Hi NoDoji, I've been following your posts for awhile. I trade futures but like reading about your experiences in stocks too. That DOM from IB appears to be showing just the current bid and ask. I think you're supposed to see 10 levels, 5 up (offers) and 5 down (bids). You might want to check into that before trying to trade it. Seeing more depth might be useful for you. Someone else who trades ES on IB can probably help as I use TT X_Trader with another broker. Here is an example: http://www.marketswiki.com/mwiki/MD_Trader
Dollars and sense First, let me clarify: this is about watching the dome in futures, i am not talking about stock trading. I will pick your brain for a change because i know Nod is tired of me getting on her case about fading moves. Did i mention she also uses overbought and oversold indicator stuff? She says to herself: "if i see one more post about using scalping stuff and NOT catching the "RUN", i will scream". So dollars & sense please explain to me and others what good is the dom except to get nervous about the trade you just got filled on. I mean lets be serious, What type of profit potential can anyone decipher by watching numbers on crack jumping around? Watching dome ficticious playtime UNFILLED orders that can be changed, manipulated or even eliminated in milli-seconds is an exercise in futility at best and just plain dumb at worst. I bet the farm watching the dom is going to increase trading emotions to the point of being manic. What else can happen? If someone places a trade from a so called signal from the dome, What can they expect from such a trade? Help me out, educate me> What am i missing. OK, answer me this: How can i project a profit target from placing a trade by using manic numbers on crack? I suppose watching the dom is sexier because it can make a trader feel more excited with the faster manic flip-flop of constant order placements, changes compared to feeling like a slow slug of a trader watching the old fashioned SLOW price changes on a chart. :eek: Please do not say watching the dom is going to change the 90% that loss becoming winners overnight. Charts still work...........but must be understood first. Ok, time to enjoy the day outside, beautiful day.
Hog, thank you much for the link to Linda's article! D&S, I don't use the DOM for anything except ease of order entry. I see order size games played there (and on L2) all the time. For stocks, I use my L2 in Etrade to detect hidden orders refreshing, but I depend on Time&Sales for the real action. For ES paper trading I've been using mainly Hog's breakout/breakdown strategy, and just plain intuition on a couple days to catch a trend from the open. On days like yesterday, stochastics worked great for both pivot points and where to take profits and re-enter the trend. Yesterday I was very uncertain about my initial trade and I have to wonder if I would've done it if trading real money. The paper trading has demonstrated the value of taking all setups, but when it comes to trading real money, I still think too much. On my first long entry yesterday, I actually said out loud, "The signal's long, but I don't think the market can sustain much upside." Who cares what I think??? The signal was long, go long, put in the stop and let the market tell me if it can or can't sustain further upside. Once an initial higher low or lower high is established, that is the first hint of a strong intraday trend initiating, especially if established off a gap open (news), or if trading opens and pivots from a previously oversold/overbought extreme on the daily chart (30-day). Once a second continuation move occurs off (or close to) the intraday 20-period moving average, stochastics don't mean much except to mirror the action near the MA, and the MA becomes to me the optimal guide to stay in a trending position, add to it, take profits and re-enter, etc. With ES yesterday I chose to take profits at overbought and re-enter the trade at oversold as long as the trend line remained intact.
I'm tired of seeing these trends late in the day (when they've hit the hi/lo ticker 100 times) and fading them for a small move. I want to catch that TREND when it starts, so I've been studying swing setups on the daily charts. I attached a chart of IBM, one of the stocks I've been studying to learn to recognize the reversal signals that lead to this kind of strong trending day. This demonstrates the setup described above.
The entire market had sold off over several days to an oversold condition, giving a probability boost to the IBM setup above, and to just about any fundamentally strong stock that day. With so much day trading, I've tended to lose track of the bigger picture, and I'm working on that now. Speaking of bigger picture, STEC, which I've been trading quite a bit lately, has a very interesting daily chart. The 30-day chart provides an approximate double top (that very brief breakout Friday above the 6/18 high was, IMHO, a short squeeze (the short interest on this one is incredibly high) and the rapidity of the pullback from the new high tells me a lot of longs wanted to grab profits at that level. The 1-year chart has this one as far from a 200-day EMA as I've ever seen, even further than HOTT before its monumental crash. I'm doubtful that this one has a whole lot of upside before putting in another decent correction to at least the 22.00 level. My last prediction from the previous high down to 21.00 was just .43 cents shy of the round number. I impatiently day traded for very small gains instead of trusting my analysis and holding a core position through the anticipated retracement. (On the other hand that short interest of over 30% is scary...)
from Nods last post..... >> (On the other hand that short interest of over 30% is scary...) Least we not forget that in futures the SHORT interest is ALWAYS 50%. Actually in daytrading futures there is no such thing as a short interest in my world. I believe price movement is the reason for the season and thats what controls the players. When i visualize price moving up or down from level to level and am in the other traders shoes i know what they and i will be doing. There is no time for bs excuses to hold or fold. ES compared to stock trading is shorthand for E-xtra S-ensative. Jobs report next Friday report. Many are looking desperately for the job recovery to start. ha, ha. I say, "addition by the amount of subttraction" is a stretch. But will agree that the trend of individual reports are what matters more than the actual number itself. Expectations of the number and the release of the number if a surprise relative to what the traders positions are can cause a big position change. And we all know a single price change can start a landslide when 50 % each are on both sides of that price. Let the games for a new week begin tomorrow morning.
Ok, lets get the week started with a couple songs to get warmed up. http://www.youtube.com/watch?v=Ooll8gfuWzE&feature=related Second song is a favorite from High School, it was played over and over in the "GRILL" restaurant where many of us met in mornings after school busses dropped us off. http://www.youtube.com/watch?v=r9hSgs0ITI0&feature=related
That's cool, just wanted you to know the info was available. It's very true about games being played. It sounds like your strategy is longer-term and doesn't have much use for that info anyway. By the way, I really appreciate how you explain your rationale and thought process. Best wishes on your new endeavour!