I'm not sure I understand your reasoning here. We're talking about a region hundreds of ticks below the market of a few seconds ago, so the tiny orders you see are probably GTCs that have been in since who knows when plus a couple of people really trying their luck. The rest of the world simply didn't have time to react yet. IMHO anyway. Why do you think there should be a tighter market? (Not trying to get your goat, just curious.)
I'm glad you like Dow theory. Marvelously simple. From the posts I read the prof is an arrogant S.O.B. Big deal, traders have to be a little arrogant to be successful. As far as a failure to trade, the only thing I saw was a journal he created that he was harrassed into closing. I have no first hand information he doesn't trade or I could give a rat's butt whether he trades or not. If he had an idea to share, either listen or not. No one was shoveling his ideas down my throat. That is the reason I lurked in here for over 2 years. I wanted to see who was full of Sh$t and who wasn't, in my opinion. And to me my opinion is all that matters until I hear something worth while. I love to scour around in here for morsels of intelligence. Others in here like to search for a fight. I guess the cover of the internet offers them a great big security blanket. Then all then need to do is rotate thumbs from butt to mouth.
Samson you don't have a more specific reason for your short at the open? No offense but surely you were taking a considerable risk of being whipsawed by some sort of rally don't you think ? I would say the odds were really stacked against you on that trade and you took some heat for 2 hours after the open . Why didn't you cover on the first new intraday low just before 10:30? Just trying to understand how you can sit for 2 hours in such a trade knowing that at any one time the market can easily and quickly rally 20-50 points just on short covering. Now it looks like not so many people shorted yesterday or just a lot of people didn't get the time to get out.
These are good observations, but you are setting yourself up to get toyed with if you strictly go by the bid/ask ratio in the book. You need to train your mind (much like learning a video game) to compare this to the actual prints on the tape. There is a lot of faking in there. There are even traders that make the book lean one way on purpose while taking the opposite position and then pull to have it go their way. The most important thing is to observe how the market acts at certain levels and then decide to take a position based on what is printing after defining how far it can go against you if you are wrong. During yesterday's spike, I was ready to take a 30 or so tick loss or more. I wasn't ready to have it drop 170+ points. As always, I get out quickly if I'm wrong no matter what. Others who held a bit longer did better. This is a deviation from what would normally happen to those who hold while scalping on a losing trade.
Kicking LOL I listed 6 excellent reasons that all confirmed continuation of the sell off. How many more did I need Structurally not one time frame showed any reason to abandon a short in favor of a reversal.
The last time this happen and I was trading, there was substantial size at most 50 and even levels. It was interesting to see that the market dropped and it would pause and then further stops are triggered and it would rush down 20+ pts again and so on. The tape would show some size triggering on the way down probably due to GTC's sitting out there on some longer term trades. I definitely didn't expect a void, but I learn every day about this puzzle.
Samson, I'm very interested in being able to make such an evaluation on a longer time frame prior to beginning for the day so that it can better support my scalping decisions. What would you say was the most helpful tool (book, etc.) that enables you to make such an evaluation? I appreciate anyone's input on this.
I wish it came all neatly packaged in a single book but it takes a lot more then that to be able to do it with competence. However a good start for a list of all the tools would be Technical Analysis of the Financial Markets, Murphy. Having the TOOLS will only take you so far though and using them CORRECTLY is the hard part.