: "% for long positions", "% for short positions", "% net position" and "% increase / decrease" (change in percent compared to the previous indicator months marked by the "Delta" icon). The table, for example, reflects the situation that has developed on the cattle market on December 31, 1984, where large hedgers have 14% of long and 43% of short positions. The indicator "- 29" in the third column means that the net share of short positions in this category of market participants is 29% (43% - 14%). The indicator "- 2" in the fourth column means that the net share of short positions increased by 2% compared with the previous month.
Under the table is a brief explanation on how to use the table. Pay attention to the warning that the total value of all positions is not always 100%. The fact is that the table does not take into account the statistics of intercussion spreads. So, by summing up long positions in all categories - 14% in the category of large hedgers, 19%-typical speculators and 62% - small traders we get 95%. Thus, the remaining 5% fall into the share of intermal spreads.
Accounting for seasonal fluctuations in the activity of various categories of market participants
Before we begin to study the table data in more detail (see Fig. 7.14), a very important amendment should be considered, which must be made in the analysis of the activity of various groups of market participants. We are talking about seasonal oscillations - the result of the characteristics of the market activity inherent in each category. Deviation from normal for this time of the year "Style" work on the market gives a real idea of \u200b\u200btheir moods. In the article U. Jailera, published in 1985 in the "Commodity Yearbook of Commodity Futures" (Commodity Year Book), explains how the CRB Agency, publishing a yearbook, uses this statistics in its analytical bulletins. It also brings some results of his research in this area.
"Differences between the current clean stakes of the open position, which is occupied by representatives of this market group, and the seasonal norm allows us to determine in what extent of their mood are bullish or bearish on this particular market."
Further, the article presents some general principles of interpretation of the behavior of market participants: "In the market, which has the most pronounced bulls, the following picture is observed: large hedgers preferably occupy long positions, overlapping their medium-sized indicator. Long positions prevail in large speculators, in small traders - short, the current net share of which is higher than the average season. In general, the manifestations of bullish sentiment among representatives of different categories of market participants take a wide variety of configurations - up to bright bearings. In the latter case, the categories are located
Fig. 7.14. Table of obligations under the three categories of market participants (major hedgeroz, large speculators and small traders) as of December 31, 1984. Open interest data is given in rounded interest expression.
the opposite scheme: large hedgers take advantageously short positions and so on. It should be particularly careful when the discrepancies between the current and long-term medium-quality indicators reach 40%, and while 5% the difference should not be taken into account at all. "
The results of studies conducted by the CRB agency showed that although both categories of large traders were the highest, large hedgers still exceeded large speculators. The worst figures were small traders.
In fig. 7.15 There are examples of graphs used by the CRBV agency analysis of seasonal preferences of three categories of market participants (borrowed from the cited article). The research method was reduced to comparing the indicators shown in the table, with the seasonal norm represented on the charts. Let's go back to the last report and try to make some conclusions.
Let's look at the statistics of the soy flour market. I will give a quote from the section "Review of the technical condition of the market" CRB Futures Chart Service CRB Futures Chart Service: January 18, 1985 (which is conducted by the author of this book): "Report on the commitments of traders"Shows an unprecedented bovine attitude of this market."
Let's figure it out. The report states that in the category of large hedgers, the net share of long positions is 21% (an increase compared to the previous month by 15%). In small traders - the predominance of short positions (16% is an increase of 17%). Thus, in the mill of large hedgers, bovine moods are already dominated and continue to grow. Small traders tend to bear moods whose strength also grows.
Now look at the schedule of seasonal moods of the soy meal market, structured by groups. At the end of December, for the category of large hedgers, a seasonal norm -Causerination of short sites (their net share is about 8%), while in small traders at this time of year there must be a transfer of long positions (about 6%). The actual indicators indicate even stronger bulls in comparison with the seasonal norm. So the net position of large traders is currently 29% more than a bullish than usual (from -8% to + 21%), bearings The mood of small traders is also higher than the norm - by 22% (from + 6% to -16%). At first glance, the fact that large hedgers are on bullish positions, and small traders - on bearish, testifies to the bull orientation of the market as a whole. After comparison with seasonal indicators, the overall picture of the market takes even more pronounced bulls.
