ALGORITHMIC AND PROGRAM ANALYSIS AND TENDENCIES

with Frank Ochoa President and Founder, PivotBoss, LLC Author, Secrets of a Pivot Boss

PRESENTS

GOALS AND AGENDAAlgorithmic and Program Trading has made an enormous impact on the markets, and with

how traders engage the market. Understanding how these algos and programs work allows traders to trade alongside the machines, instead of against them.

AGENDA:1. Introduction to Algos/Programs

2. Models and Hidden Levels

3. The Rejection Signature

4. Live Chart Analysis and Prospecting

1. How to identify hidden prices so you can find and trade high-probability opportunities

2. How to recognize future price momentum ahead of the crowd

3. How to spot the signatures and tendencies of algorithms and programs so you can profit from the impending moves

GOALS:

Algorithmic Trading gets a bad rap, and with good cause sometimes, but the algos bring liquidity and volatility, and at the end of the day, that’s what traders need to trade.

The Algos Can Be Simple or Extremely Complex

They Get a Bad Rap

The Algos Leave a Signature

The Algos leave behind distinct signatures. Once you learn to read the signature, you can then begin to engage the market like the algos, riding on the coattails of the waves of volatility and volume they bring.

An Algo can be very simple, like returning all of the instances where two bars of data have the same high price, or the same low price. On the other hand, Algos, and the Programs that deploy them, can also be extremely complex, perhaps including extremely complex mathematical formulas and modeling.

When a trader/developer creates an algorithm that tests out as a winner, they basically copy and paste that basic recipe and apply it to an entire catalog of data, looking to add any quantifiable edge to existing algos and programs. The basic “If-Then-Else” statement used by the Algos is seen at work at many of the key levels that we trade — and that is by DESIGN.

Algos Copy and Paste

INTRO TO ALGOS/PROGRAMS

The Basic Algo “If-Then” Model is applied to any and all data points from a market, from the Open price to the Previous Session’s Close, from the Volume Point of Control to FOMC-based events.

The Basic Algo “If-Then” Model Key Data Points (Prices) Algorithms Use the MostIF [PIVOT] “GOES_BID”

THEN “BUY_RETEST” of [PIVOT] AND “BUY_PULLBACKS”

ELSE IF [PIVOT] “GOES_OFFERED” OR “FAILED_NEW_HIGH”

THEN “REVERSE_BIAS”

• Volume-Weighted Average Price (VWAP)

• Previous HLC (yHI, yLO, yCL)

• Current Day’s Open (O)

• Midpoint (MID)

• Volume Point of Control (VPOC)

• Overnight Pivot (ONP)

• Price Extensions

• Standard Deviations (SD)

Other Events that Trigger Algorithms• Average Daily Volume

• FOMC-Based Events

• Economic News/Reports

• ABCD Measured Moves

• Fibonacci Levels

• Average Daily Range

MODELS AND HIDDEN LEVELS

The Absorption Signature

1. Absorption Signature: When OTF Responsive Participants absorb a price level after a recent top or bottom, a distinct signature is revealed — The Absorption Signature, which helps to pinpoint major turning points in a market. Some of the most significant tops and bottoms occur with this signature attached — IN ALL TIMEFRAMES!

2. Rejection Day: When the market probes through current support or resistance after an extended price discovery phase, but fails to establish acceptance beyond that key pivot, a Rejection Day develops. This is a significant day, and typically develops a long tail, ideally marking the new top or bottom of the recent price discovery phase.

3. Absorption Zone: After the Rejection Day, OTF Responsive Participants will look to absorb prices at The Absorption Zone, which is a zone somewhere between the midpoint of the rejection day (or tail) and the previous support or resistance level whose breach sparked the rejection. Responsive participants will absorb many rotations into this zone, which builds energy for the squeeze or liquidation to come.

4. Re-Absorption Signatures: The Market may see many Absorption Signatures throughout the life cycle of a trend, which are designed to provide extra fuel to the existing, ongoing price move. These are called Re-Absorption Signatures.

5. Failed Absorption Signatures: Passive Participants can and do have their stops run, which can spark significant momentum moves, especially if OTF participants are on the losing side. Should an Absorption Signature fail, it likely forecasts a resumption of the current trend.

As traders, the ability to forecast, identify, and diagnose a developing top or bottom in the market is crucial. The PivotBoss Approach to spotting these significant events is recognizing The Absorption Signature, which occurs in all timeframes.

ALGORITHMIC AND PROGRAM ANALYSIS AND TENDENCIES

with Frank Ochoa President and Founder, PivotBoss, LLC Author, Secrets of a Pivot Boss

PRESENTS