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ask/bid numbers: market manipulation?
- Thread starter Shraga18
- Start date
Quote from Shraga18:
I've noticed that most of the time, when the market rallies, the offers in my DOM outnumber the bids, sometimes greatly so, and vice versa during a sell-off. I saw a thread here that even discusses how to scalp based on this fact. To me it makes absolutely no sense. If there are more offers than bids, that means more people
I have noticed the same thing, I put it down to my feed being so slow that maybe it was an aliasing effect.
If you have watched a western sometimes the wheels on the stagecoach look like they are going backwards because of the speed of the movie.
So in the case of the DOM its updating every .5s or .05s so maybe an aliasing effect?
I have wondered if its not some program bot, the producer of which hasn't realized that his behaiviour resolves itself if you sample at set intervals?
Just some thoughts.
If you're buying a rally and you have enough size to worry the market with orders then it makes sense to display large offers up the page, that way when the size offer is approached little locals and computers will exit their short term longs into your smaller orders on the bid as they think the rally may pause. The only risk you face is being taken in one go on the offer but worse case scenario is it would probably flatten your long position you've been building.
There are plenty of programs that can remove or reverse your size order once it begins to trade. It's a standard game in futures markets and will ultimately get you into a better long term position than emptying the book in the direction of the rally.
There are plenty of programs that can remove or reverse your size order once it begins to trade. It's a standard game in futures markets and will ultimately get you into a better long term position than emptying the book in the direction of the rally.
Shraga - one explanation could also be the orders ABOVE the current price that are not reflected on the dom - these would be buy stop orders (which is what I use). So if you see 1500 sellers sitting at a price, there may already be 2000 buyers sitting there waiting for price to move up. Then, when people enter market orders as well, that will affect the price movement as well.
I struggled with this very topic at the beginning and in the end, for me at least, I just ignore the #'s on the dom. As another post said - it could easily be some programs and bot's playing with the #'s anyways. Just b/c you see a bunch of sellers now does not mean these sellers are actually getting a fill in real time. It's very easy to hit the cancel button or have a bot cancel the order quickly.
I struggled with this very topic at the beginning and in the end, for me at least, I just ignore the #'s on the dom. As another post said - it could easily be some programs and bot's playing with the #'s anyways. Just b/c you see a bunch of sellers now does not mean these sellers are actually getting a fill in real time. It's very easy to hit the cancel button or have a bot cancel the order quickly.
If you're referring to the 5 deep numbers on the DOM then what you're seeing is index arbitrage. Of course you know the 5 deep only shows limit orders. When a index arb program kicks off they put in a large number of limit orders away from value in case they trigger stops to make some extra coin. Then they hit the ES with market orders pushing it in the direction of their resting limit orders. Once they complete the trades on the equity side they just close out any of the completed resting orders for some extra profits. Nothing mysterious about it.