Take a look at the remaining indicators, and you will see something else. Carefully see if there are any significant changes in the last columns of all three categories. Pay attention to a significant increase in the group of large hedgers in the oil markets (+ 21%), orange juice (+ 14%), English pound (+ 21%) and Swiss franc (+ 23%). Bull Development should be expected in these markets. In small traders, there was an increase in moods in favor of pig markets (+ 10%) and pork tissues (+ 14%), so it should be concluded that the markets of pig breeding are expecting bearish times. At the same time, the same small traders showed a persistent negative attitude towards orange juice (-10%) and foreign currency, therefore you can hope that these markets will go up.
Fig.7.15 Graphs illustrating seasonal moods of three categories of traders. It is important to take into account seasonal tendencies in determining the attitude of a particular group to the market state at the moment.
There is another way to use this table, which consists of the search for unprecedented high indicators
according to open positions (long or short) for the category of small traders (the value exceeding 70% is already considered to be greater). Since the traders entering this category have a reputation of ever-misting players, then the obvious preferences of the one side of the market should serve as a warning that he will begin to develop in the opposite direction (in any case it is so observed).
In our example, large enough (that is, potentially bearish) indicators in open long positions fall on the cattle markets (62%) and forests (63%). High values \u200b\u200bare also observed by indicators for NYSE Composite indices (62%) and Value Line (77%). The subsequent movement of stock indexes, oddly enough, confirmed the correctness of the opinion of small traders. In this regard, it should be noted that most of the studies in this area were carried out on traditional agricultural markets. Therefore, it should be used with great care "Report on the commitments of traders" whenanalysis of financial futures markets (appeared relatively recently) - in any case, until additional research has been carried out.
Monthly "Report on the commitments of traders" -one of the ways to interpret open interest indicators. It is based on tracing the peculiarities of the behavior of the three main categories of market participants. The disadvantages of this method include the fact that the data comes with a two-week delay, and therefore can partially lose their value.
This effective technical analysis tool has not yet received proper recognition on futures commodity markets, mainly it is used - and quite wide-based securities markets. However, this method is very promising, since it allows you to confidently measure market mood - deserves further deep study. (In more detail about the analysis of market sentiment, we will tell in chapter 10). Anyway "Report on the commitments of traders" -tool of technical analysis, the existence of which the reader should know and which should be used from time to time. Those who are interested in this topic, we send to the book of D. Belville "Graphic Display of Pricing Conduct for Commodity Markets" (Charting Commodity Market Price Behavior, L. Dee Belveal).
Conclusion
Talking about the volume and open interest, we completed consideration of a significant part of the technical analysis of commodity futures markets. We reviewed the theoretical foundations of technical analysis, many of its basic elements described about the principles and rules for building and interpreting graphs and price models. We also studied in detail three sources of technical data on which the market study is based - price indicators, volume and open interest.
Until now, considering graphic means of technical analysis, we were limited to examples daygraphs. In the next chapter, we will expand the time prospects for analyzing the market and proceed to weekly and monthly schedules applied to analyze long-term trends. We will also show how generalized futures price indices and indices of various market groups are used.
Trade in currencies is a relatively young type of stock trading, in any case, if compared with some other "goods". Also younger - the Forex market, the appearance of which is inextricably linked with the advent of the worldwide Internet. The main difficulty of all traders has always been predicting the price of the asset price, in the case of currency trading - exchange rate. In forecasting there is ...
Trade in currencies is a relatively young type of stock trading, in any case, if compared with some other "goods". Also younger - the Forex market, the appearance of which is inextricably linked with the advent of the worldwide Internet. The main difficulty of all traders has always been predicting the price of the asset price, in the case of currency trading - exchange rate.
In forecasting there are two opposite approaches - and. Each contains an infinite set of price forecasting methods. We will talk about the method that is among the average, between technical and fundamental analysis. This method is predicting courses based on futures analysis.
What is futures?
Futures are trading tools, the purchase of which gives the right to the investor after a certain period of time to buy strictly determined by the contract amount of currency at a strictly defined price. There are two types of futures - European and American. The first implies the delivery of currencies strictly on the day of the expiration of the futures period, the second - any day before that time. Obviously, American futures are most common on the market.
It is not difficult to imagine the importance of futures functions. They allow for a small commission to get the right to buy a currency in the future at a fixed rate, which, in turn, allows you to insure the possible risks of those who work with futures. But all of the above refers to those subjects of the economy, which actually use currency for their needs. However, futures is also a way of earning, the same as trading on the spot market currency. The only difference is that at the futures market, players predict the price of the currency to a more distant future, and futures contracts of currency pairs are used as tools.
