Active DOM traders

birdman said:
Hey ScalperTrader ... fascinating insight you have shared ... my hat's off to ya!

Let me ask ... what do you think of (as at least some suggest) that a person should delete the ask offers /bid offers columns and only focus on "Time Price Size".

Would that approach be limiting or beneficial, to your process? What am i giving up if i go that streamlined route?
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I’ve read guys saying they couldn’t trade without the entire depth of market (the 300+ levels).

I myself haven’t found value in it (yet).

But the best Bid/Ask still has its use.
It’s meaningful when a large order doesn’t get filled.

Sometimes it’s just partially filled.
And sometimes they’re desperate to be filled.

It gives you some valuable hints.
So I wouldn’t skip it.

They are still seeking liquidity,
Fake or not they’re suckers for it.
 
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Please let me elaborate a bit more in response to some of the questions posted to me. I think some of you are still confusing "tape reading" and/or watching "T&S" with what I'm talking about happening on the price ladder - not the same or even related. You have a better chance of trying to correlate your TA, or even a simple supp/res level on your chart than bringing tape reading into the mix. Think about the underlying premise: You are a large player trying to buy or unload a big position - how do you do that without tipping off the market and having the price go against you? That question is the fundamental premise to this way of trading, applied over 10 years ago when I tried to learn it, and applies today. If you think about that question, and then start "staring" at the price ladder, and listen, why not - pull up your favorite chart next to the price ladder as your "training wheels" at the beginning (I don't care, OHLC, Renko, Kagi, Volume, Tick, etc.), and see what happens when the size shows up! Also, at the beginning, when the size(s) shows up, try to see if you can answer this question: Is the size buying to cover a short position or buying to initiate a long position (and vice-versa)? They are both buys and the they both show up at bid! See where I'm going with this?
 
ScalperTrader said:
Please let me elaborate a bit more in response to some of the questions posted to me. I think some of you are still confusing "tape reading" and/or watching "T&S" with what I'm talking about happening on the price ladder - not the same or even related. You have a better chance of trying to correlate your TA, or even a simple supp/res level on your chart than bringing tape reading into the mix. Think about the underlying premise: You are a large player trying to buy or unload a big position - how do you do that without tipping off the market and having the price go against you? That question is the fundamental premise to this way of trading, applied over 10 years ago when I tried to learn it, and applies today. If you think about that question, and then start "staring" at the price ladder, and listen, why not - pull up your favorite chart next to the price ladder as your "training wheels" at the beginning (I don't care, OHLC, Renko, Kagi, Volume, Tick, etc.), and see what happens when the size shows up! Also, at the beginning, when the size(s) shows up, try to see if you can answer this question: Is the size buying to cover a short position or buying to initiate a long position (and vice-versa)? They are both buys and the they both show up at bid! See where I'm going with this?
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DOM trading is a topic best explained by recorded video of real time price action regardless if its simulator or real money.

Trying to explain DOM trading via just words...too many misunderstandings that makes it seem philosophical when in fact it involves algorithms making micro-second decisions against other algorithms and against retail traders that believe in error they can out-game the algorithms via point-n-click approach without any automation.

wrbtrader
 
If it was easy, everyone would be doing it. I have had friends sitting next me watching and live trading for a long time and still did not get it. And I have friends who we trade the same market together and talk and chat, and they still think how I am trading is "weird"! At the end of the day, there are a million ways to trade "profitably". And everyone of those friends who I trade with is "profitable" consistently.

Hey, it's a long weekend, and I have not been posting on ET for over 10 years, but what the heck, let me throw something out there to help some of the newbies (or experienced traders - as I said, I considered myself experienced after years and years of trading to realize how dumb and slow learner I've been at this game)! DOM trading, chart trading, flipping a coin to go long or short, none of it matters! It's all about learning a skill, and rinse-and-repeat, mundane, boring job - day in and day out performing that one skill! But in your mind, try to become a brick layer, or a factory assembly-line worker and learn a skill to do this job with your eyes closed! I am no guru or even by a stretch of imagination trying to refute and question how all those successful traders here trade the right way or the wrong way! But one thing that I am, and I am certain of, is that I know I am a good "trader"! The profits are the byproduct of being a good "trader"! I was able to detach myself from the "money" side of trading, and being in a position to say "that was a good trade" to almost every trade that I take. A "good trade" is not a "profitable trade", but a trade that you take based on your day-in, day-out, mundane boring skill that you've mastered! Just like a good surgeon, he or she does not perform a surgery based on the fact he or she can command $20K for that surgery - no, the $20K is the by product of his or her skills being performed. He or she can certainly do the same surgery for a charitable cause without charging a dime for it! You see where I'm going with this? You master that one skill, then for all of you who question if you can trade successfully with one lot, why not size up, then change that little digit on your price ladder from "1" to "10" lots, and go from making $500 a day to $5000 a day - NOTHING has changed or will change, but it's all about mastering one skill, and the psychology of it to deal with.
 
What prevents you from increasing your size ? Have you measured your win rate and profit factor? How many trades do you typically do per day?
 
ScalperTrader said:
If it was easy, everyone would be doing it. I have had friends sitting next me watching and live trading for a long time and still did not get it. And I have friends who we trade the same market together and talk and chat, and they still think how I am trading is "weird"! At the end of the day, there are a million ways to trade "profitably". And everyone of those friends who I trade with is "profitable" consistently...
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Exactly...

You're not going to be able to explain it here at ET in a few message posts.
  • Why bother ?
In contrast, if you're going to make that effort so that its not philosophical and trapped with just words at this forum...

