DOM games

[brownsfan019]

James,
My observation of price gravitating towards these was just that - an observation. I could be wrong. This is not something I've studied or looked at with any regularity, so who knows.

It is interesting to watch and if there's a way to make money from it, I'm sure someone is doing it. I've personally never seen a profitable system or trader do this, but it would be neat to watch if done successfully.

If nothing else, this thread should serve as a reminder to everyone, esp newbies, that many, many games are played on the DOM's in the US markets.

[AbeSmith]

Very interesting post Brownsfan. I'm reading Schwager's The New Market Wizards and what you describe sounds familiar to something I read there but I don't remember the specifics. Right now with my trading I'm getting to a point where I'm starting to pay more attention to the DOM. On the YM sometimes there are orders over 100 and those orders stand out. I like to see those orders on my side of the trade, but since I don't have enough experience watching how these big orders play out I'm not willing to trade off of them unless there is another reason for the trade.

[brownsfan019]

	Quote:	AbeSmith
	Very interesting post Brownsfan. I'm reading Schwager's The New Market Wizards and what you describe sounds familiar to something I read there but I don't remember the specifics. Right now with my trading I'm getting to a point where I'm starting to pay more attention to the DOM. On the YM sometimes there are orders over 100 and those orders stand out. I like to see those orders on my side of the trade, but since I don't have enough experience watching how these big orders play out I'm not willing to trade off of them unless there is another reason for the trade.

Abe,
I suggest you study and study some more on how to use this in your trading, if at all. In my casual glances at it, as I've suggested in this thread, there's so many games being played that trying to use that info to trade off of is dangerous in my opinion. Again, I have not done nearly as much research on this as other things, so there could be some good stuff there. Let us know what you find out, if anything, about trading with the dom #'s.

FYI - what could be of help to you is the OEC dom. They have a total bid/ask thing in the settings where the dom will constantly add up the bids and the asks that you see at the bottom. It's interesting to watch, but it fluctuates so much that I didn't get much from it.

	Quote:	brownsfan019
	What I've noticed here is that when you see heavy buyers or sellers sitting, they can act like a magnet. Price seems to gravitate towards them. Now the question is why... why does price want to gravitate there (if it in fact does on a regular basis)? Are trades being filled there or do 'they' know that 'they' can create artificial pressure? The above post I put was a great example. There appeared to be heavy sellers a few times and price has continued to rise. At first glance, it would seem that there was some possible resistance there; however, that was not the case at all... It would be interesting to see some documented research on this topic. Is there really something there to use? If so, could it be used in a discretionary approach or would this require ultra-fast timing by computers... Just some ideas, a little talking out loud here.

Ah....yah!

Price tends to trade towards size....it is about moving price to where the INVENTORY IS for distribution or accumulation. Have you read any of the ACV threads...ViperSpeedTrade r points out this historically known action of the markets quite well. If the 5 levels of the DOM bid/ask can hold a ACV ratio of 2:1 or greater for a continuous period (not on-off, on-off activities)....then you can see many times price TRADE TO the size. I use this information ALL the time when I am looking at trade signal set-ups near MP levels. You need to get ACV ratio information displayed on your DOM to track this.


Fulcrum


Great ACV thread..... http://www.elitetrader.com/vb/showth...&highlight=ACV

[brownsfan019]

	Quote:	Fulcrum
	Ah....yah! Price tends to trade towards size....it is about moving price to where the INVENTORY IS for distribution or accumulation. Have you read any of the ACV threads...ViperSpeedTrade r points out this historically known action of the markets quite well. If the 5 levels of the DOM bid/ask can hold a ACV ratio of 2:1 or greater for a continuous period (not on-off, on-off activities)....then you can see many times price TRADE TO the size. I use this information ALL the time when I am looking at trade signal set-ups near MP levels. You need to get ACV ratio information displayed on your DOM to track this. Fulcrum Great ACV thread..... http://www.elitetrader.com/vb/showth...&highlight=ACV

Interesting Fulcrum, thanks for sharing.

If you have info to add, please do. It would be interesting to be able to break this down more to be able to use it meaningfully. As I said, the bid/ask totals change so quickly that I find it hard to read but haven't done much with it. If you have some guidelines or rules to share, that would be great.

[darthtrader]

Very interesting elite trader thread. Makes me sad to see how far elite has fallen. Is this stuff really only good for scalping though? I have to finish that thread but I'm not sure it sounds like you would be able to get all that much better trade location if your doing anything more than a scalp. Interesting to read how powerfull neoticker is in that thread too. This could be really interesting on nikkei futures if these games are illegal there.

I've watched the CBOT gold book before, if you want to see really absurd games check that out.

[darthtrader]

check out Dcraigs charts here
http://www.elitetrader.com/vb/showth...&pagenumber=17

Very interesting charts. I think that is the first time I've ever seen Ehlers DSP ideas put to use that it actually looks usefull. That FIR filter looks to really be smoothing out the book delta candle information nicely.

No problem Brownsfan!

I use ACV (as an additional filter) when I am about to trigger a new entry order from a signal generated by one of the several systems that I trade. If I am about to take a trend reversal type trade, and the ACV is 2:1 or greater in the opposite direction of my entry, I will hold off and wait. If the ACV is 2:1 or greater in the intended direction of my trade, I will take the trade with increased position size (about 50% greater position size). I scale out the added position size as price travels up to the tick levels creating the predominance of the 2:1 affect....or until I see the 2:1 affect neutralized (the remainder of my position I leave on with my normal parameters).

This type of trade set up I have found has a very high probability factor...well over 70% success rate. The other set up I use a lot when I observe the ACV at 2:1 OR greater, is when price is at a very key s/r (or MP) level. When I see the ACV go 2:1 or > in the direction of a breakout (through support or resistance) I jump in with a scalp play for 4 to 6 ticks....works like a champ as price busts out with momentum.....leave some runners on these trades as price can really move when this happens.

BTW, the day in Feb when the market blew out, I had 4 HUGE ACV trades as price in the ES kept blasting through major MP levels (the ACV was telling me to play the breakout through support on all 4 levels that day). My first SHORT trade I made 6 ticks with no runners (dumb me)....the last 3 SHORT trades I made 6 ticks with my primary position and over ten points total with the runners. Price would just jump away from my entries and never look back...that was a fun day.

	Quote:	darthtrader
	check out Dcraigs charts here http://www.elitetrader.com/vb/showth...&pagenumber=17 Very interesting charts. I think that is the first time I've ever seen Ehlers DSP ideas put to use that it actually looks usefull. That FIR filter looks to really be smoothing out the book delta candle information nicely.

I agree...dcraig has a nice analysis of the situation with his charts....smart trader imo.