So, we came to the fact that there are two "parallel" reality: futures and spot markets. These prices differ, the more - the more vague the trading instrument.
The price of futures for the currency is the price at which the market is currently waiting for its purchase at the time of expiration (expiration) of the futures contract. As it is clear from the definition, this is a kind of forecast given by the market itself. It is important to understand that this forecast is given in accordance with the current state of affairs, and at each time it is adjusted. That is, if at the moment the price of futures per currency is more than spot price, it does not mean that it will be higher at the time of expiration, however, this suggests that at the current state of affairs, this is the most likely option of developing events.
Predicing methods
The use of futures to predict the course is just an amendment of trading signals for market expectation. In other words, if the market confidently expects the price below the current level, it is more expedient to consider signals to trade for trading, and vice versa otherwise. This is the easiest way to use futures, and as any very simple way it does not give unequivocal results.
Much more accurate and effective, although a more complex method - method for analyzing the dynamics of changes in volumes. In addition to the current futures price on the futures market, in contrast to the spot market, there is a concept of volumes, that is, the number of futures contracts concluded at the moment. So, depending on the price of the asset, more or less contracts is. So, the price of an asset, including futures, is a kind of compromise, the optimum, which is currently satisfied with the market. However, the optimum and price level may differ, but such deviations are quickly adjusted by the market. In other words, the market is to the optimum. So, the closer the price fits such an optimal level - the more futures contracts are purchased, the volumes are growing. If, when the price of the asset in a certain direction, the inclination of transactions grow in a certain direction - this direction is probably the current trend, and it should be trading in it.
Also, on the compliance of the current direction of the price movement, the trend says a leading change in futures prices of later periods. That is, if in the fall of the monthly futures price three-monthly falling stronger - the direction is likely to meet the total market expectations.
Information on the current state of affairs can be obtained on a huge number of information sites on the Internet. There are also offices that offer information on real-time futures prices, that is, without a 10-15 minute lag.
In addition to direct analysis of futures prices on the market, there is also an analysis focused mainly on transaction volumes. Such an analysis uses the reports of the American Commission on Commodity Futures, and contains transactions in the categories of their subjects. To go into a detailed description of such reports, we will not, this is the topic for a separate, long conversation, however, it is worth noting that the analysis of reports of reports (so called such reports) has a number of indisputable advantages and is one of the most promising market analysis tools.
The use of trading futures requires great experience and knowledge, while not only in the field of trade in the foreign exchange market, but also in the field of economics and finance. Only an understanding of the entire mechanism for the functioning of the futures market allows you to make a correct forecast based on this tool, as well as the most important thing, to avoid delusions with which newcomers are often faced.
Theory of volumes. Basic concepts
The concept of volume and its role in the trading of futures
What the trade in futures attracts speculators, provided that the graphics of price movement spot are almost identical, and the working conditions on Forex are more accessible?
Look at two graphics - Euro futures for a lady and forex couple eurodollar. Prices are almost identical and differ only on a small value, called the basis (by the time of the contract expiration, the price of futures and spot will always be the same):
Trading futures, we have more guarantees as provided information (current price, volume :) Because futures are traded on specific stock exchanges and the rules of these exchanges are clearly spelled out the size of contracts for each futures, as well as its other attributes. This allows you to provide accurate records of perfect transactions. Basically, data on trading currency futures are taken with a mix (Chicago Mercantile Exchange, Chicago, USA). This is explained by the fact that the volume of trading futures futures on this exchange is the largest in the world. Also, in the reports, it is also reflected also an open interest in traded futures and options, which gives additional information to analyze the market. Thus, the openness of the information plus the customer protection give an indisputable advantage in trading precisely from exchange tools.
Trading on the exchange until recently relied in much on technical or fundamental analysis. We will not discuss, successful strategy on the basis of these types of analysis or not, we only pay attention that data on volumes, and the more opportunity to analyze them, was provided until recently insider, the so-called guys from the pit. With an increase in the share of electronic commerce and the opportunity to receive information directly from the Exchange, a chance appeared to look behind the scenes of exchange trading, namely, to see the volumes of revolutions for one or another prices.
