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Accumulation Stage: Commercial Retail Locals Smart Money

The document discusses several key concepts related to analyzing financial markets: - Accumulation Stage refers to large investors buying stock over a period of time while also selling small amounts to prevent significantly moving prices upwards. This accumulation is the opposite of distribution. - Algorithmic Trading uses advanced math models to make fast transactions, allowing large institutions to obtain best prices without affecting stock prices. - Anomalies refer to abnormal structures in Market Profile graphics that lack the desired smooth symmetry of distributions. - Other terms defined include arbitrage, auction completion, auction failure, auction market development, auction point, abnormal profile, and anomaly repair.

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jadie ali
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111 views3 pages

Accumulation Stage: Commercial Retail Locals Smart Money

The document discusses several key concepts related to analyzing financial markets: - Accumulation Stage refers to large investors buying stock over a period of time while also selling small amounts to prevent significantly moving prices upwards. This accumulation is the opposite of distribution. - Algorithmic Trading uses advanced math models to make fast transactions, allowing large institutions to obtain best prices without affecting stock prices. - Anomalies refer to abnormal structures in Market Profile graphics that lack the desired smooth symmetry of distributions. - Other terms defined include arbitrage, auction completion, auction failure, auction market development, auction point, abnormal profile, and anomaly repair.

Uploaded by

jadie ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as RTF, PDF, TXT or read online on Scribd
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Accumulation Stage 

– Commercial (as opposed to Retail or Locals)


money is buying in to [retail] weakness. Smart Money by no means enters the
market buying in huge quantities since this action would lead to offer prices
being auctioned upwards. Therefore, commercial/ Long Timeframe Market
Participants have to accumulate stock over a period of time, buying when
bouts of selling come onto the market. Having bought in the morning, they
may have to depress the price by selling enough stock quickly to bring the
price back down, but overall they are buying more than they are selling. This
is accumulation and is the exact opposite to distribution.

Algorithmic Trading - A trading system that employs very advanced


mathematical models for making fast transaction decisions in the financial
markets. Algorithmic trading is most commonly used by large institutions such
as Hedge Funds due to the large amount of shares they purchase daily.
Complex algorithms allow these institutions to obtain the best possible price
without significantly affecting the stock's price and increasing purchasing costs
via Iceberg Orders.

Anomaly - abnormal profile structure, typically at a single price or level,


recognised by its makeup in the Market Profile® graphic which is wanting the
desired smooth symmetrical distribution.

Arbitrage - simultaneously buying in one market and selling in another for


short-term gains.
Auction Completion - most commonly identified by ‘excess’
represented by a swift opposing auction in the opposite direction of the most
recent auction high or low. Auction Completion is fractal and, thus, is
observable on all time frames e.g. it might occur on the short timeframe whilst
the auction structure on the longer timeframe has yet to complete.

Auction Failure - market participants test a key reference area extreme,


such as the prior Low of Day (LoD) or a Virgin POC, but fail to auction prices
in that direction. Subsequently the opposing market participants
overwhelmingly auction prices in opposite direction with speed and
determination. This typically results in an outside day candle.

We witness overlapping value area regions, auction failures, breakouts and


the resulting outside days happening over and over again and is a reliable
combination for generating consistent profits.

Auction Market Development - the purpose of an auction market


process is to facilitate trade. It is directly influenced by Order Flow and the
magnitude of Volume. Buyers and Sellers of all time frames continuously
auction the price upwards and downwards evenly raising and lowering the
bids and offers. The Market Profile® graphic is the derivative of this
continuous auction process. The development has four (the 4th can be
absent) stages:
1. Vertical Price Activity; Imbalance; Rejection; Price Probing; Trend.
2. Stopping price.
3. Horizontal Price Activity, Balance, Acceptance, Trade Facilitation, Value.
4. Retracement or continuation.

Read our Value Trading Basics article for further details and illustrations.


Auction Point - initial tick price that exceeds the price zone
encompassed within the Initial Balance.

Abnormal Profile – the fundamental requirement for an ideal profile is


a normal, equilibrium (balanced) distribution. A profile (i.e. an auction market)
that is in equilibrium will produce a single wide distribution with a conspicuous
POC at its head. On the other hand, an Abnormal Profile is the result of an
unbalanced market that results in a day that may have more than two
distributions where a TPO based POC is hard to define.

Anomaly Repair - a term used to describe what is required to happen to


profile that has anomalies in order for it to attain the desired smooth symmetry
of a Normal Distribution.

Asymmetric Setup - occurs when the profit potential of a trade


manifold outweighs the structural based capital exposure.

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