New to DOM reading, some questions and advice please

Discussion in 'Trading' started by Z2TT, Apr 21, 2019.

  1. qlai

    qlai

    I didn't understand what "don't fade size" means. Do you mean if you see a large bid, don't short? The opposite of leaning on big size.
     
    #21     Apr 22, 2019
  2. bone

    bone

    SIZE traders in modern electronic markets have several methodologies for moving size without attracting too much attention. And you won't pick it up with Market Delta or any of those other "footprint" tools. Hands-down their favorite method is to ICEBERG orders. TT has offered the iceberg tool for a couple decades now. Size traders who are serious about getting stuff done don't offer 2,000 and then cancel when the market gets within two tics.

    But it works great if you want to scare 200 retail traders into puking into you. That's how spoofers make money. They create drastic order book imbalances in order to induce pikers into puking into them. So, they'll offer 2,000 and bid for 100 because they really want to BUY.
     
    #22     Apr 22, 2019
    qlai likes this.
  3. There are many, legal, ways to hide the total quantity you wish to execute. Time-sliced orders are similar to Icebergs. Make it fancier and work each slice with With A Tick functionality. The parent order quantity is held on a co-located server and not exposed to the order book. There's no way to truly identify what's out there.
     
    #23     Apr 24, 2019
  4. qlai

    qlai

    Interesting ... So I can convert passive order into an aggressive one as opposite size gets depleted. Is that the idea?
     
    #24     Apr 24, 2019
  5. Yes. With A Tick will monitor the contra-market, the ask if you're bidding or the bid if your offering, and if the quantity available in the contra-market falls below a threshold you declare, your order will aggress and tick into the market.
     
    #25     Apr 24, 2019
    qlai likes this.
  6. qlai

    qlai

    Thanks. And they say DOM is useless!
     
    #26     Apr 24, 2019
  7. bone

    bone

    I once saw a floor broker in the Five Year Note Pit buy a twenty lot like clockwork every two minutes. Over a six hour period he had bought a couple thousand for the client - without anyone knowing or caring. Only reason I found out was because I stood near him and of course had noticed then asked him about it after the session closed when I saw him in the lobby.

    Now, if he had bought a two thousand lot “in the open” the floor brokers, the floor clerks, and the booth clerk would have known and reported it to their clients. This particular client of this floor broker was a very well known HF Manager so he was very clever about hiding his trading.
     
    Last edited: Apr 24, 2019
    #27     Apr 24, 2019
  8. bone

    bone

    Only useless for speculative trading purposes.
     
    #28     Apr 24, 2019
  9. As Bookmap gives more data about the price auction then the traditional DOM you could have more validation about trades, for example, on 10s chart you can see an actual exhaustion of buyers or sellers which can validate a trend change.
     
    #29     Apr 29, 2019
  10. bone

    bone

    Market Profile has been doing the same thing for forty years.

    Bookmap, Market Delta, and all the other DOM footprint toolboxes have something in common - they are NOT privy to the exchange order identifier tags. These studies or toolboxes have ZERO resolution (ability) to identify Commercial, Large Spec, or retail traders making or taking liquidity. They cannot distinguish crossed orders from other fills.

    All market participants are PRICE sensitive. The more TIME a market spends at a new or fresh price range - the more accepted that valuation becomes to all market participants. PRICES that overvalue an instrument are quickly rejected by the marketplace. That’s all you need to know. You’re welcome.
     
    #30     Apr 29, 2019