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Which tool to decide to enter the market at a pre-defined area of interest?
I am currently working on my trading, and I am now willing to trade only in pre-defined areas of interest. This thread is not about ways to define such levels.
I would appreciate some ideas about the way to enter at such areas. More precisely:
Let's suppose that you start the day with pre-defined areas of interest, for instance determined by your analysis of market profile, volume profile, former support support & resistance, supply & demand, etc.
The question is: which tool have you found effective to observe the behaviour of the price at a pre-defined level in order to decide to enter or not?
For instance:
- candlestick pattern,
- price action pattern (double-top, 2B, etc.) at a lower timeframe
- strength and weakness through candlestick at a lower timeframe
- times & sales, tape reading
- DOM reading,
- divergence between the price and something
- volume footprint, volume ladder
- other tool to assess the relative strength of buyers and sellers
- some indicators
- no tool, use of "blind" limit order to enter due to confidence in the level
- etc.
I am personally more familiar with price action patterns (2nd bullet), but I would like to explore other promising areas.
The aim of my question is not to make a list of possible tools, or to know "secret" details of one's methodology.
The idea is more to know which kind of methodologies are actually used by futures.io (formerly BMT) members (willing to answer) in order to "zoom" when the price is arriving at a given level of interest, and consequently decide to enter a trade or not.
Thanks in advance for any feedback!
Nicolas
Can you help answer these questions from other members on NexusFi?
My preferred method is the 'use of "blind" limit order to enter due to confidence in the level' as i put more emphasis on the analysis and the identification of support/resistance. 'Footprint/DOM/Times&Sales' may help as well as 'strength and weakness through candlestick at a lower timeframe'. It depends of my risk and potential reward. For a scalp i might consider the Footprint but would prefer 'strength and weakness through candlestick at a lower timeframe' while for a swing trade the 'use of "blind" limit order' exclusively. At a higher level there is no need for fancy tools like the footprint in my opinion as you're not aiming for 1 or 2 points.
I like the question as I know I have wondered as well. So far in my short journey I have concluded that truly it is a combination of many of those tools you listed. It seems the more comprehensive knowledge and experience I have with each tool the better I am able to value it's input in my trading situation. That said I tend to be a very short term trader and as such, have found (atleast for me) that right now watching for tells in the DOM has been a good tool.
My goal however is to know as much as I can about each tool, so that I have as many tools at my disposal as possible and be able to use those that are of most value in each situation. ( It's just taking me longer than I thought to learn it all )
Wouldn't one be better off becoming really proficient and comfortable with one tool, and knowing it's limitations and stepping aside at those times; rather than spending a lot of time and effort trying to be competent with many different tools and situations.
I see your thought there and would agree in that I don't want to have just a mediocre understanding of many tools. I don't want to be wandering from one thing to the other either (if it's not broke don't fix it) or wasting time on something I won't use. Definitely if I'm going to use something in my trading I want to have a very competent understanding of it. I want to know on a granular level how and why it works. It's just that the more I trade the more I feel that knowledge and experience give me the power of making better choices and help me to see more of the picture from different angles. I would definitely say only add more tools if your looking for more and only after you've become proficient in the ones your using now.
and one last thought would be I don't want to try to eat a whole elephant at once . One bite at a time one day at a time or it gets really overwhelming.
I think were on the same page just different sides of it.
I should start by saying that as of late I avoid entering trades in so called "areas of interest". These areas are areas of interest only because a large number of people will be looking to take trades in them. This makes it harder to read what will actually happen at that area. I think instead you want to be exiting at "areas of interest". The fight will make it easier for you to get out.
But for deciding what price will do in an area, I am using primarily tape reading and order flow tools. By tape reading I am talking purely about watching each price level, how long price stays at a level, and how often each price is traded. Areas where price has gone between bid and ask several times are balanced areas of interest. These are places where the buyers and sellers are fighting it out, or nobody cares. What I'm more interested in is when we move away from those balanced areas towards places of unbalance where one side of the market just completely disappears and price only ticks one direction. I combine this with the order flow I see on the Jigsaw DOM to more clearly identify when the market is starting to move or not.
Legendary / Stochastic Calculus is not your friend
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I use MZ Pack order flow tools for analysis at any given area I'm interested in...but any brand of order flow tools would work provided you understand them.
)
. One bite at a time one day at a time or it gets really overwhelming. 
