Quit Job to Watch DOM.

[TheDude 10]

I think you (and plenty of others on here) are confusing 'eliminating risk' with 'eliminating the opportunity for profit'. No risk means no reward guys, there's no two ways about it. If you start jamming your stop in at break even all the time then you're not doing yourself any favours, however good it feels.

 

If you're trading systematically, then there's no need to worry about 'viewing the market objectively'. Your views of the market will become irrelevant.

 

Depends.

 

Firstly, if skilled enough, it is possible to trade moves with very minimal adverse excursion. Timing and experience are vital.

Secondly, although the fact we must take risk to assume a gain (it is so obvious it needs no mention) is true, the first priority ALWAYS has to be capital preservation*. The key is to risk as little as possible to gain as much as possible. Until you realise this, you are unlikely to get to the point where you realise the truth I mention in my first point.

 

I'd kind of agree that if most start 'jamming a stop in at break even' they wont be doing them selves any favours in the short term as their frustration at missing moves will be difficult. However, there's no reason they cant re-enter and eventually learning my first point, and also learning the core skill - WHEN to take the stop to break even in terms of whats happening in terms of order flow and price movement.

 

* I'm not talking about risking a tiny fraction of the account here. I'm talking about understanding structure that allows you to only take highly probable trades. When you're at this place, you're happy to risk 10% or more on a trade if the figure add up. This 2% rule we read so much about is useful to 2 types of traders: newbies who dont understand the markets yet and portfolio managers who are often forced to be trading a vast array of products due to regulatory reasons

Edited February 5, 2012 by TheDude

[BlueHorseshoe 10]

blue, I can easily write a strategy in which scaling out beats exiting the entire position, via an inappropriate choice of the levels at which the exits occur.

 

That sounds like an excellent suggestion - please can you post your findings, along with some general information about how you tested the strategy (timeframes etc)? I look forward to seeing your results.

 

Thanks.

[BlueHorseshoe 10]

When you're at this place, you're happy to risk 10% or more on a trade if the figure add up.

 

Is this place called Vegas?

[Tams 20]

here's a DOM you can watch

 

[onesmith 10]

Initially I visualized an absurd strategy which anyone who writes lots of strategies should be able to visualize without me saying anything more than what I said about selecting inappropriate exit levels. So I hadn't planned to actually write the strategy because I could visualize it and I believed the existence of a single model of scaling out would NOT nullify your generalization because the synergy of scaling, if that's the appropriate descriptive term, requires pairing the scaling logic with realistic rather than laughable rules.

 

I have not attempted to write a scale out strategy before so what I envisioned as a prank strategy to prove ...that a proof wouldn't necessarily prove anything, ... became something I chose to give more thought to, like maybe this could be a worthwhile area to explore. After an hour of resolving the named entry nuances I had the logic working where I could test scaling out. It took another hour to write realistic rules where scaling out beats exiting flat.

 

That sounds like an excellent suggestion - please can you post your findings, along with some general information about how you tested the strategy (timeframes etc)? I look forward to seeing your results.

 

Thanks.

[jonathan2340 10]

I have no idea about this job.

[EthanHunt 10]

You start out by saying "I made over 60% last year....(hypothetical)..."I have subscribers". What, you talk like you know something but all you know is hypothetical?:haha::haha::haha::haha:

 

I have never used the DOM. I made over 60% last year with a minimal DD (hypothetical) trading the futures. I have subscribers who take my signals with real contracts and are profitable. I do think the DOM might provide some edge. However it will likely require programming skills and possible co-location. I watched a webinar from CQG and the tools that the little guys like us are up against will make it very hard. Take a look at my Price Driver vs Liquidity Provider article here for some good ideas. Basically, all trades can be broken down into drives or liquidity provisions.

 

I've read tape for 5-6 years. It is very hard to learn to read tape and your chance of success is very low.. without knowing what to look for. It is unlikely you will learn by just watching tape. In fact, I watch it for 3-4 years but my skills were still rudimentary compared to what they are today.

