Size - magnet or repulsor

Discussion in 'Index Futures' started by TheStudent, May 22, 2008.

  1. For those who trade equity index futures.

    Do you think size in the order book is a magnet or a repulsor?

    Said in another way, should you display size or hide it.

    One theory is that in short time frames (seconds) it repels, but in longer time frames (10s of minutes) it attracts.

    Curious to hear thoughts and experience.
  2. The DOM is a giant game. Some days the volume attracts and other days it repels.

    In my experience, a complete waste of time trying to figure out which one is occurring.
  3. Lucrum


    I agree, unless you're scalping for 2 or 3 ticks it's probably just eye candy.
    This statement certainly won't apply to everyone but I know I perform better when I don't look at it. The only exception is AH when things tend to move and change much slower than during RTH.
  4. The absolute levels on the DOM hold far less importance than the changes which take place. Within a few moments, during any time of the day, one can see orders added or removed from the various levels. One can simplify this process by 'highlighting' the level changes, or as I do, using a highlight only on the largest levels. In such a fashion, when changes result (either from addition to, or removal from), one can easily 'see' the various games being played in advance of taking any required action.

    In addition, one must view the DOM in terms of the current context. Around areas of known support and / or resistance (however one wishes to 'define' these areas), the DOM becomes an invaluable tool. Whether traders remove size, or whether traders add to size already present provides important clues when viewing 'size' at such areas. For example, the removal of size at a trend line, differs greatly from 'moving' size to another level along the same trend line.

    Lastly, attempting to 'see' signals in the DOM without using Time and Sales can provide a recipe for frustration. Obviously, 'pulled orders' don't make their way onto the tape. As a result, a trader can learn to determine how and when 'fake' size reacts to increased actual trades. Viewing the DOM in combination with Time and Sales, and understanding 'context' changes which take place throughout the day provides an opportunity to determine which DOM 'changes' represent true and valid signals vs. those that represent an attempt to 'fake out' the weaker hands.

    As is normally the case with trading, the answer to your question (depending on certain key facters) is both.

    - Spydertrader