RTM combines prescription with signal
 

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RTM combines prescription with signals

VolSignals — Intraday Dealer Hedging Flow Analysis (the "prescription")
Index MMs, Broker-Dealers and Firms ('Dealers') provide options liquidity to an array of market participants with idiosyncratic needs. Trades become positions when dealers are unable to recycle those options back to customers and other end-users. These positions must be dynamically delta-hedged to minimize risks associated with carrying the options. Accurate dealer positioning allows us to estimate the net of their hedging flows in advance with a few key Greeks, or option sensitivities. Each day, the current dealer position is examined, and the associated hedge profile is analyzed through the combined lenses of Gamma, Charm & Vanna. Intraday analysis is provided by a leading index market maker with over 15 years experience trading, hedging and managing large, complex positions across the universe of S&P options products. Interactions are well articulated, questions are encouraged, and trading strategies are discussed freely throughout the day.

"Magnitudes and variations in dealer Gamma enable us to anticipate realized volatility and identify spot ranges where price should slow or accelerate, increasing the likelihood of reversals. Charm flows create intraday price trends. When paired with live IV metrics (by tenor), Vanna helps identify strong reversal potential. Combining signals from all three yields real-time insight around key levels, trends, and volatility most useful for intraday scalping & spread-trading."

TradingClosed — Leading Indicators from the Swaps Complex (the "signals")
At various moments throughout the trading day, these broader swaps markets 'come into balance.' These moments trigger Balance Marks on the Index (ES or SPX) itself. We print and display these marks on a Live feed, streamed throughout the trading day. We score these Balance Marks according to their strength (Soft, Strong, Strongest) and provide Live Commentary of the signals, helping the viewer to understand their meaning and answer any questions that newer viewers might have as they work through the natural learning process.

"These Marks provide a valuable trading edge for those looking to scalp in and out of positions on the index throughout the trading day, or for those looking to enter or exit longer term positions in a manner that allows for maximum profitability and better execution."

How the Signals Work
Depending on the set of signals and the orders in which they print—they will indicate either: 

1. Strong Mean Reversion points on the Index that spot will either pause-at, or return-to
2. Momentum / Trend Continuation signals, allowing for early entry into local/short-term moves
3. Reliable Risk Management marks, allowing you to minimize losses & maximize profits

The Signals
All of our signals print in real-time—directly onto a livestreamed TradingView chart of the active ES Futures contract.

White Bar: Soft Signal
Blue Box: Strong Signal
Blue Line: Strongest Signal (We will also add a note to the line that is the Strongest Signal of the Morning, and most days, the Strongest Signal of the Afternoon)
Beige Line: Used for notes. Often to indicate Clusters of Box Signals which have printed.

How to Read Them
When viewing our Live Stream, it's best to start with a baseline assumption that throughout the day, the Index is a Mean-Reverting Machine.

The marks it mean-reverts to—and, more importantly, the drivers behind each Mean Reversion—will change. Equally important, the durations of these Reversions will also change and are rarely consistent. However, the market can be viewed as either in periods of Mean Reversion or in periods of Momentum moving along to the next period of Mean Reversion.

To put it another, simpler way: sometimes the Index will chop around a spot for a while, and other times, a new entrant (or thousands of new entrants) will appear during the day and move the Index to the next tight range, where it will chop around again.

Our signals look to identify—as a Leading Indicator—which of those two regimes the market is in, and when it's about to break out of that regime.

We do this by recording *when* Balance is achieved in the Swaps Complex and then recording the precise Index spot price at that exact time. We then evaluate the frequency, size, and the combinations of the Balance prints to derive our Leading Indicator.

(3) Examples of Our Most Frequent Signals
We discuss additional, more nuanced signals in our Live Stream as they come up. (..don't worry about memorizing every detail)

1. Strongest Signal (Blue Line) or Cluster of Strong Signals (Blue Boxes) — Mean Reversion Mark
   Often the Index will pause and chop around—and occasionally even pin the close—at these points.
    ♦ We use these marks to get flat on day-trades.
    ♦ We use these marks as reliable limit-price targets for working into or out of longer term positions.
    ♦ When spot moves off these points, we use the levels as trade targets (read: we sell above & buy below).
   
   
2. Strong Signals (Blue Boxes) printing with consistent frequency into a Trend — Trend Continues
   This happens often throughout the day.
    ♦ These are most useful as short-term directional signals for intraday scalping.
    ♦ These signals can be used as potential confirmations of (-or challenges to) longer-term market views.
    ♦ Daytraders use them to set Entries, Exits, and Profit-Taking levels for their positions.
   
   
3.  Volume Ramp Ups — Very Short-Term Rip (or Rug) Coming...
   These are noted in the live commentary. We alert the stream when we pick up identifiable signals in the Swaps Complex reflecting the trades of specific key participant(s)—indicating they're about to buy or sell large swathes of full SPX Baskets. These large SPX program trades can rip the index 5, 10, or even 15 points in one direction. Sometimes we're only able to tell there's a quick move coming—up or down—but occasionally we're able to reliably deduce the direction as well.
    ♦ When signals present with this Volume context, they can be extremely useful for scalping / daytrading.

Get Involved
Our leveraging of the Swaps Complex as a signal group—and more specifically, our analysis of trade timing & sequencing to infer an Implied Index Spot Price—is a novel concept unfamiliar to most market participants. Expect a short learning curve to ‘grok’ how it all works.

It’s not a major challenge however, for the median market participant to ride that curve rather quickly.

The best way to do that is to jump into our Live Stream.

We've found that most traders are able to take the first 2 or 3 days to watch the signals, read the commentary and ask questions in order to familiarize themselves with our unique approach. By the end of that period, most (if not all) traders are confident enough to begin incorporating Trading Closed 2.0 into their trading systems and process.

As they move further along the learning curve, many rely on TC 2.0 signals as the lynchpins of their systems.

The best way to learn is by observing the signals yourself—in real time.
Interested applicants must complete an 8 trading-day trial before qualifying for full membership.
These are mandatory—we treat them like ‘onboarding,’ and encourage you to do the same.
We keep trial openings limited in order to maintain the integrity of the onboarding process for new applicants.

⏩Book your eight trading-day RTM trial here