 

I'm undecided how much of an edge order flow is, however. I'm not convinced its enough an "edge" by itself for the futures market. The futures game tends to reward in proportion to skillful risk taken. I do offer some tape reading/order flow materials at my website. I'm not sure why you are looking at a DOM if you have foot print/market delta information(?) I use a completely unique method which enabled me to take my tape reading skills to a completely new level.

 

My recommendation would be don't get tunnel vision. I speak to a lot of traders, many of whom are tape readers but they don't understand the whole game. This puts them at a significant disadvantage. If you're not consistently profitable.. I wouldn't even bother spread betting at $1 per point.. One thing you can do that I recommend is I recommend you start with say a reasonable SIM account like 30k give yourself a max loss limit per of say 1.5k/day and "trade" 24/7. I did a similar activity and it improved my overall trading. You can't trade this way with real money unless you want to lose it all but you will learn a lot.

 

I want to be clear about one thing. I think you are headed down wrong path with focusing on the DOM. I think order book edges are one avenue to explore with programming but I don't think you will be able to read that. Even if you found an edge, you will still have to get your order into the market! It is not even possible to read all the information in time&sales. This is where I made my break through was understanding how to really read tape.

 

Good luck!

----------

 

Curtis

[Predictor 11]

My subscribers have made thousands of dollars from taking my signals. On C2, you can look and see what trades have registered fills (only for subs that autotrade). I keep in close contact with my real money traders and track their results. So, yes they've been profitable.

 

Even though someone may be taking my signals with real money, all results still must be treated as hypothetical.

 

Curtis

 

You start out by saying "I made over 60% last year....(hypothetical)..."I have subscribers". What, you talk like you know something but all you know is hypothetical?:haha::haha::haha::haha:

[Tams 20]

 

My subscribers have made thousands of dollars from taking my signals. On C2, you can look and see what trades have registered fills (only for subs that autotrade). I keep in close contact with my real money traders and track their results. So, yes they've been profitable.

 

Even though someone may be taking my signals with real money, all results still must be treated as hypothetical.

 

Curtis

 

 

but you still cannot afford to quit your job and trade full time ????

 

 

 

.

[darklost 10]

hello, does anybody know if there is a thread or a where can I find info about how to profit from large orders at key levels, I often see this happening and the market seams to go through those walls, is it possible to trade this with success? or maybe is just my mind that wants to remember only those times when the price go through the wall?

 

thanks

 

[Predictor 11]

dark.. I have some materials on reading order flow (check my site, see profile). I don't use the DOM. However, if you think about it, the largest traders are probably the guys using the limit orders and they usually intend to get filled. I kinda chuckle when traders talk about leaning against size. The closest thing possible to this idea is to take the other side of heavy market orders if you don't think they will be able to clear. You're not leaning against size so much as running profiting from their reversal.

 

hello, does anybody know if there is a thread or a where can I find info about how to profit from large orders at key levels, I often see this happening and the market seams to go through those walls, is it possible to trade this with success? or maybe is just my mind that wants to remember only those times when the price go through the wall?

 

thanks

[SunTrader 10]

hello, does anybody know if there is a thread or a where can I find info about how ..........

Although I suppose trading is trading, I wouldn't claim to know how the Italian markets move.

[darklost 10]

dark.. I have some materials on reading order flow (check my site, see profile). I don't use the DOM. However, if you think about it, the largest traders are probably the guys using the limit orders and they usually intend to get filled. I kinda chuckle when traders talk about leaning against size. The closest thing possible to this idea is to take the other side of heavy market orders if you don't think they will be able to clear. You're not leaning against size so much as running profiting from their reversal.

 

Hi predictor, thanks for your replay, I will check your site, I'm just interested in how to trade the wall, because I see this a lot of time, I would like to learn about order flow but for what I read on the various forum there is a lot of noise due to algo trading and that it is becoming harder to trade this way.

 

 

does anybody trade these walls? what is the best way to trade them?

 

 

1) as the wall start to be hit aggressivly enter just before it seams to be all filled and take profit a few tick after the break, stop a couple of tick before the wall.

 

2) enter as the price goes a little far from the wall as there is a big chance that the price will go there and maybe take profit 1 tick before the wall, but I don't have any idea on where to place stops.

 

sorry for my english...

