Quote from Torge:
Hi,just read your tapereading thread.(ES Tapereading 101)
You wrote that the pros try to confuse the "normal trader" with hiding their intentions.
But why do you use Tapereading then....?
It is very true that 4 or five activities are conducted by those who "add" and "delete" orders on the the ES Bbid and Bask. This is also true to a lesser extend on on other levels as shown on The Depth of Market on TWS for instance.
Tri pack has a very good suggestion for watching the progression of the market.
All things considered, when you get acquainted with the DOM, you will find that it is very calming for making money. Tri pack points out that the Bbid/Bask follows a pattern as trends unfold. I refer to the sucession he points out as"translation" during trends.
One person here "sees" all positions filled with four digit numbers. She is observing the orders placed for "protection" mostly. There also happen to be three digit groups usually surounding the current price activity. If you see three of these, commonly you will see a three tick bar forming on the chart (5 min for me.).
I use "tape reading for the express reason tripack suggests in 4. In intraday trading there are usually 4 trends a day (2 am and 2 pm). As scientist points out, these trends are traversed and each travrse is many ~6 to 7 ticks say for the trend progression, and maybe less during the left to right travrse before the next trend progression of money making.
Tripak "sees" that at the ends of traverses, the Bbid/Bask does a "dance". 2 pairs of values flip flop for a while. First the "extreme" one, then the less extreme one. Finally the flip flopping ends as the opposite traverse of the trend takes over in the opposite direction. When I see this, I use it to reverse or sideline. It is extremely useful these days. We are having a lot of high volatility bars (5 min). You can glance at charts and see how bars alternate in color as a rough measure.
All the traders using all their strategies to arb, "add" and "delete" and others just showing some of their "hands" and those who use stops for protection, all work marvellously in the representations of the .7sec "snapshots that repeat on DOM of TWS. Our minds "loop" data 18 times a sec habitually. we get 12 "looks" at each snapshot. This is what scientist means when he says people are 80% better than mechanical.
I judge the duration of each par. I judge which is dominant. I judge how the "extreme pair begins to "fade" out of the picture. I snese when it is not going to make it back. at that time I reverse at "market". Always I am unable to get the extreme value. I do, often, get the reverse on either the next or the third tick. I refer to the third tick value as the "spike" value. When that tick is at play on the BBid/Bask then the traverse has happened. After that all the guys who "show"and do what they do, participate in the subsequent "translation" that traverses the particular intraday trend that is in play.
If you monitor volume, you can then plan for the duration of these traverses that have "spikes" at each end. people commented here that they watch the tape or DOM for determining market pace. Either way, knowing maket pace, tells you when to look for the tripak 4. The tripack 4. is what I term as a "spike" for reversing. Fast market paces are easiest for making money because they are "orderly".
If a person wanted to double returns on any mechanical edge system, they should add the tripak 4. to their system especially as an exit.
Imagine you are a beginner and only want to make money under low risk. Well you can use tripak 4. to do that about 8 times a day. This is a slow motion type trade. Plenty of time to do the steps. where do you find, during the day the tripak 4. in slow motion? Where else but on 2 two tick 5 min bar. the two pairs of BBid/Bask have a common middle value. You find these 8 each day by looking for volume at it's lowest. This is well under 2500 contracts per 5 minutes. Right after this bar. you sit and enter as the price goes beyond the two tick bar end. Volume will be "bursting out" or surging" for this. I call it pinwheeling.
You stay in for a bar or so ( 5min or so). You will see a "spike to end the run of profits. Do this 8 times a day. for a good return per contract each day of the week. If there are fewer two tick bars, use three tick bars. In any case each trade get to be longer if there are fewer very short bars.
2. You wrote ,most of the pro´s use market orders.
You as a volume scalper,do you use them too?
You are in for a very big discovery. All those people you see doing that wide variety of things that "show" are the people whose trades are NOT being made. If you put the T&S function of qcharts or whatever right next to the DOM of TWS, you get to "see" "market" trades going through on T&S and you see that DOM is not changing in a corresponding manner. what changes DOM is people "adding" and "deleting" almost exclusively.
Thank you for answering
