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Tape is my shape - Currency Edition


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Tape is my shape - Currency Edition

  #1 (permalink)
adaseb
Canada
 
Posts: 58 since Aug 2010
Thanks Given: 2
Thanks Received: 36

I'm going to try to make this thread very similar to the "Tape is my shape (tape reading, time and sales)" created by bloom. Only difference being that this one will be for currencies mostly the 6E (eur-usd) unlike the other thread which was for ES.

I would like this thread to be a discussion where other traders can discuss and share ideas.

Please ONLY keep this thread regarding Currencies!!

You need to keep in mind there are a few differences between ES and 6E. Most of the volume in ES is from the futures market, while the 6E is opposite. It mostly follows the spot market price.

I been trading like this for over 2 years or so. Not much has changed in the past couple of years. I only use the futures data to filter trades pretty much.

I only use this when the big players are buying the Euro Dollar, when they are buying the crosses such as Eur/Jpy or Eur/GBP, I avoid and might focus on indices like DAX30 or metal like Gold.

In the other thread what was discussed alot was about "large bids/offers" and "large market orders hitting bids/offers". For example, there was a large 2000 offer, and some large buyer hit the offer using a 2000 lot market order. What that means is you have a large seller and large buyer.

On 6E is slightly different. You will typically see a large offer, and then spot price will advance and a bot will typically take out that large offer to avoid price deviation which can cause arbitration.

I know this is probably very confusing to understand but I will post photos and maybe some videos.

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  #3 (permalink)
adaseb
Canada
 
Posts: 58 since Aug 2010
Thanks Given: 2
Thanks Received: 36


Ok First Lesson.

This is one of the VERY EASIEST types of trading opportunies you can discover.

Very easy to see and very easy to confirm.

What do you see at 1.3020?

A large bid that stands out. THis is what you need to look out for.

You MUST confirm that this order fills, because sometimes it might get pulled from the DOM.

Confirming if it fills is VERY EASY, look at the T&S and make sure an order thats rougtly between 100-150 lots gets recorded when its hits the bid. It might not be one 150 lot order, it can be separted into smaller orders such as (1,1,1,2,3,5,6,25,25,75,2,5,1,2,1) and most will typically fill as roughtly the same time stamp.

ONLY take that long if price is on support! If this is the low of the day, don't go catching a falling knife, because 1.3020 might be where a large player is taking profit NOT opening a long position.

You basically need to use some basic technical analysis here.

SIMPLE? Yes however there is one problem.

This isnt 100% accurate. Sometimes large player are wrong, sometimes they use stops which are much much too large for most, and sometimes the trade just doesn't work. BUT it works very well at filtering trades.

Second problem is that, its RARE to see this setup. Most large bids/offers are hidden or executed in a different fashion, which I will get into later.

Attached Thumbnails
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  #4 (permalink)
adaseb
Canada
 
Posts: 58 since Aug 2010
Thanks Given: 2
Thanks Received: 36

Ninjatrader is a GREAT platform because you can program your own indiciators to help you find these setups.

You should program a simple script that can alert you when there is a large difference on any of the DOM levels and get an audio alert.

This can EASILY be achieved using a simple code such as


Quoting 
for (int z=1; z < 4; z++){
if (onlyasks ==1){
if (askRows[z].Volume-bidRows[z].Volume > block){
// if (askRows[z].Volume > block){
DrawArrowDown(CurrentBar.ToString(),0, High[0] + (2*TickSize), Color.Blue);
Alert("up", NinjaTrader.Cbi.Priority.High, "Reached threshold", "Alert1.wav", 10, Color.Red, Color.Yellow);
}
}
if (onlybids ==1){
if (bidRows[z].Volume-askRows[z].Volume > block){
// if (bidRows[z].Volume > block){
DrawArrowUp(CurrentBar.ToString(),0,Low[0] - (2*TickSize), Color.Blue);
Alert("up", NinjaTrader.Cbi.Priority.High, "Reached threshold", "Alert2.wav", 10, Color.Green, Color.Yellow);

}

What the code does is, it looks only in LEVEL 2 to LEVEL 5 of the DOM, Not the inner level and compares for a difference in bids and asks, if there is a difference which you get to set in "block" it alerts you.

