Get to know about all the !OMM Strategies now! Russell Capital Group

what's up it's B and I'm here to show

you how to use the omm and create some

trading strategies from

it so if you haven't already go read the

using om slideshow and watch the using

om video on the rcg YouTube

channel we're going to go over some

behaviors and then figure out trade

ideas from that so the first behavior in

the omm is the OM volume

Divergence um this is just indicating

directional bias for this session right

so we can have some trade ideas right we

have two main categories of counter

Trend and Trend following and so in this

case right upon the break of that volume

Divergence here we would to Trend follow

we would assume directional exposure and

then to uh play the counter Trend when

we see volume convergence here which

we'll talk about in a bit this is where

you would sort of front run a conver a

counter Trend right here as or to see

the volumes

collapse so we can either capture the

premium above the PML or the floor here

as well as just directional exposure via

a long or a call in this

case let's talk about volume convergence

so volume convergence is a potential

counter Trend trade or formation of a

new trend um in this case you can see

the side lines

converging uh forming bullish

convergence on our put side lines here

right and then subsequently we can see

converging back to attempt formation to

a bearish

reversal but you can see we fail right

we convert our callid lines briefly

diverge bearish then convert back to

bullish or converge back to

bullish we can see kind of the stage of

events here a formation of the initial

Divergence

right the beginnings of convergence here

and then the confirmation of

convergence here's another big trade

here's our PML zone or PML crossover

trade and so the PML is the peak

negative exposure and this is a very

sticky area for price and as price moves

above the peak negative exposure this

shifts the chain momentum bullish and

subsequently as we move below the peak

negative exposure the shift chain

momentum bearish so you can see crossing

over the PML here coincides with uh call

side hedging and then proceeds this

bullish Divergence that occurs as we

break PML Zone

here um breaking the PML Zone I like to

see it form uh pretty strong Trends

towards the ceiling or the floor in

whatever case

um especially alongside these volume

divergencies here it's pretty

strong positive exposure uh results when

market makers lose confidence in their

original positions and must start must

start to hedge with the

flow um of the market right and so what

what happens in these cases is the

acceleration of a positive feedback loop

and so as we approach theer floor we

have this let's call a cushion range on

SPX it can range from about 8 to 11

points on QQQ it's about 48 to 96 cents

right each stock has their own

individual cushion range from the sing

number before and so what we look for is

as we approach that cushion range we

want to see B price Bounce from there

right otherwise as if it breaks through

that and moves towards the actual

ceiling or floor value that's indicating

that we're approaching positive

exposure so so as we approach the

cushion range there's two possibilities

you have a your floor in this case

remains flat in the range and the

underlying Market bounces reverts from

it does not exceed the cushion zone or

we have positive exposure where price

breaks that cushion Zone breaks the

ceiling and then forces market makers to

begin hedging with the market and form

uh Trend development and so in these

cases we could can see Trend

continuation for a large part of this

session and often times we do not see a

meaningful reversion in these

cases um especially when we have om

profiles that look like this which I'll

go into in the next slide here but this

is a very good indicator that we are not

going to see any sort of meaningful

reversal after a positive exposure

event all right so here's ceiling and

floor conversion right this happens when

market makers are confid in their

positioning and price fails to break

their positive exposure boundaries and

so the ceiling and floor stay generally

flat within their range as price engages

the cushion

Zone what we look for in this case right

is the ceiling to remain flat in range

as price engages it we want to see some

sort of counter Trend convergence from

our om and volumes you can see here in

this case right we want to then see

ceiling possibly come down as we start

to peel away from the Cushing Zone that

will help Confluence

us um as that that om volume convergence

forms that will usually spark a move to

Target towards the PML we don't always

get there but that is an optimal Target

for these kinds of

plays um otherwise you can use your

fractal to just find kind of live setups

as they form and find reversion targets

but the PML reversion trade is a very

common trade I

see so how do we know that we've

invalidated a ceiling and floor

reversion right well this happens as we

were talking about before where the

ceiling and floor begin adjusting

outside of

range um upon contact with price because

market makers are hedging so in these

cases um if we the SE if we adjust the

ceiling out of Rage even if we don't

produce a massive positive exposure move

we still have a higher potential to pin

to the ceiling rather than produce

reversion and so it's really important

to figure out to kind of separate uh

circumstances that can produce reversion

versus ones that are more likely to

produce pin possible small little

reversion Subs but nothing significant

like we look for in these example models

right I like to look for a flat floor

and flat ceiling as in this case where

it's a really tight range here um

usually upon price contact with these

levels writers are quote unquote more

confident so price is more likely to

revert from those areas rather than

producing a positive exposure

move so how do we determine when pin

versus reversion occurs right we said

before a flatter ceiling in floor is a

higher confidence in the

boundary sealing and for maintaining

their contextual range without

adjustment this also increases the

confidence of our potential reversion

Trend potential reversion um our omm uh

forming a strong counter Trend

convergence move instead of we could

call it going flat or chopping up as you

can see in this little square here or

here or here um we also look for for the

ceiling and flooor to not widen or

compress synchronously as widening is

showing an increase in the potential

session volatility compressing is

showing a decrease in the potential

session

volatility and so how do we find common

pin conditions right well first off our

om profile is very easy to tell us when

you see your put side line here this is

