Picture any auction you’ve ever seen or been to. There’s always a start, followed by a frenzied finish. You know somebody in the room knows exactly what’s going on. It’s just not you (yet).
But the room is filled with both buyers and sellers. There’s a ton of activity. You’re doing your best to ignore price, but it’s all over the place. You want desperately to be in the ‘winning 5%’. How do you spot the people to follow?
Well, it’s NOT the couple from Ohio waving their paddle in the air screaming buy and sell orders every second. They’re the equivalent of the retail traders who enter the market every second with a small trade hoping to snag a buck.
They’ll either overpay, pass out from excitement – or both. But they’re not going to change the outcome of the auction. Your price-based indicator falls for these folks every time.
Who you need to keep an eye on
IT’S THE GUY WAITING in the back of the room quietly whispering to a colleague. Don’t take your eyes off that one. These are the players who determine the fate of an auction.
They have an accurate sense of market value and make their buy and/or sell moves based on the likely outcome – not the current price. They know that price is just the current score.
In a market auction, these are the traders who make all the money. They know the institutions are in control and have very specific conditions they’re looking for before making a move. Never suckered into the frenzy, they know exactly what’s going on between buyers and sellers.
Here’s the good news: You don’t have to be an institution, or a hedge fund, to trade with the people ‘in the know’. You simply need access to the same intelligence they’re getting.
This intelligence makes the auction conditions you’re looking for very simple and easy to spot.
Your opportunity for reward when someone gets burned
In a two-way market auction, every buyer needs a seller. And vice versa. In theory an auction isn’t supposed to finish until everyone settles up at the end – both buyers and sellers.
But sometimes there’s a gap. A period when somebody gets left hanging.
This temporary opening creates the exact type of opportunity the ‘winning 5%’ in the back of the room are looking for.
It’s called unfinished business.
It’s an age-old theme that has caused gun duels and started wars. When somebody is jilted or left holding the bag – people tend to notice and take exception. The market is no different.
Especially when buyers or sellers are left hanging with no counter-party to pick up the other side of their trade at the end of an auction. Remember that each candle, regardless of timeframe, is a market auction.
If there are buyers or sellers unable to finish their business at the close of a candle, you have a moment that can’t be ignored.
Welcome to an Unfinished Auction. An immediate opportunity that the ‘5% club’ has been tapping from the back of the room all along.
Fine. So you like good drama but love profits even more? Good. Here’s why you should be looking for unfinished auctions: The second a candle closes with unfinished business, it creates a price level that serves as a magnet.
Check out this ES chart. Ever wonder why price ventures up to a certain level and then turns around – seemingly out of nowhere? It’s not magic. The market hasn’t been inspired to somehow make a move and then reverse. It’s not your dad’s classic support and resistance patterns either.
Make your entry with the winning 5%
Imagine getting a wink and a nod from the guys in the back of the room. You’re no longer guessing. You’re now going up against the couple from Ohio with an inside track. It almost doesn’t seem fair.
This is exactly how you should feel when you spot an unfinished auction. The moments where powerful buyers and sellers have been left hanging. They won’t be stood up. Price will return. Now let’s take a look at these same candles’ auctions from the perspective of the ‘profitable 5%’.
It’s hard to miss once you see it. The gold bars tie the candles that initially closed with unfinished auctions with the candles that resolved them later on. To say that price has a healthy respect for these levels is an understatement.
The pull of these price levels can’t be ignored because the market has a natural need to resolve unfinished business. When these moments surface, they become pivotal points that you can stalk for a reversal trade.
Now imagine finally being able to know what levels you should be watching… in advance… thanks to an unfinished auction that just took place.
You could take years to study candle tips. You could attempt to cobble together different systems.
Or you could just have it plotted on your chart the second it happens. This is where an unfinished auctions visualizer becomes a welcome addition to your chart.
Simply watch for an unfinished auction to occur – then stalk that price level for a reversal entry when price comes back to settle the score.
Ignore the crowd of failing traders and make your move confidently with the guys in the back of the room.