SO many traders online seem to scream 'orderflow' and 'level taken from the DOM action' etc etc. I have been looking at it for some time now to see if I notice patterns, but it really just seems like a bunch of noise. I've looked at some videos and stuff too, but i really can't seem to find any sort of edge. No patterns in the 'orderflow' - not to mention that I don't really see anything in the numbers that can't be seen on a standard footprint chart? (apart from the depth which of course is always being spoofed) I've also replayed many many swing highs/lows whilst watching the Dom, but yet to spot any patterns Anyone feel like the DOM really helps them in real time to spot things that signal a trade? And Even helps them to find good levels? (if so how) Here's what my Dom looks like: is that good enough as far as Dom's go? Am I missing vital info that these orderflow Gods can see that I can't here?
No, for me. The only value I see in the DOM is to get an idea of how much slippage you might incur for a large trade. If you're trading a 1-2 lot, doesn't make any difference. If you want to trade a 100+ lot, sometimes it does. (Sometimes there will be a spike in price, up or down, where somebody crossed a 1,000 or 2,000 or even 5,000 lot... an it will cover 6-10 handles.) The ONLY thing that really matters in trading is the price chart... and what you do with it!
Every instrument is different. Context(price action) matters. SMB has some excellent videos on using DOM for stocks IN PLAY. So does MadAzMoney. I don’t think it works for liquid futures anymore, but I don’t trade them (probably for that reason).
interesting answers. Not what I was expecting. People seem to be agreeing with me lol On twitter and a few other places I frequent, the furus harp on non-stop about 'magic of orderflow', 'it was all in the DOM!! $$$' etc etc. Of course some seem super scammy, but some do seem to make some nice calls and know their stuff, so I certainly didn't want to just dismiss the idea and so got that fancy DOM, but i've been starring at that fukker for a while now with lots of replays too and yeah, I don't see anything tbh. Sometimes someone will claim to have bought the low tick. I'll ask how what their signal was and they say 'it was all on the DOM'. i'll ask them to be specific, but they just tell me to watch replays which of course i've done hundreds of times lol (I've been told to look at the pace of tape, the depth, stacking, pulling of orders, size of prints etc which i've done)
I find the DOM useful for gauging the strength of buyers or sellers at key inflection areas, on this example the Euro open is tested & slightly breached by 3 points upon the U.S. open. The DOM shows an exhaustion of sellers at a 2B, you can see the sellers dwindling down, the last of the stops were hit - a low risk entry with asymmetrical upside.
perhaps some lightning fast algo can glean something from dom but point and click trading, no. at least not me.
On one hand, when there is a lot of low quality data, constantly changing such that acting upon it is very hard to do manually. All this makes it pretty much useless (non actionable). On the other hand, if the market is slow and you actually NEED depth because of size, then it might help. But the truth is if you need that much size, you should know what you are doing and know about liquidity issues and how to deal with hidden pools, algo accumulation, sweep to fill etc. The Spoofing wars, you can read about, but mostly over with since they made it illegal and put in penalties for it at the exchange level. All that happened over a decade ago. Also if you can only take in so much data per second. The time it takes to "read" DOM, versus the charts need to be balanced. For me it is DOM 0%, charts 80%, 20% Nothing. Hope that helps.
Even this is useless in my opinion. There can easily be an iceberg order in there that refreshes. Here is how I look at it. Suppose you want 500 contracts at 3900. You see the depth for each level is 100. So you figure that at the moment you place your order, you will clear 5 ticks of price levels in order to get your fill of 500. But I will bet you that how your order ends up filling is not how you think. I'm not sure of the exact rules, if bids or offers can be pulled before they are hit if the algo sees the levels below get taken out in one order, but I'm willing to bet that its not going to work like the snapshot that I describe. There are potentially orders in place that an algo has that if the level right beside me gets taken out in one order, then whatever size I'm posting I will pull. Like I say, not sure if this works with a large market order that is one order, but usually its going to be broken down into multiple orders that are micro seconds apart, so before you can even hit the size you see, the size is gone. Here is another way to look at it. If you see each level in the ES is 100 in size, but you see hunderds of contracts trade in a second with the price barely moving, then clearly the size keeps getting refreshed. The size we see posted is a fraction of the trade volume, so how are all those other orders getting filled? Its with superfast updates to the DOM that we can't even see because they get posted for 1 micro second and get filled right away.