Getting More Out of MarketDelta in Volatile Markets
With the unprecedented increase in volatility this past few weeks we have heard from a few of our terric subscribers about the best way to use MD in these markets. In order to frame this question properly I want to explain what they mean when they say “use MarketDelta”.
Of course our company is called MarketDelta® and our primary software product is also called MarketDelta. MarketDelta software is a technical analysis software program with some special functionality only we offer. The core product offers all the traditional charting and analytical tools traders expect to have at their disposal. It also offers a fully licensed CBOT Market Profile®. It also offers our proprietary Footprint® chart and this is what really sets us apart, along with our friendly and knowledgeable customer support.
So when someone says “get more out of MarketDelta” what they are really saying is “get more out of the Footprint® chart”. This is where we excel and this is why our customers stay with us. With all that said, I wanted to offer out some suggestions for making the most of your MarketDelta.
Non-Time Based Periodicities
If you have taken the time to read some of the material we have produced or sat in on some of the webinars we do there is no doubt you have heard us suggest non-time based periodicities. This week exemplified why these are so powerful, but lets define what they are before going any farther.
Definition: Periods or bars build on a chart that are not based on the tick of a clock. Instead, bars or periods are build on some non-time based parameter such as volume, ticks, range, change, price reversal (similar to point and figure methodology) prices, delta (unique to MarketDelta), and a few others. Examples of many of these can be found here or by downloading the Help Manual PDF and doing a search for “periodicity”.
Benefit 1: A benefit of building bars on non-time based periodicities is they are being created on market activity and not the tick of a clock. The means new bars are only being created when market activity dictates. When a market is moving all around and volatility exists, it will usually draw participants into the market because new prices are trading that attracts them into the market for various reasons. When a market is sitting still and not trading lots of new prices, then the market will not be creating lots of new bars because the non-time based criteria is most likely not being met.
Benefit 2: Non-time based periodicities are usually driven by market activity. Market activiity is evident in volume. Volume enters the market and trades on the bid or at the ask. This is what causes price to fluctuate. The underlying concept behind delta (the word we use to describe order flow to the bid and the ask) is to track in realtime with direction the majority of volume is flowing, to the bid or to the ask. This helps to confirm the underlying price activity and provide more validity to it and hint at weakening in the trend or reversal.
So when bars are build on these non time based periodicities you get a cleaner read on the underlying market dynamics, not just price. The underlying dynamics are what help to drive and support price movement. One of the primary benefits of the Footprint® chart is its ability to convey this crucial information in realtime, allowing for better decision making.
Benefit 3: Many unique patterns and ways of tracking the market the might not be apparent on time based charts.
Question of the Week
Many of our subscribers may be using time based Footprint charts (1, 3, 5, 10 minute, etc) and with all the crazy ranges we are having even in the shortest of time frames it can be difficult to get a read for some. It is almost like having a normal days entire range within a 5 or 10 minute bar. The problem the volatility creates for time based charts on the Footprint is that your stops end up having to be so wide just so you can see where the bars closes before making a decision. This just does not work for most. Another challenge is reversals may take place intra-bar at key levels and you end up getting in later than what you would normally want to and now you have the risk of the market pulling back and stopping you out.
Suggested Solution 1: Try using a non-time based periodicity as described above. If you need some suggestions feel free to email us and we can try and provide some ideas. A good rule of thumb when looking for these is to see how it catches the turns in the market. Did the delta for the bar react as expected at the reversal or was it way late? See the short video below for ideas.
Footprint Periodicity from MarketDelta on Vimeo. (5 mins)
Suggested Solution 2: If you do not want to try a non-time based periodicity, try opening the Footprint preferences window and changing the price scale from each tick (automatic) to every other tick or some other parameter. The Footprint® will aggregate the volume and deltas and provide better vertical spacing for your charts.
Tags: non-time, periodicity, trading
