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dsalas

Reading Depth of Market

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I know market and volume profiles, but profiling in the Dom is new to me. Please explain.

 

 

 

So, you pirated/stole it--nice.

 

 

 

 

You talked about "professional traders" and that they never look at charts. My guess is that you really do not know any, but that you have heard this and it sounds cool. In fact though, I do agree that many do not, but no one who relies on a DOM only would use NinjaTrader either. The reason is simple: NT has no built-in profiling capabilities in the DOM, so all you have is price flicking up and down. Most pros at the floor use XTrader or T4 (in fact that's all you see at the CME), both of which have the ability to see where volume is transacting. This is an integral part of using the DOM, otherwise you have no good idea of the actual prints (a tape that can consolidate volume at price is useful, but a standard 80 to 100 line T&S is useless for prints, because they never show up as they are too fast, and is good for tempo/rhythm only).

 

Pros may not trade off the chart in the sense that a typical retail trader would, but at the CME, NYSE, etc., traders there have access to charts up on screens all day long. You think they don't look at them to get a quick visual of how the day is progressing? I could not trade effectively without the DOM, but this notion that professional traders never look at a chart is silly.

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So, you pirated/stole it--nice.

 

 

 

 

You talked about "professional traders" and that they never look at charts. My guess is that you really do not know any, but that you have heard this and it sounds cool. In fact though, I do agree that many do not, but no one who relies on a DOM only would use NinjaTrader either. The reason is simple: NT has no built-in profiling capabilities in the DOM, so all you have is price flicking up and down. Most pros at the floor use XTrader or T4 (in fact that's all you see at the CME), both of which have the ability to see where volume is transacting. This is an integral part of using the DOM, otherwise you have no good idea of the actual prints (a tape that can consolidate volume at price is useful, but a standard 80 to 100 line T&S is useless for prints, because they never show up as they are too fast, and is good for tempo/rhythm only).

 

Pros may not trade off the chart in the sense that a typical retail trader would, but at the CME, NYSE, etc., traders there have access to charts up on screens all day long. You think they don't look at them to get a quick visual of how the day is progressing? I could not trade effectively without the DOM, but this notion that professional traders never look at a chart is silly.

 

I never said they do not LOOK at charts.....I said they do not TRADE off charts......There is a big difference there.

 

I use a chart once every morning also .....to see session highs , lows value areas etc.

 

I look at a chart for about 5 min .......and then that is it ....the rest is off order flow.

 

Yes I have X Trader also so I know about it but I am getting rid of it. . I have no problem trading of the DOM in Ninja. I have the direct ( free) edition and use it quite regularly. There is no need to pay for it unless you are chart trading, or you feel the need to use the ATM stuff which I do not.

 

What I was trying to say here was that Depth of Market , order flow , market profiling or whatever you want to call it are the ways the pros trade . They do not look for MA cross overs and all that garbage. They trade order flow .......they trade WHAT IS , and not WHAT WAS ,....

 

 

As for professional traders , yes I know 2 of them.

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... Each DOM behaves differently than the next. The ES is way different than the ZN and CL . ....

 

Gekko78, Care to describe some of those differences in how they behave? Thanks.

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I know market and volume profiles, but profiling in the Dom is new to me. Please explain.

 

Sorry if I was not clear. I simply mean a profile that is integrated into the DOM, like the attached picture. It allows the viewer to keep his eyes in one place when he needs to focus, instead of having several different places to look for information.

 

They do not look for MA cross overs and all that garbage. They trade order flow .......they trade WHAT IS , and not WHAT WAS ,....

 

I understand your point now. Though I don't use what you call "garbage," there are quite likely some very successful traders using these, so I think it's a bit unfair to lump all traders into a category. I can guarantee you that many "order flow traders" are only such in name and they think it sounds neat, and they still suck.

 

I would just like to add that "what is" is always paramount, but "what was" often affects "what is," if for no other reason than the fact that people hold positions more than a day or two. And when their positions (as evidenced by "what was") are affected by "what is," often they act on "what was" and change "what is."

dom.png.0440ce33ce016ac87a55fef73cc4018a.png

Edited by joshdance

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Any statement that begins with "professional traders" is untrue. As for that, so is any statement that begins with "retail traders".

 

The point being that we are all simply "traders"?