puts above and puts below this red line

when you see this massive Divergence

form and you see all the other lines are

sort of almost

halfway like one half of the length of

this putside line you can see I drew

these two white boxes to show that kind

of measurement here this is a pretty

good indication of a pin setup right but

we would see in this case to transition

from a low probability potential for

reversion to a high probability

potential for reversion would be

something like this where you suddenly

see a strong uh counter Trend

convergence like we were talking about

earlier we want to see that hedging also

pick up right um same thing here for if

we're transitioning from bullish to

bearish right same idea

right and so common conditions where we

fail to find meaningful reversion are

when we lack those kind of strong

counter Transformations we go flat

right we ceiling are four WS right the

uh directional Point volume as we're

showing here massively out of balance

it's also a bad sign for any sort of

shot at reversion and so when we fail to

produce a meaningful shift in the

balance this purple arrow is kind of

Shifting or showing that idea when we

fail to produce that meaningful shift we

we have a very low probability of

producing a full transition to

version when we see compression in

tandem where ceiling and floor sort of

pinch towards the PML it's also not a

really great idea or great uh potential

for reversion to form rather it kind of

shows that volatility is compressive

right so we have a higher probability to

pin randomly between the PML Zone and

the ceiling or at the seil OR at the

floor so how do we determine congestion

balance ranges occur well kind of what

we were talking about in the last slide

this choppy om is a pretty good sign

here when you see this stuff form like a

wide chop right where it moves back and

forth pretty hard that usually uh

synchronizes with the formation of

balance range with your spot price here

same you can see the same idea this

purple box here balance range right same

idea this red box here balance range

same here balance range at the CE right

and so those those om markers are big

big red flag to look for

uh price congestion rather than Trend

development uh the contextual PML Zone

as we showed in earlier slide is also um

it's like molasses for Price It's hard

to break out of there and so a lot of

the time what we will see is Rage within

the pmo zone or continued rejection

maybe before we forming a

breakout um what we can also look for

are what what's called a tangled or

indiscriminate volume which an example

would be this the green and red lines

and this red box here right where

there's not really a clear Divergence

yes we know that it's tinted bullish

because of this callid line but the lack

of a clear Divergence in this case

usually results in the continuation of

balance range right and kind of also

what we were talking about earlier right

where you see significant ceiling uh or

floor compression in this case right

here this is also indicative of

compressing volatility especially to the

downside when we are already sort of

pressed up into the ceiling kind of

stalling out our upside range then you

see this massive move up in the floor is

just uh compressing the potential

downside volatility to the floor zone

right that we end up

targeting uh flat options volume in this

case here it's a little distorted but

flat options volume in this case also

tends to result in Balance range

sessions um either ranging in the pmo

zone or just random placement um in

other cases we can see it sort of we can

see Trend develop in these flat option

volume sessions but then it just takes a

very sharp V shaped reversal right from

that flat ceiling or flat floor like we

were talking about before

all right so now we've gone over some

behaviors right so what kind of

strategies can we take right we can take

we really have two types of strategy in

this case we have Trend following and

counter Trend front running right so

Trend following is just following a

breakout of any of our Trend based plays

like a PML Zone breakout in this case we

can use volume convergence or excuse me

volume Divergence in this case you have

a lot of opportunities right and so in

those cases you want to assume either

directional exposure or capture premium

in favor of redirection right same idea

for the counter Trend front running

where if you are betting on a potential

volume convergence here for say as we

approach ceiling how are we what are we

targeting on this on a potential

reversing the fractal will give you

intermediate levels between ceiling and

PML but if we are early enough in the

session this PML exist a prime target

here and so as we approach the ceiling

on days with low implied volatility or

relatively low implied volatility uh

this uh finding strikes in this area for

the your zero DTE plays that we like to

see in rcg uh could be very cheap and

rewarding here I've seen FMC days I've

seen 1 cent contracts go to

over um you know like a buck or right in

minutes um that's just that's a lucky

example but can be profitable in this

case right and so then balance range how

do we determine when volatility is

compressing right this is a really key

uh this is a really key point for a lot

of options Traders right as time for

most debit Traders is not on your side

right if you're trading spreads it's a

little different but in this case time

is not on our side and so we need to

determine when is the best time to be in

and out of the market when we see

formation of this P large PML Zone and

price stay within on flat options volume

it's usually a bad sign right until we

form some kind of breakout and you have

a put side Divergence right if we see a

transformation day and a flat options

volume day um as we approach the ceiling

of the floor you could potentially uh

capture the spread on that instance or

just take uh positioning for the

potential uh vshed reveral right in

another case I see this happen a lot

where price opens into its ceiling or

opens into its Flor right this actually

does count as a rejection of either side

and so in this case while we initially

see our bullish hedging uh wound up in

this case we then see everything sort of

start to stall out as we reject the

ceiling and then just sort of trend

towards the PML we can also this R

balance range we can test again right

all these behaviors are complex these

are just individual models that all come

together to create a single session of

price action right so now that we've

learned some omm strategy it's time to

go out there and do it for yourself find

some strategies uh find some more models

in this case right this covers most of

most of everything but there's always

some new stuff to it so thank you very

much and take care