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Article Archive For Donald L. Jones

  • Daytrading With Market Value by Donald L. Jones

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:5 (16-23): Daytrading With Market Value by Donald L. Jones Markets are complex, self-regulating, and driven by feedback. The message is clear: Decipher the feedback to understand your market. How can you understand the market? With feedback. What is feedback? Feedback is market response. For instance, heavy demand leads to increased market activity; feedback is apparent as more ticks, more volume, increased volatility, and higher prices. You already know this, but how can you interpret this data? Most technical indicators are not adequately coupled to the market be...

  • The Market's Second Chance by Donald Jones

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:11 (28-34): The Market's Second Chance by Donald Jones In my STOCKS & COMMODITIES articles on auction market analysis (see suggested reading), I gave examples of making trades with value-based information. Implicitly, these were all "first-chance," breakout trades. You do the analysis, the market meets the entry criteria and, boom! you initiate the trade. In the real world, we all sometimes miss that first chance. Most of us know better than to chase a trade. But on occasion, the market offers a second chance. Recognizing a valid second-chance opportunity is more d...

  • Developing A Model With Auction Market Theory by Donald L. Jones

    ARTICLE SYNOPSIS ...Developing A Model With Auction Market Theory by Donald L. Jones Here's an intraday trading model that uses auction market theory. A tenet of auction market theory is the unpredictability of the markets. An auction market model is built from market knowledge without predicting the market's path. The auction market model requires input from both the market and the trader. It is dynamic, attuned to the market, theoretically sound, and universal. It is also unique to the trader who is exercising it. I will show you the logical steps for developing a trading model, using the auction market theor...

  • The Auction Market Theory by Donald Jones

    ARTICLE SYNOPSIS ...The Auction Market Theory by Donald Jones Thanks to the Internet, even when you are far removed from the floor of the exchange, you can still hear what the market is saying. At some point, every trader benefits from a surprisingly fast, good trade. When that happens, should you take what you have and run, or should you hold out in hope of additional appreciation? How do you know what the market is telling you? To answer that question, you need to know the theory behind the markets. This will help you to tie the myriad loose ends of market data together, organize them, and simplify your mark...

  • Auction Market Theory And The Longer Time Frame by Donald Jones

    ARTICLE SYNOPSIS ...Auction Market Theory And The Longer Time Frame by Donald Jones Last issue, I provided an overview of Auction Market Theory. Two important facts should be kept in mind as I discuss the next stage, applying the theory: First, markets are not correlated on a day-to-day basis, and second, markets are in a continuous cycle. The lack of correlation precludes finding market condition from yesterday's market, but you still need to know the market condition to make trading decisions. You find out about market condition from the Overlay Demand Curve. MARKET CONDITION FROM OVERLAYS As traders, we spe...

  • Commercial Floor Traders Identify Value by Donald L. Jones

    ARTICLE SYNOPSIS ...Commercial Floor Traders Identify Value by Donald L. Jones STOCKS & COMMODITIES contributor Donald Jones presents the use of Liquidity Data Bank (otherwise known as Market Profile) to analyze the futures market by studying commercial activity. A commodity's value is the attribute that all trading methods seek to identify. The fundamentalist is clearest about it: Isolate all the economic factors, weight them and combine them to grab the prize: value. Technical analysts use price (and sometimes volume and open interest) to develop trading models -- implicity equating some type of smoothed pri...

  • Locating value with auction market data by Donald L. Jones

    ARTICLE SYNOPSIS ...Locating value with auction market data by Donald L. Jones There are two fools in every market. One asks too little, one asks too much. -- Old Russian proverb The search for value in markets is a never-ending quest, since value changes with underlying economic conditions. A fundamental approach to valuation, such as that of Graham & Dodd, (Security Analysis, first printed in 1934), looks to the long term and projects an intrinsic value from earnings growth, management quality, business prospects and the like. Technical analysis uses the daily summary data (open, high, low, close, volume) to ...

  • The trade facilitation factor by Donald L. Jones

    ARTICLE SYNOPSIS ...The trade facilitation factor by Donald L. Jones A cardinal rule for traders using the Chicago Board of Trade's daily Liquidity Data Bank report is to avoid markets that are not ""facilitating"" trade. Over a period of days, such markets are characterized by decreasing volume, a narrowing of the trading range and an increasing number of Time-Price Opportunities (TPOs) per tick. Sometimes market changes are gradual; so gradual, in fact, that even an expert might have trouble recognizing the shift from trade facilitation to non-facilitation. For the average trader who must distill a market ove...

  • Market Profile/Liquidity Data Bank: A procedural outline by Donald L. Jones

    ARTICLE SYNOPSIS ...Market Profile/Liquidity Data Bank: A procedural outline by Donald L. Jones The Chicago Board of Trade's Market Profile/Liquidity Data Bank report is an unparalleled source of market- generated information. Each price traded during the day is identified by its associated volume, the class of trader doing the trading and the time period in which the trading took a place at that price. For the analyst, who for years has had to make do with daily summary data (open, high, low, close, volume and open interest), the Market Profile/Liquidity Data Bank provides almost an embarrassment of riches. Th...

  • Estimating the Market Profile Value Area for intraday trading by Donald L. Jones

    ARTICLE SYNOPSIS ...Estimating the Market Profile Value Area for intraday trading by Donald L. Jones T he prime question for every trader is whether to get into a market, or if in, whether to stay in or get out. Since these questions must be decided on the basis of inadequate knowledge (no, we really do not know where the market is going), a key element in the trading decision is the state of the market. Is it facilitating trade with its breadth (price range) and depth (volume), or is it showing signs of change? A principal tool in measuring the extent to which a market is facilitating trade is Value Area, a fe...






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