This script needs work however because I get too many false alerts, but you get the general idea. You can also set it to only alert you when a DOM level is greater than a certain value rather than just calculate the difference.

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  #5 (permalink)
adaseb
Canada
 
Posts: 58 since Aug 2010
Thanks Given: 2
Thanks Received: 36

When to Use This?

ONLY use it when you are going with the trend, DO NOT search for reversals, no matter how large the sitting order can be.

Looking at the chart I posted are 2 lines. One lower and One higher.

Basically when price broke the lower line, look for a short using the DOM.
When price broke the higher line, look for a long using the DOM.

You will see MANY LARGE BIDS when price broke the lower line, and IGNORE THOSE BIDS, they are mostly take profit.
Same goes for the LARGE OFFERS when price was at the High of the day.

As I said, just use some basic technical analysis and go with the trend.

Remember there are 2 types of orders.

1 is to open a position - which is what you are looking for
1 is to close a position - which is typically take profit.
sell/buy stops - or stoploss orders are NEVER shown on the DOM.

Remember just because large players all take profit at the same areas doesn't mean it will reverse, it can still continue the trend.

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  #6 (permalink)
 Traderji 
Australia
 
Experience: Advanced
Platform: NinjaTrader, Multicharts
Trading: Spot Forex, Gold, Silver
Posts: 176 since Oct 2010
Thanks Given: 114
Thanks Received: 114

There is no tape in Spot Forex. And the 6E is such a tiny tiny part of the FX market and something that lags behind the moves in the OTC markets anyway.

There is no edge that you can gain by watching the DOM in 6E that you couldn't gain by simply watching the $EURUSD chart. As for the sub-second arbitrage opportunities you think you can beat the algos, trading at home in Ninjatrader?

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  #7 (permalink)
adaseb
Canada
 
Posts: 58 since Aug 2010
Thanks Given: 2
Thanks Received: 36


Traderji View Post
There is no tape in Spot Forex. And the 6E is such a tiny tiny part of the FX market and something that lags behind the moves in the OTC markets anyway.

There is no edge that you can gain by watching the DOM in 6E that you couldn't gain by simply watching the $EURUSD chart. As for the sub-second arbitrage opportunities you think you can beat the algos, trading at home in Ninjatrader?

Really? Then why is it that I am that 1% off all the traders out there that actually does this for a living and actually makes money.


And if 6E lagged the spot market then there would be arbitation, wouldn't there?

You do not know what you are taking about pretty much.

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  #8 (permalink)
 Traderji 
Australia
 
Experience: Advanced
Platform: NinjaTrader, Multicharts
Trading: Spot Forex, Gold, Silver
Posts: 176 since Oct 2010
Thanks Given: 114
Thanks Received: 114


adaseb View Post
Really? Then why is it that I am that 1% off all the traders out there that actually does this for a living and actually makes money.

.


Sigh.... I thought you were just being naïve but I see now that you are a snake oil salesman.

that's the trouble with this business and something that keeps it being respectable enough - the number of scammers out there who are always selling their holy grail method. Anyway buyer beware.

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  #9 (permalink)
 
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 Big Mike 
Manta, Ecuador
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Traderji View Post
Sigh.... I thought you were just being naïve but I see now that you are a snake oil salesman.

that's the trouble with this business and something that keeps it being respectable enough - the number of scammers out there who are always selling their holy grail method. Anyway buyer beware.

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  #10 (permalink)
adaseb
Canada
 
Posts: 58 since Aug 2010
Thanks Given: 2
Thanks Received: 36



Traderji View Post
Sigh.... I thought you were just being naïve but I see now that you are a snake oil salesman.

that's the trouble with this business and something that keeps it being respectable enough - the number of scammers out there who are always selling their holy grail method. Anyway buyer beware.

You actually think I am trying to sell you something?

If you think that then maybe you should learn some english. Re-read my posts.

All the info I provided and script was FREE.

Seriously, please DO NOT post in my thread anymore. Thank you

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