[darklost 10]

Although I suppose trading is trading, I wouldn't claim to know how the Italian markets move.

 

yes maybe, but I see these walls also in the US market and it seams to have the same behavior, don't understand if those orders are taking profit orders or something else, I mean if they are long and they take profit there, why the market should continue to go up, I mean why they want to take profit knowing that the market has a big chance to go up?

 

and if they want to be filled because they are opening a short position, why the market should go in the opposite direction, so it seam more taking profit.

[SunTrader 10]

yes maybe, but I see these walls also in the US market and it seams to have the same behavior,........

Well in the markets I follow here price goes to size, not all the time obviously - but as a rule.

 

Think about it. If a large buy order it below buy point of yourself and other small traders why would sellers sell to you at that moment. They are encouraged to hold.

 

But what the large size buyers do is first sell to drive price down to their buy zone.

 

Trouble is when watching large size orders is knowing when they are truly there or not because they can drive price down and pull their large orders encouraging the market to drop further before covering short and turning around and going long. Or never even having any intention of going long but just give the impression of it.

 

Naturally they do the same on the sell side give the impression of selling when they want to buy.

 

So size is not something I bother with.

[darklost 10]

Well in the markets I follow here price goes to size, not all the time obviously - but as a rule.

 

Think about it. If a large buy order it below buy point of yourself and other small traders why would sellers sell to you at that moment. They are encouraged to hold.

 

But what the large size buyers do is first sell to drive price down to their buy zone.

 

Trouble is when watching large size orders is knowing when they are truly there or not because they can drive price down and pull their large orders encouraging the market to drop further before covering short and turning around and going long. Or never even having any intention of going long but just give the impression of it.

 

Naturally they do the same on the sell side give the impression of selling when they want to buy.

 

So size is not something I bother with.

 

So main reason that cause price to go to size is large size traders pushing the price in a certain direction, for various reason:

 

these are a couple of thoughts about when the price breaks the wall, these are questions, just to know if I understood.

 

1) They want to short big size for a few ticks and they need small traders to buy from them, so they put large buy limit orders to encourage small traders to buy, the small traders buy from them, when they accumulated all the position they need they start to push price down to their big order where they cover and make money.

So why the market then go down further? maybe because once they covered, there is no more size to support the price? so here the large traders are not interested in what will happen once they covered, they just want to cover, or maybe they covered just the first lot and maybe they will cover further down for a bigger profit?

 

 

2) they want the market to go further down so they show large buy limit orders, the small traders buys but suddenly the large traders pull the large buy limit order, small traders begin to short and other start to cover their long and the price goes down further.

 

 

often I see those walls in the book, but they are never reached, what they want to do in this case?

[SunTrader 10]

So main reason that cause price to go to size is large size traders pushing the price in a certain direction..........

In trading there are all kinds of scenarios in using the bid / offer size. But unless you are privy to much of what goes on in a big trading firm it is hard to use it profitably. Even then you won't know too much about what is "true" about what another big trading firm is doing or not doing.

 

If you have ever bought or sold a used car (less so a new car) it is a game of truth or dare. Private owner or dealer says they have many people interested in car and you better make a deal quick. Maybe they do, maybe they don't You want a lower price so you negotiate a little further with them to get to what you are willing to pay.In the end you might get it "cheap" or might lose out to one of the .... many people interested. Do they exist or are they a smokescreen?

 

Sometimes you can tell while it is happening but mostly you find out after the fact - when it is meaningless.

 

So again that is why I don't bother and believe there are much better ways to understand price action than watching size.

[lastninja2 10]

[ame=http://www.youtube.com/watch?v=Frc6kzeZWnE]2011 November 25th Morning Phase 2. OFFERING, TO BUY action at the day-low. - YouTube[/ame]

 

[ame=http://www.youtube.com/watch?v=Kr9JkVtr3qQ]2011 November 25th. Instances of OFFERING, TO BUY. FESX Morning Phase 1. - YouTube[/ame]

 

made these ages ago. i think they describe quite well what you two are discussing:

i.e. size orders being there to spook retail traders to doing the "wrong thing".

