In the past month, I have interviewed some of our traders. The first one was Tom who dropped by our offices, so I decided to talk to him about his method, software, and approach. Tom is a very systematic trader in my opinion, and his approach to markets is through microanalysis of charts and specific setups. I apologize for my voice in this video, I was a bit under the weather. The second trader is Steve, who has a methodical approach to testing and backtesting. He created this diagram https://optimusfutures.com/downloads/HumanFactorsTradingSystems.jpg and it encompasses the challenges we all face as traders. I wish you a good weekend, and I hope this material helps you in your trading. There is a substantial risk of loss in futures trading.
Hi Matt thanks for the Post s if I were to put up some capital to trade using your technology would anyone there help me define and get started on a strategy? Thanks
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Sorry to be so critical, but I watched the first video with Tom and am left scratching my head. In my opinion, and just my opinion, his ideas are elementary, and I question his understanding of some issues. Since you introduce him as being an educator, I think its important to point out where he is going wrong. First, he is comparing how Bookmap shows resting orders with how Sierra does it. He's pointing out the "thicker" levels, but as you see in this screen capture, he has two different instruments loaded. On the left is Bookmap with ES, and on the right is CL on Sierra. The fact that he trying to compare them without realizing he has two different instruments is comical. Yes, its a simple mistake made under the pressure of doing an interview, but if he is an educator, he should be used to doing presentations. For a long time, he also keeps referring to the thick levels as volume, and he contrasts this by saying what is the traditional way of looking at volume, via the volume bars on the bottom. I know he said they are bids and offers at one point, but it makes me really wonder if he truly understands the difference because he isn't being specific enough. You cannot compare the resting orders that Bookmap shows you and the volume bars on the bottom that show the actual number of contracts traded. They mean two completely different things, but he seems to just lump them all into one category by always saying volume. He places too much emphasis on the thicker levels of liquidity that are far away from price as if this is a secret only he knows. When you actually do a proper study of this, you see its not that useful. Yes, half the time a thick level will act as a wall that cannot be crossed, but the other half of the time its traded as if it wasn't there. I'm not saying I don't look at this same thing, but when you consider that these levels are maybe 1000 contracts thick, which these days is considered quite heavy, and yet 1000 contracts can trade in just a few seconds, then you see this amount is minuscule in the whole grand scheme of things. If all you ever do is fade the direction of price when it approaches a thick level, you will not do well. Anyway, just wanted to give an honest opinion. Perhaps he does well, especially if he is a full time trader, but watching him give this presentation makes me wonder how well he truly knows what he is talking about.
At 25:50 he transitioned to the CL charts. Up until that point he had ES on Bookmap and ES on SC. Then he transitioned to CL in the context of news. Then he went back and forth between the two. If you want to show a different aspect of how you analyze Bookmap, I would be more than happy to have an interview with you. Not being sarcastic. I like Tom, and I rarely see someone who has methodical as him when it comes to software. His knowledge extends beyond what he has just shown, and although I can not talk performance due to privacy policies we are bound by, he had no motive but to share his knowledge. I respect your analysis and your opposite view.
Yes, he does go back and forth between CL and ES, but at 32:50 he makes the direct comparison. He talks about how a huge order is gone when comparing the current order on the DOM in Sierra vs. the historical offers on Bookmap, but this is because he is on two different instruments. Like I say though, its just a slip up. I don't use Bookmap as Sierra now implements the same idea quite well. But here is just a random sample as I looked through my charts to show some nice variances and why its difficult to just trade with this info. 1. Here we see an ASK level that just slightly sticks on. On first encounter, it makes price bounce off nicely. Then it pulls even before its hit and price goes higher. 2. Here is an even thicker ASK level, and it has no problem trading and going higher. (although granted, not by much) 3. Here we see a thick BID that pulled as price comes down. So now we have to wonder, did buyers disappear and it will go lower or not? 4. Here is a thicker ASK, and yes, it pushed prices down. (or note is that its across several price levels and not just one) 5. Here is a very thick BID, it trades, but price goes higher, so nice support. 6. Here it trades again, and another bounce. But as you can see, on the third try, it breaks no problem, and eventually ends up lower. So although its nice to look at, and it almost looks like there is an edge here, there are several combinations that we have to be aware of. As price approaches a thick level, it can either bounce off, or it can trade through. The resting orders can also pull, and now you have to wonder if this means the buyers or sellers disappeared and what affect this will have on the direction. Yet another variation is when a thick level appears just above or below price as it is moving (ie. more people wanted to get on board, and some call this backfilling). So its not so much a resting order, but a new one that was just placed in this case. Furthermore, these levels are usually 500-1000 contracts thick. (ES used to be "thicker" years ago) This amount of volume can trade in seconds without any thick levels to be seen. So none of these resting orders really have much of an impact. If you want to load up on 1000 contracts, you really don't need to show this size and can easily accumulate it over just a few seconds. Now of course if it was all just trickery, traders would learn its fake and always fade it. So it has to "work" half the time, and fail the other half, to keep everyone guessing. But now you're guessing which time it works and which time it doesn't. I know that Bookmap also shows visually what's traded at each level, but this too isn't the smocking gun. Just because there is a huge order at a level on the BID doesn't mean its gonna support price and it will go up. On days when price is falling, there are often huge BIDs that get hit, and price keeps dropping. The fact that someone wants to keep buying on the way down doesn't mean that they are supporting price and trying to make it turn around. Anyway, these are just a few of my random thoughts. Sorry to be so critical, and I'm sure Tom knows quite a bit as well given that he has been doing this for so long, but when I watched the video, I felt bad for an amateur that would get the wrong idea.