Best to throw in some recorded videos or live trading sessions (simulator or real money) of your own (not someone's else) on something like Youtube Live. After that...don't worry about if they got it or not. They're on their own.

Without that, as you've seen so far...DOM trading has too many misunderstandings especially when you're trying to explain it to someone not even trading the same markets as you.

wrbtrader
 
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ScalperTrader said:
If it was easy, everyone would be doing it. I have had friends sitting next me watching and live trading for a long time and still did not get it. And I have friends who we trade the same market together and talk and chat, and they still think how I am trading is "weird"! At the end of the day, there are a million ways to trade "profitably". And everyone of those friends who I trade with is "profitable" consistently.

Hey, it's a long weekend, and I have not been posting on ET for over 10 years, but what the heck, let me throw something out there to help some of the newbies (or experienced traders - as I said, I considered myself experienced after years and years of trading to realize how dumb and slow learner I've been at this game)! DOM trading, chart trading, flipping a coin to go long or short, none of it matters! It's all about learning a skill, and rinse-and-repeat, mundane, boring job - day in and day out performing that one skill! But in your mind, try to become a brick layer, or a factory assembly-line worker and learn a skill to do this job with your eyes closed! I am no guru or even by a stretch of imagination trying to refute and question how all those successful traders here trade the right way or the wrong way! But one thing that I am, and I am certain of, is that I know I am a good "trader"! The profits are the byproduct of being a good "trader"! I was able to detach myself from the "money" side of trading, and being in a position to say "that was a good trade" to almost every trade that I take. A "good trade" is not a "profitable trade", but a trade that you take based on your day-in, day-out, mundane boring skill that you've mastered! Just like a good surgeon, he or she does not perform a surgery based on the fact he or she can command $20K for that surgery - no, the $20K is the by product of his or her skills being performed. He or she can certainly do the same surgery for a charitable cause without charging a dime for it! You see where I'm going with this? You master that one skill, then for all of you who question if you can trade successfully with one lot, why not size up, then change that little digit on your price ladder from "1" to "10" lots, and go from making $500 a day to $5000 a day - NOTHING has changed or will change, but it's all about mastering one skill, and the psychology of it to deal with.
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Hi. You've made some intriguing insights. I'd be willing to learn more about your method if you're willing to share. Seems like you trade news events mainly? Or anytime (news events or not)?
 
ScalperTrader said:
If it was easy, everyone would be doing it. I have had friends sitting next me watching and live trading for a long time and still did not get it. And I have friends who we trade the same market together and talk and chat, and they still think how I am trading is "weird"! At the end of the day, there are a million ways to trade "profitably". And everyone of those friends who I trade with is "profitable" consistently.

Hey, it's a long weekend, and I have not been posting on ET for over 10 years, but what the heck, let me throw something out there to help some of the newbies (or experienced traders - as I said, I considered myself experienced after years and years of trading to realize how dumb and slow learner I've been at this game)! DOM trading, chart trading, flipping a coin to go long or short, none of it matters! It's all about learning a skill, and rinse-and-repeat, mundane, boring job - day in and day out performing that one skill! But in your mind, try to become a brick layer, or a factory assembly-line worker and learn a skill to do this job with your eyes closed! I am no guru or even by a stretch of imagination trying to refute and question how all those successful traders here trade the right way or the wrong way! But one thing that I am, and I am certain of, is that I know I am a good "trader"! The profits are the byproduct of being a good "trader"! I was able to detach myself from the "money" side of trading, and being in a position to say "that was a good trade" to almost every trade that I take. A "good trade" is not a "profitable trade", but a trade that you take based on your day-in, day-out, mundane boring skill that you've mastered! Just like a good surgeon, he or she does not perform a surgery based on the fact he or she can command $20K for that surgery - no, the $20K is the by product of his or her skills being performed. He or she can certainly do the same surgery for a charitable cause without charging a dime for it! You see where I'm going with this? You master that one skill, then for all of you who question if you can trade successfully with one lot, why not size up, then change that little digit on your price ladder from "1" to "10" lots, and go from making $500 a day to $5000 a day - NOTHING has changed or will change, but it's all about mastering one skill, and the psychology of it to deal with.
More...

What prevents you from increasing your size if you are sure you have edge in reading the DOM? Have you measured your win rate and profit factor? How many trades do you typically do per day?
 
bone said:
And half the Algos running are designed to spoof the other naive Algos. Entire proprietary trading firms in Chicago and NYC are built upon the premise of gaming less sophisticated Algos and slower ECN latency.

Firms like Spike spend hundreds of thousands of dollars per month on ECN infrastructure. It’s just a micro arbitrage speed game. They’ve got IT Pros on staff that are well into six figures per year. And they don’t trade.

*************************************
If you have a mouse in your hand and you’re trading DOM order flow - you are dead meat on the table.

************************************

You’re so dead you might as well fly to Vegas and put your entire trading account equity on Red in one roulette bet. Better odds.

Because 90% of you are so underfunded that you’re clearing a deep discount broker. You want to save fifty cents per round turn - but you’re oblivious to the fact that your discount broker requires at least two additional exchange ECN messages per trade. Even when they advertise “collocated servers” {that’s the Direct Clearing Member your discount broker uses BTW}. {{To translate: your orders are getting routed to two different geographical locations before they get routed to the exchange}}. [if you’re using a discount broker, your order is getting two credit checks before it reaches the exchange server]

So you save 50 cents per RT but the super high speed direct clearing ECN Algos drain you for $12.50 in slippage. Moral victory?
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excellent post.
 
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