[johnny7 10]

 

 

made these ages ago. i think they describe quite well what you two are discussing:

i.e. size orders being there to spook retail traders to doing the "wrong thing".

 

Hi this is my first post and thanks for sharing your experinces.

 

I take it that you are based in the Uk like me. I just wondered what broker do you use as the American brokers seem to offer lower commissons and there are far more of them. I like the idea of trading US futures as I can combine this with my Career when I get home and have a day off in the week. I would demo trade for about 3-6 month before going live.

 

What data, Chart package, dom do you use and how much do they cost per month?. I think that you are using x trader which is expensive

 

How do you hedge your currency risk as you are tading the euro stoxx which is in euros.

Is your account now totally in Euros?

 

I am tired of spread betting as the spread and platform is only ideal for longer term trading. I enjoy normal share trading for the longer term aswell.

 

Kind regards

 

John

[darklost 10]

 

 

made these ages ago. i think they describe quite well what you two are discussing:

i.e. size orders being there to spook retail traders to doing the "wrong thing".

 

Do you still trade this setup? and if so do you manage to trade it for consistent profits? I would like to understand if it is a waste of time or not to study this. I am just interested in trading this large orders not in other dom/order flow setups.

 

Today i noticed the same on a couple of italian stocks i follow, I would like to make some videos and post them in a new thread, will maybe start tomorrow.

[iwshares 10]

This 2% rule we read so much about is useful to 2 types of traders: newbies who dont understand the markets yet...

 

I initially planned on trading 1% because "that's what you do". However once I started risking real capital I found I only wanted to only risk 0.66% at most, and would often risk less, especially after a loss. It wasn't until noticing I was plus pips but not £ that I went back and throughly started playing around with position sizes on my test data to work out what I was most happy risking, assuming the worst possible outcomes over a large number of trades for drawdowns and finding a happy medium between possible drawdown and possible account growth. While my strategy call for a constant position size, I can also see that, as with scaling, position size is system dependent

[lastninja2 10]

Hi this is my first post and thanks for sharing your experinces.

Hi, no probs.

------------------

I take it that you are based in the Uk like me.

I'm based in london

----------------

I just wondered what broker do you use as the American brokers seem to offer lower commissons and there are far more of them.

I do not actively trade yet because I am quite sure I would lose money. However, a few months ago I did open a 10,000GBP account with Velocity Futures.

My thoughts?

 

*Their capital reserves are less than 2million USD, and I therefore keep an eye on Velocity Futures on google news to make sure they don't look likely to blow up and take half my net worth with them.

 

*I have had some issues with their Trading Technologies data feed (the data feed, where eurex is concerned at least, is not trustworthy in my opinion). Some trading buddies of mine have also reported issues with their data.

 

*They only require 5000USD to open an account, and then they offer X-Trader platform for FREE (although transaction fees are around 1EUR more than otherwise would be, per round turn). However, since I do not actively trade (I only observe), I do not care so much about that.

 

I also recently opened an account with AMP Futures.

Why? Because they only require 500USD to open an account, and they provide access to Ninja Trader platform, and also a CQG live data feed. I have not had ANY trouble so far with this data feed, and I am very happy with it.

 

I would demo trade for about 3-6 month before going live.

 

For what my opinion is worth - and it is contrary to the opinions of some others - you should not trade with real money until you are absolutely confident the battle has already been won, so to speak.

----------------

What data, Chart package, dom do you use and how much do they cost per month? I think that you are using x trader which is expensive

*As I mentioned above, I do have X-trader on my machine, and I have access to it for FREE via Velocity Futures. But I do not actually use X-trader any longer.

I believe most of the pro's use X-trader, but there are benefits to using NinjaTrader (superior charting, for example, and it is more flexible in terms of what add-ons you can bolt on to it).

*The data feed I actively use is CQG from AMP Futures (also free, just 500USD to open account).

*The DOM I use is actually a specialized piece of software created by Jigsaw Trading (the creator posts periodically on this forum). You can google it if you like, you will see there are some advantages to it, in the way it presents the market information. It is not expensive and since I started watching this DOM, I do not envisage myself returning to the old ones. It was not built to actually execute trades on, however, so where taking the actual trades is concerned you would have to use X-trader, or Ninjatrader dom, whatever.

