DionysusToast

OK - so if MOST of the institutions are trading with market orders - who is it that's on the other side? Small retail players? Or are you saying that limit orders = non directional players aka hedgers & market orders = directional players. So all day, hedgers put orders at all price/sides and directional players take them? And you say this is the case in all markets, regardless of the amount of liquidity? Finally - how did you come across this information? Did you poll all large institutions? This isn't a poke at you, it's just a massive generalisation and I wonder how you came to it.

You aren't meddling! Just differences of opinion! I do agree that only market orders move from one price to another but that does not mean that only market orders move the market. The market changes direction in a number of ways. One is that there's no 'steam' left in that direction as you mentioned. Another is that the players on limit orders step up and start absorbing the buying/selling. Many times with spoof limit orders on the other side. We all know that every transaction is both a buy and a sell. A buy market order buys from someone with a sell limit order. Aggression can be in the form of market orders but it can just as easily come in the form of limit orders. If you watch the DOM, you will see times where selling has no impact. You will see times where the offer is stacked and there is a lot of sell market orders going through but price is not moving down, someone has iceberg orders on the bid. It's a classic spoof and goes on every day. Each market is very different in this respect - if you look at the CD on a short term chart for some thinner markets you will see CD running down for extended periods whilst price runs up. This simply reflects the use of market orders on that market. The key to short term use of CD in my opinion is this - it SHOULD do what price does, when it doesn't, that is when it presents opportunity. Hence, when your pullback shows flat CD, it presents opportunity. It's not a strong pullback. If CD starts moving down and price doesn't, it simply means that we have buyers entering with limit orders. Sellers are hitting it but the buyers on limit are sucking it up. Like I said, my money is usually with the sellers in this case on the ES.

I hear you FT - I just don't buy into those theories personally. The bit I don't buy is the claims that institutional players always enter with market orders. I saw that on a few webinars of yours. I'm not sure if you are still telling people this or whether your concepts have changed. I'd be more than willing to have an in depth discussion about the use of market orders and the claims that institutions always use them (and therefore show their tracks with CD). If all of your theories rely on that, then it's all based on a false premise because it's fairly clear to anyone reading a DOM that this is not the case. Still - that's not to say it doesn't work for you,

I use GOMI - I know the older version is on Ninja Forum but I use the newer one from BMT. GOMI has decided to put this software on the $50/elite version of BMT and I have to respect that decision by not sharing it.

I guess it depends on the instrument because CD theory does not hold up on all instruments in my experience. In any case, I would not go long in this case on the ES. Although I used to, i just got my ass handed to me most of the time. On the ES, if delta is falling and price is rising or unable to break through a particular price to the downside, then you could surmise that someone is sucking up all that market selling and therefore price will hold and eventually climb. In reality on the ES, is that most of the times this goes on for a prolonged period - say 10-20 minutes, then what will usually happen is that you'll eventually break through to the downside if delta is still dropping but price isn't. Similarly with iceberg orders, of the price has been moving aggressively down for an hour and we see an iceberg order on the bid and 3-4000 contracts trade there, what normally happens is it'll eat it's way through the iceberg. On the other hand, if price has been moving up for an hour and it pulls back and we see an iceberg on the bid, I presume this is the point it's going to continue up (as long as delta didn't put in a bid downside move with the pullback) Not sure if this makes sense.

Indeed - for the ES, this is the way I look at it... Price goes up 20 ticks, delta goes up 10,000 Price goes down 8 ticks, delta goes down 1000 Price goes up 20 ticks, delta goes up 14,000 Price goes down 9 ticks, delta goes down 2000 To me, in an uptrend, this is what you want to see to give you the confidence to go in on those pullbacks. Now - maybe you then see: Price goes up 40 ticks, delta goes up 30,000 - be careful, there might not be anyone left to buy soon. If we are seeing delta go down 3/4000 on the downswings & up 10,000+ on the upswings, I just keep going long. Once I see a down move with a big swing down in delta, then I'll consider shorts. The problem though - it's not always crystal clear. You need to watch it for a while to figure out. It takes a bit of experience to figure out the 'murky' ones. Here's a picture of - well - right now.... You can see that after the move down to 1246.50, we put in a goof move up which was also a good move up delta wise. Pullbacks are fair game to me once this has happened. The fact that the pullbacks are of equal size does not go unnoticed either. It gives you an expectation of where to look for the next one. It's not a guarantee but in a situation like this you don't want to go long after it pull back 3 ticks. Nor do you want to jump in on a move after it has gone up 6 ticks - it's too late then. As always - actual activity on T&S DOM give you your in - it may just be as simple as getting to a point where marker sellers are no longer interested in the current prices, that's where you jump in.

