[strtedat22]

	Quote:	smwinc
	Few points, We have two key areas here: Time & Sales (actual trades) Depth of Market in a price ladder (implied demand & supply) I trade predominantly off the depth in a few markets. I work with traders who trade ONLY off the depth in some markets. It is not some mystical science. However, this trading style is less suited to thicker markets. Broadly, when reading the depth, you are 'pulling apart the market' and attempting to analyse individual traders. Is there a seller in the market? Are they finished? Where are they short from? Where will weak hands be forced to reverse? etc E.g. 200 lot appears on the front of the offer in the DAX. Traders jump in front with 4,6,10 lots to get short, 'leaning' on the size. The 200 lot is implied supply. If that gets pulled, the guys who just got short will likely cut & reverse, or at least cut their trade. You see 1000 on the bid appears in ESXT50 and hit Long the DAX, on the view that the ESTX50 will get bid up, sending the DAX up. 200 lot gets pulled (maybe he was just pushing sellers into his bids?who knows, who cares). Weak shorts reverse as the DAX is bid up, etc. This is just one example. This type of analysis is fine when you are analysing a market which is of lower volume - DAX, FTSE, etc. The lower the volume of a market, the more you really need to understand the intricate price action. It is MUCH more difficult (and in my opinion, just not ideal) to try and read the depth of something like the ES, Nikkei, FX futures, etc. Big, thick markets dominated by much more complicated trading. In something thicker, you are reading the flow of the time and sales. I do like to pay attention to Accumulated Depth, as markets do tend to attract to size, but only on a minor note.

I agree with you totally. I see front running large contracts on the tape lately. I seen it today (5/2/2008) on the YM. I just dont know how to time it. I have a feel of the tape but I cant pull the trigger on those large bid/ask orders on the DOM . Im afraid the orders will get pulled when it does get close. When i dont, i see those trades show up on the tape.

strtedat22