Launch of the NeverLossTrading Swing Point Concept

January 12, 2015 at 3:40 pm Leave a comment

NeverLossTrading happily announces the launch of the NLT Swing Point Trading Concept.

Swing Point Chart AAPL 1 Hour (2)

The new indicator measures and portraits liquidity providers (market makers, ECN’s, wholesalers) initiated price changes at the beginning and end of a price move.

Background:

The economic principle behind liquidity provider initiated moves is “Pareto efficiency, or Pareto optimality”: There is a state of allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off.

It is often assumed, that for every buying or selling, there must be an equal amount of buyers or sellers on the other side. Unfortunately, this is wrong and the reality is:

There must be an equal amount of buy and sell orders, which does not imply that we have an equal amount of buyers and sellers.

When a major exchange of assets takes place, it can result in an imbalance at the side of the liquidity providers, so they need or want to better their inventory position by changing the supply per price level offered.

For being able to better their inventory positions, liquidity providers have to wait for specific market conditions:

  • First: Lower volume, allowing the conditions to initiate a price change without the risk of the market to work against it.
  • Second: Low statistical volatility, indicated by very tight price moves, reducing the risk to allocate inventory at wrong prices. This action can be found twofold: At the initial inventory bettering move and at the point where the inventory allocation is finished. Both very critical and useful happenings for you to spot and take advantage of.
  • Third: A combination of both, which gives us a very strong entry point.

The only asset class, without volume allocations is FOREX; then we purely rely on the volatility measure.

Swing Point Japanese Yet Pattern

After about five years of research and 18 months of forward testing, the concept is finally put together and ready to be integrated into your trading.

Going back in time, this I how our research project looked in the year 2010:

At this stage, we paired historic and implied volatility with the statistical volatility of the observed price bar, which was not continued by a lack of correlation. Already here, you see how volatility is contracting: blue dots on bars,  prior to a major price move: When the directional price move starts, volatility expands and we see Cyan Bars as high volatility signs.

The added arrows point out directional price moves announced by our algorithms:

Volatility Study from History 2010

We came a long way and this is how your charts can look today:

AMZN Swing Point Trading from a Weekly Chart: Long-Term Investing 

Swing Point Weekly Signal AMZN 2

History

The Japanese candle stick theory indicates a price situation of very little price movement between opening and closing as a Doji, assuming that the market contracts in very small price move and then expands after: Like a spring that is pushed together and then jumps and expands.

It was an easy undertaking, writing the algorithm for finding Doji’s on the price chart and trying to trade their assumed directional price move; however, such trade setups only gave us a 53% probability and thus had no chance to be accepted as a high probability trade setup, where we focus on signal strength above 65% predictability.

Our Model

As a consequence of not being able to find this trade setup in a small price move between opening and closing, we developed two different measures to identify the happening on the chart that are not correlated to any candle formation:

  • A collapse in volatility: Lime Green Indicator
  • A collapse in volume: Yellow Indicator

In our aim of helping you to apply this set of indicators in relation to the worked out NLT-price-move-patterns, they are offered with a 5-hour mentorship…click here for details.

Based on years of testing: The NLT Swing Point Indicator produces a strong return expectation, measured as: Odds Ratio divided by average assumed Time in the Trade (see graphic below):

= (Trade Target x (Probability of Success) / (Risk x Probability of Failure)) / (Time-in-the-Trade)

Indicator Odds Ratio

Thus, we now complete our indicator-based trading concepts, covering all institutional initiated price moves:

  • Prop trader-initiated price moves: Top-Line, HF, WealthBuilder, IncomeGenerator.
  • Enter and exit with market followers (fund managers), realized in TradeColors.com.
  • Market maker initiated price constellations: NLT Price Breakout Concept.
  • Liquidity provider initiated price moves: NLT Swing Point Trading.

NLT Swing Point Trading works as a standalone and integrated in any NLT concept.

NeverLossTrading Swing Point Indicator with NLT Top-Line(red, blue, purple, orange signals)

Swing Point and Top Line KBH

Join the world of high probability trading by following institutional money moves and contact us for a free consultation:

Call +1 866 455 4520 or contact@NeverLossTrading.com

We are looking forward to hearing back from you,

Thomas

NeverLossTrading

A Division of Nobel Living, LLC

401 E. Las Olas  Blvd. – Suite 1400

Fort Lauderdale, FL 33301

http://NeverLossTrading.com

Entry filed under: Algorithmic Trading, Day Trading, Investor Education, long-term investing, odd appraisal in trading, Swing Trading, Trading Chart, Trading Success, trading system. Tags: , , , , .

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