Why is the volume - is it so important? Because the volume shows the market sentiment. He forms it. Each price movement is accompanied by the fact that someone bought or sold at one price. If you see how the volume is formed, and then the trend is growing out of it, it will be very similar to that if you look into the womb and see how the child is formed and growing. Similarly, you can also look into the "vigor" market and see what is happening there.
Since the creation of the stock exchange (more than two centuries), the main types of analysis were technical analysis and fundamental analysis. But due to the development of communications to the century of technical progress, and together with them and e-commerce markets, we have become available that information that used only to be elected (remember that at the beginning of the last century even quotes were recognized from newspapers). Now we can see the exhibited orders (in the form of a glass), and executable transactions (in the form of prints) and as unifying the first and second - the scoreline of contracts (shares).
Basic concepts
Volume - This is the number of shares (or contracts), on which trading operations were made for a certain period of time (hour, day, week, month, etc.). Analysis of trading volume is an integral and very important element of technical analysis. According to the dynamics of volume, one can judge the significance and strength of the price movement.
So, we got access to insider information and the generally accepted method of trading on these data is not yet. In the West, no first year is used these technologies (but the intelligent technician we did not meet and it looks more like a microscope in the hands of Neanderthal), but they came to us quite recently - about a year ago the creators of the analytical platform Volfix opened the veil into the "World of Inside ", showing your trade concept with the help of volumes. Therefore, I want to bring the foundations of this concept that you can take a base - Consider the main well-known types of volume:
- Tikov - displays the dynamics of price change for a certain period.
- Quantitative - Displays the number of transactions made for a certain period of time (COUNT).
- Clean stock - displays the number of robust contracts (shares) for a certain period of time at a certain price.
The latter interests us most, since this indicator says about the fixed interest of the market regarding some prices or price ranges. It follows that price fluctuations, one way or another, are a derivative of the input or withdrawal funds to the market or from it. Simply put, the volume scheme works ---\u003e Price
 |
Thanks to the analysis of volumes, we can determine the potential location of the movement or its ending, because the cyclicity of price movement comes from the volume to the volume and algorithm of movement the same for all time periods.
Classic graphics and graphs with volume, what is the difference?
Take for example the graph of Japanese candles from the broker terminal and the cluster graph displayed in a specially developed analytical platform.
The time period from both - 15 minutes, the tool - futures on the S & P500 index, traded to the device:
 |
In this picture, we see two graphics taken in one period (the difference in platform installations in one hour, but the time interval is really the same).
From above - standard data in OHLC format (Open, Hi, Low, Close).
The graph below displays intrabaric accumulations (the number of spontaneous contracts), that is, the places in which the maximum number of positions for the period (15 min) was placed. Different colors highlighted areas with accumulations of a more specified in the filter size (3, 5, 10 thousand and maximum in the cluster). It is clearly seen here that the distribution of the vague volume inside the cluster is absolutely uniformly on the price scale, and with the standard method of display (whether it is candles or bars) we simply see this.
The total accumulation of volumes in clusters form the maximum amount of the day, which in turn acts as a certain indicator of the direction to intraday trade. Literally: Above the volume of the day - purchase in priority, below the volume of the day - sales in priority.
Now, I think it becomes clear and about the indicators:
1. Why do technical analysis indicators "late"?
Because the indicator is derived from the price, which in turn is derived from the volume.
Scheme: Interest ---\u003e Volume ---\u003e Price ---\u003e Indicator
2 Why are they sometimes not triggered?
Because they take into account all prices and all the time without defining rating priorities. And they are ...
- The volume of the contract (the maximum possible from the volume of the tool covers the entire trading period from the moment of the first lot on it)
- The volume of the month (includes 4th calendar weeks)
- The volume of the week (current and previous)
- The amount of day (current or past)
- Hour volume (half an hour, 15 minutes, 5 minutes and so on. In descending order)
All these parameters in aggregate determine the future and current behavior of the market in the price space. Remember: the price goes from volume to volume.
All intraday movements are based on intraday volumes of the day + past volumes. The amount of day is formed from the volume of hours, the volume of hours from the volumes of smaller contesions.
The main emphasis in this topic will make an understanding of intraday volumes.
Consideration of the contract movement scheme and as a result of the development of trend on the example of the December futures contract for Euro 6EZ1:
 |
The transfer of the contract is served by a certain platform for the development of further movement, all long-term trends are moved in this way. From volume to volume ...
