[macdfx]

With folks like Paul Rotter in the bund, and HFTs in the Level II equities, it's a wonder anyone relies on the DOM anymore as a barometer of price action.

Time and sales prints or trades on a chart are the best determinant of price action, without a doubt. Nothing wrong with indicators, except that they can introduce lag into your trading of price action.

[AgeKay]

Originally Posted by subterfuge »

I gave it about 3 weeks of looking at it from 9am-7pm, mainly looking at the ES, and the 6B (GPBUSD) in the mornings (im in the UK)
Maybe I threw the towel in too quickly, but I honestly felt as though i was getting nowhere.

3 weeks is definitely not enough, especially if you don't know exactly what to look for. Do you really expect to learn a profession in just a few weeks that has basically unlimited income potential? On day one you're up against the best traders of the world that have the best hardware, the best software, the best internet connection, the best staff, many years of experience and most importantly millions of dollars/euros/pounds. This is the NFL/NBA/WSOP/FIFA World Cup/Grand Slam/Formula 1/Olympics of speculation.

Your choice of markets was probably also not the best. I don't think the DOM is going to help at all with Forex. The futures probably just follow the spot market and the spot market has no centralized DOM that you can look at. I've not looked at the ES, but I am not sure the DOM is going to be very helpful there either. ES is probably the most arbitraged market in the world and there are so many trades that occur because something else is happening in another market by hedgers, pair traders and large mutual investment funds. You have the mini futures, the big S&P 500 futures, ETFs, the underlying stocks, other highly correlated stock indexes with their own ETFs, underlying stock indexes and futures. I've told you that you should look at a market where you know that it's leading the market you're trading. I recommend Bund (looking at Bobl) or Dax (looking at EuroStoxx) if you trade from UK. You could also try the U.S. Treasuries if you like to trade in the afternoon.

Originally Posted by macdfx »

With folks like Paul Rotter in the bund, and HFTs in the Level II equities, it's a wonder anyone relies on the DOM anymore as a barometer of price action.

I like that large traders like Paul Rotter are there. They move the markets and they have a certain way of doing it. If it wasn't for them, it would be just a random mess of buying and selling of many smaller traders.

[BlowFish]

I'm really not sure which side of the fence I am on this.Over the years I have stared (I choose that word over studied) at the DOM for hundred of hours. The reason I say stared is because whilst I have a general idea of what I am looking at I am not sure I really 'get it'.

I still feel that there is sense to be made of it I just haven't managed to. I also wonder if I am capable of it. I have good spacial awareness and a good intrinsic feel for magnitude. I am not particularly numerate though (odd as I just about come from a generation where a slide rule was used for maths rather than a caculator).

If you think about it as a market for physical goods oranges and lemons say. And sellers place their goods for sale out on stalls (though they may have more under the counter and can add or remove cases of oranges from the stall). Not only that you can see how many oranges are bought by punters.

Conveniently the stalls are ordered by price, the more expensive further along the line.

On the other side of the room are buyers, on there tables are empty boxes advertising how many oranges they are prepared to buy. Again they can add or remove boxes and you can see how many sales are made (with oranges being dropped into the boxes).

In brief you can see how much is bought and sold and you can see how much is advertised (even if that does go up and down). Can one judge the short term sentiment from this? Seems more than plausible to me the problem (for me) is it all happens quite fast and there is a lot of information to take in.

[AgeKay]

I wouldn't try to compare it to a physical market. Futures trading is quite different from real markets. First, speculators don't care about price. There is nothing like "expensive" or "cheap" in Futures. You always put up the same amount of margin. I am even more likely to buy when the market went up ("is more expensive") because I know traders will be puking at some point. In a real market, you don't have to sell your oranges back to the farmer. In trading you also have double auctions. Try to visualize that in a real market.

No one said that scalping is any easier than other approaches to trading. You have to be really fast and there is a lot of information you have to pay attention to. You can be very consistent though and achieve very high percentage returns.

[BlowFish]

Originally Posted by AgeKay »

I wouldn't try to compare it to a physical market. Futures trading is quite different from real markets. First, speculators don't care about price. There is nothing like "expensive" or "cheap" in Futures. You always put up the same amount of margin. I am even more likely to buy when the market went up ("is more expensive") because I know traders will be puking at some point. In a real market, you don't have to sell your oranges back to the farmer. In trading you also have double auctions. Try to visualize that in a real market.

No one said that scalping is any easier than other approaches to trading. You have to be really fast and there is a lot of information you have to pay attention to. You can be very consistent though and achieve very high percentage returns.

I don't think there is any difference myself Futures contracts are only options to buy physical goods in the future after all. There is no 'cheap' or 'expensive' when buying corn just as there is not when buying corn futures. (Having said that if you can buy corn at less than the current futures price + delivery cost you might say it is relatively cheap but arbitrage is a different topic altogether). It's all determined by who's prepared to bid up the price. Futures traders do care about price the price they got in at and the price they can get out at. Anyway lets agree to differ on that one rather than get into another rambling debate.

That was not my point anyway (obviously I was not being clear). I was attempting to point out the amount of information that is available to a futures trader and hopefully to get the naysayers to reconsider whether it might be helpful in determining short term order flow.

As to whether scalping is 'easy' again I guess I wasn't clear. I wonder whether I have the mental agility and numeracy to learn the skill? Could anyone who applies themselves learn it? And just to be clear I do mean learn the skill and not successfully apply the skill. Obviously many who manage the former will not manage to apply it successfully

P.S. Bough the book stuck it on the Kindle and took off for a couple of days with that and the laptop. Enjoying it so far.

[DugDug]

day traders care about price but they dont care about value (cheap or expensive).

[AgeKay]

Originally Posted by BlowFish »

Futures traders do care about price the price they got in at and the price they can get out at. Anyway lets agree to differ on that one rather than get into another rambling debate.

No, I do agree with you. I used the wrong word, I meant value as DugDug pointed out. It's obvious that we care about entry and exit prices just not necessarily what these prices mean. I still don't know what the price of the Bund means when it's trading at 122.05 with regards to the interest rate or whatever, and I don't need to.

Originally Posted by BlowFish »

I wonder whether I have the mental agility and numeracy to learn the skill? Could anyone who applies themselves learn it? And just to be clear I do mean learn the skill and not successfully apply the skill. Obviously many who manage the former will not manage to apply it successfully

I do think anyone could learn the skill. Even though it might seem very subjective, almost everything can be described objectively and logically and should thus be relatively easy to learn/understand. All we try to do is try to read supply/demand and apply logic/psychology. No matter what traders base their decisions on, it has to go through the order book, so we see everything (even if that means that there is too much information).

Applying the skill shouldn't be much different than using other trading approaches. It's still mostly discipline, i.e. cutting losses quickly when you're wrong although most of the time you know you're wrong before it goes against you. One thing that might be different is that you do have to be very quick and be willing to exit or even reverse positions at a drop of hat, so having no opinion at all times definitely helps. I even use a gamepad that is mapped to MD Trader's keyboard shortcuts to be able to execute very quickly and modify orders on both sides (bid/offer) at the same time. PM if you want to know what gamepad I use and how I have set it up. A low latency internet connection is also required as you'll be trying to hit market prices just as they leave or enter limit orders just as they get taken out to get the "edge".

[BlowFish]

Originally Posted by DugDug »

day traders care about price but they dont care about value (cheap or expensive).

Succinctly put.

(puts my waffle to shame)