My reckoning is it ain't going to happen - it's been 2 years since the change. I would also guess by know that the 'big' guys already did the work to re-assemble the trades and so it may be to their advantage to keep it the way it is. After all - this is hardly a gentlemans game! In terms of CD - I think it helps to keep you on side. I have a perpetual desire to trade against the trend. What I now do in a trending market is look at the size of the pullbacks and the size of the delta move for a pull back. If delta goes +10,000 on a move up but -2000 on the pullback, I will go long using DOM/T&S to enter. Later - if I see a pullback with a -10,000 delta shift, then I'll consider that we are at least temporarily in a down move. The thing is though - this is fine on the ES but doesn't seem to work so well on other instruments. If you think about it - the ES is thick but unlike the treasuries, it doesn't hang around much. I've seen treasury traders see a long opportunity and just join the bid, if you did that on the ES you'd miss most of the trades. For a long, I hit the offer which on CD terms would be a +. Of course, you do see times where people try to hold the market in the ES and in that case delta will move down when price doesn't BUT overall on the ES, the delta is a pretty good guide, mostly because if you are trading off tape/DOM, it's pretty tough to enter on a limit order. If you trade mostly of the charts, I think limit orders would be fine as you can pick your level and wait for price to come to you. On an instrument like CL - you'd be a bit nuts to enter with market orders in my opinion, one because you could slip a mile and two because it wiggles that much that once you see your 'in' - you could still get a few ticks better price because of that wiggle. For me CD is good for day trading but I dont buy into all the 'inventory grab' stuff & using it long term. Just my 2c

So that's it - I was just there looking @ google analytics for my site & saw a few links to my site from places that I barely visit. Any questions along these lines, I'm up for a discussion. Also - any general sh1t slinging at an evil vendor is also welcome :crap:

Well, actually there is - but I presume forum rules prevent me from :spam: pointing you in the direction of the product. BTW - I'm the guy "Pete" mentioned at the start of that video :o

ALL ASPECTS? Really? You have boiled the ENTIRE art of tape reading into a single indicator? I can believe that cumulative delta has been improved upon but to say that all aspects of tape reading have been boiled down into a single indicator is disappointing coming from you. As an example - tracking large traders is a key element of using tape. Actual volume is not so much the key but which side the large trades are on is. So - you could see thousands of 1 lot sell market orders going through but also 5 or 6 1000 lot buy market orders at the same time. Retailers doing one thing, institutional traders doing another. There's a lot of nuance in tape reading and you will lose a lot of it by dumbing it down into an indicator. Still - this does appeal to the lowest common denominator in trading and as such will sell like hot cakes. You said it yourself "Why on earth would I want to start at a Time & Sales for hours?" - well, we'd all like the make $1000 in 5 minutes a day version of trading wouldn't we?

There seem to be a few myths about reading tape rearing their heads here. I will be totally honest and say that I do have my own time & sales and it is a commercial product but I have no idea what the rules are here - so I won't mention which one it is. Tape reading does not involve starting at Time & Sales all day waiting for a setup. If you are a scalper, you can do that. If not, you use the tape as a confirmation tool. I don't use any indicators and I think attempts to turn the tape into an indicator are fundamentally flawed. You can either put the effort in to read tape or not. There are no shortcuts. I have been asked repeatedly to put my own Time & Sales products into an indicator form but you just dumb down the information. The markets are a 4 way auction. 1 - Buyers @ market 2 - Sellers @ market 3 - Bidders 4 - Offers The flaw with cumulative delta is that it only shows 1 & 2. Aggressiveness comes in different forms. It does come in the form of market orders but it does very often come in the form of limit orders. When you see the number of contracts to get through a level get higher and higher it often means a short term reversal is coming. This may happen across 5 or 6 ticks on the ES and on a cumulative delta chart you will simply not see the fact that delta is rising but price isn't. Let's say delta for the day is +50,000 - the 'thickening up' on the bid might occur over 6 ticks & 5000 contracts. It'll be millimetres of difference on the chart, something that will be barely noticeable. Tape reading is about changes over time. Action has a reaction. You can see the action in the market buy & sell orders. When these orders have less impact on the market, you can surmise that the people with limit orders are starting to take more contracts on board which bodes well for a reversal. If you pay too much attention to delta and no attention to what the bidders/offers are doing, then you are only doing half a job of tape reading.

In terms of competition - it is a very abstract form of competition. You are not head to head against anyone per se. Still, if you trade outright positions, then when you buy you are doing it with the expectation that someone will buy from you later on at a higher price. As such, there will always be a set of 'bagholders' who don't have a greater fool to sell to. The 90% are the perpetual bagholders. If you watch the ES for any amount of time, it is quite clear that there is a lot of gameplay going on. Most days develop as a series of shakeouts, fakeouts & reversals. The people doing this have almost unlimited risk. The people getting shaken out have 4-10 tick stops. It is transfer from weak hands to strong. The 90% are the perpetually shaken out. There is not money for everyone. If 90% of the people had what it took to be profitable then "what it took to be profitable" would change. It's akin to the laws of physics - what goes in can come out and nothing more. Perhaps we should expect it to be a bit fair and for only 50% to be losers BUT life isn't like that. The guys that are the best at the current game are the ones taking the spoils. The game could of course change in which case I sincerely doubt that distribution would be anything like equal. In that case, I'd still expect 99% of people to simply not cotton on to what the game was and for the few to win out. The 90/95/99.999% losers is a transient trading population that will come, see and be conquered. It will always be like that regardless of how many books Alexander Elder publishes (or perhaps it's because of how many he does). Effectively - there is nothing to see here, move along, all is as it should be.