What is the basis of work on volumes?
So why are the major levels of volume work all the same? Since the bulk level can be considered support / resistance, then in this place there is a cluster of multidirectional orders. It can be:
- take profit of sellers who opened the positions on Sell above
- foot of buyers who discovered positions in the hope of growth
- sellle foot traders who believe that the level will be broken
- bay limits traders who are waiting for rebounds (for the case of the price of the price from above to the level).
The idea is that what a total volume will be more - Baev or Sellov - go there and go.
It is such a cluster of orders to return to the breakdown level, since especially large purchase or sale applications are not always satisfied from the first time: first the price leaves from the level in the direction of a major transaction, and then returns to the further implementation of the same transaction at the same price.
This is what allows trades with a good mathematical expectation, since the stops are set at a minimum level, and the size of potential profits is several times higher. At the same time, even having the statistics of profitable and unprofitable transactions 50 to 50, it turns out a good positive match, which will allow the sales account to grow.
Some believe that trade in volume involves active trade only within the day. However, it is not. Here, like everywhere, everything is determined by your temperament and the style of trading. Some prefer 3-4 entrances per day with a large lot with a very small foot and profit in 20-40 p. Others make one or two transactions per week with the same little stop, but significantly large profits. There is a positional trading style in which transactions are performed quite a large lot, but are held for several months. Only for this you need steel nerves, because when you see a huge profit, which rollbacks eat - and pulls to close the position or part of it. In addition, this position is not so easy to go and keep at the very beginning of the trend.
Vertical volumes
We all know a histogram of volumes, built vertically and is usually located at the bottom of the work schedule. But what does it represent and what information is that?
Consider two options for presenting this volume (not to be confused with the volume in MT-4 - there it is something else):
 |
The top figure shows that graphically the volume is represented by red and green lines that match the color of bars (as you know, a red bear bar - "Down Tick" It turns out if the price of closing is below the price of its opening, and the green bull is "Up Tick", according to the contrary ).
What information does the information submitted in this case?
Knowing that the volume is the number of contracts spinning for some time (in the figure it is 5 minutes), we see what the bar from 16-10 to 16-15, about 5 thousand contracts were anticipated, and judging by the color , (green) Bar was bullish, that is, buyers here were more.
If you take a bar for 17-10, then sellers prevailed here.
 |
But how complete is this information? Focusing on the upper drawing, we can only say that this is bullish, and these are bearish, but we do not see the real power of buyers or sellers.
If you look at the bottom drawing, here the situation is different here (the columns of volume consist of two parts and reflect the number of purchases and the number of sales): 16-15 purchases were many times more than sales, and 16-10 sellers were only slightly prevailed. This difference between shopping and sales is characterized as a delta, and we will look at it a little later.
It is possible to estimate the number of purchases and sales in more detail using an additional cluster graph of the bar itself:
And the ordinary column volume shows only the opening-closing of the bar. Yes, and that if you use the MT-4 terminal, we will see such a picture:
 |
Knowing that in MT-4 the market volume is not transmitted, it turns out complete nonsense. Here you have a visual difference between two completely different ways of presenting market information.
Horizontal volumes
Unlike vertical, horizontal volumes we learned quite recently. The concept of the visualization platform of volumes has been presented to the concept of visualization of volumes. Some moments worked, some are not - but in general the idea quickly got its development in dozens of different systems using levels of volumes. How profitable they work are already another question, our task is to determine how they are formed and work out.
Graphically horizontal volumes can be represented as a histogram:
 |
And the way it is formed can be seen in the following figure (we will recall the ratings: the volume of teak forms the volume of minutes,: half an hour, an hour - the volume of the day is the volume of the week - the volume of the month is the volume of the contract).
It can be seen from the figure that from the first maximum amount of the day, which coincided with the current volume of the hour and the maximum volume in the cluster (at the price of 1084) the first session stroke described above occurred.
The next session reversal occurred from the new level of the day 1080.75 (78951 contract), which coincided with the level of an hour (even two in a row). One way of performing transactions in volumes is presented below:
 |
This is only one of the options for the formation and working out of the volume, but there is another value that almost no one looked at one time - this is a delta as a market motion index. The study of the behavior of Osoy (together with the testing at the auction in real life) was devoted to about a year of collaboration, and some points we will definitely consider.
Articles on the topic
