This was done by Jesse Livermore as well. The one situation where he described his use of testing trades was leading up to the '29 crash.

Livermore put on short position in some stocks he thought wildly over-valued from early August. He kept getting stopped out, and stopped out and stopped out.

But he kept putting on his test trades. Then in September of 1929, he quit getting stopped out - his shorts started to hold. Then he pressed his shorts, and pressed and pressed and pressed in a pyramiding move. The day of the crash, Livermore read the papers, but they didn't tell him anything he didn't already know.

Also in Livermore's book was the tale of someone coming to a crafty old operator Livermore called the Deacon with a hot tip. This kid comes to the Deacon with a tip that the insiders of US Sugar were buying everything they could get their hands on - the tip was they were "buying the common at the market."

The Deacon listened to this tip, nodded sagely, then told his runner to sell 10,000 shares of Sugar at the ask. The runner did this, came back and reported that the block went immediately. The Deacon then told his runner to sell another 10K shares at the ask. This next 10K went immediately too.

The tipster by this time was coming unglued, positively out of his skin. The Deacon then explained that he could have done nothing else - he had to test the information. That 10,000 shares went immediately was interesting - that a second 10,000 shares went without effort was the confirmation - that someone was buying Sugar with both hands, at the market, just as the tipster said.

The Deacon then told his runner to buy back the 20K shares and buy another 10K shares more - and that the tipster had a couple hundred of those shares' profit as payment. The tipster asked the Deacon to sell his shares with the Deacons, because the tipster learned that he didn't know quite as much about the market as he thought he did.

With markets as liquid as they are today, and with off-exchange "dark pools" -- this is pretty tough stuff to do today. But by reading longer-term indicators in the stock market (dunno about the commodities exchanges), one can get a sense of where a bottom is. The important thing is to know that there are bottoms, and there are bottoms. Some bottoms occur in different time frames than others - you have have a "near term bottom" or a "trading bottom" (or tops), etc.