 

If so, I agree to an extent; but some are certainly performing outstandingly, trading large size, and behaving in a professional manner such that they have earned the title of "professional," whereas some treat trading as simply a hobby, a game, and behave in ways that rightfully earn them the title of "amateur." Do you not agree?

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Any statement that begins with "professional traders" is untrue. As for that, so is any statement that begins with "retail traders".

 

Perhaps,

 

One could also argue that any member of a forum with the title of "Market Wizard" under their name could also be suspect or incorrect.

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Gekko78, Care to describe some of those differences in how they behave? Thanks.

 

Well for one CL is a very thin market and ES is a very thick market. Order flow reading on thin markets can be much more difficult especially with how volatile the CL is

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The point being that we are all simply "traders"?

 

If so, I agree to an extent; but some are certainly performing outstandingly, trading large size, and behaving in a professional manner such that they have earned the title of "professional," whereas some treat trading as simply a hobby, a game, and behave in ways that rightfully earn them the title of "amateur." Do you not agree?

 

No. Sorry. What I was referring to is statements along the lines of "professional traders do this" or "always do this" or "never do that". Ditto with retail traders. Anyone who makes such statements just doesn't know what he's talking about. He is rather looking for the cachet that "professional" allegedly provides.

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Perhaps,

 

One could also argue that any member of a forum with the title of "Market Wizard" under their name could also be suspect or incorrect.

 

I didn't choose it. I'd just as soon get rid of it. I think it's stupid.

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I would just like to add that "what is" is always paramount, but "what was" often affects "what is," if for no other reason than the fact that people hold positions more than a day or two. And when their positions (as evidenced by "what was") are affected by "what is," often they act on "what was" and change "what is."

 

Though when you get right down to it, and I believe somebody else pointed this out way back, there is no "is" on a data screen. Once you see it, it's already "was". This distinction between is and was is largely silly, and implies an advantage that is slim to nonexistent.

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No. Sorry. What I was referring to is statements along the lines of "professional traders do this" or "always do this" or "never do that". Ditto with retail traders. Anyone who makes such statements just doesn't know what he's talking about. He is rather looking for the cachet that "professional" allegedly provides.

 

Ok, I see what you are saying now.

Edited by joshdance

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Though when you get right down to it, and I believe somebody else pointed this out way back, there is no "is" on a data screen. Once you see it, it's already "was". This distinction between is and was is largely silly, and implies an advantage that is slim to nonexistent.

 

Yes, kind of like saying "we are in the present," when the sentence immediately becomes past as we are uttering it. But I think the point was that some traders will rely on something like an MA crossover for "confirmation," and by the time the MAs do cross as expected, the opportunity is largely gone, or even perhaps the market has already turned and momentum has shifted. This is looking at "the past," when signs of change are clearly presenting themselves in "the present," maybe the last minute or 30 minutes, via looking at price data, or volume data, or whatever one chooses. I suspect this is what we could call past vs. present, or then vs. now, or the like.

 

 

By the way, I wish you'd hang around more. You're missed.

 

Thank you Db, I really appreciate that. When some of the threads I was active in kind of fizzled away, I just lost interest in a lot of the discussion, though I certainly do miss reading some of the great posts here. I check in time and again, but I just don't post a lot.

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Yes, kind of like saying "we are in the present," when the sentence immediately becomes past. But I think the point was that some traders will rely on something like a MA crossover for "confirmation," and by the time the MAs do cross as expected, the opportunity is largely gone, or even perhaps the market has already turned and momentum has shifted. This is looking at "the past," when signs of change are clearly presenting themselves in "the present," maybe the last minute or 30 minutes, via looking at price data, or volume data, or whatever one chooses.

 

Well indicators definitely lag, but indicators are very recent in technical analysis and do not define it, regardless of what the kids think. If a T&S display of one sort or another is being used on one side of the comparison against some indicator or other then of course, the indicator is past and the display is more current. But nothing one sees on a display is "is".

 

Thank you Db, I really appreciate that. When some of the threads I was active in kind of fizzled away, I just lost interest in a lot of the discussion.

 

Most of that came to a head and got squoze. Maybe you could help bring them back to life, or think about creating new ones. Though I don't think the emini daytrading thread is salvageable. That went way off course almost from the start.

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Though when you get right down to it, and I believe somebody else pointed this out way back, there is no "is" on a data screen. Once you see it, it's already "was". This distinction between is and was is largely silly, and implies an advantage that is slim to nonexistent.

