Hello,
I have a good sense for price action and where it is headed, however I seem to fall short of the actual move.
It’s one of the main issues I have, I don’t have a way of even validating when price is getting close to move in the direction I’m anticipating.
I’ve seen a guy use some form of quant software to look at order stacking and to get a gauge on sentiment at various price locations.
Is there any direction someone have provide to better my timing on entry?
Thank you!
Posted by ToDaMoon320
6 Comments
Fools errand if you ask me.
Interesting problem. Predicting price movements based purely on technicals is notoriously tricky. Those order book heatmaps can be useful for visualizing where liquidity lies, but it’s not a crystal ball.
Instead of trying to perfectly time the market, maybe focus on identifying high-conviction setups where you’re comfortable with the risk/reward even if your entry isn’t perfect.
If you can do it with options, you can do it with shares.
If you have/get access to L2 data, you can see how many orders are open at various prices for the underlying. That could corroborate areas of support and resistance that you’ve identified via other means. Obv there’s more to the option price than just stock price but it helps.
Not sure what your strategy is, but if you’re trading a breakout then this would help you determine if the stock just busted through a sell wall or if it’s about to hit one.
Ultimately nothing is going to Just Work because you’re still dealing with probabilities. But it can be helpful in narrowing down entry and exit points.
Ah, well if you are able to tell the market direction ahead of time and really want to hold the options instead of the stock then you could look into doing a call or put stupid (named accordingly). It’s basically buying a strip of strikes in the direction you fortune tell. If you are right on direction you make a lot of money. If not, well you lose a lot of money.
If you truly have conviction in the price action. Do a risk reversal- sell a put to buy a call or sell a call spread and buy the put. This is probably may favourite trade when I’m long an underline.
A broken clock is wrong twice a day… If you are good with direction but not timing you may want to consider trading stocks instead of options and having limit orders on.
This way you aren’t fighting against theta decay and if you are indeed good with direction you’ll eventually be right.