DionysusToast
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Catch up time. In terms of the DOM - you can trade off the DOM - but not all DOMs are equal. For example - if you compare Ninja DOM & XTrader DOM, there's a lot more info on the XTrader DOM.
With thin markets, the quantities on the DOM are much more relevant than on thick markets. You can play off exceptional size limit orders in thin markets, although it's not a simple matter of fading size or trading into size. It's more seeing size & then guaging the markets reaction.
Looking @ T&S to see buying/selling thin out is problematic for a couple of reasons. First of all, the CME splits the orders and so a 500 lot order can appear to be a 'burst' of orders once it's been split according to the limits it's filled against. Secondly and more importantly - the Time & Sales will slow & speed up all day, so you have to be pretty tuned into it to notice a shift over time. You can't just glance across at it and get instant meaning from it.
As well as the T&S drying up, the other common reversal signal is orders continuing to be placed but price no longer moving up. The problem with this in an uptrend is you'll see this occur when an index arbitrage program is hitting the market - you'll see somoene step up and absorb the buying BUT it's a temporary thing and it's only half the trade - the other half is being executed on the underlying.
I think there's a lot to be said for seeing the 'holding pattern' at the top and then seeing sellers jump on it. You wont get the precise entry at the top but you will have a higher probability trade in my opinion.
Of course, this is for calling a reversal. A pullback is a bit easier to play off the DOM and the DOM/T&S signal can be taken without the need for confirmation.
With thin markets, the quantities on the DOM are much more relevant than on thick markets. You can play off exceptional size limit orders in thin markets, although it's not a simple matter of fading size or trading into size. It's more seeing size & then guaging the markets reaction.
Looking @ T&S to see buying/selling thin out is problematic for a couple of reasons. First of all, the CME splits the orders and so a 500 lot order can appear to be a 'burst' of orders once it's been split according to the limits it's filled against. Secondly and more importantly - the Time & Sales will slow & speed up all day, so you have to be pretty tuned into it to notice a shift over time. You can't just glance across at it and get instant meaning from it.
As well as the T&S drying up, the other common reversal signal is orders continuing to be placed but price no longer moving up. The problem with this in an uptrend is you'll see this occur when an index arbitrage program is hitting the market - you'll see somoene step up and absorb the buying BUT it's a temporary thing and it's only half the trade - the other half is being executed on the underlying.
I think there's a lot to be said for seeing the 'holding pattern' at the top and then seeing sellers jump on it. You wont get the precise entry at the top but you will have a higher probability trade in my opinion.
Of course, this is for calling a reversal. A pullback is a bit easier to play off the DOM and the DOM/T&S signal can be taken without the need for confirmation.