 

I see what you are saying here but the difference is actually quite large.

 

What is" is what is ( was) happening right now at this exact moment in time . Like how many people are hitting the bids vs offers right now ......1300 hit the bids vs 200 hit the offers ....that means something......... What "was" is hey the 5 ma just crossed the 20 MA.... when that happens , more often than not , the reason ( people) that made it happen are long gone. the trade is over .....you missed it.

 

Seeing who is hitting / bids and offers and size of those orders tells a story.

 

 

You say that it implies and advantage that is perhaps slim at best......and I say CORRECT!

 

Slim is all you need .......Slim is all Vegas needs and they seem to do quite well.......One does not need a huge advantage to win consistently ....a SLIM edge will do just fine...

 

 

It can be the difference between picture 1 and picture 2

 

Picture 1 is what most people trade of off.....where is the edge here?

 

Picture 2 is your SLIM EDGE .....all I need.

usoil.thumb.gif.47b3f2a9e4b67b2619350d29125d2f9e.gif

ES1.thumb.PNG.85316253b356e86a48fa8f89df5e552b.PNG

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I see what you are saying here but the difference is actually quite large.

 

What is" is what is ( was) happening right now at this exact moment in time . Like how many people are hitting the bids vs offers right now ......1300 hit the bids vs 200 hit the offers ....that means something......... What "was" is hey the 5 ma just crossed the 20 MA.... when that happens , more often than not , the reason ( people) that made it happen are long gone. the trade is over .....you missed it.

 

Seeing who is hitting / bids and offers and size of those orders tells a story.

 

You say that it implies and advantage that is perhaps slim at best......and I say CORRECT!

 

Slim is all you need .......Slim is all Vegas needs and they seem to do quite well.......One does not need a huge advantage to win consistently ....a SLIM edge will do just fine...

 

Yes, I understand. But (a) you're not attending to the discussion, my remarks have nothing to do with indicators and I used the phrase "slim to non-existent", not just "slim" and (b) it's all theory and conjecture anyway.

 

And unless you want this exchange to end abruptly, please stop with the caps and the exclamation points. All you missing is the lols. I get enough of that from people who aren't nearly as smart as you are.

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Gekko - can you back test any of this data ie; is it repeatable, quantatative and able to be proven as such, or do you still need to be able to read and interpret what is happening as it happens?

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Yes, I understand. But (a) you're not attending to the discussion, my remarks have nothing to do with indicators and I used the phrase "slim to non-existent", not just "slim" and (b) it's all theory and conjecture anyway.

 

And unless you want this exchange to end abruptly, please stop with the caps and the exclamation points. All you missing is the lols. I get enough of that from people who aren't nearly as smart as you are.

 

Well really my point the whiole thing was that a slim edge is all one needs to be successful.

 

Perhaps you do not know enough about it to make an honest statement. You know that whole " you don't know what you dont know" stuff?

 

 

I was trying to show that difference in those 2 charts I posted. Candles are nice , they look nice on a chart and the colors are nice to. But, that information alone is not enough to make a well informed decision about whether or not to put capital at risk.

 

Like I mentioned before I look at a chart every mornings for about 5 minutes to see where the key levels to look for are but that's it, I'm glad that most people use charts to trade with it helps me more. When I see price coming to these key levels and I only see 2-5 lot orders coming through trying to move price higher I know that is the very people I am talking about. I will fade because the guy who is taking the other side of those trades is who's side I want to be on. A candle cannot tell me that.

 

When price gets to said levels I look for what Is really happening there ,who is hitting into the bids , what size is trading there ? Should I fade the move because I see allot of bids being hit vs offered being lifted ? A candle going up and down and then closing at some arbitrary point tells me nothing other than it closed there.

 

I do not mind if people think that the way I do things is odd or that it won't work. Does

not bother me , but when people are misinformed about the info then I feel the need to step in.

Edited by Gekko78

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Gekko - can you back test any of this data ie; is it repeatable, quantatative and able to be proven as such, or do you still need to be able to read and interpret what is happening as it happens?

 

That's a great question ..........honestly I do not know the answer to this. I am sure it can be back tested somehow but may go beyond the tools that I posses.

 

I am not a huge fan of back testing anyway due to limitations that I feel are key when trying to research methods. Sme find value in it I just do not. Forward testing is probably better, at least for me it is.

