There is not enough information to figure out which side has the higher probability of winning.
Scalping_My Way with ACV
- Thread starter VSTscalper
- Start date
How is it that sellers stop a down trend by selling more. I dont understand that. Then he stats later on that their are still more sellers to get the up trend started. That makes no sense. Could someon explain this? Does anyone know? Does that guy that posted the Dom pictures know? This is the exact opposite of what is should be. But if that is the case. In order to start an uptrend wouldn't their not be more buyers than sellers.
So to stop a down trend we Sell.
To start an uptrend we Sell.
That's what this says. Now I'm sure he has somethign in mind. But could someone fill in the pieces where he didn't. I'd sure appreciate it, because I cant get anyone to explain this to me. I'm starting to think know one knows.
So to stop a down trend we Sell.
To start an uptrend we Sell.
That's what this says. Now I'm sure he has somethign in mind. But could someone fill in the pieces where he didn't. I'd sure appreciate it, because I cant get anyone to explain this to me. I'm starting to think know one knows.
IMHO, part of the story -
What you are seeing in the order book are orders - not trades. Suppose the market is rising and buyers perceive this. Buyers will tend to submit marketable orders which are not visible in the DOM, but nevertheless do result in trades. If you believe the market is rising, and you want in, there is not a lot of point in submitting a limit order below last traded price. Sellers, on the other hand believing the market to be rising will submit limit orders above the last traded price and let price come to them.
ie in a rising market, the sellers tend to be more passive and submit non-marketable limit orders, and the buyers tend to be more agressive and submit marketable orders (market or limit).
Reverse the logic for a falling market.
What you see in the DOM reflects somewhat the agressiveness of the buyers and sellers. More asks that bids ~ buyers are more agressive. More bids than asks ~ sellers are more agressive.
Of course this generalisation, but it seems to me there is some truth in it.
I'm talking about a specific trading signal... if you want to discuss the other 95% of the time you would not take a trade then I'm sure you can build a case for either scenario... I much prefer making money
Interesting discussion. I'm quite new to this so I have not observed the DOM in all market conditions. There does seem to be a lot of confusion about what the DOM shows, however.
Price moves due to imbalances in supply and demand (does anyone disagree with that basic premise?).
As I understand it, the DOM shows the supply of passive limit orders hoping to get hit whereas demand is made up of undisclosed (on the DOM at least) market orders. T&S shows actual executed demand. The minority has control means that when there is a shortage of something the price moves in their favour - e.g. when the market orders to buy dry up price will have to adjust down to entice them back just as the market orders to sell start hitting the other side.
One thing that is not clear to me and I hope someone can enlighten me: when the price "translates" on the DOM (say it is going up) where do the new limit order best bids come from? They appear instantly. If they were already there, wouldn't they have been executed before price moved up?
Maybe Im being dense, as I said I'm new to this stuff.
Price moves due to imbalances in supply and demand (does anyone disagree with that basic premise?).
As I understand it, the DOM shows the supply of passive limit orders hoping to get hit whereas demand is made up of undisclosed (on the DOM at least) market orders. T&S shows actual executed demand. The minority has control means that when there is a shortage of something the price moves in their favour - e.g. when the market orders to buy dry up price will have to adjust down to entice them back just as the market orders to sell start hitting the other side.
One thing that is not clear to me and I hope someone can enlighten me: when the price "translates" on the DOM (say it is going up) where do the new limit order best bids come from? They appear instantly. If they were already there, wouldn't they have been executed before price moved up?
Maybe Im being dense, as I said I'm new to this stuff.
>> "Price moves due to imbalances in supply and demand ..."
Instead, price may move to where buyers/sellers perceive that there is good value.
In futures there may be an almost unlimited supply of contracts. A new contract is created every time someone opens a short position of one contract.
Instead, price may move to where buyers/sellers perceive that there is good value.
In futures there may be an almost unlimited supply of contracts. A new contract is created every time someone opens a short position of one contract.
Actually, price moves because supply on one side has run out whilst there is new demand for the same side. Consider the following super simple case
ASK PRICE||ASK SIZE: 1450.00||50
ASK PRICE||ASK SIZE: 1449.50||40
ASK PRICE||ASK SIZE: 1449.25||20
ASK PRICE||ASK SIZE: 1449.00||10
1448.75||10:BID PRICE||BID SIZE
1448.50||20:BID PRICE||BID SIZE
1448.25||30:BID PRICE||BID SIZE
1448.00||40:BID PRICE||BID SIZE
1447.75||40:BID PRICE||BID SIZE
I MKT ORDER BUY 10 contracts...
The DOM then becomes
ASK PRICE||ASK SIZE: 1450.00||50
ASK PRICE||ASK SIZE: 1449.50||40
ASK PRICE||ASK SIZE: 1449.25||20
ASK PRICE||ASK SIZE: 1449.00||0
1448.75||10:BID PRICE||BID SIZE
1448.50||20:BID PRICE||BID SIZE
1448.25||30:BID PRICE||BID SIZE
1448.00||40:BID PRICE||BID SIZE
1447.75||40:BID PRICE||BID SIZE
As long as no one else places a LIMIT SELL ORDER at ASK (ie. 1449.00), the next MKT BUY ORDER will be transacted at 1449.25. This is the fundamentals of the DOM. You only have a PRICE CHANGE once AVAILABILITY (ie. SIZE) has run out. The new orders that fall in to the BID SIDE of 1449.00 occur because they are triggerred by other users and other forms of LIMIT STOPS etc... It is very important to sort out the SUPPLY/DEMAND is on two fronts. There is going to be DEMAND to SHORT against the SUPPLY of SHORTS, as well as DEMAND to LONG against the SUPPLY of LONGS. The desired analytics which all platforms have screwed up needs to assess/incorporate the following four INDEPENDENT COMPONENTS...
SHORT DEMAND, SHORT SUPPLY, LONG DEMAND, LONG SUPPLY
The DOM is incomplete because it only shows you 2 of these components. The other 2 are on the T&S. The corrected equation of these FOUR INDEPENDENT COMPONENTS gives the right picture (ie. the one that work$ without fail)...
Regards,
MAK
Thanks MAK - I was beginning to regret posting.
Yes. What I was getting at above is that if the demand for longs falls, supply of shorts will begin to run out.
This is the bit I still don't understand - is the exchange holding the orders back, so they appear on the DOM as limit orders once price moves? What is the motivation for this order type? If I'm bidding to buy at 1349.00 why didn't I place the market order when the offer was still 1349.00 moments earlier?
Yes, I've figured this out. From what I read few understand this dynamic.
Supply (liquidity) = limit orders on the DOM.
Demand = market orders.
Market orders hit the best available limit orders on the DOM; limit orders only get executed if a market order hits it. The list of limit orders on the DOM tells you little about the demand. The change in the limit orders on the DOM, as confirmed by T&S does tell you about demand.
Yes. What I was getting at above is that if the demand for longs falls, supply of shorts will begin to run out.
This is the bit I still don't understand - is the exchange holding the orders back, so they appear on the DOM as limit orders once price moves? What is the motivation for this order type? If I'm bidding to buy at 1349.00 why didn't I place the market order when the offer was still 1349.00 moments earlier?
Yes, I've figured this out. From what I read few understand this dynamic.
Supply (liquidity) = limit orders on the DOM.
Demand = market orders.
Market orders hit the best available limit orders on the DOM; limit orders only get executed if a market order hits it. The list of limit orders on the DOM tells you little about the demand. The change in the limit orders on the DOM, as confirmed by T&S does tell you about demand.