How to use DOM primer?

Discussion in 'Professional Trading' started by automated, Jan 8, 2011.

  1. Does anyone know a link to or another source of info on "How to Use DOM ladder / window". I am looking for interpretation help. Thanks.
  2. Big AAPL

    Big AAPL

    Are you looking for information on how to interpret the orders resting in the queue or how to physically operate a DOM with the order interface, etc.?
  3. how to interpret, make trading decisions based on what you see? pertinent to futures please.
  4. Big AAPL

    Big AAPL

    Based on your user name, I cannot even begin to tell you how you might automate a strategy based on the bid and ask sides of the market. Way too much spoofing and pulled orders on liquid contracts like the ES. This presents a problem for the discretionary trader as well. IMHO, like chart reading and PA analysis, interpreting potential future price based on the Q alone requires thousands of hours of screentime to develop a feel for movement. I personally use it in conjunction with the T&S to get a better feel for what size has genuine intent and consider it just another tool that must be learned and used correctly in conjuntion with others' inputs of interest.

    Perhaps another user can step in and offer some insight as to what other instruments could possibly offer a better opporunity to trade because its book is less misleading.
  5. another newb
  6. I think you guys misunderstood my questions. Not talking about automating trades based on DOM or using DOM by itself without other indicators.

    Some people use the bid and ask size at each price level for setting their entry/exits or stops. Some people use it for very short term trading, quick in and outs but still be somewhat scientific by using the DOM info. I have seen some provider's DOM that shows one column that gives cumulative volume (total of the number of contracts offered at each price level). Does bid side total being significantly less/more than ask side give useful indication of health of that commodity at that moment. One column shows how many total contracts have traded at a specific price level since the start of the trading day. I did not find these two columns to be of any significant use, may be someone else has. Sure like to hear from those who find them useful and how.

    If anyone can expand on the above mentioned or some other ways in which this data can be utilized, appreciate it.

    This is all in reference to futures and not other instruments.

    Comments like "Another newby" are not helpful to anybody!
  7. I pasted it from another forum, thought it might be useful to readers here.

    Making $150,000/ month trading US stocks.

    This is what a young lady trading in New York, who appeared in Active trader magazine March 2001 edition was making.It was given to me by one of her bosses to give an indication of what his proprietry traders were doing.

    Lets see how she trades in the article.

    Firstly she trades US Nasdaq stocks.She does about 250 trades a day using NASDAQ LEVEL 2 direct access.Trading between 500-6,000 shares at a time.She makes $150,000/month and has made as much as $250,000/month.She has netted $50,000 on her biggest day and lost $19,000 on her worst.She is allowed to keep 70% of her profits.All her conversation is entirely about her reading of her level 2 screen and trades are naturaly direct access into that screen.

    I'm a momentum -based trader she says."When a stock is moving i'll buy it when it slows i'll sell it.I take each buy differently from each sell,which is important.I take what i can out of a stock.sometimes i dont take as much as i can;other times i'll push a little to far.Typicaly i'll be in the quater,three eights or half a point profit range.I'll sometimes shoot for a point in some wider spread stocks,but i'll be taking more risk in those cases.(A point is a dollar run in a stock)

    I look for higher volatility and volume so i can get in and out with size.But basicaly i'll trade any stock thats moving.

    Another thing i like to do is play off support and resistance.When youre in a stock every day ,making hundreds of trades a day,you can see who the main buyers and sellers are,and when they're buying and selling.Thats how i identify support and resistance--I dont use charts for that.

    First of all the only way you can realy tell who the main buyers and sellers are and what the market makers are realy trying to do ,is to be in the stock.You can see the prints going off either on the bid or ask.Ultimately the only way to actualy know who is doing that is when you preference them(direct a trade to a select net preference order)and either they trade with you or they dont.

    Say i see Morgan Stanley buying all the morning,consistently on the inside bid,and then he flips sides and goes to the offer.Then i preference his offer because i think the stock is going up,and he dosnt trade with me.since i know he was a buyer earlier ,i know he's just trying to fake someone out.Basicaly you want to see aggressive buying or selling ,not just the posting of bids and offers.

    You want to use this past trading information to provide a little extra insight to whats going on right now-not necessarily an absolute indicator of what will happen in the future.

    The same kinds of signs ,but on the opposite side of the market.For example,if i've seen Morgan constantly going high bid,when i see he's not going high bid any more,and when people on the sell side -say other market makers like Herzog or Goldman Sachs -are actively selling and are not raising their offers to much or to quickly,that tells me the stock is slowing down and i should sell it."

    She uses a S&P futures chart and a chart of the stock,but she uses them only to see if she's not trading late in the move.She gets her stocks from seeing them run on her Nasdaq movers list.

    So there you are we can all go out and earn $150k /month now.

    PS. By the way she was in her early twenties.One major thing is, that she certainly knows the answer to support,resistance and momentum is the correct reading of her level 2 screen.
  8. risky63


    did she post PnL for 2003?
  9. This may help. He is a stand up guy. If you don't like he gives your money back He focuses on futures, bonds spec, but the concept should translate, DOM is DOM.

    I tape read just watching price and the speed of upticks vs. downticks are various levels.

    You would be better going to TradersLaboratory where more people use price and volume.
  10. pookie


    Very interesting post, automated...thanks for posting! I find stories like this to be very encouraging. Do you happen to know the trader's name?
    #10     Jan 13, 2011