 

I spent about a year learning order flow and demoing it and such. I have found much more success in order flow trading then any other kind.

 

It is just like when you first learned to read a chart . You had no idea what you were looking at and how to interpret it but to learned slowly over time until you are where you are. It's the same thing with this . Most people do not want to learn it because it causes them to have to make a decision themselves instead they would rather ( place favorite indi , cross over , oscillator , candle pattern here ) make the decision for them .

 

Everyone is always Talking about "this pattern or that pattern or this turned green or this crossed this or an arrow formed here or this candle is bigger than this one" but no one ever seems to want to know what actually happened during that time to make said object form that way.

 

The answers are in the cause and not the effect.

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Well really my point the whiole thing was that a slim edge is all one needs to be successful.

 

Perhaps you do not know enough about it to make an honest statement. You know that whole " you don't know what you dont know" stuff?

 

 

I was trying to show that difference in those 2 charts I posted. Candles are nice , they look nice on a chart and the colors are nice to. But, that information alone is not enough to make a well informed decision about whether or not to put capital at risk.

 

Like I mentioned before I look at a chart every mornings for about 5 minutes to see where the key levels to look for are but that's it, I'm glad that most people use charts to trade with it helps me more. When I see price coming to these key levels and I only see 2-5 lot orders coming through trying to move price higher I know that is the very people I am talking about. I will fade because the guy who is taking the other side of those trades is who's side I want to be on. A candle cannot tell me that.

 

When price gets to said levels I look for what Is really happening there ,who is hitting into the bids , what size is trading there ? Should I fade the move because I see allot of bids being hit vs offered being lifted ? A candle going up and down and then closing at some arbitrary point tells me nothing other than it closed there.

 

I do not mind if people think that the way I do things is odd or that it won't work. Dave not bother me , but when people are misinformed about the info then I feel the need to step in.

 

I doubt that anyone is misinformed about the info by now. However, you continue to insist that one cannot be successful unless one does it your way, and you have absolutely no hard data to support that position, perhaps because you define charts as having to do with indicators and candles and so forth.

 

If you're successful with this and can continue to do it for years and make a living with it and set aside plenty for retirement, then great. But do not continue to advance the case that you have discovered the keys to the kingdom until you have something to offer beyond personal opinion.

 

We get it. We really do. But we're doing just fine without it. Thank you.

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Incidentally, I'd like to apologize for posting here at all. This is not the Futures Are Better Than Forex thread, it's the Reading Depth Of Market thread, even though it's three years old. What I think about DOM and all of that is off-topic, and who cares?

 

So, I'll just go get a Snickers or something and as you were.

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I doubt that anyone is misinformed about the info by now. However, you continue to insist that one cannot be successful unless one does it your way, and you have absolutely no hard data to support that position, perhaps because you define charts as having to do with indicators and candles and so forth.

 

If you're successful with this and can continue to do it for years and make a living with it and set aside plenty for retirement, then great. But do not continue to advance the case that you have discovered the keys to the kingdom until you have something to offer beyond personal opinion.

 

We get it. We really do. But we're doing just fine without it. Thank you.

 

Please point to any post that I have made on this forum anywhere that I said one cannot be successful unless you do it this exact way? You will be hard pressed to find such a post....

 

I have also never stated that I found any keys to any kingdom ......those do not exist.

 

You seem to jump the gun and interpret mine ( and everyone elses posts ) as you see fit.

 

 

Perhaps you should start reading posts a little bit better before you start saying things that are just simply not true.

 

I am not Roger Felton , you want to come at me .......lets do this.

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I spent about a year learning order flow and demoing it and such. I have found much more success in order flow trading then any other kind.

 

It is just like when you first learned to read a chart . ...............

 

The answers are in the cause and not the effect.

 

Our point exactly.

 

I would like to set and forget supa dupa computa to do my trading. My miserable attempts at this failed - I am sure others can do it better than I.

 

I asked if it could be back tested - because if it cant then its much the same as many methods.Instead, we learn to read, and interpret, context and patience, then order management - and no one method of reading the same information is better/worse than the other IMHO....

Otherwise if it had the repeatable, clear edge then let the computer read it - it will be likely faster and better than any of us.

