Trading based on bid/ask (image)

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Then, people have said that price goes to where the orders are. I tried to watch this on my DOM but I feel like it happens sometimes and doesn't happen other times.

After that I decided to graph the bid and ask quantities and see if price goes toward size.

Lighter colors = more quantity.

Darker colors = less quantity.

So this bright yellow line means someone placed a huge order and price actually went to where those orders were.
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Delta or net contracts traded at difference of bid or ask might be more useful. It’s just another value in a moment in time. Delta can change based on intraday orderflow so past values may not imply future trends. What’s more important is to look at historical intraday time points where orderflow dominates relative to delta. So if you see size going in one direction at 10:30 and 2pm, more than likely that orderflow will continue in that direction. Or to look at delta at intermediate term trendlines on a intraday chart. To signify whether players are trying to ‘ paint’ a break or bounce off...
 
i think unless you have actually traded hft commercially it would be hard to understand the commercial order structure and objectives. it is more complicated than anyone might think.
 
Spectre2007 said:
Delta or net contracts traded at difference of bid or ask might be more useful. It’s just another value in a moment in time. Delta can change based on intraday orderflow so past values may not imply future trends. What’s more important is to look at historical intraday time points where orderflow dominates relative to delta. So if you see size going in one direction at 10:30 and 2pm, more than likely that orderflow will continue in that direction. Or to look at delta at intermediate term trendlines on a intraday chart. To signify whether players are trying to ‘ paint’ a break or bounce off...
More...
Can you explain that like I'm 5?
 
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