ZoneTraderPro NinjaTrader 8 Update

ZoneTraderPro NinjaTrader 8 Update and Order Flow Patterns

The ZoneTraderPro NinjaTrader 8 Update is coming along very good.  There is currently only one issue I am working with the programmer.  In past posts I have talked about not taking a trend trade after either a Exhaustion or Tick Divergence pattern has occurred.  In the NT7 version, the trend trade wasn’t programmed to disappear after a Tick Divergence pattern.  This is what is now being incorporated into the ZoneTraderPro NinjaTrader 8 Update, but it is taking some time to get it right.  The update for Order Flow Pattern has started.

Here is a nice example of why we do not take a trend trade after Tick Divergence from last Friday.

30218 Tick Divergence
30218 Tick Divergence

What is really great about NinjaTrader 8 is the ability to use Tick Replay.  In this chart I have 3 of my Order Flow Power indicators.  The first indicator is a faster setting, the middle is an intermediate setting and the bottom indicator takes into account 5 more bars of data.  What is very cool about the Tick Replay is your ability to put in a different setting and immediately see the result.  In NT7 this wasn’t possible for this indicator.  You were required to run either market replay or use live data to see this.

The fast indicator (Pane 2) told us there was not heavy selling on the way down, and the slower indicators told us the same thing.  Just a great trade setup that made a good profit.

The Order Flow Pattern Update

But I have not even demonstrated the main reason for this trade.  There are 3 major order flow patterns that are occurring for this trade.  The new  ZoneTraderPro NinjaTrader 8 Update will identify an Order Flow Pattern.

Order Flow Patterns
Order Flow Patterns

This is a picture of the new Volumetric bars now available in NinjaTrader Version 8.  What is being developed for these new bars now is a very powerful  algorithm that identifies divergence patterns, trapped buyers/sellers, stopping ratios, and buyer/seller exhaustion.  This example features Trapped Sellers, a stopping ratio and delta divergence.  There isn’t a more powerful combination than the 3 of these patterns.

Tick Divergence Example

Here is another Tick Divergence example that occurred 15 minutes before the first example.  Again note the Power Indicator numbers are falling as price again tests the blue counter trend zone.  Also note how the ratios keep you in the trade at the counter trend support level.  This gives you confidence to move the target to the strong trend support level and pick up an extra 2 points on the trade.  ZoneTraderPro accurately predicted this low of 2671.50 a full minute and a half before price traded there.

Tick Divergence Pattern
Tick Divergence Pattern

Was there an order flow pattern or patterns here?  Of course there were.  You had both Delta Divergence and Trapped buyers.  Again two major patterns occur which lead to a 5 point trading opportunity.

 

Order Flow Pattern
Order Flow Pattern

Reversal Trading Pattern

Here we have a reversal trading pattern that was testing a previous strong trend high.  Again note the Power Indicator at the 1st target which would have been blue counter trend support.  Time to move that target to strong trend support and book another 5 points!

Reversal Trading Pattern
Reversal Trading Pattern

What about an order flow pattern occurring here?

Order Flow Pattern
Order Flow Pattern

What about the exit?  The exit is interesting because of the divergences in the Power Indicator you see at the low.  Also note the failure of the Tick Divergence pattern.  Where you see the black dot, the trade is no longer divergent, and we no longer have a valid trading pattern.  However look at all 3 of the Power Indicators.

Trade Exit
Trade Exit

What about an order flow pattern?

Trade Exit Order Flow Pattern
Trade Exit Order Flow Pattern

Yes again you had two major patterns occurring.  Normally I don’t recommend taking anything except an established pattern.  In this case however there is an argument to be made that reversing the position to a long trade can be made.

  1. Low risk. Your risk is 4-5 ticks
  2. Power indicator is showing buying divergence
  3. Two major bullish trading patterns
  4. ZoneTraderPro strong trend support validated and held

Power of the Order Flow Pattern

What is also interesting is that all of these patterns occurred in less than a two hour window on Friday.  I could keep going with example after example.  But I wanted to show just one more.  In this example we have three ZoneTraderPro selling patterns.  At each ZoneTraderPro selling pattern we see order flow patterns.  Is that a big surprise?  Probably not.  But what I wanted to illustrate was the target low on the trade.

Order Flow Patterns
Order Flow Patterns

This example is not to demonstrate how great the software is, it is demonstrate the power of the order flow pattern.  Look at all 3 of the power indicators.  The are screaming heavy selling.  I would have moved my target to the next lower zone.  But what happens as price trades at 2669.50?  We have a delta divergence pattern form.  You could have exited the trade on a market order at 2670.50 which was the right move.

This is an example where I would not consider a reversal to a long position because of the Power Indicator.  When an order flow pattern emerges before a target is hit, consider respecting the order flow pattern and get out of the trade.

NinjaTrader Event August 24

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14 Winning Trades in 4 Hours

14 Winning Trades in 4 Hours

Starting at 1045 EST today the ZoneTraderPro system seamed to be hitting every trading pattern and winning trades.  It started with back-to-back-to-back winning TICK Divergence trades.  As noted in this blog and in the trading manual, taking trades AFTER a TICK Divergence pattern is probably not a good idea, and this is illustrated in each of the 3 trades.    Three trend trades were generated and all three failed. One of the TICK Divergence trades was good for 4.75 points. The next trade was 5 point reversal trade.  ZoneTraderPro then calls the top with an Exhaustion / Tick Divergence pattern which was good for 3.5 points.

The first in an impressive series of winning trades
The first in an impressive series of winning trades

Then the market enters a series of bearish short trades.  There were 4 consecutive winning short trend trading patterns.  There was an additional winning short trend trade, however it was filtered out because the TICK Filter had been hit and it occurred after TICK Divergence.  So to be consistent with strategy, the trade is not counted.  Other TICK Divergence trades were also filtered out when they became non-divergent.  Only 1 TICK Divergent trade was a 4 tick loser.

The first in an impressive series of winning trades
The second chart in a series of winning trades

After the series of short trend trades, the TICK Divergence marks the end of the sell off. A second TICK Divergence pattern is a 4.25 point winner.  A short trend trade was indicated after the TICK Divergence pattern had setup.  When analyzing these setups, there were 6 trading signals after TICK Divergence patterns.  Five of those six would have been losers.  This is why testing a trading plan is so important.  This represents a pattern within a pattern that can only be found with testing (or losing money).

The last chart in a series of winning trades
The last chart in a series of winning trades

SP Down 45 Points in Two Days Leads to Great Trading Setups

Great Trading Setups

The last two days saw a big sell off in the markets with some great trading setups.  Fortunately the increase in volatility did not decrease liquidity.  If a decrease in liquidity had happened, you would not see that quality patterns setup on the chart.  The e-mini premium would have been all over the chart as in the example below.

E-mini Premium for Breaking News
Increase in volatility in the E-mini Premium due to Breaking News

To understand more about the e-mini premium read this post here.

Instead the liquidity necessary for proper trading setups was present, and we saw some great pattern trades.  The best sequence occurs in the last two hours of Friday, with 3 perfect setups in an hour.

What is also important about these charts is that they look no different than any other trading day.  Long trades still have perfect trading setups, and you can find even more trading setups with the short trades also.

Charts from Thursdays selloff

Tick Divergence Setups
Tick Divergence Setups

Charts from Fridays selloff

Three Perfect Trading Setups

Tick Divergence Setup
Tick Divergence Setup