----------------

 

How do you hedge your currency risk as you are tading the euro stoxx which is in euros.

Is your account now totally in Euros?

 

My account is a mix of GBP, USD and EUR. The total value is around 15,300USD. I do not hedge. It fluctuates up and down, and there's not a great deal I can do about it. I just accept it.

**************

 

 

Do you still trade this setup? and if so do you manage to trade it for consistent profits?

As I mentioned above, I do not actively trade any setup. I just sit and watch the market and very very rarely will I make a bet on my spread betting platform. Why? Because I am confident at this moment in time I would lose what little money I have. One bad trade is equivalent to a days pay at my local bar - to hell with that.

----------------

 

I would like to understand if it is a waste of time or not to study this. I am just interested in trading this large orders not in other dom/order flow setups.

All I can tell you is my own experience:

I have witnessed this 'setup', as you call it, occur right before a big market reversal. Sometimes probably it was coincidental... but it happened often enough that there is DEFINITELY a link between the two. I no longer watch for this 'setup' however... I am pursuing other avenues - still a total noob though, don't get me wrong.

Why did I give up on this 'setup'?

Well, I recall some time ago there was a 1 or 2 week period when I saw this setup occur many times, but the market did not reverse. It just kept powering through the orders.

What I failed to grasp - and that is still the case today - is when the setup is valid as a signal and when it is not. I think you need to understand the context of the market to determine when it really does signal a reversal, and when it means nothing.

One potential investigative method, which I tried but gave up on due to laziness, is watching the market all day, marking the specific times that you see the setup, and then perhaps painting those occurences on a chart to see if there is some relationship between when the setup worked, and when it did not. Just a thought - maybe a bul#£hit one?

----------------

 

Today i noticed the same on a couple of italian stocks i follow, I would like to make some videos and post them in a new thread, will maybe start tomorrow.

Good luck. I cannot say whether you will succeed if you focus on this setup, or another setup like it. But I'll tell you what I firmly believe (I believed it firmly enough to throw away my old career and become a barman).

If you watch the DOM for long enough, and make notes - typed or mental notes, whatever - it will begin to make sense.

 

That's all I've got to say this evening.

 

Good luck, I'll keep my eye on this thread and periodically update.

Edited February 15, 2012 by lastninja2

[darklost 10]

Hello I just started a thread about "WALLS" and started to upload videos

 

http://www.traderslaboratory.com/forums/trading-markets/12120-trading-wall.html

[uexkuell 10]

Referring to the first post in this thread:

http://www.traderslaboratory.com/forums/futures-trading-laboratory/11717-quit-job-watch-dom.html#post136636

 

Getting profitable with one lot is proving difficult, as I expected it to be. Nevertheless I'll keep staring at the DOM until it starts to make sense to me.

 

May I ask what the outcome of this endeavour is so far?

 

Does it pay out?

[lastninja2 10]

hi

dont have a great deal of time to write an essay but will do what i can:

 

*I believe it is possible to become consistently profitable from your own bedroom. But difficult.

 

*Retailers generally have 2nd rate technology, slower news wires, and higher transaction costs. It makes trading an uphill struggle but I dont think you can use these as an excuse for failure - perhaps you could adapt your approach somewhat to offset the transaction costs as best you can, and reduce the reliance on split second entry? Also, talking forex / com is a decent squawk, in my opinion. You could probably get a couple of big "gimmie" trades each month. e.g. natural disaster/unexpected central banker spiel.

 

*I think special attention to developing long-term edge, rather than fixation on any individual outcome is important.

 

*I also think it is crucial to get a decent trade simulator - the only acceptable one I know of is via TT.

 

*Develop some basis for entering a trade. Trade it every time you see it on sim. Note down everything you can about what happened. Record the screen with camtasia if you need to and watch replay later.

 

Just some of my thoughts.

 

In the end I gave up on bartending/bedroom trading - just not sustainable, too exhausting.

I joined a prop firm instead; better place to figure it out, and also potential for backing a larger account than i could ever fund myself.

 

GL