 

A lot certainly has to do with time frame and style - in this case day trading as a scalper. For some with a longer term time frame I am sure in the right context, near support/resistance, at what might be deemed a cyclic turning point and with an unrelated stop loss, a MA cross over might be a great way to simply enter without worrying about much else.

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I do not mind if people think that the way I do things is odd or that it won't work. Does not bother me , but when people are misinformed about the info then I feel the need to step in.

 

No one is saying that what you are doing does not work, and I do not think people are really misinformed. Yet, you are saying that other things won't work:

 

Candles are nice , they look nice on a chart and the colors are nice to. But, that information alone is not enough to make a well informed decision about whether or not to put capital at risk.

 

That is an ignorant position to take, and you will be humbled for being so close-minded about what is most important in successful trading. And what's most important in successful trading has nothing to do with order flow.

 

My charts consist of: footprint, 500V, DOM/TS, 3000/10000V, market profile, 30000/50000V, TICK, and then small reference charts of the 10y, spx, ndx, djia, euro, and dax. I don't have any candles, I only use hilo bars (see my thread "The Close of a Bar is Meaningless" to see just how much I hate traditional intraday candle views). Check the "Day Trading the Emini Futures" thread a few months back (one of my last posts there) for a footprint chart I annotated highlighting how I used it to make trading decisions.

 

I say all of this to say that I am far from "traditional" in my approach, and I rely HEAVILY on order flow to make decisions (in fact, I really have no other way to really read the market). But you are saying that price information alone is not enough to form an edge so as to be able to put capital at risk. But large, huge investors do it every day, with more money than you can possibly ever hope to accumulate, and I guarantee you they don't give a rat's ass about order flow. It works great for you, it works great for me, but it doesn't have to work at all for everybody.

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The Australian Dollar has been rising against the USD for seven consecutive days, similar to the NZD and the Euro. However, the AUD is performing better than the GBP, JPY and CHF against the Dollar. However, investors should note that the bullish price movement is largely being driven by the weakness in the Dollar. The US Dollar Index has fallen 0.50% this week and trades at a 3-week low. The Australian Dollar on the other hand is witnessing mainly bullish price movements depending on the currency pair. The Australian Dollar is increasing against the GBP, Euro, Yen, and the CHF but is declining against the NZD. So here we can see there are no major conflicts between the two individual currencies. However, investors will need to continue monitoring the US Dollar Index and price condition of the AUD against other major currencies. The AUDUSD is trading above the 75-Bar Exponential Moving Average and above the “Neutral” level on the RSI as well as the Bollinger Bands. These three factors indicate a further bullish trend as the asset is yet to be read “overbought” on most oscillators. In addition to this, the asset has managed to break above the resistance level and the previous high, meaning the continuation of the traditional wave pattern. The only negative indication when evaluating technical analysis is the measurements of the previous 4 impulse waves. The average bullish wave size is 0.87% and the largest has been 0.92%. The current impulse wave reads 0.87%. Therefore, if the pattern is to continue the price may retrace soon, even if it is going to continue rising thereafter. However, this cannot be known for sure. AUDUSD – Fundamental Analysis In the Meeting Minutes, representatives stated more fear about the remaining risks of a premature decline in rates than about a persistent period of high interest rates. Against this background, markets are reconsidering the timing of a possible easing of the regulator’s position in May and June. According to the CME Groups FedWatch Tool, the likelihood of a May adjustment is currently anticipated at 30-35%. A strong possibility is considered anything above 70%. Next week’s Core PCE Price Index will be key for the Dollar as this will be the last inflation reading for the month and short-term future. If the PCE Price Index is also higher, this means all 5 inflation readings beat expectations. As a result, the Dollar may rise. However, the Dollar’s issue is that the market’s risk profile is high, and many expect the Fed to cut first. Therefore, the Dollar may continue to struggle unless other central banks become more dovish. Even though the Reserve Bank of Australia’s interest rate is lower than the Fed’s, analysts expect the Fed to cut first. Even though GDP Growth in Australia is weakening, the economy is still performing better than Europe and the UK. In addition to this, inflation is still above 4.00%, which is extremely high for the Aussie and the Unemployment Rate has risen to 4.1% which is still manageable according to analysts there. Therefore, most analysts believe the RBA will cut in the third quarter and after the Fed. Therefore, fundamental analysis is slightly in the Aussie’s favor here, but technical analysis will need to continue signalling a rise. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Michalis Efthymiou Market Analyst HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. 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